UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2020

☐ 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: 333-114564

CHINA CARBON GRAPHITE GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada		98-0550699
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

20955 Pathfinder Road, Suite 200 Diamond Bar, CA		91765
(Address of principal executive offices)		(Zip Code)

	(909) 843-6518
	(Registrant’s telephone number, including area code)

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. 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). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of ~~July~~August 214, 2020, there were 27,742,346 shares of common stock issued and outstanding.

CHINA CARBON GRAPHITE GROUP, INC.

FORM 10-Q

~~March 31~~June 30, 2020

TABLE OF CONTENTS

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements:	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2220
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
	Signatures	32

RELIANCE ON SECURITIES AND EXCHANGE COMMISSION ORDER

China Carbon Graphite Group, Inc. (the “Company”) is filing this Quarterly Report on Form 10-Q (the “Quarterly Report”) for quarter ended March 31, 2020 pursuant to the Securities and Exchange Commission (the “SEC”) Order dated March 4, 2020 (Release No. 34-88318), as modified on March 25, 2020 (Release No. 34-88465) (the “Order”) to delay the filing of the Quarterly Report due to circumstances related to the coronavirus pandemic (“COVID-19”). On May 15, 2020, the Company filed a Current Report on Form 8-K stating that it is relying on the Order to delay the filing of the Report by up to 45 days due to circumstances related to the COVID-19 pandemic. The Company followed the restrictive measures implemented in China, by suspending operation and having employees work remotely during February and March 2020. The Company gradually resumed operation and production starting in April 2020. Such restrictive measures caused a delay in the preparation of the financial statements and in the entry time of the on-site audit by the Company’s independent public accountant and consequently a delay in the completion of the Company’s financial statements for the Quarterly Report. As a result, the Company was unable to timely file the Quarterly Report without the extension provided for by the Order.

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements.

China Carbon Graphite Group, Inc. and subsidiaries

Consolidated Balance Sheets

	March 31, 2020			December 31, 2019
	June 30, 2020			December 31, 2019
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	2242,~~240~~063		$	11,585
Account Receivable		133,~~279~~457			3,781
Inventories		518,~~566~~110			17,583
Prepaid expenses		18,~~747~~789			19,067
Other receivables, net		33,018			30,709
Other receivables,net		24,766			30,709
Total current assets		92107,~~850~~185			82,725
Right-of-use asset - non current		2819,~~701~~287			38,567
Property And Equipment, Net		33,~~525~~061			36,275
Total Assets	$	~~155~~159,~~076~~533		$	157,567
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses	$	~~196~~146,~~992~~579		$	162,754
Accrued payroll - related party		~~682~~693,~~030~~219			679,410
Advance from customers		~~106~~89,~~069~~862			113,533
Other payables		1,565,172			1,576,148
Loan payable		93,900			-
Lease liability - current		28,701			36,564
Other payables		1,604,717			1,576,148
Lease liability - current		19,287			36,564
Dividends payable		55,015			55,015
Total current liabilities		2,~~633~~702,~~979~~579			2,623,424
Lease liability - non current		-			2,003
Total Liabilities		2,~~633~~702,~~979~~579			2,625,427
Stockholders’ Deficit
Common stock, $0.001 par value; 100,000,000 shares authorized 27,742,346 and 27,502,346 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		27,742			27,502
Common stock, $0.001 par value; 100,000,000 shares authorized 27,742,346 and 27,502,346 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively		27,742			27,502
Additional paid-in capital		48,~~848~~862,~~949~~722			48,827,492
Accumulated other comprehensive income		~~104~~103,~~353~~727			98,278
Accumulated loss		(51,~~459~~537,~~947~~237	)		(51,421,132	)
Total stockholders’ deficit		(2,~~478~~543,~~903~~046	)		(2,467,860	)
Total Liabilities and Stockholders’ Deficit	$	~~155~~159,~~076~~533		$	157,567

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

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of ~~Operations~~ Operations and Comprehensive Loss

For the Three and Six Months Ended ~~March~~ 31June 30, 2020 and 2019

(Unaudited)

	Three Months Ended March 31,
	Three Months ended June 30,						Six Months ended June 30,
	2020			2019			2020			2019
Sales	$	~~185~~75,~~781~~634		$	2137,~~316~~522		$	261,415		$	58,838
Cost of Goods Sold		9444,~~772~~480			1223,~~769~~395			139,252			36,164
Gross Profit		9131,~~009~~154			814,~~547~~127			122,163			22,674
Operating Expenses
		41.2	%		37.6	%		46.73	%		38.54	%
Selling expenses		21,053			4,374
Operating Expenses
General and administrative		88,351			98,840
Selling expenses		13,734			6,740			34,787			11,114
Total operating expenses		109,404			103,214
General and administrative		83,674			101,020			172,025			199,860
Loss before other income (expense) and income taxes		(18,395	)		(94,667	)
Total operating expenses		97,408			107,760			206,812			210,974
Other Income (Expense)
Loss before other income (expense) and income taxes		(66,254	)		(93,633	)		(84,649	)		(188,300	)
Interest expense		(20,420	)		(87	)
Other Income (Expense)
Other income (expense), net		-			-
Interest expense		(14,487	)		(2,691	)		(34,907	)		(2,778	)
Total other expense (income), net		(20,420	)		(87	)
Other income (expense), net		3,451			-			3,451			-
Loss before income taxes		(38,815	)		(94,754	)
Total other expense (income), net		(11,036	)		(2,691	)		(31,456	)		(2,778	)
Income Tax Expense		-			-
Loss before income taxes		(77,290	)		(96,324	)		(116,105	)		(191,078	)
Net loss		(38,815	)		(94,754	)
Income Tax Expense		-			-			-			-
Other Comprehensive Income
Net loss		(77,290	)		(96,324	)		(116,105	)		(191,078	)
Foreign currency translation gain (loss)		6,075			(8,524	)
Other Comprehensive Income
Total Comprehensive Loss	$	(32,740	)	$	(103,278	)
Foreign currency translation gain (loss)		(626	)		9,147			5,449			623
Share Data
Total Comprehensive Loss	$	(77,916	)	$	(87,177	)	$	(110,656	)	$	(190,455	)
Basic and diluted loss per share
Share Data
Net loss per share – basic and diluted	$	(0.00	)	$	(0.00	)
Basic and diluted loss per share
Weighted average common shares outstanding, basic and diluted		27,644,764			27,369,013
Net loss per share – basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Weighted average common shares outstanding, basic and diluted		27,742,346			27,502,346			27,693,555			27,436,048

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

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
	Six Months ended June 30,
	2020			2019
Cash Flows from Operating Activities
Net Loss available to common shareholders	$	(38116,~~815~~105	)	$	(94191,~~754~~078	)
Adjustments to reconcile net cash provided by operating activities
Depreciation		24,~~171~~345			24,~~048~~123
Stock compensation		4,800			7,200
Imputed interest		1730,~~145~~764			-
Changes in operating assets and liabilities
Accounts receivable		~~(9,702~~270	)		13,~~767~~995
Other receivables		(25,~~770~~603	)		(1022,~~987~~895	)
Advance to suppliers		-			~~1,981~~(560	)
Inventory		~~11,892~~(788	)		-(11,414	)
Right-of-use asset		9,353			(12,828	)
Prepaid expenses		-
Accounts payable and accrued liabilities		37,969			39,282
Right-of-use asset		18,804			(3,132	)
Advance from customers		(5,637	)		11,575
Accounts payable and accrued liabilities		(1,712	)		87,063
Taxes payable		302			146
Advance from customers		(22,113	)		66,784
Other payables		(6,368	)		48,387
Taxes payable		314			80
Lease liability		(9,353	)		12,828
Other payables		32,916			71,865
Net cash provided by (used in) operating activities		10,987			6,645
Lease liability		(18,804	)		3,132
Net cash provided by (used in) operating activities		(61,706	)		15,163
Cash flows from investing activities
Acquisition of plant and equipment		-(1,649	)		(2,~~253~~769	)
Net cash used in investing activities		-(1,649	)		(2,~~253~~769	)
Effect of exchange rate fluctuation on cash and cash equivalents		(332	)		217
Cash flows from financing activities
Net increase (decrease) in cash		10,655			4,609
Loan payable		93,900			-
Net cash used in financing activities		93,900			-
Effect of exchange rate fluctuation on cash and cash equivalents		(67	)		(142	)
Net increase (decrease) in cash		30,478			12,252
Cash and cash equivalents at beginning of period		11,585			9,137
Cash and cash equivalents at ending of period	$	2242,~~240~~063		$	1321,~~746~~389
Supplemental disclosure of cash flow information
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

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

China Carbon Graphite Group, Inc and subsidiaries

Consolidated Statements of Changes in Stockholders’ Deficit

For the Quarter Ended ~~March~~June 3130, 2020 ~~and~~ and 2019

(Unaudited)

	Common				Additional					Other			Total
	Common Stock				Additional Paid-In		Retained			Other Comprehensive			Total Stockholders’
	Stock				Paid-In		Retained			Comprehensive			Stockholder’
	Number		Amount		Capital		Earnings			Income			Deficit
Balance at December 31, 2019		27,502,346	$	27,502	$	48,827,492	$	(51,421,132	)	$	98,278		$	(2,467,860	)
Issuance of common stock for directors and employees		240,000		240		4,560		-			-			4,800
Imputed interest		-		-		16,897		-			-			16,897
Net loss		-		-		-		(38,815	)		-			(38,815	)
Foreign currency translation adjustment		-		-		-		-			6,075			6,075
Balance at March 31, 2020		27,742,346	$	27,742	$	48,848,949	$	(51,459,947	)	$	104,353		$	(2,478,903	)
Imputed interest		-		-		13,773					-			13,773
Net loss		-		-		-		(77,290	)		-			(77,290	)
Foreign currency translation adjustment		-		-		-		-			(626	)		(626	)
Balance at June 30, 2020		27,742,346	$	27,742	$	48,862,722	$	(51,537,237	)	$	103,727		$	(2,543,046	)
	Common Stock				Additional Paid-In		Retained			Other Comprehensive			Total Stockholders’
	Number		Amount		Capital		Earnings			Income			Deficit
Balance at March 31, 2019		27,502,346	$	27,502	$	48,760,711	$	(51,217,003	)	$	84,747		$	(2,344,043	)
Net loss		-		-		-		(96,324	)		-			(96,324	)
Foreign currency translation adjustment		-		-		-		-			9,147			9,147
Balance at June 30, 2019		27,502,346	$	27,502	$	48,760,711	$	(51,313,327	)	$	93,894		$	(2,431,220	)

	Common				Additional					Other			Total
	Stock				Paid-In		Retained			Comprehensive			Stockholders’
	Number		Amount		Capital		Earnings			Income			Deficit
Balance at December 31, 2018		27,262,346	$	27,262	$	48,753,751	$	(51,122,249	)	$	93,271		$	(2,247,965	)
Issuance of common stock for directors and employees		240,000		240		6,960		-			-			7,200
Net loss		-		-		-		(94,754	)		-			(94,754	)
Foreign currency translation adjustment		-		-		-		-			(8,524	)		(8,524	)
Balance at March 31, 2019		27,502,346	$	27,502	$	48,760,711	$	(51,217,003	)	$	84,747		$	(2,344,043	)

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

~~The accompanying notes are an integral part of these unaudited consolidated financial statements.~~4

4China Carbon Graphite Group, Inc and subsidiaries

~~China Carbon~~Consolidated ~~Graphite~~Statements ~~Group,~~of ~~Inc.~~Changes ~~and~~in ~~subsidiaries~~Stockholders’ Deficit

~~Notes to~~For ~~Unaudited~~the ~~Consolidated~~Two ~~Financial~~Quarters ~~Statements~~Ended June 30, 2020 and 2019

~~March 31, 2020~~(Unaudited)

(1) Organization and Business

	Common Stock				Additional Paid-In		Retained			Other Comprehensive		Total Stockholders’
	Number		Amount		Capital		Earnings			Income		Deficit

Balance at December 31, 2019		27,502,346	$	27,502	$	48,827,492	$	(51,421,132	)	$	98,278	$	(2,467,860	)

Issuance of common stock for directors and employees		240,000		240		4,560		-			-		4,800

Imputed interest		-		-		30,670		-			-		30,670

Net loss		-		-		-		(116,105	)		-		(116,105	)

Foreign currency translation adjustment		-		-		-		-			5,449		5,449

Balance at June 30, 2020		27,742,346	$	27,742	$	48,862,722	$	(51,537,237	)	$	103,727	$	(2,543,046	)

	Common Stock				Additional Paid-In		Retained			Other Comprehensive		Total Stockholders’
	Number		Amount		Capital		Earnings			Income		Deficit

Balance at December 31, 2018		27,262,346	$	27,262	$	48,753,751	$	(51,122,249	)	$	93,271	$	(2,247,965	)

Issuance of common stock for directors and employees		240,000		240		6,960		-			-		7,200

Net loss		-		-		-		(191,078	)		-		(191,078	)

Foreign currency translation adjustment		-		-		-		-			623		623

Balance at June 30, 2019		27,502,346	$	27,502	$	48,760,711	$	(51,313,327	)	$	93,894	$	(2,431,220	)

China Carbon Graphite Group, Inc. (the “Company”), through its subsidiaries, is engaged in the research and development, rework and sales of graphene and graphene oxide and graphite bipolar plates in the People’s Republic of China (“China” or the “PRC”). The ~~Company~~accompanying ~~has~~notes ~~developed~~are ~~its~~an ~~own~~integral ~~graphene prototype and reworks the products by orders only. The Company~~part ~~outsource the production~~ of ~~large~~these ~~orders~~unaudited toconsolidated ~~third~~financial ~~parties as it has not commercialized its product prototype~~statements. We also operate a business-to-business and business-to-consumers Internet portal (www.roycarbon.com) for graphite related products. Vendors can sell raw materials, industrial commodities and consumer (household) commodities to both business and consumers through the website by paying a fee for each transaction conducted through the website.

The Company was incorporated on February 13, 2003 in Nevada under the name Achievers Magazine Inc. In connection with the reverse merger transaction described below, the Company’s corporate name was changed to China Carbon Graphite Group, Inc. on January 30, 2008.5

OnChina December 17, 2007, the Company completed a share exchange pursuant to a share exchange agreement with Sincere Investment (PTC), Ltd. (“Sincere”), a British Virgin Islands corporation. Sincere was the sole stockholder of Talent International Investment Limited (“Talent”), a British Virgin Islands corporation. which is the sole stockholder of XingheYongle Carbon ~~Co.,~~Graphite ~~Ltd. (“Yongle”)~~Group, ~~a wholly foreign-owned enterprise company organized under the laws of the PRC~~Inc. ~~Pursuant to the share exchange agreement, the Company issued 9,388,172 shares of common stock to Sincere in exchange for all of the outstanding on stock of Talent,~~ and ~~Talent became a wholly-owned subsidiary of the Company.~~ ~~Upon completion of the reverse merger, the Company’s business became the business of Talent, its~~ subsidiaries ~~and its affiliated variable interest entities.~~

~~Talent owns~~Notes ~~100%~~to ofUnaudited ~~the~~Consolidated ~~stock of Yongle, which is a wholly foreign-owned enterprise organized under the laws of the PRC.~~Financial Statements

~~Acquisition in~~June ~~December~~30, ~~2013~~2020

~~On December 23, 2013, the Company acquired Golden Ivy Limited, a British Virgin Island company~~ (~~“BVI Co.,”~~1). ~~Pursuant to~~Organization ~~the terms of the acquisition, we issued an aggregate of 5,000,000 shares of common stock, par value $0.001 per share, to the former shareholders of BVI Co. in exchange for 100% of the issued~~ and ~~outstanding equity of BVI Co. The shares were issued on January 16, 2014. BVI Co. then became a wholly owned subsidiary of the Company.~~Business

~~The~~China Carbon Graphite Group, Inc. (the ~~Business~~“Company”), ~~and~~through its subsidiaries, is engaged in the ~~facilities~~research ~~related~~and ~~thereto~~development, ~~are~~rework ~~all~~and sales ~~located~~of graphene and graphene oxide and graphite bipolar plates in the People’s Republic of China (“China” or the “PRC”). ~~The~~ ~~Business~~The isCompany ~~conducted~~has bydeveloped ~~Royal~~its ~~Elite~~own ~~New~~graphene ~~Energy~~prototype ~~Science~~ and ~~Technology~~reworks ~~(Shanghai)~~the ~~Co.,~~products ~~Ltd~~by orders only. ~~(“Royal~~The ~~Shanghai”),~~Company ~~a wholly~~outsource ~~foreign~~the ~~owned~~production of ~~enterprise~~large ~~under~~orders ~~laws~~to ofthird ~~China.~~parties ~~Royal~~as ~~Shanghai~~it ishas ~~wholly~~not ~~owned~~commercialized byits ~~Royal~~product ~~Elite~~prototype. ~~International~~We ~~Limited,~~also operate a ~~Hong~~business-to-business and ~~Kong~~business-to-consumers ~~company,~~Internet ~~(“Royal~~portal ~~HK”~~(www.roycarbon.com) for graphite related products. Vendors can sell raw materials, ~~which~~industrial commodities isand ~~wholly~~consumer ~~owned~~(household) commodities to both business and consumers through the website by ~~BVI~~paying Coa fee for each transaction conducted through the website.

5The Company was incorporated on February 13, 2003 in Nevada under the name Achievers Magazine Inc. In connection with the reverse merger transaction described below, the Company’s corporate name was changed to China Carbon Graphite Group, Inc. on January 30, 2008.

~~Royal~~On December 17, 2007, the Company completed ~~Shanghai~~a ~~was~~share ~~set~~exchange uppursuant into ~~Shanghai~~a onshare ~~June~~exchange 9agreement with Sincere Investment (PTC), ~~2010~~Ltd. ~~Royal~~(“Sincere”), HKa British Virgin Islands corporation. Sincere was ~~set~~the upsole stockholder of Talent International Investment Limited (“Talent”), a British Virgin Islands corporation. which is the sole stockholder of XingheYongle Carbon Co., Ltd. (“Yongle”), a wholly foreign-owned enterprise company organized under the laws of the PRC. Pursuant to the share exchange agreement, the Company issued 9,388,172 shares of common stock to Sincere in ~~Hong~~exchange ~~Kong~~for all of the outstanding on ~~January~~stock 8of Talent, ~~2010~~and Talent became a wholly-owned subsidiary of the Company. Upon completion of the reverse merger, the Company’s business became the business of Talent, its subsidiaries and its affiliated variable interest entities.

~~The consolidated~~Talent ~~financial~~owns ~~statements~~100% ~~presented~~of ~~herein consolidate~~ the ~~financial~~stock ~~statements~~ of ~~China Carbon Graphite~~Yongle, which ~~Inc.~~is ~~with~~a ~~the financial~~wholly ~~statements~~foreign-owned ofenterprise ~~its~~organized ~~subsidiaries~~under in the ~~following~~laws ~~structure~~of ~~chart~~the PRC.

~~Organizational Structure~~Acquisition ~~Chart~~in December 2013

~~The~~On December 23, 2013, the Company acquired ~~following~~Golden ~~chart~~Ivy ~~sets~~Limited, ~~forth~~a ~~our~~British ~~organizational~~Virgin ~~structure:~~Island company (“BVI Co.,”). Pursuant to the terms of the acquisition, we issued an aggregate of 5,000,000 shares of common stock, par value $0.001 per share, to the former shareholders of BVI Co. in exchange for 100% of the issued and outstanding equity of BVI Co. The shares were issued on January 16, 2014. BVI Co. then became a wholly owned subsidiary of the Company.

~~Liquidity~~The Business and the facilities related thereto are all located in the People’s Republic of China (“China”). The Business is conducted by Royal Elite New Energy Science and ~~Working~~Technology ~~Capital~~(Shanghai) ~~Deficit~~Co., Ltd. (“Royal Shanghai”), a wholly foreign owned enterprise under laws of China. Royal Shanghai is wholly owned by Royal Elite International Limited, a Hong Kong company, (“Royal HK”), which is wholly owned by BVI Co.

