8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 7, 2006

Commission file number: 000-51364

Dolce Ventures, Inc.

(Exact name of small business issuer as specified in its charter)

Utah	32-0028823
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or organization)

118 Chatham Road, Syracuse, NY 13203

(Address of Principal Executive Offices)

(315) 476-5769

(Issuer's telephone number)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425)

o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17CFR240.14a-2)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

TABLE OF CONTENTS

Item No.	Description of Item	Page No.
Item 1.01	Entry Into a Material Definitive Agreement
Item 2.01	Completion of Acquisition or Disposition of Assets
Item 3.02	Unregistered Sale of Securities
Item 3.03	Material Modification of Rights of Security holders
Item 4.01	Changes in Registrant's Certifying Accountant
Item 5.01	Change In Control of Registrant
Item 5.06	Change in Shell Company Status
Item 8.01	Other Events
Item 9.01	Financial Statements and Exhibits

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Current Report on Form 8-K contains some forward-looking statements. Certain of the matters discussed concerning our operations, cash flows, financial position, economic performance and financial condition, including, in particular, future sales, product demand, the market for our products in the People’s Republic of China, competition, exchange rate fluctuations and the effect of economic conditions include forward-looking statements within the meaning of section 27A of the Securities Act and Section 21E of the Exchange Act.

Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions are forward-looking statements. Although we believe that these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flow, research and development costs, working capital, capital expenditures and other projections, they are subject to several risks and uncertainties, and therefore, we can give no assurance that these statements will be achieved.

Investors are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements.

As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events.

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We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in our reports on Form 10-KSB, Form 10-QSB, Form 8-K, or their successors. We also note that we have provided a cautionary discussion of risks and uncertainties under the caption "Risk Factors" in this Current Report. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us.

Information regarding market and industry statistics contained in this Current Report is included based on information available to us which we believe is accurate. We have not reviewed or included data from all sources, and cannot assure stockholders of the accuracy or completeness of the data included in this Current Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to "yuan" or "RMB" are to the currency of the People’s Republic of China (the “PRC”) yuan (also known as the rnminbi). According to Xe.com as of September 6, 2006, $1.00 = 7.942 yuan.

Explanatory Note

This Current Report on Form 8-K is being filed by Dolce Ventures, Inc. (the “Company” or “Dolce”) in connection with a reverse merger transaction in which the Company (i) consummated a share exchange transaction with the shareholders of GAS Investment China Co., Ltd. (“Gas (BVI)”), whereby the Company exchanged 14,361,647 shares of its newly designated Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Stock”) for all of the issued and outstanding stock of Gas (BVI) held by the shareholders of Gas (BVI) (the “Share Exchange Transaction”), and (ii) consummated the initial closing of a private placement offering, whereby the Company, issued to the investors of the initial funding 2,509,782 shares of the Series B Stock, and related warrants and rights in exchange for $6,876,800 (the “Private Financing”, together with “Share Exchange Transaction”, and, collectively, the “Reverse Merger Transaction”).

As a result of the Share Exchange Transaction, Gas (BVI) became a wholly-owned subsidiary of the Company, and Beijing Zhong Ran Wei Ye Gas Co., Ltd. (“Beijing Gas”), a limited liability company organized under the laws of the PRC and a wholly owned subsidiary of Gas (BVI), became an indirectly wholly owned subsidiary of the Company. Beijing Gas and its subsidiaries in the PRC are engaged in the development of natural gas distribution systems and the distribution and supply of natural gas in the PRC. As a result of the Share Exchange Transaction, the Company ceased being a shell company as such term is defined in Rule 12b-2 under the Exchange Act and is now engaged in the development of natural gas distribution systems and the distribution and supply of natural gas in the PRC. See “Business” in Item 2.01 of this Current Report for more information on our business. 

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Throughout this Current Report, and unless the context otherwise requires, “we,” “our” and “us” refers collectively to the Company, Gas (BVI), Beijing Gas and the subsidiaries of Beijing Gas. Throughout this Current Report, and unless the context otherwise requires, “Beijing Gas” refers collectively to Beijing Gas and the subsidiaries of Beijing Gas in the PRC.

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

We entered into the following material definitive agreements in connection with the Reverse Merger Transaction. In order to effect the Reverse Merger Transaction, the shareholders of Gas (BVI) purchased 72,569,764 shares or our Common Stock to effect a change of control, the details of which are more fully described in Item 5.01.

1. Share Exchange Agreement and the Issuance of Series A Stock

On September 7, 2006, the Company entered into and consummated a share exchange agreement (the “Share Exchange Agreement”) with the holders of all of the outstanding capital stock of Gas (BVI), which were: Eloten Group Ltd., Leading King Investment Limited., Zhong Zhi Min, Li Shu Wang, Chen Si, Xiang Shun Ying, Chong Shun, Liu Xiao Bing, Zhuo Qing Hui, Bian Shu Kui, Chen Fang, Shang Jian Zhong and Wang Wei Dong (collectively, the “Gas (BVI) Shareholders”).

Pursuant to the terms of the Share Exchange Agreement, the Company issued an aggregate of 14,361,647 shares of our newly designated Series A Stock in exchange for the 9,950,000 shares of common stock of Gas (BVI) held by the Gas (BVI) Shareholders, which constituted all of Gas (BVI)’s capital stock. Each share of Series A Stock will convert automatically into one share of our common stock, par value $0.001 per share (“Common Stock”) upon the completion of the reverse stock split more fully described in Item 3.03 of this Current Report (the “Reverse Split”). Therefore, the shares of Series A Stock issued to the Gas (BVI) Shareholders will automatically convert into an aggregate of 14,361,647 shares of Common Stock, which will represent approximately 71.81% of our total outstanding Common Stock after the Reverse Split.

As a result of the consummation of the Share Exchange Agreement, the Company ceased being a shell company as such term is defined in Rule 12b-2 under the Exchange Act, and Gas (BVI) is now a wholly-owned subsidiary of the Company, and Beijing Gas is now the indirectly wholly-owned subsidiary of the Company in the PRC.

The foregoing description of the Share Exchange Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 10.1.

2. Stock Purchase Agreement

On September 7, 2006, the Company entered into and closed a stock purchase agreement (the “Stock Purchase Agreement”) with Vision Opportunity Master Fund, Ltd. (“VOMF”), SEI Private Trust Co. FAO—The JM Smucker Co. Master Fund, and Coronado Capital Partners LP (together with VOMF, collectively, the “Investors”), pursuant to which the Company issued, for an aggregate of $6,876,800 in gross cash proceeds, to the Investors an aggregate of 2,509,782 shares of our newly designated Series B Stock at $2.74 per share, Series A, B, J, C and D warrants (each of which is described below) (the “Private Financing”).

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Subject to certain conditions, at the option of the holders of the Series B Stock, each share of Series B Stock is convertible into one share of our Common Stock after giving effect to the Reverse Split. Therefore, the shares of Series B Stock to be issued in the Private Financing are convertible into an aggregate of 2,509,782 shares of Common Stock after giving effect of the Reverse Split.

The Series A Warrants provide the Investors the right to purchase an aggregate of 2,509,782 shares of Common Stock for $3.84 per share. The Series B Warrants provide the Investors the right to purchase an aggregate of 1,254,891 shares of Common Stock for $5.48 per share. The Series A and B Warrants have a term of five years.

The Series J Warrants provide the Investors the right to purchase an aggregate of 2,284,651 shares of Common Stock for $3.01 per share. Each Series J Warrant is exercisable for a period of twelve (12) months following the closing of the Private Financing. The Series C Warrants provide the Investors the right to purchase an aggregate of 2,284,651 shares of Common Stock for $4.22 per share. The Series D Warrants provide the Investors the right to purchase an aggregate of 1,142,326 shares of Common Stock at $6.03 per share. The Series C and D Warrants of an Investor are only exercisable once the Series J Warrant of such Investor is exercised and their terms are for five years following that date.

The Stock Purchase Agreement requires that the Company to take certain actions after the closing, among other things:

(a) Board Observer Rights. VOMF shall have the right to have a representative serve as an observer of the Company’s Board of Directors.

(b) Investor and Public Relations. The Company is to deposit or cause to be deposited $500,000 of the funds raised in the Private Financing in a separate escrow account with a separate escrow agent to be used by the Company in connection with investor and public relations.

(c) Revenue Targets. The Company is to establish an adjustment escrow account (the “Adjustment Account”) in its name in which the Company shall deposit 3,245,784 shares of Common Stock to be issued to the Investors, and any other investors in the Series B Stock (collectively “Series B Investors”), as adjustment shares (the “Adjustment Shares”) with respect to the Company’s audited earnings after taxes. The Adjustment Account shall be managed by a third party law firm acting as escrow agent for such purpose. In the event that (A) the Company’s earnings after taxes for its 2006 fiscal year is less than $5,795,000 or (B) (i) if, by the end of its 2007 fiscal year the Company has raised not less than $20 million through the exercise of warrants or through an equity or debt offering (the “Capital Condition”), the Company’s earnings after taxes for its 2007 fiscal year is less than $9,120,000 or (ii) if the Capital Condition has not been met, the Company’s earnings after taxes for its 2007 fiscal year is less than $7,900,000, the Company shall issue or cause to be issued from the Adjustment Account in each instance 1,622,892 a number of Adjustment Shares equal to five percent (5%) of the number of shares of Common Stock outstanding as of the date hereof on a fully diluted basis; provided, however, that if by the end of its 2007 fiscal year the Company has met the Capital Condition by procuring not less then $20 million in debt financing, the Company shall issue or cause to be issued one-half of the Adjustment Shares that would otherwise be due. The Adjustment Shares shall be issued to the Series B Investors in proportion to their purchases of Series B Convertible Preferred Stock promptly following public disclosure that such revenue target has not been achieved. In addition, if the Company shall determine to proceed with the preparation and filing of a registration statement under the Securities Act in connection with the proposed offer and sale of any of its securities by it or any of its security holders (other than a registration statement on Form S-4, S-8 or other limited purpose form), then the Company must cause all Adjustment Shares issued to be included in such registration statement.

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(d) Ratchet Provision. In the event the Company, shall, at any time within two (2) years following the closing of the Private Financing, issue or sell any additional shares of Common Stock (“Additional Shares of Common Stock”), at a price per share less than $2.74 or without consideration, then the conversion rate for the Series B Stock will be adjusted so that the number of shares of Common Stock issuable upon such conversion of the Series B Stock shall be increased in proportion to such increase in outstanding shares of Common Stock.

(e) Right of First Refusal. For a period of two (2) years following the effective date of the registration statement providing for the resale of the Conversion Shares and the Warrant Shares, the Company is to provide the Series B Investors a right of refusal as to any proposed offer or sale to any third party by the Company, of Common Stock or any debt or equity securities convertible, exercisable or exchangeable into Common Stock, with certain exceptions.

The foregoing description of the Stock Purchase Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 4.1.

3. Registration Rights Agreement

In connection with the Stock Purchase Agreement, the Company entered into a Registration Rights Agreement with VOMF on September 7, 2006 (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company is required to file with the SEC a "resale" registration statement on Form SB-2 (the “Registration Statement”), providing for the resale of all Conversion Shares, Warrant Shares, 467,153 shares of Common Stock issuable upon exercise of a warrant issued to Kuhns Brothers, Inc. (the “Kuhns Shares”), an aggregate of 635,822 shares of Common Stock issuable upon conversion of the Series B Stock issued to VOMF, Kuhns Brothers, Inc., and certain other parties, and 1,314,405 shares of Common Stock issuable upon conversion of Series A Stock issued to certain shareholders of Gas (BVI) in exchange for the shares of Gas (BVI) held by such shareholders pursuant to the Share Exchange Transaction.

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The Company is obligated to file the Registration Statement by the 30^th day following the closing of the Private Financing. In the event that the Registration Statement receives a “full review” from the SEC and is not effective within 180 days of the closing date of the Private Financing, the Company will be obligated to pay an amount in cash as liquidated damages to each Investor equal to two percent (2%) for each calendar month (prorated for shorter periods) of the Investor’s initial investment in the Series B Stock (with a cap of 20%) until the Registration Statement is effective (the “Penalty”). In the event that the Registration Statement does not receive a full review by the SEC, the Penalty will begin to accrue 120 days after the closing of the Private Financing.

The foregoing description of the Registration Rights Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 4.2.

4. Lock-Up Agreement.

In connection with the Stock Purchase Agreement, on September 7, 2006, the Company entered into a Lock-Up Agreement with the Gas (BVI) Shareholders (the “Lock-Up Agreement”), pursuant to which the Gas (BVI) Shareholders agreed to not transfer any of the shares of Common Stock issuable upon conversion of the Series A Stock issued to the Gas (BVI) Shareholders in the Share Exchange Transaction from the period commencing on the closing date of the Private Financing and expiring on the date that is the later of one (1) year following the closing date of the Private Financing or six (6) months following the effective date of the registration statement filed by the Company with the SEC providing for the resale of the shares of Common Stock issuable upon conversion of the Series A Stock and exercise of any warrants; provided, however, that no Gas (BVI) Shareholder shall, during the twelve (12) months following such period, sell more than one-twelfth (1/12) of their total holdings of Common Stock or Series A Stock during any one (1) month.

The foregoing description of the Lock-Up Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 4.3.

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

While the Company’s previous management did not previously indicate that the Company was a “shell company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s new management believes that the Company, prior to the Share Exchange Agreement, qualified as a shell company.

As a result of the Reverse Merger Transactions, the Company ceased being a shell company as such term is defined in Rule 12b-2. See Item 5.06 of this Current Report for more information.

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Our Corporate Structure

Our current corporate structure is set forth below:

(i) See “Organizational History of Gas Investment China Co., Ltd. And Beijing Zhong Ran Wei Ye Gas Co., Ltd.” under Item 2.01.

Organizational History of Dolce

The Company was incorporated under the laws of the State of Utah on August 19, 1983 as Evica Resources, Inc. On April 5, 1984, we changed our name to American Arms, Inc. American Arms Inc. commenced the manufacture and sale of weapons and laser sights. On December 31, 1984, our Articles of Incorporation were suspended for failure to file an annual report. Our Articles of Incorporation were reinstated on December 19, 1985 by the Utah Department of Commerce, Division of Corporations. On October 1, 1984, our Articles of Incorporation were suspended a second time for failure to file an annual report. Our Certificate of Incorporation was reinstated on November 21, 1986 again by the State of Utah, Department of Commerce, Division of Corporations.

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On April 12, 1988, we changed our name to American Industries, Inc. as the Company was no longer engaged in the manufacturing and sale of weapons and laser sights. American Industries Inc. was in the business of providing room safes for hotel rooms.

On February 19, 2002, we formed a subsidiary corporation named Pegasus Tel, Inc. under the laws of the State of Delaware to enter into the telecommunications business. On March 28, 2002, Pegasus Tel, Inc. merged with Pegasus Communications, Inc., a New York corporation, with Pegasus Tel, Inc. as the surviving entity. On January 14, 2002 we purchased payphone assets consisting of 29 payphones and associated equipment from the Margaretville Telephone Company for $11,600.00. On May 21, 2002, we changed our name to Dolce Ventures, Inc.

As a result of the consummation of the Reverse Merger Transaction, we are now engaged in the development of natural gas distribution systems in small- and medium-sized cities in China, as well as the distribution of natural gas to residential, commercial and industrial customers in China, through our indirectly-owned subsidiaries in the PRC, Beijing Gas and its subsidiaries. We still own Pegasus Tel, but will spin it off in the form of a dividend to our shareholders of record as of August 30, 2006.

Organizational History of GAS Investment China Co., Ltd. and Beijing Zhong Ran Wei Ye Gas Co., Ltd.

Gas (BVI) was incorporated on June 19, 2003 in the Territory of the British Virgin Islands with Mr. Yu-Chuan Liu as its sole shareholder. Gas (BVI) is the holding company for Beijing Gas. Prior to the acquisition of all of the equity interests of Beijing Gas by Gas (BVI) as described below, Gas (BVI) had no business operations, assets or liabilities, apart from organizational expenses and fees.

Beijing Gas was originally formed as a limited liability company under the laws of the PRC in 2001 under the name Beijing Yuan Wang Yu Cheng Construction Ltd. (hereinafter referred to as the “Yuan Wang Yu Cheng”).  On February 17, 2004, Gas (BVI) acquired all the outstanding capital stock of Beijing Gas from its then shareholders. On July 14, 2004, Gas (BVI) transferred 1% of the capital stock of Beijing Gas to Shen Zhen Shen Qi Cheng Tong Investment Ltd., a limited liability company organized under the laws of the PRC (“Shen Zhen Shen Qi”), and, simultaneously, Shen Zhen Shen Qi invested RMB 20 million in Beijing Gas in exchange for 50% of its capital stock. As a result, Gas (BVI) and Shen Zhen Shen Qi each held 49% and 51% of the capital stock of Beijing Gas, respectively. On April 30, 2006, Gas (BVI) acquired 51% of the capital stock of Beijing Gas held by Shen Zhen Shen Qi in exchange for RMB 20.4 million. As a result of this transaction, Beijing Gas is now a “wholly foreign owned entity” under the PRC law by virtue of its status as a wholly-owned subsidiary of Gas (BVI).

Beijing Gas has 13 subsidiaries, known as project companies, in three provinces, and four branch offices in Beijing. The project companies are the operating subsidiaries of Beijing Gas. Each project company operates as a local natural gas distributor in a city or county, which we refer to as an operational location, pursuant to an exclusive franchise agreement with the local government or entities responsible for administering and/or regulating gas utilities, pursuant to which Beijing Gas is granted the exclusive right to develop and operate natural gas distribution systems and distribute natural gas at the operational location.

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Each of the 13 project companies is organized as a limited liability company under PRC law with Beijing Gas holding an equity interest of 85% to 95% and an individual shareholder nominally holding the remainder of the equity interest in such project company. Each such individual shareholder has relinquished any and all rights, power and interest of a shareholder in the respective project companies under enforceable contracts. This structure was intended to comply with a PRC law that required a limited liability company to have at least two shareholders, which requirement was removed in January 2006. Beijing Gas intends to cause the individual shareholders to transfer their share holding in each of the project companies back to Beijing Gas in the near future.

In addition, Beijing Gas holds a 40% equity interest in Beijing Zhong Ran Xiang Ke Oil and Gas Technology Co. Ltd. (“Beijing Zhong Ran Xiang Ke”), a PRC joint venture entity engaged in the business of development, licensing and sale of oil and gas technologies and equipment, and sale of self-produced products.

Set forth below are the subsidiaries of Beijing Gas:

Subsidiary	Beijing Gas’s Equity Interest
Yu Tian county Zhong Ran Wei Ye Gas Ltd.	90%
Ning Jing Wei Ye Gas Ltd.	95%
Xing Tang County Wei ye Gas Ltd.	95%
Lin Zhang County Wei Ye Gas Ltd.	85%
Jin Zhou Wei Ye Gas Ltd.	95%
Wu Qiao County Gas Ltd.	95%
Long Yao County Zhong Ran Wei Ye Gas Ltd.	95%
Shen Zhou Wei Ye Gas Ltd.	95%
An Ping County Wei Ye Gas Ltd.	95%
Pei County Wei Ye Gas Ltd.	90%
Si Hong Wei Ye Gas Ltd.	95%
Si Shui Wei Ye Gas Ltd.	95%
Lang Fang Development Zone Wei Ye Dangerous Goods Transportation Ltd.	95%
Beijing Zhong Ran Xiang Ke Gas Technology Ltd.	40%

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Overview of Our Business

As a result of the consummation of the Reverse Merger Transaction, we are now engaged in the development of natural gas distribution systems in small- and medium-sized cities in China, as well as the distribution of natural gas to residential, commercial and industrial customers in China through our indirectly owned subsidiaries in the PRC, Beijing Gas and its subsidiaries.

We own and operate 20 natural gas distribution systems serving approximately 23,000 residential and four commercial and industrial customers. Our facilities include approximately 200 kilometers (“km”) of pipeline and delivery networks with a designed daily capacity of approximately 40,000 cubic meters of natural gas (“m3”). Currently, we are constructing an additional four natural gas distribution systems and are planning two more natural gas distribution systems. We own and operate natural gas distribution systems primarily in Hebei, Jiangsu, and Shandong Provinces. The following table presents, for the periods indicated, selected operating data:

	At and for the 6 months ended June 30,	At and for the year ended December 31,
	2006	2005	2004
Total gas distributed and supplied (m3)	34,096,610.95	30,205,073.33	20,353,040.11
Distribution network (Km)	202	187.8	40.5
Number of industrial customers	4	4	1
Number of residential customers	30,788	23,700	2,300

We buy natural gas for distribution in three forms: (i) piped natural gas—we use piped natural gas (“PNG”) if the gas source, or long distance pipeline, is located within a reasonably short distance to our system; ii) compressed natural gas (“CNG”); and (iii) liquefied natural gas (“LNG”). Both CNG and LNG are natural gas that has been compressed into canisters so as to enable transportation, usually by truck, to the point of distribution or consumption. Typically CNG is compressed under 200 times pressure and transported at normal temperature, while LNG is compressed at 600 times pressure and transported at sub zero degree temperature. Because of the temperature restriction in transporting CNG, it is generally transported within a distance of 300 km. Because LNG is transported at normal temperature, there is no distance restriction in transporting LNG. As LNG is compressed at much higher pressure and transported at much lower temperature than that for CNG, the cost of compression and processing of LNG is higher than that of CNG.

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Generally, if a customer is located within 300 km of our natural gas supplier, we transport CNG to the customer. We transport LNG to a customer if the customer is located more than 300 km away from a supplier. Approximately 99% of the natural gas we purchase is LNG and approximately 1% is CNG.

We generate revenues in the following two ways: (i) connection fees for the sale of interconnections to our natural gas distribution system and (ii) the sale of natural gas. In 2004, we also generated sales from the sale of natural gas appliances and equipment, gas meters, and repair, maintenance and related services. In 2005, we ceased supplying gas appliances, equipment and gas meters as sales of such items were not very profitable and our customers can find more varieties of these items readily available on the open market.

We have two types of customers: (i) residential and (ii) commercial or industrial. The following table presents, for the periods indicated, the revenues generated from each of our activities:

	At and for the 6 months ended June 30,	At and for the year ended December 31,
	2006 (in US$ millions)	2005 (in US$ millions)	2004 (in US$ millions)
Connection fees (as % of total Sales)	0.4 ( 24%)	8.2 (75.2%)	0.7 (15.9%)
Gas sales	1.1 ( 76%)	2.7 (24.8%)	3.2 (72.7%)
Other sales	--	--	0.5 (11.4%)

Our cost of sales consists of cost of gas sales and cost of connection. Cost of gas sales consists of cost of natural gas purchased from the suppliers, transportation cost, depreciation of plant and equipment, and amortization of the capitalized construction costs as our expenditures in constructing our pipeline infrastructure are generally capitalized as fixed assets and amortized over a period of time. Cost of connection includes certain construction costs that are expensed.

The following table presents Beijing Gas’ costs of sales for the periods indicated:

	At and for the 6 months ended June 30,	At and for the year ended December 31,
	2006 (in US$ millions)	2005 (in US$ millions)	2004 (in US$ millions)
Gas cost	0.9	2.5	2.9
Connection cost	0.1	1.6	0.3

Our business is generally affected by two seasonal factors: First, between December and March, the weather is too cold in northern China for construction. For a given gas distribution project, to avoid running into this time period, we generally start the process of pipeline installation, which has a duration of six to eight months, in April so as to complete the process before December. As a result, most of our revenues from connection fees are recorded in the fourth quarter. Second, winter is our peak season for gas sales as our customers tend to consume more natural gas for heating purposes.

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Our Strategy

Our strategy involves a four-part plan: (i) serve smaller cities each with a population of no more than one million, where there is little competition to obtain a franchise, and where our franchise grants us exclusivity; (ii) contract for long term supplies of natural gas on favorable prices and terms; (iii) finance our Company using a well-designed financing plan that will give us a favorable cost of capital; and (iv) employ the best management.

(i) Small Cities; Exclusive Franchises. We focus on small- to medium-sized cities, generally near a larger metropolitan area. In such places in the PRC, we are in a better position to obtain exclusive natural gas distribution system development and supply franchise agreements in negotiating with the cities, which urgently need to provide their citizens with energy, and usually don’t have the leverage of very large cities, which can attract multiple bidders for their franchises. Accordingly, we require and receive an exclusive franchise entitling us to be the sole natural gas utility in such city. Usually, our franchises are for a period of 25-30 years.

(ii) Favorable Natural Gas Contracts. We have established and developed stable and long term contracts with China’s major natural gas suppliers, including close cooperation with such major State Owned Entities in the petroleum and natural gas industry as PetroChina Company Limited and Sinopec Corporation.

(iii) Financing Plan. We anticipate using our financing plan as a competitive tool. Our goal is to duplicate the type of financing plan and related financial instruments used by utilities in the United States, including the issuance of subsidiary level, non-recourse debt, preferred stock and holding company fixed income issuances. Such a financing plan can not only give us a favorable cost of capital, but enhance investor returns and keep investor dilution at a minimum.

We are in a very capital intensive business. Our income will depend on our ability to issue the above financial instruments. There can be no assurance, however, that we will be successful in issuing or selling such instruments to investors which would have a direct and negative impact on our future earnings.

(iv) Employ the Best Management. We have a team of senior executives who are industry experts each with a track record of success in managing larger Chinese petroleum and/or gas companies. Our founder and Chief Executive Officer, Mr. Yu-Chuan Liu, is a natural gas industry expert with over 20 years experience in senior management positions at Petro China and China Gas Holdings Limited, a Hong Stock Exchange listed PRC company. Our Chief Operating Officer, Mr. Shu-Wang Li, was previously the chief engineer for a Hong Kong Stock Exchange listed company and has over nine years of industry experience. Our Chief Engineer, Mr. Shu-Kui Bian, is one of the draftsmen of the PRC national standard for urban gas supply, and was previously the chief executive officer of the First Oil Extraction Plant of North China Oilfield.

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Chinese Natural Gas Industry Overview

Sources of Energy

Although the PRC is the world’s second largest energy consumer, its energy consumption per capita is lower than the per capita level in most other countries. This is largely due to the fact that a large portion of the Chinese population lives in rural areas where access to energy sources is limited and the energy supply infrastructure in the PRC is still relatively underdeveloped. Energy consumption is concentrated in the urban areas where there is greater access to energy sources.

Traditionally, the PRC has relied heavily on coal and crude oil as its energy sources. According to the China Statistical Yearbook, in 2002, coal, crude oil, hydro-electricity and natural gas accounted for 68.0%, 23.2%, 6.6% and 2.2%, respectively, of the PRC’s total energy consumption. In 2003, the ratios were 68.0%, 23.0%, 7.9% and 2.5% respectively. Traditionally, natural gas has been primarily used as a raw material for chemical fertilizer and to operate oil and gas fields. Accordingly, most natural gas is consumed for production of fertilizer. Only a little over 10% of natural gas is consumed as a fuel for cogeneration and residential use. (Source: The Institute of Energy Economics of Japan).

The PRC’s heavy reliance on coal is out of line with world consumption rates for the same time period which was 22.2% (Source: Energy Information Administration, U.S. Department of Energy). The use of coal, however, causes air pollution and other negative consequences to the environment. In the PRC, the heavy use of unwashed coal has lead to large emissions of sulfur dioxide and particulate matter. An air pollution study conducted by the World Health Organization in 1998 showed that seven of the 10 most polluted cities in the world were located in the PRC. As such, there have been serious environmental concerns in many countries around the world and resulted in a global trend to reduce coal usage. In consideration of such trends, the PRC set out a policy to raise the share of natural gas in the country’s energy mix in its Ninth 5-Year Plan (1996-2000). At the local government level, in many locations where natural gas supply is available, local governments often require all new residential buildings to incorporate piped gas connections in their designs as a condition to the issuance of the construction or occupancy permits. Before 2000, the gas distribution had principally been served by local municipal governments. Since then, the industry has been open to private sector, whose investments have fostered the wide use of natural gas in thePRC. The natural gas industry has been deemed by the PRC government as a suitable industry for public and private investments.

China’s Natural Gas Reserves and Gas Pipeline Infrastructure

Recognizing the serious problems caused by heavy reliance on coal usage, the PRC government has aggressively moved to reduce coal usage by substituting coal with other more environmentally friendly forms of fuel, such as natural gas. The PRC abounds in rich natural gas reserves, which are distributed principally in Xinjiang, Sichuan and Inner Mongolia in the western and north-central PRC, respectively. According to the Second Oil and Gas Reserve Assessment published by the Geological and Mineral Resources Department of China, natural gas reserves in China are estimated to be 38,000 billion cubic meters with 30,000 billion cubic meters onshore and 8,000 billion cubic meters offshore. These reserves are sufficient for 74 to 120 years of Chinese consumption based on the current consumption levels.

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Because the PRC’s largest reserves of natural gas are located in the western and north-central PRC, it requires a significant investment in gas transportation infrastructure to carry natural gas to eastern cities and the rest of the PRC. Until recent years, the PRC’s natural gas consumption was limited to local natural gas producing provinces because of the lack of national long-distance pipeline infrastructure. For example, Sichuan province, which is well known for its production of natural gas, has a local gas transport network. In the northwest, areas near the Daqing field in Heilongjiang province and the Liaohe oil field in Liaoning province have benefited from associated gas sent via gas pipeline. Because natural gas transportation was limited to areas near production sites, low cost gas supply was possible.

The principal method for transportation of natural gas from a source to end users is by means of pipelines. In order to develop the natural gas industry, it is essential that the necessary pipeline infrastructure be in place so that natural gas is easily accessible for distribution to end users at affordable cost.

In accordance with the PRC government’s Tenth 5-Year Plan (2001-2005), the country’s longest pipeline, known as the West-East Pipeline, was constructed and went into operation in January 2005. It transports natural gas to demand centers in the southeast from deposits in the western Xinjiang province to Shanghai, picking up additional gas in the Ordos Basin along the way. The West-East Pipeline starts at Lunnan in the Xinjiang Autonomous Region and ends at Baihe Town in Shanghai. It travels through 10 provinces including Xinjiang, Gansu, Ningxia, Shaanxi, Shanxi, Henan, Anhui, Jiangsu, Zhejiang and Shanghai. The full length of the pipeline is about 4,200 km with a designed annual throughput capacity of 20 billion cubic meters, a delivery pressure of 10 Mpa and 35 processing stations along the pipeline.

There are other pipelines linking smaller natural gas deposits to consumers, such as the pipeline linking the Sebei natural gas field in the Qaidam Basin with consumers in the city of Lanzhou, Ganshu province in the northwest, and a pipeline linking natural gas deposits in Sichuan province in the southwest to demand centers in Hubei and Hunan provinces in the central PRC.

In its Eleventh 5-Year Plan (2006 – 2010), the PRC government re-affirmed its commitment to making significant investments in the expansion of the natural gas pipeline infrastructure over a period of 20 years.

The Gas Delivery Process

The natural gas delivery process is categorized by three segments: production, transmission and distribution. Production involves underground exploration, drilling, extraction and purification of the natural gas. After extraction from a gas well, natural gas is transported to nearby refineries for removal of water and other impurities. The natural gas is then transported from the refineries via long distance pipelines under extremely high pressure facilitating the supply to a large number of locations near these pipelines at high speeds. The long distance pipelines are owned and operated by PRC state owned oil and gas exploration and production companies.

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Distribution companies (such as Beijing Gas) distribute natural gas to end users and often own the gas pipeline infrastructure rights of an operational location (including the intermediate pipelines, the processing stations, the main pipelines and the branch pipelines). A distribution company purchases natural gas from oil and gas exploration and production companies. The distribution company determines the method of delivering natural gas to its desired destination after taking into account factors such as the distance between the collection and delivery points and the expected demand for gas from the relevant gas supply locations.

The collection of CNG and LNG involves the delivery of the gas by truck from gas wells or stations located along the relevant long distance pipeline to a processing station. If an intermediate pipeline is constructed, the intermediate pipeline transports the natural gas under high pressure to a processing station. Such processing stations may contain CNG or LNG pressure regulating facilities which will depressurize the CNG or LNG to natural gas under medium pressure and/or natural gas pressure regulating facilities to reduce the pressure of natural gas from high pressure to medium pressure, before transferring the natural gas to a local pipeline.

The processing station is usually located on the outskirts of an operational location for safety reasons and it provides certain ancillary facilities:

l To add bromine to the gas to enable the detection of leakages when the gas is transmitted through the main pipelines, and

l To store gas under high, medium or low pressure to be used as reserves for future unexpected fluctuation in demand.

High pressure gas storage tanks usually have thicker walls and therefore, are more expensive to construct than gas storage tanks for storage of gas under medium or low pressure.

After processing, the gas is transmitted under medium pressure to the local pipelines. Local pipelines are laid within an operational location and represent the backbone of the local gas delivery system. Different sections of the local pipelines operate at slightly different pressures, with computer controlled regulators controlling the flow of natural gas for delivery to end users via the branch pipelines and customers’ pipelines.

When there is a demand for a connection of gas to a particular area within a gas supply location, the distribution company will invest in the construction of the branch pipelines to connect the main pipelines to the pressure regulating boxes located in the end-users’ buildings or premises. The pressure regulating box reduces the natural gas to a lower pressure before the natural gas is transmitted to the customers’ pipelines. Customers’ pipelines transmit the natural gas through the pressure regulating box to the end users.

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Demand for Natural Gas

Currently, natural gas consumption in the PRC accounts for less than 3% of its total energy consumption. However, driven by environmental pressure from the demand side and improvements in social infrastructure with economic growth, in the west in particular, and stable energy supply, it is anticipated that the use of natural gas will grow very rapidly in the PRC over the next 20 years.

Natural Gas Suppliers

There are approximately 60 natural gas supply companies in the pRC. Among them, China National Petroleum Corporation Group (“CNPC”), China Petroleum and Chemical Corporation Group (“Sinopec”), and China National Offshore Oil Corporation Group (“CNOOC”) account for more than 90% of the total national production. In 2002, production by CNPC, Sinopec and CNOOC accounted for 68.9%, 15.2% and 11.4%, respectively, of the total national production. CNPC and Sinopec own and primarily operate onshore pipelines while CNOOC owns and operates virtually all off shore pipelines. Before 2000, the gas distribution had been principally served by local municipal governments. Since then, natural gas industry has been designated by the PRC government as a suitable industry for public and private investment and has been open to private investment which has fueled the development of the industry and fostered a wider use of natural gas in the PRC.

Our Business Activities

Our business consists of three activities conducted in sequence for us to eventually own and operate a natural gas distribution system in a given operational location:

1. Development—(i) identifying distribution opportunities by conducting preliminary reviews and feasibility studies of new operational locations, and (ii) securing authorization by and/or franchise arrangements with local governments, negotiating supply agreements with potential customers, and implementing the related documentation;

2. Construction—building both natural gas storage and distribution networks; and

3. Operations—supply and sale of natural gas and related services to customers at the operating location.

Development

(i) Identifying distribution opportunities in new operational location: Our business development team actively explores and identifies suitable areas of service by conducting market research on potential operational locations where the demand for piped natural gas is desired. Because of experience and ongoing cooperation with governmental authorities, we also receive invitations from local governments to bid for new natural gas projects or to take over existing natural gas projects.

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As the piped natural gas supply industry in the PRC is still in the early stages of development, most areas in the PRC are not yet supplied with piped natural gas even though they may be in close proximity to natural gas sources. Due to the capital intensive nature of new natural gas distribution projects, we are very selective in our choices for new operational locations.

The selection of new operational locations is determined after conducting preliminary evaluation and studies on the target locations, and return on investment. The criteria for any potential operational location that are investigated and documented by us are:

1. Size and density of population.

2. Economic statistics of the targeted locations.

3. Extent and concentration of industrial and commercial activities.

4. New property development in the target location.

5. Projected levels of connection fees and gas usage charges.

6. Extent of the local government’s commitment to environmental protection, environmental policies in place, and the local population’s awareness of environmental issues.

7. A determination of exclusive operational rights and preferential treatment on tax and governmental fees.

8. Types of gas supply (piped natural gas, CNG or LNG) and methods of delivery. Intermediate pipeline is used if the gas source, or long distance pipeline, is located within 100 km. CNG trucks are deployed if the gas source, or long distance pipeline, is located within 300 km. There is no distance restriction for LNG delivery. Generally, LNG trucks are used if the gas source, or long distance pipeline, is located beyond 300 km.

9. For an acquisition of existing natural gas projects, the cost of acquisition, quality of assets and/or business are also valued. In addition, the liabilities of the business are analyzed along with any other perceived or actual problems encountered.

Based on the findings of the investigation, our business development team will decide whether to make a recommendation to management for approval to proceed with discussions and negotiations on a new project. We have conducted dozens of preliminary evaluations since our inception in 2003. We have an aggregate of 26 completed or partially completed operational locations and 12 operational locations under development.

(ii) Securing a New operational location. Once we have approved a potential natural gas distribution project in an operational location, we normally set up a local independent subsidiary, also know as a project company, to administer the project for its lifetime. We then prepare and submit a detailed gas project proposal to the local government and commence negotiations on major issues such as the granting of exclusive rights or rights of first refusal to supply gas to that location, proposed connection fees and gas usage charges and whether any tax and other concessions or favorable policies will be granted by the local government. Once established, the project company will conduct a series of marketing and promotional campaigns (which may include joint promotional campaigns with the local government) to increase public awareness of piped natural gas in the operational location. Concurrently, we begin actively seek out potential customers in the operational location and negotiate the terms of supply contracts with the aim of entering into supply contracts as soon as possible with such customers.

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Construction

(i) Design stage.The design of the gas pipeline infrastructure for a natural gas distribution project includes the processing stations, the local pipelines and other ancillary facilities such as gas storage tanks. It is carried out by a government approved design institute in accordance with our requirements and specifications. It also takes into account the local population size, the development of the economy, the utilization of energy resources and the environmental conditions. The design takes into consideration our technical requirements, the needs of the local population and the environmental conditions of the area covered by the design. The master design is subject to approval by the local city construction department. The design stage normally takes two to three months.

(ii) Construction Stage.Once the design is approved, we invite independent qualified contractors to tender bids for the construction work. The selection criteria for the contractors include their qualifications, experience, expertise, reputation, familiarity with the local environment, prior experience with us and price. We generally enter into turnkey contracts with independent contractors for construction, installation and maintenance of the natural gas pipelines. We pay a down payment with the remainder to be paid upon completion of the project. At the time of entering into turnkey contracts, we source raw materials such as piping, gas regulating equipment and machinery. We have strict quality control procedures for the sourcing of supplies for all construction purposes.

Our internal engineers and independent external inspectors monitor the entire construction process to ensure that each stage of construction meets our quality and safety standards and the relevant regulatory requirements.

For a given operational location, although the gas pipeline infrastructure is designed to cover the entire operational location, our construction program focuses on early gas delivery to areas of concentrated customer demand within such operational location. This ensures that natural gas supply can begin as soon as the essential gas pipeline infrastructure and facilities such as the processing stations and the intermediate pipelines are completed. Construction work in a target area will gradually extend to cover the whole operational location, which typically takes two to five years.

Operation.

Once the necessary gas pipeline infrastructure is in place in a given operational location, we begin the design and construction of the branch pipelines and customers’ pipelines pursuant to gas supply contracts with customers. The designs of branch pipelines and customers’ pipelines are normally prepared by us, reviewed by a government approved design institute, and carried out by external contractors.Upon completion of the construction of the branch pipelines and customer pipelines in the operational location, we begin to supply and sale natural gas and related services to customers within the operational location pursuant to supply contracts with such customers.

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Gas Distribution System

The chart below illustrates our gas distribution system. We purchase gas from our suppliers, who are state-owned petroleum companies, at their processing centers close to our operational location. The natural gas we purchase is compressed from piped natural gas into CNG or LNG and placed in canisters. We then transport the CNG and LNG by truck to our processing stations in various operational locations for storage, decompression and gasification. The gas will through go though our pipeline system to reach our end users.

Products and Services

Presently, we generate revenues primarily from the sale of connection services to end users’ pipelines to our natural gas distribution system for which we charge connection fees, and sale of natural gas for which we charge the customers based on usage.

Historically, connection fees and sales of natural gas constituted more than 90% of our total revenues. Connection fees were $0.7 million and $8.2 million for the fiscal years ended December 31, 2004 and 2005, respectively, constituting 16.3% and 75.2% of total revenues for the years ended December 31, 2004 and 2005, respectively. Sales of natural gas were $3.2 million and $2.7 million for the fiscal years ended December 31, 2004 and 2005, respectively, constituting 74.4% and 24.8% of the total revenues of the total revenues for the years ended December 31, 2004 and 2005, respectively. Connection fees and sales of natural gas were 0.4 million and 1.1 million for the six months ended June 30, 2006, respectively, constituting 24% and 76% of our total sales.

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Sales and Marketing

The Company’s main sales office is located in Beijing, which is responsible for managing our overall sales and devising our marketing strategy. We establish a project company at each operational location and the local sales and marketing team of each project company work together with the main office team to structure an appropriate plan accommodating the specific needs and circumstances of the operational location. The sales and marketing team is responsible for company image and brand building, as well as promoting the advantages and concept of using natural gas as a necessary part of modern day life. Once established, a project company will implement a series of promotional campaigns (which may include joint promotional campaigns with the local government) to increase public awareness of piped natural gas in an operational location. At the same time, the project company begins actively seek out potential customers in the operational location and negotiate the terms of supply contracts with the aim of entering into supply contracts with such customers as soon as possible.

Our marketing team plays an active role in lobbying the relevant government authorities during the negotiation stage.

Materials and Suppliers

Natural Gas

The principal supplies purchased for our business are natural gas, pipes, machinery and equipment. Purchase of natural gas represented 94.5%, 61.64% and 90.89% of our total purchase of supplies for the for the six months ended June 30, 2006 and the fiscal years ended December 31, 2005 and 2004, respectively. Generally, approximately 99% of the natural gas we purchase is CNG and approximately 1% is LNG.

Our principal CNG supplier has been the Fourth Oil Extraction Plant of the North China Oilfield (the “North China Oilfield”), a subsidiary of Petro China. Our LNG supplier has been Henan Zhong Yuan Lu Ye Advanced Technology Ltd. Co. (“Henan Zhong Yuan”). Historically, we have purchased approximately 90% of our total purchases of CNG from North China Oilfield and 100% of our total purchases of LNG from Henan Zhong Yuan.

We have long term supply contracts with these suppliers and have not experienced any shortage of natural gas supply in the past. To prepare for growth, we have also entered into agreements with new suppliers to meet our growing demands. These contractual relationships with our suppliers allow us to pursue natural gas distribution projects in a wide range of operational locations. So far, we have not experienced any shortage of supply of natural gas in our operations.

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The wholesale price of natural gas is agreed upon between the suppliers and us with reference to the wellhead price, distance of transportation, purification fees and the supplier’s operating costs. The wellhead price of natural gas, which is determined by the PRC State Development and Planning with approval from the PRC State Council, is currently set at $0.12 per m³ with a 10% allowance for upward or downward adjustments as a result of negotiations between suppliers and distribution companies, such as Beijing Gas. Generally, we are only required to pay for the actual quantity purchased and there is no penalty should we purchase less than the stated amount.

Pipes, Machinery and Equipment. We purchase pipes of various size and thickness domestically for installation in different segments of our natural gas pipeline infrastructure according to specifications that comply with PRC standards and regulations. We also purchase machinery and equipment, both domestically and abroad. Machinery and equipment are sourced domestically and internationally from the United States and Europe. Payments for equipment, pipes and machinery are purchased with credit terms ranging from 30 to 90 days.

Gas Appliances. As residential customers often require us to provide gas appliances, such as gas meters, we purchase gas appliances in bulk directly from manufacturers in China and maintain a limited inventory of the gas appliances. We also provide repair and maintenance service to the gas appliances supplied. We generally provide an one-year warranty of our gas distribution system to our customers, during which time we provide free check-up of the pipeline and repair for any appliances we provided.

Customers

We have two principal types of customers: (i) residential customers and (ii) commercial and industrial customers. Our sales to residential customers and industrial customers represented 68.7% and 18.9% of our net sales, respectively, for the fiscal year ended December 31, 2005; 16.4% and 1.39% of our net sales, respectively, for the fiscal year ended December 31, 2004; and 36.9% and 54.23% of our net sales, respectively, for the six months ending June 30, 2006. Sales to miscellaneous customers who are neither residential nor industrial or commercial customers accounted for the remainder of our sales.

Residential Customers.Natural gas is primarily used by residential owners for cooking as well as water and space heating. We market directly to property developers, government departments and organizations, private companies and state-owned enterprises as these entities enter into master supply contracts with us for the connection of gas to all the units within a residential development (new or existing, owned by such entities or their respective employees). These entities are responsible for making, or they coordinate with the end users to facilitate our efforts in collecting the advance payment of connection fees, while gas usage charges are paid by the individual end users. With new residential developments, connection fees are collected in advance by installment based on the ratio-of-completion of the pipeline construction work. We receive full payment of connection fees when construction is completed regardless of whether the units are sold or occupied. The actual supply of gas commences after the unit is occupied.

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We also market to existing buildings without piped natural gas supplies. Representatives of the buildings will consult individual households as to whether they wish to have piped natural gas supply and coordinate the collection of connection fees from the end users on our behalf. Both connection fees and gas usage charges are payable in advance by the individual end users. We provide connection services and supply gas at market price after receiving payment. Pipelines and gas appliances are owned by the end users, with one-year quality guarantee by us. We maintain the pipelines outside the end user’s homes. The contracts are generally renewable on a yearly basis.

At present, we have approximately 132 master supply agreements for the supply of gas to 30,788 end users in Beijing, Tian Jin, He Bei and Jiang Su. About 36 out of these master supply agreements serve more than 200 end users. Our top residential customers were Gu Lou Eastern District Managing Office of Pei County Tian Ma We Ye Co., Xu Zhou Municipal Jin Xiu Zhi Ye Ltd. and Beijing Mi Yun Jing Xi Wu Ye Managing Center, sales to whom accounted for 6.16%, 10.85% and 3.98%, respectively, of our total sales for the fiscal year ended December 31, 2005.

Industrial and Commercial Customers.Our industrial and commercial customers use natural gas primarily for heating, air conditioning, water heating and cooking purposes. These customers include owners of hotels, restaurants, office buildings, shopping centers, hospitals, educational establishments, sports and leisure facilities and exhibition halls. Natural gas has a wide variety of applications for industrial customers such as fuelling industrial boilers, furnaces, ovens, incinerators, foundries and steamers as well as water and space heating in staff canteens and dormitories within the industrial customers’ premises. We enter into supply contracts with these customers for the connection of gas to their premises, and both connection fees and gas usage charges are borne by such customers.

The table below presents information about our industrial and commercial customers for the period indicated:

	Percentage of Sales
Customers	6 months ended June 30, 2006	Fiscal year ended December 31,
		2005	2004
Hebei Zhong Gang Steel	39.4%	15.1%	--
Pei County Tian Ma Wu Ye	--	10.6%
Elite (Lang Fang) Textile	--	0.4%	--
Tang Shan Chang Sheng	9.1%	1.0%	--
Tang Shang Heng Tong	--	2.4%	--
Total	48.5%	29.5%	--

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Our agreement with Tang Shang Heng Tong expired in March 2006 and we intend to extend the agreement.

During the fiscal year ended December 31, 2004, our top two customers were Beijing Zhong Ran Xiang Ke and Beijing Hong Ji Chuang Ye, which purchased gas from us for distribution to their end users and were neither residential, nor industrial and commercial customers. Our sales generated from Beijing Zhong Ran Xiang Ke and Beijing Hong Ji Chuang Ye accounted for 54.2% and 13.8% of our total sales for the fiscal year ended December 31, 2004, respectively. Since 2005, we have reduced gas supply to customers that contributed little to our profit margin since 2005, among whom are Beijing Zhong Ran Xiang Ke and Beijing Hong Ji Chuang Ye.

Pricing and Regulations

We determine connection fees based on a detailed analysis of factors such as estimated capital expenditure, number of users, expected penetration rates, income levels and affordability to local residents. We arrive at gas usage charges after taking into consideration the wholesale price of gas, operating costs, price of substitute products, internal business model margins and the purchasing power of local residents. Connection fees and gas usage fees are subject to the approval of the local state price bureau. Future price increases are also subject to the same approval process. In considering applications for an increase in gas usage charges, the local state price bureau may consider factors such as increases in the wholesale price of gas or operating expenses, inflation, additional capital expenditure, and whether the profit margin remains fair and reasonable.

Connection Fees

We charge residential customers a flat connection fee for connections to each type of gas appliance, typically cooking stoves, water heaters and boilers. The level of connection fees varies among operational locations and are approved by the relevant local state price bureau. The average of these connection fees for the company in 2005 was approximately $270 per household.

For commercial and industrial customers, the connection fee is determined based on the facility capacity (on a m³ per day basis). Should additional capacity be needed, these customers are required to pay additional connection fees for the additional capacity installed. When entering into master supply contracts for mass connections, we usually require the payment of deposit from customers while the balance is payable in accordance with the terms set out in the contracts. In the event customers default in the payment of connection fees, we will not start the supply of natural gas until the connection fees are paid.

The deposit received from customers upon the signing of supply contracts generally funds the majority of our capital costs in any new operational location.

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Gas Usage Charges

Gas usage charges are based on actual usage on a per m³ basis. The gas usage charges per m³ vary between operational locations and the payment mechanism between different categories of customers varies.

Since our inception, the majority of our residential customers have purchased gas units in cash at our sales outlets with details of the prepaid gas units stored electronically on a debit card. The debit card is inserted into a debit card debit gas meter installed at the end user’s premises to activate the gas supply. Units of gas used are deducted from the debit card. When the level of prepaid gas units drops to a certain level (currently pre-set at 3 m³), the gas meter will produce a sound signal to remind the customer to replenish the value stored in the debit card. Over 70% of our residential customers utilize the debit card payment method. This payment method provides significant advantages to us as all gas purchases are prepaid—not at the point of sale or in arrears.

For those residential customers without a debit card gas meter installed and for commercial and industrial customers, payments for natural gas usage are made in arrears. Gas meters that record actual gas consumption are installed at the end users’ premises and meter readings are taken physically by US every month. Monthly bills based on the prior month’s actual usage are then sent to customers. In the event customers default in payment of gas usage charges, gas supply will be suspended within one month of billing. No customers’ gas supply was suspended as a result of default in payment during 2005.

Regulatory Framework for Natural Gas Distribution Companies

Pricing Regulations

We purchase natural gas from natural gas wholesalers, which are State Owned Enterprises and who must comply with the PRC natural gas pricing regulations. The wholesale price of natural gas payable by distribution companies, such as Beijing Gas, to the suppliers of natural gas is comprised of three components, the wellhead price, the pipeline transportation tariff and the purification fee. The wellhead price is fixed by the PRC State Development Planning Commission, and is currently set at $.12 per cubic meter with a 10% allowance for upward or downward adjustments for negotiation between suppliers and distribution companies. The pipeline transmission tariffs are determined by reference to the investment costs of the relevant long distance pipeline, depreciation, wear and tear and the distance of delivery. The purification fee is based on the actual purification costs of the suppliers. Both the pipeline transmission tariffs and the purification fee must also be approved by the PRC State Development Planning Commission.

Pricing of Natural Gas - per cubic meter
	2001	2002	2003	2004	2005
	USD $
Wellhead	$0.08	$0.08	$0.09	$0.09	$0.12
Pipeline	$0.09	$0.09	$0.09	$0.09	$0.09
Purification	$0.01	$0.01	$0.01	$0.01	$0.01
Total	$0.18	$0.18	$0.19	$0.19	$0.22

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Operational and Construction Permit

In the PRC, companies in the gas distribution business must also obtain an operational permit from the PRC Ministry of Construction to begin operation. In addition, a construction permit must be obtained if such gas distribution company also engages in construction. In both cases, the PRC Ministry of Construction will review the qualifications and experience of the management and technical staff of the distribution company and consider whether the distribution company is capable of fulfilling the operational and construction standards.

As of the date of this Current Report, Beijing Gas and all of our project companies and branch offices have the necessary operational permits, except for eight project companies and one branch office. We anticipate that seven of our Project Companies will obtain the operational permits by the end of September, 2006.

Safety Regulations

As a natural gas distributor, Beijing Gas is regulated by the relevant stipulations of Administrative Rules on the City Gas Safety jointly promulgated by the PRC Ministry of Construction, PRC Ministry of Labor and PRC Ministry of Public Security effective in May 1991.  According to such rules, the manufacture, storage, transportation, operation, usage of city gas, design and construction of gas-related projects, and the manufacture of gas-related facilities shall be subject to relevant safety requirements and qualifications.

