UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2010~~2011

¨	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 001-34386

CHINA PRINTING & PACKAGING, INC.

(Exact name of registrant as specified in its charter)

Nevada		35-2298521
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

Xiandong Road, Shangsong VillageBaoji City, Fufeng County

Shaanxi Province, The People’s Republic of China 722205

(Address of principal executive offices)

011-86-0907-547-1054

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. x Yes ¨ No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large accelerated filer ¨		Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $912,~~520~~932,316 (632,~~800~~330,792 shares of common stock held by non-affiliates with a closing price on ~~March~~June 1830, 2011 of $10.40, reflecting a 2.5-for-1 stock dividend issued on June 15, 2011).

Note. —If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

The number of shares of common stock outstanding as of ~~March~~April 2913, ~~2011~~2012 is 2051,~~401~~002,~~000~~502.

Table of Contents

		Page
PART I
Item 1.	Business	5
Item 1A.	Risk Factors	1714
Item 1B.	Unresolved Staff Comments	2722
Item 2.	Properties	2822
Item 3.	Legal Proceedings	2822
Item 4.	~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures	2822
PART II
Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2923
Item 6.	Selected Financial Data	3024
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3024
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3626
Item 8.	Financial Statements and supplementary Data	3726
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	3827
Item 9A.	Controls and Procedures	3827
Item 9B.	Other Information	3827
PART III
Item 10.	Directors, Executive Officers, and Corporate Governance.	3928
Item 11.	Executive Compensation	4230
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4332
Item 13.	Certain Relationships and Related Transactions, and Director Independence	4432
Item 14.	Principal Accountant Fees and Services	4533
PART IV
Item 15.	Exhibits, Financial Statement Schedules	4634

Cautionary Statement Regarding Forward Looking Statements

The discussion contained in this Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the United States Securities Exchange Act of 1934, as amended, or the Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases like “anticipate,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “target,” “expects,” “management believes,” “we believe,” “we intend,” “we may,” “we will,” “we should,” “we seek,” “we plan,” the negative of those terms, and similar words or phrases. We base these forward-looking statements on our expectations, assumptions, estimates and projections about our business and the industry in which we operate as of the date of this Form 10-K. These forward-looking statements are subject to a number of risks and uncertainties that cannot be predicted, quantified or controlled and that could cause actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this Form 10-K describe factors, among others, that could contribute to or cause these differences. Actual results may vary materially from those anticipated, estimated, projected or expected should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect. Because the factors discussed in this Form 10-K could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf, you should not place undue reliance on any such forward-looking statement. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this Form 10-K or the date of documents incorporated by reference herein that include forward-looking statements.

PART I

Item 1.

Business.

Background of China Printing & Packaging, Inc. and Corporate Structure

China Printing & Packaging, Inc. (the “Company”) was incorporated on May 3, 2007 in the State of Nevada under the name USA Therapy, Inc.

Prior to August 6, 2010, the Company was a development stage company with no revenue or profits. The Company’s initial business plan was to serve as a provider of short to long-term and temporary, screened and qualified, licensed therapists (including, but not limited to, physical, occupational and speech therapists) for hospitals, nursing homes, board and care facilities and other similar community resources. The Company also owned USA Estate Plans, LLC, a wholly owned subsidiary of the Company, which was dissolved pursuant to a unanimous written consent of the members of USA Estate Plans, LLC on March 5, 2011.

On August 6, 2010, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with ~~Asian~~Asia ~~Printing~~Packaging & ~~Packaging~~Printing, Inc. (“APPI”), a Maryland corporation, and as a result the Company adopted the business of Fufeng Jinqiu Printing & Packaging Co., Ltd. (“Jinqiu”)

In light of the our acquisition of Jinqiu, which is engaged in the business of manufacturing, marketing and sales of containerboard boxes and cartons, we decided to change the name of the Company from “USA Therapy, Inc.” to “China Printing & Packaging, Inc.” (the “Name Change”). On September 20, 2010 the board of directors unanimously authorized the Name Change, and the majority shareholders of the Company’s common stock ratified the board of directors’ written consent and further authorized the Name Change by written consent of the majority shareholders. The name change became effective on ~~September~~November 2022, 2010.

Background of Jinqiu.

Jinqiu was incorporated in the PRC on August 19, 2003, and is our operating company. Jinqiu is in the business of manufacturing, marketing and sales of containerboard boxes and cartons in China. APPI was incorporated in Maryland on August 21, 2009. Baoji (JV), an entity that is controlled by APPI, was incorporated in the PRC on April 1, 2010.

~~APPI~~ Control ~~was~~of ~~incorporated in Maryland on August 21, 2009.~~ Baoji (JV)~~, an entity that is controlled by APPI, is a “joint venture” enterprise incorporated in the PRC on April 1, 2010.~~

Under the laws of the PRC, certain restrictions are placed on round trip investments, which are defined under PRC law as an acquisition of a PRC entity by an offshore special purpose vehicle owned by one or more PRC residents.

To comply with these restrictions, APPI acquired control of Baoji (JV) by establishing Baoji (JV) as a joint venture, whereby APPI directly owns a minority equity interest, or 32%, in Baoji (JV), and Jinqiu, our operating entity, owns the remaining 68%. APPI subsequently entered into a series of agreements with Jinqiu which we believe give us effective control over the business of Baoji (JV) despite our current minority ownership in Baoji (JV). These agreements are described in more detail below.

Similarly, APPI indirectly controls Jinqiu, our operating entity, via a number of contractual arrangements between Baoji (JV) and Jinqiu. These agreements are described in more detail below. Bao Dian & Partners, our PRC counsel, has advised us that in their opinion all of the Management Entrustment Agreements and Option Agreements described below are legal and enforceable under PRC law. Through these contractual arrangements, we have the ability to substantially influence these companies’ daily operations and financial affairs, appoint their senior executives and approve all matters requiring stockholder approval. As a result of these contractual arrangements, which enable us to control Jinqiu and operate our business in the PRC through Jinqiu, we are considered the primary beneficiary of Jinqiu.

Control of Baoji (JV)

On April 22, 2010, Jinqiu, Baoji (JV) and APPI entered into a Management Entrustment Agreement. Pursuant to the Agreement, Jinqiu agrees to exclusively entrust the operation and management of Baoji (JV) to APPI. Under the agreement, APPI manages the operations and assets of Baoji (JV), is entitled to 100% of earnings of Baoji (JV) as a management fee, controls all of the cash flows of Baoji (JV) through a bank account controlled by APPI, manages recruitment and professional training of the management staff of Baoji (JV), chooses distributors for the sales of the products manufactured by Jinqiu, and is obligated to pay all payables and loan payments of Baoji (JV). In addition, under the terms of the Management Entrustment Agreement, APPI has been granted certain rights which include, in part, the right to appoint members of Baoji (JV) Board of Directors, hire management and administrative personnel and control decisions relating to entering and performing customer contracts and other instruments. The agreement does not terminate unless the business of Baoji (JV) is terminated or APPI exercises its option to acquire all of the assets or equity of Baoji (JV) under the terms of the Exclusive Option Agreement as described herein.

In order for Baoji (JV) to become a wholly owned subsidiary of APPI when permitted under PRC law, on April 22, 2010, APPI, Jinqiu and Baoji (JV) entered into an Exclusive Option Agreement (the “Baoji Option Agreement”) whereby Jinqiu granted APPI an irrevocable and exclusive purchase option to acquire all or part of the assets or equity of Baoji (JV) currently owned by Jinqiu. The option may be exercised for up to $100 and pursuant to such arrangements as may be determined by APPI, provided that the exercise will not violate any PRC laws or regulations then in effect. Accordingly, we will consider exercising the Option under such circumstances that we believe will be in our best interests and our shareholders. The Exclusive Option Agreement has been drafted to give us such flexibility.

In ~~considering~~order ~~whether~~to orcomply ~~not~~with werestrictions ~~will~~placed ~~exercise~~on ~~the~~foreign ~~Option~~exchange wein ~~may~~the ~~consider~~PRC, ~~such~~APPI ~~factors~~opted asnot ~~(1)~~to ~~if the~~ exercise ~~price~~its ~~can~~right beunder ~~lower than~~ the ~~appraised~~Baoji ~~value~~Option ~~under~~Agreement. ~~current~~On ~~PRC~~July ~~law (2) availability of funds~~11, ~~(3) any relevant tax considerations at the time~~2011, ~~(4)~~APPI ~~any~~and ~~other~~Jinqiu ~~relevant~~entered ~~PRC~~into ~~laws~~an ~~that~~Equity ~~may~~Transfer ~~exist at the time~~Agreement, ~~(5)~~pursuant ~~the value of our shares that were previously paid~~ to ~~shareholders~~which of Jinqiu, ~~and~~transferred ~~(6)~~68% ~~whether or not the exercise~~ of the ~~Option~~equity ~~will~~interest ~~provide~~in ~~any~~Baoji ~~other~~(JV) ~~additional benefits~~ to usAPPI orfor ~~our~~a ~~shareholders. Upon~~consideration ~~exercise~~ of ~~the~~RMB ~~Option~~6,240,000 ~~the parties will prepare transfer documents to be submitted for governmental approval~~ and ~~work~~Baoji ~~together~~(JV) tobecame ~~obtain~~a ~~all~~wholly ~~approvals~~own ~~and~~subsidiary ~~permits. The agreement may be terminated by agreement~~ of ~~all parties or with 30 days notice~~APPI.

Control of Jinqiu

To comply with the restrictions imposed by PRC laws, APPI indirectly controls Jinqiu, our operating entity, via a number of contractual arrangements between Baoji (JV) and Jinqiu. These agreements are described in more detail below. Bao Dian & Partners, our PRC counsel, has advised us that in their opinion all of the Management Entrustment Agreements and Option Agreements described below are legal and enforceable under PRC law. Through these contractual arrangements, we have the ability to substantially influence these companies’ daily operations and financial affairs, appoint their senior executives and approve all matters requiring stockholder approval. As a result of these contractual arrangements, which enable us to control Jinqiu and operate our business in the PRC through Jinqiu, we are considered the primary beneficiary of Jinqiu.

On April 22, 2010, Baoji (JV) entered into a Management Entrustment Agreement with Jinqiu and the shareholders of Jinqiu, in which Jinqiu and its shareholders agreed to transfer control, or entrust, the operations and management of its business to Baoji (JV). Under the agreement, Baoji (JV) manages the operations and assets of Jinqiu, controls all of the cash flows of Jinqiu through a bank account controlled by Baoji (JV), is entitled to 100% of earnings of Jinqiu as a management fee, manages recruitment and professional training of the management staff of Jinqiu, chooses distributors for the sales of the products manufactured by Jinqiu, and is obligated to pay all payables and loan payments of Jinqiu. In addition, under the terms of the Management Entrustment Agreement, Baoji (JV) has been granted certain rights which include, in part, the right to appoint and terminate members of Jinqiu’s Board of Directors, hire management and administrative personnel and control decisions relating to entering and performing customer contracts and other instruments. The Management Entrustment Agreement does not terminate unless the business of Jinqiu is terminated or Baoji (JV) exercises its option to acquire all of the assets or equity of Jinqiu under the terms of the Exclusive Option Agreement as more fully described below.

In order to enable Jinqiu to become an indirectly wholly owned subsidiary of Baoji (JV) when permitted under PRC law, Baoji (JV), Jinqiu and the Jinqiu shareholders entered into an Exclusive Option Agreement whereby the Jinqiu shareholders granted Baoji (JV) an irrevocable and exclusive purchase option to acquire Jinqiu equity and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. The option may be exercised for up to $100 and pursuant to such arrangements as may be determined by Baoji (JV), provided that the exercise will not violate any PRC laws or regulations then in effect. Accordingly, we will consider exercising the option under such circumstances we believe will be in our best interests and our shareholders. The Exclusive Option Agreement has been drafted to give us such flexibility. In considering whether or not we will exercise the option we may consider such factors as (1) if the exercise price can be lower than the appraised value under current PRC law (2) availability of funds, (3) any relevant tax considerations at the time, (4) any other relevant PRC laws that may exist at the time, (5) the value of our shares that were previously paid to shareholders of Jinqiu, and (6) whether or not the exercise of the option will provide any other additional benefits to us or our shareholders. Upon exercise of the option, the parties will prepare transfer documents to be submitted for governmental approval and work together to obtain all approvals and permits. The Exclusive Option Agreement may be terminated by agreement of all parties or by 30 days’ notice.

The consolidated financial statements include the accounts of the Company, Baoji (JV), and Jinqiu, the Company’s variable interest entities (“VIEs”), for which the Company is the primary beneficiary. A primary beneficiary is the enterprise that consolidates a VIE. All inter-company accounts and transactions have been eliminated in consolidation. The Company has adopted ASC810, which require a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Although we have no equity ownership interest in Jinqiu, through Baoji (JV), we are entitled to manage the operations of Jinqiu, manage and dispose of its assets, nominate officers and directors, make decisions as to the use of funds and manage cash flows and receive a management fee equal to 100% of earnings before tax of Jinqiu and we are obligated to pay all of its debts. As a result, we are required to consolidate the financial statements of Jinqiu under US GAAP. When we sell our equity or borrow funds we expect the proceeds will be forwarded to Jinqiu and accounted for as a loan to Jinqiu and eliminated during consolidation. We may also use the proceeds to repurchase our capital stock or for our corporate overhead expenses. If we borrow funds, we expect to be the primary obligor on any debt.

Thus, by causing our subsidiary APPI and Baoji (JV) to enter into a Management Entrustment Agreement and Exclusive Option Agreement with Jinqiu, we are required to consolidate the financial results of Jinqiu as our VIEs.

The consolidated financial statements include the accounts of the Company, Baoji (JV), and Jinqiu, the Company’s variable interest entities (“VIEs”), for which the Company is the primary beneficiary. A primary beneficiary is the enterprise that consolidates a VIE. All inter-company accounts and transactions have been eliminated in consolidation. The Company has adopted ASC810 and SFAS 167, which require a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Although we have only 32% equity ownership interest in Baoji (JV), through the Management Entrustment Agreement between Jinqiu, Baoji and APPI, we are entitled to manage the operations of Baoji (JV), manage and dispose of its assets, nominate officers and directors, make decisions as to the use of funds and manage cash flows and receive a management fee equal to 100% of earnings before tax of Baoji (JV) and we are obligated to pay all of its debts. As a result, we are allowed to consolidate the financial statements of Baoji (JV) under United States GAAP ("U.S.GAAP").

Likewise, although we have no equity ownership interest in Jinqiu, through Baoji (JV), we are entitled to manage the operations of Jinqiu, manage and dispose of its assets, nominate officers and directors, make decisions as to the use of funds and manage cash flows and receive a management fee equal to 100% of earnings before tax of Jinqiu and we are obligated to pay all of its debts. As a result, we are allowed to consolidate the financial statements of Jinqiu under GAAP. When we sell our equity or borrow funds we expect the proceeds will be forwarded to Jinqiu and accounted for as a loan to Jinqiu and eliminated during consolidation. We may also use the proceeds to repurchase our capital stock or for our corporate overhead expenses. If we borrow funds, we expect to be the primary obligor on any debt.

Thus, by causing our subsidiary APPI to enter into a Management Entrustment Agreement and Exclusive Option Agreement with Baoji (JV), and by causing Baoji (JV) to enter into a Management Entrustment Agreement and Exclusive Option Agreement with Jinqiu, we are permitted to consolidate the financial results of Baoji (JV) and Jinqiu as our VIEs.

Current Structure

Organizational History of Jinqiu

Fufeng Jinqiu Printing & Packaging Co., Ltd. was incorporated on August 19, 2003 in the People’s Republic of China. Its original registered capital was RMB 600,000 and in August 2006 it increased to RMB 6.24 million. The stock ownership of the company was jointly held by 10 shareholders including Yongming Feng and Jinhao Zhang, the largest shareholders of the company, representing 28% and 20% of the equity interests of the company, respectively. The company’s original business scope included the color printing and manufacture and distribution of cardboard boxes, cartons, and related printing labels.

Overview of Jinqiu’s Business

Jinqiu is in the business of manufacturing paperboard boxes and cartons for various uses, including exterior packaging needs of the processed food, fruit, ceramic, building material, light electronics and mechanical industries. It produces final product boxes and cartons as well as the paperboard and other subgrades from which the boxes and cartons are made.

Jinqiu is located in the Jiangzhang Economic Development Zone, Shaanxi Province, the People’s Republic of China. It occupies a land area of approximately 10,000 square meters.

With a total production capacity to manufacture up to 150 million square meters of corrugated board and two billion containers, Jinqiu is one of the largest general board/packaging manufacturers in the Shaanxi Province and in the northwest PRC.

Products

Jinqiu manufactures its boxes and cartons from two major categories of paperboard: containerboard and white boxboard. Containerboard is generally used to make corrugated and solid fiber boxes, while white boxboard is used to make folding cartons.

Below is a diagram of the paper and paper packaging industry, with the products we manufacture highlighted:

Paper Industry’s Flow Chart

Manufacturing Process

We manufacture not only the paper packaging products that we sell to our customers, but also the paperboard that we shape and assemble into packaging products, and the intermediary components that comprise the paperboard.

Paperboard Making

We produce two major types of paperboard: containerboard and white boxboard. The quality of the paperboard (and the quality of the finished packaging products) is determined by the quality of paper that is used in making the paperboard.

Corrugated containers

The most common of packaging material that Jinqiu makes is corrugated fiber boxes, used as shipping containers. These boxes are shaped and assembled out of corrugated board, which Jinqiu manufactures in-house. There are two major subgrades for corrugated board: linerboard and corrugated medium. Linerboard and corrugated medium are made from containerboard, a paper-like material that is usually over 0.25 mm thick.

Both the linerboard and corrugated medium are also produced in-house from containerboard. Containerboard is a form of paperboard specially manufactured for the production of solid and corrugated fiberboard. The term encompasses both linerboard and corrugating medium, the two types of paper that make up corrugated board. The containerboard we manufacture is primarily used to make our container products, however we do resell a small portion, approximately 2%, of our containerboard to third party vendors. Since containerboard is mainly made out of natural unbleached wood fibers, it is generally brown, though the shade can vary depending on the type of wood, recycling rate and impurities level. For certain boxes requiring good presentation, white bleached pulp or coating is used on the top ply of the paper that goes on the box surface.

Production of containerboard is the highest among all kinds of paper in the world, with more than 100 million tons per year (Source: www.wikipedia.com). It is mainly manufactured in specialized paper machines out of virgin as well as recycled fibers. Linerboard made of virgin pulp is called kraftliner, whereas recycled linerboard is named testliner. Jinqiu primarily purchases kraft paper to produce the linerboard, which, due to its high virgin fiber content, tends to be stronger and have greater moisture resistance than testliner.

Corrugating medium may likewise be recycled or virgin, the latter being normally called semi-chemical medium, making reference to the pulping process involved in its production. Jinqiu manufactures and produces corrugating medium from semi-recycled paper that we purchase from our suppliers.

Retrieved from: http://en.wikipedia.org/wiki/Containerboard

In order to manufacture corrugated containers the paper we purchase from our suppliers is wound onto a reel. The reel is then mounted in a roll-slitting machine for rewinding during which time cutters are used to cut the paper into the desired widths.

Our corrugating machines flute the containerboard through compression to produce corrugated medium. It then adheres the corrugated medium to a flat linerboard to form a single-faced board. A second flat linerboard is then adhered to the other side of the corrugated medium, forming what is called a single-wall (double-faced) corrugated board. Depending on how strong the final packaging product needs to be, we may add additional walls to the corrugated board or additional layers to the corrugated medium for reinforcement.

Boxboard

Boxboard is a dense, rigid paperboard produced from flat layers of paper. It is commonly used to make folding cartons and gift boxes. Boxboard is produced using similar processes as corrugated board. However, unlike corrugated board, boxboard does not contain any corrugated medium and therefore does not have the same flexibility as corrugated board.

Box design and manufacture

Once the requisite paperboard has been produced, we will cut down and shape the board to meet the particular specifications required by our customers. Generally, we will print the board with the desired template, then crease or score the paperboard to enable controlled bending of the board. As needed, slots are cut to provide flaps on the box. As needed we may also join the different boards together with adhesive, tape or stitching. The boxes are then packaged and stored until shipment.

For those customer orders that require color printing, we employ both sheet-fed and web-pressed processes. We generally print the color graphic directly on the corrugated board. For higher-grade containers, we may preprint the color graphic on a paperboard sheet, which is then laminated, or adhered, either to a single-faced board or to a double-faced corrugated board.

Production Lines

Jinqiu currently has one paperboard production line that can produce about 5-6 million square meters (“m2”) of corrugated board a day. We estimate that we have a total annual production capacity of corrugated board of up to 150 million m2 and up to 2 billion color-printed boxes. In the near future we plan to make preparations to roll-out an inside packing production line. Although we plan to cooperate with other producers, the line will be purchased by Jinqiu and located on Jinqiu’s manufacturing premises.

Our existing production line has the capability to produce paperboard, then score, slot, cut, fold and glue the boards into boxes for any application, according to customer needs. We are equipped with the following automatic machines, including a high-speed, computer-operated corrugator, which can make up to 50,000 m2 of paperboard per day (equivalent to 100,000 to 200,000 sets of boxes/cartons), as well as automatic printing, die-cutting, creasing, slotting machines. We have the ability to produce double-walled (five-layer) corrugated boards to suit the stacking strength and puncture resistance that is required for our boxes and cartons. We also own one automatic, high speed four-color flexo printer slotter which can process up to 150 sheets of paperboard per minute.