~~As of~~Royal ~~March~~Shanghai ~~31,~~was ~~2020~~set ~~and~~up asin ofShanghai ~~December~~on June 319, ~~2019,~~2010. ~~the~~Royal ~~Company~~HK ~~managed~~was toset ~~operate~~up ~~its~~in ~~business~~Hong ~~with~~Kong aon ~~negative~~January ~~working~~8, ~~capital~~2010.

The ~~Company~~ ~~Law~~consolidated offinancial ~~the~~statements ~~PRC~~presented herein ~~applicable~~consolidate tothe ~~Chinese~~financial ~~companies~~statements ~~provides~~of ~~that~~China ~~net~~Carbon ~~after~~Graphite, ~~tax~~Inc. ~~income~~with ~~should~~the befinancial ~~allocated~~statements byof its subsidiaries in the following ~~rules:~~ structure chart.

~~1. 10% of after tax income to be allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital.~~6

2.Organizational IfStructure the cumulative balance of statutory surplus reserve is not enough to make up the Company’s cumulative prior years’ losses, the current year’s after tax income should be first used to make up the losses before the statutory surplus reverse is drawn.Chart

3.The ~~Allocation~~following ~~can~~chart besets ~~made~~forth toour ~~the discretionary surplus reserve, if such a reserve is approved at the meeting of the equity owners.~~organizational structure:

6Liquidity and Working Capital Deficit

~~Therefore, the~~As ~~Company~~of isJune ~~required~~30, to2020 ~~maintain~~and aas ~~statutory~~of ~~reserve in China that limits any equity distributions to its shareholders. The~~December ~~maximum~~31, ~~amount~~2019, of the ~~shareholders has not been reached. The~~ Company ~~has~~managed ~~never distributed earnings~~ to ~~shareholders~~operate ~~and~~its ~~has~~business ~~no intentions~~with toa donegative soworking capital.

The ~~outbreak~~ ofCompany ~~COVID19~~Law ~~coronavirus in China starting from the beginning~~ of ~~2020 has resulted reduction of manufacturing hours for our factory. The Company followed~~ the ~~restrictive~~PRC ~~measures~~applicable implemented in China, by suspending operation and having employees work remotely during February and March 2020. The Company gradually resumed operation and production starting in April 2020. The demand for our products decreased in February and March 2020. The recent developments of COVID 19 are expected to ~~result in lower~~ ~~sales~~Chinese ~~and~~companies ~~gross~~provides ~~margin~~that innet ~~2020.~~after ~~Other~~tax ~~financial~~income ~~impact~~should ~~could~~be ~~occur~~allocated ~~though~~by ~~such~~the ~~potential~~following ~~impact is unknown at this time.~~rules:

~~(2) Going~~1. ~~Concern~~10% of after tax income to be allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital.

~~The Company’s~~2. ~~consolidated~~If ~~financial statements are prepared using generally accepted accounting principles in~~ the ~~United~~cumulative ~~States of~~balance ~~America applicable to a going concern, which contemplates the realization~~ of ~~assets~~statutory ~~and~~surplus ~~the~~reserve ~~satisfaction~~is ofnot ~~liabilities~~enough ~~in the~~to ~~normal~~make ~~course~~up ~~of business. As of and for~~ the ~~period ended March 31, 2020, the~~ Company’s ~~has~~cumulative ~~incurred~~prior ~~operating~~years’ losses ~~of $51~~,~~442,803 and~~ ~~working~~the ~~capital~~current ~~deficit~~year’s ofafter ~~$2,541,129.~~tax ~~The~~income ~~ability~~should ofbe ~~the~~first ~~Company~~used to ~~continue~~make asup ~~a going concern is dependent on~~ the ~~Company obtaining adequate capital to fund operating~~ losses ~~until~~before ~~it becomes profitable. If~~ the ~~Company~~statutory issurplus ~~unable~~reverse ~~to obtain adequate capital, it could be forced to cease operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company~~ is ~~unable to continue as a going concern~~drawn.

~~Management’s Plan~~3. Allocation can be made to ~~Continue~~the asdiscretionary surplus reserve, if such a ~~Going~~reserve ~~Concern~~is approved at the meeting of the equity owners.

~~In order to continue as a going concern~~Therefore, the Company ~~will~~is ~~need,~~required ~~among~~to ~~other things, additional capital resources. Management’s~~maintain ~~plans~~a tostatutory ~~obtain~~reserve ~~such~~in ~~resources~~China ~~for~~that ~~the~~limits ~~Company~~any ~~include (1) obtaining capital from the sale of its~~ equity ~~securities,~~distributions ~~(2)~~to ~~sales of~~ its ~~products, and (3) short-term or long-term borrowings from banks, stockholders or other party(ies) when needed~~shareholders. ~~However, management~~The ~~cannot~~maximum ~~provide~~amount ~~any~~of ~~assurance that~~ the ~~Company~~shareholders ~~will~~has not bebeen ~~successful in accomplishing any of its plans~~reached. The Company ~~plans to~~has ~~look~~never ~~for~~distributed ~~opportunities~~earnings to ~~merge~~shareholders ~~with~~and ~~other~~has ~~companies~~no inintentions ~~the~~to ~~graphite~~do ~~industry~~so.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually to secure other sources of financing and attain profitable operations.7

7The outbreak of COVID19 coronavirus in China starting from the beginning of 2020 has resulted reduction of manufacturing hours for our factory. The Company followed the restrictive measures implemented in China, by suspending operation and having employees work remotely during February and March 2020. The Company gradually resumed operation and production starting in April 2020. The demand for our products decreased in February and March 2020. The recent developments of COVID 19 are expected to result in lower sales and gross margin in 2020. Other financial impact could occur though such potential impact is unknown at this time.

(32) ~~Basis~~ ~~for~~Going ~~Preparation of the Consolidated Financial Statements~~Concern

~~Management~~The Company’s consolidated financial ~~acknowledges~~statements ~~its~~are ~~responsibility~~prepared ~~for~~using ~~the~~generally ~~preparation~~accepted ofaccounting principles in the ~~accompanying~~United ~~interim~~States ~~consolidated~~of ~~financial~~America ~~statements~~applicable ~~which~~to ~~reflect all~~a ~~adjustments~~going concern, which ~~consisting~~contemplates ofthe ~~normal~~realization ~~recurring~~of ~~adjustments,~~assets ~~considered~~and ~~necessary~~the insatisfaction ~~its~~of ~~opinion~~liabilities ~~for~~in athe ~~fair~~normal ~~statement~~course of ~~its~~business. ~~consolidated financial~~As ~~position~~of and for the ~~results~~period ofended ~~its~~June ~~operations~~30, ~~for~~2020, the ~~interim~~Company ~~period~~has ~~presented.~~incurred ~~These~~operating ~~consolidated~~losses ~~financial~~of ~~statements should~~$116,105 beand ~~read~~working incapital ~~conjunction~~deficit ~~with~~of ~~the~~$2,595,394. The ~~summary~~ability of ~~significant~~the ~~accounting~~Company ~~policies~~to ~~and~~continue ~~notes~~as toa ~~consolidated~~going ~~financial~~concern ~~statements included~~is independent on the Company’s ~~Form~~obtaining ~~10-K~~adequate ~~annual~~capital ~~report~~to ~~for~~fund ~~the~~operating losses ~~year~~until ~~ended~~it ~~December~~becomes ~~31, 2019~~profitable. ~~The~~If ~~consolidated~~the ~~balance~~Company ~~sheet~~is ~~as of~~unable ~~December~~to ~~31,~~obtain ~~2019~~adequate ~~has~~capital, ~~been~~it ~~derived~~could ~~from~~be ~~the~~forced ~~audited~~to ~~financial~~cease ~~statements~~operations. The ~~results~~accompanying ofconsolidated ~~the~~financial ~~three~~statements ~~months~~do ~~ended March 31, 2020 are~~ not ~~necessarily~~include ~~indicative~~any ofadjustments ~~the~~that ~~results~~might to be ~~expected~~necessary ~~for~~if the ~~full~~Company ~~fiscal~~is ~~year~~unable to ~~ending~~continue ~~December~~as ~~31,~~a ~~2020~~going concern.

~~The accompanying~~Management’s ~~unaudited~~Plan ~~consolidated~~to ~~financial statements for China Carbon Graphite Group, Inc. and its subsidiaries and variable~~Continue ~~interest~~as ~~entity,~~a ~~have~~Going been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.Concern

~~The~~In order to continue as a going concern, the Company ~~maintains~~will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its ~~books~~equity securities, (2) sales of its products, and ~~accounting~~(3) ~~records~~short-term or inlong-term ~~Renminbi~~borrowings from banks, stockholders or other party(~~“RMB”~~ies) when needed. However, ~~but~~management ~~its~~cannot ~~reporting~~provide ~~currency~~any isassurance that Uthe Company will be successful in accomplishing any of its plans.S. ~~dollars~~The Company plans to look for opportunities to merge with other companies in the graphite industry.

The ~~financial~~ ~~statements~~ability ~~have~~of ~~been~~the ~~prepared~~Company ~~in order~~ to ~~present~~continue as ~~the~~a ~~financial~~going ~~position~~concern ~~and~~is ~~results~~dependent ofupon ~~operations of the Company and~~ its ~~subsidiaries~~ability ~~whose~~to ~~financial~~successfully ~~condition~~accomplish ~~consolidated with~~ the ~~Company~~plans ~~pursuant~~described toin ~~ASC~~the ~~Topic~~preceding ~~810-10,~~paragraph ~~Consolidation, in accordance~~and ~~with~~eventually ~~U.S.~~to ~~GAAP.~~secure ~~All~~other ~~significant~~sources ~~intercompany~~of ~~accounts~~financing and ~~transactions~~attain ~~have~~profitable ~~been eliminated~~operations.

(43) ~~Summary~~ Basis for Preparation of ~~Significant~~the ~~Accounting~~Consolidated Financial ~~Policies~~Statements

~~The~~Management acknowledges its responsibility for the preparation of the accompanying ~~unaudited~~interim consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the ~~application~~results of ~~certain~~its operations for the interim period presented. These consolidated financial statements should be read in conjunction with the summary of significant accounting policies ~~as described~~and innotes ~~this~~to ~~note~~consolidated ~~and~~financial ~~elsewhere~~statements included in the ~~accompanying~~Company’s Form 10-K annual report for the year ended December 31, 2019. The consolidated balance sheet as of December 31, 2019 has been derived from the audited financial statements. ~~and~~The ~~notes~~results of the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2020.

~~Use~~The accompanying unaudited consolidated financial statements for China Carbon Graphite Group, Inc. and its subsidiaries and variable interest entity, have been prepared in accordance with accounting principles generally accepted in the United States of ~~estimates~~America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The ~~preparation~~ ofCompany ~~these~~maintains ~~financial~~its ~~statements~~books ~~in conformity with U.S. GAAP requires management to make estimates~~ and ~~assumptions that~~accounting ~~may~~records ~~affect~~in ~~the~~Renminbi ~~reported~~(“RMB”), ~~amounts~~but ofits ~~assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the~~ reporting ~~period.~~currency ~~Some~~is of the significant estimates include values and lives assigned to acquired property and equipment, reserves for customer returns and allowances, uncollectible accounts receivable, slow moving, obsolete and/or damaged inventoryU.S. ~~Actual results may differ from these estimates~~dollars.

~~Cash~~The financial statements have been prepared in order to present the financial position and ~~cash~~results ~~equivalents~~of operations of the Company and its subsidiaries whose financial condition consolidated with the Company pursuant to ASC Topic 810-10, Consolidation, in accordance with U.S. GAAP. All significant intercompany accounts and transactions have been eliminated.

The Company considers all highly liquid debt instruments purchased with maturity periods of six months or less to be cash equivalents. The carrying amounts reported in the accompanying balance sheet for cash and cash equivalents approximate their fair value. Substantially all of the Company’s cash is held in bank accounts in the PRC and is not protected by FDIC insurance or any other similar insurance. The Company’s bank account in the United States is protected by FDIC insurance.8

8(4) Summary of Significant Accounting Policies

~~Accounts~~The accompanying unaudited consolidated ~~receivable~~financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.

~~Trade receivables~~Use ~~are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when collection~~ of the full amount is no longer probable. Bad debts are written off as incurred. Accounts receivable are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary.estimates

~~Inventory~~The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reporting period. Some of the significant estimates include values and lives assigned to acquired property and equipment, reserves for customer returns and allowances, uncollectible accounts receivable, slow moving, obsolete and/or damaged inventory. Actual results may differ from these estimates.

~~Inventory is~~Cash ~~stated at the lower of cost or net realizable value. The cost of inventories comprises all costs of purchases,~~ and ~~other~~cash costs incurred in bringing the inventories to their present location and condition. Cost is determined using the weighted average method. Net realizable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to complete the sale. The Company periodically reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. Impairment of inventories is recorded in cost of goods sold.equivalents

~~For~~The Company considers all highly liquid ~~the~~debt ~~three~~instruments purchased with maturity periods of six months ~~ended~~or ~~March~~less ~~31,~~to ~~2020~~be cash equivalents. The carrying amounts reported in the accompanying balance sheet for cash and ~~2019,~~cash equivalents approximate their fair value. Substantially all of the Company’s cash ~~has~~is ~~not~~held ~~made~~in ~~provision~~bank ~~for~~accounts ~~inventory~~ in ~~regards~~the toPRC ~~slow~~and ~~moving~~is not protected by FDIC insurance or any other similar insurance. The Company’s ~~obsolete~~bank ~~items~~account in the United States is protected by FDIC insurance.

~~Lease~~Accounts receivable

~~The Company~~Trade ~~used~~receivables ~~comparative~~are ~~method~~recognized and ~~adopted~~carried at ~~ASU~~the ~~2018-20,~~original ~~Leases~~invoice ~~(Topic~~amount ~~842)~~less toallowance ~~recognize~~for ~~leases~~any ~~assets~~uncollectible ~~and~~amounts. ~~lease~~An ~~liabilities~~allowance ~~on the~~for ~~balance~~doubtful ~~sheet~~accounts ~~and~~is ~~disclosing~~made ~~key~~when ~~information~~collection of ~~about~~the ~~lease~~full ~~transactions~~amount is no longer probable. ~~All~~Bad ~~existing~~debts ~~leases~~are ~~since~~written ~~January~~off 1,as ~~2018~~incurred. Accounts receivable are ~~reported~~recorded at the invoiced ~~under~~amount ~~this~~and ~~rule~~do not bear interest. ~~After~~Management reviews the ~~adoption,~~adequacy ~~$38,567~~ of ~~operating~~the ~~lease~~allowance ~~right-of-use~~for ~~asset~~doubtful ~~and~~accounts ~~$38,567~~on ofan ~~operating~~ongoing ~~lease~~basis, ~~liabilities~~using ~~were~~historical ~~retroactively~~collection ~~reflected~~trends toand ~~December~~aging ~~31,~~of ~~2019 financial statements~~receivables. ~~After~~Management ~~the~~also ~~adoption,~~periodically ~~$28,701~~evaluates ofindividual ~~operating~~customer’s ~~lease~~financial ~~right-of-use~~condition, ~~asset~~credit history, and ~~$28,701~~the ofcurrent ~~operating~~economic ~~lease~~conditions ~~liabilities~~to ~~were~~make ~~retroactively~~adjustments ~~reflected~~in tothe ~~March~~allowance ~~31,~~when ~~2020~~it ~~financial~~is ~~statements~~considered necessary.

~~Property and equipment~~Inventory

~~Property and~~Inventory ~~equipment~~ is stated at the ~~historical~~lower of cost, or ~~less~~net ~~accumulated~~realizable ~~depreciation~~value. ~~Depreciation~~The oncost ~~property~~of inventories comprises all costs of purchases, and ~~equipment~~other iscosts ~~provided~~incurred in bringing the inventories to their present location and condition. Cost is determined using the ~~straight-line~~weighted average method. ~~over~~Net realizable value represents the estimated ~~useful~~selling ~~lives~~price in the ordinary course of business less the ~~assets~~estimated ~~for~~costs ~~both~~necessary ~~financial~~to complete the sale. The Company periodically reviews historical sales activity to determine excess, slow moving items and ~~income~~potentially ~~tax~~obsolete ~~reporting~~items ~~purposes~~and also evaluates asthe ~~follows:~~impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. Impairment of inventories is recorded in cost of goods sold.

Machinery and equipment			5 years
Motor vehicle			5 years

For the six months ended June 30, 2020 and 2019, the Company has not made provision for inventory in regards to slow moving or obsolete items.

9Lease

~~Expenditures for~~The ~~renewals~~Company used comparative method and adopted ~~betterments~~ASU ~~are~~2018-20, ~~capitalized~~Leases ~~while~~(Topic ~~repairs~~842) ~~and~~to ~~maintenance~~recognize ~~costs~~leases ~~are~~assets ~~normally~~and ~~charged~~lease toliabilities on the ~~statement~~balance ofsheet ~~operations~~and disclosing key ininformation ~~the~~about ~~year~~lease intransactions. ~~which~~All ~~they~~existing ~~are~~leases ~~incurred.~~since InJanuary ~~situations~~1, ~~where~~2018 itare ~~can~~reported beunder ~~clearly~~this ~~demonstrated~~rule. ~~that~~After the ~~expenditure~~adoption, $38,567 ~~has~~of ~~resulted~~operating ~~in an~~lease ~~increase~~right-of-use inasset ~~the~~and ~~future~~$38,567 ~~economic~~of ~~benefits~~operating ~~expected~~lease liabilities were retroactively reflected to beDecember 31, ~~obtained~~2019 financial ~~from~~statements. After the ~~use~~adoption, $19,287 of ~~the~~operating lease right-of-use asset, ~~the~~and ~~expenditure~~$19,287 isof ~~capitalized~~operating aslease anliabilities ~~additional~~were ~~cost~~retroactively ofreflected ~~the~~to ~~asset~~June 30, 2020 financial statements.

Upon sale or disposal of an asset, the historical cost and related accumulated depreciation or amortization of such asset were removed from their respective accounts and any gain or loss is recorded in the statements of income.9

~~The Company~~Property ~~reviews the carrying value of property, plant,~~ and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment was recorded in operating expenses during the three months ended March 31, 2020 and 2019.

~~Stock~~Property and equipment is stated at the historical cost, less accumulated depreciation. Depreciation on property and equipment is provided using the straight-~~based~~line method ~~compensation~~over the estimated useful lives of the assets for both financial and income tax reporting purposes as follows:

Stock-based compensation includes (i) common stock awards granted to employees and directors for services which are accounted for under FASB ASC 718, Compensation–Stock Compensation” and (ii) common stock awards granted to consultants which are accounted for under FASB ASC 505-50, Equity–Equity-Based Payments to Non-Employees.

Machinery and equipment			5 years
Motor vehicle			5 years

~~All grants~~Expenditures offor ~~common~~renewals ~~stock awards~~ and ~~stock~~betterments are ~~options~~capitalized towhile ~~employees~~repairs and ~~directors~~maintenance costs are ~~recognized~~normally incharged to the ~~financial~~statement ~~statements~~of ~~based~~operations ~~on their~~in ~~grant~~the ~~date~~year ~~fair~~in ~~values~~which they are incurred. ~~The~~In ~~Company~~situations ~~has~~where ~~elected~~it tocan ~~recognize~~be ~~compensation~~clearly ~~expense~~demonstrated ~~using~~that the ~~straight-line~~expenditure ~~method~~has ~~for~~resulted ~~all common~~in ~~stock~~an ~~awards~~increase ~~and~~in ~~stock~~the ~~options~~future economic ~~granted~~benefits ~~with~~expected ~~service~~to ~~conditions~~be ~~that~~obtained ~~have~~from athe ~~graded~~use ~~vesting~~of ~~schedule~~the asset, ~~with~~the aexpenditure ~~corresponding charge~~is tocapitalized as an additional ~~paid-in~~cost ~~capital~~of the asset.

~~Common stock~~Upon ~~awards~~sale ~~are~~or ~~granted~~disposal toof ~~directors~~an ~~for~~asset, ~~services~~the historical ~~provided.~~cost ~~The~~and ~~vested~~related ~~portions~~accumulated depreciation or amortization of ~~common~~such ~~stock~~asset ~~awards~~were ~~granted~~removed ~~but~~from ~~not~~their ~~yet~~respective ~~issued~~accounts ~~are~~and any gain or loss is recorded in ~~common~~the ~~stock~~statements toof ~~be issued~~income.