Income Taxes

Pursuant to the tax laws of PRC, general enterprises are subject to income tax at an effective rate of 33%. Beijing Gas is in the natural gas industry whose development is encouraged by the government. According to the income tax regulation, any company engaged in the natural gas industry enjoys a favorable tax rate. In addition, Beijing Gas has been approved as a high technology company and has been enjoying preferential income tax treatment under the PRC’s income tax policies that provide certain preferential income tax treatment to entities qualified as high technology entities. Under such policies, Beijing Gas is exempt from corporate income taxes for the first two years commencing from its first profitable year and thereafter, will be entitled to a 50% tax reduction for the succeeding three years. Our first profitable tax year was 2003. Accordingly, our income would be subject to a reduced tax rate of 9% from 2005 to 2007. From 2008, the income tax rate will be 18%. The subsidiaries of Beijing Gas are subject to the effective rate of 33%, but almost all income is earned by Beijing Gas.

Safety and Quality Control

Safety Control

We are focused on safety, have implemented a safety system and set up a safety department to oversee safety issues for all of our operations. We carry out routine inspection of the branch pipelines, customers’ pipelines, gas meters and gas appliances at the customers’ premises twice annually. These semi-annual inspections are free unless major repairs are required in which case we charge the customers for labor, replacement parts and other materials used for the repairs.

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We believe in educating users about safety procedures. Before gas is actually supplied, we provide a thorough explanation of safety procedures to end users, holds regular seminars, and distributes brochures and booklets on safety. We have a 24-hour telephone help line for enquiries and reporting of emergency matters.

In order for us to monitor the operations of the pipelines for abnormal gas usage, gas leakages, or any other irregularities, we collect information about the temperature, pressure and volume of gas from key points along the main pipelines. The information is collated in the control center located in the head office of each operational location for analysis. We utilize process control instrumentation known as Supervisory Control and Data Acquisition systems whereby a number of small detectors are installed along the pipelines to collect information and process the data real time at the control center electronically. Each Project Company conducts a major inspection of its pipelines, processing station(s) and other equipment at least once annually. If gas leakages or any other irregularities are detected, we will take remedial action immediately.

Due to the strict implementation of safety control procedures, there have been no major accidents which have resulted in serious injury or death since our inception.

Quality Control

Quality control begins in the design and construction phase of the natural gas supply infrastructure. The quality control team regularly makes inspection visits and conducts tests to ensure that the construction work meets our required standards as well as National and local regulations.

We also have strict quality control procedures for the sourcing of raw materials. We only purchases from its approved list of qualified suppliers and such suppliers have fulfilled the relevant requirements in accordance with National standards.

In order to monitor the quality of gas purchased by us, we obtain gas composition reports regularly from our gas suppliers with data on the heat content and composition of impurities. We also conduct regular tests on the gas purchased in order to verify the quality.

Research and Development

We have eightfull-time employees engaged in the company-sponsored research and development (“R&D”) efforts. These employees specialize in the fields of energy, mechanical and electronic engineering. For the fiscal year ended December 31, 2005 and 2004, respectively, we expended $545,364.45 and $216,497.35 on R&D activities. Areas that are targets of our ongoing research and development activities include:

l Methodology and practices to increase operating efficiency and safety standards.

l Expansion of the applications for natural gas, such as gas fuelled air conditioners, washing machines and dryers, and the use of CNG in motor vehicles.

l Improvements in gas storage and transportation systems.

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Our R&D department stays abreast of natural gas-related developments domestically and internationally by regularly attending domestic and international natural gas conferences that include exchange programs with international natural gas companies.

Competition

Since our inception, we have focused on supplying natural gas to small cities in the PRC where the average population is 250,000 and below, the natural gas penetration rate is typically 0%, and where we are able to obtain exclusivity for natural gas distribution from the local government. In entering into these small cities, we are generally authorized to be the sole supplier of natural gas by the local governments pursuant to franchise agreements for a typical term of 25 to 30 years. This differs from the bigger natural gas distribution companies which have focused on a few areas with large populations. The larger cities are very competitive markets that tend to offer less flexibility for `advantageous pricing arrangements. For a typical small city project, the company’s initial investment is only about $500,000 with an average IRR of 31% over the life of the project. Due to its small city focus where the operating cost is low and competition is much less intense, we believe we generate at or above-industry-average profit margin and return.

As we compete principally with small- to medium- sized private companies in the natural gas distribution industry, the information about our competition and competitive position is limited. Based on the information available to us, we estimate that there are approximately 200 hundred small- to medium- sized private gas distribution companies in the PRC. Most of these small- to medium- sized gas distribution companies target local towns, rather than cities in different provinces as we do, and operate an average of 3-4 natural gas distributions systems, as compared to 20 natural gas distribution systems that we operate.

Based on the division of the administrative districts in the PRC as of December 31, 2005, there are approximately 2,862 small cities in the PRC with a population between 100,000 to 300,000. Among them, 800 small cities have the potential to be supplied with natural gas and 100 small cities have already been supplied with natural gas. Among the 100 small cities where natural gas is already available, Beijing Gas is the distributor to 23 of them, and, therefore, we believe we have the largest market share as compared to other private companies targeting the natural gas market among small cities. In addition, compared with us, many other gas distribution companies don’t secure long-term stable supply contracts with natural gas suppliers and have few industrial customers.

There are five gas distribution companies in China on the Hong Kong Stock Exchange: Xinao Gas Holdings Limited, China Gas Holdings Limited, Panva Gas Holdings Limited, Zhengzhou Gas Company Ltd., and Chinese People Gas Holdings Company Limited.These companies focus more on supplying natural gas in bigger metropolitan areas, and. therefore do not compete with us directly. However, Beijing Gas operates very similarly to some of these publicly listed PRC gas companies (with the exception of Zhengzhou Gas Company Ltd. and Panva Gas Holdings Ltd.) where significantly revenue and profit are generated from the construction of local gas pipeline and connection of the pipeline to end users. This is primarily due to the PRC’s extremely low natural gas penetration rate (below 3% on a national basis). Therefore, the PRC gas companies behave very differently from the traditional gas utilities and exhibit financial characteristics such as high growth rate, high profit margin and relatively longer receivable collection periods due to the construction cycle. We plan to compete with some of these companies in the future as our operation grows.

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Intellectual Property

We do not hold have any registered trademark or patent. See “We may be exposed to intellectual property infringement and other claims by third parties, which, if successful, could cause us to pay significant damage awards and incur other costs,”

under “Risk Factors” for risks related to the technology we use.

We own and operate a website under the internet domain name www.weiyegas.com. The information contained in our websites is not incorporated by reference to this Registration Statement.

Insurance

We currently do not carry any product liability or other similar insurance, nor do we have property insurance covering our plants, manufacturing equipment and office buildings. While product liability lawsuits in the PRC are rare and Beijing Gas has never experienced significant failures or accidents, there can be no assurance that Beijing Gas would not face liability in the event of any failure or accident. We plan to purchase property insurance to cover our manufacturing plants, equipment and office buildings by the end of 2006.

Beijing Gas and its subsidiaries maintain social insurance for their staff and employees in accordance with relevant compulsory requirements under the PRC laws and have compulsory insurance and fixed-sum insurance for cars and other vehicles.

Employees

Presently we have 166 full-time employees, including 50 technicians, 6 management personnel, 23 branch managers, 30 engineers and eight R&D personnel.

Government Regulation

The pricing of the natural gas in China is subject to central and local government regulations or approval. The wholesale price of natural gas payable by distribution companies, such as Beijing Gas, to suppliers of natural gas in the PRC is comprised of three components: the wellhead price, the pipeline transportation tariff, and the purification fee. The wellhead price is fixed by the PRC State Development Planning Commission (“SDPC”). Both the pipeline transmission tariffs and the purification fee must also be approved by SDPC. See “Regulatory Framework for Natural Gas Distribution Companies” in Item 2.01 of this Current Report for more detailed discussion.

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Under certain regulations in the form of public notices issued by the PRC State Administration of Foreign Exchange, or SAFE, our shareholders who are PRC resident entities or individuals are subject to certain registration requirements due to the status of GAS (BVI) and Dolce as “SPC”s (as defined under the public notice issued by SAFE on October 21, 2005). These regulations would prohibit Beijing Gas from distributing dividends or profits to GAS (BVI) and/or Dolce as “SPC”s unless the registration requirements are complied with. The registration procedures were completed and Beijing Gas obtained a SAFE certificate from SAFE’s Beijing office in August 2006. Our PRC counsel advised us that the SAFE certificate will allow Beijing Gas to distribute dividends and profits out of the PRC.

We are subject to PRC regulations that require a company that is in the gas distribution business to obtain an operation permit, and a construction permit if such company also engages in construction, from the PRC Ministry of Construction to begin operation and/or construction, as the case maybe. Fuel service station standards are subject to regulation by the PRC Ministry of Construction, the PRC General Administration of Quality Supervision, and the PRC Bureau of Inspection and Quarantine. Certificates will be issued upon satisfactory inspection of service stations. In addition, there are various standards that must be met for filling stations including handling and storage of gas, tanker handling, and compressor operation. These standards are regulated by local construction and gas filed operation regulating authorities. Inspections are carried out and certificates for handling of dangerous agents are issued by relevant local authorities.

Other than the foregoing, Beijing Gas is not subject to any other significant government regulation of its business or production, or any other government permits or approval requirements, except for the laws and regulations of general applicability for corporations formed under the laws of the PRC.

As of the date of this Current Report, we believe we are in compliance with all relevant PRC rules and regulations with regards to our facilities, supply and overall operation as a distributor of natural gas.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes of Beijing Gas, appearing elsewhere in this Current Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in this Current Report.

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Overview

We are engaged in the development of natural gas distribution systems in small- and medium-sized cities in China, as well as the distribution of natural gas to residential, commercial and industrial customers in China, through our indirectly-owned subsidiaries in the PRC, Beijing Gas and its subsidiaries. We also have a subsidiary, Pegasus Tel, Inc. which owns and operates payphones. We plan to spin off our payphone operation by the end of 2006 by making a dividend of the Pegasus Tel, Inc. shares to our shareholders of record as of August 30, 2006. The discussion and analysis in this Section is focused on our natural gas business operated by Beijing Gas and its subsidiaries in China. See Item 1.01 Entry into a Material Definitive Agreement for more details regarding the Reverse Merger Transactions and Item 2.01 Completion of Acquisition or Disposition of Assets, “Our Corporate Structure” for details regarding our corporate structure and the history of the Company, Gas (BVI) and Beijing Gas.

Beijing Gas is organized as a holding company with 13 subsidiaries, known as project companies, in three provinces, and four branches offices in Beijing, as shown on the corporate structure chart provided below. The project companies are the operating subsidiaries of Beijing Gas. Each project company operates as a local natural gas distributor in a city or county, known as an operational location, under an exclusive franchise agreement between Beijing Gas and the local government or entities in charge of gas utility, pursuant to which Beijing Gas formed the project company to operate the natural gas distribution project in the operational location.

In addition, Beijing Gas holds a 40% equity interest in Beijing Zhong Ran Xiang Ke Oil and Gas Technology Co. Ltd. (“Beijing Zhong Ran Xiang Ke”), a PRC joint venture entity engaged in the business of development, licensing and sale of oil and gas technologies and equipment, and sale of self-produced products.

Through its subsidiaries, Beijing Gas is a natural gas services operator, principally engaging in the investment, operation and management of city gas pipeline infrastructure, in the distribution of natural gas to residential an industrial users, in the construction and operation of oil stations and natural gas stations, and in the development and application of oil and natural gas related technologies. Beijing Gas and it subsidiaries own and operate 20 natural gas distribution systems serving approximately 23,000 residential and four commercial or industrial customers. Our facilities include approximately 200 km of pipeline and delivery networks with a designed daily capacity of approximately 40,000 m3. Currently, we are constructing an additional four natural gas distribution systems and developing two more natural gas distribution systems. We own and operate natural gas distribution systems primarily in Hebei, Jiangsu, and Shandong provinces.

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(1) See “Organizational History of Gas Investment China Co., Ltd. And Beijing Zhong Ran Wei Ye Gas Co., Ltd.” under Item 2.01, COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

Results of Operations

Six month ended June 30, 2006 and six months ended June 30, 2005

We continued our growth in the six months ended June 30, 2006. During this period, we signed new gas supply agreements to provide natural gas connection to an aggregate of 30,027 residential units to our gas distribution network. In the six months ended June 30, 2006, we completed the construction and connection to supply gas for 7,780 new residential units out of the 30,027 new residential units. For the fiscal years ended 2005 and 2004, we completed gas supply projects to supply gas to an aggregate of 21,400 and 2,300 residential units, respectively.

As shown in the table below, for the six months ended June 30, 2006, our net sales, gross profit, income from operations, net income and gross margin all decreased as compared to the same period last year. These decreases were primarily caused by the decrease in connection fees for the six months ended June 30, 2006 as compared to the same period last year. The reduction of connection fees was caused by construction delay due to a longer winter period during this year. In general, our sales during the first half of the year represent less than 20-30% of total annual sales due to this seasonality. In addition, during the first half of 2006, we were constrained by a lack of working capital which we anticipate will improve with the completion of the Reverse Merger Transactions.

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	Six months ended June 30		Change
	2006	2005
	US$	US$	%
Net Sales	1,499,540	2,468,226	-39.2%
Gross Profit	516,053	1,291,332	-60.0%
Income from Operations	235,409	1,021,064	-76.9%
Net Income	258,142	905,967	-71.5%
Gross Margin	34.4%	52.3%	-17.9%

Net Sales

Net sales were $1,499,540 for the six months ended June 30, 2006, a decrease of $968,685 or 39.2%, as compared to net sales of $2,468,226 for the six months ended June 30, 2005. The decrease was primarily due to the 73.7% decrease in connection fees for the for the six months ended June 30, 2006 as compared to connection fees for the six months ended June 30, 2005. As discussed earlier, the reduction of connection fees were primarily caused by a longer winter period in 2006, as well as our lack of working capital in the first six months of the year.

Sale of natural gas resulted in $1,140,883 in net sales for the six months ended June 30, 2006, or a 3.2% increase over the same period last year. During the first half of 2006, we entered into gas supply agreements to construct infrastructure and connect an aggregate of 35,027 new residential units to gas supply, however, we only completed the construction and connection for 7,780 out of the 35,027 residential units due to insufficient working capital. With the proceeds from the Private Placement Offering, we anticipate that we will be able to commence the construction and connection to supply gas to the remaining 27,247 residential units.

The table below presents information about our net sales for the periods indicated:

	Six Months Ended June 30				Change
	2006		2005
	US$	%	US$	%	%
Net Sales	1,499,540	100%	2,468,226	100%	-39.2%
Gas	1,140,883	76.1%	1,104,985	44.8%	3.2%
Connection	358,657	23.9%	1,363,240	55.2%	-73.7%

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Gross Profit

Our gross profit for the six months ended June 30, 2006 was $516,053, a decrease of $779,279 or 60.0%, as compared to $1,291,332 for the six months ended June 30, 2005. The decrease was due to the fact that connection fees accounted for only 23.9% of the total net sales for the six months ended June 30, 2006, as compared to 55.2% for the six months ended June 30, 2005. Because the gross margin for connection fees is typically greater than 80% as compared to the gross margin of approximately 20% for gas sales, the reduction of connection fees as a percentage of total sales caused gross margins to decrease to 34.4% during the six months ended June 30, 2006 from 52.3% for the same period in 2005. Our gas sales were $221,611 for the six months ended June 30, 2006, an increase of approximately $98,154 or 79.5%, as compared to $123,456 for the six months ended June 30, 2005. The increase in gas sales was due to the commencement of gas supply to newly-installed residential units and the increase of gas supply to Hebei Zhong Gang, one of our main industrial customers.

The table below presents information about our gross profit for the periods indicated:

	Six Months Ended June 30
	2006			2005
	US$	%	Gross Profit Margin	US$	%	Gross Profit Margin
Gross Profit	516,053	100%	34.4%	1,291,332	100%	52.3%
Gas	221,611	42.9%	19.4%	123,456	9.6%	11.2%
Connection	294,441	57.1%	82.1%	1,167,876	90.4%	85.7%

Income from Operations

Our income from operations for the six months ended June 30, 2006 was $235,409, a decrease of $785,654 or 76.9%, as compared to income from operations of $1,021,063 for the six months ended June 30, 2005. The decrease is primarily attributable to the decrease in net sales for the six months ended June 30, 2006 for the reasons as described above.

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Cost of Sales

Our cost of sales was $983,487 for the six months ended June 30, 2006, a decrease of $193,407, or 16.4%, as compared to the cost of sales of $1,176,894 for the six months ended June 30, 2005. Our cost of sales for gas sales for the six months ended June 30, 2006 decreased 6.3% as compared to the same period last year. This decease was due to our reduction of gas sales to Zhong Ran Xiang Ke and Zhong You Xiang Ke, two associates of Bejing Gas, due to their low profitability. Gas sales to residential customers generally have higher gross margin than gas sales to these two associate customers. Our cost of sales for connection decreased 67.1% for the six months ended June 30, 2006 as compared to the same period last year. That’s mainly because we didn’t have enough capital for construction in the first half of 2006, while there was ample capital in the first half of 2005. As a result, we have connected slightly more than 1,000 customers in the first half of this year, in contrast to about 5,000 customers the same period last year.

The table below presents information about our cost of sales for the periods indicated:

	Six Months Ended June 30
	2006			2005
	US$	%	Cost/Net Sales	US$	%	Cost/Net Sales
Cost of Sales	983,487	100%	65.6%	1,176,894	100%	47.7%
Gas	919,272	93.5%	80.6%	981,529	83.4%	88.8%
Connection	64,215	6.5%	17.9%	195,365	16.6%	14.3%

Operating Expenses

Our total operating expenses were $280,644 for the six months ended June 30, 2006, an increase of $10,375 or 3.84%, as compared to the total operating expense of 270,268 for the six months ended June 30, 2005. Although our general and administrative expenses increased 11% for the six months ended June 30, 2006, as compared to those for the same period last year, our selling expenses increased 11% for the six months ended June 30, 2005 as compared to those for the same period last year. The increase in general and administrative expenses was due to the hiring of senior management personnel and professional fees related to the Reverse Merger Transaction.

The table below presents the information about our operating expenses for the periods as indicated:

	Six Months Ended June 30		Change
	2006	2005
	US$	US$	%
Selling expenses	(26,825)	(41,863)	-35.9%
General & Administrative Expenses	(253,820)	(228,405)	11.1%
Total operating expenses	(280,644)	(270,268)	3.8%

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Net Income

Net income was $ 258,142 for the six months ended June 30, 2006, a decrease of 71.5% from $ 905,967 for the six months ended June 30, 2005. The decrease in net income was caused principally by the decrease in net sales for the six months ended June 30, 2006 as compared to the same period last year for the reasons described above.

Liquidity and Capital Resources

Since our inception, Beijing Gas has financed its operations and capital expenditures with equity financing from existing shareholders and cash flows from operations. To keep pace with the rapid growth and expansion of our business, we will need additional working capital necessary to develop and construct new gas distribution projects. As discussed above, during the six months ended June 30, 2006, we entered into gas supply agreements to connect an aggregate of 35,027 new residential units to our gas distribution network but completed the construction and connection to supply gas for only 7,780 residential units out of the 35,027 new residential units due to the lack of sufficient working capital to fund the construction and connection work.

As a result, we consummated the Reverse Merger Transaction and raised approximately $6,876,800 in gross proceeds in the Private Financing. We expect to have the full closing of the Private Financing in the near future. We believe that the proceeds from the Private Financing, together with our net cash provided by operating activities, will be sufficient to finance our existing operation and to provide additional capacity for further expansion in the next 12 months.

Cash and Cash Equivalents

Cash and Cash Equivalents was $359,309 as of June 30, 2006, representing a decrease of $211,885 or 37.1% from $571,194 as of December 31, 2005. The decrease was caused by our expenditures in constructing new gas distribution projects for which we spent an aggregate of approximately $2.2 million in the sixth months ended June 2006. See the discussion under “Net Cash Used in Investing Activities” below for more information.

Net cash provided by operating activities

Net cash provided by operating activities was $2,116,152 for the six months ended June 30, 2006, as compared to $1,494,164 in cash provided by operating activities for the same period last year, representing an increase of 41.6%. The increase was due to our collection of accounts receivable of $2.65 million in the six months ended June 30, 2006.

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Net cash used in investing activities

Net cash used in investing activities was $2,058,546 for the six months ended June 30, 2006, as compared to $851,781 in net cash used in investing activities for same period last year, representing an increase of 141.7%. The increase was due to our construction and connection work for the supply of gas for 7,780 residential units out of the 35,027 residential units we signed up for gas supply in the first half of 2006.

Net cash provided in financing activities

Net cash used in financing activities was $(269,692) for the six months ended June 30, 2006, out of which $207,000 was for the payment of professional fees incurred in connection with the Reverse Merger Transaction. We did not have any net cash provided or used in financing activities during the six months ended June 30, 2005.

Accounts Receivable

Accounts Receivable decreased 30% to $5,436,372 as of June 30, 2006, as compared to $7,770,168 as of December 31, 2005. During the six months ended June 30, 2006, we collected approximately $2.33 million of accounts receivable, representing 34% of our total accounts receivable as of December 31, 2005.

Construction in Progress

Construction in progress represents the cost of constructing pipelines and is stated at cost. Costs comprise direct and indirect incremental costs of acquisition or construction. Completed items are transferred from construction in progress to the gas pipelines of fixed assets when they are ready for their intended use. The major cost of construction relates to construction materials, direct labor wages and other overhead.  

Construction in progress was $5,268,682 as of June 30, 2006, an increase of $2,197,185 or 71.5% as compared to $3,071,497 as of December 31, 2005. The increase was caused by our commencement of construction for the gas supply projects for 7,780 residential units in the six months ended June 30, 2006.

As at June 30, 2006, the pipelines under construction include mainly the projects in several cities of Hebei and Jiangsu province, and in Beijing.   Capital commitments in respect of these projects were approximately $6,040,162 at June 30, 2006, as compared to $6,300,000 at December 31, 2005.

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Prepaid expenses and other current assets

Prepaid expenses and other current assets were $1,110,654 as of June 30, 2006, as compared to $822,461 as of December 31, 2005, an increase of $11,136 or 35%. The increase was due to the increased payment for raw materials and other items related to the new gas projects commenced during the six months ended June 30, 2006.

Loans

Beijing Gas does not have any bank loans. As of June 30, 2006, we have outstanding loans in the aggregate of $1,193,156. The $505,278 owed to Shenzhen Shi Yi Long Da Co., Ltd has an interest rate of 6% per annum and due in October 2006. The $687,878 owed to Beijing Qian Shi Li Technology Development Co., Ltd. is interest free and has no fixed payment terms.

Fiscal years ended December 31, 2005 and December 31, 2004

As shown in the following table, Beijing Gas achieved rapid expansion during the fiscal year ended December 31, 2005, as compared to the fiscal year ended December 31, 2004, primarily due to the sharp increase in revenues generated from connection fees. The gross margin for our sales generated from connection fees was 80% while that for gas sales was 20%. Beijing Gas’ overall profit margin was 62% for the fiscal year ended December 31, 2005, a more than two-fold increase from the corresponding period in 2004.

	Twelve Months Ended December 31
	2005	2004	Change
	US$	US$	%
Net Sales	10,907,289	4,329,947	151.9%
Gross Profit	6,811,938	1,183,248	475.7%
Operating Income	5,800,949	793,415	631.1%
Net Income	5,702,433	1,343,957	324.3%
Gross Margin	62.5%	27.3%	35.1%

Net sales

Net sales, which consist of gas and connections fees, reached $10,907,289 for the year ended December 31, 2005, a 151.9% increase as compared to a net sales of $4,329,947 for the year ended December 31, 2004. The increase was fueled by the injection of $3.62 million in capital into Beijing Gas in 2004. We used the new capital to develop and construct new projects in 2004, which had a construction cycle of approximately eight months and resulted in a sharp increase in sales in 2005.

For the fiscal year ended December 31, 2005 and 2004, respectively, connection fees contributed 75% and 15% of the total net sales, respectively, and gas fees contributed 25% and 74% of the total net sales, respectively. This reflected a shift in Beijing Gas’ revenue composition structure from gas supply to connection fees.

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The following table presents information about our sales for the periods indicated:

	Twelve Months Ended December 31
	2005		2004		Change
	US$	%	US$	%	%
Net Sales	10,907,289	100%	4,329,947	100%	151.9%
Gas	2,702,301	24.8%	3,194,890	73.8%	-15.4%
Connection	8,204,988	75.2%	670,248	15.5%	1124.2%
Others			464,809	10.7%

Gas fees decreased 15.4% to $2,702,301 for the fiscal year ended December 31, 2005, as compared to $3,194,890 for the fiscal year ended December 31, 2004. This decrease resulted from our reduction of gas supply to those customers that contributed little to our profit margin, Zhong Ran Xiang Ke, our 40% subsidiary, and Beijing Zhong You Xiang Ke Technology Co., Ltd, a wholly owed subsidiary of Zong Ran Xiang Ke.

Connections fees increased to $8,204,988 for the fiscal year ended December 31, 2005, a more than 1000% increase as compared to $670,248 for the fiscal year ended December 31, 2004. The increase in connection fees was due to a relatively large number of connection projects we completed in 2005. In 2004, we connected 2,300 residential units while in 2005 we connected 21,400 residential units.

Gross Profit

Gross profit increased 476% to $6,811,938 for the fiscal year ended December 31, 2005, as compared to $1,183,248 for the fiscal year ended December 31, 2004. Gross profit from gas sales dropped 47% to $177,897 for the fiscal year ended December 31, 2005, from $334,902 for the fiscal year ended December 31, 2004, largely due to our efforts to cut gas supply to low-profit-margin customers. Gross profit from connection increased to $6,634,041 for the fiscal year ended December 31, 2005, an increase of 1630% from $383,537 for the fiscal year ended December 31, 2004, consistent with the increase in sales from connections.

The table below presents information about our gross profit for the periods indicated:

	Twelve Months Ended December 31
	2005			2004
	US$	%	Gross Profit Margin	US$	%	Gross Profit Margin
Gross Profit	6,811,938	100%	62.5%	1,183,248	100%	27.3%
Gas	177,897	2.6%	6.6%	334,902	28.3%	10.5%
Connection	6,634,041	97.4%	80.9%	848,346	71.7%	74.7%

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The Company’s gross profit margin for the fiscal year ended December 31, 2005 was 62.5%, as compared to 27.3% for the same period in 2004, primarily due to the improved gross margin of our gas connection operations. The gross margin of our gas connection operation increased from 74.7% for the fiscal year ended December 31, 2004 to 80.9% for the same period in 2005, due to our improved cost control in construction of natural gas stations. The gross margin for gas sales was 6.6% for the fiscal year ended December 31, 2005, as compared to 10.5% for the same period in 2004, due to the increasing transportation fees as part of gas costs.

Income from Operations

Operating income increased 631.1% to $5,800,949 for the fiscal year ended December 31, 2005, as compared to with $793,415 for the fiscal year ended December 31, 2004. As a percentage of net sales, operating income was approximately 53.2% for the fiscal year ended December 31, 2005, an increase from approximately 18.3% for the fiscal year ended December 31, 2004. The increase in operating income for the fiscal year ended December 31, 2005 was due to the increase in our net sales as a result of the expansion of our operations in 2005 following the commencement of our operations in 2004.

Cost of Sales

Cost of Sales, which consist of gas costs and connection costs, increased to $4,095,351 for the fiscal year ended December 31, 2005, a 30% increase as compared to $3,146,699 the fiscal year ended December 31, 2004. Gas costs decreased 12% to $2,524,404 for the fiscal year ended December 31, 2005, from $2,859,988 for the fiscal year ended December 31, 2004, consistent with the decrease in gas fees due to our reduction of gas supply to two customers that contribute little to our profit margin. Connection costs increased 448% to $1,570,947 for the fiscal year ended December 31, 2005, from $286,711 for the fiscal year ended December 31, 2004, reflecting the increase of connection projects completed in 2005.

The table below presents information about our cost of sales for the periods indicated:

	Twelve Months Ended December 31
	2005		2004		Change
	US$	%	US$	%	%
Cost of Sales	4,095,351	100%	3,146,699	100%	30.0%
Gas	2,524,404	61.6%	2,859,988	90.9%	-11.7%
Connection	1,570,947	38.4%	286,711	9.1%	447.9%

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Operating Expenses

Operating expenses were $99,768 for the fiscal year ended December 31, 2005, an increase of 159.3% as compared to $10,048 for the fiscal year ended December 31, 2004. The increase was due to the fact that the company commenced its operations in 2004 and our operating expenses increased because of our business and personnel expansion.

	The twelve months ended December 31		Change
	2005	2004
	US$	US$	%
Selling expenses	99,768	10,048	892.9%
General & Administrative Expenses	911,221	379,785	139.9%
Total operating expenses	1,010,989	389,833	159.3%

Net Income

Net income was $5,702,433 for the fiscal year ended December 31, 2005, an increase of 324.3% from $1,343,957 for the fiscal year ended December 31, 2004. This change is attributable to the increase in connection business. The net profit margin improved to 52.3% from 31%, due to slowing growth of connection costs.

Cash and Cash Equivalent

Cash and Cash Equivalents decreased 14.5% to $571,194 for the fiscal year ended December 31, 2005, as compared to $668,346 for the fiscal year ended December 31, 2004, primarily as a result of our investment activities in 2005.

Accounts Receivable

Accounts Receivable increased 884.8% to $7,770,168 as of December 31, 2005, as compared to $789,013 as of December 31, 2004. This increase in accounts receivable was primarily attributable to a substantial increase in connection projects and deferred receipt of payments in 2005.

Construction in Progress

Construction in progress was $3,071,497 as of December 31, 2005, an increase of $1,601,320 or 108.9% as compared to $1,470,177 as of December 31, 2045. The increase was caused by the increase of the number of residential units which connected to gas supply in the fiscal year ended December 31, 2005. We connected 21,400 residential units to gas supply in 2005 as compared to 2,300 residential units in 2004.

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As at December 31, 2005, the pipelines under construction were principally our projects in Hebei and Jiangsu province, and in Beijing.  These projects, once completed, will significantly increase gas supply capacity.  Capital commitments in respect of these projects amounted to approximately $6,300,000 and $6,700,000 at December 31, 2005 and 2004 respectively.

Prepaid expenses and other current assets

Prepaid expenses and other current assets were $822,461 as of December 31, 2005, as compared to $1,504,164 as of December 31, 2004, a decrease of 45.3%. The decrease was primarily due to a refund of advance to suppliers when we cancelled an equipment purchase agreement.

Accounts payable

Accounts payable was $3,090,870 as of December 31, 2005, an increase of 2,194.3% from $134,721 for accounts payable as of December 31, 2004. The increase in accounts payable was due to the deferred payment arrangements we had with our construction companies that allowed us to defer payment to the project construction companies to the time when we have received payment from the real state developers of residential buildings with whom we entered into master supply agreements, or industrial customers. We are generally required to pay 40% of the amount we receive from real state developers of residential buildings or industrial customers to our project construction companies. Before make any payment to the construction companies out of the payment we receive from the real estate developers and industrial customers, the amount we owe to the construction companies are counted as accounts payable.

Loans

Beijing Gas does not have any bank loans. As of December 31, 2005, we had outstanding loans in the amount of $1,181,659, as compared to $663,730 as of December 31, 2004. The loans were unsecured loans owed to two unrelated companies as of December 31, 2005. $681,250 owed to Shenzhen Shi Yi Long Da Co., Ltd has an interest rate of 6% per annum and is due in October 2006. $500,409 owed to Beijing Qian Shi Li Technology Development Co., Ltd. is interest free and has no fixed payment terms.

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Critical Accounting Policies

Management's discussion and analysis of its financial condition and results of operations is based upon Beijing Gas’ consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Beijing Gas’ financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Beijing Gas believes that the following reflect the more critical accounting policies that currently affect Beijing Gas’ financial condition and results of operations. See also Note 2 to Beijing Gas’ consolidated financial statements, “Summary of Significant Accounting Policies and Organization”.

(A)Method of Accounting

Beijing Gas maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and note are representations of management. Accounting policies adopted by Beijing Gas conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.

(B)Consolidation

The consolidated financial statements include the accounts of Beijing Gas and its subsidiaries. Significant intercompany transactions have been eliminated in consolidation. Investments in which Beijing Gas has a 20 percent to 50 percent voting interest and where the company exercises significant influence over the investee are accounted for using the equity method.

As of June 30, 2006, the particulars of the subsidiaries are as follows:

Name of Company	Place of Incorporation	Date of Incorporation	Attributable Equity Interest %	Registered Capital
Ningjin Weiye Gas Co., Ltd	PRC	12/3/2003	100	RMB 3,000,000
Jinzhou Weiye Gas Co., Ltd	PRC	7/19/2004	100	RMB 3,000,000
Xingtang Weiye Gas Co., Ltd	PRC	2/18/2004	100	RMB 3,000,000
Linzhang Weiye Gas Co., Ltd	PRC	7/6/2005	100	RMB 1,000,000
Anping Weiye Gas Co., Ltd	PRC	8/4/2005	100	RMB 5,000,000
Wuqiao Gas Co., Ltd	PRC	6/30/2004	100	RMB 2,000,000
Yutian Zhongran Weiye Gas Co.,Ltd	PRC	12/19/2003	100	RMB 3,000,000
Langfang Development
Region Weiye Dangerous
Goods Transportation Co., Ltd	PRC	3/22/2005	100	RMB 1,000,000
Sihong Weiye Gas Co., Ltd	PRC	12/3/2004	100	RMB10,000,000
Peixian Weiye Gas Co., Ltd	PRC	8/22/2005	100	RMB 5,000,000
Sishui Weiye Gas Co., Ltd	PRC	12/22/2004	100	RMB 3,000,000
LongyaoZhongranWeiyeGasCo.,Ltd	PRC	10/13/2005	100	RMB 3,000,000
Shenzhou Weiye Gas Co., Ltd	PRC	12/23/2005	100	RMB 3,000,000

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(D)Use of Estimates

In preparing of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting year. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation on useful lives of plant and machinery. Actual results could differ from those estimates.

(E)Cash and Cash Equivalents

The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

(F)Accounts and Other Receivable

Accounts and other receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company extends unsecured credit to customers in the normal course of business and does not accrue interest on trade accounts receivable.

(G)Advances to Suppliers

Advances to suppliers represent the cash paid in advance for purchasing raw materials. The advances to suppliers are interest free and unsecured.

(H)Investments in Equity Securities

The consolidated statement of income includes the Group's share of the post-acquisition results of its associate for the six months ended June 30. In the consolidated balance sheet, investments in equity securities are stated at the Group's share of the net assets of the associates plus the premium paid less any discount on acquisition in so far as it has not already been amortized to the statement of income, less any identified impairment loss.

				Portion of
				Nominal
Name of	Place	Form of		Value of
Associate	of	Business	Registered	Registered	Principal
Company	Registration	Structure	Capital	Capital	Activities
Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd	PRC	Sino-foreign equity joint venture	Registered RMB 20,000,000	40	Trading of natural gas and gas pipeline construction

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Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd is Beijing Gas’ 40% owned joint venture company and is principally engaged in sale of compressed natural gas to domestic households and industrial around sub-urban areas of Beijing and part of sub-urban areas in Hebei Province and Tianjin.

(J)Plant and Equipment

Plant and equipment, other than construction in progress, are stated at cost less depreciation and amortization and accumulated impairment loss.

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

Gas Pipelines	25 years
Motor Vehicles	10 years
Machinery & Equipment	20 years
Buildings	25 years
Leasehold Improvements	25 years
Office Equipment	8 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

(K) Construction in Progress

Construction in progress represents the cost of constructing pipelines.  The major cost of construction relates to material, labor and overhead.   Construction of pipeline, through which to distribute natural gas, is one of the Group’s principal businesses.  The Group builds city main pipeline network and branch pipeline network to make gas connection to resident users, industrial, and commercial users, with the objective of generating revenue on gas connection and gas usage fees collected from these customers. 

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(L)Revenue Recognition

Revenue is recognized when services are rendered to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Gas connection revenue is recognized when the outcome of a contract can be estimated reliably and the stage of completion at the balance sheet date can be measured reliably.

Sales of natural gas are recognized when goods are delivered and title has passed.

(Q)Income Taxes

Pursuant to the tax laws of PRC, general enterprises are subject to income tax at an effective rate of 33%. Beijing Gas is in the natural gas industry whose development is encouraged by the government. According to the income tax regulation, any company engaged in the natural gas industry enjoys a favorable tax rate. In addition, Beijing Gas has been approved as a hi-technology company and has been enjoying preferential income tax treatment under China’s income tax policies that provide certain preferential income tax treatment to entities qualified as hi-technology entities. Under such policies, Beijing Gas is exempt from corporate income taxes for the first two years commencing from its first profitable year and thereafter, will be entitled to a 50% tax reduction for the succeeding three years. The company’s first profitable tax year was 2003. Accordingly, the company’s income would be subject to a reduced tax rate of 9% from 2005 to 2007. From 2008, the income tax rate will be 18%. The subsidiaries of Beijing Gas are subject to the effective rate of 33%.

DESCRIPTON OF PROPERTIES

We have offices at all operational locations. The facilities are added with each new project or operational location as part of the build out of the project.

Under the PRC law, most land is owned by the government, which grants a "land use right" to an individual or entity after a purchase price for such “land use right” is paid to the government. The “land use right” allows the holder the right to use the land for a specified long-term period of time and enjoys all the ownership incidents to the land. Beijing Gas and/or its subsidiaries have state owned land use rights for two parcels of land registered under their names, and lease land use rights for additional parcels of land from third parties that are used as for its gas distribution projects. In addition, Beijing Gas leases office buildings and warehouse facilities for its business operations.

Set forth below is the detailed information regarding these land use rights registered under the names of Beijing Gas or its subsidiaries:

Registered owner of land use right	Location & certificate of land use right	Usage	(approximate) square meters	Date of Issuance or Grant	Expiration Date
Beijing Gas	South side of Huang He Road, Cai Yuan Town, Wu Qiao County Wu Guo Yong (2003) Zi Di Chu No. 208	Other commercial use	1,520	November 25, 2003	November 25, 2043
Yu Tian Country Zhong Ran Wei Ye Gas Ltd.	Between East side of Yu Zun West Road and South side of Guan Qu, Yu Tian County Yu Tian Guo Yong (2004) Zi Di No. 097	Industrial use	2,674.5	June 8, 2004	May 21, 2054

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In addition to the land use rights described above, we have the right to use an aggregate of approximately 36,283 square meters for our operations either through grants or transfers of land use rights or lease arrangements. The duration of these rights range between six to 20 years.

As of June 30, 2006, Beijing Gas owns 202 km of high-pressure underground pipeline all with a diameter beyond 110 mm. Beijing Gas owns and operates 20 natural gas stations with accompanying buildings, gas compression facilities and other equipment. We own four cars, eight trucks and eight containers. We also lease trucks from Petro China.

LEGAL PROCEEDINGS

To our knowledge, there is no material litigation pending or threatened against us. See “We may be exposed to intellectual property infringement and other claims by third parties, which, if successful, could cause us to pay significant damage awards and incur other costs” under “Risk Factors” for information regarding risks related to the technology we use.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this Information Statement before deciding to invest in our common stock.

Risks Related to the Business of Beijing Gas

Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations.

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We commenced our current line of business operations in 2003. Our limited operating history may not provide a meaningful basis on which to evaluate our business. Although our revenues have grown rapidly since inception, we cannot assure you that we will maintain our profitability or that we will not incur net losses in the future. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in significant operating losses. We will continue to encounter risks and difficulties frequently experienced by companies at a similar stage of development, including our potential failure to:

- raise adequate capital for expansion and operations;

- implement our business model and strategy and adapt and modify them as needed;

-  increase awareness of our brands, protect our reputation and develop customer loyalty;  

-  manage our expanding operations and service offerings, including the integration of any future acquisitions; 

-   maintain adequate control of our expenses;  

-  anticipate and adapt to changing conditions in the natural gas utility market in which we operate as well as the impact of any changes in government regulations, mergers and acquisitions involving our competitors, technological developments and other significant competitive and market dynamics.

If we are not successful in addressing any or all of these risks, our business may be materially and adversely affected.

Our failure to compete effectively may adversely affect our ability to generate revenue.

We compete primarily on the basis of our ability to secure long-term supply contracts with major natural gas suppliers, and franchise agreements with local government entities in small- and medium-sized cities that allow us the exclusive rights to develop natural gas distribution networks and supply natural gas in these cities. There can be no assurance that such contracts and franchises will be available to us in new areas as we attempt to expand or that our competitors will negotiate more favorable arrangements. We expect that we will be required to continue to invest in building natural gas distribution infrastructure. Our business requires large amounts of working capital to fund our operations. Our competitors may have better resources and better strategies to raise capital which could have a material adverse effect on our business, results of operations or financial condition.

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Our inability to fund our capital expenditure requirements may adversely affect our growth and profitability.

Our continued growth is dependent upon our ability to generate more revenue from our existing distribution systems and raise capital from outside sources. We believe that in order to continue to capture additional market share, we will have to raise more capital to fund the construction and installation of the natural gas distribution network for our customers under existing contracts and for additional customers. In the future we may be unable to obtain the necessary financing on a timely basis and on acceptable terms, and our failure to do so may adversely affect our financial position, competitive position, growth and profitability. Our ability to obtain acceptable financing at any time may depend on a number of factors, including:

-   our financial condition and results of operations, 

- the condition of the PRC economy and the natural gas industry in the PRC, and

-   conditions in relevant financial markets in the United States, the PRC and elsewhere in the world. 

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

If our business and markets grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion. In addition, we may face challenges in managing expanding natural gas distribution network and service offerings and in integrating acquired businesses with our own. Such eventualities will increase demands on our existing management, workforce and facilities. Failure to satisfy such increased demands could interrupt or adversely affect our operations and cause delay in construction and installation of gas distribution systems, longer operation location completion cycle, and administrative inefficiencies.

If we are unable to successfully complete and integrate new operational locations in a timely manner, our growth strategy could be adversely impacted.

An important element of our growth strategy has been and is expected to continue to develop operational locations in small- and medium-sized cities. However, integrating businesses involves a number of special risks, including the possibility that management may be distracted from regular business concerns by the need to integrate operations, unforeseen difficulties in integrating operations and systems, problems relating to assimilating and retaining the employees of the acquired business, accounting issues that arise in connection with the acquisition, challenges in retaining customers, and potential adverse short-term effects on operating results. In addition, we may incur debt to finance future operation locations, and we may issue securities in connection with future operation locations that may dilute the holdings of our current or future stockholders. If we are unable to successfully complete and integrate new operation locations in a timely manner, our growth strategy could be adversely impacted.

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We depend on a concentration of natural gas suppliers. Any significant fluctuation in price of our raw materials may have a material adverse effect on the manufacturing cost of our products.

As we do not own natural gas reserves, we enter into supply contracts. Therefore, gas availability could also be subject to risks of contract fulfillment from counterparties. Thus, it might be necessary to look for other sources of natural gas in the case of non-delivery from any of these sources, which could require payment of higher prices than those called for under such contracts. Furthermore, our financial condition and operations could be adversely affected if a significant event occurs that is not fully covered by insurance. Should catastrophic conditions occur which interrupt delivery of gas for any reason, such occurrence could have a material adverse impact on the profitability of our operations.

Our operation is dependent, in large part, on significant contracts from a limited number of natural gas suppliers. Our inability to continue to secure and maintain a sufficient number of large sourcing contracts would have a material adverse effect on our business, operating results and financial condition. Moreover, the success of our expansion and growth will depend in part upon our ability to obtain and secure additional natural gas supply from our existing and/or new suppliers, as well as the financial condition and success of our suppliers and general economic conditions.

The price of natural gas is subject to government regulations and market conditions.

The price of natural gas is subject to government regulations and market conditions. While we have not experienced any shortage of supply in the past, we cannot assure you that natural gas will continue to be procured at the prices currently available or acceptable to us. Although the price for natural gas has not varied significantly in the past, we can not assure you that it will not vary significantly in the future. Numerous factors, most of which are beyond our control, drive the price and supply of natural gas. Some of these factors are: general economic conditions, industry capacity utilization and government regulations. Even though we may generally be able to pass on a higher gas price to our customers, a higher price will curb the consumption of natural gas by our customers and our future profitability may be adversely affected as a result.

Our success depends on our ability to identify and develop operational locations and negotiate and enter into favorable franchise agreements with local governments of the operation locations.

Our success depends on our ability to identify new operational locations and negotiate and enter into favorable franchise agreements with local governments of the operational locations that grant us long-term exclusive right to development the natural gas distribution network and supply natural gas in the operational location. Our failure to identify and develop new operational locations and obtain the exclusive rights to be the developer of natural gas distribution networks and distribute natural gas in such operational locations would curb our revenue growth and may have adverse impact on our financial conditions and operating results.

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Our success depends on our ability to obtain large industrial supply contracts and master residential supply contracts with large quantity of end users.

Our success depends on our ability to obtain large industrial supply contracts and master residential supply contracts with large quantity of end users. Our failure to obtain large industrial supply contracts and master residential supply contracts with large quantity of end users will adversely affect our ability to generate revenue and our growth potential and may have adverse impact on our financial conditions and operating results.

We are responsible for the indemnification of our officers and directors.

Our Bylaws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against costs and expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of us. This indemnification policy could result in substantial expenditures, which we may be unable to recoup.

Our natural gas operations are subject to particular operational and market risks that could lead to an interruption in gas supply.

Our operations are subject to the inherent risks normally associated with such operations, including pipeline ruptures, damage to tankers or assets related to electricity generation, explosions, pollution, release of toxic substances, fires, adverse weather conditions, third party failure to fulfill contracts, sabotage and accidental damage to our gas distribution network and other hazards and force majeure events, each of which could result in damage to or destruction of our facilities or damages to persons and property. If the operations of our existing suppliers are disrupted, we may have to increase our purchases from other suppliers. Events such as explosion and sabotage to pipelines, damage to tanks, or other events are unpredictable and cause interruptions in our gas supply.

Prices of natural gas can be subject to significant fluctuations, which may affect our ability to provide supplies to our customers.

While our costs for natural gas are strictly controlled by the government and have remained stable over the past 3 years, the price of natural gas can fluctuate in response to changing national or international market forces such as domestic and international political events, wars, OPEC actions, industry economics over the long term and other factors. Accordingly, price levels of natural gas may rise or fall significantly over the short to medium term.

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Our natural gas operations are highly risky and we may be subject to civil liabilities as a result of our regular natural gas operations.

Our operations are subject to potential hazards incident to the gathering, processing, separation, storage and delivery of natural gas, such as pipeline ruptures, explosions, product spills, leaks, emissions and fires. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, and pollution or other environmental damage, and may result in curtailment or suspension of operations at the affected facility. Consequently, we may face civil liabilities in the ordinary course of our business. These liabilities may result in us being required to make indemnification payments in accordance with the applicable contracts and regulations. At present, we do not carry any insurance to cover such liabilities in the ordinary course of our business. Although we have not faced any civil liabilities historically in the ordinary course of our natural gas operations, there is no assurance that we will not face such liabilities in the future. If such liabilities occur in the future, they may adversely and materially affect our operations and financial condition.

Changes in the regulatory atmosphere could adversely affect our business.

The distribution of natural gas and operations of filling stations are highly regulated requiring registrations for the issuance of licenses required by various governing authorities in China. In addition, there are various standards that must be met for filling stations including handling and storage of natural gas, tanker handling, and compressor operation which are regulated. The costs of complying with regulations in the future may harm our business. Furthermore, future changes in environmental laws and regulations could occur that result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.

We may not be able to effectively protect our proprietary technology, which could harm our business and competitive position.

Our success depends, in part, on our ability to protect our proprietary technologies. At present, we use an unpatented proprietary natural gas compression process that allows us to effectively and economically compress natural gas and distribute it. This process was developed by us based on a patented technology co-owned by our President and Chief Executive Officer, Mr. Yu-Chuan Liu, and another individual. We cannot assure you that we are, and will be able to effectively protect our technology, and our current or potential competitors do not have, and will not obtain or develop similar compression process, the occurrence of either of which could harm our business and competitive position.See “We may be exposed to intellectual property infringement and other claims by third parties, which, if successful, could cause us to pay significant damage awards and incur other costs.”

Implementation of PRC intellectual property-related laws has historically been lacking, primarily because of ambiguities in the PRC laws and difficulties in enforcement. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation may require significant expenditure of cash and management efforts and could harm our business, financial condition and results of operations. An adverse determination in any such litigation will impair our intellectual property rights and may harm our business, competitive position, business prospects and reputation.

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

At present, we use an unpatented, proprietary natural gas compression process that allows us to effectively and economically compress natural gas and distribute it. This process was developed by us based on a patented technology co-owned by our President and Chief Executive Officer, Mr. Yu-Chuan Liu, and another individual. In developing the process, we did not obtain and have not obtained authorization from such individual to use the patented technology. We believe that the technology we use is significantly improved and distinguished from the original patented technology, and any infringement claim related to the original patented technology would be unlikely to succeed. However, we cannot assure you that our assessment is and will be correct. In addition, as litigation becomes more common in China in resolving commercial disputes, we face a higher risk of being the subject of intellectual property infringement claims. The validity and scope of claims relating to natural gas compression technology and related devices and machines patents involve complex technical, legal and factual questions and analysis and, therefore, may be highly uncertain. The defense and prosecution of intellectual property suits, patent opposition proceedings and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our technical and management personnel. An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability, including damage awards, to third parties, require us to seek licenses from third parties, to pay ongoing royalties, or to redesign our products or subject us to injunctions preventing the manufacture and sale of our products. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of such litigation.

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

To the knowledge of our management team, neither the construction of natural gas distribution systems nor the sale and distribution of natural gas constitute activities that requires our operation to comply with the PRC environmental laws other than the PRC environmental laws of general applicability. It has not been alleged that we have violated any current environmental regulations by China government officials; however, there can be no assurance that the Chinese government will not amend its current environmental protection laws and regulations. Our business and operating results could be materially and adversely affected if we were to increase expenditures to comply with environmental regulations affecting our operations.

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We do not have key man insurance on our Chairman and CEO, Mr. Liu, on whom we rely for the management of our business.

We depend, to a large extent, on the abilities and participation of our current management team, but have a particular reliance upon Liu, Yu Chuan. The loss of the services of Mr. Liu, for any reason, may have a material adverse effect on our business and prospects. We cannot assure you that the services of Mr. Liu will continue to be available to us, or that we will be able to find a suitable replacement for Mr. Liu. We do not carry key man life insurance for any key personnel.

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

Our future success depends heavily upon the continuing services of the members of our senior management team, in particular our President and Chief Executive Officer, Mr. Yu-Chuan Liu; our Chief Operation Officer, Mr. Shu-Wang Li; our Marketing Director, Zhi-Min Zhong; our Vice President and Chief Engineer, Shu-Kui Bian; and our Chief Financial Officer, Ms. Fang Chen. If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and senior technology personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or senior technology personnel, or attract and retain high-quality senior executives or senior technology personnel in the future. Such failure could materially and adversely affect our future growth and financial condition.

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

We currently do not carry any product liability or other similar insurance. While product liability lawsuits in the PRC are rare and we have never experienced significant failures of our products, we cannot assure you that we would not face liability in the event of the failure of any of our products. We do not carry any property insurance to cover our real property, natural gas pipelines, storage facilities and equipment, nor do we have other insurance such as business liability or disruption insurance coverage for our operations in the PRC.

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We have purchased automobile insurance with third party liability coverage for our vehicles.

We do not maintain a reserve fund for warranty or defective equipment claims. Our costs could substantially increase if we experience a significant number of warranty claims.

Currently, we provide one year service warranty to our customers after we have installed the gas distribution systems and commenced gas supply for them. The warranties require us to repair and replace defective components . Historically, we have received a very limited number of warranty claims for our products. Consequently, the costs associated with our warranty claims have historically been low. Therefore we have not established any reserve funds for potential warranty claims. If we experience an increase in warranty claims or if our repair and replacement costs associated with warranty claims increase significantly, it would have a material adverse effect on our financial condition and results of operations.

Risks Related to Doing Business in the PRC.

We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

The PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC's political, economic and social life.

The PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may have a material and adverse effect on our business.

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There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. We and any future subsidiaries are considered foreign persons or foreign funded enterprises under PRC laws, and as a result, we are required to comply with PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses.

A slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services and our business.

We are a holding company. All of our operations are conducted in the PRC and all of our revenues are generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, we cannot assure you that such growth will continue. The solar hot water and renewable energy industry in the PRC is relatively new and growing, but we do not know how sensitive we are to a slowdown in economic growth or other adverse changes in the PRC economy which may affect demand for solar hot water heaters and boilers. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC may materially reduce the demand for our products and materially and adversely affect our business.

Inflation in the PRC could negatively affect our profitability and growth.

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

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Beijing Gas is subject to restrictions on paying dividends and making other payments to us.