Below is a table of our primary machines used in our production:

Machine Type	Quantity	Purpose
Five-Layer Paperboard Production Line	1	Primarily used in the production of cardboard, corrugated medium, and five-layer paperboard in a one-pass operation. Includes a computerized cutting capability to shape 2, 3, 4, and 5-layer paperboard according to customer requirements.

Four-Color Flexo Printer Slotter	1	High-speed, four-color printing, slotting, rolling, notching, and coating. Uses environmentally friendly watercolor printing and produces bright color and precise chromaticity.

Automatic Swinging Machine	1	High-speed and high-volume creasing and bending.

Die-cutting Machine	2	Precise and burr-free carton sizing with multi-function folding and composing.

Offset Press	2	Multi-network, high grade, multi-color gift box and carton printing.

Jinqiu also has complete accessory facilities including its own water supply station, pipes, and boiler facilities.

Quality Control

We maintain a rigorous standard of quality controls. Our quality assurance staff tracks each process throughout the production according to our strict standards. We conduct quality control of our raw materials, and then test-sample our semi-finished products (such as linerboard and corrugating medium) prior to proceeding with production of our finished paperboard containers. Prior to entering the warehouse, we conduct tests on our finished containers according to industry standards and customer specifications such as exterior appearance, interior finishing, and compressive strength. Any product that does not meet such standards is immediately rejected. All our quality assurance staff is required to sign off on acceptance documents as an indication of their review and assessment that our standards have been complied with. As a result of our quality controls, we have historically never had issues with the quality of our products.

Sales of Products

Our customers are primarily regionally-based companies in Shaanxi and neighboring Gansu province from various industries who use our containerboard products to package their finished products. Shaanxi province is home to many pharmaceutical, food processing, and ceramic industries. Shaanxi is also China’s second-largest fruit-producing province and accounts for approximately one-eighth of the world’s total apple production; more than 80 apple factories reside in Fufeng County alone, where Jinqiu is located. Our largest customers have historically been those in the fruit business, and the harvest months of May through August have traditionally been our high season. Recently, however, we have been providing products to a growing ceramics industry in Baoji, which in 2009 overtook the fruit industry as the predominant source of our revenue and has tempered the seasonality of our business.

We typically have long-term annual contracts with our major customers pursuant to which they will provide us with a forecast of the type and size of paperboard containers they require. We then fulfill their orders using various technologies according to their particular requirements.

We reserve the right to adjust the prices of our products and will notify the customer(s) at least a week in advance.

We generally employ a “roll-over” payment policy, pursuant to which at the time that we deliver the customer order, we collect payment for the prior order. We have not experienced any difficulty in receiving payment for our products.

Delivery Methods

We fulfill each order according to the requirements set by the particular purchase order. Delivery of our products may be through a third-party logistics company or picked up by our customer. Delivery charges are borne by the customer. Our boxes and cartons are delivered flat, to be assembled by the customer.

Major Customers

Our customers are primarily end-users who use our containerboard and boxes/cartons to package and ship their own products. We sell substantially all of our products to customers in the Shaanxi Province.

In the fiscal year ended December 31, 2011, none of our customers accounted for more than 10% of our revenue.

Our major customers who accounted for more than 10% of our revenue in fiscal year 2010 are as follows:

Name of Customer	Sales (US$)*		Percentage
Baoji Jianzhong Jiajiale Food Products Co., Ltd.	$	1,611,721		19.55	%
Shaanxi Jintai Ceramics Holding Ltd.	$	1,514,551		18.37	%
Total	$	3,126,272

*Calculated applying RMB to USD exchange rate as of December 31, 2010, 6.60231:1.

Our major customers who accounted for more than 10% of our revenue in fiscal year 2009 are as follows:

Name of Customer	Sales (US$)		Percentage
Baoji Jianzhong Jiajiale Food Products Co., Ltd.	$	1,731,936		34.08	%
Baoji Wanbao Ceramics Corporation	$	1,053,666		20.73	%
Shaanxi Longda Pottery & Porcelain Corporation	$	934,736		18.39	%
Shaanxi Jintai Ceramics Holding Ltd.	$	714,754		14.06	%

*Calculated applying RMB to USD exchange rate as of December 31, 2010, 6.60231:1.

We regularly sell our products to over 250 customers. Although we have a handful of customers who each comprise more than 10% of our sales revenue, we do not believe there is a large risk of losing these customers since they are locally situated and enjoy the cost benefits of purchasing our locally-manufactured products. Even if we were to lose these customers, we believe it would not be difficult to replace them due to the low supply of packaging manufacturers in the region, primarily a result of early stage of development of the packaging industry in the Northwest region of China and the multitude of industries in the region that require packaging products. Accordingly, we do not believe that the loss of any one customer would have a material adverse effect on us.

Marketing and Sales

We have a team of approximately 28 sales personnel, divided into 5 teams, who work full-time on a salaried basis and receive discretionary bonuses based on their achievement of certain sales targets. We do not have independent sales agents or distributors. Because our customers are mostly local, our sales personnel work out of our headquarters and commute out to visit customers.

Marketing expenses for fiscal years ~~2010~~2011 and ~~2009~~2010 were approximately $3159,~~870~~259 and $133,~~846~~870, respectively. ~~Marketing expenses for the quarter ended December 31, 2010 were approximately $433.~~

Raw Materials

Our primary raw materials include tea paperboard, recycled paper, sized paper, bleached and unbleached pulp paper, grey coated paper, yellow coated paper, and kraft liner. Our auxiliary raw materials include packaging starch, ink, coal, flat ~~filiament~~filament, aiguillette, polyvinyl alcohol, and optical film. We purchase all of these raw materials from domestic suppliers in the Xi’an and Baoji municipalities of Shaanxi Province. We have not experienced any shortage in raw materials as they are readily available from a host of various suppliers in the local market. We typically enter into one-year contracts with our suppliers, with August being the month that we purchase the most ~~inventory~~inventories. Raw material prices for paper are subject to market forces, though we mitigate the risk of short-term price fluctuation by entering into one-year contracts. Any increases in costs of raw materials are passed on to our customers.

In the fiscal year ended December 31, 2011, none of our suppliers of raw materials accounted for more than 10% of our total raw material purchases.

Our major suppliers of raw materials who accounted for more than 10% of our total raw material purchases in fiscal year 2010 are:

Supplier Name	Raw Material	Total Purchases (US$)		Percentage of Purchases
Shaanxi Famensi Temple Paper Co., Ltd.	Paper	$	1,107,615		25.55	%
Xi’an Brothers Paper Co., Ltd.	Paper	$	728,385		16.80	%
Qishan Huaxiang Paper Containers Corporation	Paper	$	714,211		16.48	%
Xi’an Hengfeng Paper Corporation	Paper	$	534,047		12.32	%
Total		$	3,084,258

Our major suppliers of raw materials who accounted for more than 10% of our total raw material purchases in fiscal year 2009 are:

Name	Raw Material	Total Purchases (US$)		Percentage ofPurchases
Xi’an Brothers Paper Co., Ltd	Wood pulp, tea board, corrugated paper, recycled paper, bleached wood pulp, sizing agents	$	478,976		18.59	%
Xi’an Hengfeng Paper Corporation	Wood pulp, tea board, corrugated paper, recycled paper, bleached wood pulp, kraft liner, sizing agents	$	468,496		18.18	%
Shaanxi Sanyou Paper Co., Ltd	Wood pulp, tea board, corrugated paper, recycled paper, bleached wood pulp, kraft liner, sizing agents	$	414,883		16.10	%

Market Analysis

PRC Containerboard and Paper Packaging Sector

Demand for containerboard and fiber boxes is highly correlated with the performance of economic activities, such as industrial production and consumer spending. The PRC’s successful reforms have led to rapid economic growth, especially in the segments of merchandise exports and consumer spending, which in turn, have resulted in strong demand growth for containerboard and paper packaging products.

In the decade following 1978, when the PRC started making its transition to a market economy, domestic demand for containerboard more than doubled, rising from less than 1.0 million tons to 2.3 million tons by 1988. Since then, demand for containerboard has continued to experience very rapid growth, reaching an industrial output value exceeding 1.26 trillion RMB (US$190,842,296) in 2010. Chinese consumers are now buying processed food, beverages, clothing, footwear and durables that were unavailable during the pre-reform decades and most of these are packed in fiber-based boxes, which are lighter and easier to transport than boxes made of other materials. In addition, the open economy of the reform era has been driven, in part, by high levels of merchandise exports, such as footwear and toys. The exporting sectors are demanding quality packaging with added strength and better printability required to achieve competitiveness in the foreign markets.

The containerboard sector accounts for a considerable portion of the total paper output in the People’s Republic of China. In 2006, it accounted for 35.08% and in 2010, it accounted for 39.87%. Continued growth in containerboard continues to appear likely over the medium and long term, primarily due to the favorable outlook of China’s merchandise exports and consumer spending.

Meanwhile, demand for paper packaging goods in China has been growing about 11% each year, while output has increased by about 8% per year. According to projections from the China Packaging Federation, China’s output of cardboard boxes will need to reach 20 to 50 million tons over the next few years in order to meet current per capita consumption levels in Asia of 384 kg. It is expected that output will reach 80 million tons by 2015.

According to a survey conducted by the China Paper Association, between 2000 and 2010, total output of paper and paperboard in China increased by 10.54% with an average annual growth rate of 2.27%, while total consumption experienced an increase of 18.19% over the same period with an average annual growth rate of 10.2%.

The significant increase in demand for containerboard and packaging products is attributed to (1) a healthy growth in industrial production for durable and non-durable goods, (2) rising exports of merchandise goods resulting from the People’s Republic of China’s WTO membership, which in turn increased demand for packaging materials, (3) changing distribution systems and packaging methods, and (4) the increasing popularity of large scale retail outlets relative to traditional open markets. Demand growth for containerboard could be even stronger if fiber boards do not meet significant competition from alternative packaging materials (particularly plastics) in some end users.

Competition

We are located in the Shaanxi province, which is located in the northwest region of the People’s Republic of China. Although large domestic enterprises in the paper packaging industry, such as Xianmen Hexing Packaging, Shenzhen Meiyingsen, and Shanghai Huali Packaging, dominate the market share and retain large Fortune 500 companies in the southern, northern, central, southwest, and the Pearl River Delta regions of China, these large packaging companies occupy a relatively small market share in the northwest region of China due to the concentration of small enterprises and a weaker brand awareness in this geographic area. As such, there is a large potential for growth in the northwest region of China. Shaanxi Province is one of the first areas where the packaging industry has begun to develop, and there are ample human and technical resources to draw on in this province. Impeded by geographic factors (desert to the north, mountains to the south), to-date Shaanxi Province has developed at a slower pace than the coastal cities of China.

Currently there are two large packaging enterprises in the Shaanxi region, Haomao Industrial Group Co., Ltd. and Xi’an Tingjin Food Co., Ltd ("Kangshifu"). These companies manufacture and supply packaging products primarily for use by their affiliated companies: Baoji Haomao Industry Group Co., Ltd. primarily produces cigarette and liquor packaging for the company’s other branded products, while Kangshifu primarily produces packaging for its Master Kong brand of instant noodle and beverage products. These two companies operate on a large scale to service their parent companies’ needs.

In contrast, Jinqiu does not source exclusively to one company, but to various customers from different sectors in the northwest region of China, including the medical, food packaging, agricultural, and ceramic industries. Although it is of a smaller production scale than the above-mentioned competitors, Jinqiu, which had revenue of over $8 million in 2010, is a relatively large company in the Baoji municipality compared to the average revenue of Baoji companies of about $4.4 million. The northwest region is ripe for development with industrial zones, such as the Jiangxiang Food Industry Zone and the Agricultural Hi-tech Industrial Demonstration Zone that we anticipate will provide a growing source of demand for our packaging products. In June 2009 the State Council approved the "Guanzhong - Tianshui Economic Zone Development Plan" which, as one of western China’s three key economic development zones, will promote inland development in the region. The planned area for this zone includes Shaanxi and the neighboring Gansu province and encapsulates Xi’an, Baoji, and the Yangling Agricultural Hi-tech Industrial Demonstration Zone. Construction has commenced and is charted to be completed in 2020.

As a relatively early entrant to the northwest packaging industry, we have capitalized on our local positioning to attract a stable local labor and customer base. We minimize our labor costs by recruiting a flexible labor force from the local regions, which enables us to employ workers as our seasonal needs arise and helps foster good relations with our local government. We also attract local and regional customers who wish to save on transportation costs as well as overall costs when purchasing our goods.

We have a robust team of 21 technical staff who are highly experienced in their respective fields and a research and development center comprised of 3 full-time design engineers who design new packaging products that satisfy our customers’ needs as well as innovate and improve upon our existing technology.

Intellectual Property

We applied to register our company logo as a trademark in the People’s Republic of China and received approval on December 7, 2009 from the Trademark Bureau of the State Administration of Industry and Commerce (“SAIC”). The use of this trademark is authorized from March 28, 2010 to March 27, 2020. The details of our protected trademark are accessible on the SAIC’s website.

Research and Development Activities

We have a research and development center comprising 3 full-time design engineers, which we believe ensures that we stay ahead of the curve by constantly innovating and improving our technology.

Our research and development expenditures are a part of our daily operating expenses.

Government Regulations

In recent years, the State Environmental Protection Administration promulgated a series of environmental protection laws, regulations and policies, including the Catalogue of Environment-Friendly Industries to Be Developed as of the Present Time, Technical Guiding Catalog of Cleaner Production of National Key Industry and Catalogue of Outdated Production Capacity, Technologies and Products to Be Phased Out.

The PRC government strictly regulates the papermaking industry, which can be highly pollutive. Since we obtain as our raw material already processed kraft paper and our business produces relatively low amounts of pollution, we are not subject to the same level of environmental regulation as others in the paper industry. We are not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect of environmental protection, nor have we been subject to any action by any environmental administration authorities of the PRC.

Jinqiu is also subject to standard business license and approval regulations that are required for all corporations in the People’s Republic of China. We have a printing license issued by the News Publishing Regulatory Bureau, License No. 618200212, which enables us to engage in color printing and label printing and is valid through March 31, 2013.

Jinqiu is subject to People’s Republic of China environmental laws, rules and regulations that are standard to manufacturing facilities. To our knowledge, our operations meet or exceed the existing requirements of the PRC.

Approvals, Licenses and Certificates

We require a number of approvals, licenses and certificates in order to operate our business. Our principal approvals, licenses and certificates are set forth below.

·● Business License (No. 610324100001325) issued on April 2, 2009 by the Fufeng County Industry and Commerce Administration.

	·	Printing Operations License (No. Shaan Xin Chu Ying Zhi No. 618200212) issued on April 12, 2010, by Shaanxi News and Publications Bureau, valid through March 31, 2013.
	●	Printing Operations License (No. Shaan Xin Chu Ying Zhi No. 618200212) issued on April 12, 2010, by Shaanxi News and Publications Bureau, valid through March 31, 2013.
	·	Organization Code Certificate issued by Fufeng County Quality and Technical Supervisory Bureau (code No. 22149587-9, and registration No. 610324-0011397-1), the valid period of which is from March 6, 2008 to March 6, 2012.
	●	Organization Code Certificate issued by Fufeng County Quality and Technical Supervisory Bureau (code No. 22149587-9, and registration No. 610324-0011397-1), the valid period of which is from March 6, 2008 to March 6, 2012.

	·	Taxation Registration Certificate (Bao Feng Di Shui Zi No. 610324221495879-030011824) issued by the Fufeng County Industry and Commerce Administration on October 29, 2006.
	●	Taxation Registration Certificate (Bao Feng Di Shui Zi No. 610324221495879-030011824) issued by the Fufeng County Industry and Commerce Administration on October 29, 2006.
	·	Taxation Registration Certificate (Bao Feng Di Shui Zi No. 610324221495879) issued by the Fufeng County Industry and Commerce Administration on November 4, 2006 (for land).
	●	Taxation Registration Certificate (Bao Feng Di Shui Zi No. 610324221495879) issued by the Fufeng County Industry and Commerce Administration on November 4, 2006 (for land).

Employees

Due to the relative seasonality of our business, Jinqiu has between 150 and 200 full-time employees. We may retain more or less workers depending on our seasonal needs. Our employees are generally broken down into:

	Management	- 8
	Sales personnel	- 28
	Technicians	- 21
	Financial	- 7
	Production	- 100 to 150
	Procurement	- 3

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Item 1A.

Risk Factors

You should consider carefully each of the following business and investment risk factors and all of the other information in this report. If any of the following risks and uncertainties develops into actual events, the business, financial condition or results of our operations could be materially and adversely affected. If that happens, the trading price of our shares of common stock could decline significantly. The risk factors below contain forward-looking statements regarding our business. Actual results could differ materially from those set forth in the forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements."

Risks Related to the Company's Business and Industry

We have a limited operating history and limited historical financial information upon which you may evaluate our performance.

We are in our early stages of development and face risks associated with a new company in a growth industry. We may not successfully address these risks and uncertainties or successfully implement our operating strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point investors may lose their entire investment. Even if we accomplish these objectives, we may not generate positive cash flows or the profits we anticipate in the future.

Although our revenues have grown rapidly since our inception from the increasing demand for our containerboard products, we cannot assure you that we will maintain our profitability or that we will not incur net losses in the future. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in significant operating losses. We will continue to encounter risks and difficulties frequently experienced by companies at a similar stage of development, including our potential failure to:

·● expand our product offerings and maintain the high quality of our products;

·● manage our expanding operations, including the integration of any future acquisitions;

·● obtain sufficient working capital to support our expansion and to fill customers' orders in time;

·● maintain adequate control of our expenses;

·● implement our product development, marketing, sales, and acquisition strategies and adapt and modify them as needed;

·● anticipate and adapt to changing conditions in the containerboard and paper products markets in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving our competitors, technological developments and other significant competitive and market dynamics.

Intense competition in our market could harm our ability to maintain profitability.

We face competition in the containerboard and packaging industries and expect to face more intense competition with more market entrants in the packaging industry in northwest China as construction of the Guanzhong-Tianshui Economic Zone nears completion. Although we view ourselves in a favorable position vis-à-vis our competition due to our early market entry, some of the other companies that sell into our market may be more successful than us and/or have more experience and money than we do. The additional experience and money may enable our competitors to produce more cost-effective products and market their products with more success than we are able to, which would decrease our sales. In particular, since the packaging industry is labor-intensive, our competitors may be more successful in optimizing their production efficiency and thereby maximizing their competitiveness. We expect that we will be required to continue to invest in product development and productivity improvements to compete effectively in our markets. However, we cannot give you assurance that we can successfully remain competitive. If our competitors could develop a more efficient product or undertake more aggressive and costly marketing campaigns than us, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations or financial condition.

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Inadequate funding for our capital expenditure may affect our growth and profitability.

Our inability to fund our capital expenditure requirements may adversely affect our growth and profitability. Our continued growth is dependent upon our ability to raise capital from outside sources. Our ability to obtain financing will depend upon a number of factors, including:

·● our financial condition and results of operations, ·● the condition of the People’s Republic of China economy and the containerboard/paper packaging sector in the PRC, ·● conditions in relevant financial markets; and ·● relevant People’s Republic of China laws regulating the same.

If we are unable to obtain financing, as needed, on a timely basis and on acceptable terms to our investors or lenders, our financial position, competitive position, growth and profitability may be adversely affected.

We may not be able to effectively control and manage our growth.

If our business and markets grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion. In addition, we may face challenges in managing expanding product offerings and in integrating acquired businesses with our own. Such eventualities will increase demands on our existing management, workforce and facilities. Failure to satisfy such increased demands could interrupt or adversely affect our operations and cause production backlogs, longer product development time frames and administrative inefficiencies.

Significant fluctuations in raw material prices may have a material adverse effect on us.

We typically enter into one-year supply contracts with our raw material suppliers. Any significant fluctuation in price of our raw materials may have a material adverse effect on the manufacturing cost of our products. In particular, our primary raw materials, teaboard paper, kraft liner, semi-recycled paper, and coated paper, are highly affected by international market conditions and although these raw materials are generally available and we have not experienced any raw material shortage in the past, we cannot assure you that the necessary materials will continue to be available to us at prices currently in effect or acceptable to us.

We may have limited options in the short-term for alternative supply if our suppliers fail for any reason, including their business failure or financial difficulties, to continue the supply of materials or components. Moreover, identifying and accessing alternative sources may increase our costs. In the event our cost of materials is increased, we may have to raise prices of our products, making us less competitive price-wise.

We may not be able to adjust our product prices, especially in the short-term, to recover the costs of any increases in raw materials. Our future profitability may be adversely affected to the extent we are unable to pass on higher raw material costs to our customers.

We depend on a concentration of customers.

Our revenue is dependent, in large part, on significant orders from customers within 60 km of our facilities. We believe that revenue derived from such customers will continue to represent a significant portion of our total revenue although we plan to diversity our customer base by, among other things, expanding our sales. Our inability to continue to secure and maintain a sufficient number of large customers or increase our customer base would have a material adverse effect on our business, operating results and financial condition. Moreover, our success will depend in part upon our ability to obtain orders from new customers, as well as the financial condition and success of our customers and general economic conditions.