~~Common stock~~The ~~awards~~Company ~~issued~~reviews tothe ~~consultants~~carrying ~~represent~~value of ~~common~~property, ~~stock~~plant, ~~granted~~and toequipment ~~non-employees~~for inimpairment ~~exchange~~whenever ~~for~~events ~~services~~and atcircumstances ~~fair~~indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. ~~The~~In cases ~~measurement~~where ~~dates~~undiscounted ~~for~~expected ~~such~~future ~~awards~~cash flows are ~~set~~less atthan the ~~dates~~carrying ~~that~~value, ~~the~~an ~~contracts~~impairment ~~are~~loss ~~entered~~is ~~into~~recognized asequal to an amount by which the ~~awards~~carrying ~~are~~value ~~non-forfeitable~~exceeds ~~and vest~~the ~~immediately~~fair value of assets. The ~~measurement~~factors ~~date~~considered ~~fair~~by ~~value~~management isin ~~then~~performing ~~recognized~~this ~~over~~assessment include current operating results, trends and prospects, the ~~service~~manner ~~period~~in aswhich ifthe property is used, and the ~~Company~~effects ~~has~~of ~~paid~~obsolescence, demand, ~~cash~~competition and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment ~~such~~was ~~service~~recorded in operating expenses during the six months ended June 30, 2020 and 2019.

10Stock-based compensation

~~The Company~~Stock-based ~~estimates~~compensation ~~fair~~includes ~~value~~(i) of common stock awards ~~based~~granted onto ~~the~~employees ~~number~~and ofdirectors ~~shares~~for ~~granted~~services ~~and~~which ~~the~~are ~~quoted~~accounted ~~price~~for ofunder ~~the~~FASB ~~Company’s~~ASC 718, Compensation–Stock Compensation” and (ii) common stock onawards ~~the~~granted ~~date~~to ofconsultants ~~grant~~which are accounted for under FASB ASC 505-50, Equity–Equity-Based Payments to Non-Employees.

~~Foreign~~All grants of common stock awards and stock ~~currency~~options ~~translation~~to employees and directors are recognized in the financial statements based on their grant date fair values. The Company has elected to recognize compensation expense using the straight-line method for all common stock awards and stock options granted with service conditions that have a graded vesting schedule, with a corresponding charge to additional paid-in capital.

~~The~~Common ~~reporting~~stock ~~currency~~awards ~~of the Company is U.S. dollars. The Company uses RMB as its functional currency. The results of operations and cash flows~~ are ~~translated~~granted at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rates at the balance sheet dates, and equity is translated at the historical exchange rates. As a result, amounts related to ~~assets and liabilities reported on the statements of cash flows~~directors will not necessarily agree with changes in the corresponding accounts on the balance sheets. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statements of stockholders’ equity. Translation adjustments for ~~the~~services ~~three months ended March 31, 2020 and 2019 were $6,075 and $(8,524), respectively~~provided. The ~~cumulative~~vested ~~translation adjustment~~portions ~~and effect~~ of ~~exchange~~common ~~rate~~stock ~~changes~~awards ongranted ~~cash~~but ~~for~~not ~~the~~yet ~~three~~issued months ended March 31, 2020 and 2019 were $(332) and $217, respectively. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are ~~included~~recorded in ~~the~~common ~~results~~stock ofto ~~operations as incurred~~be issued.

~~Assets and~~Common ~~liabilities~~stock ~~were~~awards ~~translated~~issued atto ~~7.08~~consultants represent ~~RMB~~common ~~and~~stock ~~6.96~~granted ~~RMB~~ to ~~$1.00~~non-employees atin ~~March~~exchange ~~31,~~for ~~2020~~services ~~and~~at ~~December~~fair ~~31, 2019, respectively~~value. The ~~equity accounts~~measurement ~~were~~dates ~~stated~~for atsuch ~~their~~awards ~~historical~~are set ~~rates.~~at ~~The~~the ~~average~~dates ~~translation~~that ~~rates~~the ~~applied~~contracts toare ~~income~~entered ~~statements~~into ~~for~~as the ~~three~~awards ~~months ended~~are ~~March~~non-forfeitable ~~31, 2020~~ and ~~2019~~vest ~~were 6~~immediately.98 ~~RMB~~The ~~and~~measurement ~~6.74~~date fair ~~RMB~~value tois ~~$1.00,~~then ~~respectively.~~recognized ~~Cash~~over ~~flows are also translated at average translation rates for~~ the service period; ~~therefore,~~as ~~amounts~~if ~~reported on~~ the ~~statement~~Company ofhas paid cash ~~flows~~for ~~will~~such ~~not necessarily agree with changes in the corresponding balances on the balance sheet~~service.

~~Revenue~~The Company estimates fair value of common ~~recognition~~stock awards based on the number of shares granted and the quoted price of the Company’s common stock on the date of grant.

The Company derives revenues from distribution of graphite-based products. We recognize revenue in accordance with ASC 606, Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products. We enter into contracts that can include products, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Sales represent the invoiced value of goods, net of value added tax (“VAT”), if any, and are recognized upon delivery of goods and passage of title according to shipping terms.10

~~The Company~~Foreign iscurrency subject to VAT, which is levied on a majority of the products, at a rate ranging from 13% to 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.translation

11The reporting currency of the Company is U.S. dollars. The Company uses RMB as its functional currency. The results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rates at the balance sheet dates, and equity is translated at the historical exchange rates. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding accounts on the balance sheets. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statements of stockholders’ equity. Translation adjustments for the three months ended June 30, 2020 and 2019 were $(626) and $9,147, respectively. Translation adjustments for the six months ended June 30, 2020 and 2019 were $5,449 and $623, respectively. The cumulative translation adjustment and effect of exchange rate changes on cash for the six months ended June 30, 2020 and 2019 were $(67) and $(142), respectively. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

~~The Company~~Assets ~~recognizes~~and ~~revenue~~liabilities ~~upon~~were ~~transfer~~translated at of7.07 ~~control~~RMB ofand ~~promised~~6.96 ~~products~~RMB to ~~customers according to shipping terms~~$1. ~~The~~00 ~~Company does~~at ~~not~~June ~~provide~~30, ~~chargeback~~2020 orand ~~price~~December ~~protection~~31, ~~rights~~2019, ~~to the customers~~respectively. The ~~customer~~equity ~~only~~accounts ~~places~~were ~~purchase~~stated ~~orders~~at ~~with the Company once~~their ithistorical ~~has confirmed the sale with a third party because this is a specialized business, which dictates that the Company will not sell the products until the purchase order is received~~rates. The ~~Company~~average ~~allows~~translation ~~its~~rates ~~customers~~applied to ~~return~~income ~~products~~statements ~~only~~for ~~if its products are later determined by~~ the ~~Company~~six tomonths beended ~~defective.~~June ~~Based on the Company’s historical experience~~30, ~~product~~2020 ~~returns~~and ~~have~~2019 were ~~been~~7.03 ~~insignificant~~RMB ~~throughout~~and ~~all~~6.74 ofRMB ~~its~~to ~~product lines~~$1. ~~Therefore~~00, ~~the Company does not record an allowance for sales returns~~respectively. If ~~sales~~Cash ~~returns~~flows ~~occur, they~~ are ~~taken~~also ~~against~~translated ~~revenue~~at ~~when~~average ~~products~~translation ~~are~~rates ~~returned~~for ~~from~~the ~~customers.~~period; ~~Sales are presented net of any~~therefore, ~~discounts~~amounts ~~given~~reported toon ~~customers.~~the ~~Interest~~statement ~~income~~of iscash ~~recognized~~flows ~~when~~will ~~earned.~~not ~~The~~necessarily ~~Company~~agree ~~experienced~~with nochanges ~~returns~~in ~~for~~ the ~~three~~corresponding ~~months ended~~balances ~~March~~on ~~31,~~the ~~2020 and 2019~~balance sheet.

~~In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09,~~ Revenue ~~from Contracts with Customers (Topic 606), amending revenue~~ recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this ASU on January 1, 2018 for all revenue contracts with our customers using the modified retrospective approach.

~~There~~The Company derives revenues from distribution of graphite-based products. We recognize revenue in accordance with ASC 606, Revenue is norecognized ~~impact~~upon transfer of ~~applying~~control ~~this~~of promised ~~ASU~~products to customers in an amount that reflects the consideration we expect to receive in exchange for those products. We enter into contracts that can include products, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Sales represent the invoiced value of goods, net of value added tax (“VAT”), if any, and are recognized upon delivery of goods and passage of title according to shipping terms.

~~Cost~~The Company is subject to VAT, which is levied on a majority of ~~goods~~the ~~sold~~products, at a rate ranging from 13% to 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

~~Cost~~The Company recognizes revenue upon transfer of ~~goods~~control ~~sold~~of ~~consists~~promised ~~primarily~~products ofto customers according to shipping terms. The Company does not provide chargeback or price protection rights to the customers. The customer only places purchase ~~costs~~orders with the Company once it has confirmed the sale with a third party because this is a specialized business, which dictates that the Company will not sell the products until the purchase order is received. The Company allows its customers to return products only if its products are later determined by the Company to be defective. Based on the Company’s historical experience, product returns have been insignificant throughout all of its product lines. Therefore, the Company does not record an allowance for sales returns. If sales returns occur, they are taken against revenue when products are returned from customers. Sales are presented net of any discounts given to customers. Interest income is recognized when earned. The Company experienced no returns for the six months ended June 30, 2020 and 2019.

~~Shipping~~In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), amending revenue recognition guidance and ~~handling~~requiring ~~costs~~more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this ASU on January 1, 2018 for all revenue contracts with our customers using the modified retrospective approach.

~~The Company~~There ~~follows~~is ~~ASC~~no ~~606,~~impact asof ~~amended~~applying ~~and~~this ~~clarified by~~ ASU ~~2016-10, to record shipping and handling cost~~. The Company classifies shipping and handling costs paid on behalf of its customers in selling expenses. For the three months ended March 31, 2020 and 2019, shipping and handling costs were $20,008 and $240, respectively.

~~Taxation~~Cost of goods sold

~~Taxation on~~Cost ~~profits~~of ~~earned~~goods insold ~~the~~consists ~~PRC~~primarily ~~has been calculated based on the estimated assessable profits for the year at the rates~~ of ~~taxation~~ ~~prevailing in~~ the ~~PRC~~purchase ~~after~~costs ~~taking into account the benefits from any special tax credits or “tax holidays” allowed in the county~~ of ~~operations~~products.

The Company does not accrue U.S. income tax since it has no operations in the United States. Its operating subsidiaries are organized and located in the PRC and do not conduct any business in the United States.11

12Shipping and handling costs

~~In 2006,~~The ~~the~~Company ~~Financial~~follows ~~Accounting Standards Board (“FASB”) issued~~ ASC, ~~740 Income Tax~~606, ~~formerly known~~ as ~~FIN 48, which~~amended ~~clarifies~~and ~~the~~clarified ~~application~~by ofASU ~~SFAS~~2016-10, ~~109~~to byrecord ~~defining~~shipping aand ~~criterion~~handling ~~that~~cost. anThe ~~individual~~Company ~~income~~classifies ~~tax~~shipping ~~position~~and ~~must~~handling ~~meet~~costs ~~for~~paid ~~any part of~~on ~~the~~behalf ~~benefit~~ of ~~that~~its ~~position~~customers ~~to be recognized~~ in anselling ~~enterprise’s~~expenses. ~~financial~~For ~~statements~~the ~~and~~three ~~provides~~months ~~guidance~~ended onJune ~~measurement~~30, ~~recognition,~~ ~~classification,~~2020 ~~accounting~~and ~~for~~2019, ~~interest~~shipping and ~~penalties,~~handling ~~accounting~~costs inwere $13,088 ~~interim~~and ~~periods~~$718, ~~disclosure~~respectively. ~~and~~For ~~transition. In~~the ~~accordance~~six ~~with~~months ~~the~~ended ~~transition~~June ~~provisions~~30, ~~the~~2020 ~~Company~~and ~~adopted~~2019, ~~FIN~~shipping 48and ~~effective~~handling ~~January~~costs 1were $33,096 ~~2007~~and $958, respectively.

The Company recognizes that virtually all tax positions in the PRC are not free from some degree of uncertainty due to tax law and policy changes by the state. The Company cannot reasonably quantify political risk factors and thus must depend on guidance issued by current government officials.Taxation

~~Based~~ Taxation on ~~all~~profits ~~known~~earned ~~facts~~in ~~and circumstances and current tax law,~~ the ~~Company~~PRC ~~believes that the total amount of unrecognized tax benefits~~has asbeen ofcalculated ~~March~~based ~~31,~~on ~~2020~~the isestimated ~~not~~assessable ~~material~~profits tofor ~~its~~the ~~results~~year ofat ~~operations, financial condition or cash flows. The Company also believes that~~ the ~~total~~rates ~~amount~~ of ~~unrecognized~~taxation ~~tax~~prevailing ~~benefits~~in asthe ofPRC ~~March~~after ~~31, 2020, if recognized, would not have a material effect on its~~taking ~~effective~~into ~~tax~~account ~~rate.~~the ~~The~~benefits ~~Company~~from ~~further~~any ~~believes~~special ~~that there are no~~ tax ~~positions~~credits ~~for~~or ~~which it is reasonably possible, based on current Chinese~~ “tax ~~law~~holidays” ~~and~~allowed ~~policy, that the unrecognized tax benefits will significantly increase or decrease over the next twelve months producing, individually or~~ in the ~~aggregate,~~county ~~a material effect on the Company’s results~~ of operations~~, financial condition or cash flows~~.

~~Enterprise income~~The Company does not accrue U.S. income tax since it has no operations in the United States. Its operating subsidiaries are organized and located in the PRC and do not conduct any business in the United States.

~~The~~In 2006, the Financial Accounting Standards ~~enterprise~~Board (“FASB”) issued ASC, 740 Income Tax, formerly known as FIN 48, which clarifies the application of SFAS 109 by defining a criterion that an individual income tax isposition ~~calculated~~must onmeet ~~the~~for ~~basis~~any part of the ~~statutory~~benefit ~~profit~~of asthat ~~defined~~position to be recognized in ~~the~~an ~~PRC~~enterprise’s ~~tax~~financial ~~laws.~~statements ~~This~~and ~~statutory~~provides ~~profit~~guidance on measurement, recognition, classification, accounting for isinterest ~~computed~~and ~~differently~~penalties, ~~than~~accounting in interim periods, disclosure and transition. In accordance with the transition provisions, the Company’s ~~net~~adopted ~~income~~FIN ~~under~~48 ~~U.S.~~effective ~~GAAP~~January 1, 2007.

~~Deferred tax~~The ~~assets~~Company ~~and~~recognizes ~~liabilities~~that ~~are~~virtually ~~recognized for the future tax consequences attributable to differences between the financial statement~~all ~~carrying amounts of existing assets and liabilities and their respective~~ tax ~~basis.~~positions ~~Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income~~ in the ~~years~~PRC ~~in which those temporary differences~~ are ~~expected~~not tofree befrom ~~recovered~~some ordegree ~~settled.~~of ~~The~~uncertainty ~~effect~~due ofto ~~deferred~~ tax ~~assets~~law and ~~liabilities~~policy ~~from a~~changes ~~change~~by ~~in tax rates is recognized in income in~~ the ~~period that includes the enactment date~~state. ~~Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.~~ The ~~components of the deferred tax assets~~Company ~~and~~cannot ~~liabilities~~reasonably ~~are~~quantify ~~individually~~political ~~classified~~risk asfactors ~~current~~ and ~~non-current~~thus ~~based~~must depend on ~~their~~guidance ~~characteristics.~~issued ~~Deferred tax assets are reduced~~ by acurrent ~~valuation~~government ~~allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized~~officials.

~~Value~~Based on all known facts and circumstances ~~added~~and current tax law, the Company believes that the total amount of unrecognized tax benefits as of June 30, 2020 is not material to its results of operations, financial condition or cash flows. The Company also believes that the total amount of unrecognized tax benefits as of June 30, 2020, if recognized, would not have a material effect on its effective tax rate. The Company further believes that there are no tax positions for which it is reasonably possible, based on current Chinese tax law and policy, that the unrecognized tax benefits will significantly increase or decrease over the next twelve months producing, individually or in the aggregate, a material effect on the Company’s results of operations, financial condition or cash flows.

~~The Provisional~~Enterprise ~~Regulations~~income of the PRC Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax ~~(“VAT”) is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.~~

13The enterprise income tax is calculated on the basis of the statutory profit as defined in the PRC tax laws. This statutory profit is computed differently than the Company’s net income under U.S. GAAP.

~~VAT~~Deferred tax assets and liabilities are ~~payable~~recognized infor the ~~PRC~~future istax ~~charged~~consequences onattributable anto ~~aggregated~~differences ~~basis~~between atthe afinancial ~~rate~~statement ofcarrying ~~13%~~amounts orof ~~17%~~existing assets ~~(depending~~and onliabilities ~~the~~and ~~type~~their ofrespective ~~goods~~tax ~~involved)~~basis. onDeferred ~~the full~~tax ~~price~~assets, ~~collected~~including ~~for~~tax ~~the~~loss ~~goods~~and ~~sold~~credit orcarry forwards, inand ~~the~~liabilities are ~~case~~measured ofusing ~~taxable~~enacted ~~services~~tax ~~provided,~~rates atexpected ato ~~rate~~apply ofto ~~17%~~taxable onincome in the ~~charges~~years ~~for~~in ~~the~~which those temporary differences are ~~taxable~~expected ~~services~~to ~~provided,~~be ~~but~~recovered ~~excluding,~~or insettled. ~~respect~~The effect of ~~both~~deferred ~~goods~~tax assets and ~~services,~~liabilities ~~any~~from ~~amount~~a ~~paid~~change in ~~respect~~tax ofrates ~~VAT~~is ~~included~~recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the ~~price~~deferred ortax ~~charges,~~assets and ~~less~~deferred ~~any~~tax ~~deductible~~liabilities. ~~value~~The ~~added~~components of the deferred tax ~~already~~assets ~~paid~~and byliabilities ~~the~~are ~~taxpayer~~individually classified as current and non-current based on ~~purchases~~their ofcharacteristics. ~~goods~~Deferred ~~and~~tax ~~services~~assets are reduced by a valuation allowance when, in the ~~same~~opinion ~~financial~~of ~~year~~management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

~~Contingent liabilities and contingent assets~~12

~~A contingent~~Value ~~liability~~added is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. It can also be a present obligation arising from past events that is not recognized because it is not probable that the Company will incur a liability or obligations as a result. A contingent liability, which might occur but is not probable, is not recorded but is disclosed in the notes to the financial statements. The Company will recognize a liability or obligation when it is probable that the Company will incur such liability or obligation.tax

~~A contingent~~The ~~asset~~Provisional isRegulations anof ~~asset,~~the ~~which~~PRC Concerning ~~could~~Value ~~possibly~~Added ~~arise~~Tax ~~from~~promulgated ~~past events and whose existence will be confirmed only~~ by the ~~occurrence or~~State ~~non-occurrence~~Council ofcame ~~one~~into oreffect ~~more~~on ~~uncertain~~January ~~events~~1, ~~not~~1994. ~~wholly~~Under ~~within~~these regulations and the Implementing ~~control~~Rules of the ~~Company.~~Provisional ~~Contingent~~Regulations ~~assets~~of ~~are~~the ~~not~~PRC ~~recorded but~~Concerning ~~are~~Value ~~disclosed~~Added inTax, ~~the~~value ~~notes~~added totax ~~the~~(“VAT”) ~~financial~~is imposed ~~statements~~on ~~when~~goods itsold isin ~~likely~~or ~~that~~imported into the ~~Company~~PRC ~~will~~and ~~recognize~~on anprocessing, ~~economic~~repair ~~benefit. When~~and ~~the~~replacement ~~benefit~~services isprovided ~~virtually~~within ~~certain,~~ the ~~asset is recognized~~PRC.

~~Fair~~VAT payable in the PRC is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of VAT included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial ~~instruments~~year.

