HispanicBusiness

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

             China Carbon Graphite Group, Inc and subsidiaries  Condensed Consolidated Statements of Operations and Comprehensive Income      For the Three Months and Six Months Ended June 30, 2012 and 2011                                (Unaudited)                          Three months ended June    Six months ended June                                    30,                       30,                         ------------------------  ------------------------                             2012         2011         2012         2011                         -----------  -----------  -----------  -----------Sales                    $11,877,543  $12,145,024  $21,938,753  $23,608,359Cost of Goods Sold         8,985,125    9,456,762   16,128,731   18,340,023Gross Profit               2,892,418    2,688,262    5,810,022    5,268,336Operating Expenses    Selling expenses          29,152       57,312       75,950      107,175    General and     administrative        1,170,462    1,049,666    2,021,861    2,603,728    Depreciation and     amortization             46,826       47,152      103,830       93,754  Total operating   expenses                1,246,440    1,154,130    2,201,641    2,804,657Operating Income Before Other Income (Expense)    1,645,978    1,534,132    3,608,381    2,463,679Other Income (Expense)    Interest expense      (1,220,173)    (693,274)  (2,449,918)  (1,406,804)    Interest income               21            -           43            -    Other expense           (215,468)        (765)    (215,468)        (766)    Other income, net        215,190       15,670      215,190       76,550    Change in fair value     of warrants             445,763       26,540      (33,800)      82,692  Total other expense       (774,667)    (651,829)  (2,483,953)  (1,248,328)Net Income               $   871,311  $   882,303  $ 1,124,428  $ 1,215,351Dividend Distribution         (4,625)      (6,985)      (9,643)      17,882Net Income Available To Common Shareholders     $   866,686  $   875,318  $ 1,114,785  $ 1,233,233Other Comprehensive Income (Loss)Foreign currency translation gain (loss)    (433,954)     553,200      (10,057)     821,448Total Comprehensive Income                  $   437,357  $ 1,435,503  $ 1,114,371  $ 2,036,799Share Data    Basic earnings per     share               $      0.04  $      0.04  $      0.05  $      0.05    Diluted earnings per     share               $      0.04  $      0.04  $      0.05  $      0.05    Weighted average     common shares     outstanding, basic   23,948,851   22,350,263   23,632,248   21,993,435    Weighted average     common shares     outstanding,     diluted              24,254,661   23,194,542   23,938,058   22,671,285

             China Carbon Graphite Group, Inc. and subsidiaries              Condensed Consolidated Statements of Cash Flows              For the Six Months Ended June 30, 2012 and 2011                                (Unaudited)                                                  Six months ended June 30,                                                 --------------------------                                                     2012          2011                                                 ------------  ------------Cash flows from operating activities  Net Income                                     $  1,124,428  $  1,215,351  Adjustments to reconcile net cash provided by   operating activities      Depreciation and amortization                 1,360,692       870,310      Related party interest expenses       contribution                                   222,860             -      Stock compensation                              374,333       623,450      Change in fair value of warrants                 33,800       (82,692)  Change in operating assets and liabilities      Accounts receivable                            (557,196)   (4,308,178)      Notes receivable                               (257,316)      173,556      Other receivable                                (31,808)   (1,107,235)      Advance to suppliers                          3,529,409      (889,008)      Inventories                                  (6,755,136)   (4,121,825)      Prepaid expenses                                 (2,719)      226,703      Accounts payable and accrued liabilities      2,684,917      (141,785)      Advance from customers                          192,640     2,807,114      Taxes payable                                  (444,341)    1,476,262      Other payables                                  353,241        90,132Net cash provided by (used in) operating activities                                         1,827,804    (3,167,845)Cash flows from investing activities      Acquisition of property and equipment           (37,756)      (27,088)      Construction in progress                     (1,109,403)   (2,459,521)Net cash used in investing activities              (1,147,159)   (2,486,609)Cash flows from financing activities  Proceeds from issuing common stock                  472,000             -  Proceeds from warrants exercise                           -       371,714  Dividends paid for series B preferred stock               -       (32,996)    Proceeds from short-term bank loans            11,074,000    11,176,300    Payment to short-term bank loans              (17,876,600)   (6,047,450)  Proceeds from long-term bank loans                4,714,360    Proceeds from loans from unrelated parties      9,162,944             -    Payment of loans from unrelated parties        (9,162,944)    Payments to an related party                     (142,380)            -    Proceeds from an related party                     31,640             -    Proceeds from stock not yet issued               (145,000)            -  Restricted cash                                     996,660    (6,491,440)  Proceeds from notes payable                      17,876,600    10,410,800  Payment to notes payable                        (16,848,300)            -Net cash provided by financing activities             152,980     9,386,928Effect of exchange rate fluctuation                    (4,185)       42,368Net increase in cash                                  829,440     3,774,842Cash and cash equivalents at beginning of period      521,450       296,312Cash and cash equivalents at end of period       $  1,350,890  $  4,071,154Supplemental disclosure of cash flow information  Interest paid                                  $  1,643,371  $  1,406,804Non-cash activities:  Preferred stock conversion to common stock     $        144  $        753  Reclassfication of warrant liability with   equity                                        $          -  $     14,993  Issuance of common stock for compensation      $    153,800  $  1,787,600                                                 ============  ============