We usually enter into annual contracts with our customers. If there is an unforeseen circumstance e.g. in the dramatic increase of the costs of our raw materials, we may have to honor these contracts and suffer a loss if we are unable to renegotiate the terms.

We may be exposed to intellectual property infringement and other claims by third parties, which, if successful, could cause us to pay significant damage awards and incur other costs.

Our success also depends in large part on our ability to use and develop our technology and know-how without infringing the intellectual property rights of third parties. As litigation becomes more common in the People’s Republic of China in resolving commercial disputes, we face a higher risk of being the subject of intellectual property infringement claims. The validity and scope of claims relating to the manufacturing of containerboard products involve complex technical, legal and factual questions and analysis and, therefore, may be highly uncertain. The defense and prosecution of intellectual property suits, patent opposition proceedings and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our technical and management personnel. An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability, including damage awards, to third parties, require us to seek licenses from third parties, to pay ongoing royalties, or to redesign our products or subject us to injunctions preventing the manufacture and sale of our products. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of such litigation. Further, we do not have adequate product liability insurance coverage against defective products as our products are manufactured according to fairly basic formulas. Any disputes so far have been resolved through friendly negotiations. There is no guarantee that we will not be involved in any legal proceedings should such negotiations fail one day.

Potential environmental liability could have a material adverse effect on our operations and financial condition.

To the knowledge of our management team, neither the production nor the sale of our products constitute activities, or generate materials in a material manner, that requires our operation to comply with the People’s Republic of China environmental laws. Although it has not been alleged by People’s Republic of China government officials that we have violated any current environmental regulations, we cannot assure you that the People’s Republic of China government will not amend the current People’s Republic of China environmental protection laws and regulations. Our business and operating results may be materially and adversely affected if we were to be held liable for violating existing environmental regulations or if we were to increase expenditures to comply with environmental regulations affecting our operations.

We rely on Mr. Yongming Feng, our chairman and chief executive officer, for the management of our business, and the loss of his services may significantly harm our business and prospects.

We depend, to a large extent, on the abilities and participation of our current management team, but have a particular reliance upon Mr. Yongming Feng for the direction of our business. The loss of the services of Mr. Feng, for any reason, may have a material adverse effect on our business and prospects. We cannot assure you that the services of Mr. Feng will continue to be available to us, or that we will be able to find a suitable replacement for Mr. Feng.

We do not have key man insurance on Mr. Feng, our chairman and chief executive officer, upon whom we rely primarily for the direction of our business. If Mr. Feng dies and we are unable to replace Mr. Feng for a prolonged period of time, we may be unable to carry out our long term business plan and our future prospect for growth, and our business, may be harmed.

We may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire such personnel in the future, our ability to improve our products and implement our business objectives could be adversely affected.

Our future success depends heavily upon the continuing services of the members of our senior management team, in particular our chairman and chief executive officer, Mr. Feng. If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or senior personnel, or attract and retain high-quality senior executives or senior personnel in the future. Such failure could materially and adversely affect our future growth and financial condition.

Our management is comprised almost entirely of individuals residing in the People’s Republic of China with very limited English skills.

Our management is comprised almost entirely of individuals born and raised in the PRC. As a result of differences in culture, educational background and business experiences, our management may analyze, evaluate and present business opportunities and results of operations differently from the way they are analyzed, evaluated and presented by management teams of public companies in Europe and the United States. In addition, our management has very limited skills in English. Consequently, it is possible that our management team will emphasize or fail to emphasize aspects of our business that might customarily be emphasized in a different manner by comparable public companies from different geographical and political areas.

Our management is not familiar with the United States securities laws.

Our management and the former owners of the businesses we acquire are generally unfamiliar with the requirements of the United States securities laws and may not appreciate the need to devote the resources necessary to comply with such laws. A failure to adequately respond to applicable securities laws could lead to investigations by the Securities and Exchange Commission and other regulatory authorities that could be costly, divert management's attention and disrupt our business.

We have inadequate insurance coverage.

We do not presently maintain product liability insurance, and our property and equipment insurance does not cover the full value of our property and equipment, which leaves us with exposure in the event of loss or damage to our properties or claims filed against us.

We currently do not carry any product liability or other similar insurance. We cannot assure you that we would not face liability in the event of the failure of any of our products. This is particularly true given our plan to significantly expand our sales into international markets, like the United States, where product liability claims are more prevalent.

Except for property and automobile insurance, we do not have other insurance such as business liability or disruption insurance coverage for our operations in the PRC.

We do not maintain a reserve fund for warranty or defective products claims. Our costs could substantially increase if we experience a significant number of warranty claims. We have not established any reserve funds for potential warranty claims since historically we have experienced few warranty claims for our products so that the costs associated with our warranty claims have been low. If we experience an increase in warranty claims or if our repair and replacement costs associated with warranty claims increase significantly, it would have a material adverse effect on our financial condition and results of operations.

We will continue to incur significant costs as a result of operating as a public company, and management will be required to devote substantial time to new compliance requirements. If we fail to comply in a timely manner, our business could be harmed and our stock price could decline.

As a public company, we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose various requirements on public companies, including requiring certain corporate governance practices. Management and other personnel will need to devote a substantial amount of time to these new compliance requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of U.S. public companies’ internal control over financial reporting, and attestation of this assessment by their independent registered public accountants. While the Dodd-Frank Wall Street Reform and Consumer Protection Act exempts smaller reporting companies with respect to the attestation by their independent registered public accountants as to our financial controls, this exception does not affect the requirement that we include a report of management on our internal controls over financial reporting and will not affect the requirement to include the auditor's attestation if our public float exceeds $75 ~~millions~~million and we cease to be smaller reporting company. Existing standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. ~~While~~For ~~there~~the ~~has~~year ~~not~~ended ~~been~~December ~~any~~31, ~~detected~~2011, ~~significant~~our ~~deficiency~~CEO orand CFO have concluded that there was a material weakness in our internal control and ~~with~~therefore ~~respect~~our ~~to the assessment of the~~ internal control ~~for~~over ~~the~~financial ~~year~~reporting ~~ended~~was ~~December~~not ~~31,~~effective. ~~2009,~~Please werefer ~~cannot guarantee the implementation of controls and procedures in future years~~ to beitem ~~without any significant deficiency or material weakness~~9A.

Risks Related to Doing Business in the PRC

Changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

Our business operations may be adversely affected by the current and future political environment in the PRC. The PRC has operated as a socialist state since the mid-1900s and is controlled by the PRC’s Communist Party. The Chinese government exerts substantial influence and control over the manner in which we and it must conduct our business activities. The PRC has only permitted provincial and local economic autonomy and private economic activities since 1988. The government of the PRC has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in the PRC may be adversely affected by changes in Chinese laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. Under current leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the government of the PRC will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

The PRC's economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, there can be no assurance that this will be the case.

A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than two decades, there is no assurance that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC's political, economic and social life.

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The PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may harm its business.

The PRC laws and regulations governing our current business operations are sometimes vague and uncertain. The PRC’s legal system is a civil law system based on written statutes, in which system decided legal cases have little value as precedents unlike the common law system prevalent in the United States. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. The Chinese government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We are considered a foreign persons or foreign funded enterprises under PRC laws, and as a result, we are required to comply with PRC laws and regulations. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on its businesses. If the relevant authorities find that we are in violation of PRC laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:

·● levying fines; ·● revoking Baoji (JV) or Jinqiu’s business and other licenses; ·● requiring that we restructure our ownership or operations; and ·● requiring that we discontinue any portion or all of our business.

Among the material laws that we are subject to are the Price Law of The People’s Republic of China, Measurement Law of The People’s Republic of China, Tax Law, Environmental Protection Law, Contract Law, Patent Law, Accounting Laws and Labor Law.

Our contractual arrangements with Jinqiu and its shareholders may not be as effective in providing control over Jinqiu as direct ownership.

Since the law of the PRC limits foreign equity ownership in companies in China, we operate our business through Jinqiu. We have no equity ownership interest in Jinqiu and rely on contractual arrangements to control and operate its business. These contractual arrangements may not be effective in providing control over Jinqiu as direct ownership. For example, Jinqiu could fail to take actions required for our business despite its contractual obligation to do so. If Jinqiu fails to perform under their agreements with us, we may have to incur substantial costs and resources to enforce such arrangements and may have to rely on legal remedies under the law of the PRC, which may not be effective. In addition, we cannot assure you that the Jinqiu shareholders would always act in our best interests.

Because we may rely on the management entrustment agreement with Baoji (JV) and Jinqiu for essentially all of our revenue and cash flows, any difficulty for Jinqiu to pay management fees to Baoji (JV) or for Baoji (JV) to pay management fees to APPI under the management entrustment agreements may have a material adverse effect on our operations.

We are a holding company and currently do not conduct any business operations other than the contractual arrangements between Baoji (JV) and Jinqiu. As a result, we may rely entirely for our revenues on dividend payments from Baoji (JV) for any payment from Jinqiu pursuant to the management entrustment agreement which forms a part of the contractual arrangements between Baoji (JV) and Jinqiu. Likewise, we rely on the contractual agreements between APPI and Baoji (JV) to ensure that any payments from Jinqiu are passed up to USTP. Since Baoji (JV) is not a legal shareholder of Jinqiu under PRC statutes, the arrangement for Jinqiu to pay a substantial portion of its net income to Baoji (JV) may be challenged by the PRC government, which could prevent us from issuing dividends to our shareholders or making required payments to some of our service providers.

A slowdown, inflation or other adverse developments in the PRC economy may harm our customers and the demand for our services and products.

All of our operations are conducted in the PRC and all of our revenue is generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, we cannot assure you that this growth will continue. A slowdown in overall economic growth, an economic downturn, a recession or other adverse economic developments in the PRC could significantly reduce the demand for our products and harm our business.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth could lead to growth in the money supply and rising inflation. If prices for our products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may harm our profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on state bank lending. Such an austere policy can lead to a slowing of economic growth. In October 2004, the People's Bank of China, the PRC's central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. Repeated rises in interest rates by the central bank would likely slow economic activity in the PRC which could, in turn, materially increase its costs and also reduce demand for its products.

Governmental control of currency conversion may affect the value of your investment.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. We receive substantially all of our revenue in Renminbi, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.

The PRC government may also in the future restrict access to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due.

The fluctuation of the Renminbi may harm your investment.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions. On ~~According to the currency website xe.com, as of~~ December 31, 2010, $1the =exchange rate was $1:6.~~5871~~3585 Renminbi. As we rely entirely on revenue earned in the PRC, any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenue and financial condition. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into Renminbi for Jinqiu’s operations, appreciation of the Renminbi against the U.S. dollar would diminish the value of the proceeds of the offering and this could harm Jinqiu’s business, financial condition and results of operations because it would reduce the proceeds available to us for capital investment in proportion to the appreciation of the Renminbi. Thus if we raise 1,000,000 dollars and the Renminbi appreciates against the U.S. dollar by 15%, then the proceeds will be worth only RMB 5,599,100 as opposed to RMB 6,587,100 prior to the appreciation. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our common shares or for other business purposes and the U.S. dollar appreciates against the Renminbi; the U.S. dollar equivalent of the Renminbi we convert would be reduced in proportion to the amount the U.S. dollar appreciates. In addition, the depreciation of significant RMB denominated assets could result in a charge to our income statement and a reduction in the dollar value of these assets. Thus if Jinqiu has RMB 1,000,000 in assets and Renminbi is depreciated against the U.S. dollar by 15%, then the assets will be valued at $132,009.71 as opposed to $151,811.87 prior to the depreciation.

On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximately 23.1% appreciation of the Renminbi against the U.S. dollar as of December 31, 2011. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar.

On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximately 21.8% appreciation of the Renminbi against the U.S. dollar as of December 31, 2010. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar.

PRC State Administration of Foreign Exchange ("SAFE") regulations regarding offshore financing activities by PRC residents which may increase the administrative burden we face. The failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

SAFE issued a public notice ("SAFE #75") effective from November 1, 2005, which requires registration with SAFE by the PRC resident shareholders of any foreign holding company of a PRC entity. Without registration, the PRC entity cannot remit any of its profits out of the PRC as dividends or otherwise.

In October 2005, SAFE issued a public notice, the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China, or the SAFE notice, which requires PRC residents, including both legal persons and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of the PRC, referred to as an "offshore special purpose company," for the purpose of overseas equity financing involving onshore assets or equity interests held by them. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend its SAFE registration with the local SAFE branch with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in the PRC. Moreover, if the offshore special purpose company was established and owned the onshore assets or equity interests before the implementation date of the SAFE notice, a retroactive SAFE registration is required to have been completed before March 31, 2006. If any PRC shareholder of any offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

It is unclear whether our other PRC resident shareholders must make disclosure to SAFE. While our PRC counsel has advised us that only PRC resident shareholders who receive ownership of the foreign holding company in exchange for ownership in the PRC operating company are subject to SAFE #75, there can be no assurance that SAFE will not require our other PRC resident shareholders to register and make the applicable disclosure. In addition, SAFE #75 requires that any monies remitted to PRC residents outside of the PRC be returned within 180 days; however, there is no indication of what the penalty will be for failure to comply or if shareholder non-compliance will be considered to be a violation of SAFE #75 by us or otherwise affect us.

In the event that the proper procedures are not followed under SAFE #75, Baoji (JV) could lose the ability to remit monies outside of the PRC and would therefore be unable to pay dividends or make other distributions. Our PRC resident shareholders could be subject to fines, other sanctions and even criminal liabilities under the PRC Foreign Exchange Administrative Regulations promulgated January 29, 1996, as amended.

The PRC's legal and judicial system may not adequately protect our business and operations and the rights of foreign investors.

The PRC legal and judicial system may negatively impact foreign investors. In 1982, the National People's Congress amended the Constitution of the PRC to authorize foreign investment and guarantee the "lawful rights and interests" of foreign investors in the PRC. However, the PRC's system of laws is not yet comprehensive. The legal and judicial systems in the PRC are still rudimentary, and enforcement of existing laws is inconsistent. Many judges in the PRC lack the depth of legal training and experience that would be expected of a judge in a more developed country. Because the PRC judiciary is relatively inexperienced in enforcing the laws that do exist, anticipation of judicial decision-making is more uncertain than would be expected in a more developed country. It may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. The PRC's legal system is based on the civil law regime, that is, it is based on written statutes; a decision by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation of Chinese laws may be varied to reflect domestic political changes.

The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. However, the trend of legislation over the last 20 years has significantly enhanced the protection of foreign investment and allowed for more control by foreign parties of their investments in Chinese enterprises. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting the PRC's political, economic or social life, will not affect the PRC government's ability to continue to support and pursue these reforms. Such a shift could have a material adverse effect on our business and prospects.

The practical effect of the PRC legal system on our business operations in the PRC can be viewed from two separate but intertwined considerations. First, as a matter of substantive law, the Foreign Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate Articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are qualitatively different from the general corporation laws of the United States. Similarly, the PRC accounting laws mandate accounting practices, which are not consistent with U.S. generally accepted accounting principles. PRC's accounting laws require that an annual "statutory audit" be performed in accordance with PRC accounting standards and that the books of account of Foreign Invested Enterprises are maintained in accordance with Chinese accounting laws. Article 14 of the People's Republic of China Wholly Foreign-Owned Enterprise Law requires a wholly foreign-owned enterprise to submit certain periodic fiscal reports and statements to designated financial and tax authorities, at the risk of business license revocation. While the enforcement of substantive rights may appear less clear than United States procedures, the Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies, which enjoy the same status as other Chinese registered companies in business-to-business dispute resolution. Any award rendered by an arbitration tribunal is enforceable in accordance with the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). Therefore, as a practical matter, although no assurances can be given, the Chinese legal infrastructure, while different in operation from its United States counterpart, should not present any significant impediment to the operation of Foreign Invested Enterprises

Because our principal assets are located outside of the United States and most of our directors and all of our officers reside outside of the United States, it may be difficult for you to enforce your rights based on U.S. Federal Securities Laws against us and our officers or to enforce U.S. Court Judgments against us or them in the PRC.

Most of our directors and all of our officers reside outside of the United States. In addition, our operating company is located in the PRC and substantially all of our assets are located outside of the United States. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the U.S. Federal securities laws against us in the courts of either the U.S. or the PRC and, even if civil judgments are obtained in U.S. courts, to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement against us or our officers and directors of criminal penalties, under the U.S. Federal securities laws or otherwise.

2520

The relative lack of public company experience of our management team may put us at a competitive disadvantage.

Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. The individuals who now constitute our senior management have never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately responds to such increased legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties and distract our management from attending to the growth of our business.

Risks Related to our Common Stock

Our officers and directors control us through their positions and stock ownership and their interests may differ from other stockholders.

As of December 31, ~~2010~~2011 there were 2051,~~401~~002,~~000~~502 shares of our common stock issued and outstanding. Our officers and directors own approximately 2622.78% of our common stock. As a result, they are able to influence the outcome of stockholder votes on various matters, including the election of directors and extraordinary corporate transactions including business combinations. Yet our officers’ and directors’ interests may differ from those of other stockholders. Furthermore, ownership of 2622.78% of our common stock by our officers and directors reduces the public float and liquidity, and may affect the market price, of our common stock ~~if and when our common stock becomes eligible to trade on the OTCBB~~.

We are not likely to pay cash dividends in the foreseeable future.

We intend to retain any future earnings for use in the operation and expansion of our business. We do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay cash dividends and meet other obligations depends upon the receipt of cash dividends or other payments from our operating subsidiaries. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

There is currently no trading market for our common stock.

Our common stock is not quoted on any exchange or inter-dealer quotation system. There is no trading market for our common stock and our common stock may never be included for trading on any stock exchange or through any quotation system (including, without limitation, the NASDAQ Stock Market and the FINRA over-the-counter Bulletin Board). You may not be able to sell your shares due to the absence of a trading market.

Our common stock may be also subject to the "penny stock" rules to the extent that its price is below $5.00, which rules require delivery of a schedule explaining the penny stock market and the associated risks before any sale. These requirements may further limit your ability to sell your shares.

Our common stock is illiquid and subject to price volatility unrelated to our operations.

If a market for our common stock does develop, its market price could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting us or our competitors. In addition, the stock market itself is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

Investors may have difficulty liquidating their investment because our common stock is subject to the “penny stock" rules, which require delivery of a schedule explaining the penny stock market and the associated risks before any sale.

Our common stock may be subject to regulations prescribed by the SEC relating to "penny stock." The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price (as defined in such regulations) of less than $5 per share, subject to certain exceptions. These regulations impose additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 and individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 (individually) or $300,000 (jointly with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of these securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Legal remedies, which may be available to the investor, are as follows:

·● If penny stock are sold in violation of the investor's rights listed above, or other federal or state securities laws, the investor may be able to cancel his purchase and get his money back; ·● If the stock are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages;

·● If the investor has signed an arbitration agreement, however, s/he may have to pursue a claim through arbitration.

If the person purchasing the securities is someone other than an accredited investor or an established customer of the broker-dealer, the broker-dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker-dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the SEC's rules may limit the number of potential purchasers of the shares of our common stock and stockholders may have difficulty selling their securities.

A large number of shares may be eligible for future sale and may depress our stock price.

We may be required, under terms of future financing arrangements, to offer a large number of common shares to the public, or to register for sale by future private investors a large number of shares sold in private sales to them.

Sales of substantial amounts of common stock, or a perception that such sales could occur, and the existence of options or warrants to purchase shares of common stock at prices that may be below the then-current market price of our common stock, could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of our equity securities, either of which would decrease the value of any earlier investment in our common stock.

Item 1B.

Unresolved Staff Comments

Not applicable.

Item 2.

Properties

Headquarters and Administration Offices

Our principal executive offices are located at Fufeng County Shangsong Village Jiangzhang Industrial Zone of Baoji City, Shaanxi Province, People’s Republic of China. Our headquarters, which house our sales and management departments, and our production base, occupy a total of approximately 10,000 square meters of space. This land is leased from Shangquan Village Group Three for a period of 30 years, expiring October 31, 2037. It requires an annual payment of approximately $880 (RMB ~~6000~~6,000).

All land in the PRC is owned by the government and cannot be sold to any individual or entity. Instead, the government grants landholders a "land use right" after a purchase price for such "land use right" is paid to the government. The "land use right" allows the holder the right to use the land for a specified long-term period of time and enjoys all the incidents of ownership of the land. The following are the details regarding Jinqiu’s land use rights with regard to the land that it uses in its business.

Production Plant

Our production headquarters include a 3,800 square meter steel frame factory, 1,600 square meters of warehouse space, a 350 square meter office building, and a 2,300 square meter boiler room. We own all of the structures on our premises.

Our company is equipped with a high-speed corrugated board production line, with automatic computer-control, four-color environmental friendly automatic printing, creasing, slotting machine, and more than 50 sets of other modern automatic machines.

Item 3.

Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse ~~affect~~effect on our business, financial condition, results of operations or liquidity.