We are a holding company incorporated in the State of Utah and do not have any assets or conduct any business operations other than our investments in our subsidiaries. As a result of our holding company structure, we rely primarily on dividends payments from our subsidiary in China. However, PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiary and affiliated entity in China are also required to set aside a portion of their after-tax profits according to PRC accounting standards and regulations to fund certain reserve funds. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. See “Government control of currency conversion may affect the value of your investment.” Furthermore, if our subsidiary or affiliated entity in China incurs debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiary is unable to receive all of the revenues from our operations through these contractual or dividend arrangements, we may be unable to pay dividends on our common stock.

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

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

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

The fluctuation of the Renminbi may materially and adversely affect your investment.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions. As we rely entirely on revenues earned in the PRC, any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our common shares or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of the Renminbi we convert would be reduced. In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to our income statement and a reduction in the value of these assets.

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On July 21, 2005, the PRC government changed its decade-old policy pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximately 2.0% appreciation of the RMB against the U.S. dollar. While the international reaction to the RMB revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

Recent PRC State Administration of Foreign Exchange (“SAFE”) Regulations regarding offshore financing activities by PRC residents, have undertaken continuous changes which may increase the administrative burden we face and create regulatory uncertainties that could adversely affect the implementation of our acquisition strategy, and a failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

The PRC State Administration of Foreign Exchange, or SAFE, issued a series of public notices in 2005 (the “SAFE Regulations”), which require registrations with, and approval from, SAFE on direct or indirect offshore investment activities by PRC resident individuals. The SAFE Regulations require that if an offshore company directly or indirectly formed by or controlled by PRC resident individuals (“SPC”) intends to acquire a PRC company, such acquisition will be subject to strict examination by the SAFE. Without registration, the PRC entity cannot remit any of its profits out of the PRC as dividends or otherwise. Gas (BVI) was deemed a SPC when the SAFE Regulations went effective. Prior to the Certain shareholders of the Company who are PRC residents are subject to the SAFE Regulations by virtue of being shareholders of Gas (BVI) prior to the consummation of the Share Exchange Transaction. As of the date hereof,

The PRC State Administration of Foreign Exchange, or SAFE, issued a public notice in January 2005 (“January Notice”) requiring registrations with, and approval from, SAFE on direct or indirect offshore investment activities by PRC resident individuals. The January Notice states that if an offshore company directly or indirectly formed by or controlled by PRC resident individuals (“SPC” - as referred to in the October Notice, see the following) intends to acquire a PRC company, such acquisition will be subject to strict examination by the central SAFE, the SAFE bureau at the highest level, which requires the disclosure by PRC resident individuals regarding their ownership status with an SPC or any other asset link between or among the parties to the acquisition transaction.

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In April 2005, SAFE issued another public notice clarifying the January Notice (“April Notice”). In accordance with the April Notice, if a PRC company is acquired by an SPC, the PRC resident shareholders of an SPC are required to submit a registration form to the local SAFE branch to register his or her respective ownership interests in the SPC, even such transaction occurred prior to the January Notice. The April Notice does not specify the timeframe during which such retrospective registration must be completed. The PRC resident must also file amendments if there is a material event affecting the SPC, such as, among other things, a change to share capital, a transfer of shares, or if the SPC is involved in a merger and an acquisition or a spin-off transaction or uses its assets in the PRC to guarantee offshore obligations. Furthermore, the April Notice expanded the definition of the term “foreign acquisition”, which makes the registration obligation applicable to any transaction that results in PRC residents directly or indirectly holding shares in an SPC.

On October 21, 2005, SAFE issued the third public notice (“October Notice”) effective from November 1, 2005 (“Effective Date”), which shall supersede the January Notice and April Notice by clarifying the documentation requirement and procedure of any registration process occurring after the Effective Date. It defines the term “SPC” as to be an offshore company directly or indirectly formed by or controlled by PRC resident entities or resident individuals for the purpose of equity financing (including financing by convertible bonds) by the assets or interests in a PRC entity. It also clarifies that the registration approval authority is the local SAFE, instead of the central SAFE, as set forth in the January Notice.

Gas (BVI) is deemed a SPC under the SAFE regulations discussed above. As such, our shareholders who are PRC residents, must comply with the registration and disclosure requirements provided thereunder. As of the date hereof, Mr. Yu-Chuan Liu, our President, Chief Executive Officer and Chairman of the Board, has completed the registration with the SAFE. Our other PRC shareholders who are subject to the SAFE regulations are in the process of registering with the SAFE.

Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could adversely affect our operations.

A renewed outbreak of SARS or another widespread public health problem in the PRC, where all of the Company’s revenue is derived, could have an adverse effect on our operations. Our operations may be impacted by a number of health-related factors, including quarantines or closures of some of our offices that would adversely disrupt our operations.

Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our operations.

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

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

We may face obstacles from the communist system in the PRC.

Foreign companies conducting operations in PRC face significant political, economic and legal risks. The Communist regime in the PRC, including a cumbersome bureaucracy, may hinder Western investment.

We may have difficulty establishing adequate management, legal and financial controls in the PRC.

The PRC historically has not adopted a Western style of management and financial reporting concepts and practices, as well as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.

Risks Related to Our Common Stock.

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

Our officers, directors and affiliates beneficially own approximately 64.87% (prior to the Reverse Split) and 89.94% (after the Reverse Split) of our Common Stock. Liu Yu Chuan, our Chairman and Chief Executive Officer, beneficially owns approximately 32.71% (prior to the Reverse Split) and 45.14% (after the Reverse Split) of our Common Stock. As a result, Mr. Liu is able to influence the outcome of stockholder votes on various matters, including the election of directors and extraordinary corporation transactions including business combinations. Yet Mr. Liu’s interests may differ from other stockholders. Furthermore, the current ratios of ownership of our common stock reduce the public float and liquidity of our common stock which can in turn affect the market price of our common stock. See “Security Ownership of Certain Beneficial Owners and Management” under Item 2.01 of this Current Report for more information regarding beneficial ownership of securities of our management.

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

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

There is currently a limited trading market for our common stock.

Our common stock is quoted on the over-the-counter Bulletin Board. However, our bid and asked quotations have not regularly appeared on the OTC Bulletin Board for any consistent period of time. There is no established trading market for our common stock and our common stock may never be included for trading on any stock exchange or through any other quotation system (including, without limitation, the NASDQ Stock Market). You may not be able to sell your shares due to the absence of a trading market.

Our common stock may be also subject to the "penny stock" rules to the extent that the price drops below $5.00, which require delivery of a schedule explaining the penny stock market and the associated risks before any sale. See "MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS." These requirements may further limit your ability to sell your shares.

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

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

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

We are required under the Registration Rights Agreement to register for sale by the investors and certain other parties all of the shares of Common Stock issuable upon conversion of Series B Stock and exercise of warrants issued in the Private Financing and shares of Common Stock issuable upon conversion of Series A Stock issued to certain Gas (BVI) Shareholders in the Share Exchange Transaction.

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of September 7, 2006, certain information with respect to the beneficial ownership of our common stock, our only shares of voting securities, by (i) any person or group with more than 5% of Common Stock, (ii) each director, (iii) our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all executive officers and directors as a group. The table reflects the ownership of our Common Stock by the foregoing parties before and after the Reverse Split.

As of September 7, 2006, we had outstanding (i) 100,770,140 shares of Common Stock, (ii) 14,361,647 shares of Series A Stock, which were issued to the Gas (BVI) Shareholders in the Share Exchange Transaction, (iii) 2,372,264 shares of Series B Stock, which were issued to the Investors in the Private Financing, (iv) Series A Warrants to purchase an aggregate of 2,189,782 shares of Common Stock at $3.84 per share, (v) Series B Warrants to purchase an aggregate of 1,094,891 shares of Common Stock at $5.48 per share, (vi) a Series J Warrant to purchase an aggregate of 1,993,355 shares of Common Stock at $3.01 per share, (vii) Series C Warrants to purchase an aggregate of 1,993,355 shares of Common Stock at $4.22 per share, and (viii) Series D Warrants to purchase an aggregate of 996,678 shares of Common Stock at $6.03 per share. Series A and Series B Warrants were issued to the Investors, and Series J, C and D Warrants were only issued to VOMF, in the Private Financing.

Each Series A Warrant provides VOMF the right to purchase one share of Common Stock for $3.84 per share. Each Series B Warrant provides VOMF the right to purchase one share of Common Stock for $5.48 per share. The Series A and B Warrants have a term of five years.

The Series J Warrant provides VOMF the right to purchase an aggregate of 1,993,355 shares of Common Stock for $3.01 per share. The Series J Warrant is exercisable for a period of twelve (12) months following the closing of the Private Financing. The Series C Warrant provides VOMF the right to purchase an aggregate of 1,993,355 shares of Common Stock for $4.22 per share. Each Series D Warrant provides VOMF the right to purchase an aggregate of 996,678 shares of Common Stock at $6.03 per share. The Series C and D Warrants are only exercisable once the Series J Warrant is exercised and their terms are for five years following that date.

Shares of Series A and Series B Stock vote together with shares of Common Stock on all matters upon which stockholders are entitled to vote, except to the extent a class vote is required under Utah law or as otherwise provided in the certificate of designation creating such series. On those matters upon which the Series A Stock votes together with the Common Stock and Series B Stock as a single class, each share of Series A carries a number of votes equal to the number of shares of Common Stock issuable in a mandatory conversion based on the then applicable conversion rate. On those matters upon which the Series B Stock votes together with the Common Stock and Series A Stock as a single class, each share of Series B Stock carries a number of votes equal to the number of shares of Common Stock that would be issuable upon conversion. Each holder of Series A and Series B Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Company.

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In determining beneficial ownership of the Common Stock after the Reverse Split, the number of shares shown includes shares which the beneficial owner may acquire upon exercise of warrants or options which may be acquired within 60 days. In determining the percent of Common Stock owned by a person on September 6, 2006, (a) the numerator is the number of shares of the class beneficially owned by such person, including shares which the beneficial ownership may acquire within 60 days upon conversion of the Series A or Series B Stock or exercise of the warrants and option, and (b) the denominator is the sum of (i) the total shares of that class outstanding on September 7, 2006, and (ii) the total number of shares that the beneficial owner may acquire upon conversion of the Series A or Series B Stock or exercise of the warrants and option. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares. 

	Amount and Nature of Beneifical Ownership						Percent of Class			Amount and Nature of Beneifical Ownership				Percent of Class
										(After Reverse Split)				(After Reverse Split)
	Preferred Stock						Preferred Stock			Preferred Stock				Preferred Stock
Shareholder	Series A		Series B		Common Stock	(1)	Series A	Series B	Common Stock	Series A	Series B	Common Stock	(2)	Series A	Series B	Common Stock
Owner of More than 5% of Class
GAS (BVI)					72,569,764				72.02%			238,368				72.02%
Eloten Group Ltd.	6,524,174				32,966,814	(1)	45.43%		32.71%			6,632,459				45.14%
Leading King Investment Limited	5,384,923				27,210,151	(1)	37.50%		27.00%			5,474,299				37.26%
Vision Opportunity Master Fund, Ltd.			2,475,902					78.71%			2,475,902	10,743,963			78.71%	42.24%
John Kuhns			170,772	(3)				5.43%			170,772	637,925			5.43%	4.16%
Kuhns Brothers, Inc.			113,847	(4)				3.62%			113,847	581,000			3.62%	3.80%
Coronado Capital Partners LP			180,000					5.72%			180,000	859,635				5.78%
Directors and Executive Officers
Liu Yu Chuan	6,524,174	(5)			32,966,814	(6)	45.43%		32.71%			6,632,459	(6)	0.00%		45.14%
Sun Quan Dong	5,384,923				27,210,151	(7)	37.50%		27.00%			5,474,299	(7)	0.00%		37.26%
Zhong Zhi Min	393,581				1,988,772	(1)	2.74%		1.97%			400,113	(1)			2.72%
Li Shu Wang	393,581				1,988,772	(1)	2.74%		1.97%			400,113	(1)			2.72%
Bian Shu Kui	173,962				879,037	(1)	1.21%		0.87%			176,850	(1)			1.20%
Chen Fang	65,604				331,498	(1)	0.46%		0.33%			66,693	(1)			0.45%
Chen Wei Guo	0				-		0.00%		0.00%			-				0.00%
John Kuhns	0		170,772	(3)	-		0.00%	5.43%	0.00%		170,772	637,925	(3)		5.43%	4.29%
All Directors and Executive Officers	12,935,824		170,772		65,365,045		90.07%	5.43%	64.87%	-	170,772	13,788,452		0.00%	5.43%	89.94%

(1) The Preferred Stock and Warrants are assumed to be non- convertible or exercisable within 60 days of the Closing Date.

(2) Includes the shares of Series A Stock which will automatically convert into Common Stock based on a 1:1 conversion ration after the Reverse Split, and shares of Common Stock issuable upon conversion of Series B Preferred Stock based on a 1:1 conversion ration after giving effect to the Reverse Split, and shares of Common Stock issuable upon exercise of Warrants.

(3) Shares of Common Stock issued to Gas (BVI) as a result of the consummation of the Share Exchange Agreement are beneficially attributed to each of the Gas (BVI) shareholders based on such Gas (BVI) Shareholder's percentage ownership interest in Gas (BVI) immediately prior to the Share Exchange Agreement.

(4) Includes 113,847 shares of Series B Stock issued to Kuhns Brothers, Inc., which are beneficially attributed to John Kuhns, and 56,925 Shares of Series B Stock issued to John Kuhns.

(5) Includes 6,524,174 shares of Series A Stock issued to Eloten Group Ltd., which are beneficially attributed to Mr. Liu Yu Chuan. Mr. Liu and his wife hold an aggregate of 100% ownership interest in Eloten Group Ltd.

(6) Includes 32,966,814 shares of common Stock beneficially attributed to Eloten Group Ltd. based Eloten Group Ltd.'s ownership interest in Gas (BVI).

(7) Includes 27,210,151 shares of Common Stock Beneficially attributed to Leading King Investment Limited based on Leading King Investment Limited's ownership interest in Gas (BVI). Mr. Sun holds 50% ownership interest in Leading King Investment Limited.

DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

In connection with the change of control pursuant to the Reverse Merger described in Item 5.01 of this Current Report, the following persons were appointed executive officers and directors of the Company. Except for John D. Kuhns, each of our current Directors and executive officers is a resident of the PRC. As a result, it may be difficult for investors to effect service of process within the United States or British Virgin Islands upon them, or to enforce court judgments obtained against them in the United States courts or British Virgin Islands’ courts.

Directors and Executive Officers of the Company

Directors and Executive Officers	Position/Title	Age
Liu Yu Chuan	President & Chief Executive Officer, director and Chairman of the Board	43
Li Shu Wang	Chief Operation Officer	40
Zhong Zhi Min	Marketing Director	52
Bian Shu Kui	Vice President & Chief Engineer	43
Chen Fang	Chief Financial Officer, director	34
Chen Guo Wei	director	51
Sun Quan Dong	director	41
John D. Kuhns	director	56

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There are no family relationships among our directors or executive officers.

All our directors hold office until the next annual meeting of our shareholders, and until their successors have been qualified after being elected or appointed. Officers serve at the discretion of our Board of Directors.

Set forth below is the biographical information about our directors and executive officers:

Mr. Liu, Yu ChuanMr. Liu was appointed Chairman, Chief Executive Officer and President of the Company on September 7, 2006. Mr. Liu graduated from North Industrial University, Beijing, PRC with a B.S. degree in electrical engineering. Mr. Liu has been a licensed Senior Engineer in the PRC since 1997. Mr. Liu was the Chairman of the board of directors and General Manager of Beijing Xiang Ke Jia Hua Petroleum and Natural Gas Co., Ltd. between 2000 and 2003. Prior to that, Mr. Liu served as CEO of Lang Fang Zhong Gong Petroleum and Natural Gas Technology Co., Ltd. from 1997 to 1999. Prior to that, Mr. Liu served as the Chief of Research and Development Department of Petro China from 1983 to 1997.

Mr. Li, Shu Wang Mr. Li was appointed the Chief Operating Officer of the Company on September 7, 2006. Mr. Li graduated from Hebei Industrial University, PRC, with a B.S. Mr. Li has more than 10 years of experience in the technology and management in the natural gas industry. He was the Director and Chief Engineer of a Hong Kong publicly traded company, Huashen Natural Gas (China) Investment Co., Ltd., from 2002 to 2004. Prior to that, he was the Manager of Tianjin Petrochemical Construction and Installation Engineering Co., Ltd from 1988 to 2002.

Mr. Zhong Zhi Min Mr. Zhong was appointed the Marketing Director of the Company on September 7, 2006. Mr. Zhong graduated from Nanjing University with a B.S. in Philosophy. Mr. Zhong was Vice President of Shen Zhen Guo Qi Real Estate Co. Ltd from 1995 to 2004. Prior to that, Mr. Zhong served as a government official in several cities in Jiang Xi Province between 1978 and 1995.

Mr. Bian, Shu Kui Mr. Bian was appointed Vice President and Chief Engineer of the Company on September 7, 2006. Mr. Bian graduated from Daqing Petroleum Institute with a B.S. and Petroleum University with a M.S. He served as Vice President of Beijing Zhong Ran Xiang Ke Petroleum and Oil Technology Co., Ltd. between 2000 and 2006. Prior to that, Mr. Bian had been with North China Oilfield The First Refinery Factory for fourteen years. Mr. Bian was one of the industry experts that drafted The National Standard of Natural Gas Usage in Cities in China.

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Ms. Chen, Fang Ms. Chen was appointed director and the Chief Financial Officer of the Company on September 7, 2006. Ms. Chen graduated from Sun Yat-Sen University, PRC, with a B.A in law, and from Zhongnan University of Economics and Law, PRC, with an MBA. Ms. Chen has been a licensed attorney in PRC since 1995. She served as Vice-President and General Manager at Zhuhai Brightzone Securities Investment and Consulting Ltd. from 2000 to 2002. Prior to that, Ms. Chen served as Manager of Investment Department at Zhuhai International Trust and Investment Ltd. from 1994 to 2000. Ms. Chen has a wide range of experience in the financial industry.

Mr. Chen Guo WeiMr. Chen was appointed director of the Company on September 7, 2006. Mr. Chen graduated from East China College of Metallurgy with a major in Accounting. From March 2006 to present, Mr. Chen has been the general manager and chairman of the board of Shen Zhen Jia Xin Real Estate Development Co., Ltd. Prior to that, he was the general manager of Hang Zhou Steal Group from 2001 to February 2006. Mr. Chen is very experienced in general and financial management.

Mr. Sun, Quan Dong,Mr. Sun was appointed director of the Company on September 7, 2006. Mr. Sun graduated from Shanghai Maritime University with a B.S. Mr. Sun has been Chairman of Jidong Shipping Co., Ltd from 1995. Prior to that, Mr. Sun served as Manager in the Shipping Department of Shekou Shipping Co., Ltd between 1987 to 1994.

Kuhns, John D., Director, Mr. John D. Kuhns was appointed a director of our company on September 7, 2006. Mr. Kuhns has been a 45% shareholder, a director and chairman of Kuhns Brothers, Inc., a holding company founded in 1987 for its subsidiary, Kuhns Bros. & Co., Inc., an investment banking firm specializing in providing financing for power technology ventures, and, more recently, manufacturing operations within the PRC. Additionally, Kuhns Brothers, Inc. owns 100% of Kuhns Brothers Securities Corporation, a broker dealer, registered with the SEC, in which Mr. Kuhns is the Chairman. Since March 2005, Mr. Kuhns has been a director and chairman of Deli Solar (USA), Inc., a U.S. reporting company with solar hot water heaters manufacturing operation in the PRC. Since, December, 2005, Mr. Kuhns has served as a Director of Fushi International, Inc. Since 2002, Mr. Kuhns has been a director and chairman of Distributed Power, Inc., a public company that owns electric generating projects. Mr. Kuhns is also a director of China Sciences Conservational Power Limited, a company listed on the Hong Kong Stock Exchange. Neither of the foregoing Kuhns companies, nor Deli Solar (USA), Inc., Distributed Power, Inc., Fushi International, Inc. or China Sciences Conservational Power Limited are affiliated with the Company. Mr. Kuhns holds a bachelors degree in sociology and fine arts from Georgetown University, a master's degree in fine arts from the University of Chicago and an MBA degree from the Harvard Business School.

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To our knowledge, during the last five years, none of our directors and executive officers (including those of our subsidiaries) has:

· Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

· Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.

· Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.

· Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Audit Committee Financial Expert

Our board of directors currently acts as our audit committee. Because we only recently consummated the Reverse Merger and appointed the current members of our board of directors, our board of directors has not yet determined whether we have a member who qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. Our board of directors is in the process of searching for a suitable candidate for this position.

Audit Committee

We have not yet appointed an audit committee, and our board of directors currently acts as our audit committee. At the present time, we believe that the members of board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our company, however, recognizes the importance of good corporate governance and intends to appoint an audit committee comprised entirely of independent directors, including at least one financial expert, during our 2006 fiscal year.

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EXECUTIVE COMPENSATION

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following is a summary of the compensation paid by Beijing Gas to its named executive officers and directors for the three years ended December 31, 2005, 2004 and 2003, respectively.

Summary Compensation Table

Name	Principal Position	Annual Compensation				Long Term Compensation			All Other Compensation ($)
						Awards		Payouts
		Year	Salary ($)	Bonus ($)	Other Annual Compensation ($)	Restricted Stock Award(s) ($)	Securities Underlying Options and SARs(#)	LTIP Payouts
Liu Yu-Chuan	President, CEO	2005	22,800	1,913
	President, CEO	2004	19,000	750
	President, CEO	2003	-	-

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Share Exchange Agreement and the Issuance of Series A Stock

On September 7, 2006, the Company entered into and consummated the Share Exchange Agreement with the holders of all of the outstanding capital stock of Gas (BVI), which were: Eloten Group Ltd., Leading King Investment Limited., Zhong Zhi Min, Li Shu Wang, Chen Si, Xiang Shun Ying, Chong Shun, Liu Xiao Bing, Zhuo Qing Hui, Bian Shu Kui, Chen Fang, Shang Jian Zhong and Wang Wei Dong, collectively, known as the Gas (BVI) Shareholders.

Pursuant to the terms of the Share Exchange Agreement, the Company issued an aggregate of 14,361,647 shares of our newly designated Series A Stock in exchange for the 9,950,000 shares of common stock of Gas (BVI) held by the Gas (BVI) Shareholders, which constituted all of Gas (BVIs) capital stock. Each share of Series A Stock will convert automatically into one share of our common stock, par value $0.001 per share (“Common Stock”) upon the completion of the reverse stock split more fully described in Item 3.03 of this Current Report (the “Reverse Split”). Therefore, the shares of Series A Stock issued to the Gas (BVI) Shareholders will automatically convert into an aggregate of 14,361,647 shares of Common Stock, which will represent approximately 73% of our total outstanding Common Stock after the Reverse Split.

As a result of the consummation of the Share Exchange Agreement, Gas (BVI) is now a wholly-owned subsidiary of the Company, and Beijing Gas is now an indirectly wholly-owned subsidiary of the Company in the PRC.

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The foregoing description of the Share Exchange Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 10.1.

Private Placement Offering of Series B Stock and Warrants

On September 7, 2006, the Company entered into and closed Stock Purchase Agreement with the “Investors”, pursuant to which the Company issued, for an aggregate of $6,876,800 in gross cash proceeds, to the Investors an aggregate of 2,509,782 shares of our newly designated Series B Stock at $2.74 per share, Series A, B, J, C and D warrants (each of which is described below).

Subject to certain conditions, at the option of the holders of the Series B Stock, each share of Series B Stock is convertible into one share of our Common Stock after giving effect to the Reverse Split. Therefore, the shares of Series B Stock to be issued in the Private Financing are convertible into an aggregate of 2,509,782 shares of Common Stock after giving effect of the Reverse Split.

The Series A Warrants provide the Investors the right to purchase an aggregate of 2,509,782 shares of Common Stock for $3.84 per share. The Series B Warrants provide the Investors the right to purchase an aggregate of 1,254,891 shares of Common Stock for $5.48 per share. The Series A and B Warrants have a term of five years.

The Series J Warrants provide the Investors the right to purchase an aggregate of 2,284,651 shares of Common Stock for $3.01 per share. Each Series J Warrant is exercisable for a period of twelve (12) months following the closing of the Private Financing. The Series C Warrants provide the Investors the right to purchase an aggregate of 2,284,651 shares of Common Stock for $4.22 per share. The Series D Warrants provide the Investors the right to purchase an aggregate of 1,142,326 shares of Common Stock at $6.03 per share. The Series C and D Warrants of an Investor are only exercisable once the Series J Warrant of such Investor is exercised and their terms are for five years following that date.

Please refer to Item 1.01 of this Current Report for additional information regarding the private offering of Series B Stock and the warrants.

The foregoing description of the Stock Purchase Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 10.2.

Registration Rights Agreement

In connection with the Stock Purchase Agreement, the Company entered into the Registration Rights Agreement with the Investors on September 7, 2006. Pursuant to the Registration Rights Agreement, the Company is required to file with the SEC a "resale" registration statement on Form SB-2 (the “Registration Statement”), providing for the resale of all Conversion Shares, Warrant Shares, 467,153 shares of Common Stock issuable upon exercise of a warrant issued to Kuhns Brothers, Inc. (the “Kuhns Shares”), an aggregate of 635,822 shares of Common Stock issuable upon conversion of the Series B Stock issued to VOMF, Kuhns Brothers, Inc., and certain other parties, and 1,314,405 shares of Common Stock issuable upon conversion of Series A Stock issued to certain shareholders of Gas (BVI) in exchange for the shares of Gas (BVI) held by such shareholders pursuant to the Share Exchange Transaction.

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Please refer to Item 1.01 of this Current Report for additional information regarding the Registration Rights Agreement.

Lock-Up Agreement.

In connection with the Stock Purchase Agreement, on September 7, 2006, the Company entered into a Lock-Up Agreement with the Gas (BVI) Shareholders (the “Lock-Up Agreement”), pursuant to which the Gas (BVI) Shareholders agreed to not transfer any of the shares of Common Stock issuable upon conversion of the Series A Stock issued to the Gas (BVI) Shareholders in the Share Exchange Transaction from the period commencing on the closing date of the Private Financing and expiring on the date that is the later of one (1) year following the closing date of the Private Financing or six (6) months following the effective date of the registration statement filed by the Company with the providing for the resale of the shares of Common Stock ssuable upon conversion of the Series A Stock and exercise of any warrants; provided, however, that no Gas (BVI) Shareholder shall, during the twelve (12) months following such period, sell more than one-twelfth (1/12) of their total holdings of Common Stock or Series A Stock during any one (1) month.

Please refer to Item 1.01 of this Current Report for additional information regarding the Lock-Up Agreement.

Placement Agent Compensation

In connection with the Private Financing, Kuhns Brothers, Inc., received the following compensation: (i) $80,000 cash as signing fee, documentation fee and purchase fee, (ii) $120,000 cash as purchase fees in connection with the purchase by Gas (BVI) of the common stock of Dolce from certain shareholders of Dolce pursuant to a stock purchase agreement dated as of August 24, 2006, (iii) 10% of the total cash paid for the Series B Stock and warrants, and (iv) a warrant to purchase an aggregate of 467,153 shares of Common Stock at $3.84 per share. In addition, Kuhns Brothers, Inc. is to receive 10% of the proceeds of any exercise of the warrants sold to investors of the Series B Stock. Upon the closing of the Private Financing, a non-refundable monthly retainer of $10,000 per month will be paid to Kuhns Brothers for 24 months.

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Consulting Agreement

Pursuant to a Consulting Agreement dated as of August 8, 2006 by and between the Company and Kuhns Brothers, Inc. (the “Consulting Agreement”) Kuhns Brothers, Inc. is entitled to receive an aggregate of 635,822 shares of Series B Stock, representing 3.1791% of the total outstanding capital stock of the Company after giving effect to the Reverse Split. Kuhns Brothers, Inc., designated the following persons to receive a portion of its Series B Stock:

Name	Shares
“James” Tie Li	27,373
Sam Shoen	25,875
Paul Kuhns	5,175
Kuhns Brothers, Inc.	113,847
John Kuhns	56,925
Mary Fellows	56,925
Vision Opportunity Master Fund, Ltd.	286,120
Belmont Partners, LLC	31,791
Guzov Ofsink, LLC	31,791

Description of Securities

Our authorized capital stock consists of (i) 250,000,000 shares of Common Stock par value $0.001 per share, of which there are 100,770,140 shares issued and outstanding, and (ii) 100,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”). Our Preferred Stock consists of (i) Series A convertible preferred stock, of which 20,000,000 shares have been authorized and 14,361,647 shares are issued and outstanding; and (ii) Series B convertible preferred stock, of which 5,000,000 shares have been authorized and 2,509,782 shares are issued and outstanding.

The following is a summary of the material terms of our capital stock. This summary is subject to and qualified in its entirety by our Articles of Incorporation, as amended and corrected, Certificate of Designations for our series A and series B convertible preferred stock, our By-laws and by the applicable provisions of Utah law.

Common Stock

We are authorized to issue 250,000,000 shares of Common Stock, with a par value of $0.001. There are 100,770,140 shares of Common Stock issued and outstanding as of the date of this Current Report. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The Common Stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the company, the holders of common stock will share equally in any balance of the company's assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of Common Stock are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the board of directors from funds legally available.

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Preferred Stock

In addition to the 250,000,000 shares of Common Stock, we are authorized to issue 100,000,000 shares of preferred stock, with a par value of $0.001. Shares of the preferred stock may be issued from time to time in one or more classes or series, each of which class or series shall have such distinctive designation or title as shall be fixed by the board of directors prior to the issuance any shares thereof.

The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holder to block such a transaction, or facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of the holders of the common stock. Although the board of directors is required to make any determination to issue such stock based on its judgment as to the best interests of our stockholders, the board of directors could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. The board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized preferred stock, unless otherwise required by law.

On August 30, 2006, our board of directors designated 20,000,000 shares of our authorized $0.001 par value per share preferred stock as Series A Stock and 5,000,000 shares of our preferred stock as Series B Preferred Stock. On August 31, 2006, we filed Certificates of Designations for the Series A and Series B Stock with the Office of the Secretary of State of Utah. For a description of the terms of the Series A and B Stock, see Item 3.03 of this Current Report.

Warrants

We currently have five classes of warrants outstanding. Each Series A Warrant provides its holder the right to purchase one share of Common Stock for $3.84 per share. A total of 2,509,782 Series A Warrants are outstanding. Each Series B Warrant provides its holder the right to purchase one share of Common Stock for $5.48 per share. A total of 1,254,891 Series B Warrants are outstanding. The Series A and B Warrants have a term of five years.

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The Series J Warrants provides its holders the right to purchase an aggregate of 2,284,651 shares of Common Stock for $3.01 per share. Each Series J Warrant is exercisable for a period of twelve (12) months following the closing of the Private Financing. The Series C Warrants provide its holders the right to purchase an aggregate of 2,284,651 shares of Common Stock for $4.22 per share. The Series D Warrants provide its holders the right to purchase an aggregate of 1,142,326 shares of Common Stock at $6.03 per share. The Series C and D Warrants of a holder are only exercisable once the Series J Warrant of such holder is exercised and their terms are for five years following that date.

We have granted a Series A Warrant to Kuhns Brothers and its designees to purchase an aggregate of 467,153 shares of Common Stock at the exercise price of $3.84 per share. We issued these warrants for advisory services in connection with the Reverse Merger Transaction.

MARKET FOR OUR COMMON STOCK

Bid and ask quotations for our Common Stock appear on the NASD's over-the-counter Bulletin Board under the symbol “DLCV.OB”. The high and low bid prices for our Common Stock as reported by Yahoo Finance on September 6, 2006 were: $0.015 and $0.02. These over-the-counter market high and low bid quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. As of September 6, 2006, our Common Stock was held by approximately 660 holders of record.

Penny Stock Regulations

The SEC has adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share. Our common stock, falls within the definition of penny stock and subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000, together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell the our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary

 

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Dividends

Our board of directors has not declared a dividend on our Common Stock during the last two fiscal years or the subsequent interim period and we do not anticipate the payments of dividends in the near future as we intend to reinvest our profits to grow operations. We rely on dividends from Beijing Gas for our funds and PRC regulations may limit the amount of funds distributed to us from Beijing Gas, which will affect our ability to declare any dividends. See “Risk Factors—Risks Related to Doing Business in the PRC See “Risk Factors—Risks Related to an Investment in our Common Stock—Beijing Gas is subject to restrictions on paying dividends and making other payments to us”, “We are not likely to pay cash dividends in the foreseeable future” and “Governmental control of currency conversion may affect the value of your investment” in this Item 2.01. Also see "Description of Securities—Common Stock."

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the U.S. Securities and Exchange Commission (the “SEC”), reports, statements and other information as required under the Securities Exchange Act of 1934. These reports, statements and other information may be read and copied at the SEC's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room at 1-800-SEC-0330.

The SEC maintains a web site (HTTP://WWW.SEC.GOV.) that contains the registration statements, reports, proxy and information statements and other information regarding registrants that file electronically with the SEC such as us. You may access our SEC filings electronically at this SEC website. These SEC filings are also available to the public from commercial document retrieval services.

ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES

Share Exchange Agreement and the Issuance of Series A Stock

On September 7, 2006, the Company entered into and consummated the Share Exchange Agreement with the Gas (BVI) Shareholders.

Pursuant to the terms of the Share Exchange Agreement, the Company issued an aggregate of 14,361,647 shares of our newly designated Series A Stock in exchange for the 9,950,000 shares of common stock of Gas (BVI) held by the Gas (BVI) Shareholders, which constituted all of Gas (BVI)’scapital stock.

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Please refer to Item 1.01 of this Current Report for additional information regarding the Share Exchange Agreement and the Issuance of Series A Stock.

Private Placement Offering of Series B Stock and Warrants

On September 7, 2006, the Company entered into and closed Stock Purchase Agreement with the “Investors”, pursuant to which the Company issued, for an aggregate of $6,876,800 in gross cash proceeds, to the Investors an aggregate of 2,509,782 shares of our newly designated Series B Stock at $2.74 per share, Series A, B, J, C and D warrants (each of which is described below).

Subject to certain conditions, at the option of the holders of the Series B Stock, each share of Series B Stock is convertible into one share of our Common Stock after giving effect to the Reverse Split. Therefore, the shares of Series B Stock to be issued in the Private Financing are convertible into an aggregate of 2,509,782 shares of Common Stock after giving effect of the Reverse Split.

The Series A Warrants provide the Investors the right to purchase an aggregate of 2,509,782 shares of Common Stock for $3.84 per share. The Series B Warrants provide the Investors the right to purchase an aggregate of 1,254,891 shares of Common Stock for $5.48 per share. The Series A and B Warrants have a term of five years.

The Series J Warrants provide the Investors the right to purchase an aggregate of 2,284,651 shares of Common Stock for $3.01 per share. Each Series J Warrant is exercisable for a period of twelve (12) months following the closing of the Private Financing. The Series C Warrants provide the Investors the right to purchase an aggregate of 2,284,651 shares of Common Stock for $4.22 per share. The Series D Warrants provide the Investors the right to purchase an aggregate of 1,142,326 shares of Common Stock at $6.03 per share. The Series C and D Warrants of an Investor are only exercisable once the Series J Warrant of such Investor is exercised and their terms are for five years following that date.

Please refer to Item 1.01 of this Current Report for additional information regarding the Private Financing.

The foregoing description of the Stock Purchase Agreement is qualified in its entirety, by the text of the agreement which is annexed hereto as Exhibit 10.2.

Issuance of Warrant to the Placement Agent

In connection with the Private Financing, Kuhns Brothers, Inc., was issued a warrant to purchase an aggregate of 467,153 shares of Common Stock at $3.84 per share.

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Consulting Agreement with Kuhns Brothers, Inc.

Pursuant to a Consulting Agreement dated as of August 8, 2006 by and between the Company and Kuhns Brothers, Inc. (the “Consulting Agreement”) Kuhns Brothers, Inc. is entitled to receive an aggregate of 635,822 shares of Series B Stock, representing 3.1791% of the total outstanding capital stock of the Company after giving effect to the Reverse Split. Kuhns Brothers, Inc., designated the following persons to receive apportion of its Series B Stock:

Name	Shares
“James” Tie Li	27,373
Sam Shoen	25,875
Paul Kuhns	5,175
Kuhns Brothers, Inc.	113,847
John Kuhns	56,925
Mary Fellows	56,925
Vision Opportunity Master Fund, Ltd.	286,120
Belmont Partners, LLC	31,791
Guzov Ofsink, LLC	31,791

ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.

Designations, Preferences and Rights of Newly Issued Series A and B Stock

On August 30, 2006, our Board of Directors designated 20,000,000 shares of our authorized $0.001 par value per share preferred stock as Series A Stock and 5,000,000 shares of our preferred stock as Series B Stock. On August 31, 2006, we filed certificates of designations for the Series A and Series B Stock with the Office of the Secretary of State of Utah. On September 6, 2006, our board of directors amended the designations of the Series B Stock and we filed an amended certificate of designations for the Series B Stock with the Office of the Secretary of State of Utah. Our Board of Directors created the Series A Stock to allow us to consummate the Share Exchange Agreement with Gas (BVI) Shareholders and the Series B Stock in connection with the Private Financing, although in each case we do not have sufficient unissued authorized common stock to allow for a complete conversion. Each share of the Series A Stock and will convert automatically into one shares of our Common Stock after the Reverse Split. Each share of the Series B Stock will become convertible into Common Stock, at the option of the holder after the Reverse Split.

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The following are the material designations, preferences and rights of the Series A Stock and the Series B Stock which are substantially the same, except as stated below, with respect to liquidation preference and special rights of the Series B Stock:

Conversion:

Each share of Series A Stock will convert automatically into one share of our Common Stock after the Reverse Split is completed.

Each share of Series B Stock will become convertible, at the option of the holder, into one share of Common Stock after the Reverse Split is completed.

Liquidation Preference and Redemption:

The Series A Stock has no liquidation or redemption rights.

The Series B shall, in respect of the right to participate in distributions or payments in the event of any liquidation, dissolution or winding up, voluntary or involuntary, of the Company (a “Liquidation Event”), rank (a) senior to the Common Stock and to any other class or series of stock issued by the Company not designated as ranking senior to the Series B in respect of the right to participate in distributions or payments upon a Liquidation Event; and (b) pari passu with any other class or series of stock of the Company, the terms of which specifically provide that such class or series shall rank pari passu with the Series B in respect of the right to participate in distributions or payments upon a Liquidation Event. The Series B may not be redeemed by the Company without the express written consent (provided or withheld in their sole discretion) of each holder of the then-outstanding Series B. In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of shares of Series B then outstanding shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders, an amount equal to $2.74 per share (the "Liquidation Preference Amount") before any payment shall be made or any assets distributed to the holders of the Common Stock or any other stock that ranks junior to the Series B.

Voting:

Shares of Series A and Series B Stock vote together with shares of Common Stock on all matters upon which stockholders are entitled to vote, except to the extent a class vote is required under Utah law or as otherwise provided in the certificate of designation creating such series. On those matters upon which the Series A Stock votes together with the Common Stock and Series B Stock as a single class, each share of Series A carries a number of votes equal to the number of shares of Common Stock issuable in a mandatory conversion based on the then applicable conversion rate. On those matters upon which the Series B Stock votes together with the Common Stock and Series A Stock as a single class, each share of Series B Stock carries a number of votes equal to the number of shares of Common Stock that would be issuable upon conversion. Each holder of Series A and Series B Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Company.

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Dividends:

The holders of Series A and Series B Stock will not be entitled to dividends unless the Company pays cash dividends or dividends in other property to holders of outstanding shares of Common Stock, in which event, each outstanding share of the Series B Preferred will be entitled to receive dividends of cash or property, out of any assets legally available therefor, in an amount or value equal to the conversion rate multiplied by the Reverse Split multiplied by the amount paid in respect of one share of Common Stock (as adjusted for any stock dividends, combinations, splits or similar recapitalization events) prior and in preference to any declaration or payment of any dividend (payable other than in shares of Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock) on the Common Stock. Any dividend payable to the Series B Preferred will have the same record and payment date and terms as the dividend is payable on the Common Stock.

Please refer to Item 1.01 of this Current Report for additional information regarding Series B Stock.

Indemnification of Directors and Officers

Although Utah law allows us to indemnify our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf, and under certain circumstances to advance the expenses of such litigation upon securing their promise to repay us if it is ultimately determined that indemnification will not be allowed to an individual in that litigation, neither our articles of incorporation or bylaws impose an indemnity obligation upon us. In addition, we have not entered into any agreements under which we have assumed such an indemnity obligation.

ITEM 4.01. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.

On August 30, 2006, our Board of Directors approved the dismissal of Robison, Hill & Co. (“Robison") as our registered independent certified public accounting firm effective on September 7, 2006. Concurrent with this action, our Board of Directors appointed Samuel H. Wong & Co., LLP (“Wong”) as our new registered independent certified public accounting firm. Wong is located at Room 703, Nan Dao Commercial Building, 359-361 Queen’s Road Central, Hong Kong.

Beijing Gas’ operating businesses have previously been audited by Wong and management elected to continue this existing relationship. There have been no disagreements with Robison during the previous two fiscal years or any subsequent interim period.

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Robison's audit opinions on the financial statements for the fiscal years ended December 31, 2004 and 2005 did not contain an adverse opinion, a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that the report of Robison for the fiscal year ended December 31, 2004 and 2005 indicated conditions which raised substantial doubt about the Company's ability to continue as a going concern.

ITEM 5.01 CHANGE IN CONTROL OF REGISTRANT

On September 7, 2006, Gas (BVI) and certain shareholders of the Company (“Dolce Selling Shareholders”) entered into a stock purchase agreement (the “Dolce Stock Purchase Agreement”), whereby Dolce Selling Shareholders agreed to sell to Gas (BVI) an aggregate of 72,569,764 shares of our Common Stock, representing approximately 72.01% of our then total issued and outstanding voting securities as of the date thereof, in exchange for $675,000 (the “Stock Sale”).

In connection with the Dolce Stock Purchase Agreement, our board of directors agreed, at the closing of the Stock Sale, to appoint Gas (BVI)’s appointees to the board of directors and to resign their positions on our board and as our officers. As a result, immediately after the closing of the Stock Sale, there was a change in the entirety of our board of directors. The appointees of Gas (BVI) to the board of the Company are: Messrs. Liu, Yu Chuan, Chen, Guo Wei, Sun, Quan Dong, Kuhns, John D., and Ms. Chen, Fang.

ITEM 5.06 CHANGE IN SHELL COMPANY STATUS

As a result of the consummation of the Reverse Merger Transaction as described in Item 2.01, which description is in its entirety incorporated by reference in this Item 5.06 of this Current Report, we ceased being a shell company as such term is defined in Rule 12b-2 under the Exchange Act.

ITEM 8.01 OTHER EVENTS

On September 12, 2006, the Company issued a press release regarding the Reverse Merger Transaction. A copy of the press release is attached as an exhibit to this Current Report.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements of business acquired.

(b) Pro forma financial information.

(c) Exhibits

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INDEX TO EXHIBITS

Exhibit No.	Description of Exhibit
3.1	Articles of Incorporation, as amended and corrected.
3.2	Bylaws.
3.3	Specimen of Common Stock certificate.
3.4	Certificate of Designations authorizing the Series A Convertible Preferred Stock.
3.5	Certificate of Designations authorizing the Series B Convertible Preferred Stock.
3.6	Amended and Restated Certificate of Designations authorizing the Series B Convertible Preferred Stock.
4.1	Form of Series B Stock Purchase Agreement, dated as of September 7, 2006, by and among, Dolce Ventures, Inc., Vision Opportunity Master Fund, Ltd. and each of the other investors party thereto.
4.2	Form of Registration Rights Agreement, dated as of September 7, 2006, by and between, Dolce Ventures, Inc., Vision Opportunity Master Fund, Ltd.
4.3	Form of Lock-Up Agreement, dated as of September 7, 2006, by and among, Dolce Ventures, Inc., Leading King Investment Limited, Eloten Group, Ltd., Cheng Fang and certain other parties named therein.
4.4	Form of Series A Warrant
4.5	Form of Series B Warrant
4.6	Form of Series C Warrant
4.7	Form of Series D Warrant
4.8	Form of Series J Warrant
4.9	Form of Warrant issued to Kuhns Brothers
10.1	Form of Share Exchange Agreement dated as of September 7, 2006, by and between, Dolce Ventures, Inc., Yu-chuan Liu, and each of the other parties named therein.
10.2	Form of Stock Purchase Agreement dated as of August 24, 2006, by and between, Gas Investment China Co., Ltd. and each of the other parties named therein.
10.3	Form of Consulting Agreement dated August 8, 2006, by and between Kuhns Brothers, Inc. and Dolce Ventures, Inc.
10.4	Form of Engagement Letter dated May 22, 2006, by and between, Beijing Zhong Ran Wei Ye Gas Co., Ltd. and Kuhns Brothers, Inc.
10.5	Form of Escrow Agreement dated September 7, 2006, by and between, Gas Investment China Co., Ltd., Vision Opportunity Master Fund, Ltd. and Kramer Levin Naftalis & Frankel LLP.
16.1	Letter dated September 7, 2006 from Dolce Ventures, Inc. to Robison, Hill & Co.
16.2	Letter dated September 12, 2006 from Robison, Hill & Co. to the SEC.
21.1	List of Subsidiaries
99.1	Press Release of Dolce Ventures, Inc. issued on September 12, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

	Dolce Ventures, Inc.
Date: September 13, 2006	By:	/s/ Chen Fang
		Chief Financial Officer and Secretary

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Beijing Zhong Ran Wei Ye Gas Co., Ltd

Consolidated Financial Statements

December 31, 2005 and 2004

(Stated in US dollars)

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Contents	Pages
Independent Auditor’s Report	1
Consolidated Balance Sheet	2 - 3
Consolidated Statement of Income	4
Consolidated Statement of Stockholders’ Equity	5
Consolidated Statement of Cash Flows	6
Notes to Consolidated Financial Statements	7 - 23

Board of Directors and Stockholders

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Independent Auditor’s Report

We have audited the accompanying consolidated balance sheets of Beijing Zhong Ran Wei Ye Gas Co., Ltd as of December 31, 2005 and 2004 and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Beijing Zhong Ran Wei Ye Gas Co., Ltd as of December 31, 2005 and 2004 and the results of its operations, and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

South San Francisco	Samuel H. Wong & Co., LLP
April 30, 2006	Certified Public Accountants

1

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Consolidated Balance Sheets

At December 31, 2005 and 2004

(Stated in US Dollars)

	Note		2005		2004
Assets
Current Assets
Cash and Cash Equivalents			$	571,194	$	668,346
Accounts Receivable		3		7,770,168		789,013
Advances to Suppliers				372,442		1,206,735
Prepaid Expenses				12,097		3,658
Other Receivables		6		437,922		293,771
Total Current Assets				9,163,823		2,961,523
Long Term Assets
Investments in Equity Securities				2,443,378		1,980,168
Plant and Equipment, Net		4		3,200,682		2,194,499
Construction in Progress				3,071,497		1,470,177
Intangible Assets		5		437,265		65,693
Total Long Term Assets				9,152,822		5,710,537
Total Assets			$	18,316,645	$	8,672,060
Liabilities
Current Liabilities
Accounts Payable			$	3,090,870	$	134,721
Other Payables		7		2,264,965		1,759,514
Unearned Revenue				133,035		57,010
Accrued Liabilities				201,384		64,471
Total Current Liabilities				5,690,254		2,015,716
Total Liabilities			$	5,690,254	$	2,015,716

See Accompanying Notes to the Consolidated Financial Statements

2

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Consolidated Balance Sheet

At December 31, 2005 and 2004

(Stated in US Dollars)

	Note	2005		2004
Stockholders’ Equity
Common Stock			4,827,012		4,827,012
Statutory Surplus Reserves			1,219,720		333,010
Accumulated Other Comprehensive Income			267,865		251
Retained Earnings			6,311,794		1,496,071
			12,626,391		6,656,344
Total Liabilities & Stockholders’ Equity		$	18,316,645	$	8,672,060

See Accompanying Notes to the Consolidated Financial Statements

3

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Consolidated Statement of Income

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

	Note		2005			2004
Net Sales			$	10,907,289		$	4,329,947
Cost of Sales				(4,095,351	)		(3,146,699	)
Gross Profit				6,811,938			1,183,248
Selling and Distributing Costs				(99,768	)		(10,048	)
Administrative and Other Operating Expenses				(911,221	)		(379,785	)
Income from Operations				5,800,949			793,415
Interest (Expenses)/Income, net				(2,486	)		1,877
							0
Other Expenses, net				(1,865	)		(119	)
							0
Other Income				437,750			580,064
Income before Taxes				6,234,348			1,375,237
							0
Income Tax		8		(531,915	)		(31,280	)
Net Income			$	5,702,433		$	1,343,957

See Accompanying Notes to the Consolidated Financial Statements

4

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Consolidated Statement of Stockholders’ Equity

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

					Accumulated
			Statutory		Other
	Common		Surplus		Comprehensive		Retained
	Stock		Reserves		Income		Earnings			Total
Balance, January 1, 2005		4,827,012		333,010		251		1,496,071		$	6,656,344
Net Income		-		-		-		5,702,433			5,702,433
Appropriations to
Statutory Surplus Reserves		-		886,710		-		(886,710	)		-
Foreign Currency
Translation Adjustment		-		-		267,614		-			267,614
Balance, December 31, 2005		4,827,012		1,219,720		267,865		6,311,794		$	12,626,391

					Accumulated
			Statutory		Other
	Common		Surplus		Comprehensive		Retained
	Stock		Reserves		Income		Earnings			Total
Balance, January 1, 2004		1,206,753		57,862		-		427,262		$	1,691,877
Net Income		-		-		-		1,343,957			1,343,957
Appropriations to
Statutory Surplus Reserves		-		275,148		-		(275,148	)		-
Proceeds from Issuance of
Shares		3,620,259		-		-		-			3,620,259
Foreign Currency
Translation Adjustment		-		-		251		-			251
Balance, December 31, 2004		4,827,012		333,010		251		1,496,071		$	6,656,344

See Accompanying Notes to the Consolidated Financial Statements

5

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Consolidated Statement of Cash Flows

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

	2005			2004
Cash Flows from Operating Activities
Net Income	$	5,702,433		$	1,343,957
Increase in Accounts Receivable		(6,850,120	)		(413,110	)
Decrease/(Increase) in Prepayments and Other Receivables		710,839			(1,352,033	)
Increase/(Decrease) in Accounts Payable		2,905,842			(765,912	)
Increase in Other payables and Accruals		658,460			1,300,281
Equity in an Investment		(404,436	)		(106,094	)
Depreciation and Amortization		131,865			11,757
Net Cash Provided by Operating Activities		2,854,883			18,846
Cash Flows from Investing Activities
Purchases of Intangible Assets		(365,145	)		(44,615	)
Payment of Construction in Progress		(1,537,774	)		(837,328	)
Purchase of Fixed Assets		(1,065,108	)		(2,182,079	)
Net Cash Used in Investing Activities		(2,968,027	)		(3,064,022	)
Cash Flows from Financing Activities
Issuance of Common Stock		-			3,620,259
Net Cash Provided by Financing Activities		-			3,620,259
Net in Cash and Cash Equivalents(Used)/Sourced		(113,144	)		575,083
Effect of Foreign Currency Translation on Cash and
Cash Equivalents		15,992			-
Cash and Cash Equivalents - Beginning of Year		668,346			93,263
Cash and Cash Equivalents - End of Year	$	571,194		$	668,346

See Accompanying Notes to the Consolidated Financial Statements

6

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

1. Organization and Principal Activities

Beijing Zhong Ran Wei Ye Gas Co., Ltd (“the Company”) (Formerly known as Beijing Zhong Ran Wei Ye Investment Co., Ltd) was established in August 29, 2001 as a domestic limited liability company under the laws of the People’s Republic of China (“PRC”). On February 24, 2004, the Company registered as a foreign investment company with a registered capital of RMB20 million. The registered capital was fully contributed by the Gas Investment China Co., Ltd (BVI). On May 8, 2004, the registered capital of the Company was increased from RMB20 million to RMB40 million. The additional capital of RMB20 million was solely contributed by Shenzheng Shenqichengtong Investment Co., Ltd.

Upon completion of the increase in share capital, the respective contributions to the registered capital and percentage of equity interests of the equity holders of the Company were as follows:

	Contribution to
	registered		% of equity
Registered holders	capital		holdings
	(RMB)
Gas Investment China Co., Ltd (BVI)		19,600,000		49
Shenzheng Shenqichengtong Investment
Co., Ltd		20,400,000		51
		40,000,000		100

The Company is a natural gas services operator, principally engaging in the investment, operation and management of city gas pipeline infrastructure, in the distribution of natural gas to residential and industrial users, in the construction and operation of oil stations and gas stations, and in the development and application of oil and natural gas related technologies.