~~The Company~~Contingent ~~has~~liabilities ~~adopted ASC Topic 820, Fair Value Measurement~~ and ~~Disclosure, which defines fair value, establishes a framework for~~contingent measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:assets

●A ~~Level~~contingent 1liability ~~inputs~~is toa possible obligation that arises from past events and whose existence will only be confirmed by the ~~valuation~~occurrence ~~methodology~~or ~~are~~non-occurrence ~~quoted~~of ~~prices~~one ~~(unadjusted)~~or ~~for~~more ~~identical~~uncertain future ~~assets~~events not wholly within the control of the Company. It can also be a present obligation arising from past events that is not recognized because it is not probable that the Company will incur a liability or ~~liabilities~~obligations as a result. A contingent liability, which might occur but is not probable, is not recorded but is disclosed in ~~active~~the ~~markets~~notes to the financial statements. The Company will recognize a liability or obligation when it is probable that the Company will incur such liability or obligation.

●A ~~Level~~contingent 2asset ~~inputs~~is toan asset, which could possibly arise from past events and whose existence will be confirmed only by the ~~valuation~~occurrence ~~methodology~~or ~~include~~non-occurrence ~~quoted~~of ~~prices~~one ~~for~~or ~~similar~~more ~~assets~~uncertain events ~~and~~not ~~liabilities~~wholly inwithin ~~active~~the ~~markets,~~control ~~and~~of ~~inputs~~the ~~that~~Company. Contingent assets are ~~observable~~not ~~for~~recorded but are disclosed in the ~~assets~~notes orto ~~liability,~~the ~~either~~financial statements ~~directly~~when orit ~~indirectly,~~is ~~for~~likely ~~substantially~~that the ~~full~~Company ~~term~~will ofrecognize an economic benefit. When the ~~financial~~benefit ~~instruments~~is virtually certain, the asset is recognized.

●Fair ~~Level~~value 3of ~~inputs~~financial ~~to the valuation methodology are unobservable and significant to the fair value.~~instruments

14The Company has adopted ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

~~The carrying~~● ~~amount~~Level of1 ~~other~~inputs ~~receivables, advance~~ to ~~vendors,~~the ~~advances~~valuation ~~from~~methodology ~~customers, other payables, accrued liabilities~~ are ~~reasonable estimates~~quoted ofprices ~~their~~(unadjusted) ~~fair~~for ~~value~~identical ~~because~~assets ofor ~~the~~liabilities ~~short-term~~in ~~nature~~active ~~of these items~~markets.

~~Loss per~~● ~~share~~Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

~~Basic loss~~● ~~per~~Level ~~share~~3 isinputs ~~computed by dividing net income available~~ to ~~common shareholders by~~ the ~~weighted~~valuation ~~average~~methodology ~~number~~are ofunobservable shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock, common stock equivalents and ~~potentially~~significant dilutive securities outstanding during each period. Potentially dilutive shares of common stock consist of the common stock issuable upon the conversion of convertible debt, preferred stock and warrants. The Company uses if-converted method to ~~calculate~~ the ~~dilutive~~fair ~~preferred stock and treasury stock method to calculate the dilutive shares issuable upon exercise of warrants~~value.

The carrying amount of other receivables, ~~following~~advance ~~table~~to ~~sets~~vendors, ~~forth~~advances ~~the~~from ~~computation~~customers, ofother ~~the~~payables, ~~number~~accrued ofliabilities ~~net~~are ~~loss~~reasonable ~~per~~estimates ~~share~~of ~~for~~their ~~the~~fair ~~three~~value ~~months~~because of ~~ended~~the ~~March~~short-term ~~31,~~nature ~~2020~~of ~~and~~these ~~2019:~~items.

	March 31, 2020			March 31, 2019
Weighted average shares of common stock outstanding (basic)		27,644,764			27,369,013
Shares issuable upon conversion of Series B Preferred Stock		-			-
Weighted average shares of common stock outstanding (diluted)		27,644,764			27,369,013
Net loss available to common shareholders	$	(38,815	)	$	(94,754	)
Net loss per shares of common stock (basic)	$	(0.00	)	$	(0.00	)
Net loss per shares of common stock (diluted)	$	(0.00	)	$	(0.00	)

Loss per share

~~Accumulated~~Basic loss per share is computed by dividing ~~other~~net ~~comprehensive~~income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive shares of common stock consist of the common stock issuable upon the conversion of convertible debt, preferred stock and warrants. The Company uses if-converted method to calculate the dilutive preferred stock and treasury stock method to calculate the dilutive shares issuable upon exercise of warrants.

The Company follows ASC 220, Comprehensive Income, formerly known as SFAS No. 130, Reporting Comprehensive Income, to recognize the elements of comprehensive income. 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. For the Company, comprehensive income for the three months ended March 31, 2020 and 2019 included net income and foreign currency translation adjustments.13

~~Related~~The following table sets forth the computation ~~parties~~of the number of net loss per share for the six months ended June 30, 2020 and 2019:

Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Transactions with related parties are disclosed in the financial statements.

	June 30, 2020			June 30, 2019
Weighted average shares of common stock outstanding (basic)		27,693,555			27,436,048
Shares issuable upon conversion of Series B Preferred Stock		-			-
Weighted average shares of common stock outstanding (diluted)		27,693,555			27,436,048
Net loss available to common shareholders	$	(116,105	)	$	(191,078	)
Net loss per shares of common stock (basic)	$	(0.00	)	$	(0.01	)
Net loss per shares of common stock (diluted)	$	(0.00	)	$	(0.01	)

15The following table sets forth the computation of the number of net loss per share for the three months ended June 30, 2020 and 2019:

Recent accounting pronouncements

	June 30, 2020			June 30, 2019
Weighted average shares of common stock outstanding (basic)		27,742,346			27,502,346
Shares issuable upon conversion of Series B Preferred Stock		-			-
Weighted average shares of common stock outstanding (diluted)		27,742,346			27,502,346
Net loss available to common shareholders	$	(77,290	)	$	(96,324	)
Net loss per shares of common stock (basic)	$	(0.00	)	$	(0.00	)
Net loss per shares of common stock (diluted)	$	(0.00	)	$	(0.00	)

~~The Company~~Accumulated ~~has~~other ~~reviewed~~comprehensive all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.income

~~In February~~The ~~2016~~Company follows ASC 220, ~~the~~Comprehensive Income, ~~FASB~~formerly ~~issued~~known ~~ASU~~as SFAS No. ~~2016-02~~130, ~~“Leases~~Reporting ~~(Topic~~Comprehensive ~~842)”~~Income, to ~~increase~~recognize the ~~transparency~~elements ~~and~~of ~~comparability about~~comprehensive ~~leases among entities~~income. ~~The~~Comprehensive income ~~new~~is ~~guidance~~comprised ~~requires~~of ~~lessees~~net toincome ~~recognize a lease liability~~ and aall ~~corresponding~~changes ~~lease~~to ~~asset for~~the ~~virtually~~statements ~~all~~of ~~lease~~stockholders’ ~~contracts.~~equity, Itexcept ~~also~~those ~~requires~~due ~~additional~~to ~~disclosures~~investments by ~~about~~stockholders, ~~leasing~~changes ~~arrangements.~~in ~~ASU 2016~~paid-02in iscapital ~~effective for interim~~ and ~~annual~~distributions ~~periods~~to ~~beginning~~stockholders. ~~after~~For ~~December~~the 15Company, ~~2018,~~comprehensive ~~and~~income ~~requires~~for athe ~~modified retrospective approach to adoption.~~six ~~The~~months ~~Company~~ended ~~adopted~~June ~~the policy on January 1~~30, ~~2019~~2020 and ~~the~~2019 ~~impact~~included ofnet ~~the~~income ~~adoption~~and offoreign ~~this~~currency ~~guidance~~translation ~~is listed in Note 15~~adjustments.

~~In October~~Related 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory”, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for the Company in its first quarter of 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.parties

~~Management~~Parties are considered to be related to ~~does~~the ~~not~~Company ~~believe~~if the parties that, ~~any~~directly ~~recently~~or ~~issued~~indirectly, ~~but~~through ~~not~~one ~~yet~~or ~~effective~~more ~~accounting~~intermediaries, ~~pronouncements~~control, ~~when~~are ~~adopted~~controlled by, ~~will~~or ~~have~~are under acommon ~~material~~control with the Company. Related parties also include principal owners of the Company, its management, members of ~~effect~~the onimmediate families of principal owners of the ~~accompanying~~Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Transactions with related parties are disclosed in the financial statements.

~~(5) Concentration of Business and Credit Risk~~14

~~Most of~~Recent ~~the~~accounting Company’s bank accounts are in banks located in the PRC and are not covered by any type of protection similar to that provided by the Federal Deposit Insurance Corporation (“FDIC”) on funds held in U.S. banks. The Company’s bank account in the United States is covered by FDIC insurance.pronouncements

~~Because the~~The Company’s ~~operations~~has ~~are~~reviewed ~~located~~all inrecently ~~the~~issued, but ~~PRC~~not yet effective, ~~this~~accounting ~~may~~pronouncements ~~give~~and ~~rise~~does tonot ~~significant~~believe ~~foreign~~the ~~currency~~future ~~risks~~adoption ~~due~~of toany ~~fluctuations~~such pronouncements will have ina ~~and~~material ~~the~~impact ~~volatility~~on ofits ~~foreign~~financial ~~exchange~~condition ~~rates~~or ~~between~~the ~~U.S.~~results ~~dollars~~of ~~and~~its ~~RMB~~operations.

~~Financial instruments~~In ~~that~~February ~~potentially~~2016, ~~subject~~ the ~~Company~~FASB toissued ~~concentration~~ASU No. of2016-02, ~~credit~~“Leases ~~risk~~(Topic ~~consist~~842)”, ~~principally~~to ofincrease ~~cash,~~the ~~trade~~transparency ~~accounts receivables~~ and ~~inventories,~~comparability ~~the~~about ~~balances~~leases ofamong ~~which~~entities. ~~are~~The new ~~stated~~guidance onrequires ~~the~~lessees ~~balance~~to ~~sheet.~~recognize ~~The~~a ~~Company~~lease ~~places~~liability ~~its~~and ~~cash~~a incorresponding ~~banks~~lease ~~located~~asset infor ~~China~~virtually all lease contracts. ~~Concentration~~It ofalso ~~credit~~requires ~~risk~~additional ~~with~~disclosures ~~respect~~about toleasing ~~trade~~arrangements. ~~accounts~~ASU ~~receivables~~2016-02 is ~~limited~~effective ~~due~~for tointerim ~~the~~and ~~diversity~~annual ofperiods ~~the Company’s~~beginning ~~customers~~after ~~who~~December ~~are~~15, ~~located~~2018, inand ~~different~~requires ~~regions~~a ofmodified ~~China~~retrospective approach to adoption. The Company ~~does~~adopted ~~not~~the ~~require~~policy ~~collateral~~on orJanuary 1, ~~other~~2019 ~~security~~and tothe ~~support financial~~impact ~~instruments~~of ~~subject~~the toadoption ~~credit~~of ~~risk~~this guidance is listed in Note 15.

16Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

~~Sales to~~(5) ~~certain~~Concentration ~~customers generated over 10%~~ of ~~the~~Business ~~Company’s~~and ~~total net sales. Sales to one Company for the three months ended~~Credit ~~March 31, 2020 were approximately 65% of the Company’s net sales. Sales to another Company for the three months ended March 31, 2020 were approximately 28% of the Company’s net sales.~~Risk

~~Sales to~~Most ~~certain customers generated over 10%~~ of the Company’s ~~total~~bank ~~net~~accounts are ~~sales.~~in ~~Sales~~banks tolocated ~~one~~in ~~Company for~~ the ~~three~~PRC ~~months~~and ~~ended March~~are ~~31,~~not ~~2019~~covered ~~were~~by ~~approximately~~any ~~61%~~type of ~~the~~protection ~~Company’s~~similar ~~net sales. Sales~~ to ~~other~~that ~~Company~~provided ~~for~~by the ~~three~~Federal ~~months~~Deposit ~~ended March~~Insurance ~~31,~~Corporation ~~2019~~(“FDIC”) ~~were~~on ~~approximately~~funds ~~13%~~held ofin ~~the~~U.S. banks. The Company’s ~~net~~bank ~~sales.~~account ~~Sales~~in ~~to another Company for~~ the ~~three~~United ~~months~~States ~~ended~~is ~~March 31,~~covered ~~2019~~by ~~were~~FDIC ~~approximately 11% of the Company’s net sales~~insurance.

~~For~~ Because the ~~three~~Company’s ~~months~~operations are ~~ended~~located ~~March~~in ~~31,~~the ~~2020~~PRC, ~~two~~ ~~suppliers~~this ~~accounted~~may ~~for~~give ~~approximately~~rise ~~92%~~to significant foreign currency risks due to fluctuations in and the volatility of ~~total~~foreign exchange ~~purchases~~rates between U.S. dollars and RMB.

~~For~~Financial instruments that potentially subject the ~~three~~Company ~~months~~to ~~ended~~concentration ~~March~~of 31credit risk consist principally of cash, ~~2019~~trade accounts receivables and inventories, ~~three~~the balances ~~suppliers~~of ~~accounted~~which ~~for~~are ~~approximately~~stated ~~90%~~on the balance sheet. The Company places its cash in banks located in China. Concentration of ~~total~~credit risk ~~purchases~~with respect to trade accounts receivables is limited due to the diversity of the Company’s customers who are located in different regions of China. The Company does not require collateral or other security to support financial instruments subject to credit risk.

~~(6)~~Sales to certain customers generated over ~~Accounts~~10% ~~Receivable~~of the Company’s total net sales. Sales to one Company for the six months ended June 30, 2020 were approximately 60% of the Company’s net sales. Sales to other Company for the six months ended June 30, 2020 were approximately 14% of the Company’s net sales. Sales to another Company for the six months ended June 30, 2020 were approximately 11% of the Company’s net sales.

~~The Company~~Sales ~~establishes~~to ancertain ~~individualized~~customers ~~credit~~generated ~~and~~over 10% ~~collection~~of ~~policy~~the ~~based on each individual customer~~Company’s ~~credit~~total ~~history.~~net ~~The Company does not have a uniform policy that applies equally to all customers~~sales. ~~The~~ ~~collection~~Sales ~~period usually ranges from three months~~ to ~~twelve~~one ~~months. The~~ Company ~~grants~~for ~~extended payment terms only when~~ the ~~Company~~six ~~believes~~months ~~that~~ended ~~the~~June ~~payment~~30, ~~will~~2019 bewere ~~collectible at~~approximately ~~the end~~ 34% of the ~~term. The~~ Company’s ~~grants~~net ~~extended~~sales. ~~payment~~Sales ~~terms~~ to ~~customers~~other ifCompany ~~based~~for on the ~~following~~six ~~factors:~~months ~~(a)~~ended ~~whether or~~June ~~not the Company views a real need~~30, ~~from~~2019 ~~the~~were ~~customer’s~~approximately ~~perspective,~~22% ~~for~~of the ~~extension and (b) how critical the~~ Company’s ~~relationship~~net ~~with the customer and is the customer the Company’s long-term business~~sales. ~~The~~Sales ~~Company~~to ~~grants~~another ~~extended payment terms only when the~~ Company ~~believes~~for ~~that~~ the ~~payment~~six ~~will~~months beended ~~collectible~~June ~~at the end of the term. This meets the criteria of revenue recognition under U.S. GAAP~~30, ~~which~~2019 ~~requires~~were ~~that~~approximately ~~collection~~12% of the ~~resulting~~Company’s ~~receivable~~net ~~be reasonably assured~~sales.

~~As of~~For ~~March~~the ~~31,~~six ~~2020~~months ~~and~~ended ~~December~~June 3130, ~~2019~~2020, three suppliers ~~accounts~~accounted ~~receivable~~for ~~consisted~~approximately 99% of ~~the~~total ~~following:~~purchases.

	March 31, 2020		December 31, 2019
Amount outstanding	$	13,279	$	3,781
Less: Allowance for doubtful accounts		-		-
Net amount	$	13,279	$	3,781

For the six months ended June 30, 2019, three suppliers accounted for approximately 90% of total purchases.

1715

(76) ~~Inventories~~ Accounts Receivable

AsThe Company establishes an individualized credit and collection policy based on each individual customer’s credit history. The Company does not have a uniform policy that applies equally to all customers. The collection period usually ranges from three months to twelve months. The Company grants extended payment terms only when the Company believes that the payment will be collectible at the end of ~~March~~the 31term. The Company grants extended payment terms to customers if based on the following factors: (a) whether or not the Company views a real need, from ~~2020~~the customer’s perspective, for the extension and ~~December~~(b) ~~31,~~how ~~2019~~critical the Company’s relationship with the customer and is the customer the Company’s long-term business. The Company grants extended payment terms only when the Company believes that the payment will be collectible at the end of the term. This meets the criteria of revenue recognition under U.S. GAAP, ~~inventories~~which requires ~~consisted~~that collection of the ~~following:~~resulting receivable be reasonably assured.

	March 31, 2020		December 31, 2019
Inventory	$	5,566	$	17,583
Reserve for slow moving and obsolete inventory		-		-
Inventory, net	$	5,566	$	17,583

As of June 30, 2020 and December 31, 2019, accounts receivable consisted of the following:

For the three months ended March 31, 2020 and 2019, the Company has not made provision for inventory in regards to slow moving or obsolete items. As of March 31, 2020 and December 31, 2019, the Company did not record any provision for inventory in regards to slow moving or obsolete items.

	June 30, 2020		December 31, 2019
Amount outstanding	$	3,457	$	3,781
Less: Allowance for doubtful accounts		-		-
Net amount	$	3,457	$	3,781

(87) ~~Prepaid~~ ~~Expense~~Inventories

~~Prepaid expense~~As ~~amounted $18,747 and $19,067 as~~ of ~~March~~June 3130, 2020 and December 31, 2019, inventories ~~respectively.~~consisted ~~Prepaid~~of ~~expenses~~the ~~are mainly prepayment for fixed assets.~~following:

(9) Other Receivables

	June 30, 2020		December 31, 2019
Inventory	$	18,110	$	17,583
Reserve for slow moving and obsolete inventory		-		-
Inventory, net	$	18,110	$	17,583

~~Other receivables~~For ~~amounted~~the ~~$33~~six months ended June 30,~~018~~ 2020 and ~~$30~~2019,~~709~~ asthe Company has not made provision for inventory in regards to slow moving or obsolete items. As of ~~March~~June 3130, 2020 and December 31, 2019, ~~respectively.~~the ~~Other~~Company ~~receivables~~did ~~are~~not ~~mainly export~~record ~~tax~~any ~~rebates~~provision for inventory in regards to slow moving or obsolete items.

(108) ~~Property~~ ~~and~~Prepaid ~~Equipment, net~~Expense

AsPrepaid expense amounted $18,789 and $19,067 as of ~~March~~June 3130, 2020 and December 31, 2019, ~~property,~~respectively. ~~plant~~Prepaid ~~and~~expenses ~~equipment~~are ~~consisted~~mainly ofprepayment ~~the~~for ~~following:~~fixed assets.

	March 31, 2020			December 31, 2019
Machinery and equipment	$	41,008		$	41,708
Office equipment		10,778			10,963
Motor vehicles		39,452			40,127
Total		91,238			92,798
Less: accumulated depreciation		(57,713	)		(56,523	)
Plant and Equipment, net	$	33,525		$	36,275

(9) Other Receivables

~~For the~~Other ~~three~~receivables ~~months~~amounted ~~ended~~$24,766 ~~March~~and $30,709 31as of June 30, 2020 and December 31, 2019, ~~depreciation~~respectively. ~~expenses~~Other ~~amounted~~receivables toare ~~$2,171~~mainly ~~and~~export ~~$2,048,~~tax ~~respectively~~rebates.

~~The Company purchased approximately $0 and $2,264 property and equipment during the three months ended March 31, 2020 and 2019, respectively.~~16

~~The Company~~(10) ~~reviews~~Property ~~the carrying value of property~~ and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying valueEquipment, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment was recorded in operating expenses during the three months ended March 31, 2020 and 2019.net

18As of June 30, 2020 and December 31, 2019, property, plant and equipment consisted of the following:

(11) Stockholders’ deficit

	June 30, 2020			December 31, 2019
Machinery and equipment	$	42,740		$	41,708
Office equipment		10,802			10,963
Motor vehicles		39,540			40,127
Total		93,082			92,798
Less: accumulated depreciation		(60,021	)		(56,523	)
Plant and Equipment, net	$	33,061		$	36,275

~~Restated~~For the three months ended June 30, 2020 ~~Articles~~and of2019, ~~Incorporation~~depreciation expenses amounted to $2,174 and $2,075, respectively. For the six months ended June 30, 2020 and 2019, depreciation expenses amounted to $4,345 and $4,123, respectively.