Item 4. ~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures

28Not applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

~~Our~~We ~~common~~began ~~stock~~trading ~~is listed and quoted and traded~~ on ~~OTC Bulletin Board at this time under~~ the ~~symbol~~Over ~~"CHPI". However,~~ the ~~trading~~Counter ~~only~~Bulletin ~~began~~Board on March 3, 2011~~. Therefore~~, ~~the~~and ~~current market for~~ our ~~stock~~symbol is ~~not well developed~~"CHPI. ~~Should~~OB." aPrior ~~market~~to ~~develop for our shares~~that, ~~the~~there ~~trading~~had ~~price~~never ofbeen ~~the~~any ~~common~~established ~~stock~~public ismarket ~~likely~~for toshares beof ~~highly~~our ~~volatile~~common ~~and~~stock. ~~could~~The befollowing ~~subject~~table tosets ~~wide~~forth ~~fluctuations~~for inthe ~~response~~period toindicated ~~factors~~the ~~such~~prices asof ~~actual~~the orcommon ~~anticipated~~stock ~~variations~~ in ~~quarterly~~the ~~operating~~over-the-counter ~~results~~market, ~~announcements~~as ofreported ~~technological~~and ~~innovations,~~summarized ~~new~~by ~~sales~~the ~~formats,~~OTC orBulletin ~~new~~Board. ~~services~~Such byprices usare orbased ~~our~~on ~~competitors,~~inter-dealer ~~changes~~bid inand ~~financial~~asked ~~estimates~~prices, bywithout ~~securities~~markup, ~~analysts~~markdown, ~~conditions~~commissions, or ~~trends~~adjustments ~~in internet or traditional retail markets, changes in the market valuations of other equipment~~ and ~~furniture~~may ~~leasing~~not ~~service~~represent ~~providers~~actual ortransactions. ~~accounting~~As ~~related business services, announcements by us or our competitors~~ of ~~significant~~April ~~acquisitions~~13, ~~strategic partnerships~~2011, ~~joint~~the ~~ventures,~~last ~~capital~~reported ~~commitments,~~closing ~~additions~~price ~~or departures~~ of ~~key~~our ~~personnel, sales of~~ common stock ~~and~~was ~~other~~$0.12 ~~events~~per ~~or factors, many of which are beyond our control~~share. InWhere ~~addition~~applicable, the ~~stock~~prices ~~market~~set inforth ~~general,~~below ~~and~~give ~~the~~retroactive ~~market~~effect ~~for instant messaging business services in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate~~ to ~~the~~our ~~operating performance of such companies~~2.5-for-1 ~~These~~stock ~~broad~~dividends ~~market~~issued ~~and~~on ~~industry~~June ~~factors may materially adversely affect the market price of the common stock~~15, ~~regardless of our operating performance~~2011.

Consequently, future announcements concerning us or our competitors, litigation, or public concerns as to the commercial value of one or more of our products or services may cause the market price of our common stock to fluctuate substantially for reasons which may be unrelated to operating results. These fluctuations, as well as general economic, political and market conditions, may have a material adverse effect on the market price of our common stock.

CALENDAR QUARTER ENDED	HIGH BID($)		LOW BID($)
March 31, 2011	$	0.70	$	0.56
June 30, 2011	$	0.56	$	0.10
September 30, 2011	$	0.40	$	0.15
December 31, 2011	$	0.16	$	0.10

As of ~~March~~April 2913, ~~2011~~2012, we had ~~134~~129 shareholders of record of our common stock.

Market for Common Equity and Related Stockholder Matters

Our stock did not begin trading until March 3, 2011. Therefore, there was no market for our shares in 2009 or 2010.

Securities Authorized for Issuance Under Equity Compensation Plans.

As of the date of this Current Report, we do not have any securities authorized for issuance under any equity compensation plans and we do not have any equity compensation plans.

Dividend Policy

Any future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion of our board of directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions to declare or pay dividends on our shares of Common Stock. In addition, we currently have no plans to pay such dividends. However, ~~even~~ if we wish to pay cash dividends, because our cash flow is dependent on dividend distributions from our affiliated entities in PRC, we may be restricted from distributing cash dividends to our holders of shares of our common stock in the future if at the time we are unable to obtain sufficient cash dividend distributions from APPI, Baoji (JV) and Jinqiu. Our board of directors currently intends to retain all earnings for use in the business for the foreseeable future. See “Risk Factors.”

Penny Stock Regulations

Our shares of common stock are subject to the "penny stock" rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, "penny stock" is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer's net tangible assets or revenues. In the last case, the issuer's net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer's average revenues for each of the past three years must exceed $6,000,000.

Trading in shares of penny stock is subject to additional sales practice requirements for broker-dealers who sell penny stocks to persons other than established customers and accredited investors. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 (or $300,000 together with their spouse), and certain institutional investors. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of the security and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent disclosing recent price information for the penny stocks. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock, to the extent it is penny stock, and may affect the ability of shareholders to sell their shares.

Recent Sales of Unregistered Securities

Pursuant to the Share Exchange Agreement, on August 6, 2010 we issued 20,000,000 shares of our Common Stock to the shareholders of APPI in exchange for 100% of the outstanding shares of APPI. The issuance of these shares was exempt from registration, in part pursuant to Regulation S and Regulation D under the Securities Act of 1933 and in part pursuant to Section 4(2) of the Securities Act of 1933. We made this determination based on the representations of APPI which included, in pertinent part, that such shareholders were either (a) “accredited investors” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, or (b) not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S under the Act, and that such shareholders were acquiring our common stock, for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to the resale or distribution thereof, and that APPI shareholders understood that the shares of our common stock may not be sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.

Stock Transfer Agent

Our transfer agent is Pacific Stock Transfer Co., 4045 South Spencer Street, Suite 403, Las Vegas, NV 89119, Tel: (702) 361-3033.

Item 6.

Selected Financial Data.

Not applicable.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~The~~Disclaimer ~~following~~Regarding ~~Management’s~~Forward ~~Discussion~~Looking ~~and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition.~~Statements

Our ~~discussion~~Management’s Discussion and ~~analysis~~Analysis of ~~our~~Financial ~~financial~~Condition ~~condition~~ and ~~results~~Results of ~~operations~~Operations ~~are~~contains ~~based~~not ~~upon~~only ~~APPI~~statements ~~audited~~that ~~consolidated~~are ~~financial~~historical ~~statements~~facts, ~~for~~but ~~the~~also ~~years’~~statements ~~ended~~that ~~December~~are ~~31,~~forward-looking ~~2010~~(within ~~and~~the ~~2009,~~meaning ~~both~~ of ~~which~~Section 27A ~~have~~of ~~been~~the ~~prepared~~Securities inAct ~~accordance~~of ~~with~~1933 ~~accounting~~and ~~principles~~Section 21E ~~generally~~of ~~accepted in~~ the ~~United~~Securities ~~States.~~Exchange ~~Through~~Act ~~various~~of ~~contractual~~1934). ~~arrangements~~Forward-looking ~~completed~~statements ~~on April 22~~are, ~~2010,~~by ~~APPI~~their ~~has~~very anature, ~~controlling~~uncertain ~~interest~~and inrisky. ~~Baoji~~These ~~(JV)~~risks and ~~Jinqiu~~uncertainties ~~and~~include ~~therefore~~international, wenational ~~are~~and ~~required~~local togeneral ~~consolidate~~economic ~~Baoji (JV)~~ and ~~Jinqiu's~~market ~~financial~~conditions; ~~statements~~demographic ~~and~~changes; ~~ultimately~~our ~~consolidate~~ability ~~them~~to ~~with~~sustain, ~~the~~manage, ~~financial~~or ~~statements~~forecast ofgrowth; ~~APPI.~~our ~~The~~ability ~~preparation~~to ofsuccessfully ~~financial~~make ~~statements~~and inintegrate ~~conformity~~acquisitions; ~~with~~raw ~~accounting~~material ~~principles~~costs ~~generally~~and ~~accepted~~availability; innew ~~the~~product ~~United~~development ~~States~~and ~~requires~~introduction; usexisting togovernment ~~make~~regulations ~~estimates~~ and ~~assumptions~~changes ~~that~~in, ~~affect~~or the ~~reported~~failure ~~amounts~~to ofcomply ~~assets~~with, ~~and~~government ~~liabilities,~~regulations; ~~disclosure~~adverse ofpublicity; ~~any~~competition; ~~contingent~~the ~~liabilities~~loss atof ~~the~~significant ~~financial~~customers ~~statement~~or ~~date~~suppliers; fluctuations and ~~reported~~difficulty ~~amounts~~in offorecasting ~~revenue~~operating ~~and~~results; ~~expenses~~changes ~~during~~in ~~the~~business ~~reporting~~strategy ~~period.~~or Ondevelopment anplans; ~~on-going~~business ~~basis~~disruptions; wethe ~~review~~ability ~~our~~to ~~estimates~~attract and ~~assumptions.~~retain ~~Our~~qualified ~~estimates~~personnel; ~~are~~the ~~based~~ability onto ~~our~~protect ~~historical~~technology; ~~experience~~ and other ~~assumptions~~risks that wemight ~~believe to~~ be ~~reasonable~~detailed ~~under the circumstances. Actual results are likely to differ~~ from ~~those~~time ~~estimates under different assumptions or conditions. Our critical accounting policies, the policies we believe are most important~~ to ~~the~~time ~~presentation~~in of our ~~financial~~filings ~~statements~~with ~~and require~~ the ~~most~~Securities ~~difficult, subjective~~ and ~~complex~~Exchange ~~judgments are outlined below in “Critical Accounting Policies~~Commission.”

30Although the forward-looking statements in this Annual Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

FORWARD-LOOKING STATEMENTS

Certain statements made in this report may constitute “forward-looking statements on our current expectations and projections about future events.” These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements.

Overview

We are a Nevada corporation that, through our wholly owned subsidiary and our 100% controlled variable interest entities (“VIEs”), is primarily engaged in the research, development, manufacture, marketing, and distribution of containerboard products in northwestern China. All of our operations are conducted in the People’s Republic of China where our manufacturing facility is located. Through various contractual arrangements completed on April 22, 2010, (i) APPI has a controlling interest in Baoji (JV), (ii) Baoji (JV) has a controlling interest in Jinqiu, and (iii) therefore we are required to consolidate Baoji (JV)'s and Jinqiu’s financial statements and ultimately consolidate with the financial statements of APPI.

Stock Dividend

On June 15, 2011, we issued a stock dividend with a ratio of 2.5-for-1, whereby each issued and outstanding shares of common stock was divided into 2.5 shares of common stock (the “Stock Dividend”).

Throughout this Annual Report on Form 10-K, each instance which refers to a number of shares of our common stock, refers to the number of shares of common stock after giving effect to the Stock Dividend, unless otherwise indicated.

Critical Accounting Policies

Management believes that the critical accounting policies and estimates discussed below involve the most complex management judgments due to the sensitivity of the methods and assumptions necessary in determining the related asset, liability, revenue and expense amounts. ~~Specific~~In ~~risks~~consultation ~~associated~~ with ~~these~~our ~~critical~~Board ~~accounting~~of ~~policies are discussed throughout this MD&A~~Directors, ~~where~~we ~~such policies~~ have aidentified ~~material effect on reported and expected financial results. For a detailed discussion of~~ the ~~application~~following ofcritical ~~these and other~~ accounting policies, ~~refer~~that torequire ~~the~~management’s ~~individual~~most ~~Notes~~difficult tosubjective ~~the Financial Statements for the years ended December 31, 2010 and 2009.~~judgment:

~~Principles~~Accounts ~~of Consolidation~~Receivable

The ~~consolidated financial statements include the accounts of the~~ Company, ~~APPI,~~maintains ~~and~~reserves ~~Baoji~~for ~~(JV)~~potential ~~and~~credit ~~Jinqiu,~~losses ~~the VIEs~~on ~~for~~accounts ~~which~~receivable. Management ~~the~~reviews ~~Company is~~ the ~~primary~~composition ~~beneficiary.~~of ~~All inter-company~~ accounts receivable and ~~transactions~~analyzes ~~have~~historical ~~been~~bad ~~eliminated~~debts, incustomer ~~consolidation.~~concentrations, Incustomer ~~accordance~~credit ~~with~~worthiness, ~~FASB~~current ~~ASC~~economic ~~810~~trends ~~“consolidation”~~ and ~~SFAS~~changes ~~167,~~in ~~the~~customer ~~Company~~payment ispatterns ~~required~~ to ~~consolidate~~evaluate athe ~~VIE~~adequacy ifof ~~that~~these ~~company~~reserves. Reserves isare ~~subject~~recorded tobased aon ~~majority of~~ the ~~risk~~Company’s ofhistorical ~~loss~~collation trend. Allowances for ~~the~~doubtful ~~VIE~~accounts oras isof ~~entitled~~December to31, ~~receive~~2011 aand ~~majority~~2010 ofwere ~~the~~$127,835 ~~VIE’s~~and ~~residual~~$98,477 ~~returns~~respectively.

~~In determining Jinqiu is the VIE of Baoji (JV), the Company considered the following indicators, among others:~~24

●Long-Lived Baoji (JV) has the full right to control and administrate the financial affairs and daily operation of Jinqiu and has the right to manage and control all assets of Jinqiu. The equity holders of Jinqiu as a group have no right to make any decision about Jinqiu activities without the consent of Baoji (JV).Assets

●The ~~Baoji~~Company ~~(JV)~~accounts ~~was~~for ~~assigned~~long-lived ~~all~~assets ~~voting~~in ~~rights~~accordance ofwith ~~Jinqiu~~ASC 360, “Property, Plant, and ~~has~~Equipment”. The Company periodically evaluates the ~~right~~carrying value of long-lived assets to ~~appoint~~be ~~all~~held ~~directors~~and used, impairment losses are to be recorded on long-lived assets used in operations, when indicators of impairment are present and ~~senior~~the ~~management~~undiscounted ~~personnel~~cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of ~~Jinqiu~~the long-lived assets. Loss ~~The~~on ~~equity~~long-lived ~~holders~~assets to be disposed of ~~Jinqiu~~is ~~possess~~determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2011 and 2010, there were no ~~substantive~~significant ~~voting~~impairments ~~rights~~of its long-lived assets.

●Revenue Baoji (JV) should be paid a management fee equal to 100% of the earnings before tax of Jinqiu and should assume all operation risks of Jinqiu and bear all losses of Jinqiu. Therefore, Baoji (JV) is the primary beneficiary of Jinqiu.Recognition

31The Company’s revenue recognition policies are in compliance with FASB ASC Topic 605. Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

~~Jinqiu~~Results isof ~~wholly~~Operation ~~owned~~for by the ~~majority~~Years ~~shareholders~~Ended ofDecember ~~the Company. Under various contractual agreements~~31, ~~the~~2011 ~~shareholders of Jinqiu are required to transfer their ownership to the Company’s subsidiary in China when permitted by PRC laws~~ and ~~regulations or to designees of the Company at any time when the Company considers it is necessary to acquire Jinqiu.~~2010

In determining Baoji (JV) is the VIE of APPI, the Company considered the following indicators, among others:

● APPI has the full right to control and administrate the financial affairs and daily operation of Baoji (JV) and has the right to manage and control all assets of Baoji (JV). The equity holders of Baoji (JV) as a group have no right to make any decision about Baoji (JV) activities without the consent of APPI.

● APPI was assigned all voting rights of Baoji (JV) and has the right to appoint all directors and senior management personnel of Baoji (JV). The equity holders of Baoji (JV) possess no substantive voting rights.

● APPI should be paid a management fee equal to 100% of the earnings before tax of Baoji (JV) and should assume all operation risks of Baoji (JV) and bear all losses of Baoji (JV). Therefore, APPI is the primary beneficiary of Baoji (JV).

Jinqiu is wholly owned by the majority shareholders of the Company. Under various contractual agreements, the shareholders of Jinqiu are required to transfer their ownership to the Company’s subsidiary in China when permitted by PRC laws and regulations or to designees of the Company at any time when the Company considers it is necessary to acquire Jinqiu.

Foreign Currency

The Company’s reporting currency is the U.S. dollar. The Company’s operation in China uses Chinese Renminbi (RMB) as its functional currency. The financial statements of the subsidiary are translated into U.S. Dollars (USD) in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, “Foreign Currency Translation.” According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, “Reporting Comprehensive Income,” as a component of shareholders’ equity. Foreign exchange transaction gains and losses are reflected in the income statement. For the year ended December 31, 2010 and 2009, the foreign currency translation adjustments to the Company’s comprehensive income were $60,737 and $1,690 respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

For a discussion of the adoption and potential impact of recently issued accounting standards refer to the Recent Accounting Pronouncements section of Note 2 “Summary of Significant Accounting Policies,” in the Notes to Interim and Annual Financial Statements.

Results of Operation for the Years Ended December 31, 2010 and 2009

Revenue

In the fiscal year ended December 31, ~~2010~~2011, we had revenue of $810,~~246~~295,~~182~~973, an increase of approximately 6225% as compared with $58,~~082~~246,~~549~~182 ~~sold~~for in the year ended December 31, ~~2009~~2010. ~~This~~Of the 25% increase, ~~was~~approximately ~~primarily~~5% is due to the ~~Company’s~~appreciation ~~entrance~~of ~~into~~RMB against the ~~ceramics~~US ~~industry in Baoji~~Dollar. ~~During~~ The ~~the~~actual ~~year~~increase ~~2010,~~was ~~the~~due ~~Company~~to ~~acquired~~a ~~some~~general 30increase ~~new~~of ~~customers~~15% inof the ~~ceramics~~sale ~~industry and the~~prices ~~sales~~ of ~~containerboard~~our products toand ~~the~~an ~~ceramics~~increased ~~industry~~demand ~~amounted~~for toour ~~$3,620,252~~products. ~~This~~We ~~increase~~were inable ~~sales~~ to ~~the~~retain ~~ceramic~~existing ~~industry~~customers ~~was~~as ~~the~~well ~~main~~as ~~reason~~develop ~~why~~new ~~total~~customers ~~sales increased significantly in fiscal year 2010 as compared~~ to ~~fiscal~~increase ~~year~~our ~~2009~~market share.

Cost of sales

Cost of sales increased to $56,~~236~~298,~~465~~181 for the fiscal year ended December 31, ~~2010~~2011, representing an increase of $21,~~432~~061,~~230~~716, or approximately 8720%, as compared with $25,~~804~~236,~~235~~465 for the same period ofin ~~2009~~2010. ~~The~~Taking into account an increase indue ~~cost~~to ofa ~~sales~~5% ~~for~~appreciation of RMB, the ~~year~~actual ~~was~~increase ais ~~direct~~due ~~result~~to ofan increase in production volume and the costs of raw materials. The increase inis ~~sales~~consistent with the increase in ~~2010~~sales.

Gross profit

~~Gross~~Our gross profit margin increased ~~approximately~~to 3239% tofor ~~$3,009,717 in~~ the ~~fiscal~~ year ended December 31, ~~2010~~2011, as compared to ~~$2,278,314~~36% for ~~fiscal~~the ~~year~~same ~~ended~~period ~~December~~in ~~31, 2009~~2010. Gross ~~Our gross~~ profit ~~margin~~increased ~~fell~~ approximately 933% ~~from~~to ~~36%~~$3,997,792 asin of the fiscal year ended December 31, ~~2009~~2011, ~~to approximately 45%~~ as ofcompared ~~the same period in 2010 mainly due~~ to ~~the~~$3,009,717 ~~significant~~for ~~increase in~~ the ~~cost of raw paper materials compared with that in 2009. The Company changed its raw materials procurement policy in the~~ year ended December 31, 2010. The inincrease ~~that~~is ~~instead~~due ofto ~~stocking inventory of raw materials at~~ the ~~Company’s~~increase ~~warehouse, the Company orders raw materials on a just~~ in ~~time~~sales ~~production basis by placing advances to suppliers. This policy makes sure that the supply of raw materials meets the Company’s production schedule~~ and ~~stabilizes~~ the ~~cost~~increase ofin ~~raw paper materials procured during~~ the ~~year~~sales ~~2010. However~~prices, ~~the~~as ~~policy~~well isas ~~not~~better ~~able~~control ~~to lower the increase in raw material costs to the level~~ of ~~increase~~our invariable ~~selling price~~costs.

Income from operations

Operating income increased approximately 34% to $2,406,148 for the fiscal year ended December 31, 2010, as compared with $1,800,811 for the fiscal year ended December 31, 2009. The increase was primarily a result of the increase in net sales during the year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ~~were~~amounted ~~$603,569~~to ~~for~~7.7% ~~the~~and ~~fiscal~~7.3% ~~year~~of our revenue during the years ended December 31, 2011 and 2010, respectively. There was an increase of ~~approximately~~$184,375 ~~26%~~to $787,944 for the year ended December 31, 2011, as compared to $~~477~~603,~~503~~569 for the same period in ~~2009~~2010. This increase was ~~due~~consistent ~~primarily~~with tothe an increase in ~~basic~~sales ~~salaries~~volume, ~~for~~and ~~all~~was ~~staff,~~due ~~increase~~primarily into ~~transportation~~the ~~and~~ increase in ~~provision~~staff ~~for~~salaries, ~~doubtful~~advertising ~~debt~~and travel related expenses.