7

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

2. Summary of Significant Accounting Policies

(A) Method of Accounting

The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and note are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.

(B) Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries (“the Group”). Significant intercompany transactions have been eliminated in consolidation. Investments in which the company has a 20 percent to 50 percent voting interest and where the company exercises significant influence over the investee are accounted for using the equity method.

As of December 31, 2005, the particulars of the subsidiaries are as follows:

Name of Company	Place of Incorporation	Date of Incorporation	Attributable Equity Interest %	Registered Capital
Ningjin Weiye Gas Co., Ltd	PRC	12/3/2003	100	RMB 3,000,000
Jinzhou Weiye Gas Co., Ltd	PRC	7/19/2004	100	RMB 3,000,000
Xingtang Weiye Gas Co., Ltd	PRC	2/18/2004	100	RMB 3,000,000
Linzhang Weiye Gas Co., Ltd	PRC	7/6/2005	100	RMB 1,000,000
Anping Weiye Gas Co., Ltd	PRC	8/4/2005	100	RMB 5,000,000
Wuqiao Gas Co., Ltd	PRC	6/30/2004	100	RMB 2,000,000
Yutian Zhongran Weiye Gas Co.,Ltd	PRC	12/19/2003	100	RMB 3,000,000
Langfang Development
Region Weiye Dangerous
Goods Transportation Co., Ltd	PRC	3/22/2005	100	RMB 1,000,000
Sihong Weiye Gas Co., Ltd	PRC	12/3/2004	100	RMB10,000,000
Peixian Weiye Gas Co., Ltd	PRC	8/22/2005	100	RMB 5,000,000
Sishui Weiye Gas Co., Ltd	PRC	12/22/2004	100	RMB 3,000,000
LongyaoZhongranWeiyeGasCo.,Ltd	PRC	10/13/2005	100	RMB 3,000,000
Shenzhou Weiye Gas Co., Ltd	PRC	12/23/2005	100	RMB 3,000,000

8

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(C) Economic and Political Risks

The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(D) Use of Estimates

In preparing of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting year. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation on useful lives of plant and machinery. Actual results could differ from those estimates.

(E) Cash and Cash Equivalents

The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

(F) Accounts and Other Receivable

Accounts and other receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company extends unsecured credit to customers in the normal course of business and does not accrue interest on trade accounts receivable. Allowance for uncollectible accounts as of December 31, 2005 is not significant.

9

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(G) Advances to Suppliers

Advances to suppliers represent the cash paid in advance for purchasing raw materials. The advances to suppliers are interest free and unsecured.

(H) Investments in Equity Securities

The consolidated statement of income includes the Group's share of the post-acquisition results of its associate for the year. In the consolidated balance sheet, investments in equity securities are stated at the Group's share of the net assets of the associates plus the premium paid less any discount on acquisition in so far as it has not already been amortized to the statement of income, less any identified impairment loss.

				Portion of
				Nominal
Name of	Place	Form of		Value of
Associate	of	Business	Registered	Registered	Principal
Company	Registration	Structure	Capital	Capital	Activities
Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd	PRC	Sino-foreign equity joint venture	Registered RMB 20,000,000	40	Trading of natural gas and gas pipeline construction

Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd is the Group's 40% owned joint venture company and is principally engaged in sale of compressed natural gas to domestic households and industrial around sub-urban areas of Beijing and part of sub-urban areas in Hebei Province and Tianjin.

10

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(I) Long-Lived Assets

The Group adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Live Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Group periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December, 2005, there were no significant impairments of its long-lived assets.

(J) Plant and Equipment

Plant and equipment, other than construction in progress, are stated at cost less depreciation and amortization and accumulated impairment loss.

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

Gas Pipelines	25 years
Motor Vehicles	10 years
Machinery & Equipment	20 years
Buildings	25 years
Leasehold Improvements	25 years
Office Equipment	8 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

11

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(K) Intangible assets

Intangible assets, are stated at cost less amortization and accumulated impairment loss. Amortization is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the intangibles are as follows:

Land use rights	40 - 50 years
Franchises	30 years
Other intangibles	3 years

(L) Construction in Progress

Construction in progress represents the cost of constructing pipelines and is stated at cost. Costs comprise direct and indirect incremental costs of acquisition or construction. Completed items are transferred from construction in progress to the gas pipelines of fixed assets when they are ready for their intended use. The major cost of construction relates to construction materials, direct labor wages and other overhead.  Construction of pipeline, through which to distribute natural gas, is one of the Group’s principal businesses.  The Group builds city main pipeline network and branch pipeline network to make gas connection to resident users, industrial, and commercial users, with the objective of generating revenue on gas connection and gas usage fees collected from these customers.  As at December 31, 2005, the pipelines under construction include mainly the projects in several cities of Hebei and Jiangsu province, and in Beijing.  These projects, once completed, will significantly increase the gas supply capacity.  Capital commitments in respect of these projects amounted to approximately $6,300,000 and $6,700,000 at December 31, 2005 and 2004 respectively.

(M) Unearned revenue

Unearned revenue represents prepayments by customers for gas purchases and advance payments on construction and installation of pipeline contracts. The Company records such prepayment as unearned revenue when the payments are received.

(N) Financial Instruments

The carrying amounts of all financial instruments approximate fair value. The carrying amounts of cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. The carrying amounts of borrowings approximate the fair value based on the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.

12

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(O) Foreign Currency Translation

The Company maintains its consolidated financial statements in the functional currency. The functional currency of the Company is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

For financial reporting purposes, the consolidated financial statements of the Company which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

	2005
Year end RMB : US$ exchange rate		8.0734
Average yearly RMB : US$ exchange rate		8.2033

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

13

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(P) Revenue Recognition

Revenue is recognized when services are rendered to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Net sales, which consist of gas and connection fee revenue. And the cost of sales consists of gas cost and connection cost.

Gas connection revenue is recognized when the outcome of a contract can be estimated reliably and the stage of completion at the balance sheet date can be measured reliably.

Sales of natural gas are recognized when goods are delivered and title has passed.

(Q) Other Income

Other income represents the Group’s share of post- acquisition results of its investment in equity securities for the year.

(R) Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. At December 31, 2005, there was no significant book to tax differences.

Pursuant to the tax laws of PRC, general enterprises are subject to income tax at an effective rate of 33%. The Group is in the natural gas industry whose development is encouraged by the government. According to the income tax regulation, any company engaged in the natural gas industry enjoys a favorable tax rate. Also, the Company is exempt from corporate income tax for its first two years and is then entitled to a 50% tax reduction for the succeeding three years. The Company’s first profitable tax year was 2003. Accordingly, the Company’s income is subject to a reduced tax rate of 9%. Subsidiaries are subject to the effective rate of 33%.

14

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(S) Advertising

The Group expensed all advertising costs as incurred. Advertising costs for the years ended December 31, 2005 and 2004 were insignificant.

(T) Concentration of Credit Risk

Concentration of credit risk is limited to accounts receivable and is subject to the financial conditions of major customers. The Group does not require collateral or other security to support accounts receivable. The Group conducts periodic reviews of its clients’ financial condition and customers’ payment practices to minimize collection risk on accounts receivable.

(U) Retirement Benefits

Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the statements of income as incurred. The retirement benefit expenses for 2005 were $46,752, and $nil respectively and were included in general and administrative expenses.

15

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(V) Statutory Surplus Reserves

As stipulated by the Company Law of the People's Republic of China (PRC) as applicable to Chinese companies with foreign ownership, net income after taxation can only be distributed as dividends after appropriation has been made for the following:

i. Making up cumulative prior years' losses, if any;

ii. Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;

iii. Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and

iv. Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.

The Group has appropriated $886,710 as reserve for the statutory surplus reserve and welfare fund for the year ended December 31, 2005.

Surplus reserves consist of the following as of December 31,

	2005		2004
Statutory surplus reserve		813,147		222,007
Statutory common welfare fund		406,573		111,003
		1,219,720		333,010

16

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(W) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other consolidated financial statements. The Group’s current component of other comprehensive income is the foreign currency translation adjustment.

(X) Statement of Cash Flows

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

(Y) Recent Accounting Pronouncements

In May 2005, the FASB issued a SFAS 154, “Accounting Changes and Error Corrections” to replace APB Opinion No. 20, “Accounting Changes” and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements” requiring retrospective application to prior periods consolidated financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  When it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, SFAS 154 requires the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement.  When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, SFAS 154 requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable.  The effective date for this statement is for accounting changes and corrections of errors made in fiscal year beginning after December 15, 2005. 

17

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

(Y) Recent Accounting Pronouncements (Cont’d)

In February 2006, the FASB issued a SFAS 155, “Accounting for Certain Hybrid Financial Instruments” to amend FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation and eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.  This statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. 

The Group does not anticipate that the adoption of these two standards will have a material impact on these consolidated financial statements.

3. Accounts Receivable

The followings are the largest ten accounts receivable as at December 31,

	2005		2004
Hebei Zhong Gang Steel Co., Ltd		1,672,158		-
Pei Xian Tian Ma Property Co.		1,201,935		-
Xuzhou Shi Jin Xiu Property Co., Ltd		682,302		-
Beijing Xin Cheng Yuan Jing Property Development Co., Ltd		441,463		-
Beijing Mi Yun Jing Xi Xiao Qu Property Centre		408,378		-
Pei Xian Zheng Yuan Construction Engineering Co		250,700		-
Beijing Hong Ji Co., Ltd		220,535		209,837
Jiangsu Xin Sheng Property Co., Ltd		189,759		-
Long Ju Shan Zhuang Village Committee		179,107		-
Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd		177,401		398,325
		5,423,738		608,162

All of the above accounts receivable are due within one year of aging.

18

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

4. Plant and Equipment

Plant and Equipment consist of the following as of December 31:

	2005		2004
At Cost
Gas Pipelines	$	2,819,341	$	1,872,076
Motor Vehicles		99,376		88,044
Machinery & Equipment		253,536		76,111
Buildings		86,952		94,129
Leasehold Improvements		46,036		46,427
Office Equipment		41,607		29,579
	$	3,346,848	$	2,206,366
Less: Accumulated depreciation
Gas Pipelines	$	80,557	$	-
Motor Vehicles		21,319		4,813
Machinery & Equipment		23,969		2,710
Buildings		3,304		869
Leasehold Improvements		9,849		692
Office Equipment		7,168		2,783
		146,166		11,867
	$	3,200,682	$	2,194,499

19

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

5. Intangible Assets

Intangible assets consist of the following as of December 31:

	2005		2004
Land use rights	$	99,881	$	65,693
Franchises		337,012		-
Other intangibles		372		-
	$	437,265	$	65,693

The Group operates as a local natural gas distributor in a city or county, known as an operation location, under an exclusive franchise agreement between the Group and the local government or entities in charge of gas utility. Franchises are the rights to develop sites in Anping and Jinzhou in China. They are stated at cost less accumulated depreciation.

6. Other Receivables

Other receivables consist of the following as of December 31,

	2005		2004
Deposit paid	$	104,483	$	-
Amounts due from employees		188,715		34,659
Amounts due from shareholders		22,004		-
Sundry receivables		122,720		259,112
	$	437,922	$	293,771

Amounts due from employees are advances for business traveling and purchases of consumables. All the amounts due from employees/shareholders are unsecured, interest free, and have no fixed repayment terms.

20

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

7. Other Payables

Other payables consist of the following as of December 31,

	2005		2004
Deposit received	$	67,934	$	909,854
Amounts due to employees		3,528		-
Employees’ welfare payables		50,207		3,729
Tax payable		790,057		1,172
Loan from an unrelated company - Qian Shi Li		681,250		663,730
Loan from an unrelated company - Shi Yi Long Da		500,409		-
Sundry payables		171,580		181,029
	$	2,264,965	$	1,759,514

All the amounts due to employees are unsecured, interest free, and have no fixed repayment terms. Loan from Shenzhen Shi Yi Long Da Co., Ltd (Shi Yi Long Da) is unsecured, interest at 6% per annum and due Oct 2006. Loan from Beijing Qian Shi Li Technology Development Co.,Ltd (Qian Shi Li) is unsecured, interest free, and have no fixed repayment terms.

8. Income Taxes

In accordance with the relevant tax laws and regulations of PRC, the corporation income tax rate is 33%. However, in accordance with the relevant taxation laws in the PRC, the Group is eligible for tax concessions and was exempted from part of the PRC income taxes for the year.

The following table accounts for the differences between the actual tax provision and the amounts obtained by applying the applicable PRC corporation income tax rate of 33% to income before taxes for the years ended December 31,.

	2005			2004
Income before Taxes	$	6,234,348		$	1,375,237
					0
Provision for income taxes at PRC income tax rate		2,057,335			453,828
Effect of tax exemption granted to the Group		(1,525,420	)		(422,548	)
Income Tax	$	531,915		$	31,280

21

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

9. Commitments under Operating Leases

At December, 31 2005, the Group had commitment for future minimum lease payments under non-cancelable operating leases in respect of rented premises which fall due as follows:

	2005		2004
Land and Buildings
Not later than one year	$	59,455	$	57,926
Later than one year and not later than five years		237,818		231,702
After five years		505,363		550,293
	$	802,636	$	839,921

10. Business and Geographical Segments

The Company has contracted with customers usually in two business segments altogether, one is for the construction and installation of gas facilities and another one is the subsequent sales of gas to that customers through the gas facilities the Company constructs. However, the respective gas facilities contracts and gas supply contracts have separately provided for the basis of revenue recognition and distinctive from each other for the relevant cost-and-revenue to be incurred and hence separate calculation and subsequent payment of fees for respective business without any interdependence on each other in this respect.

For management purposes, the Group is currently organised into two major operating divisions - gas pipeline construction (installation of gas facilities) and sales of piped gas. These principal operating activities are the basis on which the Group reports its primary segment information.

2005	Gas pipeline			Sales of
	construction			piped gas			Others		Consolidated
Turnover		8,204,988			2,702,301			-		10,907,289
Cost of sales		(1,570,947	)		(2,524,404	)		-		(4,095,351	)
Segment result	$	6,634,041		$	177,897			-	$	6,811,938

22

Beijing Zhong Ran Wei Ye Gas Co., Ltd

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2005 and 2004

(Stated in US Dollars)

11. Business and Geographical Segments (Cont’d)

2004	Gas pipeline			Sales of
	construction			piped gas			Others		Consolidated
Turnover		670,248			3,194,890			464,809		4,329,947
Cost of sales		(286,711	)		(2,859,988	)		-		(3,146,699	)
Segment result	$	383,537		$	334,902		$	464,809	$	1,183,248

The Group's operations are located in the PRC. All revenue is from customers in the PRC. All of the Group’s assets are located in the PRC. Sales of piped gas and gas pipeline construction are carried out in the PRC. Accordingly, no analysis of the Group's sales and assets by geographical market is presented.

10. Related Parties Transactions

The following material transactions with related parties during the years were in the opinion of the directors, carried out in the ordinary course of business and on normal commercial terms:

Sales to Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd (Zhongran Xiangke), an investee for which the equity method is used, for the years 2005 and 2004 were $1,088,990 and $2,346,479 respectively. The amounts receivable from Zhongran Xiangke for the years 2005 and 2004 were $177,401 and $398,325 respectively. Also, included in the other payables are payables to Zhongran Xiangke for the years 2005 and 2004 were $135,792 and $114,021 respectively.

Sales to Beijing Zhongyou Xiangke Oil Gas Technology Co. Ltd (Zhongyou Xiangke), an investee of Zhongran Xiangke, for the years 2005 and 2004 were $64,205 and $178,679 respectively. The amounts receivable from Zhongyou Xiangke for the years 2005 and 2004 were $13,392 and $10,523 respectively.

23

BEIJING ZHONG RAN WEI YE GAS CO.,LTD

BALANCE SHEET

DECEMBER 31,2005 AND JUNE 30, 2006 (UNAUDITED)

	December 31, 2005		June 30, 2006 (unaudited)
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	571,194	$	359,309
Accounts Receivable		7,770,168		5,436,372
Advances to Suppliers		372,442		402,332
Prepaid Expenses		12,097		23,234
Other Receivables		437,922		685,088
Total Current Assets		9,163,823		6,906,335
LONG TERM ASSETS:
Investments in Equity Securities		2,443,378		2,443,378
Plant and Equipment,Net		3,200,682		3,358,927
Construction in Progress		3,071,497		5,268,682
Intangible Assets		437,265		428,818
Total Long Term Assets		9,152,822		11,499,805
	$	18,316,645	$	18,406,140
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable	$	3,090,870	$	3,089,916
Other Payables		2,264,965		2,145,773
Unearned Revenue		133,035		153,945
Accrued Liabilities		201,384		111,035
Total Current Liabilities		5,690,254		5,500,669
	$	5,690,254	$	5,500,669
STOCKHOLDERS' EQUITY
Common Stock		4,827,012		4,827,012
Statutory Surplus Reserve		1,219,720		1,219,720
Accumulated Other Comprehensive Income		267,865		288,803
Retained Earnings		6,311,794		6,569,936
Total Stockholders' Equity		12,626,391		12,905,471
	$	18,316,645	$	18,406,140

BEIJING ZHONG RAN WEI YE GAS CO.,LTD

STATEMENT OF INCOME

FOR THE YEARS ENDED DECEMBER 31,2004 AND 2005

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2006 (UNAUDITED)

	For The Years Ended December 31						For The Six Months Ended June 30
	2005			2004			2006			2005
Net Sales	$	10,907,289		$	4,329,947		$	1,499,540		$	2,468,226
Cost of Sales		(4,095,351	)		(3,146,699	)		(983,487	)		(1,176,894	)
Gross Profit		6,811,938			1,183,248			516,053			1,291,332
Selling and Distribution costs		(99,768	)		(10,048	)		(26,825	)		(41,863	)
Administrative and Other Operating Expenses		(911,221	)		(379,785	)		(253,820	)		(228,405	)
Income from Operations		5,800,949			793,415			235,409			1,021,064
Interest(Expenses)/Income, net		(2,486	)		1,877			(3,142	)		1,145
Other Expenses, net		(1,865	)		(119	)		(2	)		(1,452	)
Other income		437,750			580,064			43,465			(40,089	)
Income before Taxes		6,234,348			1,375,237			275,730			980,668
Income Tax		(531,915	)		(31,280	)		(17,587	)		(74,701	)
Net Income	$	5,702,433		$	1,343,957		$	258,142		$	905,967

BEIJING ZHONG RAN WEI YE GAS CO.,LTD

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,2004 AND 2005

FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2006 (UNAUDITED)

	For The Years Ended December 31						For The Six Months Ended June 30
	2005			2004			2006			2005
Cash Flow from Operating Activities
Net Income	$	5,702,433		$	1,343,957		$	258,142		$	905,967
Decrease/(Increase) in Accounts Receivables		(6,850,120	)		(413,110	)		2,333,796			(752,172	)
Decrease/(Increase) in Prepayments and Other Receivables		710,839			(1,352,033	)		(307,979	)		1,275,766
Increase/(Decrease) in Accounts Payable		2,905,842			(765,912	)		(954	)		(134,721	)
Increase in Other Payable and accruals		658,460			1,300,281			(188,631	)		104,728
Equity in an Investment		(404,436	)		(106,094	)		(43,465	)		40,089
Depreciation and Amortization		131,865			11,757			65,243			54,507
Net Cash Provided by Operating Activities		2,854,883			18,846			2,116,152			1,494,164
Cash Flow from Investing Activities
Purchase of Intangible Assets		(365,145	)		(44,615	)					(20,603	)
Payment of Construction in Progress		(1,537,774	)		(837,328	)		(1,835,058	)		(824,558	)
Purchase of Fixed Assets		(1,065,108	)		(2,182,079	)		(223,487	)		(6,621	)
Other Investment
Net Cash Used in Investing Activities		(2,968,027	)		(3,064,022	)		(2,058,546	)		(851,781	)
Cash Flow from Financing Activities
Issuance of Common Stock					3,620,259
Other Payment Related to Financing Activities								(269,492	)
Net Cash Provided by Financing Activities					3,620,259			(269,492	)
Net in Cash and Cash Equivalents(Used)/Sourced		(113,144	)		575,083			(211,885	)		642,382
Effect of Foreign Currency Translation on Cash & Cash Equivalents		15,992									(119	)
Cash and Cash Equivalents - Beginning of Year		668,346			93,263			571,194			668,346
Cash and Cash Equivalents - End of Year	$	571,194		$	668,346		$	359,309		$	1,310,609

Footnotes to the Financial Statements:

Plant and Equipment

Plant and Equipment consist of the following as of June 30, 2006 and December 31, 2005:

	As of June 30, 2006		As of December 31, 2005
At Cost
Gas Pipelines	$	2,835,058	$	2,819,341
Motor Vehicles		304,446		99,376
Machinery & Equipment		253,536		253,536
Buildings		86,952		86,952
Leasehold Improvements		46,036		46,036
Office Equipment		44,308		41,607
	$	3,570,336	$	3,346,848
Less: Accumulated depreciation
Gas Pipelines	$	120,591	$	80,557
Motor Vehicles		30,881		21,319
Machinery & Equipment		30,874		23,969
Buildings		4,972		3,304
Leasehold Improvements		14,465		9,849
Office Equipment		9,626		7,168
	$	211,409	$	146,166
	$	3,358,927	$	3,200,682

Intangible Assets

Intangible assets consist of the following as of June 30, 2006 and December 31, 2005:

	As of June 30, 2006		As of December 31, 2005
Land use rights	$	97,417	$	99,881
Franchises		331,280		337,012
Other intangibles		121		372
	$	428,818	$	437,265

Other Receivables

Other receivables consist of the following as of June 30, 2006 and December 31, 2005:

	As of June 30, 2006		As of December 31, 2005
Deposit paid	$	164,483	$	104,483
Amounts due from employees		75,141		188,715
Sundry receivables		445,464		144,724
	$	685,088	$	437,922

All the amounts due from employees are unsecured, interest free, and have no fixed repayment terms.

Other Payables

Other payables consist of the following as of June 30, 2006 and December 31, 2005:

	As of June 30, 2006		As of December 31,  2005
Deposit received	$	67,934	$	67,934
Amounts due to employees		3,528		3,528
Employees’ welfare payables		52,434		50,207
Tax payable		670,198		790,057
Loan from an unrelated company - Qian Shi Li		681,250		681,250
Loan from an unrelated company - Shi Yi Long Da		500,409		500,409
Sundry payables		170,020		171,580
	$	2,145,773	$	2,264,965

All the amounts due to employees are unsecured, interest free, and have no fixed repayment terms. Loan from Shenzhen Shi Yi Long Da Co., Ltd (Shi Yi Long Da) is unsecured, interest at 6% per annum and due Oct 2006. Loan from Beijing Qian Shi Li Technology Development Co.,Ltd (Qian Shi Li) is unsecured, interest free, and have no fixed repayment terms.

Income Taxes

In accordance with the relevant tax laws and regulations of PRC, the corporation income tax rate is 33%. However, in accordance with the relevant taxation laws in the PRC, the Group is eligible for tax concessions and was exempted from part of the PRC income taxes for the year.

The following table accounts for the differences between the actual tax provision and the amounts obtained by applying the applicable PRC corporation income tax rate of 33% to income before taxes for the six months ended June 30, 2006 and the year ended December 31,.2005.

	For The Six Months Ended June 30,2006			For The Year Ended December 31, 2005
Income before Taxes	$	275,730		$	6,234,348
Provision for income taxes at PRC income tax rate		90,991			2,057,335
Effect of tax exemption granted to the Group		(73,403	)		(1,525,420	)
Income Tax	$	17,588		$	531,915

Business and Geographical Segments

The Company has contracted with customers usually in two business segments altogether, one is for the construction and installation of gas facilities and another one is the subsequent sales of gas to that customers through the gas facilities the Company constructs. However, the respective gas facilities contracts and gas supply contracts have separately provided for the basis of revenue recognition and distinctive from each other for the relevant cost-and-revenue to be incurred and hence separate calculation and subsequent payment of fees for respective business without any interdependence on each other in this respect.

For management purposes, the Group is currently organized into two major operating divisions - gas pipeline construction (installation of gas facilities) and sales of piped gas. These principal operating activities are the basis on which the Group reports its primary segment information.

Six Months Ended June 30	Gas pipeline			Sales of
2006	piped gas			construction			Others		Consolidated
Turnover		1,140,883			358,657			-		1,499,540
Cost of sales		(919,272	)		(64,215	)		-		(983,487	)
Segment result	$	221,611		$	294,442			-	$	516,053

2005	Gas pipeline			Sales of
	construction			piped gas			Others		Consolidated
Turnover		8,204,988			2,702,301			-		10,907,289
Cost of sales		(1,570,947	)		(2,524,404	)		-		(4,095,351	)
Segment result	$	6,634,041		$	177,897			-	$	6,811,938

The Group's operations are located in the PRC. All revenue is from customers in the PRC. All of the Group’s assets are located in the PRC. Sales of piped gas and gas pipeline construction are carried out in the PRC. Accordingly, no analysis of the Group's sales and assets by geographical market is presented.

Related Parties Transactions

The following material transactions with related parties during the years were in the opinion of the directors, carried out in the ordinary course of business and on normal commercial terms:

Sales to Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd (Zhongran Xiangke), associate company of the Company, for the six months ended June 30, 2006, were $79,960, accounting for 5% of Net Sales.

The amounts receivable from Zhongran Xiangke for the six months ended June 30, 2006 were $56,865.

The amounts payable to Beijing Zhongran Xiangke for the six months ended June 30, 2006 were $137,113.

The following pro forma consolidated statement of operations is presented for illustrative purposes only and is not necessarily indicative revenue and results of the operations of the Group that actually would have been achieved has the acquisition been completed on January 1, 2006 (six months ended June 30, 2006: January, 2006).

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2006 (Stated in US Dollars)

							Pro forma		Pro forma
	Company			Beijing Gas			Adjustment		Combined
	$			$			$		$
Net sales		878			1,499,540			-		1,500,418
Cost of sales		(2,704	)		(983,487	)		-		(986,191	)
Gross profit		(1,826	)		516,053			-		514,227
Selling and distributing costs		-			(26,825	)		-		(26,825	)
Administrative and
other operating expenses		(17,661	)		(253,820	)		-		(271,481	)
		(19,487	)		235,408					215,921
Income from operations		-			43,463			-		43,463
Interest expenses, net		(1,448	)		(3,142	)		-		(4,590	)
Income before taxes		(20,935	)		275,729					254,794
Income taxes		(455	)		(17,587	)		-		(18,042	)
Net income		(21,390	)		258,142					236,752
Earnings per share										0.002

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2005 (Stated in US Dollars)

							Pro forma		Pro forma
	Company			Beijing Gas			Adjustment		Combined
	$			$			$		$
Net sales		4,768			2,468,226			-		2,472,994
Cost of sales		(3,339	)		(1,176,894	)		-		(1,180,233	)
Gross profit		1,429			1,291,332					1,292,761
Selling and distributing costs		-			(41,863	)		-		(41,863	)
Administrative and
other operating expenses		(34,143	)		(228,405	)		-		(262,548	)
Income from operations		(32,714	)		1,021,064					988,350
Interest expenses, net		(126	)		1,145			-		1,019
Other income		-			(41,541	)		-		(41,541	)
Income before taxes		(32,840	)		980,668					947,828
Income taxes		83			(74,701	)		-		(74,618	)
Net income		(32,757	)		905,967					873,210
Earnings per share										0.01

Earnings per share

	For the six months ended
	June 30,
	2006		2005
Net profit available to common shareholders
(numerator)		236,752		873,210
Weighted average number of common shares
Outstanding used in profit per share
for the period (denominator)		100,700,140		87,731,466

EX-3.6

                              AMENDED AND RESTATED

               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

                     OF SERIES B CONVERTIBLE PREFERRED STOCK

                                       OF

                               DOLCE VENTURES INC.

      Dolce Ventures Inc. (the "Company"),  a corporation organized and existing
under and by virtue of the Utah Revised Business  Corporation Act, in accordance
with the Utah Revised Business Corporation Act, DOES HEREBY CERTIFY that:

      The Articles of  Incorporation  of the Company provide that the Company is
authorized to issue  100,000,000  shares of preferred  stock with a par value of
$.001.  The  Articles  of  Incorporation  provide,  further,  that the  Board of
Directors  is  authorized,  to the extent  permitted  by law, to provide for the
issuance of the shares of preferred stock in series, and by filing a certificate
pursuant to the Utah Revised Business Corporation Act, to establish from time to
time  the  number  of  shares  to be  included  in  each  series  and to fix the
designation, powers, preferences and rights and the qualifications,  limitations
or restrictions  thereof.  Pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation, the Board of Directors, by Unanimous
Written Consent dated September 6, 2006, adopted a resolution  providing for the
designation, rights, powers and preferences and the qualifications,  limitations
and  restrictions of 5,000,000  shares of Series B Convertible  Preferred Stock.
That resolution amended and superceded the resolution dated August 30, 2006, and
that a copy of such resolution is as follows:

      RESOLVED,  that pursuant to the authority vested in the Board of Directors
      of the Company,  the provisions of its Articles of  Incorporation,  and in
      accordance with the Utah Revised  Business  Corporation  Act, the Board of
      Directors  hereby  authorizes  the  filing  of  an  Amended  and  Restated
      Certificate  of   Designations,   Preferences   and  Rights  of  Series  B
      Convertible  Preferred Stock of Dolce Ventures Inc., as no shares have yet
      been issued  Accordingly,  the  Company is  authorized  to issue  Series B
      Convertible Preferred Stock with par value of $.001 per share, which shall
      have  the  powers,   preferences   and  rights  and  the   qualifications,
      limitations and restrictions thereof, as follows:

      1.  Designation  and  Number  of  Shares.  Shares of the  series  shall be
designated  and  known as the  "Series  B  Convertible  Preferred  Stock" of the
Company. The Series B Convertible Preferred Stock (the "Series B") shall consist
of  5,000,000  shares.  Shares  of the  Series B which  are  redeemed,  retired,
converted  into shares of the  Company's  $.001 par value per share Common Stock
(the "Common  Stock"),  purchased or otherwise  acquired by the Company shall be
cancelled  (and  thereafter  shall not be  re-issued  as shares of Series B) and
shall  revert  to  the  status  of  authorized  but  unissued  preferred  stock,
undesignated  as to series and subject to reissuance by the Company as shares of
preferred  stock of any one or more  series  as  permitted  by the  Articles  of
Incorporation.



      2. Redemption;  Liquidation Preference.  The Series B shall, in respect of
the  right to  participate  in  distributions  or  payments  in the event of any
liquidation, dissolution or winding up, voluntary or involuntary, of the Company
(a  "Liquidation  Event"),  rank (a) senior to the Common Stock and to any other
class or series of stock issued by the Company not  designated as ranking senior
to the Series B in  respect  of the right to  participate  in  distributions  or
payments  upon a Liquidation  Event;  and (b) pari passu with any other class or
series of stock of the  Company,  the terms of which  specifically  provide that
such  class or series  shall rank pari passu with the Series B in respect of the
right to participate in distributions or payments upon a Liquidation  Event. The
Series B may not be redeemed by the Company  without the express written consent
(provided  or  withheld  in  their  sole  discretion)  of  each  holder  of  the
then-outstanding  Series  B. In the  event of the  liquidation,  dissolution  or
winding up of the affairs of the Company, whether voluntary or involuntary,  the
holders of shares of Series B then outstanding shall be entitled to receive, out
of the assets of the Company available for distribution to its stockholders,  an
amount equal to $2.74 per share (the "Liquidation Preference Amount") before any
payment  shall be made or any assets  distributed  to the  holders of the Common
Stock or any other stock that ranks junior to the Series B.

      3.  Dividends.  The Series B will not be entitled to dividends  unless the
Company  pays cash  dividends  or  dividends  in other  property  to  holders of
outstanding  shares of Common Stock, in which event,  each outstanding  share of
the Series B will be entitled to receive  dividends  of cash or property  out of
any  assets  legally  available  therefor,  in an amount  or value  equal to the
Conversion  Rate  multiplied  by the Reverse  Split (as defined in Section  4(a)
below) multiplied by the amount paid in respect of one share of Common Stock (as
adjusted   for  any   stock   dividends,   combinations,   splits   or   similar
recapitalization  events) prior and in preference to any  declaration or payment
of any  dividend  (payable  other  than in  shares  of  Common  Stock  or  other
securities  and rights  convertible  into or  entitling  the  holder  thereof to
receive,  directly  or  indirectly,  additional  shares of Common  Stock) on the
Common Stock. Any dividend payable to the Series B will have the same record and
payment date and terms as the dividend is payable on the Common Stock.

      4. Conversion.  The holder of Series B shall have the following conversion
rights (the "Conversion Rights"):

      (a) Reverse  Split.  The Company  shall file an amendment to the Company's
Articles of Incorporation ("Amendment") with the Secretary of State of the State
of Utah effecting a 304.4444-for-1  reverse stock split of the Common Stock (the
"Reverse  Split") (or such other  ratio) so that the  Company  has a  sufficient
number of  authorized  and  unissued  shares of Common Stock so as to permit the
conversion  of all  outstanding  shares  of the  Series B and  resulting  in all
holders of the  Series B owning no less than  23.35% of the  outstanding  Common
Stock immediately following the conversion of all outstanding shares of Series B
(the "Required Percentage").

                                       2



      (b) Obligation.  The Company agrees that it shall in good faith,  promptly
take any and all such action as may, in the opinion of its counsel, be necessary
to effect the Reverse  Split and,  upon the request of each holder of any shares
of Series B in accordance with Section 4(c) herein, to expeditiously  effect the
conversion of all  outstanding  shares of the Series B to shares of Common Stock
and use its best  efforts to obtain the  requisite  shareholder  approval of any
necessary  amendment or restatement to the Articles of  Incorporation to achieve
the  foregoing.  In the event the Reverse  Split is not effected by February 28,
2007, each holder of Series B shall have the right, at such holder's option,  to
require the Company to redeem all or a portion of such holder's shares of Series
B at a  price  per  share  equal  to  one  hundred  ten  percent  (110%)  of the
Liquidation Preference Amount.

      (c)  Right to  Convert.  At any time on or after  the  Amendment  is filed
effecting the Reverse  Split,  the holder of any such shares of Series B may, at
such holder's  option,  subject to the limitation set forth in Section 7 herein,
elect to convert (a  "Conversion")  all or any portion of the shares of Series B
held by such  person  into a number of fully  paid and  nonassessable  shares of
Common Stock at a conversion  rate as would result in the Series B acquiring the
Required  Percentage,  which is  expected  to be one (1) share of fully paid and
non-assessable  Common Stock for one (1) share of Series B ("Conversion  Rate").
In the event of a  liquidation,  dissolution  or winding up of the Company,  the
Conversion  Rights shall terminate at the close of business on the last full day
preceding  the date fixed for the payment of any such amounts  distributable  on
such  event to the  holders  of Series  B. In the  event of such a  liquidation,
dissolution or winding up, the Company shall provide to each holder of shares of
Series B notice of such  redemption or  liquidation,  dissolution or winding up,
which  notice  shall  (i) be  sent at  least  fifteen  (15)  days  prior  to the
termination of the Conversion  Rights (or, if the Company  obtains lesser notice
thereof, then as promptly as possible after the date that it has obtained notice
thereof)  and (ii)  state the  amount per share of Series B that will be paid or
distributed on such liquidation, dissolution or winding up, as the case may be.

      (d) Mechanics of Conversion. The Conversion of Series B shall be conducted
in the following manner:

      (i) Holder's Delivery  Requirements.  To convert Series B into full shares
of Common Stock on any date (the  "Conversion  Date"),  the holder thereof shall
(A) transmit by facsimile  (or  otherwise  deliver),  for receipt on or prior to
5:00 p.m.,  New York time on such  date,  a copy of a fully  executed  notice of
conversion in the form attached hereto as Exhibit I (the  "Conversion  Notice"),
to the Company at 011-86-10-8260-0042,  Attention: Chief Executive Officer, with
a copy to Guzov Ofsink, LLC at 212-688-7273,  Attention: Darren L. Ofsink, Esq.,
and (B)  surrender  to a common  carrier for  delivery to the Company as soon as
practicable   following   such   Conversion   Date  the  original   certificates
representing  the  shares of  Series B being  converted  (or an  indemnification
undertaking  with  respect to such  shares in the case of their  loss,  theft or
destruction) (the "Preferred Stock  Certificates")  and the originally  executed
Conversion Notice.

                                       3


      (ii) Company's  Response.  Upon receipt by the Company of a facsimile copy
of a Conversion  Notice,  the Company shall immediately  send, via facsimile,  a
confirmation of receipt of such Conversion  Notice to such holder.  Upon receipt
by the Company of a copy of the fully executed Conversion Notice, the Company or
its  designated  transfer agent (the "Transfer  Agent"),  as applicable,  shall,
within  three (3) trading days  following  the date of receipt by the Company of
the fully executed Conversion Notice,  issue and deliver to the Depository Trust
Company ("DTC") account on the Holder's behalf via the Deposit  Withdrawal Agent
Commission System ("DWAC") as specified in the Conversion Notice,  registered in
the name of the holder or its designee, for the number of shares of Common Stock
to which the holder  shall be  entitled.  Notwithstanding  the  foregoing to the
contrary, the Company or its Transfer Agent shall only be obligated to issue and
deliver  the shares to the DTC on a holder's  behalf via DWAC if a  registration
statement  providing for the resale of the shares of Common Stock  issuable upon
conversion of the Series B (the "Registration  Statement") is effective.  If the
number of shares of Series B represented by the Preferred  Stock  Certificate(s)
submitted for  conversion is greater than the number of shares of Series B being
converted,  then the Company shall, as soon as practicable and in no event later
than three (3) trading days after receipt of the Preferred Stock  Certificate(s)
and at the  Company's  expense,  issue and deliver to the holder a new Preferred
Stock Certificate representing the number of shares of Series B not converted.

      (iii) Dispute  Resolution.  In the case of a dispute as to the  arithmetic
calculation  of  the  number  of  shares  of  Common  Stock  to be  issued  upon
conversion,  the Company shall cause its Transfer Agent to promptly issue to the
holder  the  number of shares of Common  Stock  that is not  disputed  and shall
submit  the  arithmetic  calculations  to the holder  via  facsimile  as soon as
possible, but in no event later than two (2) business days after receipt of such
holder's  Conversion  Notice. If such holder and the Company are unable to agree
upon the  arithmetic  calculation  of the number of shares of Common Stock to be
issued  upon  such  conversion  within  one (1)  business  day of such  disputed
arithmetic  calculation  being  submitted to the holder,  then the Company shall
within one (1)  business  day  submit  via  facsimile  the  disputed  arithmetic
calculation  of the  number of shares  of  Common  Stock to be issued  upon such
conversion to the Company's independent,  outside accountant.  The Company shall
cause the accountant to perform the  calculations and notify the Company and the
holder of the  results  no later  than  seventy-two  (72) hours from the time it
receives the  disputed  calculations.  Such  accountant's  calculation  shall be
binding upon all parties absent manifest error. The reasonable  expenses of such
accountant  in making such  determination  shall be paid by the Company,  in the
event the holder's  calculation was correct,  or by the holder, in the event the
Company's  calculation was correct,  or equally by the Company and the holder in
the event that neither the  Company's or the holder's  calculation  was correct.
The period of time in which the  Company is required  to effect  conversions  or
redemptions  under this Certificate of Designation  shall be tolled with respect
to the subject  conversion or redemption pending resolutin of any dispute by the
Company made in good faith and in accordance with this Section 4(d)(iii).

      (iv) Record Holder.  The person or persons  entitled to receive the shares
of Common Stock  issuable upon a conversion of the Series B shall be treated for
all  purposes as the record  holder or holders of such shares of Common Stock on
the Conversion Date.

                                       4


      (v) Company's Failure to Timely Convert.  If within three (3) trading days
of the Company's  receipt of an executed copy of the Conversion  Notice (so long
as the applicable  Preferred Stock  Certificates and original  Conversion Notice
are received by the Company on or before such third business day) (the "Delivery
Date") the Transfer Agent shall fail to issue and deliver to a holder the number
of shares of Common  Stock to which such holder is entitled  upon such  holder's
conversion  of the  Series  B or to  issue  a new  Preferred  Stock  Certificate
representing  the number of shares of Series B to which such  holder is entitled
pursuant  to Section  4(c) (a  "Conversion  Failure"),  in addition to all other
available remedies which such holder may pursue hereunder and under the Series B
Convertible  Preferred Stock Purchase Agreement (the "Purchase Agreement") among
the Company and the initial  holders of the Series B (including  indemnification
pursuant to Section 6 thereof), the Company shall pay additional damages to such
holder on each  business  day after  such  third  (3rd)  business  day that such
conversion is not timely  effected in an amount equal 0.5% of the product of (A)
the sum of the  number of shares of Common  Stock not  issued to the holder on a
timely basis  pursuant to Section 4(c) and to which such holder is entitled and,
in the event the Company has failed to deliver a Preferred Stock  Certificate to
the holder on a timely basis pursuant to Section 4(d)(ii),  the number of shares
of Common Stock  issuable upon  conversion of the shares of Series B represented
by such  Preferred  Stock  Certificate,  as of the last  possible date which the
Company  could have  issued  such  Preferred  Stock  Certificate  to such holder
without  violating  Section  4(d)(ii)  and (B) the Closing Bid Price (as defined
below) of the Common  Stock on the last  possible  date which the Company  could
have issued such Common Stock and such Preferred Stock Certificate,  as the case
may be, to such holder without violating Section 4(d)(ii).  If the Company fails
to pay the additional  damages set forth in this Section 4(d)(v) within five (5)
business days of the date incurred, then such payment shall bear interest at the
rate of 2.0% per month (pro rated for partial  months)  until such  payments are
made.  The term "Closing Bid Price" shall mean, for any security as of any date,
the last closing bid price of such  security on the OTC Bulletin  Board or other
principal  exchange on which such  security is traded as reported by  Bloomberg,
or, if no closing bid price is reported for such security by Bloomberg, the last
closing trade price of such  security as reported by  Bloomberg,  or, if no last
closing trade price is reported for such  security by Bloomberg,  the average of
the bid prices of any market  makers for such  security as reported in the "pink
sheets" by the National  Quotation Bureau,  Inc. If the Closing Bid Price cannot
be calculated for such security on such date on any of the foregoing  bases, the
Closing Bid Price of such  security on such date shall be the fair market  value
as  mutually  determined  by the  Company  and the  holders of a majority of the
outstanding shares of Series B.

                                       5


      (vi)  Buy-In  Rights.  In addition to any other  rights  available  to the
holders  of  Series  B, if the  Company  fails to cause  its  Transfer  Agent to
transmit to the holder a certificate or certificates  representing the shares of
Common Stock issuable upon  conversion of the Series B on or before the Delivery
Date,  and if after such date the holder is  required  by its broker to purchase
(in an open market  transaction or otherwise)  shares of Common Stock to deliver
in  satisfaction  of a sale by the holder of the shares of Common Stock issuable
upon  conversion of Series B which the holder  anticipated  receiving  upon such
conversion  (a  "Buy-In"),  then the Company shall (1) pay in cash to the holder
the amount by which (x) the holder's total purchase price  (including  brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (A) the number of shares of Common Stock issuable
upon  conversion  of Series B that the  Company  was  required to deliver to the
holder in connection  with the  conversion at issue times (B) the price at which
the sell order giving rise to such purchase obligation was executed,  and (2) at
the option of the holder, either reinstate the shares of Series B and equivalent
number of shares of Common  Stock for which such  conversion  was not honored or
deliver to the holder the number of shares of Common  Stock that would have been
issued  had the  Company  timely  complied  with  its  conversion  and  delivery
obligations hereunder.  For example, if the holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
conversion of shares of Common Stock with an aggregate sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Company  shall be required to pay to the holder  $1,000.
The holder  shall  provide the Company  written  notice  indicating  the amounts
payable  to the  holder in  respect  of the  Buy-In,  together  with  applicable
confirmations and other evidence  reasonably  requested by the Company.  Nothing
herein shall limit a holder's right to pursue any other remedies available to it
hereunder,  at law or in  equity  including,  without  limitation,  a decree  of
specific  performance  and/or  injunctive  relief with respect to the  Company's
failure to timely deliver certificates  representing shares of Common Stock upon
conversion of the Series B as required pursuant to the terms hereof.

      5.  Adjustments  to  Conversion  Rate and Certain Other  Adjustments.  The
Conversion Rate for the number of shares of Common Stock into which the Series B
shall  be  converted  shall  be  subject  to  adjustment  from  time  to time as
hereinafter set forth,  notice of which shall be promptly provided to the Series
B holders:

      (a) Stock Dividends,  Recapitalization,  Reclassification,  Split-Ups. If,
prior to or on the date of a  Conversion,  the number of  outstanding  shares of
Common Stock is increased by a stock dividend  payable in shares of Common Stock
or any right to  acquire  Common  Stock or by a  split-up,  recapitalization  or
reclassification  of shares of Common Stock or other similar event, then, on the
effective date thereof,  the Conversion Rate will be adjusted so that the number
of shares of Common Stock  issuable on such  Conversion of the Series B shall be
increased in proportion to such increase in  outstanding  shares of Common Stock
and to ensure the Series B holders,  in the  aggregate,  acquired  the  Required
Percentage of Common Stock.

      (b) Aggregation of Shares. If prior to or on the date of a Conversion, the
number of  outstanding  shares of Common Stock is decreased by a  consolidation,
combination or reclassification of shares of Common Stock or other similar event
(including the Reverse Split), then, upon the effective date thereof, the number
of  shares of Common  Stock  issuable  on  Conversion  of the  Series B shall be
decreased in proportion to such decrease in  outstanding  shares of Common Stock
and to ensure the Series B holders,  in the  aggregate,  acquired  the  Required
Percentage of Common Stock.

                                       6


      (c) Mergers or  Consolidations.  If at any time or from time to time prior
to the date of a Conversion there is a merger,  consolidation or similar capital
reorganization of the Common Stock (other than a recapitalization,  subdivision,
combination,  reclassification,  exchange or substitution of shares provided for
in  Section  5(a) or 5(b)  above),  as a part  of such  capital  reorganization,
provision shall be made so that the holders of the Series B shall  thereafter be
entitled  to  receive  upon  conversion  of the Series B the number of shares of
stock or other  securities  or  property of the Company to which a holder of the
number of shares of Common Stock  deliverable  upon  conversion  would have been
entitled on such capital  reorganization,  subject to  adjustment  in respect of
such stock or securities by the terms  thereof.  In any such case, the resulting
or  surviving  corporation  (if not the  Company)  shall  expressly  assume  the
obligations  to deliver,  upon the exercise of the  conversion  privilege,  such
securities  or property as the  holders of Series B  remaining  outstanding,  or
other  convertible  preferred  stock  received by such holders in place thereof,
shall be entitled  to receive  pursuant to the  provisions  hereof,  and to make
provisions for the protection of the conversion right as provided above. If this
Section 5(c) applies, Sections 5(a) and 5(b) shall not apply. In addition to all
other rights of the holders of Series B contained herein,  simultaneous with the
occurrence of a merger,  consolidation or similar capital  reorganization of the
Common Stock described  above,  each holder of Series B shall have the right, at
such holder's option,  to require the Company to redeem all or a portion of such
holder's  shares  of  Series B at a price  per  share  of  Series B equal to one
hundred ten percent (110%) of the Liquidation Preference Amount.

      (d) Successive  Changes.  The  provisions of this Section shall  similarly
apply   to   successive   reclassifications,    reorganizations,    mergers   or
consolidations, sales or other transfers.

      (e) Adjustments for Issuance of Additional  Shares of Common Stock. In the
event the Company, shall, at any time within two (2) years following the initial
issuance  date of the  Series B, issue or sell any  additional  shares of Common
Stock  ("Additional  Shares of Common  Stock"),  at a price per share  less than
$2.74 or without  consideration,  then the  Conversion  Rate will be adjusted so
that the number of shares of Common  Stock  issuable on such  Conversion  of the
Series B shall be increased in proportion to such increase in outstanding shares
of Common Stock and to ensure the Series B holders,  in the aggregate,  acquired
the Required Percentage of Common Stock.

      (f) Issuance of Common Stock  Equivalents.  The provisions of this Section
5(f) shall apply if (a) the Company,  at any time within two (2) years following
the  initial  issuance  date  of  the  Series  B,  shall  issue  any  securities
convertible  into or  exchangeable  for,  directly or  indirectly,  Common Stock
("Convertible Securities"), other than the Series B or Series A Preferred Stock,
or (b) any rights or warrants or options to  purchase  any such Common  Stock or
Convertible Securities  (collectively,  the "Common Stock Equivalents") shall be
issued or sold.  If the price  per share for which  Additional  Shares of Common
Stock may be issuable pursuant to any such Common Stock Equivalent shall be less
than $2.74,  or if,  after any such  issuance of Common Stock  Equivalents,  the
price  per share for which  Additional  Shares of Common  Stock may be  issuable
thereafter  is amended or adjusted,  and such price as so amended  shall be less
than  $2.74,  then the  Conversion  Rate will be  adjusted so that the number of
shares of Common  Stock  issuable  on such  Conversion  of the Series B shall be
increased in proportion to such increase in  outstanding  shares of Common Stock
and to ensure the Series B holders,  in the  aggregate,  acquired  the  Required
Percentage of Common Stock.

                                       7


      6. Voting  Rights.  The holders of shares of Series B shall be entitled to
the following voting rights:

      (a) Those voting rights required by applicable law;

      (b) The right to vote  together  with the holders of the Common  Stock and
Series B, as a single  class,  upon all matters  submitted  to holders of Common
Stock for a vote,  with each share of Series B carrying a number of votes  equal
to the number of shares of Common Stock that would be issuable  upon  Conversion
to ensure the  acquisition  of the Required  Percentage of Common Stock based on
the  then  applicable  Conversion  Rate  and each  holder  of  Series B shall be
entitled to notice of any stockholders' meeting in accordance with the bylaws of
the Company; and

      (c)  Whenever  holders of Series B are  required or  permitted to take any
action by vote,  such action may be taken without a meeting on written  consent,
setting  forth the action so taken and signed by the holders of the  outstanding
capital  stock of the Company  having not less than the minimum  number of votes
that would be  necessary  or  required  to  authorize  or take such  action at a
meeting at which all such  shares  entitled  to vote  thereon  were  present and
voted.  Each share of the Series B shall entitle the holder  thereof to one vote
on all  matters  to be voted on by the  holders of the Series B, as set forth in
this Section 6(c).

      7. Conversion  Restriction.  Notwithstanding  anything to the contrary set
forth in this  Certificate of Designation,  at no time may a holder of shares of
Series B convert  shares of the Series B if the number of shares of Common Stock
to be issued  pursuant  to such  conversion  would cause the number of shares of
Common Stock owned by such holder at such time to exceed,  when  aggregated with
all other shares of Common  Stock owned by such holder at such time,  the number
of shares of Common Stock which would result in such holder  beneficially owning
(as determined in accordance  with Section 13(d) of the Securities  Exchange Act
of 1934,  as amended,  and the rules  thereunder)  in excess of 9.9% of the then
issued  and  outstanding  shares  of  Common  Stock  outstanding  at such  time;
provided,  however,  that upon a holder of Series B providing  the Company  with
sixty-one (61) days notice (the "Waiver  Notice") that such holder would like to
waive Section 7 of this  Certificate  of  Designation  with regard to any or all
shares of Common  Stock  issuable  upon  conversion  of Series B, this Section 7
shall be of no  force  or  effect  with  regard  to  those  shares  of  Series B
referenced in the Waiver Notice.

      8. Inability to Fully Convert.

      (a)  Holder's  Option  if  Company  Cannot  Fully  Convert.  If,  upon the
Company's  receipt of a  Conversion  Notice after the  Amendment  has been filed
effecting  the Reverse  Split,  the Company  cannot issue shares of Common Stock
upon a Conversion for any reason,  including,  without  limitation,  because the
Company  (w) does  not have a  sufficient  number  of  shares  of  Common  Stock
authorized  and available,  (x) is otherwise  prohibited by applicable law or by
the rules or regulations of any stock exchange,  interdealer quotation system or
other  self-regulatory  organization  with  jurisdiction over the Company or its
securities  from  issuing  all of the  Common  Stock  which is to be issued to a
holder of Series B pursuant  to a  Conversion  Notice or (y)  subsequent  to the
effective date of the Registration Statement,  fails to have a sufficient number
of  shares  of  Common  Stock  registered  for  resale  under  the  Registration
Statement,  then the Company shall issue as many shares of Common Stock as it is
able to issue in  accordance  with such  holder's  Conversion  Notice and,  with
respect to the unconverted Series B, the holder, solely at such holder's option,
can  elect,  within  five (5)  business  days after  receipt of notice  from the
Company thereof to:

                                       8


      (i) require the  Company to redeem  from such  holder  those  Series B for
which the  Company  is  unable to issue  Common  Stock in  accordance  with such
holder's  Conversion Notice ("Mandatory  Redemption") at a price per share equal
to one hundred  ten percent  (110%) of the  Liquidation  Preference  Amount (the
"Mandatory  Redemption  Price");  provided  that the Company shall have the sole
option to pay the Mandatory Redemption Price in cash or shares of Common Stock;

      (ii) if the Company's  inability to fully convert  Series B is pursuant to
Section 8(a)(y) above,  require the Company to issue restricted shares of Common
Stock in accordance with such holder's Conversion Notice ;

      (iii) void its Conversion Notice and retain or have returned,  as the case
may be,  the  shares  of  Series B that were to be  converted  pursuant  to such
holder's  Conversion  Notice  (provided  that a holder's  voiding its Conversion
Notice shall not effect the  Company's  obligations  to make any payments  which
have accrued prior to the date of such notice); or

      (iv)  exercise its Buy-In rights  pursuant to and in  accordance  with the
terms and provisions of Section 4(d)(vi) hereof.