~~On January~~The ~~22, 2008, the~~ Company ~~changed~~purchased ~~its~~approximately ~~authorized capital stock to 120~~$1,~~000,000 shares of capital stock, of which 20,000,000~~649 ~~shares~~and ~~are shares of preferred stock, par value~~ $~~0.001 per share~~2,769 property and ~~100,000,000~~equipment ~~shares~~during ~~are shares of common stock, par value $0.001 per share. The restated articles of incorporation authorizes~~ the ~~board~~six ofmonths ~~directors~~ended ofJune ~~the Company to issue one or more series of preferred stock and to designate the rights~~30, ~~preferences,~~2020 ~~privileges~~ and ~~limitation of the holders of such preferred stock. The board of directors has authorized the issuance of two series of preferred stock~~2019, ~~Series A Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Convertible Preferred Stock (“Series B Preferred Stock”)~~respectively.

~~Issuance~~The Company reviews the carrying value of ~~Common~~property ~~Stock~~and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment was recorded in operating expenses during the six months ended June 30, 2020 and 2019.

~~The Company~~(11) ~~has~~Stockholders’ ~~total outstanding shares of common stock of 27,742,346 and 27,502,346 as of March 31, 2020 and December 31, 2019, respectively.~~deficit

~~(a) Stock Issuances~~Restated ~~For~~Articles ~~Compensation~~of Incorporation

On ~~February~~ 6January 22, ~~2020~~2008, the Company ~~issued an~~changed its ~~aggregate~~authorized capital stock to 120,000,000 shares of ~~200~~capital stock, of which 20,000,000 shares are shares of preferred stock, par value $0.001 per share, and 100,000,000 shares are shares of common stock, topar ~~four~~value $0.001 per share. The restated articles of incorporation authorizes the board of directors asof ~~compensation~~the ~~for~~Company to issue one or more series of preferred stock and to designate ~~services~~the ~~provided~~rights, inpreferences, ~~2019~~privileges and limitation of the holders of such preferred stock. The board of directors has authorized the issuance of ~~these~~two ~~shares~~series ~~was~~of ~~recorded~~preferred atstock, ~~grant~~Series ~~date~~A ~~fair~~Convertible ~~market~~Preferred ~~value~~Stock at(“Series ~~$0.02~~A ~~per~~Preferred ~~share~~Stock”) and Series B Convertible Preferred Stock (“Series B Preferred Stock”).

~~On February 6, 2020, the Company issued 40,000 shares of common stock to the CFO. The issuance of these shares was recorded at grant date fair market value of $0.02 per share.~~17

~~(b) Shares Held~~Issuance inof ~~Escrow~~Common Stock

~~In a~~The ~~private placement that closed on December 22, 2009 and January 13, 2010, the~~ Company ~~sold~~has antotal ~~aggregate~~outstanding ~~of 2,480,500~~ shares of ~~Series B Preferred Stock and five-year warrants to purchase 992,000 shares~~ of common stock ~~at an exercise price~~ of ~~$1.30 per share~~27, ~~for an aggregate purchase price of $2~~742,~~976,600.~~346 ~~The Company also paid the private placement agent an aggregate of $298,000~~ and ~~issued~~ ~~five-year warrants to purchase 124~~27,~~025 shares of common stock at an exercise price of $1.32 per share. In connection with the private placement and pursuant to the transaction agreements~~502,346 ~~the~~as ~~Company deposited into escrow an aggregate~~ of ~~1,240,250 shares~~June ~~of common stock~~30, ~~which~~2020 ~~are~~and ~~to be held in escrow to be returned to the Company or delivered to the investors, depending on whether the Company meets certain financial performance targets for the years ending~~ December 31, ~~2010~~2019, ~~and 2011~~respectively.

19(a) Stock Issuances For Compensation

~~The Company~~On ~~did~~February ~~not~~6, ~~meet the financial targets. The number of Escrow Shares payable to each Investor shall be equal to a fraction of the total number of Escrow Shares potentially issuable pursuant to the terms hereof~~2020, the ~~numerator~~Company ~~of which shall be the amount by which (i) the number of Conversion Shares~~ issued ~~or issuable upon Preferred Shares which was initially issued to the Investor~~ an ~~exceeds~~aggregate ~~(ii) the sum~~ of ~~(x)~~200,000 ~~the number of Conversion Shares sold or otherwise transferred by the Investor plus (y) the number of~~ shares of ~~Conversion~~common ~~Shares~~stock ~~issued~~to orfour ~~issuable~~directors ~~sold~~as orcompensation ~~otherwise~~for ~~transferred~~services byprovided ~~the Investor, and the denominator of which is the number of Conversion Shares issued or issuable by the Company~~ in ~~the Offering~~2019. ~~Any~~The ~~Escrow~~issuance ~~Shares~~of ~~for either Fiscal Year~~these ~~2011~~shares orwas ~~Fiscal~~recorded ~~Year~~at ~~2010~~grant ~~which~~date ~~are~~fair ~~not~~market ~~transferred~~value toat ~~the Investors pursuant to this paragraph shall be returned to the Company for cancellation~~$0.02 Asper ~~of March 31, 2020, no Escrow Shares have been transferred to investors or returned to the Company~~share.

~~(12)~~On February 6, 2020, the Company issued ~~Related~~40,000 ~~Parties~~shares of common stock to the CFO. The issuance of these shares was recorded at grant date fair market value of $0.02 per share.

~~As of March 31, 2020~~(b) ~~and~~Shares ~~December~~Held 31, 2019, $637,030 and $634,410 are the salary owed to Mr. Donghai Yu, who is CEO of the Company. As of March 31, 2020 and December 31, 2019, $45,000 and $45,000 are the salary owed to Ms. Grace King, who is VP finance of the Company. Ms. Grace King has resigned from the Company in ~~2018.~~Escrow

(In a private placement that closed on December 22, 2009 and January 13), 2010, the Company sold an aggregate of 2,480,500 shares of Series B Preferred Stock and five-year warrants ~~Other~~to ~~Payable~~purchase 992,000 shares of common stock at an exercise price of $1.30 per share, for an aggregate purchase price of $2,976,600. The Company also paid the private placement agent an aggregate of $298,000 and issued five-year warrants to purchase 124,025 shares of common stock at an exercise price of $1.32 per share. In connection with the private placement and pursuant to the transaction agreements, the Company deposited into escrow an aggregate of 1,240,250 shares of common stock, which are to be held in escrow to be returned to the Company or delivered to the investors, depending on whether the Company meets certain financial performance targets for the years ending December 31, 2010 and 2011.

~~Other~~The Company did not meet the financial targets. The number of Escrow Shares payable ~~amounted~~to ~~$1,565,172 and~~each ~~$1,576,148~~Investor asshall be equal to a fraction of the total number of Escrow Shares ~~March~~potentially ~~31,~~issuable ~~2020~~pursuant ~~and~~to ~~December~~the ~~31,~~terms ~~2019~~hereof, ~~respectively. Other~~the ~~payables~~numerator ~~are~~of ~~mainly money~~which ~~borrowed~~shall ~~from~~be ~~unrelated~~the ~~parties~~amount ~~for~~by which (i) the number of Conversion ~~operating~~Shares ~~purpose.~~issued ~~These~~or ~~payable~~issuable ~~are~~upon ~~without~~Preferred ~~collateral,~~Shares ~~with~~which ~~interest~~was initially issued to the Investor exceeds (ii) the sum of (x) the number of Conversion Shares sold or otherwise transferred by the Investor plus (y) the number of shares of Conversion Shares issued or issuable sold or otherwise transferred by the Investor, and ~~due~~the ondenominator ~~demand.~~of ~~Imputed~~which ~~interest~~is ~~amounted~~the ~~$16,897~~number of Conversion Shares issued or issuable by the Company in the Offering. Any Escrow Shares for either Fiscal Year 2011 or Fiscal Year 2010 which are not transferred to the ~~three~~Investors ~~months~~pursuant ~~ended~~to ~~March~~this 31paragraph shall be returned to the Company for cancellation. As of June 30, 2020, ~~and~~no ~~was~~Escrow ~~recorded~~Shares have asbeen ~~paid~~transferred into ~~capital~~investors or returned to the Company.

(1412) ~~Lease Commitment~~ Related Parties

~~Our~~As of June 30, 2020 and December 31, ~~principal~~2019, ~~executive~~$648,219 ~~office~~and is$634,410 ~~located~~are inthe USsalary owed to Mr. ~~The~~Donghai Yu, who is CEO of the Company. ~~leased~~As ~~its~~of ~~corporate~~June ~~address~~30, ~~month~~2020 and December 31, 2019, $45,000 and $45,000 are the salary owed to ~~month~~Ms. ~~for~~Grace aKing, ~~monthly~~who ~~fee~~is VP finance of ~~$365~~the Company. Ms. Grace King has ~~The~~resigned ~~lease~~from isthe ~~month~~Company toin ~~month~~2018.

~~Royal Shanghai~~(13) ~~has~~Loan ~~operating leases for corporate offices. Our leases have remaining lease terms of 6 months to 24 months.~~Payable

~~Royal Shanghai~~Loan ~~leases~~payable anamounted ~~office~~$93,900 and $0 inas ~~Shanghai China. The lease term~~ of ~~the~~June ~~office~~30, ~~space~~2020 isand ~~from~~December ~~March 16~~31, 2019 ~~to March 15~~, ~~2021~~respectively. Loan ~~The current~~payable ~~monthly~~are ~~rent~~the ~~including~~disaster ~~monthly~~loans ~~management~~from ~~fee is approximately $1,015 (RMB 7,063)~~SBAD.

Royal Shanghai leases another office in Shanghai China. The lease term of the office space is from December 1, 2019 to November 30, 2020. The current monthly rent including monthly management fee is approximately $2,500 (~~RMB 17,407~~14). Other Payable

20Other payable amounted $1,604,717 and $1,576,148 as of June 30, 2020 and December 31, 2019, respectively. Other payables are mainly money borrowed from unrelated parties for operating purpose. These payable are without collateral, with interest, and due on demand. Imputed interest amounted $30,670 for the six months ended June 30, 2020 and was recorded as paid in capital.

~~The components of lease expense were as follows:~~18

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	10,104	$	10,902

(15) Lease Commitment

~~Supplemental~~Our ~~cash~~principal ~~flow~~executive ~~information~~office ~~related~~is located in US. The Company leased its corporate address month to ~~leases~~month ~~was~~for asa ~~follows:~~monthly fee of $365. The lease is month to month.

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9,353	$	12,828
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		9,353		12,828

Royal Shanghai has operating leases for corporate offices. Our leases have remaining lease terms of 6 months to 24 months.

~~Supplemental~~Royal Shanghai leases an office in Shanghai ~~balance~~China. ~~sheet~~The ~~information~~lease ~~related~~term of the office space is from March 16, 2019 to ~~leases was as~~ ~~follows:~~March 15, 2021. The current monthly rent including monthly management fee is approximately $1,015 (RMB 7,063).

	March 31, 2020		December 31, 2019
Operating Leases
Operating lease right-of-use assets-non current	$	28,701	$	38,567
Total operating lease right-of-use assets		28,701		38,567
Operating lease liability-current	$	28,701	$	36,564
Operating lease liability-non current		-		2,003
Total operating lease liabilities	$	28,701	$	38,567

~~Maturities~~ The components of lease ~~liabilities~~expense were as follows:

Year Ending March 31,	Operating Leases
	Six months Ended June 30,
~~2020~~	$2020	~~28,701~~	2019
2021		-
Operating lease cost	$	16,555	$	21,022
Total lease payments		28,701
Less imputed interest		-
Total	$	28,701

21Supplemental cash flow information related to leases was as follows:

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Six months Ended June 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18,804	$	3,132

Right-of-use assets obtained in exchange for lease obligations:
Operating leases		18,804		3,132

~~The~~Supplemental ~~following~~balance ~~discussion~~sheet ~~of the results~~information ~~of our operations and financial condition should be read in conjunction with our financial statements and the~~ related ~~notes, which appear elsewhere in this report. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results~~ to leases was as ~~differ from our forward-looking statements, see the section entitled “Cautionary Note Regarding Forward Looking Statements” above.~~follows:

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. This Annual Report should be read in its entirety and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

	June 30, 2020		December 31, 2019
Operating Leases

Operating lease right-of-use assets-non current	$	19,287	$	38,567

Total operating lease right-of-use assets		19,287		38,567

Operating lease liability-current	$	19,287	$	36,564
Operating lease liability-non current		-		2,003

Total operating lease liabilities	$	19,287	$	38,567

~~Overview~~Maturities of lease liabilities were as follows:

We are engaged in the research and development, small production and sales of graphene and graphene oxide and graphite bipolar plates in the People’s Republic of China. We have developed our own graphene prototype and produces the products by orders only, for which we sell domestically and export internationally. We outsource the production of large orders to third parties as we have not commercialized our product prototype. Starting in the second quarter of 2018, we have started producing our graphene products on a regular basis and standardized the packaging for our customers’ commercial use. We also operate a business-to-business and business-to-consumers Internet portal (www.roycarbon.com) for graphite related products.

Year Ending June 30,	Operating Leases

2020	$	19,287
2021		-

Total lease payments		19,287
Less imputed interest		-

Total	$	19,287

As of and for the three months ended March 31, 2020, the Company has incurred operating losses. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of its products, and (3) short-term or long-term borrowings from banks, stockholders or other party(ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans. The Company plans to look for opportunities to merge with or acquire other graphite companies.19

~~PRC regulations grant broad powers to the~~Item ~~government~~2. toManagement’s ~~adjust~~Discussion ~~the~~and ~~price~~Analysis of ~~raw~~Financial ~~materials~~Condition and ~~manufactured~~Results products. Although the government has not imposed price controls on our raw materials or our products, it is possible that price controls may be implemented in the future, thereby affecting our results of ~~operations and financial condition~~Operations.

~~Results~~The following discussion of the results of our operations and financial condition should be read in conjunction with our financial ~~Operations~~statements and the related notes, which appear elsewhere in this report. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ from our forward-looking statements, see the section entitled “Cautionary Note Regarding Forward Looking Statements” above.

~~Comparison~~In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, undue reliance should not be placed on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the ~~Three~~date of ~~Months~~this ~~Ended~~report. This Annual Report should be read in its entirety and with the understanding that our actual future results may ~~March~~be 31materially different from what we expect. Except as required by law, ~~2020~~we ~~and~~assume ~~2019~~no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

~~Sales.~~Overview

~~During the~~We ~~three~~are ~~months~~engaged ~~ended~~in ~~March~~the ~~31,~~research ~~2020~~and development, wesmall ~~had~~production and sales of ~~$185,781,~~graphene ~~compared~~and tographene ~~sales~~oxide ofand ~~$21,316~~graphite ~~for~~bipolar plates in the ~~three~~People’s ~~months~~Republic ~~ended~~of ~~March~~China. 31We have developed our own graphene prototype and produces the products by orders only, ~~2019,~~for anwhich ~~increase~~we ofsell ~~$164,465,~~domestically orand ~~approximately~~export ~~771~~internationally.~~56%.~~ ~~Significant~~We ~~sales~~outsource ~~increase~~the ~~was~~production ~~mainly~~of ~~due~~large orders to ~~increased~~third ~~market~~parties ~~demand,~~as ~~year-end~~we have ~~delivery~~not ~~delays~~commercialized our product prototype. Starting in the second quarter of 2018, aswe ~~well~~have asstarted ~~COVID-19~~producing our graphene products on a regular basis and ~~revenue~~standardized ~~recognition~~the ~~principles~~packaging for our customers’ commercial use. We also operate a business-to-business and business-to-consumers Internet portal (www.roycarbon.com) for graphite related products.

~~Cost~~As of ~~goods~~and ~~sold~~for the six months ended June 30, 2020, the Company has incurred operating losses. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (i) obtaining capital from the sale of its equity securities, (ii) sales of its products, and (iii) short-term or long-term borrowings from banks, stockholders or other party(ies) when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans. The Company plans to look for opportunities to merge with or acquire other graphite companies.

~~Our~~PRC regulations ~~cost~~grant ofbroad ~~goods~~powers ~~sold~~to ~~consists~~the ofgovernment ~~the~~to ~~purchase~~adjust ~~cost. During~~ the ~~three~~price ~~months ended March 31, 2020, our cost~~ of ~~goods~~raw ~~sold~~materials ~~was~~and ~~$94,772,~~manufactured ~~compared~~products. toAlthough ~~$12,769~~the government ~~for~~has ~~the~~not ~~cost~~imposed ofprice ~~goods~~controls ~~sold~~on ~~for~~our ~~the three~~raw ~~months~~materials ~~ended~~or ~~March~~our 31products, ~~2019,~~it anis ~~increase~~possible ofthat ~~$82,003~~price orcontrols ~~approximately~~may ~~642.20%. The~~be ~~increase~~ implemented in the ~~cost~~future, ofthereby ~~sales was~~affecting ~~primarily~~our ~~attributable~~results toof ~~the~~operations ~~significant~~and ~~increase~~financial ~~in sales volume~~condition.

22Results of Operations

~~Gross~~Comparison of ~~profit.~~the Three Months Ended June 30, 2020 and 2019

~~Our gross profit increased from $8,547 for the three months ended March 31, 2019 to $91,009 for the three months ended March 31, 2020~~Sales. ~~The increase of the gross profit is mainly attributed to increase in the sales.~~

~~Gross~~During ~~profit~~the ~~Margin~~three months ended June 30, 2020, we had sales of $75,634 compared to sales of $37,522 for the three months ended June 30, 2019, an increase of $38,112 or approximately 101.57%. Significant sales increase was mainly due to increased market demand, year-end delivery delays, as well as COVID-19 and revenue recognition principles.

~~Our~~Cost ~~gross~~of ~~profit~~goods ~~margin increased from 40~~sold.~~10% for the three months ended March 31, 2019 to 48.99% for the three months ended March 31, 2020 due to increased more profitable products.~~

~~Operating~~Our ~~expenses~~cost of goods sold consists of the purchase cost. During the three months ended June 30, 2020, our cost of goods sold was $44,480, compared to $23,395 for the cost of goods sold for the three months ended June 30, 2019, an increase of $21,085 or approximately 90.13%. The increase in the cost of sales was primarily attributable to the significant increase in sales volume.

~~Operating expenses totaled $109,404 for the three months ended March 31, 2020, compared to $103,214 for the three months ended March 31, 2019, an increase of $6,190, or approximately 6.00%.~~20

~~Selling, general and administrative~~Gross ~~expenses~~profit.

~~Selling~~Our ~~expenses~~gross profit increased from $414,~~374~~127 for the three months ended ~~March~~June 3130, 2019 to $2131,~~053~~154 for the three months ended ~~March~~June 3130, 2020,. anThe increase of ~~$16,679,~~the orgross ~~approximately~~profit ~~381.32%. The increase~~ is mainly attributed to ~~increased~~increase in the sales.

~~Our~~Gross ~~general~~profit and administrative expenses consist of salaries, office expenses, utilities, business travel, amortization expenses, public company expenses (including legal expenses, accounting expenses and investor relations expenses) and stock compensationMargin. General and administrative expenses were $88,351 for the three months ended March 31, 2020, compared to $98,840 for the three months ended March 31, 2019, a decrease of $10,489 or 10.61%. The decrease of general and administrative expenses is mainly due to decreased payroll expense and decreased stock compensation.

~~Loss~~Our gross profit margin increased from 37.6% ~~operations~~for the three months ended June 30, 2019 to 41.2% for the three months ended June 30, 2020 due to increased more profitable products.

AsOperating a result of the factors described above, operating loss was $18,395 for the three months ended March 31, 2020, compared to operating loss of $94,667 for the three months ended March 31, 2019, a decrease in loss of approximately $76,272, or 80expenses.~~57%.~~

~~Other~~Operating ~~income~~expenses totaled ~~and~~$97,408 ~~expenses~~for the three months ended June 30, 2020, compared to $107,760 for the three months ended June 30, 2019, a decrease of $10,352, or approximately 9.61%.