Other ~~Expenses~~expenses

~~Total other expenses represent the excess of other expense and interest expense over the aggregate of interest income and other income.~~ During the ~~fiscal~~years ~~year~~ ended December 31, 2011 and 2010, total other expenses ~~decreased~~were ~~approximately 13% to~~ $55,~~053~~550 ~~from~~and ~~$63~~55,~~121during the fiscal year ended December 31, 2009~~053. There ~~The~~were ~~decrease~~no ~~was~~significant ~~mainly due to:~~differences.

i)Income ~~increase~~tax ~~of interest~~ expense ~~in 2009 of $64,500 to the current year amount of $76,150. This was due to the draw down of bank loan in June 2009.~~

~~ii)~~We ~~increase~~operate mainly in ~~other~~the PRC, thus income ~~from~~tax ~~$455~~expense inconsisted ~~2009~~entirely toof ~~$24,657~~current taxes for our operations in ~~2010.~~the ~~This~~PRC and is ~~attributable~~subjected to ~~the~~a ~~gain~~statutory ontax ~~disposal~~rate of ~~waste~~25%. Income ~~material~~tax ~~during~~expenses for the year ended December 31, 2011 and 2010 were $842,585 and $612,264 respectively. The effective tax rates were 26.7% and 26.0% respectively for those years.

iii) savings in i) and ii) compensated for the in increase in other expense of $2,114 in 2009 to $5,990 in 2010, the reason for increase in other expense was increase in exchange loss during the year.

Net income

Net income was $12,~~738~~311,~~831~~713 for the year ended December 31, ~~2010~~2011, an increase of approximately 3732% from $1,~~270~~738,~~847~~831 for the year ended December 31, ~~2009~~2010. This increase is primarily attributable to an increase in net sales. ~~Our~~Net ~~net~~income ~~profit~~accounted ~~margin~~for ~~fell approximately 4~~22.5% ~~from~~and 2521.1% ~~for~~of ~~the~~total ~~year~~revenue ~~ended December 31, 2009 to approximately 21%~~ for the ~~year~~years ended ~~December~~2011 ~~31,~~and 2010. This decrease was primarily attributable to the significant increase in raw material costs as more fully explained in the “Gross Profit” section above. This increase was primarily attributable to the significant increase in total volume of sales when comparing to year 2009 where the direct production costs increased in a lower rate.

Liquidity and Capital Resources

Year Ended December 31, 2010

Cash and Cash Equivalent

Our cash and cash equivalent were $~~237~~1,~~917~~535,705 as at ~~the end of the year ended~~ December 31, ~~2009 and increased to $335~~2011,~~493~~ byrepresenting ~~the~~an ~~end~~increase of ~~the year ended December 31~~$1, ~~2010~~200,212 anfrom ~~increase of~~ $97335,~~576~~493 oron ~~approximately~~December ~~14%~~31, 2010. We believe our existing cash and cash equivalents will be sufficient to maintain our operations at present level for at least the next twelve months.

Net cash provided by operating activities

~~Net~~Although ~~cash~~our ~~provided~~net byincome ~~operating~~increased ~~activities~~by ~~was~~ $1572,~~958~~882,~~440~~ ~~for~~net ~~the~~cash ~~year~~provided ~~ended~~by ~~December~~operating ~~31,~~activities ~~2010. This~~remained ~~was~~the ~~primarily~~same ~~due~~for to the ~~net~~years ~~income~~ended ofDecember $131,~~738~~ 2011,~~831,~~ ~~adjusted~~and by2010. Net ~~non-~~cash ~~related~~provided ~~expenses~~by ~~including~~operating ~~provision~~activities ~~for~~was ~~doubtful accounts of~~ $551,~~765~~936,977 ~~depreciation~~and of $~~134~~1,~~064~~958,440 ~~and~~for athe ~~net~~years ~~increase~~ended inDecember ~~working~~31, ~~capital~~2011 ~~items~~and ~~of $141,310~~2010. ~~The~~This ~~net increase in working capital items~~ was ~~mainly~~ due to aan ~~decrease~~increase inof ~~accounts receivable~~$436,102 ~~inventories,~~or ~~prepaid~~about ~~expenses~~19% ~~and other receivables and increase~~ in ~~amount~~accounts ~~due~~receivable towhich ~~a director,~~is ~~accrued expenses, and other payables and income tax liability. The net increase~~ in ~~working~~line ~~capital~~with ~~items was partially offset by~~ the increase in ~~advances~~sales. We tohave ~~suppliers~~also ~~and~~paid ~~decrease~~down inour accounts payable, accrued expenses and ~~customer~~other ~~deposits~~current liabilities.

Net cash generated in operating activities was $149,125 for the year ended December 31, 2009. This was primarily due to the net income of $1,270,847, adjusted by non-cash related expenses of depreciation of $126,677, offset by a net decrease in working capital items of $1,700,803. The net decrease in working capital items was mainly due to an increase in accounts receivable, and a decrease in amount due to a related party, accounts payable, accrued expenses and other payables. The net decrease in working capital items was partially offset by the decrease in inventories and prepaid expenses and other receivable and increase in customer deposits and income tax liability.

Net cash used in investing activities

Net cash used in investing activities was $164,~~883,723~~426 for the year ended December 31, ~~2010~~2011, ~~representing~~and ~~the~~comprised ~~addition~~mainly of ~~property~~cash ~~and~~used ~~equipment as well acquisition for intangible assets~~ in ~~the~~building ~~nature~~a ofnew ~~land use rights~~warehouse. Net cash used in investing activities ~~was $40,032~~ for the year ended December 31, ~~2009~~2010 was $1,883,723, ~~representing~~which ~~the~~comprised ~~addition~~mainly of ~~property~~cash ~~and~~used ~~equipment~~in ~~partially~~the ~~offset~~acquisition byof ~~proceeds~~land ~~from~~use ~~disposal~~rights ofwhere ~~property~~our ~~and~~production ~~equipment~~facility is located.

Net cash provided by financing activities

Net cash ~~provided~~used byin financing activities was $1704,~~013~~610 for the year ended December 31, ~~2010~~2011. We ~~and~~used $761,138 ~~204~~to repay all bank loans,~~652~~ ~~for~~and ~~the~~received ~~year~~an ~~ended~~advance ~~December~~of 31$56,528 ~~2009. This~~from ~~was~~an ~~due~~officer, towho ~~the~~is ~~Company~~also ~~not~~a ~~raising~~director ~~additional~~of ~~bank~~the ~~loans~~Company. For in the year ended December 31, 2010, Net cash provided by financing activities was $1,013, representing cash that we acquired as a result of the reverse merger transaction.

Contractual Obligations

On May 29, 2006, Jinqiu entered into a loan agreement with the Rural Credit Union of Shaanxi Province, Shangsong Branch, for a loan in the amount of RMB 2,840,000 (or $429,535 as of December 31, 2010). The loan carries a 0.78% interest rate per month. The loan runs for five years, starting May 30, 2006, and is payable on the maturity date of May 30, 2011. Additionally, the loan was renewed with a three year expiration date running from June 8, 2011 to June 8, 2014.

On March 13, 2008, Jinqiu entered into a loan agreement with the Rural Credit Union of Shaanxi Province, Shangsong Branch, for a loan in the amount of RMB ~~640~~680,000 (or $102,846 as of December 31, 2010). The loan carried a 0.96% interest rate per month. The loan ran for three years, starting March 13, 2008, and was paid on the maturity date of March 12, 2011. Additionally, the loan was renewed with a ~~two~~three year expiration date running from March 1613, 2011 to March 1612, ~~2013~~2014.

On June 23, 2009, Jinqiu entered into a loan agreement with the Rural Credit Union of Shaanxi Province, Shangsong Branch, for a loan in the amount of RMB 1,400,000 (or $211,743 as of December 31, 2010). The loan carries a 0.9% interest rate per month. The loan runs for three years, starting June 23, 2009, and is payable on the maturity date of June 22, 2012.

~~Our~~During ~~anticipated needs for~~ the ~~future~~year ~~are~~ended toDecember be31, ~~negotiated~~2011, inall ~~accordance~~bank ~~with~~loans ~~manufacturing~~were ~~and~~repaid. We ~~operation~~do ~~needs,~~not ~~and~~have ~~the~~any ~~market~~contractual ~~conditions~~obligations as of ~~next~~December ~~year~~31, 2011.

Valuation of Intangibles

From time to time, we acquire intangible assets that are beneficial to our product development processes. Management periodically evaluates the carrying value of intangibles, including the related amortization periods. In evaluating acquired intangible assets, management determines whether there has been impairment by comparing the anticipated undiscounted cash flows from the operation and eventual disposition of the land use right with its carrying value. If the undiscounted cash flows are less than the carrying value, the amount of the impairment, if any, will be determined by comparing the carrying value of each intangible asset with its fair value. Fair value is generally based on either a discounted cash flows analysis or market analysis. Future operating income is based on various assumptions, including regulatory approvals, patents being granted, and the type and nature of competing products. If regulatory approvals or patents are not obtained or are substantially delayed, or other competing technologies are developed and obtain general market acceptance or market conditions otherwise change, our intangibles may have a substantially reduced value, which could be material.

In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, “Determination of the Useful Life of Intangible Assets,” which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The adoption of this new FSP did not have a material impact on the Company’s financial position, results of operations or cash flows.

The Fair Value Option for Financial Assets and Financial Liabilities

In February, 2007, FASB issued SFAS 159, ‘The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115.” This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The adoption of this new standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

Income Taxes

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of 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.

In July 2006, the FASB issued Interpretation No. 48 (FIN 48), "Accounting for uncertainty in Income Taxes." FIN 48 codified – FASB ASC Topic 740 clarifies the accounting for Income Taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition and clearly scopes income taxes out of SFAS 5, "Accounting for Contingencies." FIN 48 is effective for fiscal years beginning after December 15, 2006. Having conducted a thorough review of the Company’s tax position in light of the provisions of FIN 48, the Company had no unrecognized tax benefit and related interest and penalties expense. This is due to the fact that the Company has not received any notice of examination by the tax authority in the PRC wherein the Company’s operations are carried out. The tax authority in PRC has the right to examine the Company’s tax position in all past years.

Inflation

Inflation in recent years has affected the business results of the Company. First of all, on the global economic expansion, supply has been restricted and coupled with the fact that the United States has adopted a relaxed currency policy, which increases inflation risks. Secondly, GNP increases in China elevates consumption ability and production cost which naturally increases prices. Finally, because prices are increasing as a result of the macro-economic trend, the Company’s procurement prices are affected which is resulting in an increase in the cost of sales.

The Company operates in China and as such, the Company’s business activities, financial position and operational results will be affected by PRC politics, economic and legal environments and also affected by the overall economic situation of China. The business of the Company may be affected by the relevant laws, regulations, anti-inflation measures, currency conversion and overseas remittance and exchange rates issues etc. that are related to PRC politics.

Off-Balance Sheet Commitments and Arrangements

We do not have any financial undertaking or any other guarantee responsible for third party obligations and commitments. We have not entered into any derivative products contracts linking the Company’s equity that have not been reflected in the consolidated Pro Forma financial statements. Furthermore, in passing our assets to those Bodies providing credits, clearing, or market risk support services, we have not reserved any rights or undefined rights on the passing of assets. The Company does not have any benefits from Bodies providing finance, clearing, market risk or credit support services or with Bodies engaged by us for leasing, hedging or research and development services.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the fiscal year has had, or is expected to have a material impact on these consolidated financial statements.

Reports to Security Holders

We are subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year.

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8.

Financial Statements and Supplementary Data

~~CHINA PRINTING & PACKAGING, INC.~~26

(FORMERLY KNOWN AS USA THERAPY, INC.)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Income and Comprehensive Income	F-4
Consolidated Statements of Cash Flows	F-5
Consolidated Statements of Stockholders’ Equity	F-6
Notes to Consolidated Financial Statements	F-7 - F-18

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

China Printing & Packaging, Inc.

We have audited the accompanying consolidated balance sheet of China Printing & Packaging, Inc. as of December 31, 2010 and 2009, and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2010. China Printing & Packaging, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that out audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Printing & Packaging, Inc. as of December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

Clement C. W. Chan & Co.

Certified Public Accountants

3/F., & 5/F., Heng Shan Centre, 145 Queen’s Road East, Wanchai, Hong Kong

March 25, 2011

F-2

CHINA PRINTING & PACKAGING, INC.
CONSOLIDATED BALANCE SHEETS
	Note		December 31,		December 31,
			2010		2009
ASSETS
Current Assets
Cash and cash equivalents			$	335,493	$	237,917
Accounts receivable		2		2,317,044		2,249,822
Advances to suppliers		2		446,172		25,634
Prepaid expenses and deposit paid				8,297		27,813
Inventories		2		130,847		603,495
Other receivable				-		1,662
Due from a related party		3		-		7,313
Total Current Assets				3,237,853		3,153,656
Property and equipment, net		2		1,238,764		1,285,897
Intangible assets, net		2		1,796,792		-
Total Assets			$	6,273,409	$	4,439,553
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	2		129,157	$	319,231
Accrued expenses and other payable				427,510		204,155
Customer deposits				55,270		163,567
Income tax payable		7		170,856		85,566
Due to a director		5		5,853		2,106
Short-term bank loans		6		532,381		-
Total Current Liabilities				1,321,027		774,625
Long-term bank loans		6		211,743		719,593
Total Liabilities				1,532,770		1,494,218
Stockholders' Equity
Common stock, $0.001 par value, 75,000,000 shares authorized,
20,401,000 and 20,000,000 shares issued and outstanding at December 31, 2010 and December 31, 2009 respectively		8		20,401		20,000
Additional paid-in capital		8		830,144		834,809
Statutory reserves		9		1,592,363		719,368
Accumulated other comprehensive income/(loss)		10		34,134		(26,603	)
Retained earnings				2,263,597		1,397,761
Total Stockholders' Equity				4,740,639		2,945,335
Total Liabilities and Stockholders' Equity			$	6,273,409	$	4,439,553

The accompanying notes are an integral part of these consolidated financial statements.

F-3

CHINA PRINTING & PACKAGING, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

		2010			2009
Sales	$	8,246,182		$	$5,082,549
Cost of sales		(5,236,465	)		(2,804,235	)
Gross profit		3,009,717			2,278,314
Selling, general and administrative expenses		(603,569	)		(477,503	)
Income from operations		2,406,148			1,800,811
Other Income/(Expense)
Interest income		2,430			3,038
Interest expense		(76,150	)		(64,500	)
Other income		24,657			455
Other expense		(5,990	)		(2,114	)
Total other expense		(55,053	)		(63,121	)
Income before income taxes		2,351,095			1,737,690
Provision for income taxes - note 7)		(612,264	)		(466,843	)
Net income	$	1,738,831		$	1,270,847
Weighted average common shares outstanding
Basic		20,162,597			20,000,000
Diluted		20,162,597			20,000,000
Net income per common share
Basic	$	0.09		$	0.06
Diluted	$	0.09		$	0.06
Net income	$	1,738,831		$	1,270,847
Other comprehensive income		60,737			1,690
Comprehensive income	$	1,799,568		$	1,272,537

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CHINA PRINTING & PACKAGING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,738,831		$	1,270,847
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation		134,064			126,677
Provision for doubtful accounts written off/ (written back)		(55,765	)		152,841
Loss on assets retirement		-			1,313
Changes in operating assets and liabilities:
Accounts receivable		65,008			(1,783,184	)
Advances to suppliers		(409,329	)		(20,022	)
Prepaid expenses and other receivable		21,623			14,423
Inventories		481,074			(126,740	)
Accounts payable		(197,237	)		(12,511	)
Accrued expense and other payable		207,148			71,935
Customer deposits		(111,069	)		132,368
Income tax liability		80,345			20,822
Amount due to a director		3,747			2,106
Net cash provided by (used in) operating activities		1,958,440			(149,125	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition for property, plant and equipment		(86,931	)		(41,026	)
Proceeds from disposal of property and equipment		-			994
Acquisition for intangible assets		(1,796,792	)		-
Net cash used in investing activities		(1,883,723	)		(40,032	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new bank loan		-			204,652
Proceeds from other short term loan		449,990			-
Repayment of other short term loan		(449,990	)		-
Deemed issue of shares on reverse acquisition - note 8)		1,013			-
Net cash provided by financing activities		1,013			204,652
Effect of exchange rate changes on cash and cash equivalents		21,846			560
Net Increase in cash and cash equivalents		97,576			16,055
Cash and cash equivalents, beginning balance		237,917			221,862
Cash and cash equivalents, ending balance	$	335,493		$	237,917
SUPPLEMENTAL DISCLOSURES:
Interest payments	$	76,150		$	64,500
Income taxes paid	$	531,919		$	446,021

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CHINA PRINTING & PACKAGING, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

	Common stock				Additional					Other						Total
	Stock				Paid-in			Statutory		Comprehensive			Retained			Stockholders
	outstanding		Amount		Capital			Reserves		Income/(loss)			Earnings			Equity
Balance December 31, 2008		20,000,000	$	20,000	$	834,809		$	83,392	$	(28,293	)		762,890		$	1,672,798
Foreign currency translation adjustments		-		-		-			-		1,690			-			1,690
Transferred to Statutory reserve		-		-		-			635,976		-			(635,976	)		-
Income for the year ended December 31, 2008		-		-		-			-		-			1,270,847			1,270,847
Balance December 31, 2009		20,000,000		20,000		834,809			719,368		(26,603	)		1,397,761			2,945,335
Foreign currency translation adjustments		-		-		-			-		60,737			-			60,737
Transferred to Statutory reserve		-		-		-			872,995		-			(872,995	)		-
Income for the year ended December 31, 2010		-		-		-			-		-			1,738,831			1,738,831
Issuance of stock for merger with China Printing & Packaging, Inc.		401,000		401		(4,665	)		-		-			-			(4,264	)
Balance December 31, 2010		20,401,000	$	20,401	$	830,144		$	1,592,363	$	34,134		$	2,263,597		$	4,740,639

The accompanying notes are an integral part of these consolidated financial statements

F-6

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 1 - ORGANIZATION

China Printing & Packaging, Inc. (Formerly known as USA Therapy, Inc.) (“CPPI” or “the Company”) was incorporated on May 3, 2007 under the Laws of the State of Nevada. Asia Packaging & Printing, Inc. (“APPI”) was incorporated in the United States in Maryland on August 19, 2009. On April 1, 2010, APPI formed a joint venture company, Baoji Jinqiu Printing & Packaging Co., Ltd. (“Baoji”). APPI holds 32% equity interest in Baoji. The other party which holds the remaining 68% equity interest in Baoji is Fufeng Jinqiu Printing & Packaging Co., Ltd. (“Fufeng”). Fufeng is a corporation formed under the laws of Peoples’ Republic of China (“PRC”). USA Therapy Inc later on changed name to China Printing & Packaging, Inc.(“CPPI”).

In April, 2010, APPI, Baoji, Fufeng and the shareholders of Fufeng entered into a series of agreements (the “Agreements”) including Agreements on Entrustment for Operation and Management, Exclusive Option Agreements, Shareholders’ Voting Proxy Agreement and Shares Pledge Agreement (the “Transaction”). According to these Agreements, i) Baoji acquired management control of Fufeng whereby Baoji is entitled to all of the net profits of Fufeng, as a management fee, and is obligated to fund Fufeng’s operations and pays all of its debts; ii) APPI, in addition to its 32% equity interest ownership in Baoji, by virtue of the provisions of Agreements on Entrustment has been entrusted the remaining 68% ownership of Baoji including all management and administration rights on this 68% share interest in Baoji by Fufeng.

The contractual arrangements completed in April, 2010 provide APPI with controlling interest in Fufeng as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation”, Section 10-15, “Variable Interest Entities” and SFAS 167, which requires the Company to consolidate the financial statements of Baoji and Fufeng. The Company, as an entity that consolidates a Variable Interest Entity is called the primary beneficiary of the VIE. Accordingly, the Company is the primary beneficiary of Fufeng.

APPI, through its joint venture company, Baoji and exclusive contractual arrangement with Fufeng., is engaged in the business of manufacturing and marketing paper products for the Chinese marketplace.

On August 6, 2010, APPI became a wholly owned subsidiary of the Company through a reverse acquisition. The Company acquired all of the issued and outstanding capital stock of APPI pursuant to the Share Exchange Agreement dated August 6, 2010 by and among Kathy Kestler, Todd Bauman, Asia Packaging & Printing, Inc., the Shareholders of APPI (the “APPI Shareholders”), Baoji Jinqiu Printing & Packaging Co., Ltd. (“Baoji”), and Fufeng Jinqiu Printing & Packaging Co., Ltd. ("Fufeng"). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the capital stock and ownership interests of APPI in exchange for 20,000,000 newly-issued shares of the Company’s common stock, and Kathy Kestler and Todd Bauman, the controlling shareholders and outgoing directors and officers, agreed to cancel an aggregate of 20,000,000 shares of the Company’s common stock.

Prior to the acquisition of APPI, CPPI was a non-operating public shell. Pursuant to Securities and Exchange Commission (“SEC”) rules, the merger or acquisition of a private operating company into a non-operating public shell with nominal net assets is considered as capital transaction, rather than a business combination. Accordingly, for accounting purposes, the transaction was treated as a reverse acquisition and recapitalization, and proforma information is not presented.

F-7

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements present the Company and its subsidiaries on a historical basis.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company adopted the new accounting guidance (“Codification”) on July 1, 2009. For the year ended December 31, 2010, all reference for periods subsequent to July 1, 2009 are based on the codification. The Company's functional currency is the Chinese Renminbi; however the accompanying consolidated financial statements have been translated and presented in the United States Dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiary and variable interest entity (“VIE”) for which the Company is the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation. An enterprise should consolidate a VIE if it has variable interests that provide it with a controlling financial interest as evidenced by (a) the power to direct the activities of the VIE that most significantly impact its economic performance and (b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

Translation Adjustment

As of December 31, 2010, the accounts of the Company were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi (“CNY”). Such financial statements were translated into U.S. Dollars (“USD”) in accordance with the Foreign Currency Matters Topic of the Codification, with the CNY as the functional currency. According to the Codification, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification, as a component of shareholders’ equity. Transaction gains and losses are reflected in the income statement.