      (b)  Mechanics  of  Fulfilling   Holder's  Election.   The  Company  shall
immediately  send via  facsimile  to a holder of Series  B,  upon  receipt  of a
facsimile  copy of a  Conversion  Notice from such holder  which cannot be fully
satisfied  as  described  in  Section  8(a)  above,  a notice  of the  Company's
inability to fully satisfy such holder's  Conversion  Notice (the  "Inability to
Fully Convert  Notice").  Such  Inability to Fully Convert Notice shall indicate
(i) the  reason  why the  Company  is  unable  to fully  satisfy  such  holder's
Conversion  Notice,  (ii) the  number  of  shares  of  Series B which  cannot be
converted and (iii) the applicable Mandatory Redemption Price. Such holder shall
notify the Company of its election  pursuant to Section 8(a) above by delivering
written notice via facsimile to the Company ("Notice in Response to Inability to
Convert").

      (c) Payment of  Redemption  Price.  If such holder shall elect to have its
shares  redeemed  pursuant to Section  8(a)(i) above,  the Company shall pay the
Mandatory  Redemption  Price  to such  holder  within  thirty  (30)  days of the
Company's  receipt of the  holder's  Notice in Response to Inability to Convert,
provided that prior to the Company's  receipt of the holder's Notice in Response
to  Inability  to Convert the Company has not  delivered a notice to such holder
stating,  to the  satisfaction  of the  holder,  that  the  event  or  condition
resulting in the  Mandatory  Redemption  has been cured and all shares of Common
Stock  issuable  to such  holder  can and will be  delivered  to the  holder  in
accordance  with the terms of  Section 4.  Until the full  Mandatory  Redemption
Price is paid in full to such  holder,  such  holder may (i) void the  Mandatory
Redemption with respect to those shares of Series B for which the full Mandatory
Redemption  Price has not been paid, and (ii) receive back such shares of Series
B.

                                       9


      (d) Pro-rata Conversion and Redemption.  In the event the Company receives
a  Conversion  Notice  from more than one holder of Series B on the same day and
the Company can convert and redeem  some,  but not all, of the Series B pursuant
to this  Section 8, the  Company  shall  convert  and redeem from each holder of
Series B electing to have Series B converted and redeemed at such time an amount
equal to such holder's  pro-rata  amount (based on the number shares of Series B
held by such holder  relative to the number shares of Series B  outstanding)  of
all shares of Series B being converted and redeemed at such time.

      9. No  Impairment.  The Company  will not, by amendment of its Articles of
Incorporation  or through  any  reorganization,  recapitalization,  transfer  of
assets, consolidation,  merger, dissolution,  issue or sale of securities or any
other action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or  performed  hereunder  by the  Company,  but will at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Certificate  of  Designations  and in the  taking  of all such  action as may be
necessary  or  appropriate  in order to  protect  the  conversion  rights of the
holders of Series B against impairment.

      10. No Fractional Shares and Certificate as to Adjustments.  No fractional
shares shall be issued upon the  conversion of any share or shares of the Series
B, and the number of shares of Common Stock to be issued shall be rounded to the
nearest  whole share.  The number of shares  issuable upon  conversion  shall be
determined  on the basis of the total number of shares of Series B the holder is
at the time  converting  into  Common  Stock and the  number of shares of Common
Stock issuable upon such aggregate conversion.

      11. Notices of Record Date. In the event of any taking by the Company of a
record of the holders of any class of securities  for the purpose of determining
the holders  thereof who are entitled to receive any dividend (other than a cash
dividend)  or other  distribution,  any  right to  subscribe  for,  purchase  or
otherwise  acquire any shares of stock of any class or any other  securities  or
property, or any other right, the Company shall mail to each holder of Series B,
at least ten (10) days prior to the date specified  therein, a notice specifying
the date on which  any  such  record  is to be  taken  for the  purpose  of such
dividend,  distribution or right, and the amount and character of such dividend,
distribution or right.

      12. Notices.  Any notice required by the provisions of this Certificate of
Designations  to be given to the  holders  of shares of Series B shall be deemed
given if deposited in the United States mail, postage prepaid,  and addressed to
each holder of record at his address appearing on the books of the Company.

      13. Protective Provisions.  Except for the designation and issuance of the
Company's  Series A  Convertible  Preferred  Stock  which  is  being  designated
contemporaneously  with the  Series  B, so long as any  shares  of  Series B are
outstanding, the Company shall not without first obtaining the approval (by vote
or written consent,  as provided by law) of the holders of at least seventy-five
percent (75%) of the then  outstanding  shares of Series B, voting as a separate
class:

                                       10


      (a) in any  manner  authorize,  issue or create  (by  reclassification  or
otherwise)  any new  class or series of shares  having  rights,  preferences  or
privileges equal or senior to the Series B;

      (b) adversely  alter or change the rights,  preferences,  designations  or
privileges of the Series B;

      (c) amend the Company's  Articles of  Incorporation or By-laws in a manner
that adversely  affects the rights,  preferences,  designations or privileges of
the holders of the Series B;

      (d)  increase or decrease  the  authorized  number of shares of  preferred
stock  of  the  Company  or  otherwise  reclassify  the  Company's   outstanding
securities;

      (e) redeem,  purchase or otherwise acquire (or pay into or set funds aside
for a sinking fund for such  purpose) any share or shares of preferred  stock or
Common Stock; provided, however, that this restriction shall not apply to the de
minimus  repurchases  of  shares  of  Common  Stock  from  employees,  officers,
directors,  consultants or other persons performing  services for the Company or
any subsidiary  pursuant to agreements under which the Company has the option to
repurchase  such shares at cost upon the occurrence of certain  events,  such as
the  termination  of  employment,  or through the exercise of any right of first
refusal; or

      (f)  voluntarily  file for bankruptcy,  liquidate the Company's  assets or
make an assignment for the benefit of the Company's creditors.

      14. No Charge for Conversion.  The issuance of certificates  for shares of
Common  Stock upon the  conversion  of shares of Series B shall be made  without
charge to the converting holders for such certificates or for any tax in respect
of the issuance of such certificates.

      15.  Reservation  of Shares.  To the  fullest  extent  possible  (it being
understood  that as of the date of filing of this  Certificate  of  Designations
there are an  insufficient  number of authorized,  but unissued shares of Common
Stock to issue upon conversion of all of the shares of Series B Stock designated
hereby and that  contemporaneously with the issuance of Series B the Corporation
intends to issue  warrants to  purchase an  aggregate  of  11,154,614  shares of
Common Stock), the Corporation shall at all times reserve and keep available out
of any stock held as treasury stock or out of its authorized but unissued Common
Stock, or both, solely for the purpose of effecting the conversion of the shares
of Series B, the full number of shares of Common  Stock then  issuable  upon the
conversion  of all  outstanding  shares  of  Series  B.  The  Corporation  shall
immediately,  in  accordance  with the laws of the State of Utah,  increase  the
authorized  amount of its Common Stock if, at any time, the authorized amount of
its  Common  Stock  remaining  unissued  shall not be  sufficient  to permit the
conversion  of all shares of Series B;  provided,  however,  that such  covenant
shall be deemed to be satisfied  if the  Corporation  effects the Reverse  Split
within 120 days after the initial issuance date of the Series B.

                                       11


      16. Return of Status as Authorized Shares.  Upon a Conversion or any other
redemption or extinguishment of the Series B, the shares converted,  redeemed or
extinguished  will be cancelled  (and may not be reissued as shares of Series B)
and  automatically  returned to the status of authorized and unissued  shares of
preferred stock,  available for future  designation and issuance pursuant to the
terms of the Articles of Incorporation.

      17. Amendment.  This Certificate of Designations  constitutes an agreement
between  the  Company and the holders of the Series B. For as long as any shares
of Series B are outstanding, the terms hereof may be amended, modified, repealed
or waived  only by the  affirmative  vote or  written  consent  of  holders of a
majority of the then outstanding  shares of Series B, voting together as a class
and series.

                                       12


      IN WITNESS  WHEREOF,  the  undersigned  has executed and  subscribed  this
Certificate  and does affirm the  foregoing  as true this 6th day of  September,
2006.

                                              DOLCE VENTURES INC.

                                              -----------------------
                                              Name: Carl E. Worboys
                                              Title:   President

                                              -----------------------
                                              Name: John F. Passalaqua
                                              Title:   Treasurer and Secretary

                                       13


                                                                       EXHIBIT I

                              DOLCE VENTURES, INC.
                                CONVERSION NOTICE

Reference is made to the  Certificate of Designation of the Relative  Rights and
Preferences  of the  Series  B  Preferred  Stock of Dolce  Ventures,  Inc.  (the
"Certificate  of   Designation").   In  accordance  with  and  pursuant  to  the
Certificate of Designation,  the undersigned hereby elects to convert the number
of  shares  of Series B  Preferred  Stock,  par  value  $0.001  per  share  (the
"Preferred  Shares"),   of  Dolce  Ventures,   Inc.,  a  Utah  corporation  (the
"Company"),  indicated  below into shares of Common Stock,  par value $0.001 per
share  (the  "Common   Stock"),   of  the  Company,   by  tendering   the  stock
certificate(s)  representing the share(s) of Preferred Shares specified below as
of the date specified below.

      Date of Conversion:                         ------------------------------

      Number of Preferred Shares to be converted: ----------

      Stock certificate no(s). of Preferred Shares to be converted: ------------

      The Common Stock have been sold  pursuant to the  Registration  Statement:
      YES      NO
          ----   ----
Please confirm the following information:

      Number of shares of Common Stock
      to be issued:
                                                  ------------------------------

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion:
                                         -------------------------

Please  issue the  Common  Stock  into  which  the  Preferred  Shares  are being
converted  and, if  applicable,  any check drawn on an account of the Company in
the following name and to the following address:

         Issue to:
                                        ----------------------------------------

         Facsimile Number:
                                        ----------------------------------------

         Authorization:
                                        ----------------------------------------
                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------

Dated:

                                       14

EX-4.1

                  SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE

                                    AGREEMENT

                          Dated as of September 7, 2006

                                      among

                               DOLCE VENTURES INC.

                                       and

                       THE PURCHASERS LISTED ON EXHIBIT A



                                TABLE OF CONTENTS



                                                                                                               PAGE
                                                                                                           
ARTICLE I Purchase and Sale of Preferred Stock....................................................................1

         Section 1.1       Purchase and Sale of Stock and Warrants................................................1

         Section 1.2       Regulation D...........................................................................1

         Section 1.3       Conversion Shares......................................................................1

         Section 1.4       Closing................................................................................2

         Section 1.5       Share Exchange Transaction ............................................................2

ARTICLE II Representations and Warranties.........................................................................3

         Section 2.1       Representations and Warranties of the Company..........................................3

         Section 2.2       Representations and Warranties of the Purchasers......................................13

ARTICLE III Covenants............................................................................................16

         Section 3.1       Securities Compliance.................................................................16

         Section 3.2       Registration and Listing..............................................................16

         Section 3.3       Compliance with Laws..................................................................16

         Section 3.4       Keeping of Records and Books of Account...............................................17

         Section 3.5       Reporting Requirements................................................................17

         Section 3.6       Amendments............................................................................17

         Section 3.7       Other Agreements......................................................................17

         Section 3.8       Use of Proceeds.......................................................................18

         Section 3.9       Reservation of Shares.................................................................18

         Section 3.10      Transfer Agent Instructions...........................................................18

         Section 3.11      Disposition of Assets.................................................................18

         Section 3.12      Reporting Status......................................................................19

         Section 3.13      Disclosure of Transaction ............................................................19

         Section 3.14      Disclosure of Material Information....................................................19

         Section 3.15      Pledge of Securities..................................................................19

         Section 3.16      Form SB-2 Eligibility.................................................................19

         Section 3.17      Board Observer Rights ................................................................20

         Section 3.18      DTC...................................................................................20

         Section 3.19      Investor and Public Relations.........................................................20

         Section 3.20      Lock-Up Agreement.....................................................................20

         Section 3.21      Revenue Targets ......................................................................20

         Section 3.22      Adjustments for Issuance of Additional Shares ........................................21

         Section 3.23      Subsequent Financings.................................................................21

ARTICLE IV Conditions............................................................................................22

         Section 4.1       Conditions Precedent to the Obligation of the Company to Sell the Shares..............22




                                                                                                           
         Section 4.2       Conditions Precedent to the Obligation of the Purchasers to Purchase the Shares.......23

ARTICLE V Stock Certificate Legend...............................................................................25

         Section 5.1       Legend................................................................................25

ARTICLE VI Indemnification.......................................................................................27

         Section 6.1       General Indemnity.....................................................................27

         Section 6.2       Indemnification Procedure.............................................................27

ARTICLE VII Miscellaneous........................................................................................28

         Section 7.1       Fees and Expenses.....................................................................28

         Section 7.2       Specific Enforcement, Consent to Jurisdiction.........................................28

         Section 7.3       Entire Agreement; Amendment...........................................................29

         Section 7.4       Notices...............................................................................29

         Section 7.5       Waivers...............................................................................30

         Section 7.6       Headings..............................................................................29

         Section 7.7       Successors and Assigns................................................................29

         Section 7.8       No Third Party Beneficiaries..........................................................30

         Section 7.9       Governing Law.........................................................................31

         Section 7.10      Survival..............................................................................31

         Section 7.11      Counterparts..........................................................................31

         Section 7.12      Publicity.............................................................................31

         Section 7.13      Severability..........................................................................31

         Section 7.14      Further Assurances....................................................................31




                                       ii


             SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

      This  SERIES  B  CONVERTIBLE   PREFERRED  STOCK  PURCHASE  AGREEMENT  (the
"Agreement") is dated as of September 7, 2006 by and among Dolce Ventures, Inc.,
a Utah  corporation  (the  "Company"),  and each of the  Purchasers of shares of
Series B Convertible Preferred Stock of the Company whose names are set forth on
Exhibit  A  hereto   (individually,   a  "Purchaser"   and   collectively,   the
"Purchasers").

      The parties hereto agree as follows:

                                    ARTICLE I

                      Purchase and Sale of Preferred Stock

            Section 1.1 Purchase and Sale of Stock and Warrants.  Subject to the
terms and conditions hereof and in consideration of and in express reliance upon
the  representations,  warranties,  covenants,  terms  and  conditions  of  this
Agreement, the Company agrees to issue and sell, for an aggregate purchase price
of $6,876,800 (the "Purchase  Price"),  to the  Purchasers,  and the Purchasers,
severally but not jointly, agree to purchase:

                  (i) the number of shares of the Company's Series B Convertible
Preferred  Stock,  par value  $.001 per share and a purchase  price of $2.74 per
share (the "Preferred Shares"),  convertible into shares of the Company's common
stock, par value $.001 per share (the "Common Stock"),  in the amounts set forth
opposite such  Purchaser's name on Exhibit A hereto.  The  designation,  rights,
preferences and other terms and provisions of the Series B Convertible Preferred
Stock are set forth in the Certificate of Designation of the Relative Rights and
Preferences  of the Series B  Convertible  Preferred  Stock  attached  hereto as
Exhibit B (the "Certificate of Designation"),

                  (ii) Series A Warrants,  in  substantially  the form  attached
hereto as Exhibit  C-1 (the  "Series A  Warrants"),  to  purchase  the number of
shares of Common  Stock  equal to one  hundred  percent  (100%) of the number of
Preferred  Shares  purchased  by each  Purchaser  pursuant  to the terms of this
Agreement, as set forth opposite such Purchaser's name on Exhibit A hereto, and

                  (iii) Series B Warrants,  in  substantially  the form attached
hereto as Exhibit  C-2 (the  "Series B  Warrants"),  to  purchase  the number of
shares of Common Stock equal to fifty  percent  (50%) of the number of Preferred
Shares purchased by each Purchaser  pursuant to the terms of this Agreement,  as
set forth opposite such Purchaser's name on Exhibit A hereto.

                  (iv) Series J Warrants,  in  substantially  the form  attached
hereto as Exhibit  C-3 (the  "Series J  Warrants"),  to  purchase  the number of
shares of Common  Stock  equal to one  hundred  percent  (100%) of the number of
Preferred  Shares  purchased  by each  Purchaser  pursuant  to the terms of this
Agreement, as set forth opposite such Purchaser's name on Exhibit A hereto,

                  (v) Series C  Warrants,  in  substantially  the form  attached
hereto as Exhibit  C-4 (the  "Series C  Warrants"),  to  purchase  the number of
shares of Common  Stock  equal to one  hundred  percent  (100%) of the number of
Preferred  Shares  purchased  by each  Purchaser  pursuant  to the terms of this
Agreement, as set forth opposite such Purchaser's name on Exhibit A hereto, and

                  (vi) Series D Warrants,  in  substantially  the form  attached
hereto as Exhibit C-5 (the "Series D Warrants"  and,  together with the Series A
Warrants,  the  Series B  Warrants,  the  Series  J  Warrants  and the  Series C
Warrants,  the  "Warrants"),  to purchase  the number of shares of Common  Stock
equal to fifty percent (50%) of the number of Preferred Shares purchased by each
Purchaser  pursuant to the terms of this  Agreement,  as set forth opposite such
Purchaser's name on Exhibit A hereto.

            (b) Each of the Series A,  Series B,  Series C and Series D Warrants
shall  expire five (5) years  following  the Closing Date (as defined in Section
1.3 below). The Series J Warrant shall expire one (1) year following the Closing
Date.  Each of the Warrants  shall have an exercise price per share equal to the
Warrant Price (as defined in the applicable Warrant).

                  Section 1.2  Regulation D. The Company and the  Purchasers are
executing and delivering  this Agreement in accordance with and in reliance upon
the exemption from securities  registration afforded by Rule 506 of Regulation D
("Regulation  D") as  promulgated  by the United States  Securities and Exchange
Commission (the "Commission")  under the Securities Act of 1933, as amended (the
"Securities Act") or Section 4(2) of the Securities Act.

                  Section 1.3 Conversion  Shares. The Company has authorized and
has reserved and covenants to continue to reserve, free of preemptive rights and
other  similar  contractual  rights of  stockholders,  such  number of shares of
Common Stock as shall from time to time be sufficient  to effect the  conversion
of all of the Preferred  Shares and exercise of the Warrants  then  outstanding.
Any shares of Common Stock issuable upon conversion of the Preferred  Shares and
exercise of the Warrants (and such shares when issued) are herein referred to as
the "Conversion  Shares" and the "Warrant Shares",  respectively.  The Preferred
Shares, the Conversion Shares and the Warrant Shares are sometimes  collectively
referred to as the "Shares".



            Section 1.4  Closing.  The closing of the  purchase  and sale of the
Preferred  Shares and the  Warrants to be acquired  by the  Purchasers  from the
Company  under this  Agreement  shall take place at the offices of Kramer  Levin
Naftalis & Frankel LLP ("KL"),  1177 Avenue of the Americas,  New York, New York
10036 (the  "Closing")  at 10:00 a.m.,  New York time on or before  September 7,
2006;  provided,  that all of the  conditions set forth in Article IV hereof and
applicable  to the Closing  shall have been  fulfilled  or waived in  accordance
herewith (the "Closing  Date").  The Purchasers  acknowledge  and agree that the
Company may consummate the sale of additional  Preferred  Shares and Warrants to
other purchasers,  on terms substantially similar to the terms of this Agreement
and the other Transaction Documents (as defined in Section 2.1(b) hereof), which
closing(s) shall occur no later than October 3, 2006, for an aggregate  purchase
price  of up to  $5,923,200  and  a  per  share  purchase  price  of  $2.74  (an
"Additional  Series B  Financing").  Subject to the terms and conditions of this
Agreement,  at the Closing the Company shall deliver or cause to be delivered to
each  Purchaser (x) a certificate  for the number of Preferred  Shares set forth
opposite  the name of such  Purchaser  on Exhibit A hereto,  (y) its Warrants to
purchase such number of shares of Common Stock as is set forth opposite the name
of such  Purchaser  on  Exhibit A attached  hereto  and (z) any other  documents
required to be delivered  pursuant to Article IV hereof.  At the  Closing,  each
Purchaser  shall direct that KL, as escrow agent,  deliver its Purchase Price by
wire transfer to an account designated by the Company. In addition,  the parties
acknowledge that Five Hundred Thousand Dollars  ($500,000) of the Purchase Price
funded on the Closing Date shall be deposited in a separate  escrow account with
a separate  escrow agent to be used by the Company in  connection  with investor
and public relations in accordance with Section 3.19 hereof.

            Section 1.5 Share Exchange Transaction. The parties acknowledge that
immediately  prior to the consummation of the transactions  contemplated by this
Agreement,  the Company will issue shares of its Series A Preferred Stock to the
shareholders of GAS Investment China Co. Ltd., a British Virgin Islands company,
pursuant to that certain Share Exchange  Agreement  dated as of the date hereof,
and  upon  the  consummation  of the  transactions  contemplated  by such  Share
Exchange  Agreement,  GAS  Investment  China Co. Ltd. will become a wholly-owned
subsidiary of the Company (the "Share Exchange Transaction").


                                      -2-


                                   ARTICLE II

                         Representations and Warranties

            Section 2.1  Representations  and  Warranties  of the  Company.  The
Company hereby represents and warrants to the Purchasers,  as of the date hereof
and the Closing Date (except as set forth on the Schedule of Exceptions attached
hereto with each numbered Schedule  corresponding to the section number herein),
as follows:

            (a)  Organization,  Good  Standing  and  Power.  The  Company  is  a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Utah and has the requisite  corporate  power to own,  lease
and operate its  properties  and assets and to conduct its business as it is now
being conducted.  The Company does not have any subsidiaries except as set forth
in the Company's Form 10-KSB for the year ended December 31, 2005, including the
accompanying  financial statements (the "Form 10-KSB"), or in the Company's Form
10-QSB for the fiscal quarters ended June 30, 2006, March 31, 2006 and September
30, 2005  (collectively,  the "Form 10-QSB"),  or on Schedule 2.1(g) hereto. The
Company and each such  subsidiary is duly qualified as a foreign  corporation to
do business and is in good standing in every jurisdiction in which the nature of
the  business  conducted  or  property  owned  by it  makes  such  qualification
necessary  except for any  jurisdiction(s)  (alone or in the aggregate) in which
the  failure  to be so  qualified  will not have a Material  Adverse  Effect (as
defined in Section 2.1(c) hereof) on the Company's financial condition.

            (b)  Authorization;  Enforcement.  The  Company  has  the  requisite
corporate  power and  authority  to enter into and perform this  Agreement,  the
Registration  Rights  Agreement  in the form  attached  hereto as Exhibit D (the
"Registration  Rights Agreement"),  the Lock-Up Agreement (as defined in Section
3.20 hereof) in the form attached hereto as Exhibit H, the Irrevocable  Transfer
Agent Instructions (as defined in Section 3.10), the Certificate of Designation,
and the Warrants  (collectively,  the "Transaction  Documents") and to issue and
sell the  Shares and the  Warrants  in  accordance  with the terms  hereof.  The
execution,  delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions  contemplated  hereby and thereby
have been duly and validly authorized by all necessary  corporate action, and no
further  consent or  authorization  of the Company or its Board of  Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company.  The other  Transaction  Documents will have been duly executed and
delivered  by the  Company at the  Closing.  Each of the  Transaction  Documents
constitutes,  or shall  constitute  when  executed  and  delivered,  a valid and
binding obligation of the Company  enforceable against the Company in accordance
with its terms,  except as such  enforceability  may be  limited  by  applicable
bankruptcy,     insolvency,     reorganization,     moratorium,     liquidation,
conservatorship,   receivership  or  similar  laws  relating  to,  or  affecting
generally  the  enforcement  of,  creditor's  rights  and  remedies  or by other
equitable principles of general application.

            (c) Capitalization.  The authorized capital stock of the Company and
the shares thereof  currently  issued and  outstanding as of the date hereof are
set forth on Schedule 2.1(c) hereto. All of the outstanding shares of the Common
Stock and the Preferred Shares have been duly and validly authorized.  Except as
set forth on Schedule  2.1(c) hereto,  no shares of Common Stock are entitled to
preemptive rights or registration  rights and there are no outstanding  options,
warrants,  scrip,  rights to subscribe to, call or  commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital   stock  of  the   Company.   There  are  no   contracts,   commitments,
understandings,  or  arrangements by which the Company is or may become bound to


                                      -3-


issue  additional  shares  of the  capital  stock  of the  Company  or  options,
securities  or rights  convertible  into shares of capital stock of the Company.
The  Company  is  not  a  party  to  any  agreement  granting   registration  or
anti-dilution  rights to any  person  with  respect to any of its equity or debt
securities.  The  Company  is not a party to,  and it has no  knowledge  of, any
agreement  restricting the voting or transfer of any shares of the capital stock
of the Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable  Federal and state securities laws, and no stockholder has a
right of rescission or claim for damages with respect thereto which would have a
Material  Adverse Effect (as defined  below).  The Company has furnished or made
available to the Purchasers true and correct copies of the Company's Articles of
Incorporation  as in  effect  on the  date  hereof  (the  "Articles"),  and  the
Company's  Bylaws  as in  effect  on the date  hereof  (the  "Bylaws").  For the
purposes of this Agreement, "Material Adverse Effect" means any material adverse
effect  on  the  business,  operations,   properties,  prospects,  or  financial
condition   of  the  Company  and  its   subsidiaries   and/or  any   condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the  ability of the Company to perform  any of its  obligations  under this
Agreement in any material respect.

            (d) Issuance of Shares.  The Preferred Shares and the Warrants to be
issued at the  Closing  have been duly  authorized  by all  necessary  corporate
action and the Preferred Shares,  when paid for or issued in accordance with the
terms  hereof,  shall  be  validly  issued  and  outstanding,   fully  paid  and
nonassessable  and  entitled  to the  rights  and  preferences  set forth in the
Certificate of  Designation.  When the Conversion  Shares and the Warrant Shares
are issued in accordance  with the terms of the  Certificate of Designation  and
the Warrants, respectively, such shares will be duly authorized by all necessary
corporate   action  and  validly   issued  and   outstanding,   fully  paid  and
nonassessable,  and the holders  shall be  entitled to all rights  accorded to a
holder of Common Stock.

            (e) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions contemplated herein and therein do not and will not (i) violate any
provision of the Company's Articles or Bylaws, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration  or  cancellation  of,  any  agreement,  mortgage,  deed of  trust,
indenture,  note, bond,  license,  lease agreement,  instrument or obligation to
which the  Company  is a party or by which it or its  properties  or assets  are
bound, (iii) create or impose a lien,  mortgage,  security  interest,  charge or
encumbrance  of any nature on any property of the Company under any agreement or
any  commitment to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, or (iv) result
in  a  violation  of  any  federal,  state,  local  or  foreign  statute,  rule,
regulation,  order,  judgment or decree (including  Federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by


                                      -4-


which any property or asset of the Company or any of its  subsidiaries are bound
or affected,  except, in all cases other than violations pursuant to clauses (i)
and  (iv)  above,  for  such  conflicts,  defaults,  terminations,   amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  have a Material Adverse Effect.  The business of the Company and its
subsidiaries  is not being  conducted in violation  of any laws,  ordinances  or
regulations of any  governmental  entity,  except for possible  violations which
singularly  or in the  aggregate  do not and will not  have a  Material  Adverse
Effect.  The Company is not required under Federal,  state or local law, rule or
regulation to obtain any consent,  authorization or order of, or make any filing
or  registration  with,  any  court or  governmental  agency  in order for it to
execute,  deliver  or  perform  any of its  obligations  under  the  Transaction
Documents,  or issue and sell the Shares and the Warrants in accordance with the
terms hereof or thereof (other than any filings which may be required to be made
by the Company with the Commission or state securities administrators subsequent
to the Closing,  any registration  statement which may be filed pursuant hereto,
and  the  Certificate  of  Designation);  provided  that,  for  purposes  of the
representation  made in this sentence,  the Company is assuming and relying upon
the accuracy of the relevant  representations  and  agreements of the Purchasers
herein.

            (f) Commission Documents,  Financial Statements. The Common Stock is
registered  pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934,  as amended the  "Exchange  Act"),  and the  Company has timely  filed all
reports,  schedules,  forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the Exchange
Act, including material filed pursuant to Section 13(a) or 15(d) of the Exchange
Act (all of the foregoing  including  filings  incorporated by reference therein
being  referred  to herein  as the  "Commission  Documents").  The  Company  has
delivered  or made  available to each of the  Purchasers  at the request of such
Purchaser true and complete copies of the Commission Documents.  The Company has
not provided to the  Purchasers  any material  non-public  information  or other
information which, according to applicable law, rule or regulation, was required
to have  been  disclosed  publicly  by the  Company  but  which  has not been so
disclosed,  other than with  respect to the  transactions  contemplated  by this
Agreement.  At the times of their  respective  filings,  the Form 10-KSB and the
Form 10-QSB  complied in all  material  respects  with the  requirements  of the
Exchange  Act  and the  rules  and  regulations  of the  Commission  promulgated
thereunder  and  other  federal,  state and local  laws,  rules and  regulations
applicable to such documents,  and, as of their  respective  dates,  none of the
Form 10-KSB and the Form 10-QSB  contained  any untrue  statement  of a material
fact or  omitted  to state a  material  fact  required  to be stated  therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made,  not  misleading.  The  financial  statements of the
Company  included in the Commission  Documents comply as to form in all material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the Commission or other  applicable  rules and  regulations  with
respect thereto. Such financial statements have been prepared in accordance with
United States generally  accepted  accounting  principles  ("GAAP") applied on a
consistent  basis  during the periods  involved  (except (i) as may be otherwise
indicated in such financial  statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be  condensed  or summary  statements),  and fairly  present in all material
respects the financial  position of the Company and its  subsidiaries  as of the
dates thereof and the results of operations  and cash flows for the periods then
ended (subject,  in the case of unaudited  statements,  to normal year-end audit
adjustments).


                                      -5-


            (g) Subsidiaries.  Schedule 2.1(g) hereto sets forth each subsidiary
of the Company,  showing the  jurisdiction of its  incorporation or organization
and showing the percentage of the Company's ownership.  For the purposes of this
Agreement,  "subsidiary"  shall mean any corporation or other entity of which at
least a majority of the securities or other  ownership  interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons  performing  similar  functions  are  at  the  time  owned  directly  or
indirectly  by the  Company  and/or  any of its other  subsidiaries.  All of the
outstanding  shares of capital stock of each subsidiary  directly and indirectly
held by the Company have been duly authorized and validly issued,  and are fully
paid and nonassessable. Other than as contemplated by the Transaction Documents,
there  are no  outstanding  preemptive,  conversion  or other  rights,  options,
warrants or agreements  granted or issued by or binding upon any  subsidiary for
the purchase or  acquisition of any shares of capital stock of any subsidiary or
any other securities convertible into, exchangeable for or evidencing the rights
to subscribe for any shares of such capital stock. Other than as contemplated by
the Transaction Documents,  neither the Company nor any subsidiary is subject to
any obligation  (contingent or otherwise) to repurchase or otherwise  acquire or
retire any shares of the  capital  stock of any  subsidiary  or any  convertible
securities,  rights,  warrants or options of the type described in the preceding
sentence.  Neither  the  Company  nor any  subsidiary  is party to,  nor has any
knowledge of, any agreement  restricting the voting or transfer of any shares of
the capital stock of any subsidiary.

            (h) No Material Adverse Change. Since December 31, 2005, the Company
has not experienced or suffered any Material Adverse Effect.

            (i) No Undisclosed  Liabilities.  Neither the Company nor any of its
subsidiaries  has  any  liabilities,  obligations,  claims  or  losses  (whether
liquidated or unliquidated,  secured or unsecured, absolute, accrued, contingent
or otherwise)  other than those incurred in the ordinary course of the Company's
or its  subsidiaries  respective  businesses  since December 31, 2005 and which,
individually  or in the aggregate,  do not or would not have a Material  Adverse
Effect on the Company or its subsidiaries.

            (j)  No  Undisclosed  Events  or  Circumstances.  To  the  Company's
knowledge,  no event or circumstance  has occurred or exists with respect to the
Company  or  its  subsidiaries  or  their  respective  businesses,   properties,
prospects,  operations or financial condition, which, under applicable law, rule
or regulation,  requires  public  disclosure or  announcement by the Company but
which has not been so publicly announced or disclosed.

            (k)  Indebtedness.  The Form 10-KSB,  Form 10-QSB and the financials
statements of Beijing Zhong Ran Wei Ye Gas Co., Ltd. ("Beijing Gas") for the six
months  ended June 30,  2006 and the fiscal  years ended  December  31, 2005 and
2004,  sets  forth  as of the  dates  and  periods  indicated  on such  form and
financial statements,  all outstanding secured and unsecured Indebtedness of the
Company  or any  subsidiary,  or for which the  Company  or any  subsidiary  has
commitments.  For the purposes of this Agreement,  "Indebtedness" shall mean (a)
any  liabilities for borrowed money or amounts owed in excess of $100,000 (other
than trade accounts  payable  incurred in the ordinary course of business),  (b)
all  guaranties,  endorsements  and other  contingent  obligations in respect of
Indebtedness  of others,  whether or not the same are or should be  reflected in


                                      -6-


the  Company's  balance  sheet  (or the notes  thereto),  except  guaranties  by
endorsement  of  negotiable  instruments  for deposit or  collection  or similar
transactions  in the ordinary  course of business;  and (c) the present value of
any lease  payments  in excess  of  $25,000  due  under  leases  required  to be
capitalized  in accordance  with GAAP.  Except as set forth on Schedule  2.1(k),
neither  the  Company  nor any  subsidiary  is in  default  with  respect to any
Indebtedness.

            (l) Title to Assets.  Each of the Company and the  subsidiaries  has
good and marketable title to, or valid leasehold  interest in, free and clear of
all  mortgages,   pledges,   charges,   liens,   security   interests  or  other
encumbrances, all properties and assets (i) purportedly owned or used by them as
reflected  in the Form  10-KSB,  or (ii) or  necessary  for the conduct of their
business as currently  conducted,  except for those disclosed in the Form 10-KSB
or such that,  individually or in the aggregate, do not cause a Material Adverse
Effect.

            (m) Actions Pending. There is no action, suit, claim, investigation,
arbitration,  alternate  dispute  resolution  proceeding or any other proceeding
pending or, to the knowledge of the Company,  threatened  against the Company or
any  subsidiary  which  questions  the validity of this  Agreement or any of the
other Transaction  Documents or the transactions  contemplated hereby or thereby
or any  action  taken or to be taken  pursuant  hereto or  thereto.  There is no
action, suit, claim,  investigation,  arbitration,  alternate dispute resolution
proceeding or any other proceeding  pending or, to the knowledge of the Company,
threatened,  against or involving  the Company,  any  subsidiary or any of their
respective  properties or assets.  There are no outstanding  orders,  judgments,
injunctions,  awards or decrees  of any court,  arbitrator  or  governmental  or
regulatory body against the Company or any subsidiary or any executive  officers
or directors of the Company or subsidiary in their capacities as such.

            (n)  Compliance  with  Law.  The  business  of the  Company  and the
subsidiaries  has been and is presently  being  conducted in accordance with all
applicable  federal,  state and local governmental laws, rules,  regulations and
ordinances,   except  for  such  noncompliance  that,  individually  or  in  the
aggregate,  would not cause a Material  Adverse Effect.  The Company and each of
its  subsidiaries  have all franchises,  permits,  licenses,  consents and other
governmental  or  regulatory  authorizations  and  approvals  necessary  for the
conduct of its  business  as now being  conducted  by it unless  the  failure to
possess such franchises,  permits, licenses,  consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

            (o) Taxes.  The Company and each of the  subsidiaries has accurately
prepared and filed all federal,  state and other tax returns  required by law to
be filed by it, has paid or made  provisions  for the payment of all taxes shown
to be due and all additional assessments,  and adequate provisions have been and
are  reflected in the financial  statements of the Company and the  subsidiaries
for all current taxes and other  charges to which the Company or any  subsidiary
is subject  and which are not  currently  due and  payable.  None of the federal
income tax returns of the  Company or any  subsidiary  have been  audited by the
Internal  Revenue  Service.  The  Company  has no  knowledge  of any  additional
assessments,  adjustments or contingent tax liability (whether federal or state)
of any nature  whatsoever,  whether pending or threatened against the Company or
any  subsidiary  for any  period,  nor of any  basis  for any  such  assessment,
adjustment or contingency.


                                      -7-


            (p) Certain Fees.  Except as set forth on Schedule 2.1(p) hereto, no
brokers,  finders or financial  advisory fees or commissions  will be payable by
the Company or any subsidiary or any Purchaser with respect to the  transactions
contemplated by this Agreement.

            (q)  Disclosure.  Except as set  forth on  Schedule  2.1(q)  hereto,
neither  this  Agreement  or the  Schedules  hereto  nor  any  other  documents,
certificates  or instruments  furnished to the Purchasers by or on behalf of the
Company or any subsidiary in connection  with the  transactions  contemplated by
this Agreement  contain any untrue statement of a material fact or omit to state
any  material  fact  necessary  in order to make the  statements  made herein or
therein,  in the light of the circumstances under which they were made herein or
therein, not false or misleading.

            (r) Operation of Business.  The Company and each of the subsidiaries
owns  or  possesses  all  patents,  trademarks,  domain  names  (whether  or not
registered) and any patentable  improvements or  copyrightable  derivative works
thereof,  websites and intellectual  property rights relating  thereto,  service
marks, trade names, copyrights,  licenses and authorizations as set forth in the
Form 10-KSB,  and all rights with respect to the foregoing,  which are necessary
for the conduct of its business as now  conducted  without any conflict with the
rights of others, except where the failure to so own or possess would not have a
Material Adverse Effect.

            (s)  Environmental  Compliance.  Since their inception,  neither the
Company,  nor any of its subsidiaries  have been, in violation of any applicable
law relating to the  environment or occupational  health and safety,  where such
violation  would have a material  adverse  effect on the  business or  financial
condition  of any of the Company and its  Subsidiaries.  Each of Company and its
Subsidiaries  has  operated  all  facilities  and  properties  owned,  leased or
operated by it in  material  compliance  with the  Environmental  Laws.  As used
herein, "Environmental Laws" means all applicable laws governing,  regulating or
otherwise affecting the environment, health or safety.

            (t) Books and Record  Internal  Accounting  Controls.  The books and
records of the Company and its subsidiaries  accurately  reflect in all material
respects  the  information  relating  to the  business  of the  Company  and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions  giving  rise to the  obligations  or  accounts  receivable  of the
Company or any subsidiary.  The Company and each of its subsidiaries  maintain a
system of  internal  accounting  controls  sufficient,  in the  judgment  of the
Company,  to provide reasonable  assurance that (i) transactions are executed in
accordance  with   management's   general  or  specific   authorizations,   (ii)
transactions  are  recorded as  necessary  to permit  preparation  of  financial
statements in conformity with GAAP and to maintain asset  accountability,  (iii)
access to assets is permitted only in accordance  with  management's  general or
specific  authorization  and (iv) the  recorded  accountability  for  assets  is
compared  with the  existing  assets at  reasonable  intervals  and  appropriate
actions is taken with respect to any differences.

            (u) Material  Agreements.  The Company and each of its  subsidiaries
has in all  material  respects  performed  all the  obligations  required  to be
performed  by them to date  under  any  written  or oral  contract,  instrument,
agreement, commitment, obligation, plan or arrangement (a copy of which would be
required  to be filed  with  the  Commission  as an  exhibit  to a  registration


                                      -8-


statement on Form S-3 or applicable  form if the Company or any subsidiary  were
registering  securities  under the Securities  Act),  have received no notice of
default  and are not in default  under any such  agreement  now in  effect,  the
result of which  could cause a Material  Adverse  Effect.  Except as  restricted
under applicable laws and regulations, the incorporation documents, certificates
of  designations  or the  Transaction  Documents,  no written or oral  contract,
instrument,  agreement,  commitment,  obligation,  plan  or  arrangement  of the
Company or of any  subsidiary  limits or shall limit the payment of dividends on
the Preferred Shares, the Company's other preferred stock, if any, or its Common
Stock.

            (v)  Transactions  with  Affiliates.  Except  as  set  forth  in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements,   management   contracts  or   arrangements   or  other   continuing
transactions  between (a) the Company or any subsidiary on the one hand, and (b)
on the other hand, any officer, employee, consultant or director of the Company,
or any of its  subsidiaries,  or any  person  owning  any  capital  stock of the
Company or any subsidiary or any member of the immediate family of such officer,
employee, consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant,  director or stockholder, or a
member of the immediate family of such officer, employee,  consultant,  director
or stockholder.

            (w)  Securities  Act of  1933.  Based  in  material  part  upon  the
representations  herein of the  Purchasers,  the Company has  complied  and will
comply with all applicable  federal and state securities laws in connection with
the offer,  issuance and sale of the Shares and the Warrants hereunder.  Neither
the Company nor anyone acting on its behalf, directly or indirectly, has or will
sell, offer to sell or solicit offers to buy any of the Shares,  the Warrants or
similar  securities  to, or solicit  offers with respect  thereto from, or enter
into any preliminary  conversations  or negotiations  relating thereto with, any
person,  or has taken or will take any  action so as to bring the  issuance  and
sale of any of the Shares and the  Warrants  in  violation  of the  registration
provisions of the Securities Act and applicable state  securities laws.  Neither
the Company  nor any of its  affiliates,  nor any person  acting on its or their
behalf, has engaged in any form of general  solicitation or general  advertising
(within the meaning of Regulation D under the Securities Act) in connection with
the offer or sale of any of the Shares and the Warrants.

            (x)  Governmental  Approvals.  Except  for the  filing of any notice
prior or  subsequent to the Closing Date that may be required  under  applicable
state and/or  Federal  securities  laws (which if required,  shall be filed on a
timely  basis) of the  United  States  and/or  applicable  laws of the  People's
Republic  of China,  including,  without  limitation,  the filing of a Form D, a
current report on Form 8-K, a registration  statement or statements  pursuant to
the  Registration  Rights  Agreement,  and  the  filing  of the  Certificate  of
Designation with the Secretary of State for the State of Utah, no authorization,
consent, approval,  license, exemption of, filing or registration with any court
or   governmental   department,    commission,    board,   bureau,   agency   or
instrumentality,  domestic  or  foreign,  is or will  be  necessary  for,  or in
connection  with,  the  execution  or delivery of the  Preferred  Shares and the
Warrants,  or for the  performance by the Company of its  obligations  under the
Transaction Documents.


                                      -9-


            (y)  Employees;  Labor  Relations.   Neither  the  Company  nor  any
subsidiary has any collective bargaining arrangements or agreements covering any
of its employees, except as set forth on Schedule 2.1(y) hereto and as disclosed
in the Commission  Documents.  Except as set forth on Schedule 2.1(y) hereto and
as disclosed in the Commission Documents, neither the Company nor any subsidiary
has  any  employment  contract,  agreement  regarding  proprietary  information,
non-competition   agreement,    non-solicitation   agreement,    confidentiality
agreement,  or any other similar contract or restrictive  covenant,  relating to
the right of any officer,  employee or  consultant  to be employed or engaged by
the  Company or such  subsidiary  required  to be  disclosed  in the  Commission
Documents  that is not so  disclosed.  Since  December  31,  2005,  no  officer,
consultant or key employee of the Company or any subsidiary  whose  termination,
either  individually or in the aggregate,  would be reasonably  likely to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present  intention of terminating  his or her employment or engagement  with
the Company or any  subsidiary.  Except as could not  reasonably  be expected to
have  a  Material  Adverse  Effect,  (i)  neither  the  Company  nor  any of its
Subsidiaries is engaged in any unfair labor  practice,  (ii) there is no strike,
labor dispute, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, and (iii) neither the
Company  nor any of its  Subsidiaries  is a party to any  collective  bargaining
agreement or contract.

            (z) Absence of Certain  Developments.  Except as may be disclosed in
the Commission  Documents,  since December 31, 2005, neither the Company nor any
subsidiary has:

                  (i) issued any stock,  bonds or other corporate  securities or
any rights, options or warrants with respect thereto;

                  (ii) borrowed any amount or incurred or become  subject to any
liabilities  (absolute or contingent) except current liabilities incurred in the
ordinary  course of business  which are  comparable  in nature and amount to the
current  liabilities  incurred in the  ordinary  course of  business  during the
comparable  portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such subsidiary's business;

                  (iii)  discharged or satisfied any lien or encumbrance or paid
any  obligation  or  liability  (absolute  or  contingent),  other than  current
liabilities paid in the ordinary course of business;

                  (iv) declared or made any payment or  distribution  of cash or
other  property to  stockholders  with  respect to its stock,  or  purchased  or
redeemed,  or made any  agreements  so to purchase or redeem,  any shares of its
capital stock;

                  (v) sold,  assigned or transferred any other tangible  assets,
or canceled any debts or claims, except in the ordinary course of business;

                  (vi)  sold,   assigned  or  transferred   any  patent  rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual   property  rights,  or  disclosed  any  proprietary   confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;


                                      -10-


                  (vii) suffered any substantial  losses or waived any rights of
material value,  whether or not in the ordinary course of business,  or suffered
the loss of any material amount of prospective business;

                  (viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;

                  (ix) made capital  expenditures  or commitments  therefor that
aggregate in excess of $100,000;

                  (x)  entered  into any  other  transaction  other  than in the
ordinary  course of business,  or entered into any other  material  transaction,
whether or not in the ordinary course of business;

                  (xi) made  charitable  contributions  or  pledges in excess of
$25,000;

                  (xii)  suffered any material  damage,  destruction or casualty
loss, whether or not covered by insurance;

                  (xiii)   experienced  any  material  problems  with  labor  or
management in connection with the terms and conditions of their employment;

                  (xiv)  effected any two or more events of the  foregoing  kind
which in the aggregate would be material to the Company or its subsidiaries; or

                  (xv) entered into an agreement,  written or otherwise, to take
any of the foregoing actions.

            (aa) Public Utility Holding  Company Act and Investment  Company Act
Status.  The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public  Utility  Holding  Company Act of 1935,  as
amended. The Company is not, and as a result of and immediately upon the Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.

            (bb) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan (as defined  below) by the Company or
any of its subsidiaries  which is or would be materially  adverse to the Company
and its  subsidiaries.  The  execution  and delivery of this  Agreement  and the
issuance and sale of the Preferred Shares will not involve any transaction which
is subject to the  prohibitions  of Section 406 of ERISA or in  connection  with
which a tax could be imposed  pursuant to Section 4975 of the  Internal  Revenue
Code of 1986, as amended, provided that, if any of the Purchasers, or any person
or entity  that  owns a  beneficial  interest  in any of the  Purchasers,  is an
"employee  pension  benefit  plan" (within the meaning of Section 3(2) of ERISA)
with respect to which the Company is a "party in  interest"  (within the meaning
of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of
ERISA, if applicable,  are met. As used in this Section 2.1(ac), the term "Plan"
shall mean an "employee pension benefit plan" (as defined in Section 3 of ERISA)
which is or has been established or maintained, or to which contributions are or
have been made,  by the Company or any  subsidiary  or by any trade or business,
whether or not incorporated, which, together with the Company or any subsidiary,
is under common control, as described in Section 414(b) or (c) of the Code.


                                      -11-


            (cc) Dilutive Effect. The Company  understands and acknowledges that
its  obligation  to issue  Conversion  Shares upon  conversion  of the Preferred
Shares in accordance  with this Agreement and the Certificate of Designation and
its obligations to issue the Warrant Shares upon the exercise of the Warrants in
accordance with this Agreement and the Warrants,  is, in each case, absolute and
unconditional  regardless of the dilutive  effect that such issuance may have on
the ownership interest of other stockholders of the Company.

            (dd) No  Integrated  Offering.  Neither the Company,  nor any of its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales of any security or solicited  any offers to
buy any security under circumstances that would cause the offering of the Shares
pursuant to this Agreement to be integrated  with prior offerings by the Company
for purposes of the  Securities Act which would prevent the Company from selling
the Shares  pursuant to Rule 506 under the  Securities  Act,  or any  applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its  affiliates  or  subsidiaries  take any action or steps that would cause the
offering of the Shares to be integrated with other  offerings.  The Company does
not have any registration  statement  pending before the Commission or currently
under the  Commission's  review and since  February 1, 2006, the Company has not
offered or sold any of its equity securities or debt securities convertible into
shares of Common Stock.

            (ee)  Sarbanes-Oxley  Act.  The  Company is in  compliance  with the
applicable  provisions of the  Sarbanes-Oxley  Act of 2002 (the  "Sarbanes-Oxley
Act"), and the rules and regulations promulgated thereunder, that are effective,
and intends to comply with other  applicable  provisions  of the  Sarbanes-Oxley
Act,  and  the  rules  and   regulations   promulgated   thereunder,   upon  the
effectiveness of such provisions.

            (ff) Independent Nature of Purchasers. The Company acknowledges that
the obligations of each Purchaser  under the  Transaction  Documents are several
and not joint with the  obligations  of any other  Purchaser,  and no  Purchaser
shall be  responsible in any way for the  performance of the  obligations of any
other Purchaser under the Transaction  Documents.  The Company acknowledges that
the decision of each Purchaser to purchase securities pursuant to this Agreement
has  been  made  by such  Purchaser  independently  of any  other  purchase  and
independently  of any information,  materials,  statements or opinions as to the
business,  affairs,  operations,  assets,  properties,  liabilities,  results of
operations, condition (financial or otherwise) or prospects of the Company or of
its  Subsidiaries  which may have made or given by any other Purchaser or by any
agent or employee of any other Purchaser,  and no Purchaser or any of its agents
or employees  shall have any  liability to any  Purchaser  (or any other person)
relating  to or arising  from any such  information,  materials,  statements  or
opinions.  The Company  acknowledges  that nothing  contained  herein, or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant hereto or
thereto,  shall be deemed to  constitute  the  Purchasers as a  partnership,  an
association,  a  joint  venture  or any  other  kind  of  entity,  or  create  a


                                      -12-


presumption  that the  Purchasers are in any way acting in concert or as a group
with  respect  to  such  obligations  or the  transactions  contemplated  by the
Transaction  Documents.  The Company  acknowledges  that each Purchaser shall be
entitled to  independently  protect and  enforce its rights,  including  without
limitation,  the  rights  arising  out of  this  Agreement  or out of the  other
Transaction Documents,  and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company
acknowledges   that  for  reasons  of   administrative   convenience  only,  the
Transaction  Documents  have been prepared by counsel for one of the  Purchasers
and such  counsel  does  not  represent  all of the  Purchasers  but  only  such
Purchaser and the other  Purchasers  have retained their own individual  counsel
with respect to the transactions  contemplated  hereby. The Company acknowledges
that  it has  elected  to  provide  all  Purchasers  with  the  same  terms  and
Transaction  Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

            (gg)  Transfer  Agent.  The name,  address,  telephone  number,  fax
number, contact person and email address of the Company's current transfer agent
is set forth on Schedule 2.1(gg) hereto.

            Section 2.2 Representations  and Warranties of the Purchasers.  Each
of the Purchasers hereby makes the following  representations  and warranties to
the  Company  with  respect  solely to itself and not with  respect to any other
Purchaser:

            (a) Organization and Standing of the Purchasers. If the Purchaser is
an entity,  such Purchaser is a corporation or partnership duly  incorporated or
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its incorporation or organization.

            (b)  Authorization and Power. Each Purchaser has the requisite power
and  authority  to enter into and perform this  Agreement  and each of the other
Transaction  Documents to which such  Purchaser is a party,  and to purchase the
Preferred  Shares  and  Warrants  being  sold to it  hereunder.  The  execution,
delivery and  performance  of this  Agreement and each of the other  Transaction
Documents  to  which  such  Purchaser  is a  party,  by such  Purchaser  and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate or partnership action, and no further
consent  or   authorization  of  such  Purchaser  or  its  Board  of  Directors,
stockholders,  or  partners,  as the  case  may  be,  is  required.  Each of the
Transaction  Documents  to  which  such  Purchaser  is a  party  has  been  duly
authorized,  executed and delivered by such Purchaser and constitutes,  or shall
constitute  when executed and delivered,  a valid and binding  obligation of the
Purchaser  enforceable  against  the  Purchaser  in  accordance  with the  terms
thereof.