~~Our interest expense was $20~~Selling,~~420 for~~ ~~the~~general ~~three months~~and ~~ended March 31, 2020, compared to interest income of $87 for the three months ended March 31, 2019. The reason is due to~~administrative ~~more borrowings in the three months ended March 31, 2020 compared to the same period 2019~~expenses.

~~Other~~Selling ~~income~~expenses ofincreased from $~~nil and~~6,740 for ~~other~~the ~~expense of~~three ~~$nil~~months ~~were~~ended ~~recorded~~June as30, ~~other~~2019 ~~income~~ to $13,734 for the three months ended ~~March~~June 3130, 2020, ~~and~~an ~~2019~~increase of $6,994, ~~respectively~~or approximately 103. 77%. The increase is mainly attributed to increased sales.

~~Income~~Our ~~tax~~general and administrative expenses consist of salaries, office expenses, utilities, business travel, amortization expenses, public company expenses (including legal expenses, accounting expenses and investor relations expenses) and stock compensation. General and administrative expenses were $83,674 for the three months ended June 30, 2020, compared to $101,020 for the three months ended June 30, 2019, a decrease of $17,346 or 17.17%. The decrease of general and administrative expenses is mainly due to decreased payroll expense and decreased stock compensation.

~~During~~Loss ~~the~~from ~~three months ended March 31, 2020 and 2019, we did not incur any income tax due for these periods~~operations.

~~Net~~As a result of the factors described above, operating loss was $66,254 for the three months ended June 30, 2020, compared to operating loss of $93,633 for the three months ended June 30, 2019, a decrease in loss of approximately $27,379, or 29.24%.

AsOther aincome ~~result~~and of the factors described above, our net loss for the three months ended March 31, 2020 was $38,815, compared to net loss of $94,754 for the three months ended March 31, 2019, a decrease in loss of $55,939, or approximately 59expenses.~~04%.~~

~~Foreign~~Our interest ~~currency~~expense was ~~translation~~$19,165 for the three months ended June 30, 2020, compared to interest expense of $2,691 for the three months ended June 30, 2019. The reason is due to more borrowings in the three months ended June 30, 2020 compared to the same period 2019.

~~Our~~Other ~~consolidated~~income ~~financial statements are expressed in U.S. dollars but the functional currency~~ of ~~our operating subsidiary is RMB. Results of operations and cash flows are translated at average exchange rates during the period~~$3, ~~assets~~ 451 and ~~liabilities are translated at the unified exchange rate at the end of the~~ ~~period~~other ~~and~~expense ~~equity is translated at historical exchange rates. Translation adjustments resulting from the process~~ of ~~translating the~~$nil ~~financial~~were ~~statements~~recorded ~~denominated~~as inother ~~RMB into U.S. dollars are included in determining comprehensive~~ income~~. Our foreign currency translation gain~~ for the three months ended ~~March~~June 3130, 2020 ~~was~~and $62019,~~075,~~ ~~compared~~respectively. Other income ~~a translation loss~~ of $83,~~524~~000 ~~for~~is debt ~~the~~forgiveness ~~three~~since ~~months~~that SBAD loan ~~ended~~is ~~March~~not ~~31,~~require ~~2019,~~for ~~a decrease~~ repayment in ~~loss of $14,599~~2020.

23Income tax.

~~Net~~During ~~loss~~the ~~available~~three tomonths ~~common~~ended ~~stockholders~~June 30, 2020 and 2019, we did not incur any income tax due for these periods.

Net loss ~~available to our common stockholders was $38,815, or $(0~~.00) per share (basic and diluted), for the three months ended March 31, 2020, compared to net loss of $94,754, or net loss of $(0.00) per share (basic and diluted), for the three months ended March 31, 2019.

~~Liquidity~~As ~~and~~a ~~Capital~~result ~~Resources~~of the factors described above, our net loss for the three months ended June 30, 2020 was $77,290, compared to net loss of $96,324 for the three months ended June 30, 2019, a decrease in loss of $19,034, or approximately 17.96%.

~~All~~Foreign ofcurrency ~~our business operations are carried out by Royal Shanghai, and all of the cash generated by our operations has been held by that entity~~translation. In order to transfer such cash to our parent entity, China Carbon Graphite Group, Inc., which is a Nevada corporation, we would need to rely on dividends, loans or advances made by our PRC subsidiaries. Such transfers may be subject to certain regulations or risks. To date, our parent entity has paid its expenses by raising capital through private placement transactions. In the future, in the event that our parent entity is unable to raise needed funds from private investors, Royal Shanghai would have to transfer funds to our parent entity through our wholly-owned subsidiaries, Royal Hongkong and BVI. Co,

~~PRC~~Our ~~regulations~~consolidated ~~relating~~financial tostatements ~~statutory reserves~~are ~~and~~expressed ~~currency~~in ~~conversion~~U.S. ~~would~~dollars ~~impact~~but the functional currency of our ~~ability~~operating tosubsidiary ~~transfer~~is RMB. Results of operations and cash ~~within~~flows are ~~our~~translated ~~corporate~~at ~~structure.~~average ~~The~~exchange ~~Company~~rates ~~Law~~during the period, assets and liabilities are translated at the unified exchange rate at the end of the ~~PRC~~period ~~applicable~~and equity is translated at historical exchange rates. Translation adjustments resulting from the process toof ~~Chinese~~translating ~~companies~~the ~~provides~~financial ~~that~~statements ~~net~~denominated ~~after~~in ~~tax~~RMB into U.S. dollars are included in determining comprehensive income. Our ~~should~~foreign becurrency ~~allocated~~translation byloss for the ~~following~~three ~~rules:~~months ended June 30, 2020 was $626, compared a translation gain of $9,147 for the three months ended June 30, 2019, a decrease in gain of $9,773.

~~1. 10% of after tax income to be allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital.~~21

2.Net loss Ifavailable ~~the accumulate balance of statutory surplus reserve is not enough~~ to ~~make~~common ~~up the Company’s cumulative prior years’ losses, the current year’s after tax income should be first used to make up the losses before the statutory surplus reverse is drawn~~stockholders.

3Net loss available to our common stockholders was $77,290, or $0.00 ~~Allocation~~per ~~can~~share be(basic ~~made~~and todiluted), for the ~~discretionary~~three ~~surplus~~months ~~reserve~~ended June 30, if2020, ~~such~~compared ato ~~reserve~~net isloss ~~approved~~of at$96,324, or ~~the~~net ~~meeting~~loss of $0.00 per share (basic and diluted), for the ~~equity~~three ~~owners~~months ended June 30, 2019.

~~Therefore,~~Comparison ~~the Company is required to maintain a statutory reserve in China that limits any equity distributions to its shareholders. The maximum amount~~ of the ~~shareholders~~Six ~~has not~~Months ~~been~~Ended ~~reached.~~June 30, ~~The~~2020 ~~company has never distributed earnings to shareholders~~ and ~~has consistently stated in the Company’s filings it has no intentions to do so.~~2019

~~The RMB cannot be freely exchanged into the Dollars~~Sales. The State Administration of Foreign Exchange (“SAFE”) administers foreign exchange dealings and requires that they be conducted though designated financial institutions. Foreign Investment Enterprises, such as Royal Shanghai, may purchase foreign currency from designated financial institutions in connection with current account transactions, including profit repatriation.

~~These~~During ~~factors~~the ~~will~~six ~~limit~~months ~~the~~ended ~~amount~~June ~~of funds~~30, ~~that~~ 2020, we ~~can~~had ~~transfer~~sales ~~from~~of ~~Royal~~$261,415 ~~Shanghai~~compared to ~~our~~sales ~~parent~~of ~~entity~~$58,838 ~~and~~for ~~may~~the ~~delay~~six ~~any~~months ~~such~~ended ~~transfer.~~June In30, ~~addition~~2019, ~~upon~~an ~~repatriation of~~increase ~~earnings~~ of ~~Royal Shanghai to the United States~~$202,577 ~~those~~or ~~earnings may become subject to United States federal and state income~~approximately ~~taxes~~344. ~~We have not accrued any U~~30%.S. ~~federal~~Significant orsales ~~state~~increase ~~tax~~was ~~liability~~mainly ondue ~~the undistributed earnings of our foreign subsidiary because those funds are intended~~ to beincreased ~~indefinitely~~market ~~reinvested~~demand, inyear-end ~~our~~delivery ~~international operations. Accordingly~~delays, ~~taxes~~as ~~imposed~~well ~~upon~~as ~~repatriation~~COVID-19 and ofrevenue ~~those~~recognition ~~earnings to the U~~principles.~~S. would reduce the net worth of the Company.~~

~~Our~~Cost ~~primary capital needs have been to fund our working capital requirements. Our primary sources~~ of ~~financing~~goods ~~will be cash generated from loans from banks, equity investment from investors, and borrowings from unrelated parties~~sold.

~~The Company’s~~Our ~~consolidated~~cost ~~financial~~of ~~statements~~goods ~~are~~sold ~~prepared~~consists ~~using~~of ~~generally~~the purchase ~~accepted~~cost. During ~~accounting principles in~~ the ~~United~~six ~~States of~~months ~~America~~ended ~~applicable~~June to30, ~~a going concern~~2020, ~~which~~our ~~contemplates~~cost ~~the realization~~ of ~~assets~~goods ~~and~~sold ~~the~~was ~~satisfaction~~$139,252, ofcompared ~~liabilities~~to in$36,164 for the ~~normal~~cost ~~course~~ of ~~business.~~goods Assold ~~of and~~ for the ~~period~~six months ended ~~March~~June 3130, ~~2020~~2019, ~~the~~an ~~Company~~increase ~~has~~of ~~incurred~~$103,088 ~~operating~~or ~~losses~~approximately ~~and~~285.06%. The ~~working~~increase in ~~capital~~the ~~deficit~~cost ~~from~~of ~~operating activities. The Company’s~~ sales ~~revenue~~was isprimarily ~~not~~attributable ~~sufficient~~ to ~~cover~~ the ~~company’s~~significant ~~expenses for~~increase ~~the~~in ~~three~~sales ~~months ended March 31, 2020~~volume.

24Gross profit.

~~The~~Our ~~ability of~~gross ~~the~~profit ~~Company~~increased tofrom ~~continue~~$22,674 for asthe asix ~~going~~months ~~concern~~ended isJune ~~dependent~~30, on2019 ~~the Company obtaining adequate capital~~ to ~~fund~~$122,163 ~~operating~~for ~~losses until it becomes profitable. If~~ the ~~Company~~six ismonths ~~unable~~ended toJune ~~obtain adequate capital~~30, ~~it could be forced to cease operations~~2020. AtThe ~~this~~increase ~~point, there~~of ~~can be no assurance that~~ the ~~Company~~gross profit is mainly ~~able~~attributed to ~~obtain~~increase ~~such~~in ~~funding~~the sales.

~~Our~~Gross ~~long-term~~profit ~~goal is to develop our Royal Shanghai business~~Margin. ~~During the interim, we expect that anticipated cash flows from future operations, loans and equity investment from unrelated or related parties, provided that:~~

●Our wegross ~~generate~~profit ~~sufficient~~margin ~~business~~increased sofrom 38.5% ~~that~~for wethe ~~are~~six ~~able~~months ended June 30, 2019 to ~~generate~~46.7% ~~substantial~~for ~~profits~~the six months ended June 30, ~~which~~2020 ~~cannot~~due beto ~~assured;~~increased more profitable products.

●Operating ~~we are able to generate savings by improving the efficiency of our operations~~expenses.

WeOperating ~~may~~expenses totaled ~~require additional equity~~$206,812 ~~debt or~~for ~~bank~~the ~~funding~~six tomonths ~~finance~~ended ~~acquisitions~~June or30, to2020, ~~allow~~compared us to ~~develop our Royal Shanghai business~~$210,974 ~~which~~for isthe ~~one~~six ofmonths ~~our~~ended ~~primary~~June ~~growth strategies. We~~30, ~~can~~2019, ~~provide~~a ~~no assurances that we will be able to enter into any additional financing agreements on terms favorable~~decrease toof us$4, ~~if at all~~162, ~~especially~~or ~~considering~~approximately ~~the current global instability of the capital markets~~1.97%.

~~At March 31~~Selling, ~~2020,~~general ~~cash~~ and ~~cash equivalents~~administrative ~~were $22,240, compared to $11,585 at December 31, 2019, an increase of $10,655~~expenses. ~~Our working capital deficit increased by $430 to a deficit of $2,541,129 at March 31, 2020 from $2,540,699 at December 31, 2019.~~

~~Accounts~~Selling ~~receivable,~~expenses ~~net~~increased offrom ~~allowance, were~~ $1311,~~279~~114 for ~~and~~the ~~$3,781~~six asmonths ofended ~~March~~June 3130, ~~2020 and December 31,~~ 2019, ~~respectively. The increase was mainly due~~ to ~~increased~~$34,787 ~~sales.~~for ~~Accounts receivable are recorded at~~ the ~~invoiced~~six ~~amount~~months ~~and~~ended doJune ~~not~~30, ~~bear~~2020, ~~interest.~~an ~~Our~~increase ~~management reviews the adequacy~~ of ~~our allowance for doubtful accounts on an ongoing basis~~$23,673, ~~using~~or ~~historical collection trends and the aging of receivables~~approximately 213.00%. ~~Management~~The ~~also~~increase ~~periodically~~is ~~evaluates individual~~mainly ~~customer’s~~attributed ~~financial condition, credit history, and the current economic conditions~~ to ~~make~~increased ~~adjustments in the allowance when it is considered necessary~~sales.

AsOur general and administrative expenses consist of ~~March~~salaries, 31office expenses, ~~2020~~utilities, ~~inventories~~business travel, amortization expenses, public company expenses (including legal expenses, accounting expenses and investor relations expenses) and stock compensation. General and administrative expenses were $5172,~~566~~025 for the six months ended June 30, 2020, compared to $17199,~~583~~860 atfor ~~December~~the 31six months ended June 30, 2019, a decrease of $1227,~~017,~~ 835 or 68 13.3493%. As ofThe ~~March~~decrease ~~31,~~of ~~2020~~general and ~~December~~administrative ~~31, 2019,~~expenses ~~the~~is ~~Company~~mainly ~~has~~due ~~not made provision for inventory in regards~~ to ~~slow~~decreased ~~moving~~payroll orexpense ~~obsolete~~and ~~items~~decreased stock compensation.

~~The following table sets forth information about our net cash flow for the three months indicated:~~22

	For the Three months Ended March 31,
	2020		2019
Net cash flows provided by operating activities	$	10,987	$	6,645
Net cash flows used in investing activities	$	-	$	(2,253	)
Net cash flows (used in) financing activities	$	-	$	-

Loss from operations.

~~Net~~As ~~cash~~a ~~flow~~result ~~provided~~of bythe factors described above, operating ~~activities~~loss was $1084,~~987~~649 for the ~~three~~six months ended ~~March~~June 3130, 2020, compared to ~~$6,645~~operating ~~provided~~loss byof ~~operating~~$188,300 ~~activities~~ for the ~~three~~six months ended ~~March 31,~~ ~~2019,~~June ~~an increase of $4~~30,~~342.~~ ~~The increase in net cash flow provided by operating activities was mainly due to due to an increase of $11~~2019,~~892~~ ~~in inventory and an increase of $55,939 in net loss available to common shareholders, offset by~~ a decrease ~~of $17,212~~ in ~~advance~~loss ~~from customers, a decrease~~ of ~~$22,182 in~~approximately ~~lease liability and a decrease of~~ $54103,~~755~~651, inor ~~other payables~~55.05%.

~~Net~~Other ~~cash~~income flow used in investing activities was $nil for the three months ended March 31, 2020, compared to $2,253for the three months ended March 31, 2019, a decrease of $2,253, or 100%. The decrease is mainly due to decrease acquisitions of plant and ~~equipment in the three months ended March 31, 2020~~expenses.

~~Net~~Our interest ~~cash~~expense was ~~flow~~$34,907 for the ~~used~~six inmonths ~~financing~~ended ~~activities was~~June ~~$nil~~30, ~~and~~2020, ~~nil~~compared to interest expense of $2,778 for the ~~three~~six months ended ~~March~~June 3130, 2019. The reason is due to more borrowings in the six months ended June 30, 2020 ~~and~~compared to the same period 2019.

25Other income of $3,451 and other expense of $nil were recorded as other income for the six months ended June 30, 2020 and 2019, respectively. Other income of $3,000 is debt forgiveness since that SBAD loan is not require for repayment in 2020.

~~Concentration~~Income ~~of Business and Credit Risk~~tax.

~~Most~~During of the ~~Company’s~~six ~~bank~~months ~~accounts are~~ended inJune ~~banks~~30, ~~located~~2020 and in2019, ~~the~~we ~~PRC~~did ~~and are~~ not ~~covered~~incur by any ~~type~~income oftax ~~protection~~due ~~similar~~for tothese ~~that provided by the Federal Deposit Insurance Corporation (“FDIC”) on funds held in U~~periods.~~S. banks. The Company’s bank account in the United States is covered by FDIC insurance.~~

~~Because~~Net ~~the Company’s operations are located in the PRC, this may give rise to significant foreign currency risks due to fluctuations in and the volatility of foreign exchange rates between U~~loss.~~S. dollars and RMB.~~

~~Financial~~As ~~instruments~~a ~~that~~result ~~potentially subject~~of the ~~Company~~factors todescribed ~~concentration of credit risk consist principally of cash~~above, ~~trade accounts receivables and inventories, the~~ ~~balances~~our ofnet ~~which~~loss ~~are~~for ~~stated on~~ the ~~balance~~six ~~sheet.~~months ~~The~~ended ~~Company~~June ~~places~~30, ~~its~~2020 ~~cash~~was in$116,105, ~~banks~~compared ~~located~~to innet ~~China.~~loss ~~Concentration~~ of ~~credit risk~~$191,078 ~~with~~for ~~respect to trade accounts receivables is limited due to~~ the ~~diversity~~six ofmonths ~~the~~ended ~~Company’s~~June 30, ~~customers~~2019, ~~who~~a ~~are~~decrease ~~located~~ in ~~different~~loss ~~regions~~ of ~~China.~~$74,973, ~~The Company does not require collateral~~ or ~~other~~approximately ~~security to support financial instruments subject to credit risk~~39.24%.

~~Significant~~Foreign ~~Accounting~~currency ~~Estimates and Policies~~translation.

~~The~~Our ~~discussion~~consolidated ~~and analysis of our~~ financial ~~condition~~ ~~and results of operations is based upon our financial~~ statements ~~that~~are expressed ~~have~~in ~~been~~U.S. ~~prepared~~dollars inbut ~~accordance~~the ~~with~~functional ~~accounting principles~~currency ~~generally~~of ~~accepted~~our inoperating ~~the~~subsidiary ~~United~~is ~~States~~RMB. ~~The~~Results ~~preparation~~ of ~~these~~operations ~~financial~~and ~~statements~~cash ~~requires~~flows are ustranslated toat ~~make~~average ~~estimates and~~exchange ~~judgments~~rates ~~that~~during ~~affect~~ the ~~reported~~period, ~~amounts of~~ assets and liabilities. Onare antranslated ~~ongoing~~at ~~basis,~~the weunified ~~evaluate~~exchange ~~our estimates including~~rate at the ~~allowance~~end ~~for~~of ~~doubtful accounts,~~ the ~~salability~~period and ~~recoverability~~equity ofis ~~our~~translated ~~products,~~at ~~income~~historical ~~taxes~~exchange ~~and contingencies~~rates. WeTranslation ~~base our~~adjustments ~~estimates~~resulting onfrom ~~historical~~the ~~experience~~process of ~~and~~translating onthe ~~other~~financial ~~assumptions~~statements ~~that~~denominated wein ~~believe~~RMB tointo beU.S. ~~reasonable~~dollars ~~under~~are ~~the~~included ~~circumstances,~~in ~~the~~determining ~~results~~comprehensive income. ofOur ~~which~~foreign ~~form~~currency ~~our~~translation ~~basis~~gain for ~~making~~the ~~judgments~~six ~~about~~months ~~the~~ended ~~carrying~~June ~~values~~30, of2020 ~~assets~~was ~~and~~$5,449, ~~liabilities~~compared ~~that~~a ~~are~~translation ~~not~~gain ~~readily~~of ~~apparent~~$623 for ~~from~~the ~~other~~six ~~sources.~~months ~~Actual~~ended ~~results~~June ~~may~~30, ~~differ~~2019, ~~from~~an ~~these~~increase ~~estimates~~in ~~under~~gain ~~different~~of ~~assumptions or conditions~~$4,826.

