China Carbon Graphite (OTC BB:CHGI)

We expect that anticipated cash flows from operations, short-term and long-term bank loans and loans from a related party will be sufficient to fund our operations through at least the next twelve months, provided that:

• We generate sufficient business so that we are able to generate substantial profits, which cannot be assured;
•  Our banks continue to provide us with the necessary working capital financing; and
• We are able to generate savings by improving the efficiency of our operations.

In December 2009 and January 2010, we raised an aggregate of approximately $3 million in a private placement transaction. We may require additional equity, debt or bank funding to finance acquisitions or to allow us to produce graphite for the nuclear industry, which are our primary growth strategies