            (c) No Conflicts.  The execution,  delivery and  performance of this
Agreement and each of the other Transaction Documents to which such Purchaser is
a party and the consummation by such Purchaser of the transactions  contemplated
hereby  and  thereby  or  relating  hereto  do not and will not (i)  result in a
violation   of  such   Purchaser's   charter   documents   or  bylaws  or  other
organizational  documents or (ii) conflict  with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation  of any  agreement,  indenture or instrument or obligation to which
such  Purchaser is a party or by which its  properties  or assets are bound,  or
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental  agency  applicable to such Purchaser or its
properties  (except for such  conflicts,  defaults and  violations as would not,


                                      -13-


individually  or in the  aggregate,  have a  material  adverse  effect  on  such
Purchaser). Such Purchaser is not required to obtain any consent,  authorization
or order of, or make any filing or registration  with, any court or governmental
agency in order for it to  execute,  deliver or perform  any of its  obligations
under this  Agreement or each of the other  Transaction  Documents to which such
Purchaser is a party or to purchase the Preferred Shares or acquire the Warrants
in  accordance  with  the  terms  hereof,  provided  that  for  purposes  of the
representation  made in this  sentence,  such  Purchaser is assuming and relying
upon the accuracy of the relevant  representations and agreements of the Company
herein.

            (d)  Acquisition  for  Investment.  Each  Purchaser is acquiring the
Preferred  Shares and the Warrants solely for its own account for the purpose of
investment and not with a view to or for sale in connection  with  distribution.
Each Purchaser does not have a present intention to sell the Preferred Shares or
the  Warrants,  nor a present  arrangement  (whether or not legally  binding) or
intention to effect any  distribution of the Preferred Shares or the Warrants to
or  through  any  person  or  entity;  provided,  however,  that by  making  the
representations  herein and subject to Section 2.2(h) below, such Purchaser does
not agree to hold the Shares or the Warrants  for any minimum or other  specific
term and reserves the right to dispose of the Shares or the Warrants at any time
in  accordance  with  Federal  and  state  securities  laws  applicable  to such
disposition.  Each Purchaser  acknowledges that it is able to bear the financial
risks associated with an investment in the Preferred Shares and the Warrants and
that it has been  given  full  access to such  records  of the  Company  and the
subsidiaries  and to the  officers  of the  Company  and  the  subsidiaries  and
received such  information as it has deemed  necessary or appropriate to conduct
its due diligence  investigation and has sufficient  knowledge and experience in
investing in companies similar to the Company in terms of the Company's stage of
development  so as to be able to evaluate the risks and merits of its investment
in  the  Company.  Each  Purchaser  further  acknowledges  that  such  Purchaser
understands the risks of investing in companies  domiciled  and/or which operate
primarily in the People's  Republic of China and that the purchase of the Shares
and Warrants involves substantial risks.

            (e) Status of Purchasers. Such Purchaser is an "accredited investor"
as defined in Regulation D promulgated  under the Securities Act. Such Purchaser
is not required to be  registered  as a  broker-dealer  under  Section 15 of the
Exchange Act and such Purchaser is not a broker-dealer.

            (f) Disclosure of Information.  Each Purchaser  hereby  specifically
acknowledges  that  such  Purchaser  has been  provided  a copy of the  document
attached hereto as Exhibit G (the "Disclosure  Document"),  and has reviewed and
fully  understands  the  information   contained  in  the  Disclosure  Document,
including,  without limitation,  the risks associated in making an investment in
the Company and its business.  Each Purchaser  acknowledges  that such Purchaser
has had full access to all the information it considers necessary or appropriate
to make an informed  investment decision with respect to the Shares and Warrants
to be purchased under this Agreement.  Each Purchaser further  acknowledges that
such Purchaser has had the  opportunity to ask questions of and receive  answers
from, or obtain  additional  information  from,  the  executive  officers of the
Company  concerning  the  financial and other affairs of the Company and each of


                                      -14-


its  subsidiaries,  and  to  the  extent  deemed  necessary  in  light  of  such
Purchaser's  personal  knowledge  of the  affairs of the Company and each of its
subsidiaries,  such Purchaser has asked such  questions and received  answers to
the full satisfaction of such Purchaser, and such Purchaser desires to invest in
the Company.  In making the decision to invest in the Company and its  business,
each Purchaser  hereby  specifically  acknowledges  that such  Purchaser  relied
solely on the Disclosure  Document and has not relied on any oral representation
made by the Company,  or any  subsidiary or any officer,  director,  employee or
agent of any of them.

            (g) No General  Solicitation.  Each Purchaser  acknowledges that the
Preferred Shares and the Warrants were not offered to such Purchaser by means of
any form of general or public solicitation or general  advertising,  or publicly
disseminated   advertisements   or   sales   literature,   including   (i)   any
advertisement,   article,   notice  or  other  communication  published  in  any
newspaper, magazine, or similar media, or broadcast over television or radio, or
(ii) any  seminar or meeting to which such  Purchaser  was invited by any of the
foregoing means of communications.

            (h) Rule 144.  Such  Purchaser  understands  that the Shares must be
held indefinitely  unless such Shares are registered under the Securities Act or
an exemption from  registration is available.  Such Purchaser  acknowledges that
such  Purchaser is familiar  with Rule 144 of the rules and  regulations  of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such person has been advised  that Rule 144 permits  resales only under
certain  circumstances.  Such Purchaser understands that to the extent that Rule
144 is not  available,  such Purchaser will be unable to sell any Shares without
either  registration  under  the  Securities  Act or the  existence  of  another
exemption from such registration requirement.

            (i) No  Registration.  Other than as contemplated  herein and in the
Registration  Rights Agreement,  such Purchaser  understands that the Conversion
Shares and the Warrants Shares have not been registered under the Securities Act
or any state  securities  laws. Such Purchaser  understands  that the Shares are
being  offered  and  sold in  reliance  on a  transactional  exemption  from the
registration requirement of Federal and state securities laws and the Company is
relying  upon  the  truth  and  accuracy  of  the  representations,  warranties,
agreements,  acknowledgments  and  understandings  of such  Purchaser  set forth
herein  in order to  determine  the  applicability  of such  exemptions  and the
suitability of such Purchaser to acquire the Shares.

            (j)  Independent  Investment.  Except  as  may be  disclosed  in any
filings with the Commission by the Purchasers under Section 13 and/or Section 16
of the Exchange Act, no Purchaser has agreed to act with any other Purchaser for
the purpose of acquiring,  holding,  voting or disposing of the Shares purchased
hereunder  for  purposes  of Section  13(d)  under the  Exchange  Act,  and each
Purchaser is acting independently with respect to its investment in the Shares.

                                   ARTICLE III

                                    Covenants

      The  Company  covenants  with each of the  Purchasers  as  follows,  which
covenants are for the benefit of the  Purchasers and their  permitted  assignees
(as defined herein).


                                      -15-


            Section 3.1  Securities  Compliance.  The Company  shall  notify the
Commission in accordance with their rules and  regulations,  of the transactions
contemplated by any of the Transaction Documents, including filing a Form D with
respect to the Preferred Shares, Warrants,  Conversion Shares and Warrant Shares
as required  under  Regulation  D, filing of a current  report on Form 8-K,  and
shall take all other  necessary  action and  proceedings  as may be required and
permitted  by  applicable  law,  rule and  regulation,  for the  legal and valid
issuance of the Preferred  Shares,  the Warrants,  the Conversion Shares and the
Warrant Shares to the Purchasers or subsequent holders.

            Section 3.2  Registration  and Listing.  The Company shall cause its
Common Stock to continue to be registered  under  Sections 12(b) or 12(g) of the
Exchange  Act,  to  comply  in  all  respects  with  its  reporting  and  filing
obligations  under the Exchange Act, to comply with all requirements  related to
any registration statement filed pursuant to this Agreement, and to not take any
action or file any document  (whether or not permitted by the  Securities Act or
the rules  promulgated  thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing  obligations under the Exchange
Act or Securities  Act,  except as permitted  herein.  The Company will take all
action  necessary  to  continue  the  quotation  of its Common  Stock on the OTC
Bulletin Board or other exchange or market on which the Common Stock is trading.
Subject to the terms of the Transaction Documents, the Company further covenants
that it will take such further action as the Purchasers may reasonably  request,
all to the extent  required  from time to time to enable the  Purchasers to sell
the Shares without  registration  under the Securities Act within the limitation
of the exemptions  provided by Rule 144  promulgated  under the Securities  Act.
Upon the request of the Purchasers,  the Company shall deliver to the Purchasers
a written  certification  of a duly  authorized  officer  as to  whether  it has
complied with such requirements.

            Section 3.3  Compliance  with Laws.  The Company shall  comply,  and
cause each subsidiary to comply,  with all applicable laws,  rules,  regulations
and orders, noncompliance with which could have a Material Adverse Effect.

            Section 3.4  Keeping of Records  and Books of  Account.  The Company
shall keep and cause  each  subsidiary  to keep  adequate  records  and books of
account,  in  which  complete  entries  will  be made in  accordance  with  GAAP
consistently applied,  reflecting all financial  transactions of the Company and
its  subsidiaries,  and in which,  for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence,  amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

            Section 3.5 Reporting Requirements.  If the Commission ceases making
periodic  reports filed under the Exchange Act available via the Internet,  then
at a  Purchaser's  request  the Company  shall  furnish  the  following  to such
Purchaser so long as such Purchaser shall be obligated hereunder to purchase the
Preferred Shares or shall beneficially own any Shares:

            (a) Quarterly  Reports  filed with the  Commission on Form 10-QSB as
soon as practical  after the document is filed with the  Commission,  and in any
event within five (5) days after the document is filed with the Commission;


                                      -16-


            (b) Annual  Reports filed with the Commission on Form 10-KSB as soon
as practical after the document is filed with the  Commission,  and in any event
within five (5) days after the document is filed with the Commission; and

            (c)  Copies  of  all  notices  and  information,  including  without
limitation  notices and proxy  statements in connection with any meetings,  that
are provided to holders of shares of Common  Stock,  contemporaneously  with the
delivery of such notices or information to such holders of Common Stock.

            Section 3.6  Amendments.  The  Company  shall not amend or waive any
provision  of the  Articles  or  Bylaws  of the  Company  in any way that  would
adversely  affect the  liquidation  preferences,  dividends  rights,  conversion
rights,  voting rights or redemption rights of the Preferred  Shares;  provided,
however,  that while the  Preferred  Shares are  outstanding,  any  creation and
issuance of another  series of Junior  Stock (as defined in the  Certificate  of
Designation)  or any other  class or series  of equity  securities  which by its
terms  shall rank on parity  with the  Preferred  Shares  shall not be deemed to
materially and adversely affect such rights, preferences or privileges.

            Section 3.7 Other  Agreements.  The Company shall not enter into any
agreement  in which the terms of such  agreement  would  restrict  or impair the
right  or  ability  to  perform  of the  Company  or any  subsidiary  under  any
Transaction Document.

            Section 3.8 Use of Proceeds.  The net proceeds  from the sale of the
Shares hereunder and any cash exercise of the Warrants issued hereunder shall be
used  by the  Company  for  capital  expenditures  on  tangible  assets  and gas
distribution  rights  and land  rights  and not to redeem  any  Common  Stock or
securities  convertible,  exercisable  or  exchangeable  into Common Stock or to
settle  any  outstanding  litigation.  The  proceeds  of the sale of the  Shares
hereunder  shall be used as set forth on Schedule 3.8 hereto.  In addition,  the
Company shall provide to VOMF monthly  reports  detailing how such proceeds have
been used by the Company.

            Section 3.9  Reservation of Shares.  So long as any of the Preferred
Shares or  Warrants  remain  outstanding,  the  Company  shall  take all  action
necessary  to at all times have  authorized,  and  reserved  for the  purpose of
issuance, such number of shares of Common Stock as sufficient to provide for the
issuance of the Conversion Shares and the Warrant Shares.

            Section 3.10 Transfer  Agent  Instructions.  The Company shall issue
irrevocable  instructions  to its transfer  agent,  and any subsequent  transfer
agent,  to issue  certificates,  registered in the name of each Purchaser or its
respective nominee(s),  for the Conversion Shares and the Warrant Shares in such
amounts as  specified  from time to time by each  Purchaser  to the Company upon
conversion  of the  Preferred  Shares or exercise of the Warrants in the form of
Exhibit E attached hereto (the "Irrevocable Transfer Agent Instructions"). Prior
to  registration  of the  Conversion  Shares and the  Warrant  Shares  under the
Securities  Act,  all  such  certificates  shall  bear  the  restrictive  legend
specified  in  Section  5.1 of this  Agreement.  The  Company  warrants  that no
instruction other than the Irrevocable  Transfer Agent Instructions  referred to
in this Section 3.10 will be given by the Company to its transfer agent and that
the Shares shall  otherwise be freely  transferable  on the books and records of
the Company as and to the extent provided in this Agreement and the Registration
Rights  Agreement.  If a  Purchaser  provides  the  Company  with an  opinion of


                                      -17-


counsel,  in a generally  acceptable  form,  to the effect  that a public  sale,
assignment or transfer of the Shares may be made without  registration under the
Securities Act or the Purchaser provides the Company with reasonable  assurances
that the Shares can be sold pursuant to Rule 144 without any  restriction  as to
the  number of  securities  acquired  as of a  particular  date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of the
Conversion  Shares and the Warrant Shares,  promptly instruct its transfer agent
to issue  one or more  certificates  in such name and in such  denominations  as
specified by such  Purchaser  and without any  restrictive  legend.  The Company
acknowledges that a breach by it of its obligations under this Section 3.10 will
cause  irreparable harm to the Purchasers by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly,  the Company acknowledges that
the remedy at law for a breach of its  obligations  under this Section 3.10 will
be inadequate and agrees,  in the event of a breach or threatened  breach by the
Company of the  provisions of this Section 3.10,  that the  Purchasers  shall be
entitled,  in  addition  to all other  available  remedies,  to an order  and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the  necessity  of showing  economic  loss and without any bond or other
security being required.

            Section 3.11 Disposition of Assets.  So long as the Preferred Shares
remain outstanding,  neither the Company nor any subsidiary shall sell, transfer
or  otherwise  dispose of any of its  properties,  assets and rights  including,
without limitation, its software and intellectual property, to any person except
for sales to  customers  in the  ordinary  course of  business or with the prior
written  consent of the  holders  of a majority  of the  Preferred  Shares  then
outstanding.

            Section 3.12 Reporting Status.  So long as a Purchaser  beneficially
owns any of the Shares, the Company shall timely file all reports required to be
filed with the  Commission  pursuant to the Exchange  Act, and the Company shall
not  terminate  its  status  as an issuer  required  to file  reports  under the
Exchange Act even if the Exchange  Act or the rules and  regulations  thereunder
would permit such termination.

            Section 3.13  Disclosure of  Transaction.  The Company shall issue a
press release  describing  the material terms of the  transactions  contemplated
hereby (the "Press Release") as soon as practicable  after the Closing but in no
event later than 9:00 A.M.  Eastern Time on the first Trading Day following such
Closing.  The Company  shall also file with the  Commission a Current  Report on
Form 8-K (the "Form 8-K")  describing  the  material  terms of the  transactions
contemplated  hereby (and  attaching  as exhibits  thereto this  Agreement,  the
Registration  Rights  Agreement,  the  Certificate of  Designation,  the Lock-Up
Agreement,  the form of each series of Warrant and the Press Release) as soon as
practicable  following  the  Closing  Date but in no event  more  than  four (4)
Trading Day following such Closing Date,  which Press Release and Form 8-K shall
be subject to prior review and comment by the  Purchasers.  "Trading  Day" means
any day during  which the OTC  Bulletin  Board (or other  principal  exchange on
which the Common Stock is traded) shall be open for trading.

            Section  3.14  Disclosure  of  Material  Information.   The  Company
covenants  and agrees that neither it nor any other person  acting on its behalf
has  provided or will  provide any  Purchaser  or its agents or counsel with any
information  that  the  Company   believes   constitutes   material   non-public
information,  unless prior thereto such Purchaser  shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands  and confirms that each Purchaser  shall be relying on the foregoing
representations in effecting transactions in securities of the Company.


                                      -18-


            Section  3.15 Pledge of  Securities.  The Company  acknowledges  and
agrees that the Shares may be pledged by a Purchaser in  connection  with a bona
fide margin agreement or other loan or financing  arrangement that is secured by
the  Common  Stock.  The  pledge  of  Common  Stock  shall not be deemed to be a
transfer,  sale or  assignment of the Common Stock  hereunder,  and no Purchaser
effecting a pledge of Common Stock shall be required to provide the Company with
any notice  thereof or otherwise  make any  delivery to the Company  pursuant to
this Agreement or any other Transaction Document;  provided that a Purchaser and
its pledgee shall be required to comply with the  provisions of Article V hereof
in order to  effect a sale,  transfer  or  assignment  of  Common  Stock to such
pledgee.  At the Purchasers'  expense,  the Company hereby agrees to execute and
deliver  such  documentation  as a pledgee  of the Common  Stock may  reasonably
request in  connection  with a pledge of the Common  Stock to such  pledgee by a
Purchaser.

            Section 3.16 Form SB-2 Eligibility.  The Company currently meets the
"registrant  eligibility" and transaction  requirements set forth in the general
instructions to Form SB-2 applicable to "resale"  registrations on Form SB-2 and
the Company shall file all reports  required to be filed by the Company with the
Commission in a timely manner.

            Section  3.17 Board  Observer  Rights.  VOMF shall have the right to
have a representative (the "Vision  Representative") serve as an observer of the
Company's  Board  of  Directors;   provided  that,  upon  request,   the  Vision
Representative shall enter into a confidentiality agreement in a form reasonably
satisfactory to the Company. The Company shall provide the Vision Representative
at least  forty-eight  (48) hours prior  written  notice of any  meetings of the
Company's Board of Directors.  The Vision  Representative  may elect in its sole
discretion to attend such meetings of the Company's Board of Directors.

            Section  3.18  DTC.  Not  later  than  the  effective  date  of  the
Registration  Statement (as defined in the Registration  Rights Agreement),  the
Company  shall  cause its Common  Stock to be  eligible  for  transfer  with its
transfer  agent pursuant to the Depository  Trust Company  Automated  Securities
Transfer Program.

            Section  3.19  Investor  and Public  Relations.  The  Company  shall
deposit or cause to be deposited Five Hundred Thousand Dollars ($500,000) of the
Purchase  Price funded on the Closing Date in a separate  escrow  account with a
separate  escrow agent to be used by the Company in connection with investor and
public relations.

            Section 3.20 Lock-Up Agreement.  The persons listed on Schedule 3.20
attached  hereto  shall be  subject  to the  terms and  provisions  of a lock-up
agreement  in  substantially   the  form  of  Exhibit  H  hereto  (the  "Lock-Up
Agreement"),  which  shall  provide  the manner in which such  persons may sell,
transfer or dispose of their shares of Common Stock.


                                      -19-


            Section  3.21  Revenue  Targets.  The  Company  shall  establish  an
adjustment  escrow account (the  "Adjustment  Account") in its name in which the
Company  shall  deposit  3,245,784  shares of  Common  Stock to be issued to the
Purchasers,  along with each other  purchaser of Series B Convertible  Preferred
Stock  in  an  Additional  Series  B  Financing  (collectively,  the  "Series  B
Purchasers"), as adjustment shares (the "Adjustment Shares") with respect to the
Company's audited earnings after taxes. The Adjustment  Account shall be managed
by a third party law firm acting as escrow agent for such purpose.  In the event
that (A) the  Company's  earnings  after  taxes for its 2006 fiscal year is less
than  $5,795,000  or (B) (i) if, by the end of its 2007  fiscal year the Company
has raised not less than $20,000,000 through the exercise of warrants or through
an equity or debt  offering (the "Capital  Condition"),  the Company's  earnings
after  taxes for its 2007  fiscal  year is less than  $9,120,000  or (ii) if the
Capital  Condition has not been met, the Company's  earnings after taxes for its
2007 fiscal year is less than $7,900,000, the Company shall issue or cause to be
issued from the Adjustment Account in each instance 1,622,892 Adjustment Shares;
provided,  however,  that if by the end of its 2007  fiscal year the Company has
met the  Capital  Condition  by  procuring  not less  then  $20,000,000  in debt
financing,  the  Company  shall  issue  or cause to be  issued  one-half  of the
Adjustment  Shares that would  otherwise be due. The Adjustment  Shares shall be
issued to the  Series B  Purchasers  in  proportion  to their  purchases  of the
Preferred Shares promptly  following public  disclosure that such revenue target
has not been achieved.  In addition,  if the Company shall  determine to proceed
with the preparation and filing of a registration statement under the Securities
Act in connection  with the proposed  offer and sale of any of its securities by
it or any of its security  holders (other than a registration  statement on Form
S-4,  S-8 or other  limited  purpose  form),  then the  Company  will  cause all
Adjustment  Shares  issued  pursuant to this Section 3.21 to be included in such
registration statement,  all to the extent requisite to permit the resale by the
Series B Purchasers of such Adjustment Shares.

            Section 3.22 Adjustments for Issuance of Additional Shares of Common
Stock.  In the  event  the  Company,  shall,  at any time  within  two (2) years
following the date hereof,  issue or sell any additional  shares of Common Stock
("Additional  Shares of Common Stock"),  at a price per share less than $2.74 or
without  consideration,  then the Conversion Rate (as defined in the Certificate
of  Designation)  will be adjusted so that the number of shares of Common  Stock
issuable  upon such  conversion  of the  Preferred  Shares shall be increased in
proportion to such increase in outstanding  shares of Common Stock and to ensure
the Series B Purchasers, in the aggregate,  acquired the Required Percentage (as
defined in the  Certificate of  Designation)  of Common Stock.  In the event the
Company,  shall,  at any time within two (2) years  following  the date  hereof,
shall issue any securities  convertible  into or exchangeable  for,  directly or
indirectly,  Common Stock ("Convertible  Securities"),  other than the Preferred
Shares or the Company's  Series A Preferred  Stock, or any rights or warrants or
options  to  purchase   any  such  Common   Stock  or   Convertible   Securities
(collectively,  the "Common Stock Equivalents") shall be issued or sold, and the
price  per share for which  Additional  Shares of Common  Stock may be  issuable
pursuant to any such Common Stock  Equivalent  shall be less than $2.74,  or if,
after any such  issuance of Common  Stock  Equivalents,  the price per share for
which Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted,  and such  price as so  amended  shall be less  than  $2.74,  then the
Conversion  Rate will be adjusted  so that the number of shares of Common  Stock
issuable on such  Conversion  of the  Preferred  Shares  shall be  increased  in
proportion to such increase in outstanding  shares of Common Stock and to ensure
the Series B Purchasers,  in the aggregate,  acquired the Required Percentage of
Common  Stock.  The terms of this  Section  3.21  shall not apply to  securities
issued in connection with a Permitted  Financing (as defined in Section 3.23 (b)
below).


                                      -20-


            Section  3.23  Subsequent  Financings.  (a) For a period  of two (2)
years following the effective date of the registration  statement  providing for
the  resale  of the  Conversion  Shares  and the  Warrant  Shares,  the  Company
covenants  and  agrees  to  promptly  notify  (in no event  later  than five (5)
business  days after  making or  receiving  an  applicable  offer) in writing (a
"Rights  Notice") the Series B  Purchasers  of the terms and  conditions  of any
proposed offer or sale to any third party by the Company, of Common Stock or any
debt or equity securities  convertible,  exercisable or exchangeable into Common
Stock  (a  "Subsequent  Financing").   The  Rights  Notice  shall  describe,  in
reasonable detail, the proposed Subsequent  Financing,  the names and investment
amounts of all investors participating in the Subsequent Financing, the proposed
closing  date of the  Subsequent  Financing,  which shall be within  twenty (20)
calendar  days  from the date of the  Rights  Notice,  and all of the  terms and
conditions thereof and proposed  definitive  documentation to be entered into in
connection therewith. The Rights Notice shall provide each Series B Purchaser an
option (the "Rights Option") during the ten (10) Trading Days following delivery
of the Rights  Notice (the "Option  Period") to inform the Company  whether such
Series B Purchaser  will purchase up to its pro rata portion of all or a portion
of the  securities  being  offered  in such  Subsequent  Financing  on the same,
absolute terms and conditions as contemplated by such Subsequent  Financing.  If
any Series B Purchaser  elects not to participate in such Subsequent  Financing,
the other Series B Purchasers  may  participate  on a pro-rata  basis so long as
such  participation  in the aggregate  does not exceed the total  Purchase Price
hereunder. For purposes of this Section, all references to "pro rata" means, for
any Series B Purchaser electing to participate in such Subsequent Financing, the
percentage  obtained by dividing (x) the number of Preferred Shares purchased by
such  Purchaser at the Closing plus the number of shares of Series B Convertible
Preferred  Stock  purchased by the Series B Purchasers  at the  closing(s) of an
Additional  Series B Financing by (y) the total  number of all of the  Preferred
Shares purchased by all of the participating  Purchasers at the Closing plus the
number of shares of Series B Convertible Preferred Stock purchased by the Series
B Purchasers at the closing(s) of an Additional Series B Financing.  Delivery of
any Rights Notice  constitutes a representation and warranty by the Company that
there are no other material terms and  conditions,  arrangements,  agreements or
otherwise except for those disclosed in the Rights Notice, to provide additional
compensation to any party  participating in any proposed  Subsequent  Financing,
including,  but not limited to, additional  compensation based on changes in the
Purchase  Price or any type of reset or  adjustment  of a purchase or conversion
price or to issue additional  securities at any time after the closing date of a
Subsequent Financing.  If the Company does not receive notice of exercise of the
Rights Option from the Series B Purchasers within the Option Period, the Company
shall have the right to close the Subsequent  Financing on the scheduled closing
date with a third party;  provided that all of the material terms and conditions
of the closing are the same as those  provided to the Series B Purchasers in the
Rights  Notice.  If the closing of the proposed  Subsequent  Financing  does not
occur on that date, any closing of the contemplated  Subsequent Financing or any
other  Subsequent  Financing  shall be subject to all of the  provisions of this
Section 3.23(a),  including,  without  limitation,  the delivery of a new Rights
Notice.  The provisions of this Section  3.23(a) shall not apply to issuances of
securities in a Permitted Financing.


                                      -21-


            (b) For  purposes  of this  Agreement,  a  Permitted  Financing  (as
defined  hereinafter)  shall  not  be  considered  a  Subsequent  Financing.   A
"Permitted  Financing" shall mean (i) securities  issued pursuant to a bona fide
firm underwritten public offering of the Company's  securities,  (ii) securities
issued  pursuant to the  conversion or exercise of  convertible  or  exercisable
securities  issued  or  outstanding  on or prior to the date  hereof  or  issued
pursuant to this  Agreement (so long as the conversion or exercise price in such
securities  are not  amended  to lower such price  and/or  adversely  affect the
Series B Purchasers),  (iii) the Warrant Shares,  (iv) securities  issued (other
than  for  cash) in  connection  with an  acquisition  of the  Company,  (v) any
warrants issued to the placement agent for the transactions contemplated by this
Agreement,   (vi)  securities   issued  in  connection  with  strategic  license
agreements and other  partnering  arrangements so long as such issuances are not
for the  purpose of raising  capital  and the  Company  has  received  the prior
written  consent of the Series B  Purchasers,  and (vii) the  issuance of Common
Stock or the issuance or grants of options to purchase  Common Stock pursuant to
the Company's  stock option plans and employee  stock  purchase  plans and which
have been approved by the Company's Board of Directors so long as such issuances
in the  aggregate do not exceed ten percent  (10%) of the  Company's  issued and
outstanding Common Stock as of the Closing Date.

                                   ARTICLE IV

                                   CONDITIONS

            Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Shares.  The obligation  hereunder of the Company to issue and sell the
Preferred  Shares  and  the  Warrants  to  the  Purchasers  is  subject  to  the
satisfaction or waiver, at or before the Closing,  of each of the conditions set
forth below.  These  conditions  are for the  Company's  sole benefit and may be
waived by the Company at any time in its sole discretion.

            (a) Accuracy of Each  Purchaser's  Representations  and  Warranties.
Each of the  representations  and warranties of each Purchaser in this Agreement
and each of the other  Transaction  Documents to which such Purchaser is a party
shall be true and correct in all material  respects as of the date when made and
as of the Closing Date as though made at that time,  except for  representations
and warranties that are expressly made as of a particular  date,  which shall be
true and correct in all material respects as of such date.

            (b)  Performance  by  the  Purchasers.  Each  Purchaser  shall  have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing.

            (c) No Injunction.  No statute, rule,  regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

            (d) Delivery of Purchase Price. The Purchase Price for the Preferred
Shares and Warrants has been delivered to the Company at the Closing Date.


                                      -22-


            (e) Delivery of Transaction  Documents.  The  Transaction  Documents
have been duly executed and delivered by the Purchasers to the Company.

            (f) Share Exchange Transaction. The Share Exchange Transaction shall
have been consummated.

            Section 4.2 Conditions Precedent to the Obligation of the Purchasers
to Purchase the Shares.  The  obligation  hereunder of each Purchaser to acquire
and pay for the Preferred Shares and the Warrants is subject to the satisfaction
or waiver, at or before the Closing,  of each of the conditions set forth below.
These conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion.

            (a) Accuracy of the Company's  Representations and Warranties.  Each
of the  representations and warranties of the Company in this Agreement and each
of the other Transaction  Documents shall be true and correct in all respects as
of the date when  made and as of the  Closing  Date as though  made at that time
(except for  representations  and  warranties  that are  expressly  made as of a
particular  date),  which shall be true and  correct in all  respects as of such
date.

            (b)  Performance by the Company.  The Company shall have  performed,
satisfied  and  complied in all  respects  with all  covenants,  agreements  and
conditions  required by this  Agreement to be  performed,  satisfied or complied
with by the Company at or prior to the Closing.

            (c) No Suspension, Etc. Quotation of the Common Stock shall not have
been  suspended  by the  Commission  or the OTC Bulletin  Board  (except for any
suspension  of trading  of  limited  duration  agreed to by the  Company,  which
suspension shall be terminated prior to the Closing),  and, at any time prior to
the Closing  Date,  trading in  securities  generally  as reported by  Bloomberg
Financial  Markets  ("Bloomberg")  shall not have been suspended or limited,  or
minimum prices shall not have been  established  on securities  whose trades are
reported by Bloomberg,  or on the New York Stock  Exchange,  nor shall a banking
moratorium  have been  declared  either by the  United  States or New York State
authorities,  nor shall there have occurred any material  outbreak or escalation
of  hostilities or other  national or  international  calamity or crisis of such
magnitude  in its effect on, or any  material  adverse  change in any  financial
market  which,  in each  case,  in the  judgment  of such  Purchaser,  makes  it
impracticable or inadvisable to purchase the Preferred Shares.

            (d) No Injunction.  No statute, rule,  regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

            (e) No  Proceedings  or  Litigation.  No action,  suit or proceeding
before any arbitrator or any  governmental  authority shall have been commenced,
and no investigation  by any governmental  authority shall have been threatened,
against the Company or any  subsidiary,  or any of the  officers,  directors  or
affiliates  of the Company or any  subsidiary  seeking to  restrain,  prevent or
change the  transactions  contemplated by this Agreement,  or seeking damages in
connection with such transactions.


                                      -23-


            (f) Certificate of Designation of Rights and  Preferences.  Prior to
the Closing,  the  Certificate  of Designation in the form of Exhibit B attached
hereto shall have been filed with the Secretary of State of Utah.

            (g) Opinion of Counsel.  At the Closing,  the Purchasers  shall have
received an opinion of counsel to the Company,  dated the date of such  Closing,
in the form of Exhibit F hereto,  and such other  certificates  and documents as
the Purchasers or its counsel shall reasonably require incident to such Closing.

            (h) Registration Rights Agreement. At the Closing, the Company shall
have executed and delivered the Registration Rights Agreement to each Purchaser.

            (i) Stock  Certificates;  Warrants.  The Company shall have executed
and delivered to the Purchasers the certificates (in such  denominations as such
Purchaser  shall  request)  for the  Preferred  Shares  and the  Warrants  being
acquired  by such  Purchaser  at the  Closing  (in  such  denominations  as such
Purchaser shall request).

            (j)  Resolutions.  The Board of Directors of the Company  shall have
adopted  resolutions  consistent with Section 2.1(b) hereof in a form reasonably
acceptable to such Purchaser (the "Resolutions").

            (k) Reservation of Shares. As of the Closing Date, the Company shall
have reserved out of its  authorized and unissued  Common Stock,  solely for the
purpose of effecting the conversion of the Preferred  Shares and the exercise of
the Warrants,  a number of shares of Common Stock equal to the aggregate  number
of Conversion  Shares issuable upon conversion of the Preferred Shares issued or
to be  issued  pursuant  to this  Agreement  and the  number of  Warrant  Shares
issuable upon exercise of the number of Warrants issued or to be issued pursuant
to this Agreement.

            (l)  Transfer  Agent  Instructions.  As of  the  Closing  Date,  the
Irrevocable  Transfer  Agent  Instructions,  in the form of  Exhibit E  attached
hereto,  shall  have  been  delivered  to and  acknowledged  in  writing  by the
Company's transfer agent.

            (m)  Secretary's  Certificate.  The Company shall have  delivered to
such  Purchaser a secretary's  certificate,  dated as of the Closing Date, as to
(i) the Resolutions,  (ii) the Articles,  (iii) the Bylaws, (iv) the Certificate
of  Designation,  each as in effect at the Closing,  and (iv) the  authority and
incumbency of the officers of the Company  executing the  Transaction  Documents
and any other  documents  required  to be executed or  delivered  in  connection
therewith.

            (n) Officer's  Certificate.  The Company shall have delivered to the
Purchasers a certificate of an executive officer of the Company, dated as of the
Closing  Date,  confirming  the  accuracy  of  the  Company's   representations,
warranties  and covenants as of such Closing Date and  confirming the compliance
by the Company with the conditions precedent set forth in this Section 4.2 as of
such Closing Date.


                                      -24-


            (o) Material  Adverse Effect.  No Material Adverse Effect shall have
occurred at or before the Closing Date.

            (p) Share Exchange Transaction. On or prior to the Closing Date, the
Share Exchange Transaction shall have been consummated.

            (q) Audited Financial  Statements.  On or prior to the Closing Date,
the  Company  shall have  delivered  to the  Purchasers  the  audited  financial
statements of Beijing Gas for the fiscal years ended  December 31, 2005 and 2004
prepared by Samuel H. Wong & Co., LLP.

            (r) Form 8-K. On or prior to the  Closing  Date,  the Company  shall
have delivered to the Purchasers  the Form 8-K  substantially  in the form to be
filed with the Commission pursuant to Section 3.13 hereof.

            (s) Lock-Up Agreement.  On or prior to the Closing Date, the persons
listed on Schedule  3.20  attached  hereto shall have executed and delivered the
Lock-Up Agreement to the Purchasers.

                                    ARTICLE V

                            Stock Certificate Legend

            Section 5.1 Legend.  Each  certificate  representing  the  Preferred
Shares and the Warrants, and, if appropriate,  securities issued upon conversion
thereof,  shall be stamped or otherwise imprinted with a legend substantially in
the  following  form (in  addition to any legend  required by  applicable  state
securities or "blue sky" laws):

            THESE SECURITIES  REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES")
            HAVE  NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AS
            AMENDED (THE "SECURITIES  ACT") OR ANY STATE SECURITIES LAWS AND MAY
            NOT BE SOLD,  TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
            UNDER THE SECURITIES ACT AND UNDER  APPLICABLE STATE SECURITIES LAWS
            OR DOLCE  VENTURES  INC.  SHALL HAVE  RECEIVED AN OPINION OF COUNSEL
            THAT  REGISTRATION OF SUCH  SECURITIES  UNDER THE SECURITIES ACT AND
            UNDER THE  PROVISIONS OF  APPLICABLE  STATE  SECURITIES  LAWS IS NOT
            REQUIRED.

      The  Company  agrees  to  reissue  certificates  representing  any  of the
Conversion Shares and the Warrant Shares,  without the legend set forth above if
at such time, prior to making any transfer of any such  securities,  such holder
thereof shall give written notice to the Company describing the manner and terms
of such  transfer  and  removal as the  Company  may  reasonably  request.  Such
proposed  transfer  and removal will not be effected  until:  (a) either (i) the


                                      -25-


Company  has  received  an  opinion of counsel  reasonably  satisfactory  to the
Company,  to the effect that the  registration  of the Conversion  Shares or the
Warrant Shares under the Securities Act is not required in connection  with such
proposed  transfer,  (ii) a  registration  statement  under the  Securities  Act
covering  such  proposed  disposition  has been  filed by the  Company  with the
Commission and has become  effective under the Securities Act, (iii) the Company
has received other  evidence  reasonably  satisfactory  to the Company that such
registration  and  qualification  under the Securities Act and state  securities
laws are not required,  or (iv) the holder  provides the Company with reasonable
assurances  that  such  security  can be sold  pursuant  to Rule 144  under  the
Securities  Act;  and (b)  either (i) the  Company  has  received  an opinion of
counsel reasonably  satisfactory to the Company, to the effect that registration
or  qualification  under the  securities  or "blue sky" laws of any state is not
required in connection with such proposed  disposition,  or (ii) compliance with
applicable  state  securities  or "blue sky" laws has been  effected  or a valid
exemption  exists with  respect  thereto.  The Company  will respond to any such
notice from a holder within five (5) business  days. In the case of any proposed
transfer  under this Section 5.1,  the Company  will use  reasonable  efforts to
comply with any such applicable  state  securities or "blue sky" laws, but shall
in no event be required,  (x) to qualify to do business in any state where it is
not then  qualified,  (y) to take any action that would  subject it to tax or to
the general service of process in any state where it is not then subject, or (z)
to  comply  with  state  securities  or "blue  sky"  laws of any state for which
registration by coordination is unavailable to the Company.  The restrictions on
transfer  contained  in this Section 5.1 shall be in addition to, and not by way
of  limitation  of, any other  restrictions  on transfer  contained in any other
section of this Agreement.  Whenever a certificate  representing  the Conversion
Shares or  Warrant  Shares is  required  to be issued to a  Purchaser  without a
legend, in lieu of delivering physical certificates  representing the Conversion
Shares or Warrant  Shares  (provided  that a  registration  statement  under the
Securities  Act  providing for the resale of the Warrant  Shares and  Conversion
Shares  is then in  effect),  the  Company  shall  cause its  transfer  agent to
electronically  transmit the Conversion  Shares or Warrant Shares to a Purchaser
by crediting the account of such  Purchaser's  Prime Broker with the  Depository
Trust Company ("DTC") through its Deposit  Withdrawal Agent Commission  ("DWAC")
system (to the extent not inconsistent with any provisions of this Agreement).

                                   ARTICLE VI

                                 Indemnification

            Section 6.1 General  Indemnity.  The Company agrees to indemnify and
hold  harmless  the  Purchasers  (and  their  respective  directors,   officers,
managers, partners, members,  shareholders,  affiliates,  agents, successors and
assigns) from and against any and all losses, liabilities,  deficiencies, costs,
damages and expenses (including, without limitation, reasonable attorneys' fees,
charges  and  disbursements)  incurred  by the  Purchasers  as a  result  of any
inaccuracy in or breach of the representations,  warranties or covenants made by
the Company herein. Each Purchaser severally but not jointly agrees to indemnify
and hold harmless the Company and its directors, officers, managers, affiliates,
agents, successors and assigns from and against any and all losses, liabilities,
deficiencies,  costs,  damages  and  expenses  (including,  without  limitation,
reasonable  attorneys' fees, charges and disbursements)  incurred by the Company
as result of any inaccuracy in or breach of the  representations,  warranties or
covenants made by such Purchaser herein. The maximum aggregate liability of each
Purchaser  pursuant to its  indemnification  obligations  under this  Article VI
shall not  exceed  the  portion of the  Purchase  Price  paid by such  Purchaser
hereunder.


                                      -26-


            Section  6.2  Indemnification   Procedure.  Any  party  entitled  to
indemnification under this Article VI (an "indemnified party") will give written
notice  to the  indemnifying  party of any  matters  giving  rise to a claim for
indemnification;   provided,   that  the  failure  of  any  party   entitled  to
indemnification  hereunder  to give notice as provided  herein shall not relieve
the  indemnifying  party of its obligations  under this Article VI except to the
extent that the  indemnifying  party is actually  prejudiced  by such failure to
give  notice.  In case any  action,  proceeding  or claim is brought  against an
indemnified party in respect of which  indemnification is sought hereunder,  the
indemnifying  party  shall be  entitled  to  participate  in and,  unless in the
reasonable  judgment of the indemnified  party a conflict of interest between it
and the indemnifying party may exist with respect of such action,  proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified  party.  In  the  event  that  the  indemnifying  party  advises  an
indemnified  party  that  it  will  contest  such a  claim  for  indemnification
hereunder,  or fails,  within thirty (30) days of receipt of any indemnification
notice to notify, in writing,  such person of its election to defend,  settle or
compromise,  at its sole cost and expense,  any action,  proceeding or claim (or
discontinues its defense at any time after it commences such defense),  then the
indemnified party may, at its option,  defend, settle or otherwise compromise or
pay such action or claim. In any event,  unless and until the indemnifying party
elects in writing to assume  and does so assume the  defense of any such  claim,
proceeding or action, the indemnified  party's costs and expenses arising out of
the defense,  settlement or  compromise of any such action,  claim or proceeding
shall be losses subject to  indemnification  hereunder.  The  indemnified  party
shall  cooperate  fully  with  the  indemnifying  party in  connection  with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information  reasonably available to
the indemnified  party which relates to such action or claim.  The  indemnifying
party shall keep the  indemnified  party  fully  apprised at all times as to the
status of the defense or any settlement  negotiations  with respect thereto.  If
the  indemnifying  party  elects to defend  any such  action or claim,  then the
indemnified  party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense.  The indemnifying party shall not be
liable for any settlement of any action,  claim or proceeding  effected  without
its prior written  consent.  Notwithstanding  anything in this Article VI to the
contrary,  the  indemnifying  party shall not,  without the indemnified  party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment  in  respect  thereof  which  imposes  any  future  obligation  on  the
indemnified party or which does not include,  as an unconditional  term thereof,
the  giving by the  claimant  or the  plaintiff  to the  indemnified  party of a
release  from all  liability  in  respect  of such  claim.  The  indemnification
required  by this  Article VI shall be made by  periodic  payments of the amount
thereof  during the course of  investigation  or defense,  as and when bills are
received or expense,  loss,  damage or  liability  is  incurred,  so long as the
indemnified party  irrevocably  agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to  indemnification.  The  indemnity  agreements  contained  herein  shall be in
addition to (a) any cause of action or similar rights of the  indemnified  party
against  the  indemnifying   party  or  others,  and  (b)  any  liabilities  the
indemnifying party may be subject to pursuant to the law.


                                      -27-


                                   ARTICLE VII

                                  Miscellaneous

            Section 7.1 Fees and Expenses. Except as otherwise set forth in this
Agreement and the other Transaction Documents, each party shall pay the fees and
expenses of its advisors,  counsel,  accountants and other experts,  if any, and
all  other  expenses,  incurred  by  such  party  incident  to the  negotiation,
preparation,  execution,  delivery and performance of this  Agreement,  provided
that the Company shall pay all actual  attorneys'  fees and expenses  (including
disbursements and out-of-pocket expenses) actually incurred by VOMF in retaining
one legal  counsel,  KL, in connection  with (i) the  preparation,  negotiation,
execution and delivery of this Agreement and the other Transaction Documents and
the  transactions  contemplated  thereunder,  including  review of the documents
relating to the Share Exchange  Transaction,  which payment shall be made at the
Closing,  (ii) the filing and declaration of  effectiveness by the Commission of
the Registration Statement (as defined in the Registration Rights Agreement) and
(iii) any amendments,  modifications  or waivers of this Agreement or any of the
other Transaction Documents. The Company shall also pay $100,000 in cash to VOMF
or its affiliates at the Closing in connection  with all due diligence  expenses
incurred by VOMF or its affiliates and all reasonable fees and expenses incurred
by the Purchasers in connection with the enforcement of this Agreement or any of
the other Transaction Documents,  including,  without limitation, all reasonable
attorneys' fees and expenses. Notwithstanding the foregoing to the contrary, any
amounts  having been paid by the Company in relation  thereto  prior to the date
hereof shall be deducted from the amounts owed by the Company to the Purchasers,
and any  amounts to be paid by the  Company to the  Purchasers  pursuant to this
Section  7.1 shall be paid out of the  proceeds  held in escrow  pursuant to the
Escrow  Agreement  dated as of September 7, 2006, by and between GAS  Investment
China Co., Ltd. and the Purchasers at the Closing.

            Section 7.2 Specific Enforcement, Consent to Jurisdiction.

            (a) The  Company  and the  Purchasers  acknowledge  and  agree  that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement or the other  Transaction  Documents  were not performed in accordance
with their specific terms or were otherwise  breached.  It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the  provisions of this  Agreement and to enforce  specifically
the terms and provisions hereof or thereof,  this being in addition to any other
remedy to which any of them may be entitled by law or equity.

            (b) Each of the Company and the  Purchasers  (i) hereby  irrevocably
submits to the  jurisdiction  of the United States District Court sitting in the
Southern District of New York and the courts of the State of New York located in
New York county for the purposes of any suit,  action or proceeding  arising out
of or relating to this  Agreement or any of the other  Transaction  Documents or
the  transactions  contemplated  hereby or thereby and (ii) hereby  waives,  and
agrees not to assert in any such suit,  action or proceeding,  any claim that it
is not  personally  subject to the  jurisdiction  of such court,  that the suit,
action or  proceeding is brought in an  inconvenient  forum or that the venue of
the  suit,  action  or  proceeding  is  improper.  Each of the  Company  and the
Purchasers  consents  to  process  being  served  in any such  suit,  action  or
proceeding  by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and  sufficient  service of process  and  notice  thereof.  Nothing in this
Section 7.2 shall affect or limit any right to serve process in any other manner
permitted by law.


                                      -28-


            Section 7.3 Entire  Agreement;  Amendment.  This  Agreement  and the
Transaction  Documents  contains the entire  understanding  and agreement of the
parties  with  respect to the  matters  covered  hereby and  thereby,  except as
specifically  set forth  herein or in the  Transaction  Documents,  neither  the
Company nor any of the Purchasers makes any representations,  warranty, covenant
or  undertaking  with  respect  to such  matters  and they  supersede  all prior
understandings  and agreements with respect to said subject matter, all of which
are merged herein. No provision of this Agreement may be waived or amended other
than by a written  instrument  signed by the Company and the holders of at least
seventy-five  percent (75%) of the  Preferred  Shares then  outstanding,  and no
provision hereof may be waived other than by an a written  instrument  signed by
the party against whom enforcement of any such amendment or waiver is sought. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Preferred Shares then outstanding.  No consideration shall
be offered or paid to any person to amend or consent to a waiver or modification
of  any  provision  of  any  of  the  Transaction   Documents  unless  the  same
consideration is also offered to all of the parties to the Transaction Documents
or holders of Preferred Shares, as the case may be.

            Section 7.4 Notices. Any notice,  demand,  request,  waiver or other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received),  telecopy or facsimile at the address or number  designated below (if
delivered on a business day during normal business hours where such notice is to
be received),  or the first  business day following  such delivery (if delivered
other than on a business day during normal  business  hours where such notice is
to be received) or (b) on the second  business day following the date of mailing
by express courier service,  fully prepaid,  addressed to such address,  or upon
actual receipt of such mailing,  whichever shall first occur.  The addresses for
such communications shall be:

            If to the Company:      Dolce Ventures Inc.
                                    N0.18 Zhong Guan Cun Dong St.
                                    Haidian District
                                    Beijing, China
                                    Attention: Chen Fang
                                    Tel. No.: 011-86-10-82600527
                                    Fax No.: 011-010-82600042

            with copies to:         GUZOV OFSINK, LLC
                                    600 Madison Avenue, 14th Floor
                                    New York, New York 10022
                                    Attention: Darren Ofsink
                                    Tel. No.: (212) 371-8008, ext. 127
                                    Fax No.: (212) 688-7273

            If to any Purchaser:    At the address of such  Purchaser  set forth
                                    on Exhibit A to this Agreement,  with copies
                                    to  Purchaser's  counsel  as  set  forth  on
                                    Exhibit A or as specified in writing by such
                                    Purchaser with copies to:


                                      -29-


                                    Kramer Levin Naftalis & Frankel LLP
                                    1177 Avenue of the Americas
                                    New York, New York 10036
                                    Attention: Christopher S. Auguste
                                    Tel No.: (212) 715-9100
                                    Fax No.: (212) 715-8000

      Any party  hereto may from time to time  change its address for notices by
giving at least ten (10) days  written  notice of such  changed  address  to the
other party hereto.

            Section 7.5  Waivers.  No waiver by either party of any default with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed  to be a  continuing  waiver  in the  future  or a  waiver  of any  other
provisions,  condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right  hereunder in any manner  impair the exercise of
any such right accruing to it thereafter.

            Section 7.6 Headings.  The article,  section and subsection headings
in this  Agreement are for  convenience  only and shall not constitute a part of
this  Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.

            Section 7.7 Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.

            Section 7.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns  and is not for the  benefit  of, nor may any  provision  hereof be
enforced by, any other person.

            Section 7.9 Governing Law. This  Agreement  shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the application of the substantive law of another  jurisdiction.  This Agreement
shall not be  interpreted or construed  with any  presumption  against the party
causing this Agreement to be drafted.

            Section 7.10  Survival.  The  representations  and warranties of the
Company and the Purchasers  shall survive the execution and delivery  hereof and
the Closings hereunder for a period of two years following the Closing Date.

            Section 7.11  Counterparts.  This  Agreement  may be executed in any
number of counterparts,  each of which when so executed shall be deemed to be an
original  and, all of which taken  together  shall  constitute  one and the same
Agreement and shall become effective when  counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation  of the  party  executing  (or on  whose  behalf  such  signature  is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.


                                      -30-


            Section  7.12  Publicity.  The  Company  agrees  that  it  will  not
disclose,  and will not  include  in any  public  announcement,  the name of the
Purchasers  without  the  consent  of  the  Purchasers  unless  and  until  such
disclosure  is required by law or  applicable  regulation,  and then only to the
extent of such requirement.

            Section 7.13 Severability.  The provisions of this Agreement and the
Transaction  Documents  are  severable  and,  in the  event  that  any  court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement or the Transaction  Documents
shall,  for any reason,  be held to be invalid,  illegal or unenforceable in any
respect,  such invalidity,  illegality or unenforceability  shall not affect any
other  provision  or part of a provision of this  Agreement  or the  Transaction
Documents and such provision  shall be reformed and construed as if such invalid
or illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid,  legal and enforceable
to the maximum extent possible.

            Section  7.14  Further  Assurances.  From and after the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the  Purchasers  shall  execute and deliver such  instrument,  documents and
other writings as may be reasonably  necessary or desirable to confirm and carry
out and to effectuate  fully the intent and purposes of this  Agreement and each
of the other Transaction Documents.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -31-


      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
duly executed by their respective  authorized officer as of the date first above
written.


                                        DOLCE VENTURES INC.

                                        By: ____________________________________
                                            Name:
                                            Title:


                                        PURCHASER

                                        By: ____________________________________
                                            Name:
                                            Title:


                                      -32-


                                        SEI PRIVATE TRUST CO. FAO -
                                        THE JM SMUCKER CO. MASTER TRUST

                                        By: ____________________________________
                                            Name:
                                            Title:


                                        CORONADO CAPITAL PARTNERS LP

                                        By: ____________________________________
                                            Name:
                                            Title:


                                      -33-


                                EXHIBIT A to the

           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

                               DOLCE VENTURES INC.