~~Revenue~~Net ~~Recognition~~loss available to common stockholders.

~~The~~Net ~~Company~~loss ~~derives~~available ~~revenues~~to ~~from~~our ~~distribution~~common stockholders ofwas ~~graphite-based products. We recognize revenue in accordance with ASC 605-25~~$116, ~~Revenue Recognition~~105, ~~which~~or ~~states~~$0.00 ~~that~~per ~~revenue should~~share ~~be recognized when the following criteria are met:~~ (1)basic ~~persuasive evidence of an arrangement exists; (2) the service has been rendered; (3) the selling price is fixed or determinable;~~ and (4diluted), ~~collection~~for of the ~~resulting~~six ~~receivable~~months isended ~~reasonably~~June ~~assured. Sales~~30, ~~represent~~2020, ~~the~~compared ~~invoiced~~to ~~value~~net loss of ~~goods~~$191,078, or net loss of ~~value~~$0.01 ~~added~~per ~~tax~~share (~~“VAT”),~~basic ifand ~~any~~diluted), ~~and~~for ~~are~~the ~~recognized~~six ~~upon~~months ~~delivery of~~ended ~~goods~~June ~~and~~30, ~~passage of title according to shipping terms~~2019.

The Company is subject to VAT, which is levied on a majority of the products, at a rate ranging from 13% to 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.23

~~The Company recognizes revenue upon delivery~~Liquidity ~~of goods~~ and ~~passage~~Capital of title according to shipping terms. The Company does not provide chargeback or price protection rights to the customers. The customer only places purchase orders with the Company once it has confirmed the sale with a third party because this is a specialized business, which dictates that the Company will not sell the products until the purchase order is received. The Company allows its customers to return products only if its products are later determined by the Company to be defective. Based on the Company’s historical experience, product returns have been insignificant throughout all of its product lines. Therefore, the Company does not record an allowance for sales returns. If sales returns occur, they are taken against revenue when products are returned from customers. Sales are presented net of any discounts given to customers. Interest income is recognized when earned. The Company experienced no returns for the three months ended March 31, 2019 and 2018. Resources

InAll of ~~May~~our ~~2014~~business operations are carried out by Royal Shanghai, and all of the ~~FASB~~cash ~~issued~~generated ~~Accounting~~by our operations has been held by ~~Standards~~that ~~Update~~entity. ~~(“ASU”)~~In ~~2014-09, Revenue~~order ~~from~~to ~~Contracts~~transfer ~~with~~such ~~Customers~~cash ~~(Topic~~to ~~606)~~our parent entity, ~~amending~~China ~~revenue~~Carbon ~~recognition guidance~~Graphite ~~and~~Group, ~~requiring~~Inc., ~~more~~which ~~detailed~~is ~~disclosures~~a Nevada corporation, we would need to ~~enable~~rely ~~users~~on ofdividends, ~~financial~~loans ~~statements~~or advances made by our PRC subsidiaries. Such transfers may be subject to ~~understand~~certain ~~the~~regulations or ~~nature,~~risks. ~~amount,~~To ~~timing~~date, ~~and~~ ~~uncertainty~~our ofparent ~~revenue~~entity ~~and~~has ~~cash~~paid ~~flows~~its ~~arising~~expenses ~~from~~by ~~contracts~~raising ~~with~~capital ~~customers~~through private placement transactions. WeIn ~~adopted~~the ~~this~~future, in ~~ASU~~the onevent ~~January~~that 1our parent entity is unable to raise needed funds from private investors, ~~2018~~Royal ~~for~~Shanghai ~~all~~would have to transfer ~~revenue~~funds ~~contracts~~to ~~with~~our parent entity through our ~~customers~~wholly-owned ~~using~~subsidiaries, ~~the~~Royal ~~modified~~Hongkong ~~retrospective~~and ~~approach~~BVI. Co,

~~There~~PRC regulations isrelating noto statutory reserves and currency conversion would impact ofour ~~applying~~ability ~~this~~to ~~ASU~~transfer cash within our corporate structure. The Company Law of the PRC applicable to Chinese companies provides that net after tax income should be allocated by the following rules:

261. 10% of after tax income to be allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital.

~~Comprehensive~~2. ~~Income~~If the accumulate balance of statutory surplus reserve is not enough to make up the Company’s cumulative prior years’ losses, the current year’s after tax income should be first used to make up the losses before the statutory surplus reverse is drawn.

We3. ~~have~~Allocation ~~adopted~~can ~~ASC~~be ~~220,~~made ~~Comprehensive Income,~~to ~~formerly~~the ~~known~~discretionary assurplus ~~SFAS No. 130~~reserve, ~~Reporting~~if ~~Comprehensive~~such ~~Income, which establishes standards for reporting and presentation of comprehensive income (loss) and its components in~~ a ~~full~~reserve ~~set~~is ofapproved ~~general~~at ~~purpose financial statements. We have chosen to report comprehensive income (loss) in~~ the ~~statements~~meeting of ~~operations~~the ~~and~~equity ~~comprehensive income~~owners.

~~Income~~Therefore, the ~~Taxes~~Company is required to maintain a statutory reserve in China that limits any equity distributions to its shareholders. The maximum amount of the shareholders has not been reached. The company has never distributed earnings to shareholders and has consistently stated in the Company’s filings it has no intentions to do so.

WeThe RMB ~~account~~cannot ~~for~~be ~~income~~freely ~~taxes~~exchanged ~~under~~into the ~~provisions of ASC 740, Income Tax, formerly known as SFAS No~~Dollars. ~~109,~~The ~~Accounting~~State ~~for~~Administration ~~Income~~of ~~Taxes,~~Foreign ~~which~~Exchange ~~requires~~(“SAFE”) ~~recognition~~administers foreign ofexchange ~~deferred~~dealings ~~tax assets~~ and ~~liabilities~~requires ~~for the expected future tax consequences of events~~ that ~~have~~they ~~been~~be ~~included~~conducted inthough ~~the~~designated ~~consolidated~~ financial ~~statements~~ ~~or tax returns~~institutions. ~~Deferred~~Foreign ~~tax~~Investment ~~assets and liabilities are recognized for the future tax consequence attributable to the~~Enterprises, ~~difference~~such ~~between~~as ~~the~~Royal ~~tax~~Shanghai, ~~bases~~may ofpurchase ~~assets~~foreign ~~and~~currency ~~liabilities~~from ~~and~~designated ~~their reported amounts in the~~ financial ~~statements.~~institutions ~~Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income~~ in ~~the~~connection ~~years~~with incurrent ~~which those~~account ~~temporary~~transactions, ~~differences~~including ~~are~~profit ~~expected to be recovered or settled~~repatriation. ~~The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.~~

~~Effective~~These factors ~~January~~will 1,limit ~~2008,~~ the ~~new~~amount ~~Chinese income~~of ~~tax~~funds ~~law~~that ~~sets~~we ~~unified~~can ~~income~~transfer ~~tax~~from ~~rates~~Royal ~~for~~Shanghai ~~domestic~~to our parent entity and ~~foreign~~may ~~companies~~delay atany ~~25%~~such transfer. In addition, ~~except~~upon ~~for~~repatriation aof ~~15%~~earnings ~~corporate~~of ~~income~~Royal ~~tax~~Shanghai ~~rate for~~to ~~qualified~~the ~~high~~United ~~technology~~States, ~~and~~those ~~science~~earnings ~~enterprises.~~may Inbecome ~~accordance~~subject ~~with~~to ~~this~~United States ~~new~~federal and state income ~~tax~~taxes. ~~law,~~We ~~low~~have ~~preferential~~not ~~tax~~accrued ~~rates~~any ~~in accordance~~U.S. ~~with~~federal ~~both~~or ~~the~~state tax ~~laws~~liability ~~and~~on ~~administrative~~the ~~regulations~~undistributed ~~prior~~earnings of our foreign subsidiary because those funds are intended to ~~the~~be ~~promulgation~~indefinitely ofreinvested ~~this~~in ~~law~~our ~~gradually~~international ~~become~~operations. ~~subject~~Accordingly, totaxes ~~the~~imposed ~~new~~upon ~~tax~~repatriation ~~rate~~of ~~within~~those ~~five~~earnings ~~years~~to ~~after~~the U.S. would reduce the ~~implementation~~net worth of ~~this~~the ~~law~~Company.

~~Accounts~~Our primary ~~Receivable~~capital ~~and~~needs ~~Allowance~~have been to fund our working capital requirements. Our primary sources of financing will be cash generated ~~For~~from loans ~~Doubtful~~from ~~Accounts~~banks, equity investment from investors, and borrowings from unrelated parties.

~~Accounts receivables are recognized and~~The ~~carried~~Company’s atconsolidated ~~the~~financial ~~original~~statements ~~invoice~~are ~~amount~~prepared ~~less~~using ~~allowance~~generally ~~for~~accepted ~~any~~accounting ~~uncollectible~~principles ~~amounts.~~in Anthe ~~estimate~~United ~~for allowance for doubtful accounts~~States ~~is made when collection~~ of ~~the~~America ~~full~~applicable ~~amount~~to isa nogoing ~~longer~~concern, ~~probable.~~which ~~Bad~~contemplates ~~debts are written off as incurred. Accounts receivable are recorded at~~ the ~~invoiced~~realization ~~amount~~of assets and ~~do not bear interest. Management reviews~~ the ~~adequacy~~satisfaction of ~~the~~liabilities ~~allowance for doubtful accounts~~in onthe annormal ~~ongoing~~course ~~basis,~~of ~~using~~business. ~~historical~~As ~~collection~~of ~~trends~~ and ~~aging~~for ofthe ~~receivables.~~period ~~Management~~ended ~~also~~June ~~periodically evaluates individual customer’s financial condition~~30, ~~credit history~~2020, ~~and~~ the ~~current~~Company ~~economic~~has ~~conditions~~incurred tooperating ~~make~~losses ~~adjustments~~and ~~in the allowance~~working ~~when~~capital itdeficit isfrom ~~considered~~operating ~~necessary~~activities. The ~~allowance~~Company’s ~~for~~sales ~~doubtful~~revenue ~~accounts~~is ~~amounted~~not sufficient to ~~$nil~~cover asthe ofcompany’s ~~March~~expenses for ~~31,~~the ~~2020~~three ~~and~~months ~~December~~ended 31June 30, ~~2019~~2020.

~~Inventories~~24

~~Inventories~~The ability ~~are~~of ~~stated at~~ the ~~lower~~Company ~~of cost,~~to ~~determined~~continue onas a ~~weighted~~going ~~average~~concern ~~basis, and net realizable value. Net realizable value~~ is ~~the~~dependent ~~estimated~~on ~~selling price, in~~ the ~~ordinary~~Company ~~course~~obtaining ofadequate ~~business,~~capital ~~less~~to ~~estimated~~fund ~~costs~~operating losses tountil ~~complete~~it ~~and~~becomes ~~dispose~~profitable. ~~The~~If ~~cost~~the ofCompany ~~inventories~~is ~~comprises~~unable ~~all~~to ~~costs~~obtain ofadequate ~~purchases~~capital, ~~costs~~ ofit ~~conversion~~could ~~and~~be ~~other~~forced ~~costs incurred in bringing the inventories~~ to ~~their~~cease ~~present location and condition~~operations. At ~~For~~this ~~the~~point, ~~three months~~there ~~ended~~can ~~March~~be ~~31,~~no ~~2020~~assurance ~~and~~that ~~2019,~~ the Company ~~has~~is ~~not~~able ~~made provision for inventory in regards~~ to ~~slow~~obtain ~~moving~~such ~~or obsolete items~~funding.

~~Property~~Our long-term goal is to develop our Royal Shanghai business. During the interim, ~~Plant~~we expect that anticipated cash flows from future operations, loans and ~~Equipment~~equity investment from unrelated or related parties, provided that:

~~Property,~~● ~~plant~~we ~~and~~generate ~~equipment~~sufficient ~~are~~business ~~stated at~~so cost. Major expenditures for betterments and renewals are capitalized while ordinary repairs and maintenance costs are expensed as incurred. Depreciation and amortization is provided using the straight-line method over the estimated useful life of the assets after taking into account the estimated residual value. The Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that ~~the~~we ~~carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows~~ are ~~less~~able ~~than the carrying value, an impairment loss is recognized equal~~ to angenerate ~~amount~~substantial ~~by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results~~profits, ~~trends and prospects, the manner in~~ which ~~the~~cannot ~~property~~be is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment was recorded in operating expenses during the three months ended March 31, 2020 and 2019. assured;

27● we are able to generate savings by improving the efficiency of our operations.

~~Research~~We may ~~and~~require ~~Development~~additional equity, debt or bank funding to finance acquisitions or to allow us to develop our Royal Shanghai business, which is one of our primary growth strategies. We can provide no assurances that we will be able to enter into any additional financing agreements on terms favorable to us, if at all, especially considering the current global instability of the capital markets.

~~Research~~At ~~and~~June ~~development~~30, ~~costs are expensed as incurred~~2020, cash and ~~are~~cash ~~included~~equivalents were in$42,063, ~~general~~compared ~~and~~to ~~administrative~~$11,585 ~~expenses.~~at ~~These~~December ~~costs~~31, ~~primarily~~2019, ~~consist~~an ofincrease ~~the cost~~ of ~~material~~$30,478. ~~used and~~Our ~~salaries~~working ~~paid~~capital ~~for~~deficit ~~the~~increased ~~development~~by ~~of our products and fees paid~~ $54,695 to ~~third~~a ~~parties.~~deficit ~~Our~~of ~~research~~$2,595,394 ~~and~~at ~~development~~June ~~expense~~30, ~~for the~~2020 ~~three~~from $2,540,699 ~~months~~at ~~ended~~December ~~March~~ 31, ~~2020 and~~ 2019 ~~were not significant~~.

~~Value~~Accounts ~~Added~~receivable, ~~Tax~~net of allowance, were $3,457 and $3,781 as of June 30, 2020 and December 31, 2019, respectively. Accounts receivable are recorded at the invoiced amount and do not bear interest. Our management reviews the adequacy of our allowance for doubtful accounts on an ongoing basis, using historical collection trends and the aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary.

~~Pursuant~~As toof ~~China’s~~June ~~VAT~~30, ~~rules and regulations~~2020, asinventories anwere ~~ordinary~~$18,110 compared ~~VAT~~to ~~taxpayer~~$17,583 weat ~~are~~December ~~subject~~31, to2019, aan ~~tax~~increase ~~rate~~ of ~~17%~~$527, ~~(“output~~or ~~VAT”)~~3.00%. As ~~The~~of ~~output~~June ~~VAT~~30, is2020 ~~payable after~~and ~~offsetting~~December ~~VAT~~31, ~~paid~~2019, ~~by us on purchases (“input VAT”). Under~~ the ~~commercial~~Company has ~~practice~~not ofmade ~~the~~provision ~~PRC,~~for ~~the~~inventory ~~Company~~in ~~paid VAT~~regards ~~and~~to ~~business~~slow ~~tax~~moving ~~based~~or onobsolete ~~tax invoices issued~~items.

The ~~tax invoices may be issued subsequent~~ tofollowing ~~the~~table ~~date~~sets onforth ~~which~~information ~~revenue~~about isour ~~recognized,~~net ~~and~~cash ~~there~~flow may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued. In the event that the PRC tax authorities dispute the date on which revenue is recognized for ~~tax purposes,~~ the ~~PRC~~six ~~tax~~months office has the right to assess a penalty, which can range from zero to five times the amount of the taxes that are determined to be late or deficient. In the event that a tax penalty is assessed on late or deficient payments, the penalty will be expensed as a period expense if and when a determination has been made by the taxing authorities that a penalty is due.indicated:

Fair Value of Financial Instruments

	For the Six months Ended June 30,
	2020			2019
Net cash flows (used in) provided by operating activities	$	(61,706	)	$	15,163
Net cash flows used in investing activities	$	(1,649	)	$	(2,769	)
Net cash flows provided by financing activities	$	93,900		$	-

OnNet ~~January~~cash 1,flow ~~2008~~used in operating activities was $61,706 for the ~~Company~~six ~~began~~months ~~recording financial~~ended ~~assets~~June ~~and~~30, ~~liabilities~~2020, ~~subject~~compared to ~~recurring~~$15,163 ~~fair~~provided ~~value~~by ~~measurement~~operating atactivities for the ~~price~~six ~~that~~months ~~would~~ended June be30, ~~received~~2019, toa ~~sell~~decrease anof ~~asset or~~$76,869. ~~paid~~The decrease in net cash flow provided by operating activities was mainly due to ~~transfer~~due ato ~~liability~~an increase of $10,626 in inventory, an ~~orderly~~increase ~~transaction~~of ~~between~~$28,498 ~~market~~in ~~participants.~~other Onreceivables ~~January~~and 1,an ~~2009~~increase of $74,973 ~~the~~in ~~Company~~net ~~began~~loss ~~recording~~available ~~non-recurring~~to ~~financial~~common asshareholders, ~~well~~offset asby ~~all~~a ~~non-financial~~decrease ~~assets~~of ~~and~~$88,897 ~~liabilities~~in ~~subject~~advance tofrom ~~fair~~customers, ~~value~~a ~~measurement~~decrease ~~under~~of ~~the~~$21,936 in ~~same~~lease ~~principles.~~liability, ~~These~~a ~~fair~~decrease ~~value~~of ~~principles~~$88,775 in ~~prioritize~~accounts ~~valuation~~payable ~~inputs~~and ~~across~~accrued ~~three~~liabilities ~~broad~~and ~~levels.~~a ~~The~~decrease ~~three~~of ~~levels~~$38,949 ~~are~~in ~~defined~~other ~~as follows:~~payables.

●Net ~~Level~~cash flow used in investing activities was $1,649l ~~inputs~~for the six months ended June 30, 2020, compared to $2,769 for the ~~valuation~~six ~~methodology~~months ~~are~~ended ~~quoted~~June ~~prices~~30, ~~(unadjusted)~~2019, ~~for~~a ~~identical~~decrease ~~assets~~of $1,120, or ~~liabilities~~40.45%. The decrease is mainly due to decrease acquisitions of plant and equipment in ~~active~~the ~~markets~~six months ended June 30, 2020.

●Net ~~Level~~cash 2flow ~~inputs~~provided toby ~~the~~financing ~~valuation~~activities was ~~methodology~~$93,900 ~~include~~and ~~quoted~~nil ~~prices~~ for ~~similar~~the ~~assets~~six ~~and~~months ~~liabilities~~ended inJune ~~active markets~~30, 2020 and ~~inputs~~2019. ~~that~~The ~~are~~increase ~~observable~~is ~~for~~mainly ~~the~~due ~~assets~~to orincrease ~~liabilities,~~disaster ~~either~~loan ~~directly~~from SBAD orin ~~indirectly, for substantially~~ the ~~full~~six ~~term~~months ofended ~~the~~June ~~financial~~30, ~~instruments~~2020.

~~● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.~~25

~~The carrying amounts~~ Concentration of ~~financial~~Business ~~assets~~ and ~~liabilities,~~Credit including cash and cash equivalents, accounts receivable, notes receivable, advances to suppliers, other receivables, short-term bank loans, notes payable, accounts payable, advances from customers and other payables, approximate their fair values because of the short maturity period for these instruments.Risk

~~Stock-based~~Most of ~~Compensation~~the Company’s bank accounts are in banks located in the PRC and are not covered by any type of protection similar to that provided by the Federal Deposit Insurance Corporation (“FDIC”) on funds held in U.S. banks. The Company’s bank account in the United States is covered by FDIC insurance.