Use of Estimates

reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-8

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Comprehensive Income

The Company uses SFAS 130 “Reporting Comprehensive Income” (codified in FASB ASC Topic 220). Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the years ended December 31, 2010 and 2009 included net income and foreign currency translation adjustments.

Risks and Uncertainties

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There were no contingencies of this type as of December 31, 2010 and 2009.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There were no contingencies of this type as of December 31, 2010 and 2009.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

F-9

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded based on the Company’s historical collation trend. Allowances for doubtful accounts as of December 31, 2010 and 2009 was $98,477 and $152,841 respectively.

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. The Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. As of December 31, 2010 and 2009, inventories consist of the following:

	2010		2009
Raw materials	$	88,975	$	268,567
Work-in-progress		2,017		-
Finished goods		39,855		334,928
Total	$	130,847	$	603,495

During the year, the Company has changed its raw materials procurement policy. Instead of stocking inventory of raw materials at the Company’s warehouse, the Company orders raw materials on a just in time production basis by placing advances to suppliers. As a result, at December 31, 2010, advances to suppliers, inventories and accounts payable were respectively stated at $446,172 (2009 : $25,634), $130,847 (2009 : $603,495) and $129,157 (2009 : $319,231).

Property, Plant & Equipment

Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property, plant and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property, plant and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Buildings	30 years
Machinery	10 years
Vehicles	8 years
Office equipment	5 years
Others	5 years

F-10

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As of December 31, 2010 and 2009 Property, Plant & Equipment consist of the following:

	2010			2009
Buildings	$	636,318		$	620,743
Machinery		995,918			995,918
Vehicles		97,876			35,748
Office equipment		15,967			6,740
Others		1,698			1,697
Total	$	1,747,777		$	1,660,846
Accumulated depreciation		(509,013	)		(374,949	)
	$	1,238,764		$	1,285,897

Depreciation expense for the years ended December 31, 2010 and 2009 was $134,064 and $126,677, respectively.

Intangible Assets

Intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging for fifty years. Management evaluates the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. At December 31, 2010, the Company has intangible assets in the nature of land use right. No impairments of intangible assets have been identified during the current year presented. Land use right is subject to amortization with estimated lives as follows :

Land use right 50 years (expiring in 2060)

Land in PRC China is not freely transferable. However the right to use land could be transferred by the local Government to users. The Company acquired the land use right for its factory premises from the former owner of the same land use right at the end of the current financial year.

The components of finite-lived intangible assets are as follows :

		2010		2009
Land use right	$	1,796,792	$	-
Less : Accumulated amortization		-		-
	$	1,796,792	$	-

Amortization expense for the year ended December 31, 2010 was $Nil (2009 : Nil as no intangible assets acquired).

F-11

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The estimated future annual amortization expenses related to land use right as of December 31, 2010 are as follows:

2011			35,936
2012			35,936
2013			35,936
2014			35,936
2015			35,936
Thereafter			1,617,112

Long-Lived Assets

The Property, Plant and Equipment Topic of the Codification addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2010, there were no impairments of its long-lived assets.

Fair Value of Financial Instruments

The Financial Instrument Topic of the Codification requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the consolidated balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value. The carrying amount of long-term bank loans are considered to be representative of their fair values.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with SEC Staff Accounting bulletin (“SAB”) 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. For the year ended December 31, 2010 and 2009, the Company incurred advertising expenses of $3,870 and $13,846 respectively.

F-12

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Shipping and handling costs

Shipping and handling costs consist primarily of transportation charges for delivery of goods to customers and are included in selling, general and administrative expenses. The Company expenses all shipping costs when they are incurred. For the year ended December 31, 2010 and 2009, the Company incurred transportation charges of $76,256 and $72,155 respectively.

Income Taxes

The Company utilizes the accounting standards (“SFAS”) No. 109, “Accounting for Income Taxes,” codified in Financial Accounting Standard Board Accounting Standards Codification (“ASC”) Topic 740 which requires the recognition of 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 Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”), codified in FASB ASC Topic 740. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. The adoption of FIN 48 did not have a material impact on the Company’s financial statements. At December 31, 2010 and December 31, 2009, the Company did not take any uncertain positions that would necessitate recording a tax related liability.

It is the Company’s intention to permanently reinvest earnings from activity with China. And thereby indefinitely postpone repatriation of these funds to the US. Accordingly, no domestic deferred income tax provision has been made for US income tax which could result from paying dividend to the Company.

There were no deferred tax difference at December 31, 2010 and 2009

Statement of Cash Flows

In accordance with SFAS 95 “Statement of Cash Flows”, codified in FASB ASC Topic 230, cash flows from the Company’s operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

F-13

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basic and Diluted Earnings per Share

Earnings per share are calculated in accordance with FASB ASC Topic 260, “Earnings per Share”. Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and advances to suppliers arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has been developing a diversified customer base located in China even though at present, there is a high concentration on a few customers as more fully explained in note 13 hereof. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Segment Reporting

SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, included in the Codification as ASC 280, Segment Reporting, requires use of the management approach model for 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.

Recent Accounting Pronouncements

In October 2009, the FASB issued, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. This is effective beginning January 1, 2011. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

F-14

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In October 2009, the FASB issued, Certain Revenue Arrangements That Include Software Elements—a consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software when the software is considered more than incidental to the product or service. As a result of the amendments, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the amendments, the following components would be excluded from the scope of software revenue recognition guidance: the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). This amendment is effective beginning January 1, 2011. The adoption of this ASU did not have a material impact on the Company’s consolidation financial statements.

On February 25, 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-09 Subsequent Events Topic 855, “Amendments to Certain Recognition and Disclosure Requirements,” effective immediately. The amendments in the ASU remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of US GAAP. The FASB believes these amendments remove potential conflicts with the SEC’s literature. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

On March 5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815, “Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the guidance within the derivative literature that exempts certain credit related features from analysis as potential embedded derivatives requiring separate accounting. The ASU specifies that an embedded credit derivative feature related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another is not subject to bifurcation from a host contract under ASC 815-15-25, Derivatives and Hedging – Embedded Derivatives – Recognition. All other embedded credit derivative features should be analyzed to determine whether their economic characteristics and risks are “clearly and closely related” to the economic characteristics and risks of the host contract and whether bifurcation is required. The ASU is effective for the Company on July 1, 2010. Early adoption is permitted. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

In April 2010, the FASB codified the consensus reached in Emerging Issues Task Force Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. FASB ASU No. 2010-17 is effective for fiscal years beginning on or after June 15, 2010, and is effective on a prospective basis for milestones achieved after the adoption date. The Company does not expect this ASU will have a material impact on its financial position or results of operations when it adopts this update on January 1, 2011.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of December 31, 2010, except as hereinabove fully discussed, there are no other recently issued accounting standards not yet adopted that would have a material effect on the Company’s financial statements.

F-15

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 3 - DUE FROM A RELATED PARTY

The Company had a receivable due from a related party. As of December 31, 2010 and December 31, 2009, due from a related party was $Nil and $7,313, respectively.

Note 4 - COMPENSATED ABSENCES

Regulation 45 of the local labor laws of the People’s Republic of China (“PRC”) entitles employees to annual vacation leave after 1 year of service. In general, all leave must be utilized annually, with proper notification. Any unutilized leave is cancelled.

Note 5 - DUE TO A DIRECTOR

The Company has a payable due to a director. As of December 31, 2010 and December 31, 2009, due to a related party was $5,853 and $2,106, respectively.

Note 6 - DEBTS

As of December 31, 2010 and December 31, 2009, the Company had debts in the nature of bank loans repayable in the currency of Chinese Yuan Renminbi (“CNY”), that are used by the Company for working capital, as follows:

	2010			2009
Shaanxi Rural Credit Union	$	429,535	Shaanxi Rural Credit Union	$	415,375
Terms of the loan call for interest 0.78% per month, with principal due in May 2011			Terms of the loan call for interest 0.78% per month, with principal due in May 2011
Shaanxi Rural Credit Union		102,846	Shaanxi Rural Credit Union		99,456
Term of these loans called for interest 0.96% per month, with principal due in March 2011			Term of the loan called for interest 0.96% per month, with principal due in March 2011
Shaanxi Rural Credit Union		211,743	Shaanxi Rural Credit Union		204,762
Term of these loans called for interest 0.9% per month, with principal due in June 2012			Term of the loan called for interest 0.9% per month, with principal due in June 2012
Total	$	744,124		$	719,593
Less current portion	$	532,381			-
Non current portion	$	211,743		$	719,593

F-16

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 7 - INCOME TAXES

The Company operates in more than one jurisdictions with the main operations conducted in PRC and virtually no activities in USA with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities. The Company evaluates its tax positions and establishes liabilities, if required.

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) through December 31, 2007 is at a statutory rate of 33%, which is comprised of 30% national income tax and 3% local income tax. As from January 1, 2008 onwards, the EIT is at a statutory rate of 25%.

Provision for income taxes for the years ended December 31, 2010 and 2009 consists entirely of current taxes. There were no deferred tax difference at December 31, 2010 and 2009.

Uncertain Tax Positions

Interest associated with unrecognized tax benefits are classified as income tax and penalties in setting, general and administrative expenses in the statements of income and comprehensive income.

For the years ended December 31, 2010 and 2009, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company has not received any notice of examination by the tax authority in PRC wherein the Company’s operations are carried out, but the tax authority in PRC has the right to examine the Company’s tax position in all past years.

Note 8 - COMMON STOCK AND ADDITIONAL PAID IN CAPITAL

As detailed in note 1, on August 6, 2010, APPI became a wholly-owned subsidiary of USA Therapy Inc, (“USAT”) through issuance of 20,000,000 new shares of par value of USD0.001 of USAT. For accounting purpose, this transaction was treated as capital transaction or reverse acquisition on the basis that APPI is the accounting acquirer. For the recapitalisation, APPI’s equity accounts are restated based on the ratio of the exchange of 20,000,000 USAT shares for 16,620,000 APPI’s shares. As the par value of each share of USAT and APPI are USD0.001 and USD0.0001 respectively, the difference in capital of USD18,338 arising from this re-capitalisation is reallocated to and is included in additional paid-in capital account and represents part of the balance at December 31, 2008 of that account. The original 401,000 USAT shares held by the original shareholders of USAT immediately prior to the reverse acquisition are considered as shares issued in consideration for acquisition of the assets and liabilities of USAT immediately prior to the reverse acquisition. This resulted in $1,013 cash inflow to the Company which represents the cash held by USAT.

The difference of the acquisition consideration of $401 to the amount of net deficit of assets acquired on reverse acquisition of $4,264 resulted in a total deficit of $4,665 is recorded as movement in the year 2010 in the additional paid-in capital account.

Note 9 - STATUTORY RESERVES

In accordance with the laws and regulations of the PRC, Fufeng, the VIE’s annual income, after the payment of the PRC income taxes, shall be partly allocated to the Statutory Reserve Funds. The allocation is 10 percent of income after tax and the cumulative allocations are not to exceed 50 percent of registered capital. However voluntary allocations to Statutory Reserve Funds are not prohibited. These reserve funds are not transferable by the Company in the form of cash dividends, loans or advances. These reserve funds are therefore not available for distribution except in liquidation. As of December 31, 2010 and December 31, 2009, the Company had allocated $1,592,363 (inclusive of voluntary transfers to reserves of $1,207,175) and $719,368 (inclusive of voluntary transfers to reserves of $508,779), respectively, to these non-distributable reserve funds.

F-17

CHINA PRINTING & PACKAGING, INC.

(FORMERLY KNOWN AS USA THERAPY, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

Note 10 - ACCUMULATED OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income, included in stockholders’ equity, at December 31, 2010 and 2009, are as follows:

	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income
Balance at December 31, 2008	$	(28,293	)		(28,293	)
Change for 2009		1,690			1,690
Balance at December 31, 2009		(26,603	)		(26,603	)
Change for 2010		60,737			60,737
Balance at December 31, 2010	$	34,134		$	34,134

Note 11 - SEGMENT INFORMATION

For the years ended December 31, 2010 and 2009, all revenues of the Company represented the sales of paper products. No financial information by business segment is presented. Furthermore, as all revenues are derived from the PRC, no geographic information by geographical segment is presented. All tangible and intangible assets are located in the PRC. The Company operates in only one reportable segment.

Note 12 - CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRC's economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 13 - MAJOR CUSTOMERS AND CREDIT RISK

Two customers each accounted for more than 10% of accounts receivable at December 31, 2010, totalling 23% and at December 31, 2009, four customers each accounted for more than 10% of accounts receivable, totalling 88%. One vendor accounted for 35% of accounts payable at December 31, 2010; at December 31, 2009, one vendor accounted for 27% of accounts payable. Two customers each accounted for more than 10% of sales amount, for the year ended December 31, 2010, totalling 38% (the two customers individually account for 20% and 18% of sales, respectively) and for the year ended December 31, 2009, four customers each accounted for more than 10% of sales amount, totalling 87% (the four customers individually accounted for 34%, 21%, 18% and 14% of sales respectively). Four vendors supplied 71% of purchases for the year ended December 31, 2010; for the year ended December 31, 2009, three vendors accounted for 53% of purchases.

Note 14 - SUBSEQUENT EVENTS

For the year ended December 31, 2010, the Company has evaluated subsequent events for potential recognition and disclosure. No significant events occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our consolidated financial statements.

F-18

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including Yongming Feng, the Company’s Chief Executive Officer (“CEO”), and Jinrong Shi, the Company’s Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the fiscal year ended December 31, ~~2010~~2011. Based upon that evaluation, the Company’s CEO and CFO concluded that, as of the date of evaluation, there was a material weakness and therefore the Company’s internal control over financial reporting was not effective. The material weakness was related to a lack of technical accounting expertise due to the lack of a sufficient number of personnel with an appropriate level of knowledge of and experience in generally accepted accounting principles in the United States of America (U.S. GAAP) that are appropriate to the Company's financial reporting requirements. As a result of such evaluation, the Company's CEO concluded that, as of the date of evaluation, the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, or that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

The Company is taking the following steps to remediate the deficiencies in disclosure controls and procedures that are identified above:

1. Hiring additional accounting and operations personnel, as needed, to ensure that accounting personnel with adequate experience, skills and knowledge relating to complex, non-routine transactions are directly involved in the review and accounting evaluation of our complex, non-routine transactions.

2. Requiring senior accounting personnel and the principal accounting officer to review complex, non-routine transactions to evaluate and approve the accounting treatment for such transactions.

3. Interviewing prospective new Directors for our Board, including a member who is appropriately credentialed as a financial expert as well as sufficient independent Directors.

We believe that the foregoing steps will remediate the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

Changes in internal controls

The Company’s management, with the participation of the Company’s CEO and CFO, performed an evaluation as to whether any change in our internal controls over financial reporting occurred during the fiscal year ended December 31, ~~2010~~2011. Based on that evaluation, our CEO and CFO concluded that, other than as disclosed above, no change occurred in the Company's internal controls over financial reporting during the fiscal year ended December 31, ~~2010~~2011 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

Item 9B.

Other Information

None.

3827

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The following are our officers and directors as of the date of this annual report. Most of our officers and directors are residents of the PRC and, therefore, it may be difficult for investors to effect service of process within the U.S. upon them or to enforce judgments against them obtained from the U.S. courts.

The following table sets forth certain information concerning our directors and executive officers:

Name	Age	Position
Yongming Feng	5556	Chairman and Chief Executive Officer
Jinrong Shi	2829	Chief Financial Officer
Xiting Yang	37	Director
Michael Segal	68	Director
Michael Segal	67	Director
Xiting Yang (1)	38	Former Director

(1) Xiting Yang resigned as a director on May 3, 2011.

To the best of the Company’s knowledge, none of the incoming or existing directors or executive officers of the Company have been the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting such person’s involvement in any type of business, securities or banking activities or been found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Set forth below is certain information with respect to the above-named officers and directors:

YONGMING FENG – Chairman and Chief Executive Officer. Mr. Feng was appointed Chairman and Chief Executive Officer of the Company on August 6, 2010. He is also an associate engineer, party member, and political advisor to Fufeng County. In 1993, Mr. Feng established Fufeng County Jinqiu Packaging Factory, which was incorporated as a joint-stock company under the name Fufeng Jinqiu Printing and Packaging Co., Ltd. in 2003. Mr. Feng continues to serve as Chairman of Jinqiu. Between 1984 and 1993, Mr. Feng served as manager of Changxing Papermaking Factory. Mr. Feng was awarded the “Pioneer in Entrepreneurship in Shaanxi Province” award in 2008.

JINRONG SHI – Chief Financial Officer. Ms. Shi was appointed Chief Financial Officer of the Company on August 6, 2010. She has served as the CFO of Fufeng Jinqiu Printing and Packaging Co., Ltd. since March 2010. From September 2006 to December 2009, Ms. Shi served as Chief Accountant in Yangling Benxiang Poultry Product Co., Ltd. From 2002 to 2006, she studied in Xi’an Jiaotong University and received a bachelor’s degree from Yangling Technical College in 2002.

~~XITING~~MICHAEL ~~YANG~~SEGAL – Director. Mr. ~~Yang~~Segal is ~~the~~President, ~~founder~~General Securities Principal, an Options Compliance Principal and an Investment Banking Representative of ~~Yangling~~Halcyon ~~Technical~~Cabot ~~Printing~~Partners ~~Factory~~LTD., ~~where~~a hemember ~~has~~of ~~served~~the Financial Industry Regulatory Authority (FINRA) since January 2010. From 2006 to 2009 and 2003 to 2005 Mr. Segal was a Principal, Option Compliance Principal and Branch Manager of Whitaker Securities LLC. Mr. Segal is also individually registered as ~~Chairman~~a Commodity Trading Advisor with the Commodity Futures Trading Commission and ~~Chief~~is ~~Executive~~a ~~Officer~~founding ~~since~~member ~~August~~of ~~1992~~the Managed Funds Association. Mr. ~~Yang~~Segal ~~graduated~~received a B.B.A. in marketing and economics from ~~Xi’an~~the University of ~~Technology~~Miami ~~with~~in Florida. Mr. Segal sits on the board of directors of the following privately held companies: China Chanfang Pharmaceuticals Inc.; International American Capital Inc. and Segal Cirone Services Inc. Mr. Segal also sits on the board of directors of the following publicly held company: Asia Carbon Industries Inc. (ACRB.BB); China Agri-Business Inc. (CHBU.BB); China Pharmaceuticals Inc.(CFMI.BB); China Power Equipment Company Inc.(CPQQ.BB); and DK Sinopharma Inc.(DKSP.BB). From March 2007 until December 2009, Mr. Segal was a ~~vocational~~member ~~degree~~of the board of directors of Biostar Pharmaceuticals Inc. (BSPM) Mr. Segal brings to our Board of Directors his expertise in ~~printing~~the financial and ~~packaging~~equity markets and his years of experience providing strategic and financial advisory services to complex international organizations. Mr. Segal also provides unique perspective as our only U.S. director.

~~MICHAEL~~XITING ~~SEGAL,~~YANG -– Former Director. Mr. ~~Segal~~Yang is ~~President,~~the ~~General~~founder ~~Securities Principal, an Options Compliance Principal and an Investment Banking Representative~~ of ~~Halcyon~~Yangling ~~Cabot~~Technical ~~Partners~~Printing ~~LTD.~~Factory, awhere ~~member~~he ofhas ~~the~~served Financial Industry Regulatory Authority (FINRA) since January 2010. From 2006 to 2009 and 2003 to 2005 Mr. Segal was a Principal, Option Compliance Principal and Branch Manager of Whitaker Securities LLC. Mr. Segal is also individually registered as aChairman ~~Commodity Trading Advisor with the Commodity Futures Trading Commission~~ and isChief aExecutive ~~founding~~Officer ~~member~~since ofAugust ~~the Managed Funds Association~~1992. Mr. ~~Segal~~Yang ~~received~~graduated ~~a B.B.A. in marketing and economics~~ from ~~the~~Xi’an University of ~~Miami~~Technology inwith Florida. Mr. Segal sits on the board of directors of the following privately held companies: China Chanfang Pharmaceuticals Inc.; International American Capital Inc. and Segal Cirone Services Inc. Mr. Segal also sits on the board of directors of the following publicly held company: Asia Carbon Industries Inc. (ACRB.BB); China Agri-Business Inc. (CHBU.BB); China Pharmaceuticals Inc.(CFMI.BB); China Power Equipment Company Inc.(CPQQ.BB); and DK Sinopharma Inc.(DKSP.BB). From March 2007 until December 2009, Mr. Segal was a ~~member~~vocational ofdegree ~~the board of directors of Biostar Pharmaceuticals Inc. (BSPM) Mr. Segal brings to our Board of Directors his expertise~~ in ~~the~~printing ~~financial~~ and ~~equity markets and his years of experience providing strategic and financial advisory services to complex international organizations~~packaging. ~~Mr. Segal also provides unique perspective as our only U.S. director.~~

3928

Director Qualifications

The Board believes that each of the Company’s directors is highly qualified to serve as a member of the Board. Each of the directors has contributed to the mix of skills, core competencies and qualifications of the Board. When evaluating candidates for election to the Board, the Board seeks candidates with certain qualities that it believes are important, including integrity, an objective perspective, good judgment, and leadership skills. The Company’s directors are highly educated and have diverse backgrounds and talents and extensive track records of success in what the Company believes are highly relevant positions. Some of the Company’s directors have served in its new operating entity, Jinqiu, for many years and benefit from an intimate knowledge of our operations and corporate philosophy.