Names and Addresses                     Number of Preferred Shares          Dollar Amount of
of Purchasers                           & Warrants Purchased                Investment
- -------------                           --------------------                ----------
                                                                      
Vision Opportunity Master Fund, Ltd.    Preferred Shares: 2,189,782         $6,000,000
20 W 55th St., 5th floor                Series A Warrants: 2,189,782
New York, NY 10019                      Series B Warrants: 1,094,891
Tax ID: 27-0120759                      Series J Warrants: 1,993,355
                                        Series C Warrants: 1,993,355
                                        Series D Warrants: 996,678

SEI Private Trust Co. FAO
The JM Smucker Co. Master Trust         Preferred Shares: 140,000           $383,600
1 Freedom Valley Dr                     Series A Warrants: 140,000
Oaks, PA 19456                          Series B Warrants: 70,000
Attn: Suzanne Rokosny                   Series J Warrants: 127,442
Tax ID: 23-3060382                      Series C Warrants: 127,442
                                        Series D Warrants: 63,721

Coronado Capital Partners LP            Preferred Shares: 180,000           $493,200
c/o MS Howells                          Series A Warrants: 180,000
20555 N Pima Rd, Suite 100              Series B Warrants: 90,000
Scottsdale, AZ 85255                    Series J Warrants: 163,854
Attn: Christine Nichols                 Series C Warrants: 163,854
Tax ID: 20-2427088                      Series D Warrants: 81,927




                                EXHIBIT B to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                       FORM OF CERTIFICATE OF DESIGNATION



                               EXHIBIT C-1 to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                            FORM OF SERIES A WARRANT



                               EXHIBIT C-2 to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                            FORM OF SERIES B WARRANT



                               EXHIBIT C-3 to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                            FORM OF SERIES J WARRANT



                               EXHIBIT C-4 to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                            FORM OF SERIES C WARRANT



                               EXHIBIT C-5 to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                            FORM OF SERIES D WARRANT



                                EXHIBIT D to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                      FORM OF REGISTRATION RIGHTS AGREEMENT



                                EXHIBIT E to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                               DOLCE VENTURES INC.

                                                        as of September 7, 2006

[Name and address of Transfer Agent]
Attn:  _____________

Ladies and Gentlemen:

      Reference is made to that certain  Series B  Convertible  Preferred  Stock
Purchase Agreement (the "Purchase Agreement"), dated as of September 7, 2006, by
and among Dolce  Ventures  Inc., a Utah  corporation  (the  "Company"),  and the
purchasers named therein (collectively,  the "Purchasers") pursuant to which the
Company  is  issuing  to the  Purchasers  shares  of its  Series  B  Convertible
Preferred  Stock,  par value  $.001 per  share,  (the  "Preferred  Shares")  and
warrants (the  "Warrants") to purchase shares of the Company's common stock, par
value  $.001 per share (the  "Common  Stock").  This  letter  shall serve as our
irrevocable  authorization  and  direction  to you  provided  that  you  are the
transfer agent of the Company at such time) to issue shares of Common Stock upon
conversion of the Preferred Shares (the "Conversion Shares") and exercise of the
Warrants (the "Warrant Shares") to or upon the order of a Purchaser from time to
time  upon (i)  surrender  to you of a  properly  completed  and  duly  executed
Conversion  Notice or Exercise Notice,  as the case may be, in the form attached
hereto  as  Exhibit  I and  Exhibit  II,  respectively,  (ii) in the case of the
conversion of Preferred  Shares, a copy of the  certificates  (with the original
certificates  delivered  to the  Company)  representing  Preferred  Shares being
converted or, in the case of Warrants  being  exercised,  a copy of the Warrants
(with the original  Warrants  delivered to the Company) being  exercised (or, in
each  case,  an   indemnification   undertaking   with  respect  to  such  share
certificates or the warrants in the case of their loss,  theft or  destruction),
and (iii) delivery of a treasury order or other  appropriate order duly executed
by a duly  authorized  officer of the  Company.  So long as you have  previously
received  (x)  written   confirmation   from  counsel  to  the  Company  that  a
registration  statement  covering  resales of the  Conversion  Shares or Warrant
Shares,  as  applicable,  has been  declared  effective  by the  Securities  and
Exchange  Commission  (the "SEC") under the  Securities  Act of 1933, as amended
(the "1933 Act"), and no subsequent  notice by the Company or its counsel of the
suspension  or  termination  of  its  effectiveness  and  (y)  a  copy  of  such
registration  statement,  and if the  Purchaser  represents  in writing that the
Conversion  Shares or the Warrant Shares, as the case may be, were sold pursuant
to the Registration  Statement,  then  certificates  representing the Conversion
Shares and the  Warrant  Shares,  as the case may be,  shall not bear any legend
restricting  transfer of the Conversion  Shares and the Warrant  Shares,  as the
case may be, thereby and should not be subject to any stop-transfer restriction.
Provided,  however,  that if you have not  previously  received  those items and
representations  listed above,  then the certificates for the Conversion  Shares
and the Warrant Shares shall bear the legend substantially as follows:

                        "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                  (THE SECURITIES  ACT"),  OR ANY STATE  SECURITIES LAWS AND MAY



                  NOT BE SOLD,  TRANSFERRED  OR  OTHERWISE  DISPOSED  OF  UNLESS
                  REGISTERED  UNDER  THE  SECURITIES  ACT  OR  APPLICABLE  STATE
                  SECURITIES  LAWS,  OR AN OPINION OF COUNSEL HAS BEEN  PROVIDED
                  THAT  REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
                  AND UNDER THE PROVISIONS OF APPLICABLE  STATE  SECURITIES LAWS
                  IS NOT REQUIRED."

and,  provided  further,  that the  Company  may from time to time notify you to
place  stop-transfer  restrictions on the certificates for the Conversion Shares
and the  Warrant  Shares  in the event a  registration  statement  covering  the
Conversion Shares and the Warrant Shares is subject to amendment for events then
current.

      A  form  of  written  confirmation  from  counsel  to the  Company  that a
registration statement covering resales of the Conversion Shares and the Warrant
Shares has been  declared  effective  by the SEC under the 1933 Act is  attached
hereto as  Exhibit  III.  Further,  the legal  opinion  should  indicate  if the
Conversion  Shares or Warrant  Shares can be issued  directly  from the transfer
agent without restrictive legend as an original issue.

      Please be advised that the  Purchasers  are relying upon this letter as an
inducement to enter into the Purchase Agreement and, accordingly, each Purchaser
is a third party beneficiary to these instructions.

      Please  execute  this letter in the space  indicated to  acknowledge  your
agreement  to act in  accordance  with these  instructions.  Should you have any
questions concerning this matter, please contact me at ___________.

                                        Very truly yours,

                                        DOLCE VENTURES INC.

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

ACKNOWLEDGED AND AGREED:

[TRANSFER AGENT]

By: ____________________________________
Name: __________________________________
Title: _________________________________
Date: _____________



                                    EXHIBIT I

                               DOLCE VENTURES INC.
                                CONVERSION NOTICE

Reference is made to the  Certificate of Designation of the Relative  Rights and
Preferences  of  the  Series  B  Preferred   Stock  of  (the   "Certificate   of
Designation").   In  accordance   with  and  pursuant  to  the   Certificate  of
Designation,  the  undersigned  hereby elects to convert the number of shares of
Series B Preferred Stock, par value $.001 per share (the "Preferred Shares"), of
Dolce Ventures Inc., a Utah corporation  (the  "Company"),  indicated below into
shares of Common Stock, par value $.001 per share (the "Common  Stock"),  of the
Company,  by tendering  the stock  certificate(s)  representing  the share(s) of
Preferred Shares specified below as of the date specified below.

      Date of Conversion:                          _____________________________

      Number of Preferred Shares to be converted:  ________

      Stock certificate no(s). of Preferred Shares to be converted:  ________

The Common  Stock have been sold  pursuant  to the  Registration  Statement  (as
defined in the Registration Rights Agreement): YES ____         NO____

Please confirm the following information:

      Conversion Price:                            _____________________________

      Number of shares of Common Stock
      to be issued:                                _____________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion: _________________________

Please  issue the  Common  Stock  into  which  the  Preferred  Shares  are being
converted  and, if  applicable,  any check drawn on an account of the Company in
the following name and to the following address:

      Issue to:                                    _____________________________
                                                   _____________________________

      Facsimile Number:                            _____________________________

      Authorization:                               _____________________________

                                                   By: _________________________
                                                   Title: ______________________

      Dated:



                                   EXHIBIT II

                             FORM OF EXERCISE NOTICE

                               DOLCE VENTURES INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of  Common  Stock of Dolce
Ventures Inc. covered by the within Warrant.

Dated: _________________                Signature _____________________________

                                        Address   _____________________
                                                  _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________                Signature _____________________________

                                        Address   _____________________
                                                  _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________                Signature _____________________________

                                        Address   _____________________
                                                  _____________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-_____  canceled (or  transferred or exchanged) this _____ day
of  ___________,  _____,  shares of Common Stock issued  therefor in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.



                                   EXHIBIT III

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Name and address of Transfer Agent]
Attn: _____________

            Re:   Dolce Ventures Inc.

Ladies and Gentlemen:

      We are counsel to Dolce Ventures Inc., a Utah corporation (the "Company"),
and have  represented  the  Company in  connection  with that  certain  Series B
Convertible Preferred Stock Purchase Agreement (the "Purchase Agreement"), dated
as of  September  7, 2006,  by and among the  Company and the  purchasers  named
therein (collectively, the "Purchasers") pursuant to which the Company issued to
the Purchasers  shares of its Series B Convertible  Preferred  Stock,  par value
$.001 per share,  (the  "Preferred  Shares") and warrants  (the  "Warrants")  to
purchase  shares of the Company's  common stock,  par value $.001 per share (the
"Common  Stock").  Pursuant  to the  Purchase  Agreement,  the  Company has also
entered  into  a  Registration   Rights   Agreement  with  the  Purchasers  (the
"Registration  Rights  Agreement"),  dated as of September 7, 2006,  pursuant to
which the Company  agreed,  among other  things,  to  register  the  Registrable
Securities  (as defined in the  Registration  Rights  Agreement),  including the
shares of Common Stock  issuable upon  conversion  of the  Preferred  Shares and
exercise of the  Warrants,  under the  Securities  Act of 1933,  as amended (the
"1933 Act"). In connection with the Company's obligations under the Registration
Rights Agreement,  on  ________________,  2006, the Company filed a Registration
Statement on Form SB-2 (File No.  333-________) (the  "Registration  Statement")
with the Securities and Exchange  Commission  (the "SEC") relating to the resale
of the Registrable  Securities  which names each of the present  Purchasers as a
selling stockholder thereunder.

      In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by  telephone  that the SEC has entered an order  declaring
the  Registration  Statement  effective  under  the 1933 Act at  [ENTER  TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,  after
telephonic  inquiry  of a  member  of the  SEC's  staff,  that  any  stop  order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose are pending  before,  or  threatened  by, the SEC and  accordingly,  the
Registrable  Securities  are available for resale under the 1933 Act pursuant to
the Registration Statement.

                                        Very truly yours,

                                        [COMPANY COUNSEL]

                                        By: ____________________________________

cc:   [LIST NAMES OF PURCHASERS]



                                EXHIBIT F to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                           FORM OF OPINION OF COUNSEL

            1. The Company is a corporation duly incorporated,  validly existing
and in good  standing  under the laws of the State of Utah and has the requisite
corporate  power to own,  lease and operate its  properties  and assets,  and to
carry on its business as presently conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary.

            2. The Company has the  requisite  corporate  power and authority to
enter into and perform its obligations  under the  Transaction  Documents and to
issue the  Preferred  Stock,  the Warrants and the Common  Stock  issuable  upon
conversion of the Preferred  Stock and exercise of the Warrants.  The execution,
delivery and performance of each of the Transaction Documents by the Company and
the consummation by it of the transactions  contemplated  thereby have been duly
and validly authorized by all necessary  corporate action and no further consent
or  authorization  of the Company or its Board of Directors or  stockholders  is
required.  Each  of the  Transaction  Documents  have  been  duly  executed  and
delivered,  and the Preferred  Stock and the Warrants  have been duly  executed,
issued  and  delivered  by the  Company  and each of the  Transaction  Documents
constitutes a legal,  valid and binding  obligation  of the Company  enforceable
against the Company in accordance  with its respective  terms.  The Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants are
not subject to any preemptive  rights under the Articles of Incorporation or the
Bylaws.

            3. The Preferred  Stock and the Warrants  have been duly  authorized
and,  when  delivered  against  payment  in full  as  provided  in the  Purchase
Agreement,  will be validly issued, fully paid and nonassessable.  The shares of
Common Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants,  have been duly  authorized  and  reserved  for  issuance,  and,  when
delivered  upon  conversion  or  against  payment  in  full as  provided  in the
Certificate of  Designation  and the Warrants,  as  applicable,  will be validly
issued, fully paid and nonassessable.

            4. The execution,  delivery and  performance of and compliance  with
the terms of the Transaction  Documents and the issuance of the Preferred Stock,
the Warrants and the Common Stock  issuable  upon  conversion  of the  Preferred
Stock and  exercise of the  Warrants do not (i)  violate  any  provision  of the
Articles of Incorporation or Bylaws, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would  become a default)
under, or give to others any rights of termination,  amendment,  acceleration or
cancellation of, any material  agreement,  mortgage,  deed of trust,  indenture,
note,  bond,  license,  lease  agreement,  instrument or obligation to which the
Company is a party,  (iii) create or impose a lien, charge or encumbrance on any
property of the  Company  under any  agreement  or any  commitment  to which the
Company  is a party  or by which  the  Company  is bound or by which  any of its
respective  properties or assets are bound, or (iv) result in a violation of any
federal,  state, local or foreign statute,  rule,  regulation,  order, judgment,
injunction  or  decree   (including   Federal  and  state  securities  laws  and
regulations)  applicable to the Company or by which any property or asset of the
Company  is bound or  affected,  except,  in all  cases  other  than  violations
pursuant  to  clauses  (i)  and  (iv)  above,   for  such  conflicts,   default,
terminations,  amendments,  acceleration,  cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect.

            5.  No  consent,   approval  or  authorization  of  or  designation,
declaration or filing with any governmental authority on the part of the Company
is required under Federal,  state or local law, rule or regulation in connection
with the valid  execution  and  delivery of the  Transaction  Documents,  or the
offer, sale or issuance of the Preferred Stock, the Warrants or the Common Stock
issuable upon  conversion  of the  Preferred  Stock and exercise of the Warrants
other than the Certificate of Designation and the Registration Statement.



            6. There is no action,  suit,  claim,  investigation  or  proceeding
pending or threatened  against the Company which  questions the validity of this
Agreement or the transactions  contemplated  hereby or any action taken or to be
taken pursuant hereto or thereto. There is no action, suit, claim, investigation
or proceeding pending, or to our knowledge, threatened, against or involving the
Company or any of its properties or assets and which,  if adversely  determined,
is  reasonably  likely to  result in a  Material  Adverse  Effect.  There are no
outstanding  orders,  judgments,  injunctions,  awards or  decrees of any court,
arbitrator  or  governmental  or  regulatory  body  against  the  Company or any
officers or directors of the Company in their capacities as such.

            7. The  offer,  issuance  and sale of the  Preferred  Stock  and the
Warrants and the offer, issuance and sale of the shares of Common Stock issuable
upon conversion of the Preferred Stock and exercise of the Warrants  pursuant to
the Purchase  Agreement,  the  Certificate of Designation  and the Warrants,  as
applicable, are exempt from the registration requirements of the Securities Act.

            8. The  Company  is not,  and as a result  of and  immediately  upon
Closing will not be, an  "investment  company" or a company  "controlled"  by an
"investment  company," within the meaning of the Investment Company Act of 1940,
as amended.

                                        Very truly yours,



                                EXHIBIT G to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                               DISCLOSURE DOCUMENT

                           [To insert draft Form 8-K]



                                EXHIBIT H to the
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                               DOLCE VENTURES INC.

                            FORM OF LOCK-UP AGREEMENT

EX-4.2

                          REGISTRATION RIGHTS AGREEMENT

      This Registration  Rights Agreement (this "Agreement") is made and entered
into  as of  September  7,  2006,  by and  among  Dolce  Ventures  Inc.,  a Utah
corporation (the "Company"), and the purchasers listed on Schedule I hereto (the
"Purchasers").

      This  Agreement is being entered into pursuant to the Series B Convertible
Preferred Stock Purchase Agreement dated as of the date hereof among the Company
and the Purchasers (the "Purchase Agreement").

      The Company and the Purchasers hereby agree as follows:

      1. Definitions.

      Capitalized  terms used and not  otherwise  defined  herein shall have the
meanings given such terms in the Purchase Agreement.  As used in this Agreement,
the following terms shall have the following meanings:

      "Advice" shall have meaning set forth in Section 3(m).

      "Affiliate"  means,  with  respect to any  Person,  any other  Person that
directly or indirectly controls or is controlled by or under common control with
such Person.  For the  purposes of this  definition,  "control,"  when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the  direction  of the  management  and policies of such Person,
whether  through the ownership of voting  securities,  by contract or otherwise;
and the terms of  "affiliated,"  "controlling"  and  "controlled"  have meanings
correlative to the foregoing.

      "Board" shall have meaning set forth in Section 3(n).

      "Business  Day"  means any day except  Saturday,  Sunday and any day which
shall be a legal holiday or a day on which banking  institutions in the state of
New York generally are authorized or required by law or other government actions
to close.

      "Closing  Date" means the date of the Closing of the  purchase and sale of
the Preferred Stock and the Warrants pursuant to the Purchase Agreement.

      "Commission" means the Securities and Exchange Commission.

      "Common  Stock"  means the  Company's  Common  Stock,  par value $.001 per
share.

      "Effectiveness Date" means with respect to the Registration  Statement the
earlier of (A) the one hundred  twentieth (120th) day following the Closing Date
(or in the event the  Registration  Statement  receives  a "full  review" by the
Commission, the one hundred eightieth (180th) day following the Closing Date) or
(B) the date which is within three (3) Business Days after the date on which the
Commission  informs  the  Company  that (i) the  Commission  will not review the
Registration  Statement or (ii) the Company may request the  acceleration of the
effectiveness of the Registration  Statement and the Company makes such request;
provided  that,  if the  Effectiveness  Date falls on a Saturday,  Sunday or any
other day which  shall be a legal  holiday or a day on which the  Commission  is
authorized  or  required  by law or  other  government  actions  to  close,  the
Effectiveness Date shall be the following Business Day.



      "Effectiveness Period" shall have the meaning set forth in Section 2.

      "Event" shall have the meaning set forth in Section 7(e).

      "Event Date" shall have the meaning set forth in Section 7(e).

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Filing Date" means the  thirtieth  (30th) day following the Closing Date;
provided  that, if the Filing Date falls on a Saturday,  Sunday or any other day
which shall be a legal holiday or a day on which the Commission is authorized or
required by law or other  government  actions to close, the Filing Date shall be
the following Business Day.

      "Holder" or  "Holders"  means the holder or  holders,  as the case may be,
from time to time of Registrable Securities.

      "Indemnified Party" shall have the meaning set forth in Section 5(c).

      "Indemnifying Party" shall have the meaning set forth in Section 5(c).

      "Losses" shall have the meaning set forth in Section 5(a).

      "Person"  means  an  individual  or  a  corporation,  partnership,  trust,
incorporated or  unincorporated  association,  joint venture,  limited liability
company, joint stock company,  government (or an agency or political subdivision
thereof) or other entity of any kind.

      "Preferred  Stock"  means  shares of the  Company's  Series B  Convertible
Preferred Stock issued to the Purchasers pursuant to the Purchase Agreement.

      "Proceeding"  means an action,  claim,  suit,  investigation or proceeding
(including,  without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

      "Prospectus" means the prospectus  included in the Registration  Statement
(including,  without  limitation,  a prospectus  that  includes any  information
previously omitted from a prospectus filed as part of an effective  registration
statement in reliance upon Rule 430A  promulgated  under the Securities Act), as
amended or supplemented by any prospectus supplement,  with respect to the terms
of the  offering of any  portion of the  Registrable  Securities  covered by the
Registration  Statement,  and  all  other  amendments  and  supplements  to  the
Prospectus,  including post-effective  amendments, and all material incorporated
by reference in such Prospectus.

                                      -2-


      "Registrable  Securities"  (i) the shares of Common  Stock  issuable  upon
conversion of the Preferred  Stock and (ii) the shares of Common Stock  issuable
upon exercise of the Warrants.

      "Registration   Statement"  means  the  registration  statements  and  any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus,  amendments and supplements to such registration statement
or  Prospectus,  including  pre- and  post-effective  amendments,  all  exhibits
thereto,  and all  material  incorporated  by  reference  in  such  registration
statement.

      "Rule 144" means Rule 144  promulgated by the  Commission  pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

      "Rule 158" means Rule 158  promulgated by the  Commission  pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

      "Rule 415" means Rule 415  promulgated by the  Commission  pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

      "Rule 424" means Rule 424  promulgated by the  Commission  pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Special Counsel" means Kramer Levin Naftalis & Frankel LLP, for which the
Holders will be reimbursed by the Company pursuant to Section 4.

      "Warrants" means the separate  warrants to purchase shares of Common Stock
issued to the Purchasers pursuant to the Purchase Agreement.

      2. Resale Registration.

      On or prior to the Filing Date the Company shall prepare and file with the
Commission a "resale"  Registration  Statement  providing  for the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415.  The  Registration  Statement  shall be on Form SB-2 (except if the
Company is not then eligible to register for resale the  Registrable  Securities
on Form SB-2, in which case such  registration  shall be on another  appropriate
form in accordance  herewith and the  Securities  Act and the rules  promulgated
thereunder).  Such  Registration  Statement shall cover to the extent  allowable
under the Securities Act and the rules  promulgated  thereunder  (including Rule
416), such  indeterminate  number of additional shares of Common Stock resulting
from stock splits,  stock dividends or similar  transactions with respect to the
Registrable  Securities.  The Company shall (i) not permit any securities  other
than the  Registrable  Securities and the securities to be listed on Schedule II
hereto  to be  included  in the  Registration  Statement  and  (ii) use its best
efforts to cause the Registration  Statement to be declared  effective under the
Securities  Act as  promptly as possible  after the filing  thereof,  but in any
event prior to the Effectiveness  Date, and to keep such Registration  Statement
continuously  effective  under  the  Securities  Act  until  such date as is the
earlier  of (x)  the  date  when  all  Registrable  Securities  covered  by such
Registration  Statement have been sold or (y) the date on which the  Registrable
Securities  may be sold  without  any  restriction  pursuant  to Rule  144(k) as
determined by the counsel to the Company  pursuant to a written  opinion letter,
addressed to the  Company's  transfer  agent to such effect (the  "Effectiveness
Period").  The Company shall request that the effective time of the Registration
Statement is 4:00 p.m.  Eastern Time on the  effective  date. If at any time and
for any reason,  an  additional  Registration  Statement is required to be filed
because at such time the actual  number of shares of Common Stock into which the
Preferred Stock is convertible and the Warrants are exercisable  plus the number
of shares of Common Stock exceeds the number of Registrable Securities remaining
under the  Registration  Statement,  the Company shall have twenty (20) Business
Days to file such additional Registration  Statement,  and the Company shall use
its best efforts to cause such additional  Registration Statement to be declared
effective  by the  Commission  as soon as  possible,  but in no event later than
sixty (60) days after filing.

                                      -3-


      3. Registration Procedures.

      In connection with the Company's registration  obligations hereunder,  the
Company shall:

      (a) Prepare and file with the Commission on or prior to the Filing Date, a
Registration  Statement on Form SB-2 (or if the Company is not then  eligible to
register for resale the  Registrable  Securities on Form SB-2 such  registration
shall be on another  appropriate form in accordance  herewith and the Securities
Act and the  rules  promulgated  thereunder)  in  accordance  with  the  plan of
distribution  as set forth on Exhibit A hereto and in accordance with applicable
law,  and cause  the  Registration  Statement  to become  effective  and  remain
effective as provided  herein;  provided,  however,  that not less than five (5)
Business Days prior to the filing of the  Registration  Statement or any related
Prospectus or any amendment or supplement  thereto  (including any document that
would be  incorporated  therein by reference),  the Company shall (i) furnish to
the Holders and any Special Counsel, copies of all such documents proposed to be
filed,  which  documents  (other than those  incorporated  by reference) will be
subject to the review of such Holders and such Special  Counsel,  and (ii) cause
its officers and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of
Special Counsel,  to conduct a reasonable review of such documents.  The Company
shall  not  file  the  Registration  Statement  or any  such  Prospectus  or any
amendments  or  supplements  thereto to which the  Holders of a majority  of the
Registrable Securities or any Special Counsel shall reasonably object in writing
within three (3) Business Days of their receipt thereof.

      (b) (i) Prepare and file with the Commission  such  amendments,  including
post-effective  amendments, to the Registration Statement as may be necessary to
keep the  Registration  Statement  continuously  effective as to the  applicable
Registrable  Securities for the  Effectiveness  Period and prepare and file with
the Commission such additional  Registration Statements as necessary in order to
register for resale under the Securities Act all of the Registrable  Securities;
(ii) cause the related  Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule  424 (or any  similar  provisions  then in  force)  promulgated  under  the
Securities  Act;  (iii)  respond as promptly as possible,  but in no event later
than ten (10) Business Days, to any comments  received from the Commission  with
respect to the  Registration  Statement or any amendment  thereto and to provide
the Holders,  within such ten (10) Business Day period, true and complete copies
of all  correspondence  from and to the Commission  relating to the Registration
Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
Act no later than 1:00 p.m.  Eastern Time on the Business Day following the date
the  Registration  Statement is declared  effective by the  Commission;  and (v)
comply in all material  respects with the  provisions of the  Securities Act and
the Exchange Act with respect to the disposition of all  Registrable  Securities
covered  by the  Registration  Statement  during  the  Effectiveness  Period  in
accordance  with the intended  methods of disposition by the Holders thereof set
forth in the  Registration  Statement as so amended or in such  Prospectus as so
supplemented.

                                      -4-


      (c) Notify the Holders of Registrable  Securities and any Special  Counsel
as promptly as possible  (and, in the case of (i)(A) below,  not less than three
(3) Business Days prior to such filing,  and in the case of (iii) below,  on the
same day of receipt by the Company of such notice from the  Commission)  and (if
requested by any such  Person)  confirm such notice in writing no later than one
(1) Business Day following  the day (i)(A) when a Prospectus  or any  Prospectus
supplement or post-effective  amendment to the Registration  Statement is filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration  Statement and whenever the Commission  comments in writing on
such Registration  Statement and (C) with respect to the Registration  Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state  governmental  authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional  information;  (iii) of the  issuance by the  Commission  of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the  Registrable  Securities  or the  initiation  or  threatening  of any
Proceedings for that purpose; (iv) if at any time any of the representations and
warranties of the Company contained in any agreement  contemplated hereby ceases
to be true and  correct  in all  material  respects;  (v) of the  receipt by the
Company of any notification  with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any  jurisdiction,  or the  initiation or threatening of any Proceeding for such
purpose;  and (vi) of the  occurrence of any event that makes any statement made
in the  Registration  Statement or  Prospectus or any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration  Statement,  Prospectus or other
documents so that, in the case of the Registration  Statement or the Prospectus,
as the case may be, it will not contain any untrue  statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements  therein, in the light of the circumstances under which they
were made, not misleading.

      (d) Use its best efforts to avoid the  issuance of, or, if issued,  obtain
the  withdrawal  of, as  promptly  as  possible,  (i) any order  suspending  the
effectiveness  of the  Registration  Statement  or (ii)  any  suspension  of the
qualification  (or  exemption  from  qualification)  of any  of the  Registrable
Securities for sale in any jurisdiction.

                                      -5-


      (e)  If  requested  by  the  Holders  of a  majority  in  interest  of the
Registrable  Securities,  (i) promptly incorporate in a Prospectus supplement or
post-effective  amendment to the Registration  Statement such information as the
Company  reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus  supplement or such post-effective  amendment as soon
as practicable after the Company has received  notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.

      (f) If  requested  by any  Holder,  furnish to such Holder and any Special
Counsel,  without  charge,  at least  one  conformed  copy of each  Registration
Statement  and  each  amendment  thereto,  including  financial  statements  and
schedules,  all documents  incorporated or deemed to be incorporated  therein by
reference,  and all exhibits to the extent  requested by such Person  (including
those  previously  furnished or  incorporated  by reference)  promptly after the
filing of such documents with the Commission.

      (g)  Promptly  deliver to each  Holder and any  Special  Counsel,  without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus)  and each  amendment  or  supplement  thereto  as such  Persons  may
reasonably request; and subject to the provisions of Sections 3(m) and 3(n), the
Company  hereby  consents to the use of such  Prospectus  and each  amendment or
supplement  thereto  by each of the  selling  Holders  in  connection  with  the
offering and sale of the Registrable  Securities  covered by such Prospectus and
any amendment or supplement thereto.

      (h) Prior to any public offering of Registrable  Securities,  use its best
efforts to register  or qualify or  cooperate  with the selling  Holders and any
Special  Counsel  in  connection  with the  registration  or  qualification  (or
exemption  from  such   registration  or   qualification)  of  such  Registrable
Securities  for offer and sale  under  the  securities  or Blue Sky laws of such
jurisdictions  within the United  States as any Holder  requests in writing,  to
keep each such registration or qualification (or exemption  therefrom) effective
during  the  Effectiveness  Period  and to do any and all  other  acts or things
necessary or advisable to enable the  disposition in such  jurisdictions  of the
Registrable Securities covered by a Registration Statement;  provided,  however,
that the Company  shall not be required to qualify  generally  to do business in
any  jurisdiction  where it is not then so  qualified or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or subject  the Company to any  material  tax in any such
jurisdiction where it is not then so subject.

      (i) Cooperate  with the Holders to facilitate the timely  preparation  and
delivery of certificates representing Registrable Securities to be sold pursuant
to a Registration Statement, which certificates,  to the extent permitted by the
Purchase  Agreement and applicable  federal and state  securities laws, shall be
free of all restrictive legends, and to enable such Registrable Securities to be
in such  denominations and registered in such names as any Holder may request in
connection with any sale of Registrable Securities.

      (j) Upon the occurrence of any event contemplated by Section 3(c)(vi),  as
promptly  as  possible,   prepare  a  supplement  or   amendment,   including  a
post-effective  amendment,  to the Registration Statement or a supplement to the
related  Prospectus or any document  incorporated  or deemed to be  incorporated
therein  by  reference,  and file  any  other  required  document  so  that,  as
thereafter  delivered,  neither the  Registration  Statement nor such Prospectus
will contain an untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the circumstances under which they were made, not misleading.

                                      -6-


      (k) Use its best efforts to cause all Registrable  Securities  relating to
the  Registration  Statement to be listed on the OTC Bulletin Board or any other
securities  exchange,  quotation  system or  market,  if any,  on which  similar
securities  issued by the Company are then listed or traded as and when required
pursuant to the Purchase Agreement.

      (l)  Comply  in all  material  respects  with  all  applicable  rules  and
regulations  of the  Commission  and make  generally  available  to its security
holders  all  documents  filed  or  required  to be filed  with the  Commission,
including,  but not limited, to, earning statements satisfying the provisions of
Section  11(a) of the  Securities  Act and Rule 158 not later than 45 days after
the end of any 12-month  period (or 90 days after the end of any 12-month period
if such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the  Registration  Statement,
which statement shall conform to the requirements of Rule 158.

      (m) The Company may require each selling  Holder to furnish to the Company
information  regarding  such  Holder and the  distribution  of such  Registrable
Securities as is required by law to be disclosed in the Registration  Statement,
Prospectus,  or any amendment or supplement thereto, and the Company may exclude
from  such  registration  the  Registrable  Securities  of any such  Holder  who
unreasonably  fails to furnish such  information  within a reasonable time after
receiving such request.

      If the Registration Statement refers to any Holder by name or otherwise as
the holder of any  securities  of the  Company,  then such Holder shall have the
right to require (if such  reference  to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the  reference to such Holder in any  amendment or supplement to the
Registration  Statement  filed or  prepared  subsequent  to the time  that  such
reference ceases to be required.

      Each Holder  covenants  and agrees  that it will not sell any  Registrable
Securities under the Registration Statement until the Company has electronically
filed the Prospectus as then amended or  supplemented as contemplated in Section
3(g)  and  notice  from the  Company  that the  Registration  Statement  and any
post-effective  amendments  thereto  have become  effective as  contemplated  by
Section 3(c).

      Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the  occurrence of any event of the
kind described in Section 3(c)(ii),  3(c)(iii),  3(c)(iv),  3(c)(v), 3(c)(vi) or
3(n),  such Holder will forthwith  discontinue  disposition of such  Registrable
Securities under the  Registration  Statement until such Holder's receipt of the
copies of the  supplemented  Prospectus  and/or amended  Registration  Statement
contemplated  by Section 3(j), or until it is advised in writing (the  "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental  filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.

                                      -7-


      (n) At any time  following  the date that the  Registration  Statement  is
declared  effective  by the  Commission,  if (i)  there is  material  non-public
information  regarding the Company which the Company's  Board of Directors  (the
"Board")  determines  not to be in the  Company's  best interest to disclose and
which the  Company  is not  otherwise  required  to  disclose,  (ii)  there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary  course of business) or any
merger,  consolidation,  tender offer or other similar transaction) available to
the Company which the Board  determines not to be in the Company's best interest
to disclose, or (iii) the Company is required to file a post-effective amendment
to the Registration  Statement to incorporate the Company's quarterly and annual
reports and audited  financial  statements on Forms 10-QSB and 10-KSB,  then the
Company may postpone or suspend effectiveness of a registration  statement for a
period not to exceed twenty (20) consecutive days; provided that the Company may
not suspend  effectiveness  of a registration  statement under this Section 3(n)
for more than  forty-five  (45) days in the  aggregate  during any three hundred
sixty (360) day period;  provided,  however,  that no such  suspension  shall be
permitted for consecutive twenty (20) day periods arising out of the same set of
facts, circumstances or transactions.

      4. Registration Expenses.

      All fees and expenses  incident to the  performance of or compliance  with
this  Agreement  by the Company,  except as and to the extent  specified in this
Section  4,  shall be  borne  by the  Company  whether  or not the  Registration
Statement  is filed or becomes  effective  and  whether  or not any  Registrable
Securities  are  sold  pursuant  to the  Registration  Statement.  The  fees and
expenses  referred  to  in  the  foregoing   sentence  shall  include,   without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses  (A) with respect to filings  required to be made with the OTC
Bulletin Board and each other securities exchange or market on which Registrable
Securities  are  required  hereunder  to be listed,  if any, (B) with respect to
filing  fees  required  to be paid to the  National  Association  of  Securities
Dealers,  Inc. and the NASD  Regulation,  Inc. and (C) in compliance  with state
securities  or  Blue  Sky  laws  (including,   without   limitation,   fees  and
disbursements   of  counsel  for  the  Holders  in  connection   with  Blue  Sky
qualifications   of  the  Registrable   Securities  and   determination  of  the
eligibility of the Registrable  Securities for investment under the laws of such
jurisdictions  as the  Holders  of a  majority  of  Registrable  Securities  may
designate)), (ii) printing expenses (including, without limitation,  expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the  printing of  prospectuses  is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses,  (iv) fees and disbursements of counsel for the
Company and Special Counsel for the Holders, in the case of the Special Counsel,
up to a maximum amount of $7,500, (v) Securities Act liability insurance, if the
Company so  desires  such  insurance,  and (vi) fees and  expenses  of all other
Persons  retained  by the Company in  connection  with the  consummation  of the
transactions contemplated by this Agreement,  including, without limitation, the
Company's independent public accountants  (including the expenses of any comfort
letters or costs associated with the delivery by independent  public accountants
of a comfort  letter or comfort  letters).  In  addition,  the Company  shall be
responsible  for all of its internal  expenses  incurred in connection  with the
consummation  of the  transactions  contemplated  by this Agreement  (including,
without  limitation,  all salaries  and  expenses of its officers and  employees
performing  legal or accounting  duties),  the expense of any annual audit,  the
fees and expenses  incurred in  connection  with the listing of the  Registrable
Securities on any securities exchange as required hereunder.

                                      -8-


      5. Indemnification.

      (a) Indemnification by the Company. The Company shall, notwithstanding any
termination  of this  Agreement,  indemnify and hold  harmless each Holder,  the
officers, directors, managers, partners, members, shareholders, agents, brokers,
investment  advisors and employees of each of them, each Person who controls any
such Holder  (within the meaning of Section 15 of the  Securities Act or Section
20 of the Exchange  Act) and the  officers,  directors,  agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from  and  against  any and all  losses,  claims,  damages,  liabilities,  costs
(including,  without  limitation,  costs of preparation and attorneys' fees) and
expenses (collectively,  "Losses"),  as incurred,  arising out of or relating to
any  violation of  securities  laws or untrue or alleged  untrue  statement of a
material fact  contained in the  Registration  Statement,  any Prospectus or any
form  of  prospectus  or in  any  amendment  or  supplement  thereto  or in  any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact  required to be stated  therein or necessary to make
the  statements  therein (in the case of any Prospectus or form of prospectus or
supplement  thereto,  in the light of the  circumstances  under  which they were
made) not misleading,  except to the extent,  but only to the extent,  that such
untrue statements or omissions are based solely upon information  regarding such
Holder or such other  Indemnified  Party  furnished in writing to the Company by
such Holder  expressly  for use  therein.  The Company  shall notify the Holders
promptly of the institution,  threat or assertion of any Proceeding of which the
Company  is  aware in  connection  with the  transactions  contemplated  by this
Agreement.

      (b)  Indemnification  by Holders.  Each Holder  shall,  severally  and not
jointly,  indemnify  and hold  harmless the Company,  its  directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents and employees of such controlling  Persons, to the
fullest  extent  permitted by  applicable  law,  from and against all Losses (as
determined by a court of competent  jurisdiction in a final judgment not subject
to appeal or review),  as incurred,  arising  solely out of or based solely upon
any untrue statement of a material fact contained in the Registration Statement,
any  Prospectus,  or any form of  prospectus,  or arising solely out of or based
solely upon any  omission of a material  fact  required to be stated  therein or
necessary to make the statements  therein (in the case of any Prospectus or form
of prospectus or supplement  thereto,  in the light of the  circumstances  under
which they were made) not  misleading,  to the  extent,  but only to the extent,
that such untrue  statement  or  omission is  contained  in any  information  so
furnished in writing by such Holder or other  Indemnifying  Party to the Company
specifically  for inclusion in the  Registration  Statement or such  Prospectus.
Notwithstanding  anything to the contrary contained herein, each Holder shall be
liable  under this  Section 5(b) for only that amount as does not exceed the net
proceeds  to such  Holder  as a  result  of the sale of  Registrable  Securities
pursuant to such Registration Statement.

                                      -9-


      (c) Conduct of  Indemnification  Proceedings.  If any Proceeding  shall be
brought or asserted  against  any Person  entitled to  indemnity  hereunder  (an
"Indemnified  Party"),  such Indemnified  Party promptly shall notify the Person
from whom  indemnity  is sought (the  "Indemnifying  Party) in writing,  and the
Indemnifying  Party shall be entitled to assume the defense  thereof,  including
the employment of counsel  reasonably  satisfactory to the Indemnified Party and
the  payment  of all fees and  expenses  incurred  in  connection  with  defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve  the  Indemnifying  Party of its  obligations  or  liabilities
pursuant  to this  Agreement,  except  (and only) to the extent that it shall be
finally determined by a court of competent  jurisdiction (which determination is
not  subject  to  appeal  or  further  review)  that  such  failure  shall  have
proximately and materially adversely prejudiced the Indemnifying Party.

      An Indemnified  Party shall have the right to employ  separate  counsel in
any such Proceeding and to participate in the defense thereof,  but the fees and
expenses of such counsel  shall be at the expense of such  Indemnified  Party or
Parties  unless:  (1) the  Indemnifying  Party has agreed in writing to pay such
fees and expenses;  or (2) the Indemnifying  Party shall have failed promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory to such Indemnified Party in any such Proceeding;  or (3) the named
parties to any such Proceeding  (including any impleaded  parties)  include both
such Indemnified  Party and the Indemnifying  Party, and such parties shall have
been  advised by counsel  that a conflict  of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such  Indemnified  Party notifies the  Indemnifying  Party in
writing  that it  elects  to  employ  separate  counsel  at the  expense  of the
Indemnifying  Party, the  Indemnifying  Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying
Party).  The  Indemnifying  Party shall not be liable for any  settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified  Party,  effect any settlement of any pending
or threatened  Proceeding in respect of which any  Indemnified  Party is a party
and  indemnity has been sought  hereunder,  unless such  settlement  includes an
unconditional  release of such  Indemnified  Party from all  liability on claims
that are the subject matter of such Proceeding.

      All fees and expenses of the Indemnified Party (including  reasonable fees
and  expenses  to the  extent  incurred  in  connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified  Party,  as incurred,  within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder;  provided, that the Indemnified Party shall reimburse
all such fees and  expenses  to the extent it is finally  judicially  determined
that such Indemnified Party is not entitled to indemnification hereunder).

                                      -10-


      (d)  Contribution.  If a claim for  indemnification  under Section 5(a) or
5(b) is due but  unavailable  to an  Indemnified  Party  because of a failure or
refusal  of  a  governmental   authority  to  enforce  such  indemnification  in
accordance  with its terms (by reason of public policy or otherwise),  then each
Indemnifying  Party,  in lieu of  indemnifying  such  Indemnified  Party,  shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of such Losses,  in such  proportion as is  appropriate  to reflect the relative
benefits received by the Indemnifying  Party on the one hand and the Indemnified
Party on the other from the offering of the  Preferred  Stock and the  Warrants.
If,  but only if, the  allocation  provided  by the  foregoing  sentence  is not
permitted by applicable  law, the  allocation of  contribution  shall be made in
such  proportion  as is  appropriate  to reflect not only the relative  benefits
referred  to  in  the  foregoing  sentence  but  also  the  relative  fault,  as
applicable,  of the Indemnifying  Party and Indemnified Party in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and  Indemnified  Party shall be  determined  by reference to, among other
things,  whether any action in question,  including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been  taken  or made  by,  or  relates  to  information  supplied  by,  such
Indemnifying  Party or  Indemnified  Party,  and the parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include,  subject to the  limitations set forth
in Section 5(c), any reasonable  attorneys' or other reasonable fees or expenses
incurred  by such party in  connection  with any  Proceeding  to the extent such
party   would  have  been   indemnified   for  such  fees  or  expenses  if  the
indemnification  provided  for in this  Section was  available  to such party in
accordance  with its terms.  In no event shall any selling Holder be required to
contribute  an amount  under  this  Section  5(d) in excess of the net  proceeds
received  by such  Holder  upon  sale of such  Holder's  Registrable  Securities
pursuant  to  the  Registration  Statement  giving  rise  to  such  contribution
obligation.

      The  parties  hereto  agree  that it would  not be just and  equitable  if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent  misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any Person
who was not  guilty of such  fraudulent  misrepresentation.  The  indemnity  and
contribution  agreements  contained  in  this  Section  are in  addition  to any
liability  that the  Indemnifying  Parties may have to the  Indemnified  Parties
pursuant to the law.

      6. Rule 144.

      As long as any  Holder  owns  Preferred  Stock,  Warrants  or  Registrable
Securities,  the  Company  covenants  to timely  file (or obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the Company  after the date hereof  pursuant to Section
13(a) or 15(d) of the Exchange Act. As long as any Holder owns Preferred  Stock,
Warrants  or  Registrable  Securities,  if the  Company is not  required to file
reports  pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare
and furnish to the Holders and make publicly  available in accordance  with Rule
144(c)  promulgated  under the  Securities  Act annual and  quarterly  financial
statements, together with a discussion and analysis of such financial statements
in form and  substance  substantially  similar to those that would  otherwise be
required  to be included  in reports  required by Section  13(a) or 15(d) of the
Exchange Act, as well as any other  information  required  thereby,  in the time
period that such  filings  would have been  required to have been made under the
Exchange  Act.  The Company  further  covenants  that it will take such  further
action as any Holder may  reasonably  request,  all to the extent  required from
time to time to enable such Person to sell Conversion  Shares and Warrant Shares
without  registration  under the  Securities  Act within the  limitation  of the
exemptions  provided by Rule 144 promulgated under the Securities Act, including
providing  any legal  opinions  relating to such sale pursuant to Rule 144. Upon
the request of any Holder,  the Company  shall  deliver to such Holder a written
certification  of a duly  authorized  officer as to whether it has complied with
such requirements.

                                      -11-


      7. Miscellaneous.

      (a) Remedies.  In the event of a breach by the Company or by a Holder,  of
any of their  obligations under this Agreement,  such Holder or the Company,  as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific  performance of its rights under this  Agreement.  The Company and each
Holder agree that monetary damages would not provide  adequate  compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement  and  hereby  further  agrees  that,  in the event of any  action  for
specific  performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

      (b)  No  Inconsistent  Agreements.  Neither  the  Company  nor  any of its
subsidiaries  has, as of the date hereof  entered into and  currently in effect,
nor shall the Company or any of its  subsidiaries,  on or after the date of this
Agreement,  enter into any  agreement  with  respect to its  securities  that is
inconsistent  with the  rights  granted  to the  Holders  in this  Agreement  or
otherwise conflicts with the provisions hereof.  Except as disclosed in Schedule
2.1(c) of the Purchase Agreement or Schedule II hereto,  neither the Company nor
any of its subsidiaries has previously  entered into any agreement  currently in
effect granting any registration rights with respect to any of its securities to
any Person.  Without  limiting  the  generality  of the  foregoing,  without the
written consent of the Holders of a majority of the then outstanding Registrable
Securities,  the Company  shall not grant to any Person the right to request the
Company to register any  securities  of the Company,  under the  Securities  Act
unless the rights so granted are subject in all  respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

      (c) No  Piggyback  on  Registrations.  Neither  the Company nor any of its
security holders (other than the Holders in such capacity  pursuant hereto or as
disclosed on Schedule  2.1(c) of the  Purchase  Agreement or Schedule II hereto)
may include  securities of the Company in the  Registration  Statement,  and the
Company shall not after the date hereof enter into any agreement  providing such
right to any of its  securityholders,  unless the right so granted is subject in
all respects to the prior rights in full of the Holders set forth herein, and is
not otherwise in conflict with the provisions of this Agreement.

                                      -12-


      (d)  Piggy-Back  Registrations.  If at  any  time  when  there  is  not an
effective  Registration  Statement  providing for the resale of the  Registrable
Securities,  the Company shall determine to prepare and file with the Commission
a  registration  statement  relating to an  offering  for its own account or the
account of others  under the  Securities  Act of any of its  equity  securities,
other  than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
Act) or their then equivalents relating to equity securities to be issued solely
in  connection  with  any  acquisition  of any  entity  or  business  or  equity
securities  issuable in connection  with stock option or other employee  benefit
plans, the Company shall send to each holder of Registrable  Securities  written
notice of such  determination  and, if within  thirty (30) days after receipt of
such notice,  or within such  shorter  period of time as may be specified by the
Company in such  written  notice as may be  necessary  for the Company to comply
with  its  obligations  with  respect  to the  timing  of  the  filing  of  such
registration  statement,  any such  holder  shall so request  in writing  (which
request shall specify the Registrable  Securities  intended to be disposed of by
the Purchasers),  the Company will cause the  registration  under the Securities
Act of all  Registrable  Securities  which the Company has been so  requested to
register by the holder, to the extent requisite to permit the disposition of the
Registrable  Securities so to be registered,  provided that if at any time after
giving  written  notice of its intention to register any securities and prior to
the effective date of the  registration  statement filed in connection with such
registration,  the Company shall  determine for any reason not to register or to
delay  registration of such securities,  the Company may, at its election,  give
written notice of such determination to such holder and,  thereupon,  (i) in the
case of a determination not to register,  shall be relieved of its obligation to
register any Registrable  Securities in connection with such  registration  (but
not from its  obligation to pay expenses in  accordance  with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay  registering any Registrable  Securities being  registered  pursuant to
this  Section  7(d) for the same period as the delay in  registering  such other
securities.  The Company shall include in such registration statement all or any
part of such  Registrable  Securities  such holder  requests  to be  registered;
provided,  however,  that the Company  shall not be  required  to  register  any
Registrable  Securities pursuant to this Section 7(d) that are eligible for sale
pursuant to Rule 144(k) of the  Securities  Act. In the case of an  underwritten
public  offering,  if  the  managing  underwriter(s)  or  underwriter(s)  should
reasonably  object  to the  inclusion  of the  Registrable  Securities  in  such
registration statement, then if the Company after consultation with the managing
underwriter  should reasonably  determine that the inclusion of such Registrable
Securities would materially  adversely affect the offering  contemplated in such
registration statement,  and based on such determination recommends inclusion in
such  registration  statement of fewer or none of the Registrable  Securities of
the  Holders,  then (x) the  number of  Registrable  Securities  of the  Holders
included in such  registration  statement  shall be reduced  pro-rata among such
Holders  (based  upon the  number  of  Registrable  Securities  requested  to be
included  in the  registration),  if the  Company  after  consultation  with the
underwriter(s)  recommends the inclusion of fewer Registrable Securities, or (y)
none of the  Registrable  Securities  of the  Holders  shall be included in such
registration   statement,   if  the   Company   after   consultation   with  the
underwriter(s)  recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable  securities intended to be offered
by the Holders  than the  fraction of similar  reductions  imposed on such other
persons or entities (other than the Company).

                                      -13-


      (e) Failure to File Registration  Statement and Other Events.  The Company
and  the  Purchasers   agree  that  the  Holders  will  suffer  damages  if  the
Registration  Statement  is not  filed on or prior  to the  Filing  Date and not
declared  effective by the Commission on or prior to the Effectiveness  Date and
maintained in the manner contemplated herein during the Effectiveness  Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain  the extent of such  damages with  precision.
Accordingly,  if (A) the Registration  Statement is not filed on or prior to the
Filing Date, or (B) the Registration  Statement is not declared effective by the
Commission on or prior to the Effectiveness  Date (or in the event an additional
Registration  Statement is filed  because the actual  number of shares of Common
Stock into which the  Warrants are  exercisable  exceeds the number of shares of
Common Stock initially  registered is not filed and declared  effective with the
time periods set forth in Section 2), or (C) the Company  fails to file with the
Commission a request for  acceleration  in accordance  with Rule 461 promulgated
under the  Securities  Act within three (3)  Business  Days of the date that the
Company  is  notified  (orally  or in  writing,  whichever  is  earlier)  by the
Commission that a Registration  Statement will not be "reviewed," or not subject
to further review, or (D) the Registration  Statement is filed with and declared
effective  by the  Commission  but  thereafter  ceases to be effective as to all
Registrable  Securities at any time prior to the expiration of the Effectiveness
Period, without being succeeded promptly by a subsequent  Registration Statement
filed with and declared effective by the Commission in accordance with Section 2
hereof,  or (E) the Company has  breached  Section  3(n),  or (F) trading in the
Common Stock shall be  suspended  or if the Common Stock is delisted  from or no
longer quoted on the OTC Bulletin  Board (or other  principal  exchange on which
the  Common  Stock is listed or  traded)  for any reason for more than three (3)
Business Days in the aggregate  (any such failure or breach being referred to as
an "Event," and for purposes of clauses (A) and (B) the date on which such Event
occurs,  or for purposes of clause (C) the date on which such three (3) Business
Day period is  exceeded,  or for  purposes of clause (D) after more than fifteen
(15)  Business  Days, or for purposes of clause (F) the date on which such three
(3) Business Day period is exceeded,  being  referred to as "Event  Date"),  the
Company shall pay an amount in cash as  liquidated  damages to each Holder equal
to two percent (2%) for each calendar  month  (prorated for shorter  periods) of
the Holder's initial investment in the Preferred Stock from the Event Date until
the applicable  Event is cured;  provided,  however,  that in no event shall the
amount of  liquidated  damages  payable at any time and from time to time to any
Holder pursuant to this Section 7(e) exceed an aggregate of twenty percent (20%)
of the  amount  of the  Holder's  initial  investment  in the  Preferred  Stock.
Notwithstanding  anything to the contrary in this  paragraph  (e), if (i) any of
the Events  described in clauses (A), (B), (C), (D) or (F) shall have  occurred,
(II) on or prior to the applicable  Event Date, the Company shall have exercised
its rights under  Section 3(n) hereof and (III) the  postponement  or suspension
permitted  pursuant  to such  Section  3(n) shall  remain  effective  as of such
applicable Event Date, then the applicable Event Date shall be deemed instead to
occur on the second Business Day following the termination of such  postponement
or  suspension.  Liquidated  damages  payable by the  Company  pursuant  to this
Section  7(e) shall be payable on the first  (1st)  Business  Day of each thirty
(30) day  period  following  the Event  Date.  Notwithstanding  anything  to the
contrary  contained herein, in no event shall any liquidated  damages be payable
with respect to the Warrants or the Warrant Shares.

      (f) Amendments and Waivers.  The provisions of this  Agreement,  including
the provisions of this sentence,  may not be amended,  modified or supplemented,
and waivers or  consents to  departures  from the  provisions  hereof may not be
given,  unless the same shall be in writing  and signed by the  Company  and the
Holders of a majority of the Registrable Securities outstanding.