~~Stock-based~~Because the ~~compensation~~Company’s ~~includes~~operations ~~(i)~~are ~~common stock~~located ~~awards~~in ~~granted~~the toPRC, ~~employees~~this ~~and~~may ~~directors~~give ~~for~~rise ~~services~~to ~~which~~significant ~~are~~foreign ~~accounted~~currency ~~for~~risks ~~under~~due ~~FASB~~to ~~ASC 718, Compensation–Stock~~fluctuations ~~Compensation,~~in and ~~(ii)~~the ~~common~~volatility ~~stock~~of ~~awards~~foreign ~~granted~~exchange torates ~~consultants~~between ~~which~~U.S. ~~are~~dollars ~~accounted~~and ~~for under FASB ASC 505-50, Equity–Equity-Based Payments to Non-Employees~~RMB.

~~All~~Financial instruments ~~grants~~that ofpotentially ~~common~~subject ~~stock~~the ~~awards~~Company ~~and~~to ~~stock options~~concentration toof ~~employees~~credit ~~and~~risk ~~directors~~consist ~~are~~principally ~~recognized~~of incash, trade accounts receivables and inventories, the ~~financial~~balances ~~statements~~of ~~based~~which onare ~~their~~stated ~~grant~~on ~~date~~the ~~fair~~balance ~~values~~sheet. The Company places its cash in banks located in China. ~~has~~Concentration ~~elected~~of tocredit ~~recognize~~risk ~~compensation~~with ~~expense~~respect ~~using~~to ~~the~~trade ~~straight-line~~accounts ~~method~~receivables ~~for~~is ~~all~~limited ~~common~~due ~~stock~~to ~~awards~~the ~~and~~diversity ~~stock~~of ~~options~~the ~~granted~~Company’s ~~with~~customers ~~service~~who ~~conditions~~are ~~that~~located ~~have~~in adifferent ~~graded~~regions ~~vesting~~of ~~schedule,~~China. ~~with~~The aCompany ~~corresponding~~does ~~charge~~not require collateral or other security to ~~additional~~support financial ~~paid-in~~instruments ~~capital~~subject to credit risk.

28Significant Accounting Estimates and Policies

~~Common~~The discussion ~~stock~~and ~~awards~~analysis ~~are~~of ~~granted~~our financial condition and results of operations is based upon our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to ~~directors~~make estimates and judgments that affect the reported amounts of assets and liabilities. On an ongoing basis, we evaluate our estimates including the allowance for ~~services~~doubtful ~~provided~~accounts, the salability and recoverability of our products, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

~~Common stock awards issued to consultants~~Revenue represent common stock granted to non-employees in exchange for services at fair value. The measurement dates for such awards are set at the dates that the contracts are entered into as the awards are non-forfeitable and vest immediately. The measurement date fair value is then recognized over the service period as if the Company has paid cash for such service. The Company did not make significant grants to consultants for any of the periods presented.Recognition

The Company ~~estimates~~derives ~~fair~~revenues ~~value~~from distribution of ~~common~~graphite-based products. We recognize revenue in accordance with ASC 605-25, Revenue ~~stock~~Recognition, ~~awards~~which ~~based~~states onthat revenue should be recognized when the ~~number~~following criteria are met: (1) persuasive evidence of ~~shares~~an arrangement ~~granted~~exists; ~~and~~(2) the ~~quoted~~service has been rendered; (3) the selling price is fixed or determinable; and (4) collection of the resulting ~~Company’s~~receivable ~~common~~is ~~stock~~reasonably onassured. Sales represent the ~~date~~invoiced value of ~~grant~~goods, net of value added tax (“VAT”), if any, and are recognized upon delivery of goods and passage of title according to shipping terms.

~~$4,800~~The Company ~~and~~is $7subject to VAT,~~200~~ which is levied on a majority of ~~stock~~ ~~compensation expenses~~the ~~were~~products, ~~amortized~~at ~~and~~a ~~recognized~~rate asranging ~~general~~from ~~and~~13% ~~administrative~~to ~~expenses~~17% ~~for~~on the ~~three~~invoiced ~~months~~value of ~~ended~~sales. ~~March~~Output ~~31,~~VAT ~~2020~~is borne by customers in addition to the invoiced value of sales and ~~2019,~~input VAT is borne by the Company in ~~respectively~~addition to the invoiced value of purchases to the extent not refunded for export sales.

~~Recent~~The Company ~~Accounting~~recognizes ~~Pronouncements~~revenue upon delivery of goods and passage of title according to shipping terms. The Company does not provide chargeback or price protection rights to the customers. The customer only places purchase orders with the Company once it has confirmed the sale with a third party because this is a specialized business, which dictates that the Company will not sell the products until the purchase order is received. The Company allows its customers to return products only if its products are later determined by the Company to be defective. Based on the Company’s historical experience, product returns have been insignificant throughout all of its product lines. Therefore, the Company does not record an allowance for sales returns. If sales returns occur, they are taken against revenue when products are returned from customers. Sales are presented net of any discounts given to customers. Interest income is recognized when earned. The Company experienced no returns for the six months ended June 30, 2020 and 2019.

~~The~~In May ~~Company~~2014, ~~has~~the ~~reviewed~~FASB ~~all~~issued ~~recently~~Accounting ~~issued~~Standards Update (“ASU”) 2014-09, ~~but~~ Revenue ~~not~~from ~~yet~~Contracts ~~effective~~with Customers (Topic 606), ~~accounting~~amending ~~pronouncements~~revenue recognition guidance and ~~does~~requiring ~~not~~more ~~believe~~detailed disclosures to enable users of financial statements to understand the ~~future~~nature, ~~adoption~~amount, timing, and uncertainty of ~~any~~revenue ~~such~~and ~~pronouncements~~cash ~~will~~flows ~~have~~arising from contracts with customers. We aadopted ~~material~~this ~~impact~~ASU on ~~its~~January ~~financial~~1, ~~condition~~2018 orfor ~~the~~all ~~results~~revenue ofcontracts ~~its~~with ~~operations~~our customers using the modified retrospective approach.

~~In February 2016, the FASB issued ASU No.~~There 2016-02, “Leases (Topic 842)”, to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. ASU 2016-02 is ~~effective~~no ~~for~~impact ~~interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company does not expect that the adoption~~ of applying this ~~guidance will have a material impact on its consolidated financial statements~~ASU.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows”. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. 26

~~In October~~Comprehensive ~~2016, the FASB issued ASU 2016-16, “~~Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory”, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for the Company in its first quarter of 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

InWe have ~~October~~adopted ~~2016~~ASC 220, ~~the~~Comprehensive ~~FASB issued ASU 2016-17~~Income, ~~“Consolidation~~ ~~(Topic~~formerly ~~810):~~known ~~Interests~~as ~~Held~~SFAS ~~through Related Parties That Are under Common Control”~~No. ~~The~~130, ~~amendments~~Reporting ~~affect reporting~~Comprehensive ~~entities~~Income, ~~that~~which ~~are required to evaluate whether they should consolidate a variable interest entity in certain situations~~establishes ~~involving~~standards ~~entities~~for ~~under common control. Specifically, the amendments change the evaluation of whether a~~ reporting ~~entity~~and ispresentation ~~the primary beneficiary~~ of acomprehensive ~~variable~~income ~~interest~~(loss) ~~entity~~and byits ~~changing~~components ~~how~~in a ~~reporting~~full ~~entity~~set ~~that is a single decision maker~~ of ageneral ~~variable interest~~purpose ~~entity treats indirect interests in the entity held through related parties that are under common control with the reporting~~financial ~~entity~~statements. ~~The~~We ~~amendments~~have ~~are~~chosen ~~effective~~to ~~for~~report ~~public~~comprehensive ~~business~~income ~~entities~~(loss) ~~for~~in ~~fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect that~~ the ~~adoption~~statements of ~~this~~operations ~~guidance will~~and ~~have~~comprehensive ~~a material impact on its consolidated financial statements~~income.

29Income Taxes

InWe account ~~January~~for ~~2017,~~income taxes under the ~~FASB~~provisions ~~issued~~of ~~ASU~~ASC ~~No. 2017-01~~740, ~~“Business~~Income ~~Combinations~~Tax, ~~(Topic~~formerly ~~805):~~known ~~Clarifying~~as ~~the~~SFAS ~~Definition of a Business”~~No. ~~The~~109, ~~amendments~~Accounting infor ~~this~~Income ~~ASU clarify~~Taxes, ~~the~~which ~~definition~~requires recognition of adeferred ~~business~~tax ~~with~~assets ~~the~~and ~~objective~~liabilities offor ~~adding~~the ~~guidance~~expected tofuture ~~assist~~tax ~~entities~~consequences ~~with~~of ~~evaluating~~events ~~whether~~that ~~transactions should~~have bebeen ~~accounted~~included ~~for~~in asthe ~~acquisitions~~consolidated ~~(or~~financial ~~disposals)~~statements ~~of assets~~ or ~~businesses~~tax returns. ~~Basically~~Deferred ~~these~~tax ~~amendments~~assets ~~provide~~and aliabilities ~~screen~~are torecognized ~~determine~~for ~~when~~the afuture ~~set~~tax isconsequence ~~not~~attributable ato ~~business. If~~ the ~~screen~~difference isbetween ~~not met,~~ the ~~amendments~~tax inbases ~~this~~of ~~ASU~~assets ~~first,~~and ~~require~~liabilities ~~that~~and totheir bereported ~~considered a business,~~amounts ain ~~set~~the ~~must~~financial ~~include,~~statements. atDeferred atax ~~minimum,~~assets anand ~~input~~liabilities ~~and~~are ameasured ~~substantive~~using ~~process~~the ~~that~~enacted ~~together~~tax ~~significantly~~rate ~~contribute~~expected to ~~the~~apply ~~ability~~ to ~~create~~ ~~output~~taxable ~~and~~income ~~second,~~in ~~remove~~ the ~~evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal~~ years ~~beginning~~in ~~after~~which ~~December 15, 2017 and interim periods within~~ those ~~periods,~~temporary ~~and~~differences ~~all other~~are ~~entities~~expected ~~should~~to ~~apply~~be ~~these~~recovered ~~amendments~~or ~~for~~settled. ~~fiscal~~The ~~years~~effect ~~beginning~~on ~~after~~deferred tax ~~December~~assets ~~15, 2018,~~ and ~~interim~~liabilities ~~periods~~of ~~within~~a ~~annual periods~~change ~~beginning~~in ~~after~~tax ~~December~~rates ~~15,~~is ~~2019.~~recognized ~~The~~in ~~Company~~income ~~does~~in ~~not~~the ~~expect~~period that includes the ~~adoption~~enactment ~~of this guidance will have a material impact on its consolidated financial statements~~date.

~~Management~~Effective January ~~does~~1, ~~not~~2008, ~~believe~~the ~~that~~new ~~any~~Chinese ~~recently issued,~~income ~~but~~tax ~~not~~law ~~yet~~sets ~~effective~~unified ~~accounting~~income ~~pronouncements~~tax rates for domestic and foreign companies at 25%, ~~when~~except for ~~adopted~~a 15% corporate income tax rate for qualified high technology and science enterprises. In accordance with this new income tax law, ~~will~~low ~~have~~preferential atax ~~material~~rates ~~effect~~in onaccordance with both the ~~accompanying~~tax ~~financial~~laws and administrative regulations prior to the promulgation ~~statements~~of this law gradually become subject to the new tax rate within five years after the implementation of this law.

~~Off-Balance~~Accounts Receivable ~~Sheet~~and ~~Arrangements~~Allowance For Doubtful Accounts

WeAccounts receivables ~~have~~are ~~not~~recognized ~~entered~~and ~~into~~carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for allowance for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off~~-balance~~ ~~sheet~~as ~~arrangements~~incurred. Accounts receivable are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. The allowance for doubtful accounts amounted to $nil as of June 30, 2020 and December 31, 2019.

~~Item 3. Quantitative and Qualitative Disclosures about Market Risk.~~Inventories

~~Not~~Inventories are ~~applicable~~stated ~~because~~at wethe ~~are~~lower of cost, determined on a ~~smaller~~weighted average basis, and net realizable value. Net realizable value is the ~~reporting~~estimated ~~company~~selling price, in the ordinary course of business, less estimated costs to complete and dispose. The cost of inventories comprises all costs of purchases, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. For the six months ended June 30, 2020 and 2019, the Company has not made provision for inventory in regards to slow moving or obsolete items.

~~Item~~Property, Plant ~~4. Controls~~ and ~~Procedures.~~Equipment

~~Evaluation~~Property, plant and equipment are stated at cost. Major expenditures for betterments and renewals are capitalized while ordinary repairs and maintenance costs are expensed as incurred. Depreciation and amortization is provided using the straight-line method over the estimated useful life of ~~Disclosure~~the ~~Controls~~assets after taking into account the estimated residual value. The Company reviews the carrying value of property, plant, and ~~Procedures~~equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment was recorded in operating expenses during the six months ended June 30, 2020 and 2019.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.27

~~Management conducted its evaluation of~~Research ~~disclosure controls~~ and procedures under the supervision of our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, because of the material weakness in internal control over financial reporting, our disclosure controls and procedures were not effective as of March 31, 2020. Development

~~Changes~~Research and development costs are expensed as incurred, and are included in ~~Internal~~general ~~Control~~and ~~over~~administrative ~~Financial~~expenses. ~~Reporting~~These costs primarily consist of the cost of material used and salaries paid for the development of our products and fees paid to third parties. Our research and development expense for the six months ended June 30, 2020 and 2019 were not significant.

~~There were no changes in the Company’s~~Value ~~internal~~Added control over financial reporting during the three months ended March 31, 2020, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Tax

30Pursuant to China’s VAT rules and regulations, as an ordinary VAT taxpayer we are subject to a tax rate of 17% (“output VAT”). The output VAT is payable after offsetting VAT paid by us on purchases (“input VAT”). Under the commercial practice of the PRC, the Company paid VAT and business tax based on tax invoices issued.

~~PART~~The tax IIinvoices –may ~~OTHER~~be ~~INFORMATION~~issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued. In the event that the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty, which can range from zero to five times the amount of the taxes that are determined to be late or deficient. In the event that a tax penalty is assessed on late or deficient payments, the penalty will be expensed as a period expense if and when a determination has been made by the taxing authorities that a penalty is due.

~~Item~~Fair Value 1.of ~~Legal~~Financial ~~Proceedings~~Instruments

~~There~~On January ~~are no other actions~~1, ~~suits~~2008, ~~proceedings, inquiries~~the orCompany ~~investigation~~began ~~before~~recording orfinancial byassets ~~any~~and ~~court,~~liabilities ~~public~~subject ~~board,~~to ~~government~~recurring ~~agency,~~fair ~~self-regulatory~~value ~~organization~~measurement orat ~~body pending~~the ~~or,~~price tothat ~~the~~would ~~knowledge~~be ofreceived ~~the~~to ~~executive~~sell ~~officers~~an ofasset ~~our~~or ~~company~~paid orto ~~any~~transfer ofa ~~our~~liability ~~subsidiaries,~~in ~~threatened~~an ~~against~~orderly ortransaction ~~affecting~~between ~~our~~market ~~company,~~participants. ~~our~~On ~~common~~January ~~stock~~1, ~~any~~2009, ofthe ~~our~~Company ~~subsidiaries~~began orrecording ofnon-recurring ~~our~~financial ~~companies~~as orwell ~~our~~as ~~subsidiaries’~~all ~~officers~~non-financial orassets ~~directors~~and inliabilities ~~their capacities~~subject asto ~~such,~~fair invalue ~~which~~measurement anunder ~~adverse~~the ~~decision~~same ~~could~~principles. ~~have~~These afair ~~material~~value ~~adverse~~principles ~~effect~~prioritize valuation inputs across three broad levels. The three levels are defined as follows:

~~Item~~● 2.Level ~~Unregistered~~1 ~~Sales~~inputs ofto ~~Equity~~the ~~Securities~~valuation ~~and~~methodology ~~Use~~are ofquoted ~~Proceeds~~prices (unadjusted) for identical assets or liabilities in active markets.

~~None~~● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.

~~Item~~● Level 3. ~~Defaults~~inputs ~~Upon~~to ~~Senior~~the ~~Securities~~valuation methodology are unobservable and significant to the fair value.

~~There~~The carrying ~~has~~amounts ~~been~~of nofinancial ~~default~~assets inand ~~the~~liabilities, ~~payment~~including cash and cash equivalents, accounts receivable, notes receivable, ofadvances ~~principal~~to suppliers, ~~interest~~other receivables, ~~sinking~~short-term orbank ~~purchase~~loans, ~~fund~~notes ~~installment~~payable, oraccounts ~~any~~payable, ~~other~~advances ~~material~~from ~~default~~customers and other payables, ~~with~~approximate ~~respect~~their tofair ~~any~~values ~~indebtedness~~because of the ~~Company~~short maturity period for these instruments.

~~Item 4. Mine Safety Disclosures~~Stock-based Compensation

~~Not~~Stock-based compensation ~~applicable~~includes (i) common stock awards granted to employees and directors for services which are accounted for under FASB ASC 718, Compensation–Stock Compensation, and (ii) common stock awards granted to consultants which are accounted for under FASB ASC 505-50, Equity–Equity-Based Payments to Non-Employees.

~~Item~~All grants 5of common stock awards and stock options to employees and directors are recognized in the financial statements based on their grant date fair values. ~~Other~~The ~~Information~~Company has elected to recognize compensation expense using the straight-line method for all common stock awards and stock options granted with service conditions that have a graded vesting schedule, with a corresponding charge to additional paid-in capital.

~~There is no other information required to be disclosed under this item which was not previously disclosed.~~ 28

~~Item~~Common stock 6.awards ~~Exhibits~~are granted to directors for services provided.

Exhibit Number		Description
31.1*		Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certifications of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certifications of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

Common stock awards issued to consultants represent common stock granted to non-employees in exchange for services at fair value. The measurement dates for such awards are set at the dates that the contracts are entered into as the awards are non-forfeitable and vest immediately. The measurement date fair value is then recognized over the service period as if the Company has paid cash for such service. The Company did not make significant grants to consultants for any of the periods presented.

*The Company ~~Filed~~estimates ~~herewith~~fair value of common stock awards based on the number of shares granted and the quoted price of the Company’s common stock on the date of grant.

+$4,800 Inand ~~accordance~~$7,200 ~~with~~of stock ~~the~~compensation expenses ~~SEC~~were ~~Release~~amortized ~~33-8238,~~and ~~deemed~~recognized ~~being~~as ~~furnished~~general and ~~not~~administrative ~~filed~~expenses for the six months ended June 30, 2020 and 2019, respectively.

31Recent Accounting Pronouncements

~~SIGNATURES~~The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

~~Pursuant~~In February to2016, the ~~requirements~~FASB ofissued ASU No. 2016-02, “Leases (Topic 842)”, to increase the ~~Securities Exchange~~transparency and comparability ~~Act~~about ofleases ~~1934~~among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, ~~the~~2018, ~~registrant~~and ~~has~~requires ~~duly caused~~a ~~this~~modified ~~report~~retrospective approach to beadoption. Early ~~signed~~adoption onis ~~its~~permitted. ~~behalf~~The byCompany does not expect that the ~~undersigned,~~adoption ~~thereunto~~of ~~duly~~this ~~authorized~~guidance will have a material impact on its consolidated financial statements.

	CHINA CARBON GRAPHITE GROUP, INC.
Date: July 6, 2020	By:	/s/ Donghai Yu
		Donghai Yu
		Chief Executive Officer
Date: July 6, 2020	By:	/s/ ZhenfangYang
		Zhenfang Yang
		Chief Financial Officer

32In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory”, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for the Company in its first quarter of 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

In October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. The amendments affect reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. Specifically, the amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management conducted its evaluation of disclosure controls and procedures under the supervision of our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, because of the material weakness in internal control over financial reporting, our disclosure controls and procedures were not effective as of June 30, 2020.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the six months ended June 30, 2020, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There are no other actions, suits, proceedings, inquiries or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

There is no other information required to be disclosed under this item which was not previously disclosed.

Item 6. Exhibits

Exhibit Number		Description

31.1*		Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certifications of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certifications of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith.

In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

SIGNATURES

Pursuant to the requirements 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 CARBON GRAPHITE GROUP, INC.

Date: August 19, 2020	By:	/s/ Donghai Yu
		Donghai Yu
		Chief Executive Officer

Date: August 19, 2020	By:	/s/ ZhenfangYang
		Zhenfang Yang
		Chief Financial Officer

Filing Compare · China Carbon Graphite Group, Inc.