Committees of the Board of Directors

Audit Committee and Audit Committee Financial Expert

Our board of directors currently acts as our audit committee. Our Board of Directors is still in the process of finding an “audit committee financial expert” as defined in Regulation S-K and directors that are “independent” as that term is used in Section 10A of the Securities Exchange Act.

We have not yet appointed an audit committee. At the present time, we believe that the members of Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We do, however, recognize the importance of good corporate governance and intend to appoint an audit committee comprised entirely of independent directors, including at least one financial expert, in the near future.

Compensation Committee

We do not presently have a compensation committee. Our board of directors currently acts as our compensation committee.

Nominating Committee

We do not presently have a nominating committee. Our board of directors currently acts as our nominating committee.

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

Conflicts of Interest

Certain potential conflicts of interest are inherent in the relationships between our officers and directors, and us.

From time to time, one or more of our affiliates may form or hold an ownership interest in and/or manage other businesses both related and unrelated to the type of business that we own and operate. These persons expect to continue to form, hold an ownership interest in and/or manage additional other businesses which may compete with ours with respect to operations, including financing and marketing, management time and services and potential customers. These activities may give rise to conflicts between or among the interests of us and other businesses with which our affiliates are associated. Our affiliates are in no way prohibited from undertaking such activities, and neither we nor our shareholders will have any right to require participation in such other activities.

Further, because we intend to transact business with some of our officers, directors and affiliates, as well as with firms in which some of our officers, directors or affiliates have a material interest, potential conflicts may arise between the respective interests of us and these related persons or entities. We believe that such transactions will be effected on terms at least as favorable to us as those available from unrelated third parties.

Board Meetings

The board held three meetings during the fiscal year of ~~2010~~2011:

The meetings include meetings that were held by means of a conference telephone call, but do not include actions taken by unanimous written consent.

During ~~2010~~2011, the Board acted by unanimous written consent on three occasions.

Board Leadership Structure and Role in Risk Oversight

Our Chief Executive Officer also serves as Chairman of the Board. The Board believes that the Company’s Chief Executive Officer is best situated to serve as Chairman of the Board because he is the director most familiar with our business and industry and the director most capable of identifying strategic priorities and executing our business strategy. In addition, having one person serve as both Chairman and Chief Executive Officer eliminates potential for confusion and provides clear leadership for the Company, with a single person setting the tone and managing our operations. The Board oversees specific risks, including, but not limited to:

·● appointing, retaining and overseeing the work of the independent auditors, including resolving disagreements between the management and the independent auditors relating to financial reporting; ·● approving all auditing and non-auditing services permitted to be performed by the independent auditors; ·● reviewing annually the independence and quality control procedures of the independent auditors; ·● reviewing, approving, and overseeing risks arising from proposed related party transactions; ·● discussing the annual audited financial statements with the management; ·● meeting separately with the independent auditors to discuss critical accounting policies, management letters, recommendations on internal controls, the auditor’s engagement letter and independence letter and other material written communications between the independent auditors and the management; and ·● monitoring the risks associated with management resources, structure, succession planning, development and selection processes, including evaluating the effect the compensation structure may have on risk decisions.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Form 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish our company with copies of all Section 16(a) reports they file.

Based solely on our review of the copies of such reports received by us and on written representations by our officers and directors regarding their compliance with the applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that, with respect to the fiscal year ended December 31, ~~2010~~2011, our officers and directors, and all of the persons known to us to own more than 10% of our common stock, filed all required reports on a timely basis ~~with the exception of two individuals, Ms~~. Kathy Kestler and Mr. Todd Bauman. Ms. Kestler and Mr. Bauman were directors and officers of USA Therapy before the reverse acquisition was consummated pursuant to the Exchange Agreement on August 6, 2010. During their time as directors and officers, they were each the beneficial owners of 42.56% of the Company’s Common Stock. By not reporting their beneficial ownership on Form 3 until August 25, 2010, Ms. Kestler and Mr. Bauman failed to comply with Section 16(a) of the Exchange Act.

Item 11.

Executive Compensation

The following table sets forth information with respect to the compensation of each of the named executive officers for services provided in all capacities to China Printing & Packaging, Inc. and its subsidiaries in the fiscal years ended December 31, ~~2010~~2011 and ~~2009~~2010 in their capacity as such officers.

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Yongming Feng
					—		—				—		—		—
Chairman & Chief	2010		6,364
Executive Officer (1)(2)	2009		5,294		-0-		-0-		-0-		-0-		-0-		-0-		5,294
JinRong Shi	2010		3,091
Chief Financial Officer (2)(3)	2009		-0-		-0-		-0-		-0-		-0-		-0-

Summary Compensation Table

Outstanding Equity Awards at 2010 Fiscal Year End

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Yongming Feng	2011	7,472		-		-		-		-		-		-		7,472

Chairman & Chief
Executive Officer	2010		6,364		-		-		-		-		-		-		6,364

JinRong Shi	2011		3,629		-		-		-		-		-		-		3,629
Chief Financial Officer	2010		3,091		-		-		-		-		-		-		3,091

Outstanding Equity Awards at 2011 Fiscal Year End

We do not maintain any equity incentive or stock option plan. Accordingly, we did not grant options to purchase any equity interests to any employees or officers, and no stock options are issued or outstanding to any officers.

Employment Agreements

As of this time, we do not have any employment agreements with any of our executive officers.

Director Compensation

Name and Principal Position	Fee earned or paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Yongming Feng, Chairman of the Board of Directors		6,364		—		—		—		—		—		6,364
Xiting Yang, Director		0		—		—		—		—		—		0
Michael Segal, Director		0		—		—		—		—		—		0

The following table sets forth a summary of compensation paid to our directors who are not listed in the Summary Compensation Table during the fiscal years ended December 31, 2011 and 2010:

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)	Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

Michael Segal, Director	2011		24,000	-		-		-		-		-		-	24,000
	2010		-	-		-		-		-		-		-	-
Xiting Yang, Director (1)	2011		-	-		-		-		-		-		-	-
	2010		-	-		-		-		-		-		-	-

(1) Xiting Yang resigned as a director on May 3, 2011.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and (iv) all executive officers and directors as a group as of ~~March~~April 2913, ~~2011~~2012.

Name and Address (1)	Number of Shares Beneficially Owned (2)		Percentage of Outstanding Shares (3)
Owners of More than 5% of Class
Jinhao Zhang Rm 231, Tian Yuan Ju, Wei’er Rd., Yangling District, Xianyang, Shaanxi Province, China		27,~~100~~055,~~800~~935		1013.383	%
Executive Officers and Directors
Yongming Feng Chairman, President, and Chief Executive Officer		210,~~941~~858,~~120~~775		1421.4229	%
Jinrong Shi Chief Financial Officer		050,000		--0.10	%
Xiting Yang Director No. 1 Street 1, Zu 5, West Village, Da Zhai Country, Yangling District, Xianyang, Shaanxi Province, China		1,402,390		6.87	%
Michael Segal Director 11 East 86 th Street, Suite 19B New York, NY 10028		707,000		1.39	%
Michael Segal Director 11 East 86th Street, Suite 19B New York, NY 10028		282,800		1.39	%
Officers and Directors as a group (3 individuals)		11,615,775		22.78	%
Officers and Directors as a group (4 individuals)		5,324,720		26.10	%

	(1)	Except as otherwise indicated, the address of each beneficial owner is c/o China Printing & Packaging, Inc., Xiangdong Road, Shangshong Village, Baoji City, Fufeng County, Shaanxi Province, the People’s Republic of China 722205.
	(2)	In determining beneficial ownership of our common stock as of a given date, the number of shares shown includes shares of common stock which may be acquired on exercise of warrants or options or conversion of convertible securities within 60 days of that date. In determining the percent of common stock owned by a person or entity on ~~March~~April 2913, ~~2010~~2012, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on ~~March~~April 2913, ~~2010~~2012 (3151,~~651~~002,~~251~~502), and (ii) the total number of shares that the beneficial owner may acquire upon conversion of the preferred and on exercise of the warrants and options. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.
	(3)	Applicable percentage ownership is based on an assumption of 2051,~~401~~002,~~000~~502 shares of common stock issued and outstanding as of ~~March~~April 2913, ~~2011~~2012. The number of shares beneficially owned by a person includes shares of common stock underlying options or warrants held by that person that are currently exercisable or exercisable within 60 days of ~~March~~April 2913, ~~2011~~2012. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently obtainable or obtainable within 60 days of ~~March~~April 2913, ~~2011~~2012 by exercise or conversion of other securities are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Pursuant to the Share Exchange Agreement, the Company acquired 100% of the capital stock of APPI in exchange for 20,000,000 (50,000,000 as of June 15, 2011, retroactively adjusted to reflect the 2.5 for 1 stock dividend) newly-issued shares of the Company’s common stock, and Kathy Kestler and Todd Bauman, the controlling stockholders and outgoing directors and officers, agreed to cancel an aggregate of 20,000,000 (50,000,000 as of June 15, 2011, retroactively adjusted to reflect the 2.5 for 1 stock dividend) shares of the Company’s common stock.

As a result of the consummation of the Share Exchange Agreement on August 6, 2010, we acquired control of APPI, a Maryland corporation, which indirectly controls our operating entity, Jinqiu, by issuing to the APPI shareholders shares our of Common Stock as consideration for all of the outstanding capital stock of APPI.

~~The~~On ~~following~~February ~~transactions~~16, ~~relate~~2012, tothe Company obtained a loan in the ~~activities~~amount of ~~APPI~~$1,130,000 from a corporation controlled by a shareholder who owns more than 10% of the Company’s outstanding common stock. The loan is non-interest bearing and ~~our~~is ~~new~~due ~~operating~~on ~~entity~~June 15, ~~Jinqiu:~~2012.

AsExcept as disclosed above, none of ~~March~~the 31Company’s directors or officers, ~~2010~~nor any incoming director, $2nor any person who beneficially owns,~~606~~ ~~was~~directly ~~due~~or indirectly, shares carrying more than 10% of the voting rights attached to ~~Michael~~the ~~Segal~~Company’s outstanding shares, anor ~~director~~any of the Company’s promoters, ~~for~~nor ~~certain~~any ~~advances~~relative ~~made~~or onspouse ~~behalf~~of any of ~~APPI~~the ~~for~~foregoing ~~certain~~persons ~~corporate~~has ~~administrative~~or ~~expenses. The~~will ~~amount~~have ~~bears~~any nomaterial interest, ~~and~~direct ~~has~~or ~~yet~~indirect, in any transaction for the past two years or in any presently proposed transaction to which the Company was or is to be ~~paid~~party ~~back~~and asthe amount involved exceeds $120,000. None of ~~December~~the 31Company’s directors or officers, ~~2010~~nor any incoming director is indebted to the Company.

~~As of December 31, 2009, $7,313 was due from Yongming Feng, our Chief Executive Officer. This amount was subsequently paid in full.~~32

Other than as disclosed above, there have been no other transactions since the beginning of our last fiscal year, or any currently proposed transactions in which we are, or plan to be, a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.

Except with respect to the Share Exchange Agreement, none of the Company’s directors or officers, nor any incoming director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to the Company’s outstanding shares, nor any of the Company’s promoters, nor any relative or spouse of any of the foregoing persons has or will have any material interest, direct or indirect, in any transaction for the past two years or in any presently proposed transaction to which the Company was or is to be party. None of the Company’s directors or officers, nor any incoming director is indebted to the Company.

Procedures for Approval of Related Party Transactions

Our Board of Directors is charged with reviewing and approving all potential related party transactions. All such related party transactions must then be reported under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.

Director Independence

The Company currently has 2one independent ~~directors~~director, Michael Segal ~~and Xiting Yang~~, as that term is defined under the National Association of Securities Dealers Automated Quotation system.

Item 14.

Principal Accounting Fees and Services

~~Audit~~We ~~Fees~~were billed by Clement C. W. Chan & Co., an independent public accounting firm, for the following professional services they performed for us during the fiscal years ended December 31, 2011 and 2010 as set forth in the table below.

We incurred, in the aggregate, approximately $259,494 for professional services rendered by our registered independent public accounting firm for the audit of the Company’s annual financial statements, the internal control for financial reporting, and the quarterly reviews of financial statements included in the Company’s annual financial statements for the year ended December 31, 2010.

	Fiscal year ended December 31,
	2011		2010
Audit fees	$	85,800	$	259,494
Audit-related fees		-		69,200
Tax fees		-		68
All other fees		-		5,213
Total	$	85,800	$	333,975

~~Audit~~The Board of Directors pre-~~Related~~approves ~~Fees~~all audit and non-audit services performed by the Company's auditor and the fees to be paid in connection with such services. As of the date of this filing, our current policy is to not engage Clement C. W. Chan & Co. to provide, among other things, bookkeeping service, appraisal or valuation services, or international audit services. The policy provides that we only engage Clement C. W. Chan & Co. to provide audit, tax, and other Assurance services, such as review of SEC reports of filings.

~~In 2009 the company incurred $80,000 in audit fees. In 2010, the company incurred $69,200 in audit fees.~~33

Tax Fees

We incurred approximately $68 in fees for tax compliance or tax consulting services during the year ended December 31, 2010.

All Other Fees

We incurred expenses for products and services in 2010 of $5213. We incurred expenses for products and services in 2009 of $18,715.

PART IV

Item 15.

Exhibits, Financial Statement Schedules

Exhibit Number		Description
2.1		Share Exchange Agreement dated August 6, 2010, by and among USA Therapy, Inc. Kathy Kestler, Todd Bauman, APPI, the shareholders of APPI, and Baoji (JV), Jinqiu. (1)
3.1		Articles of Incorporation of USA Therapy, Inc., a Nevada corporation. (2)
3.2		Bylaws of USA Therapy, Inc. (2)
3.3		Amended and Restated Articles of Incorporation of China Printing & Packaging, Inc. (4)
10.1		Property Lease Agreement, dated May 3, 1993, by and between the third group of Shangquan Village and Jinqiu. (1)
10.2		Property Lease Agreement, dated May 3, 1993, by and between the third group of Shangquan Village and Jinqiu. (1)
10.3		Loan Agreement, dated March 13, 2008, by and between Fufeng County Credit Union Shangsong branch and Jinqiu. (1)
10.4		Loan Agreement, dated June 23, 2009, by and between Fufeng County Credit Union Shangsong branch and Jinqiu. (1)
10.5		Loan Agreement, dated May 29, 2006, by and between Fufeng County Credit Union Shangsong branch and Jinqiu. (1)
10.6		Agreement on Entrustment for Operation and Management, dated April 22, 2010, by and between Jinqiu and APPI. (1)
10.7		Exclusive Option Agreement, dated April 22, 2010, by and among APPI, Jinqiu and Baoji (JV). (1)
10.8		Agreement on Entrustment for Operation and Management, dated April 22, 2010, by and between Jinqiu and Baoji (JV). (1)
10.9		Exclusive Option Agreement, dated April 22, 2010, by and among Baoji (JV), Jinqiu and the shareholders of Jinqiu. (1)
10.10		Form of Customer Agreement. (1)
10.11		Supply Agreement, dated Dec. 29, 2008, by and between Xi’an Brother Paper Industries Co., Ltd. and Jinqiu. (1)
10.12		Supply Agreement, dated Dec. 19, 2008, by and between Shaanxi Three Friends Paper Industries Co., Ltd. and Jinqiu. (1)
10.13		Supply Agreement, dated Dec. 19, 2008, by and between Xi’an Hengfeng Paper Industries Co., Ltd. and Jinqiu. (1)
10.14		Supply Agreement, dated Dec. 9, 2008, by and between Shaanxi Fanmensi Paper Industries Co., Ltd. and Jinqiu. (1)
10.15		Return to Treasury Agreement, dated August 6, 2010, by and among USA Therapy, Inc. Kathy Kestler and Todd Bauman. (1)
14.1		Code of Ethics
10.16		Equity Transfer Agreement, dated July 11, 2011, between Asia Printing & Packaging, Inc. and Fufeng Jinqiu Printing & Packaging Co., Ltd.
14.1		Code of Ethics (4)
16.1		Letter from M&K CPAs, LLC, to the SEC, dated August 13, 2010(3)
31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Incorporated by reference to the exhibit to our Current Report on Form 8-K filed with the SEC on August 12, 2010.
EX-101.INS		XBRL INSTANCE DOCUMENT
(2)	Incorporated by reference to the exhibit to our Registration Statement on Form SB-2 filed with the SEC on May 3, 2007.
EX-101.SCH		XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
(3)	Incorporated by reference to the exhibit to our Current Report on Form 8-K filed with the SEC on September 9, 2010
EX-101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB		XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

(1)	Incorporated by reference to the exhibit to our Current Report on Form 8-K filed with the SEC on August 12, 2010.
(2)	Incorporated by reference to the exhibit to our Registration Statement on Form SB-2 filed with the SEC on May 3, 2007.
(3)	Incorporated by reference to the exhibit to our Current Report on Form 8-K filed with the SEC on September 9, 2010
(4)	Incorporated by reference to the exhibit on our Annual Report on Form 10-K filed with the SEC on March 31, 2011.

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.

	CHINA PRINTING & PACKAGING, INC.
Date: March 31, 2011	By:	/s/ Yongming Feng
Date: April 16, 2012	By:	/s/ Yongming Feng
		Yongming Feng Chairman and Chief Executive Officer
		Yongming Feng
		Chairman and Chief Executive Officer
		(Principal Executive Officer)

In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ Yongming Feng	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	~~March~~April 3116, ~~2011~~2012
Yongming Feng
/s/ Jinrong Shi	Chief Financial Officer (Principal Financial Officer)	~~March~~April 3116, ~~2011~~2012
Jinrong Shi
/s/ Xiting Yang	Director	March 31, 2011
/s/ Michael Segal	Director	April 16, 2012
Xiting Yang
/s/ Michael Segal	Director	March 31, 2011
Michael Segal

4735

CHINA PRINTING & PACKAGING, INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

F-1

TABLE OF CONTENTS


Report of Independent Registered Public Accounting Firm	F-3

Consolidated Balance Sheets	F-4

Consolidated Statements of Income and Comprehensive Income	F-5

Consolidated Statements of Cash Flows	F-6

Consolidated Statements of Stockholders’ Equity	F-7

Notes to Consolidated Financial Statements	F-8

F-2

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

China Printing & Packaging, Inc.

We have audited the accompanying consolidated balance sheets of China Printing & Packaging, Inc. as of December 31, 2011 and 2010, and the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2011. China Printing & Packaging, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Printing & Packaging, Inc. as of December 31, 2011 and 2010, and the consolidated results of its operations and its consolidated cash flows for each of the years in the two-year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 14 to the accompanying consolidated financial statements, the consolidated financial statements of the Company for the year ended December 31, 2010 have been restated.

Clement C. W. Chan & Co.

Certified Public Accountants

3/F., & 5/F., Heng Shan Centre, 145 Queen’s Road East, Wanchai, Hong Kong

April 11, 2012

F-3

CHINA PRINTING & PACKAGING, INC.

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2011 AND 2010

	2011		2010
			(Restated)

ASSETS

Current Assets
Cash	$	1,535,705	$	335,493
Accounts receivable (note 2)		2,829,455		2,317,044
Other receivable		3,145		-
Advances to suppliers (note 3)		448,219		446,172
Prepaid expenses and deposit paid		6,661		8,297
Inventories (note 3)		183,626		130,847
Total Current Assets		5,006,811		3,237,853

Property and equipment, net (note 4 and 14)		1,356,708		1,385,049
Intangible assets, net (note 5 and 14)		1,877,235		1,842,161

Total Assets	$	8,240,754	$	6,465,063

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable (note 3)	$	112,673	$	129,157
Accrued expenses and other payables		411,288		427,510
Customer deposits		-		55,270
Income tax payable		160,426		170,856
Due to related parties (note 6)		77,020		5,853
Short-term bank loan (note 7)		-		532,381
Total Current Liabilities		761,407		1,321,027

Long-term bank loans (note 7)		-		211,743
Total Liabilities	$	761,407	$	1,532,770

Stockholders' Equity
Common stock, $0.001 per value, 75,000,000 share authorized, 51,002,502 shares issued and outstanding at December 31, 2011 and 2010 (note 9)	$	51,003	$	51,003
Additional paid in capital		799,542		799,542
Statutory reserve (note 10)		1,666,390		1,592,363
Accumulated other comprehensive income		461,129		225,788
Accumulated retained earnings		4,501,283		2,263,597
Total Stockholder's Equity	$	7,479,347	$	4,932,293

Total Liabilities and Stockholder's Equity	$	8,240,754	$	6,465,063

The accompanying notes are an integral part of these consolidated financial statements

F-4

CHINA PRINTING & PACKAGING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	2011			2010
				(Restated)

Sales	$	10,295,973		$	8,246,182
Cost of sales		6,298,181			5,236,465
Gross profit		3,997,792			3,009,717

Selling, general and administrative expense		787,944			603,569
Income from operations		3,209,848			2,406,148

Interest income		5,952			2,430
Interest expense		(84,386	)		(76,150	)
Other income		23,112			24,657
Other expense		(228	)		(5,990	)
Total Other Income (Expense)		(55,550	)		(55,053	)

Income before income taxes		3,154,298			2,351,095

Provision for income taxes (note 8)		(842,585	)		(612,264	)

Net income	$	2,311,713			1,738,831

Foreign currency translation adjustment (Note 14)		235,341			152,171

Comprehensive income	$	2,547,054		$	1,891,002


Net income per common share
Earnings per share - basic and diluted	$	0.05		$	0.03
Weighted average common shares outstanding		51,002,502			50,406,493

The accompanying notes are an integral part of these consolidated financial statements

F-5

CHINA PRINTING & PACKAGING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	2,311,713		$	1,738,831
Adjustments to reconcile net income to net cash used in operating activities
Depreciation		146,578			134,064
Provision for doubtful accounts (written back)		22,850			(55,765	)
Amortization of intangible assets		37,686			-
(Increase) decrease in current assets
Accounts receivables		(436,102	)		65,008
Advances to suppliers		15,470			(409,329	)
Prepaid expenses and other receivables		(1,160	)		21,623
Inventories		(46,790	)		481,074
Increase (decrease) in current liabilities
Accounts payable		(21,226	)		(197,237	)
Accrued expenses and other payables		(32,553	)		207,148
Customer deposits		(56,534	)		(111,069	)
Income tax liabilities		(16,955	)		80,345
Due to related parties		14,000			3,747
Net cash provided by operating activities		1,936,977			1,958,440

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment		(64,426	)		(86,931	)
Acquisition of intangible assets		-			(1,796,792	)
Net cash (used in) investing activities		(64,426	)		(1,883,723	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bank loan		(761,138	)		(449,990	)
Proceed from bank loan		-			449,990
Advance from a director		56,528			-
Deemed acquisition of cash from reverse merger (note 9)		-			1,013
Net cash (used in) provided by financing activities		(704,610	)		1,013

Effect of exchange rate changes on cash and cash equivalents		32,271			21,846

Net change in cash and cash equivalents		1,200,212			97,576
Cash and cash equivalents, beginning balance		335,493			237,917
Cash and cash equivalents, ending balance	$	1,535,705		$	335,493

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	859,540		$	531,919
Interest payments	$	104,375		$	76,150

The accompanying notes are an integral part of these consolidated financial statements

F-6

CHINA PRINTING & PACKAGING, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Description	Common Share		Amount		Additional Paid-in Capital			Other Compre-hensive Income			Statutory Reserves		Retained Earnings			Total Stock-holders' Equity

Balance, December 31, 2009		50,000,000	$	50,000	$	804,809		$	73,617	α	$	719,368	$	1,397,761		$	3,045,555
Foreign currency translation adjustments		-		-		-			152,171	α		-		-			152,171
Transfer to statutory reserves		-		-		-			-			872,995		(872,995	)		-
Issuance of stock for merger with China Printing & Packaging, Inc. (note 9)		1,002,502		1,003		(5,267	)		-			-		-			(4,264	)
Income for the year		-		-		-			-			-		1,738,831			1,738,831
Balance, December 31, 2010		51,002,502		51,003		799,542			225,788			1,592,363		2,263,597			4,932,293
Foreign currency translation adjustments		-		-		-			235,341			-		-			235,341
Transfer to statutory reserves		-		-		-			-			74,027		(74,027	)		-
Income for the year		-		-		-			-			-		2,311,713			2,311,713
Balance, December 31, 2011		51,002,502	$	51,003	$	799,542		$	461,129		$	1,666,390	$	4,501,283		$	7,479,347

α – Amounts restated (note 14)

The accompanying notes are an integral part of these consolidated financial statements

F-7

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 1 - ORGANIZATION

China Printing & Packaging, Inc. (“CHPI” or the “Company”)

China Printing & Packaging, Inc., formerly known as USA Therapy, Inc., was incorporated on May 3, 2007 in the State of Nevada. Prior to the acquisition of Asia Packaging & Printing, Inc. (“APPI”) on August 6, 2010, the Company was a non-operating public shell. Subsequent to the acquisition of APPI, the Company, through Fufeng Jinqiu Printing & Packaging Co., Ltd., a 100% controlled variable interest entity (“VIE”) is engaged in the business of manufacturing and marketing of paper products for the Chinese marketplace. The Company changed its name to China Printing & Packaging Inc. on November 22, 2010.

Pursuant to a Share Exchange Agreement dated August 6, 2010, the Company acquired 100% of the issued and outstanding capital stock and ownership interest of APPI, in exchange for 50,000,000 (note 9) newly-issued shares of the Company’s common stock, and the original controlling shareholders of the Company cancelled an aggregate of 50,000,000 old shares of the company’s common stock.

Pursuant to Securities and Exchange Commission (“SEC”) rules, the merger or acquisition of a private operating company into a non-operating public shell with nominal net assets is considered as capital transaction, rather than a business combination. Accordingly, for accounting purposes, the transaction was treated as a reverse acquisition and recapitalization, and pro-forma information is not presented.

Asia Packaging & Printing, Inc. (“APPI”)

Asia Packaging & Printing, Inc., incorporated in the State of Maryland on August 19, 2009 is a wholly owned subsidiary of the Company. APPI, through a series of contractual agreements, exercises 100% control of Fufeng, our operating entity in the People’s Republic of China (“PRC”).

Baoji Jinqiu Printing & Packaging Co., Ltd. (“Baoji”)

Baoji Jinqiu Printing & Packaging Co., Ltd. was originally formed as a joint venture company in the PRC on April 1, 2010, whereas APPI and Fufeng held 32% and 68% of equity interest respectively. On July 11, 2011, Baoji was transformed into a wholly owned foreign enterprise under the laws of the PRC, when APPI acquired Fufeng’s 68% equity interest in Baoji. Since then, Baoji became a wholly owned subsidiary of the Company.

Fufeng Jinqiu Printing & Packaging Co., Ltd. (“Fufeng”)

Fufeng Jinqiu Printing & Packaging Co., Ltd. is a corporation formed under the laws of the PRC on August 19, 2003. In April, 2010, APPI, Baoji, Fufeng and the shareholders of Fufeng entered into a series of contractual agreements (the “Agreements”) including Agreements on Entrustment for Operation and Management, Exclusive Option Agreements, Shareholders’ Voting Proxy Agreement and Shares Pledge Agreement., whereby providing APPI with 100% controlling interest in Fufeng. Fufeng is a 100% controlled VIE of the Company.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, and are expressed in United States Dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries and VIE for which the Company is the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation.

F-8

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currencies Translation

The Company’s reporting currency is the U.S. dollar. The Company’s operation in China, and uses Chinese Yuan Renminbi (“CNY”) as its functional currency. The financial statements of the subsidiaries and controlled VIE are translated into U.S. Dollars (“USD”) in accordance with ASC 830, “Foreign Currency Matters”. All assets and liabilities were translated at the current exchange rate, stockholders’ equity was translated at the historical rates and income statement items were translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance ASC 220, “Comprehensive Income”. Foreign exchange transaction gains and losses are reflected in the income statement.

In accordance ASC 230, cash flows from the Company’s operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Use of Estimates

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. As of December 31, 2011 and 2010, cash and cash equivalents were mainly denominated in CNY and were placed with banks in the PRC. These cash and cash equivalents may not be freely convertible into foreign currencies and the remittance of these funds out of the PRC may be subjected to exchange control restrictions imposed by the PRC government.

Accounts Receivable

Inventories

Property, Plant & Equipment

F-9

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Buildings	30 years
Machinery	10 years
Vehicles	8 years
Office equipment	5 years
Others	5 years

Intangible Assets

Intangible assets are amortized using the straight-line method over their estimated period of benefit. Management evaluates the recoverability of intangible assets periodically and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. At December 31, 2011 and 2010, the Company has intangible assets in the nature of land use right. No impairments of intangible assets have been identified during the current period presented. Land use right is subject to amortization with estimated lives as follows:

Land use right 50 years (expiring in 2060)

Long-Lived Assets

The Company accounts for long-lived assets in accordance with ASC 360, “Property, Plant, and Equipment”. The Company periodically evaluates the carrying value of long-lived assets to be held and used, impairment losses are to be recorded on long-lived assets used in operations, when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2011 and 2010, there were no significant impairments of its long-lived assets.

Value Added Tax Payable

The Company is subject to a value added tax (“VAT”) rate of 17% on product sales by the PRC. VAT payable is computed net of VAT paid on purchases for all sales in the PRC. The amount of sales and cost of sales reported in these consolidated financial statements do not include VAT.

Fair Value of Financial Instruments

The Financial Instrument Topic of the Codification requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the consolidated balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value. The carrying amounts of long-term bank loans are considered to be representative of their fair values.

F-10

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Income Taxes

The Company adopted ASC 740 which requires the recognition of 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 Company also adopted the provisions codified in ASC 740 to account for uncertainties in income taxes. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.

There were no deferred tax differences at December 31, 2011 and 2010.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with FASB ASC Topic 605. Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising and are included in Selling, general and administrative expense. The Company expenses all advertising costs as incurred. For the years ended December 31, 2011 and 2010, the Company incurred advertising expenses of $159,259 and $3,870 respectively.

Shipping and handling costs

Shipping and handling costs consist primarily of transportation charges for delivery of goods to customers and are included in selling, general and administrative expenses. The Company expenses all shipping costs when they are incurred. For the years ended December 31, 2011 and 2010, the Company incurred transportation charges of $72,355 and $76,256 respectively.

Comprehensive Income

The Company has adopted FASB ASC 220, “Comprehensive Income”, which establishes standards for reporting and display of comprehensive income (loss), its components and accumulated balances. Components of comprehensive income included net income and foreign currency translation adjustments.

F-11

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basic and Diluted Earnings per Share

Earnings per share are calculated in accordance with FASB ASC Topic 260, “Earnings per Share”. Basic earnings per share are based upon the weighted average number of common shares outstanding. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. There were no contingencies as of December 31, 2011 and 2010.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and advances to suppliers arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has been developing a diversified customer base located in China even though at present, there is a high concentration on a few customers as more fully explained in note 12 hereof. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Segment Reporting

ASC 280, “Segment Reporting”, requires use of the management approach model for 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.

For the years ended December 31, 2011 and 2010, the Company operates in only one reportable segment.

Reclassification

Certain items have been reclassified in the accompanying consolidated financial statements and notes for prior periods to be comparable with the classification for the year ended December 31, 2011. The reclassifications had no effect on previously reported net income.

F-12

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends the current fair value measurement and disclosure guidance of ASC Topic 820, Fair Value Measurement, to include increased transparency around valuation inputs and investment categorization. The guidance provided in ASU No. 2011-04 is effective prospectively for interim and annual periods beginning after December 15, 2011. The adoption of these provisions does not have a material impact on the Company’s consolidated statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income (ASU 2011-05). ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. Instead, ASU 2011-05 requires entities to report all non-owner changes in stockholders’ equity in either a single continuous statement of comprehensive income, or in two separate, but consecutive statements. ASU 2011-05 does not change the items that must be reported in other comprehensive income, or when an item must be reclassified to net income. In December 2011, the FASB issued Accounting Standards Update No. 2011-12 (“ASU 2011-12”) which defers certain requirements within ASU 2011-05. These amendments are being made to allow the FASB time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income in all periods presented. This new guidance is to be applied retrospectively. The Company has already adopted these provisions and there is no material impact on the Company’s consolidated statements.

In September 2011, the FASB has issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill for impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350, Intangibles-Goodwill and Other. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of these provisions does not have a material impact on the Company’s consolidated statements.

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities,” (“ASU 2011-11”). ASU 2011-11 enhances disclosures regarding financial instruments and derivative instruments. Entities are required to provide both net information and gross information for these assets and liabilities in order to enhance comparability between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. This new guidance is to be applied retrospectively. The adoption of these provisions does not have a material impact on the Company’s consolidated statements.

Note 3 - INVENTORIES

As of December 31, 2011 and 2010, inventories consist of the following:

	2011		2010

Raw materials	$	113,591	$	88,975
Work-in-progress		1,325		2,017
Finished goods		68,710		39,855
Total	$	183,626	$	130,847

F-13

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 3 – INVENTORIES (CONTINUED)

Since the year 2010, the Company has changed its raw materials procurement policy. Instead of stock high volume inventory of raw materials at the Company’s warehouse, the Company orders raw materials on a just in time production basis by placing advances to suppliers. This policy has been in place with no change up to now. As a result, at December 31, 2011, advances to suppliers, inventories and accounts payable were respectively stated at $448,219 (2010: $446,172), $183,626 (2010: $130,847) and $112,673 (2010: 129,157).

Note 4 – PROPERTY, PLANT & EQUIPMENT

As of December 31, 2011 and 2010 property, plant & equipment consist of the following:

	2011			2010
Buildings	$	793,542		$	701,858
Machinery		1,141,728			1,097,988
Vehicles		107,890			103,756
Office equipment		18,799			16,377
Others		1,951			1,877
Total		2,063,910			1,921,856
Accumulated depreciation		(707,202	)		(536,807	)
Total	$	1,356,708		$	1,385,049

Depreciation expense for the years ended December 31, 2011 and 2010 was $146,578 and $134,064, respectively.

Note 5 – INTANGIBLE ASSETS

The components of finite-lived intangible assets are as follows:

	2011			2010
Land use right	$	1,915,546		$	1,842,161
Accumulated amortization		(38,311	)		-
Land use right, net	$	1,877,235		$	1,842,161

Amortization expense for the years ended December 31, 2011 and 2010 was $37,686 and $nil, respectively.

The estimated future annual amortization expenses related to land use right as of December 31, 2011 are as follows:

2012	$	38,311
2013		38,311
2014		38,311
2015		38,311
2016		38,311
Thereafter		1,685,680

F-14

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 6 - RELATED PARTY TRANSACTIONS

As at December 31, 2011 and 2010, the Company has payables due to directors of the Company in the amount of $63,020 and $5,853, respectively for expenses incurred on behalf of the Company in the course of normal operations.

For the years ended December 31, 2011 and 2010, the Company paid and accrued fees to a director of the Company totaling $24,000 and $nil, respectively. As at December 31, 2011and 2010, the Company has outstanding director fees payable of $14,000 and nil.

During the year ended December 31, 2011 and 2010, the Company expensed a total of $11,101 and $9,455, respectively, in salaries, wages and benefits for 2 officers, one of whom is a also a director of the Company.

Note 7 – BANK LOANS

During the year ended December 31, 2011, the Company repaid all bank loans totaling $744,124. For the year ended December 31, 2010, the Company had short term bank loans, maturing within one year, in the amount of $532,381 and long term bank loans of $211,743.

Note 8 - INCOME TAXES

The Company’s income before income taxes comprised of the following:

Income (Loss) before income taxes:	2011			2010
USA	$	(14,446	)	$	(2,939	)
PRC		3,168,744			2,354,034
Total income before income taxes from all tax jurisdiction	$	3,154,298		$	2,351,095

The Company operates mainly in PRC and virtually no activities in USA. The Company has determined that it has no assessable income (loss) in the USA. Provision for income taxes for the years ended December 31, 2011 and 2010 consists entirely of current taxes for the operations in PRC and is reconciled as follows:

	2011			2010
Income (loss) before taxes from PRC operations	$	3,168,744		$	2,354,034
Statutory tax rate		25	%		25	%
Income tax at statutory tax rate		792,186			588,509
Permanent tax differences		50,399			23,755
Income tax expense at effective rate	$	842,585		$	612,264

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) from January 1, 2008 onwards, EIT is at a statutory rate of 25%. The Company has determined that there were no deferred tax assets (liabilities) for the periods stated.

Deferred USA income taxes have not been provided on the undistributed income of the Company’s foreign subsidiaries and controlled VIE, because the Company does not plan to initiate any action that would require the payment of USA income taxes.

F-15

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 8 - INCOME TAXES (CONTINUED)

Uncertain Tax Positions

FASB ASC 740-10-25 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. Under the new Corporate Income Tax Law in the PRC (“CIT”), effective on January 1, 2008, the Company may be deemed to be a resident enterprise by the PRC tax authorities. If the Company was deemed to be resident enterprise, the Company may be subject to the CIT at 25% on the worldwide taxable income and dividends paid from PRC subsidiaries to their overseas holding companies may be exempted from 10% PRC withholding tax. Except for certain immaterial interest income from bank deposits placed with financial institutions outside the PRC, all of the Company’s income is generated from the PRC operation. Given the immaterial amount of income generated from outside the PRC and the PRC subsidiaries do not intend to pay dividend in the foreseeable future, management has determined the impact arising from resident enterprise rules on the Company’s financial position is not significant. Management evaluated the Company’s overall tax positions and has determined that no provision for uncertain income tax positions is necessary as of December 31, 2011 and 2010.

Currently the Company has not received any notice of examination by the tax authority in PRC wherein the Company’s operations are carried out, but the tax authority in PRC has the right to examine the Company’s tax position in all past years.

Note 9 - SHARE CAPITAL

The total authorized capital is 75,000,000 common shares with a par value of $0.001 per common share. On June 15, 2011, the Company issued a stock dividend with a ratio of 2.5-for-1, whereby each issued and outstanding shares of common stock was divided into 2.5 shares of common stock (the “Stock Dividend”). The number of shares, and references to per share information presented elsewhere in these consolidated financial statements have been adjusted to reflect the result of the Stock Dividend.

On August 6, 2010, the Company completed a reverse merger transaction with APPI through the issuance of 50,000,000 common shares (Note 1). For accounting purposes, the original 1,002,502 outstanding common shares of the Company was deemed to have been issued in consideration for the Company’s net liabilities totaling $4,264 (consisting of cash of $1,013 and accounts payable and accrued liabilities totaling $5,277), immediately prior to the reverse acquisition.

Note 10 - STATUTORY RESERVES

In accordance with the laws and regulations of the PRC, Fufeng, the VIE’s annual income, after the payment of the PRC income taxes, shall be partly allocated to the Statutory Reserve Funds. The allocation is 10 percent of income after tax and the cumulative allocations are not to exceed 50 percent of registered capital. However voluntary allocations to Statutory Reserve Funds are not prohibited. These reserve funds are not transferable by the Company in the form of cash dividends, loans or advances. These reserve funds are therefore not available for distribution except in liquidation. As of December 31, 2011 and 2010, the Company had allocated $1,666,390 (inclusive of voluntary transfers to reserves of $1,207,175) and $1,592,363 (inclusive of voluntary transfers to reserves of $1,207,175), respectively, to these non-distributable reserve funds.

Note 11 - CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRC's economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

F-16

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 12 - MAJOR CUSTOMERS AND CREDIT RISK

Three customers each accounted for more than 10% of accounts receivable at December 31, 2011, totaling 34%. At December 31, 2010, two customers each accounted for more than 10% of accounts receivable, totaling 23%. Two vendors each accounted for more than 10% of accounts payable, totaling 21% at December 31, 2011. At December 31, 2010, one vendor accounted for 35% of accounts payable.

There was no customer that accounted for more than 10% of sales amount for the year ended December 31, 2011. Two customers each accounted for more than 10% of sales amount for the year ended December 31, 2010, totaling 38% (the two customers individually account for 20% and 18% of sales, respectively). There was no vendor that accounted for more than 10% of purchases amount for the year ended December 31, 2011. Four vendors each accounted for more than 10% of purchases amount for the year ended December 31, 2010, totaling 71% of purchases.

Note 13 - SUBSEQUENT EVENTS

On February 16, 2012, the Company obtained a loan in the amount of $1,130,000 from a corporation controlled by a shareholder who owns more than 10% of the Company’s outstanding common stock. The loan is non-interest bearing and is due on June 15, 2012.

Other than the item stated above, no significant events occurred subsequent to the December 31, 2011, to the date of the audit report, which would have a material impact on the Company’s consolidated financial statements.

Note 14 – RESTATEMENT

The accompanying consolidated balance sheet as at December 31, 2010, consolidated statements of operations and comprehensive income, statement of stockholders’ equity and certain sections of the notes to consolidated financial statements for the year then ended, have been restated to translate net property, plant and equipment and intangible assets using exchange rate at the balance sheet date. The Company previously translated these items using historical exchange rates.

	As at December 31, 2010
	Amounts previously reported			Restated
Property, plant and equipment, net		$	1,238,764		$	1,385,049
Intangible assets, net			1,796,792			1,842,161
Total		$	3,035,556		$	3,227,210

The restatement has the following effect on accumulated other comprehensive income:

	Amounts previously reported			Restated
Accumulated other comprehensive income, 2009	$	(26,603	)	$	73,617
Foreign currency translation		60,737			152,171
Accumulated other comprehensive income, 2010	$	34,134		$	225,788

F-17

CHINA PRINTING & PACKAGING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

Note 14 – RESTATEMENT (CONTINUED)

The restatement has the following effect on comprehensive income:

	Year ended December 31, 2010
	Amounts previously reported			Restated
Net income		$	1,738,831		$	1,738,831
Foreign currency translation			60,737			152,171
Comprehensive income		$	1,799,568		$	1,891,002

The restatement has no effect on previously reported retained earnings and net income.

F-18

Filing Compare · China Printing & Packaging, Inc.