                                      -14-


      (g) Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business  Day, (ii) the Business Day after the date of  transmission,  if such
notice or  communication  is delivered via facsimile at the facsimile  telephone
number  specified  for notice later than 5:00 p.m.,  New York City time,  on any
date and earlier than 11:59 p.m.,  New York City time,  on such date,  (iii) the
Business Day  following  the date of mailing,  if sent by overnight  delivery by
nationally  recognized  overnight  courier service or (iv) actual receipt by the
party to whom  such  notice is  required  to be given.  The  addresses  for such
communications  shall be with  respect to each  Holder at its  address set forth
under its name on Schedule I attached  hereto  with copies to its legal  counsel
named therein, or with respect to the Company, addressed to:

                                    Dolce Ventures Inc.
                                    N0.18 Zhong Guan Cun Dong St.
                                    Haidian District
                                    Beijing, China
                                    Attention: Chen Fang
                                    Tel. No.: 011-86-10-82600527
                                    Fax No.: 011-010-82600042

with copies (which copies
shall not constitute notice
to the Company) to:                 GUZOV OFSINK, LLC
                                    600 Madison Avenue, 14th Floor
                                    New York, New York 10022
                                    Attention:  Darren Ofsink
                                    Tel. No.:  (212) 371-8008, ext. 127
                                    Fax No.:  (212) 688-7273

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have  designated in writing to the other parties  hereto
by such  notice.  Copies of notices to each  Holder  (in  addition  to the legal
counsel set forth on Schedule I hereto) shall be sent to Kramer Levin Naftalis &
Frankel LLP,  Kramer Levin  Naftalis & Frankel LLP, 1177 Avenue of the Americas,
New York,  New York 10036,  Attention:  Christopher  S. Auguste,  Telephone No.:
(212) 715-9100, Facsimile No.: (212) 715-8000.

      (h) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors  and  permitted  assigns and
shall inure to the benefit of each Holder and its  successors  and assigns.  The
Company  may not  assign  this  Agreement  or any of its  rights or  obligations
hereunder  without the prior written consent of each Holder.  Each Purchaser may
assign its rights  hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

                                      -15-


      (i)  Assignment  of  Registration   Rights.  The  rights  of  each  Holder
hereunder,  including  the  right  to  have  the  Company  register  for  resale
Registrable Securities in accordance with the terms of this Agreement,  shall be
automatically assignable by each Holder to any Person of all or a portion of the
Preferred  Stock or Registrable  Securities if: (i) the Holder agrees in writing
with the  transferee  or  assignee  to assign  such  rights,  and a copy of such
agreement  is  furnished  to the  Company  within a  reasonable  time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment,  furnished  with written  notice of (a) the name and address of such
transferee  or  assignee,  and (b) the  securities  with  respect  to which such
registration  rights are being  transferred  or assigned,  (iii)  following such
transfer  or  assignment  the  further  disposition  of such  securities  by the
transferee or assignees is restricted  under the  Securities  Act and applicable
state  securities  laws,  (iv) at or before the time the  Company  receives  the
written notice  contemplated  by clause (ii) of this Section,  the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Purchase Agreement.  The rights to assignment
shall apply to the Holders (and to subsequent) successors and assigns.

      (j)  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of which when so executed  shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered to the other parties hereto, it being understood that all parties need
not sign the same  counterpart.  In the event that any signature is delivered by
facsimile  transmission,  such signature shall create a valid binding obligation
of the party  executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile  signature were the original
thereof.

      (k) Governing Law;  Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the application of the substantive law of another  jurisdiction.  This Agreement
shall not be  interpreted or construed  with any  presumption  against the party
causing  this  Agreement to be drafted.  The Company and the Holders  agree that
venue for any dispute  arising under this Agreement will lie  exclusively in the
state or federal  courts  located in New York County,  New York, and the parties
irrevocably  waive any right to raise forum non conveniens or any other argument
that New York is not the proper venue.  The Company and the Holders  irrevocably
consent to personal jurisdiction in the state and federal courts of the state of
New York.  The Company and the Holders  consent to process  being  served in any
such suit,  action or  proceeding by mailing a copy thereof to such party at the
address in effect for  notices to it under this  Agreement  and agrees that such
service  shall  constitute  good and  sufficient  service of process  and notice
thereof.  Nothing in this  Section 7(k) shall affect or limit any right to serve
process in any other manner permitted by law. The Company and the Holders hereby
agree that the prevailing party in any suit, action or proceeding arising out of
or relating to this  Agreement or the Purchase  Agreement,  shall be entitled to
reimbursement  for  reasonable  legal fees from the  non-prevailing  party.  The
parties hereby waive all rights to a trial by jury.

      (l) Cumulative  Remedies.  The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

      (m) Severability.  If any term, provision, covenant or restriction of this
Agreement is held to be invalid,  illegal, void or unenforceable in any respect,
the remainder of the terms,  provisions,  covenants and  restrictions  set forth
herein  shall  remain in full force and effect and shall in no way be  affected,
impaired or  invalidated,  and the  parties  hereto  shall use their  reasonable
efforts  to find  and  employ  an  alternative  means  to  achieve  the  same or
substantially  the same  result as that  contemplated  by such term,  provision,
covenant  or  restriction.  It is  hereby  stipulated  and  declared  to be  the
intention of the parties  that they would have  executed  the  remaining  terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

                                      -16-


      (n)  Headings.  The  headings  herein  are for  convenience  only,  do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

      (o) Shares Held by the Company and its Affiliates. Whenever the consent or
approval of Holders of a  specified  percentage  of  Registrable  Securities  is
required hereunder, Registrable Securities held by the Company or its Affiliates
(other than any Holder or transferees  or successors or assigns  thereof if such
Holder is deemed to be an  Affiliate  solely by reason of its  holdings  of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.

      (p) Independent  Nature of Purchasers.  The Company  acknowledges that the
obligations of each Purchaser  under the  Transaction  Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under the Transaction  Documents.  The Company  acknowledges  that the
decision of each  Purchaser  to  purchase  Securities  pursuant to the  Purchase
Agreement has been made by such Purchaser  independently  of any other Purchaser
and  independently of any information,  materials,  statements or opinions as to
the business, affairs, operations, assets, properties,  liabilities,  results of
operations, condition (financial or otherwise) or prospects of the Company or of
its  Subsidiaries  which may have made or given by any other Purchaser or by any
agent or employee of any other Purchaser,  and no Purchaser or any of its agents
or employees  shall have any  liability to any  Purchaser  (or any other person)
relating  to or arising  from any such  information,  materials,  statements  or
opinions.  The Company  acknowledges  that nothing  contained  herein, or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant hereto or
thereto (including,  but not limited to, the (i) inclusion of a Purchaser in the
Registration  Statement  and (ii) review by, and  consent to, such  Registration
Statement by a Purchaser)  shall be deemed to  constitute  the  Purchasers  as a
partnership,  an  association,  a joint venture or any other kind of entity,  or
create a presumption  that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction  Documents.  The Company  acknowledges  that each Purchaser shall be
entitled to  independently  protect and  enforce its rights,  including  without
limitation,  the  rights  arising  out of  this  Agreement  or out of the  other
Transaction Documents,  and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company
acknowledges   that  for  reasons  of   administrative   convenience  only,  the
Transaction  Documents  have been prepared by counsel for one of the  Purchasers
and  such  counsel  does  not  represent  the  other  Purchasers  and the  other
Purchasers  have  retained  their own  individual  counsel  with  respect to the
transactions  contemplated  hereby. The Company acknowledges that it has elected
to provide all Purchasers with the same terms and Transaction  Documents for the
convenience of the Company and not because it was required or requested to do so
by the Purchasers.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -17-


      IN WITNESS  WHEREOF,  the parties  hereto  have  caused this  Registration
Rights Agreement to be duly executed by their respective  authorized  persons as
of the date first indicated above.

                                            DOLCE VENTURES, INC.

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                            PURCHASER:

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                      -18-


                                   Schedule I
                               List of Purchasers



Names and Addresses                         Number of Preferred Shares          Dollar Amount of
of Purchasers                               & Warrants Purchased                Investment
- -------------                               --------------------                ----------
                                                                          
Vision Opportunity Master Fund, Ltd.        Preferred Shares: 2,189,782         $6,000,000
20 W 55th St., 5th floor                    Series A Warrants: 2,189,782
New York, NY 10019                          Series B Warrants: 1,094,891
                                            Series J Warrants: 1,993,355
                                            Series C Warrants: 1,993,355
                                            Series D Warrants: 996,678

SEI Private Trust Co. FAO
The JM Smucker Co. Master Trust             Preferred Shares: 140,000           $383,600
1 Freedom Valley Dr                         Series A Warrants: 140,000
Oaks, PA 19456                              Series B Warrants: 70,000
Attn: Suzanne Rokosny                       Series J Warrants: 127,442
Tax ID: 23-3060382                          Series C Warrants: 127,442
                                            Series D Warrants: 63,721

Coronado Capital Partners LP                Preferred Shares: 180,000           $493,200
c/o MS Howells                              Series A Warrants: 180,000
20555 N Pima Rd, Suite 100                  Series B Warrants: 90,000
Scottsdale, AZ 85255                        Series J Warrants: 163,854
Attn: Christine Nichols                     Series C Warrants: 163,854
Tax ID: 20-2427088                          Series D Warrants: 81,927



                                      -19-


                                   Schedule II
          Securities Permitted to be Included on Registration Statement

                           [SEE ATTACHED SPREADSHEET]

                                      -20-


                                    Exhibit A
                              Plan of Distribution

      The selling security holders and any of their pledgees,  donees, assignees
and  successors-in-interest  may,  from  time to time,  sell any or all of their
shares  of  common  stock  being  offered  under  this  prospectus  on any stock
exchange,  market or trading  facility on which  shares of our common  stock are
traded or in private  transactions.  These  sales may be at fixed or  negotiated
prices.  The selling  security  holders may use any one or more of the following
methods when disposing of shares:

o     ordinary   brokerage   transactions   and   transactions   in  which   the
      broker-dealer solicits purchasers;

o     block trades in which the broker-dealer will attempt to sell the shares as
      agent but may  position  and resell a portion of the block as principal to
      facilitate the transaction;

o     purchases by a broker-dealer as principal and resales by the broker-dealer
      for its account;

o     an exchange  distribution  in accordance  with the rules of the applicable
      exchange;

o     privately negotiated transactions;

o     to cover short sales made after the date that the  registration  statement
      of  which  this  prospectus  is  a  part  is  declared  effective  by  the
      Commission;

o     broker-dealers  may agree  with the  selling  security  holders  to sell a
      specified number of such shares at a stipulated price per share;

o     a combination of any of these methods of sale; and

o     any other method permitted pursuant to applicable law.

      The shares may also be sold  under  Rule 144 under the  Securities  Act of
1933,  as amended  ("Securities  Act"),  if  available,  rather  than under this
prospectus.  The selling security holders have the sole and absolute  discretion
not to  accept  any  purchase  offer or make any sale of shares if they deem the
purchase price to be unsatisfactory at any particular time.

      The selling  security  holders may pledge  their  shares to their  brokers
under the margin provisions of customer agreements. If a selling security holder
defaults on a margin loan, the broker may, from time to time, offer and sell the
pledged shares.

      Broker-dealers  engaged by the  selling  security  holders may arrange for
other  broker-dealers  to  participate  in  sales.  Broker-dealers  may  receive
commissions  or  discounts  from  the  selling  security  holders  (or,  if  any
broker-dealer acts as agent for the purchaser of shares,  from the purchaser) in
amounts to be negotiated,  which commissions as to a particular broker or dealer
may be in excess of customary  commissions to the extent permitted by applicable
law.

                                      -21-


      If  sales  of  shares   offered   under  this   prospectus   are  made  to
broker-dealers  as  principals,  we would be required  to file a  post-effective
amendment to the  registration  statement of which this prospectus is a part. In
the post-effective  amendment, we would be required to disclose the names of any
participating  broker-dealers and the compensation arrangements relating to such
sales.

      The selling  security  holders and any  broker-dealers  or agents that are
involved in selling the shares offered under this prospectus may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with these
sales.  Commissions received by these broker-dealers or agents and any profit on
the  resale of the  shares  purchased  by them may be deemed to be  underwriting
commissions or discounts under the Securities Act. Any  broker-dealers or agents
that are  deemed to be  underwriters  may not sell  shares  offered  under  this
prospectus  unless and until we set forth the names of the  underwriters and the
material  details of their  underwriting  arrangements  in a supplement  to this
prospectus  or,  if  required,  in  a  replacement   prospectus  included  in  a
post-effective  amendment to the registration statement of which this prospectus
is a part.

      The selling  security  holders and any other persons  participating in the
sale or distribution of the shares offered under this prospectus will be subject
to  applicable  provisions  of the Exchange  Act, and the rules and  regulations
under that act, including Regulation M. These provisions may restrict activities
of,  and limit the  timing of  purchases  and sales of any of the shares by, the
selling security holders or any other person.  Furthermore,  under Regulation M,
persons   engaged  in  a  distribution   of  securities   are  prohibited   from
simultaneously  engaging in market making and other  activities  with respect to
those  securities for a specified  period of time prior to the  commencement  of
such distributions,  subject to specified exceptions or exemptions. All of these
limitations may affect the marketability of the shares.

      If any of the shares of common  stock  offered  for sale  pursuant to this
prospectus are transferred  other than pursuant to a sale under this prospectus,
then  subsequent  holders could not use this prospectus  until a  post-effective
amendment or prospectus  supplement is filed,  naming such holders.  We offer no
assurance as to whether any of the selling security holders will sell all or any
portion of the shares offered under this prospectus.

      We have  agreed  to pay all fees and  expenses  we incur  incident  to the
registration of the shares being offered under this  prospectus.  However,  each
selling  security  holder and purchaser is responsible for paying any discounts,
commissions and similar selling expenses they incur.

      We and the selling  security  holders have agreed to indemnify one another
against certain losses,  damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.

                                      -22-

EX-4.3

                                LOCK-UP AGREEMENT

      THIS AGREEMENT (this  "Agreement") is dated as of September 7, 2006 by and
among  Dolce  Ventures,  Inc.,  a Utah  corporation  (the  "Company"),  and  the
shareholders of the Company listed on Schedule A attached hereto  (collectively,
the "Shareholders").

      WHEREAS,  to induce the Company and the  investors  (the  "Investors")  to
enter into the Series B Convertible  Preferred Stock Purchase Agreement dated as
of the date hereof (the  "Purchase  Agreement") by and among the Company and the
Investors,  the Shareholders have agreed not to sell any shares of the Company's
common  stock,  $0.001  par value  per share  (the  "Common  Stock"),  that such
Shareholders  presently  own or may  acquire  after the date  hereof,  except in
accordance  with the terms and  conditions set forth herein.  Capitalized  terms
used herein without definition shall have the meanings assigned to such terms in
the Purchase Agreement.

      NOW,   THEREFORE,   in  consideration  of  the  covenants  and  conditions
hereinafter contained, the parties hereto agree as follows:

      1. Restriction on Transfer. The Shareholders hereby agree with the Company
that the Shareholders will not offer, sell, contract to sell, assign,  transfer,
hypothecate, pledge or grant a security interest in, or otherwise dispose of, or
enter into any transaction which is designed to, or might reasonably be expected
to, result in the  disposition  of (whether by actual  disposition  or effective
economic  disposition  due to cash settlement or otherwise by the Company or any
affiliate  of the  Company  or any  person in  privity  with the  Company or any
affiliate of the Company),  directly or indirectly,  any of the shares of Common
Stock from the period  commencing  on the Closing  Date and expiring on the date
that is the later of one (1) year  following  the Closing Date or six (6) months
following the effective date of the registration  statement filed by the Company
with the  Securities  and Exchange  Commission  providing  for the resale of the
shares of Common Stock  issuable upon  conversion  of the  Preferred  Shares and
exercise  of the  Warrants  issued  pursuant  to  the  Purchase  Agreement  (the
"Period");  provided,  however that no Shareholder shall, during the twelve (12)
months  following the Period,  sell more than one twelfth  (1/12) of their total
holdings of Common Stock or Preferred Shares during any one (1) month.

      2. Ownership.  During the term of this Agreement,  the Shareholders  shall
retain  all  rights  of  ownership  in  the  Common  Stock,  including,  without
limitation,  voting rights and the right to receive any dividends,  if any, that
may be declared in respect thereof.

      3.  Company  and  Transfer  Agent.  The  Company is hereby  authorized  to
disclose the existence of this Agreement to its transfer agent.  The Company and
its transfer agent are hereby  authorized to decline to make any transfer of the
Common  Stock if such  transfer  would  constitute a violation or breach of this
Agreement and the Purchase Agreement.



      4. Notices. All notices,  demands,  consents,  requests,  instructions and
other communications to be given or delivered or permitted under or by reason of
the  provisions  of  this  Agreement  or in  connection  with  the  transactions
contemplated  hereby shall be in writing and shall be deemed to be delivered and
received by the intended recipient as follows: (i) if personally  delivered,  on
the business day of such  delivery (as  evidenced by the receipt of the personal
delivery  service),  (ii) if mailed  certified or registered mail return receipt
requested,  four (4)  business  days after being  mailed,  (iii) if delivered by
overnight courier (with all charges having been prepaid), on the business day of
such delivery (as evidenced by the receipt of the overnight  courier  service of
recognized  standing),  or (iv) if delivered by facsimile  transmission,  on the
business  day of such  delivery  if sent by 6:00  p.m.  in the time  zone of the
recipient,  or if sent after that time, on the next succeeding  business day (as
evidenced  by the  printed  confirmation  of delivery  generated  by the sending
party's  telecopier  machine).  If  any  notice,   demand,   consent,   request,
instruction  or other  communication  cannot be  delivered  because of a changed
address of which no notice was given (in accordance with this Section 4), or the
refusal to accept same, the notice,  demand,  consent,  request,  instruction or
other  communication  shall be deemed  received on the second  business  day the
notice is sent (as  evidenced  by a sworn  affidavit  of the  sender).  All such
notices, demands, consents, requests, instructions and other communications will
be sent to the following addresses or facsimile numbers as applicable.

                  If to the Company:

                  Dolce Ventures Inc.
                  N0.18 Zhong Guan Cun Dong St.
                   Haidian District
                  Beijing, China
                  Attention: Chen Fang
                  Tel. No.: 011-86-10-82600527
                  Fax No.: 011-010-82600042

                  With copies to:

                  GUZOV OFSINK, LLC
                  600 Madison Avenue, 14th Floor
                  New York, New York 10022
                  Attention:  Darren Ofsink
                  Tel. No.:  (212) 371-8008, ext. 127
                  Fax No.:  (212) 688-7273

                  and to:

                  Kramer Levin Naftalis & Frankel LLP
                  1177 Avenue of the Americas
                  New York, New York 10036
                  Attention: Christopher S. Auguste
                  Tel No.: (212) 715-9100
                  Fax No.: (212) 715-8000



               If to any of the Shareholders, addressed to such Shareholder at:

                  c/o Dolce Ventures Inc.
                  N0.18 Zhong Guan Cun Dong St.
                  Haidian District
                  Beijing, China
                  Attention: Chen Fang
                  Tel. No.: 011-86-10-82600527
                  Fax No.: 011-010-82600042


or to such other  address as any party may specify by notice  given to the other
party in accordance with this Section 4.

      5.  Amendment.  This  Agreement may not be modified,  amended,  altered or
supplemented,  except by a written  agreement  executed  by each of the  parties
hereto.

      6. Entire Agreement.  This Agreement contain the entire  understanding and
agreement of the parties  relating to the subject  matter hereof and  supersedes
all prior and/or  contemporaneous  understandings and agreements of any kind and
nature (whether  written or oral) among the parties with respect to such subject
matter, all of which are merged herein.

      7.  Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of New York applicable to agreements made
and to be performed in that state,  without  regard to any of its  principles of
conflicts  of laws or other laws which would  result in the  application  of the
laws of another jurisdiction.  This Agreement shall be construed and interpreted
without regard to any presumption against the party causing this Agreement to be
drafted.

      8. Waiver of Jury Trial.  EACH OF THE PARTIES HEREBY  UNCONDITIONALLY  AND
IRREVOCABLY  WAIVES  THE  RIGHT  TO A  TRIAL  BY  JURY  IN ANY  ACTION,  SUIT OR
PROCEEDING  ARISING  OUT OF OR RELATING TO THIS  AGREEMENT  OR THE  TRANSACTIONS
CONTEMPLATED  HEREBY.  EACH  OF  THE  PARTIES  UNCONDITIONALLY  AND  IRREVOCABLY
CONSENTS TO THE  EXCLUSIVE  JURISDICTION  OF THE COURTS OF THE STATE OF NEW YORK
LOCATED  IN NEW YORK  COUNTY AND THE  FEDERAL  DISTRICT  COURT FOR THE  SOUTHERN
DISTRICT OF NEW YORK WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING  ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS  CONTEMPLATED  HEREBY,  AND
EACH OF THE PARTIES HEREBY  UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY OBJECTION
TO VENUE IN NEW YORK COUNTY OR SUCH  DISTRICT,  AND AGREES  THAT  SERVICE OF ANY
SUMMONS,  COMPLAINT,  NOTICE OR OTHER PROCESS  RELATING TO SUCH SUIT,  ACTION OR
OTHER PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED IN SECTION 4.



      9. Severability. The parties agree that if any provision of this Agreement
be held to be  invalid,  illegal  or  unenforceable  in any  jurisdiction,  that
holding shall be effective only to the extent of such  invalidity,  illegally or
unenforceability  without invalidating or rendering illegal or unenforceable the
remaining   provisions   hereof,   and  any  such   invalidity,   illegally   or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.  It is the intent of the
parties that this Agreement be fully enforced to the fullest extent permitted by
applicable law.

      10.  Binding  Effect;  Assignment.  This  Agreement  and  the  rights  and
obligations  hereunder may not be assigned by any party hereto without the prior
written  consent of the other parties  hereby.  This Agreement  shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
successors and permitted assigns.

      11. Headings. The section headings contained in this Agreement (including,
without limitation, section headings and headings in the exhibits and schedules)
are inserted  for  reference  purposes  only and shall not affect in any way the
meaning,  construction or interpretation of this Agreement. Any reference to the
masculine,  feminine, or neuter gender shall be a reference to such other gender
as is appropriate.  References to the singular shall include the plural and vice
versa.

      12.  Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, and all of which, when
taken together, shall constitute one and the same document. This Agreement shall
become effective when one or more counterparts,  taken together, shall have been
executed and delivered by all of the parties.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



      IN WITNESS  WHEREOF,  the parties have executed  this  Agreement as of the
date first written above herein.

                                            DOLCE VENTURES, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:



                                    Exhibit A


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EX-4.4

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  THE  ISSUER  THAT  REGISTRATION  OF  SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                          SERIES A WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                               DOLCE VENTURES INC.

                           Expires September __, 2011

No.: W-A-06- __                                    Number of Shares: ___________
Date of Issuance: September __, 2006

      FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth, the
undersigned,  Dolce  Ventures,  Inc.,  a Utah  corporation  (together  with  its
successors    and   assigns,    the    "Issuer"),    hereby    certifies    that
_______________________________  or its  registered  assigns  (the  "Holder") is
entitled  to  subscribe  for and  purchase,  during  the  Term  (as  hereinafter
defined),  up  to  ____________________________________  (_____________)  shares
(subject to adjustment as hereinafter provided) of the duly authorized,  validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price  per  share  equal to the  Warrant  Price  then in effect on the terms and
conditions  hereinafter set forth. The number of shares of Common Stock issuable
upon  exercise of this Warrant  reflects the number of shares of Common Stock to
which the Holder is entitled following the 1-for-304.4444 reverse stock split to
be effected by the Issuer  following the Original Issue Date (the "Reverse Stock
Split"). Capitalized terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 8 hereof.

      1. Term. The term of this Warrant shall commence on September __, 2006 and
shall expire at 6:00 p.m.,  eastern  time,  on  September  __, 2011 (such period
being the "Term").

      2. Method of  Exercise;  Payment;  Issuance of New  Warrant;  Transfer and
Exchange.

      (a) Time of Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term.


                                      -1-


      (b) Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached  hereto as  Exhibit A duly  executed)  at the  principal  office of the
Issuer, and by the payment to the Issuer of an amount of consideration  therefor
equal to the Warrant Price in effect on the date of such exercise  multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised,  payable at such Holder's election (i) by certified or official
bank check or by wire transfer to an account  designated by the Issuer,  (ii) by
"cashless  exercise" in accordance with the provisions of subsection (c) of this
Section  2, but only when a  registration  statement  under the  Securities  Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

      (c)  Cashless  Exercise.  Notwithstanding  any  provisions  herein  to the
contrary and  commencing  one (1) year following the Original Issue Date, if (i)
the Per Share  Market  Value of one share of Common  Stock is  greater  than the
Warrant  Price  (at the  date of  calculation  as set  forth  below)  and (ii) a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect by the date such  registration  statement is
required to be  effective  pursuant to the  Registration  Rights  Agreement  (as
defined in the  Purchase  Agreement)  or not  effective  at any time  during the
Effectiveness  Period  (as  defined in the  Registration  Rights  Agreement)  in
accordance  with the  terms of the  Registration  Rights  Agreement,  in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless  exercise  and shall  receive the number of shares of Common Stock
equal to an amount (as  determined  below) by  surrender  of this Warrant at the
principal  office of the Issuer  together with the properly  endorsed  Notice of
Exercise in which event the Issuer  shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

            X = Y - (A)(Y)
                    ------
                      B

Where       X =   the  number  of  shares  of  Common  Stock to be issued to the
                  Holder.

            Y =   the number of shares of Common Stock purchasable upon exercise
                  of all of the  Warrant or, if only a portion of the Warrant is
                  being exercised, the portion of the Warrant being exercised.

            A =   the Warrant Price.

            B =   the Per Share Market Value of one share of Common Stock.

      (d)  Issuance of Stock  Certificates.  In the event of any exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and conditions hereof, certificates for the shares of Warrant Stock so purchased
shall be dated the date of such  exercise  and  delivered  to the Holder  hereof
within a  reasonable  time,  not  exceeding  three (3)  Trading  Days after such
exercise (the "Delivery Date") or, at the request of the Holder (provided that a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is then in effect),  issued and delivered to the Depository  Trust
Company ("DTC") account on the Holder's behalf via the Deposit  Withdrawal Agent


                                      -2-


Commission  System  ("DWAC")  within a reasonable  time, not exceeding three (3)
Trading Days after such exercise,  and the Holder hereof shall be deemed for all
purposes to be the holder of the shares of Warrant  Stock so purchased as of the
date of such  exercise.  The Holder shall deliver this original  Warrant,  or an
indemnification  undertaking  with  respect  to such  Warrant in the case of its
loss,  theft or destruction,  at such time that this Warrant is fully exercised.
With respect to partial exercises of this Warrant, the Issuer shall keep written
records for the Holder of the number of shares of Warrant Stock  exercised as of
each date of exercise.

      (e) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the Holder, if the Issuer
fails to cause its  transfer  agent to transmit to the Holder a  certificate  or
certificates representing the Warrant Stock pursuant to an exercise on or before
the Delivery  Date,  and if after such date the Holder is required by its broker
to purchase (in an open market  transaction or otherwise) shares of Common Stock
to deliver in  satisfaction  of a sale by the Holder of the Warrant  Stock which
the Holder  anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
Issuer  shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant  Stock for which such  exercise  was not  honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Issuer shall be required to pay the Holder  $1,000.  The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable  confirmations and
other evidence reasonably requested by the Issuer.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect  to the  Issuer's  failure  to timely  deliver
certificates  representing  shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.

      (f)  Transferability  of Warrant.  Subject to Section  2(h)  hereof,  this
Warrant,  and the rights evidenced  hereby,  may be transferred by a Holder,  in
whole or in part, without the consent of the Issuer. If transferred  pursuant to
this  paragraph,  this Warrant may be  transferred on the books of the Issuer by
the Holder hereof in person or by duly  authorized  attorney,  upon surrender of
this Warrant at the principal  office of the Issuer,  properly  endorsed (by the
Holder  executing an assignment in the form attached hereto) and upon payment of
any  necessary  transfer  tax or other  governmental  charge  imposed  upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants to purchase the same aggregate number of shares of Warrant Stock,  each
new Warrant to represent  the right to purchase such number of shares of Warrant
Stock as the Holder  hereof shall  designate at the time of such  exchange.  All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical  with this  Warrant  except as to the number of shares of
Warrant Stock issuable pursuant thereto.


                                      -3-


      (g) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge  in writing the  extent,  if any, of its  continuing  obligation  to
afford to such  Holder all  rights to which such  Holder  shall  continue  to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

      (h) Compliance with Securities Laws.

            (i) The Holder of this Warrant,  by acceptance hereof,  acknowledges
      that this  Warrant  and the  shares  of  Warrant  Stock to be issued  upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other  party,  and for  investment,  and that the
      Holder will not offer,  sell or  otherwise  dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise  hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph  (iii) below,  this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted  with a legend in  substantially  the
      following form:

            THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE  UPON EXERCISE
            HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED (THE "SECURITIES  ACT") OR ANY STATE SECURITIES LAWS AND MAY
            NOT BE SOLD,  TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
            UNDER THE SECURITIES ACT AND UNDER  APPLICABLE STATE SECURITIES LAWS
            OR THE ISSUER SHALL HAVE  RECEIVED AN OPINION OF COUNSEL  REASONABLY
            SATISFACTORY  TO THE ISSUER  THAT  REGISTRATION  OF SUCH  SECURITIES
            UNDER THE  SECURITIES  ACT AND UNDER THE  PROVISIONS  OF  APPLICABLE
            STATE SECURITIES LAWS IS NOT REQUIRED.

            (iii) The Issuer  agrees to  reissue  this  Warrant or  certificates
      representing any of the Warrant Stock,  without the legend set forth above
      if at such time, prior to making any transfer of any such securities,  the
      Holder shall give written  notice to the Issuer  describing the manner and
      terms of such transfer and removal as the Issuer may  reasonably  request.
      Such proposed  transfer and removal will not be effected until: (a) either
      (i) the Issuer has received an opinion of counsel reasonably  satisfactory
      to the Issuer,  to the effect  that the  registration  of such  securities
      under the Securities Act is not required in connection  with such proposed
      transfer,  (ii) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (iii) the Issuer has received other evidence  reasonably  satisfactory  to
      the Issuer that such registration and  qualification  under the Securities
      Act and  state  securities  laws  are not  required,  or (iv)  the  Holder
      provides the Issuer with  reasonable  assurances that such security can be
      sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
      Issuer has received an opinion of counsel  reasonably  satisfactory to the
      Issuer,  to the  effect  that  registration  or  qualification  under  the
      securities  or "blue sky" laws of any state is not required in  connection


                                      -4-


      with such proposed  disposition,  or (ii) compliance with applicable state
      securities  or "blue  sky"  laws has been  effected  or a valid  exemption
      exists with  respect  thereto.  The Issuer will respond to any such notice
      from a holder  within three (3) Trading  Days. In the case of any proposed
      transfer under this Section 2(h),  the Issuer will use reasonable  efforts
      to comply with any such  applicable  state  securities or "blue sky" laws,
      but shall in no event be  required,  (x) to qualify to do  business in any
      state where it is not then qualified, or (y) to take any action that would
      subject it to tax or to the general  service of process in any state where
      it is not then subject.  The  restrictions  on transfer  contained in this
      Section 2(h) shall be in addition to, and not by way of limitation of, any
      other  restrictions  on transfer  contained  in any other  section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the  Holder  without  a  legend,  in lieu of  delivering
      physical  certificates  representing  the Warrant Stock  (provided  that a
      registration  statement  under the Securities Act providing for the resale
      of the  Warrant  Stock is then in  effect),  the  Issuer  shall  cause its
      transfer agent to electronically  transmit the Warrant Stock to the Holder
      by crediting the account of the Holder's Prime Broker with DTC through its
      DWAC system.

      (i) Accredited Investor.  In no event may the Holder exercise this Warrant
in whole or in part unless the Holder is an "accredited  investor" as defined in
Regulation D under the Securities Act.

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and reserved for the purpose of the issuance  upon  exercise of this
Warrant a number of authorized  but unissued  shares of Common Stock equal to at
least  one  hundred  percent  (100%) of the  number  of  shares of Common  Stock
issuable  upon exercise of this Warrant  without  regard to any  limitations  on
exercise.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any Governmental  Authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its best efforts as  expeditiously  as possible at its expense to
cause such shares to be duly  registered or qualified.  If the Issuer shall list
any shares of Common Stock on any securities  exchange or market it will, at its
expense,  list thereon,  and maintain and increase when  necessary such listing,
of, all shares of Warrant  Stock from time to time issued upon  exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has


                                      -5-


been  registered  pursuant to a registration  statement under the Securities Act
then in effect),  and, to the extent permissible under the applicable securities
exchange  rules,  all  unissued  shares of Warrant  Stock  which are at any time
issuable  hereunder,  so long as any shares of Common  Stock shall be so listed.
The Issuer will also so list on each  securities  exchange  or market,  and will
maintain such listing of, any other  securities which the Holder of this Warrant
shall be entitled to receive  upon the  exercise of this  Warrant if at the time
any securities of the same class shall be listed on such securities  exchange or
market by the Issuer.

      (c)  Covenants.  The  Issuer  shall not by any action  including,  without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or  through  any  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other action,  avoid or seek to
avoid the  observance or  performance  of any of the terms of this Warrant,  but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or  appropriate to protect
the rights of the Holder  hereof  against  dilution (to the extent  specifically
provided  herein)  or  impairment.   Without  limiting  the  generality  of  the
foregoing,  the Issuer will (i) not permit the par value,  if any, of its Common
Stock to exceed the then effective  Warrant Price,  (ii) not amend or modify any
provision  of the  Articles  of  Incorporation  or  by-laws of the Issuer in any
manner that would  adversely  affect the rights of the Holders of the  Warrants,
(iii)  take all such  action as may be  reasonably  necessary  in order that the
Issuer may  validly and legally  issue  fully paid and  nonassessable  shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant,  and (iv) use
its best efforts to obtain all such authorizations,  exemptions or consents from
any public  regulatory  body having  jurisdiction  thereof as may be  reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

      (d) Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      (e)  Payment of Taxes.  The Issuer  will pay any  documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided, however, that the Issuer shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any  certificates  representing  Warrant Stock in a name
other than that of the Holder in respect to which such shares are issued.

      4. Adjustment of Warrant Price.  The price at which such shares of Warrant
Stock may be  purchased  upon  exercise  of this  Warrant  shall be  subject  to
adjustment  from time to time as set forth in this  Section 4. The Issuer  shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with the notice provisions set forth in
Section 5.


                                      -6-


      (a)  Recapitalization,  Reorganization,  Reclassification,  Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering  Event"): (a) consolidate or merge with
      or into any other  Person and the Issuer  shall not be the  continuing  or
      surviving  corporation of such  consolidation or merger, or (b) permit any
      other Person to  consolidate  with or merge into the Issuer and the Issuer
      shall be the continuing or surviving  Person but, in connection  with such
      consolidation or merger,  any Capital Stock of the Issuer shall be changed
      into or exchanged for  Securities of any other Person or cash or any other
      property,  or (c) transfer all or  substantially  all of its properties or
      assets to any other  Person,  or (d)  effect a capital  reorganization  or
      reclassification  of its Capital Stock,  other than any event set forth in
      Section 4(b) below,  then, and in the case of each such Triggering  Event,
      proper  provision  shall be made so that, upon the basis and the terms and
      in the manner  provided in this Warrant,  the Holder of this Warrant shall
      be entitled upon the exercise hereof at any time after the consummation of
      such  Triggering  Event, to the extent this Warrant is not exercised prior
      to such Triggering Event, to receive at the Warrant Price in effect at the
      time  immediately  prior to the  consummation of such Triggering  Event in
      lieu of the Common Stock issuable upon such exercise of this Warrant prior
      to such Triggering Event, the Securities,  cash and property to which such
      Holder would have been entitled upon the  consummation  of such Triggering
      Event if such Holder had exercised the rights  represented by this Warrant
      immediately  prior thereto  (including the right of a shareholder to elect
      the  type of  consideration  it will  receive  upon a  Triggering  Event),
      subject to adjustments  (subsequent  to such  corporate  action) as nearly
      equivalent as possible to the  adjustments  provided for elsewhere in this
      Section  4;  provided,  however,  the  Holder at its  option  may elect to
      receive an amount in cash equal to the value of this Warrant calculated in
      accordance with the Black-Scholes  formula.  Notwithstanding the foregoing
      to the  contrary,  this Section  4(a)(i) shall only apply if the surviving
      entity pursuant to any such Triggering Event is a company that has a class
      of equity securities registered pursuant to the Securities Exchange Act of
      1934,  as amended,  and its common stock is listed or quoted on a national
      securities  exchange,  national  automated  quotation  system  or the  OTC
      Bulletin  Board.  In the event that the surviving  entity  pursuant to any
      such Triggering Event is not a public company that is registered  pursuant
      to the Securities Exchange Act of 1934, as amended, or its common stock is
      not listed or quoted on a national securities exchange, national automated
      quotation system or the OTC Bulletin Board, then the Holder shall have the
      right to demand  that the Issuer pay to the Holder an amount in cash equal
      to  the  value  of  this  Warrant   calculated  in  accordance   with  the
      Black-Scholes formula.


                                      -7-


            (ii)  Notwithstanding  anything  contained  in this  Warrant  to the
      contrary and so long as the surviving  entity  pursuant to any  Triggering
      Event  is a  company  that  has a class of  equity  securities  registered
      pursuant to the  Securities  Exchange  Act of 1934,  as  amended,  and its
      common  stock is  listed  or quoted  on a  national  securities  exchange,
      national  automated   quotation  system  or  the  OTC  Bulletin  Board,  a
      Triggering  Event shall not be deemed to have  occurred  if,  prior to the
      consummation  thereof,  each Person  (other than the Issuer)  which may be
      required to deliver any Securities,  cash or property upon the exercise of
      this  Warrant as  provided  herein  shall  assume,  by written  instrument
      delivered to, and reasonably  satisfactory to, the Holder of this Warrant,
      (A) the  obligations  of the Issuer  under this Warrant (and if the Issuer
      shall survive the consummation of such Triggering  Event,  such assumption
      shall be in  addition  to,  and shall not  release  the Issuer  from,  any
      continuing  obligations  of the  Issuer  under this  Warrant)  and (B) the
      obligation to deliver to such Holder such Securities, cash or property as,
      in accordance  with the foregoing  provisions of this subsection (a), such
      Holder shall be entitled to receive,  and such Person shall have similarly
      delivered  to such  Holder an opinion of counsel  for such  Person,  which
      counsel  shall  be  reasonably  satisfactory  to  such  Holder,  or in the
      alternative,  a written acknowledgement executed by the President or Chief
      Financial  Officer  of  the  Issuer,   stating  that  this  Warrant  shall
      thereafter  continue  in  full  force  and  effect  and the  terms  hereof
      (including,  without limitation,  all of the provisions of this subsection
      (a)) shall be applicable to the  Securities,  cash or property  which such
      Person may be required to deliver upon any exercise of this Warrant or the
      exercise of any rights pursuant hereto.

      (b) Stock  Dividends,  Subdivisions and  Combinations.  If at any time the
Issuer shall:

            (i) make or issue or set a record date for the holders of the Common
      Stock for the purpose of entitling them to receive a dividend  payable in,
      or other distribution of, shares of Common Stock (other than in connection
      with the  dividend  payable in shares of Common  Stock to be issued by the
      Issuer to the Issuer's stockholders in connection with the spin-off of the
      Issuer's wholly-owned subsidiary, Pegasus Tel, Inc.),

            (ii) subdivide its outstanding  shares of Common Stock into a larger
      number of shares of Common Stock, or

            (iii) combine its outstanding  shares of Common Stock into a smaller
      number of shares of Common  Stock  (other  than  pursuant  to the  Reverse
      Split),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.


                                      -8-


      (c) Certain Other  Distributions.  If at any time the Issuer shall make or
issue or set a record  date for the  determination  of the holders of the Common
Stock for the  purpose  of  entitling  them to  receive  any  dividend  or other
distribution of:

            (i) cash  (other  than a cash  dividend  payable  out of earnings or
      earned surplus  legally  available for the payment of dividends  under the
      laws of the jurisdiction of incorporation of the Issuer),

            (ii) any evidences of its  indebtedness,  any shares of stock of any
      class or any other securities or property of any nature  whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),
      or

            (iii) any warrants or other rights to subscribe  for or purchase any
      evidences  of its  indebtedness,  any  shares of stock of any class or any
      other  securities or property of any nature  whatsoever  (other than cash,
      Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such  evidences  of  indebtedness,  shares of  stock,  other  securities  or
property or warrants or other  subscription or purchase rights so distributable,
and (2) the  Warrant  Price then in effect  shall be  adjusted  to equal (A) the
Warrant Price then in effect  multiplied by the number of shares of Common Stock
for which  this  Warrant  is  exercisable  immediately  prior to the  adjustment
divided  by (B) the number of shares of Common  Stock for which this  Warrant is
exercisable immediately after such adjustment.  A reclassification of the Common
Stock  (other  than a change in par value,  or from par value to no par value or
from no par value to par value)  into  shares of Common  Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its  Common  Stock of such  shares of such  other  class of stock  within the
meaning of this  Section  4(c) and, if the  outstanding  shares of Common  Stock
shall be changed into a larger or smaller  number of shares of Common Stock as a
part of such  reclassification,  such change  shall be deemed a  subdivision  or
combination,  as the case may be, of the  outstanding  shares  of  Common  Stock
within the meaning of Section 4(b).

      (d) Issuance of Additional Shares of Common Stock. In the event the Issuer
shall at any time within the two (2) year period following the Original Issuance
Date issue any Additional  Shares of Common Stock (otherwise than as provided in
the  foregoing  subsections  (b) through (c) of this  Section 4), at a price per
share less than $2.74 or without consideration, then the Warrant Price upon each
such  issuance  shall be adjusted to the price  equal to the  consideration  per
share paid for such Additional Shares of Common Stock.


                                      -9-


      (e) Issuance of Common Stock Equivalents. In the event the Issuer shall at
any time within the two (2) year period  following  the Original  Issuance  Date
take a record of the holders of its Common  Stock for the  purpose of  entitling
them to receive a distribution  of, or shall in any manner (whether  directly or
by  assumption  in a merger in which the  Issuer is the  surviving  corporation)
issue or sell,  any  Common  Stock  Equivalents,  whether  or not the  rights to
exchange or convert  thereunder are immediately  exercisable,  and the price per
share for which Common Stock is issuable upon such  conversion or exchange shall
be less than $2.74  immediately  prior to the time of such issue or sale, or if,
after any such  issuance of Common  Stock  Equivalents,  the price per share for
which Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted,  and such price as so amended  shall be less than $2.74 at the time of
such  amendment or  adjustment,  then the Warrant  Price then in effect shall be
adjusted as provided in Section  4(d). No further  adjustments  of the number of
shares of Common  Stock for which this  Warrant is  exercisable  and the Warrant
Price then in effect  shall be made upon the actual  issue of such Common  Stock
upon conversion or exchange of such Common Stock Equivalents.

      (f) Other  Provisions  Applicable to Adjustments  under this Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

            (i) Computation of Consideration.  To the extent that any Additional
Shares of Common Stock or any Common Stock Equivalents (or any warrants or other
rights  therefor)  shall be issued  for cash  consideration,  the  consideration
received by the Issuer  therefor shall be the amount of the cash received by the
Issuer therefor,  or, if such Additional  Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription,  the subscription price,
or, if such  Additional  Shares of Common Stock or Common Stock  Equivalents are
sold to  underwriters  or dealers  for public  offering  without a  subscription
offering,  the initial public  offering price (in any such case  subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation,  discounts or expenses paid or incurred by
the Issuer for and in the  underwriting of, or otherwise in connection with, the
issuance  thereof).  In connection with any merger or consolidation in which the
Issuer is the surviving  corporation  (other than any consolidation or merger in
which the previously  outstanding  shares of Common Stock of the Issuer shall be
changed  to  or  exchanged  for  the  stock  or  other   securities  of  another
corporation),  the amount of consideration  therefore shall be, deemed to be the
fair  value,  as  determined  reasonably  and in good  faith  by the  Board  and
acceptable  to the  Holder,  of such  portion of the assets and  business of the
nonsurviving  corporation as the Board may determine to be  attributable to such
shares of Common  Stock or Common  Stock  Equivalents,  as the case may be.  The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other  rights to  subscribe  for or  purchase  the same shall be the
consideration  received by the Issuer for issuing such  warrants or other rights
plus the  additional  consideration  payable to the Issuer upon exercise of such
warrants or other rights.  The consideration for any Additional Shares of Common
Stock issuable  pursuant to the terms of any Common Stock  Equivalents  shall be
the consideration received by the Issuer for issuing warrants or other rights to
subscribe for or purchase such Common Stock Equivalents,  plus the consideration
paid or payable to the Issuer in respect of the  subscription for or purchase of
such  Common  Stock  Equivalents,  plus the  additional  consideration,  if any,
payable to the Issuer upon the exercise of the right of  conversion  or exchange


                                      -10-


in such Common Stock Equivalents. In the event of any consolidation or merger of
the Issuer in which the Issuer is not the surviving  corporation or in which the
previously  outstanding  shares of Common  Stock of the Issuer  shall be changed
into or exchanged for the stock or other securities of another  corporation,  or
in the event of any sale of all or substantially all of the assets of the Issuer
for stock or other securities of any corporation,  the Issuer shall be deemed to
have issued a number of shares of its Common  Stock for stock or  securities  or
other  property  of the other  corporation  computed  on the basis of the actual
exchange ratio on which the transaction was predicated,  and for a consideration
equal to the fair market value on the date of such transaction of all such stock
or  securities  or other  property  of the other  corporation.  In the event any
consideration  received  by the Issuer for any  securities  consists of property
other than cash,  the fair  market  value  thereof at the time of issuance or as
otherwise  applicable  shall be as determined in good faith by the Board. In the
event Common Stock is issued with other shares or  securities or other assets of
the Issuer for consideration  which covers both, the  consideration  computed as
provided in this Section  4(f)(i) shall be allocated  among such  securities and
assets as determined in good faith by the Board.

            (ii) When  Adjustments to Be Made. The adjustments  required by this
Section 4 shall be made whenever and as often as any specified  event  requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common  Stock for which this  Warrant is  exercisable  that would  otherwise  be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common  Stock,  as  provided  for in Section  4(b)) up to, but not
beyond the date of  exercise if such  adjustment  either by itself or with other
adjustments  not previously made adds or subtracts less than one percent (1%) of
the shares of Common  Stock for which this  Warrant is  exercisable  immediately
prior to the making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid)  which is postponed shall be
carried  forward  and  made  as soon as such  adjustment,  together  with  other
adjustments  required by this Section 4 and not previously made, would result in
a  minimum  adjustment  or on the  date  of  exercise.  For the  purpose  of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

            (iii)  Fractional  Interests.  In computing  adjustments  under this
Section 4,  fractional  interests in Common Stock shall be taken into account to
the nearest one one-hundredth (1/100th) of a share.

            (iv) When Adjustment Not Required. If the Issuer shall take a record
of the holders of its Common Stock for the purpose of entitling  them to receive
a  dividend  or  distribution  or  subscription  or  purchase  rights and shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

      (g) Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.


                                      -11-


      (h) Escrow of Warrant Stock. If after any property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and the Holder  exercises  this  Warrant,  any shares of Common Stock
issuable  upon  exercise by reason of such  adjustment  shall be deemed the last
shares of Common Stock for which this Warrant is exercised  (notwithstanding any
other provision to the contrary  herein) and such shares or other property shall
be held in escrow for the  Holder by the Issuer to be issued to the Holder  upon
and to the extent  that the event  actually  takes  place,  upon  payment of the
current  Warrant  Price.  Notwithstanding  any other  provision  to the contrary
herein,  if the event  for  which  such  record  was taken  fails to occur or is
rescinded,  then such  escrowed  shares  shall be  cancelled  by the  Issuer and
escrowed property returned.

      5. Notice of  Adjustments.  Whenever  the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the  option  of the  Holder  of this  Warrant  be  submitted  to an  Independent
Appraiser  reasonably  acceptable to the Issuer and the Holder. The Issuer shall
use its  best  efforts  to  cause  the  Independent  Appraiser  to  perform  the
calculations  and notify the Issuer and the Holder of the  results no later than
five (5) business days from the time it receives the disputed calculation.  Such
Independent  Appraiser's  calculation  shall be binding upon all parties  absent
manifest error. The reasonable  expenses of the Independent  Appraiser in making
such  determination  shall be paid by the  Issuer,  in the  event  the  Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was  correct,  or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof,  but in lieu of such fractional  shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

      7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the
contrary  set forth in this  Warrant,  at no time may a Holder  of this  Warrant
exercise  this  Warrant  if the  number of  shares of Common  Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares of
Common  Stock owned by such Holder at such time,  the number of shares of Common
Stock which would result in such Holder  beneficially  owning (as  determined in
accordance  with Section 13(d) of the Exchange Act and the rules  thereunder) in
excess of 9.9% of the then  issued  and  outstanding  shares  of  Common  Stock;
provided,  however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 12 hereof) (the "Waiver Notice")
that such  Holder  would like to waive this  Section 7 with regard to any or all
shares of Common Stock  issuable upon  exercise of this Warrant,  this Section 7
will be of no force or effect  with  regard to all or a portion  of the  Warrant
referenced in the Waiver Notice; provided, further, that this provision shall be
of no  further  force or effect  during  the  sixty-one  (61)  days  immediately
preceding the expiration of the term of this Warrant.


                                      -12-


      8. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer  after the  Original  Issue  Date,  and all shares of
      Other Common,  if any, issued by the Issuer after the Original Issue Date,
      except:  (i) securities  issued pursuant to a bona fide firm  underwritten
      public  offering  of  the  Issuer's  securities,  (ii)  securities  issued
      pursuant  to the  conversion  or exercise of  convertible  or  exercisable
      securities issued or outstanding on or prior to the Original Issue Date or
      issued  pursuant to the Purchase  Agreement (so long as the  conversion or
      exercise  price in such  securities  are not  amended  to lower such price
      and/or  adversely  affect the  Holders),  (iii) the  Warrant  Stock,  (iv)
      securities  issued (other than for cash) in connection with an acquisition
      of the Issuer,  (v) any  warrants  issued to the  placement  agent for the
      transactions  contemplated  by the  Purchase  Agreement,  (vi)  securities
      issued  in  connection  with  strategic   license   agreements  and  other
      partnering  arrangements so long as such issuances are not for the purpose
      of raising  capital and the Issuer has received the prior written  consent
      of the Holder,  and (vii) the  issuance of Common Stock or the issuance or
      grants of options to purchase  Common Stock pursuant to the Issuer's stock
      option  plans and  employee  stock  purchase  plans  and  which  have been
      approved by the Issuer's  Board of Directors so long as such  issuances in
      the aggregate do not exceed ten percent  (10%) of the Issuer's  issued and
      outstanding Common Stock as of the Original Issue Date.

            "Articles of  Incorporation"  means the Articles of Incorporation of
      the Issuer as in effect on the Original  Issue Date, and as hereafter from
      time to time  amended,  modified,  supplemented  or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital   Stock"  means  and  includes  (i)  any  and  all  shares,
      interests, participations or other equivalents of or interests in (however
      designated)  corporate stock,  including,  without  limitation,  shares of
      preferred or preference  stock,  (ii) all partnership  interests  (whether
      general  or  limited)  in any  Person  which is a  partnership,  (iii) all
      membership interests or limited liability company interests in any limited
      liability  company,  and (iv) all  equity or  ownership  interests  in any
      Person of any other type.

            "Common Stock" means the Common Stock, par value $.001 per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any  Additional  Shares
      of Common Stock or any Convertible Security.


                                      -13-


            "Convertible Securities" means evidences of Indebtedness,  shares of
      Capital  Stock  or  other  Securities  which  are or  may  be at any  time
      convertible  into or exchangeable  for Additional  Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental  Authority"  means  any  governmental,  regulatory  or
      self-regulatory entity, department, body, official, authority, commission,
      board,  agency or  instrumentality,  whether federal,  state or local, and
      whether domestic or foreign.

            "Holders"  mean the  Persons  who  shall  from  time to time own any
      Warrant. The term "Holder" means one of the Holders.

            "Independent  Appraiser"  means a  nationally  recognized  or  major
      regional  investment banking firm or firm of independent  certified public
      accountants of recognized  standing  (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of  corporations
      or other  entities as going  concerns,  and which is not  affiliated  with
      either the Issuer or the Holder of any Warrant.

            "Issuer"  means Dolce  Ventures  Inc., a Utah  corporation,  and its
      successors.

            "Majority  Holders"  means  at any  time  the  Holders  of  Warrants
      exercisable  for a majority of the shares of Warrant Stock  issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means September __, 2006.

            "OTC Bulletin Board" means the over-the-counter  electronic bulletin
      board.

            "Other  Common"  means any other  Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the  distribution of earnings and assets of the Issuer without  limitation
      as to amount.

            "Outstanding  Common Stock" means,  at any given time, the aggregate
      amount of  outstanding  shares of Common Stock,  assuming  full  exercise,
      conversion or exchange (as applicable) of all options,  warrants and other
      Securities which are convertible into or exercisable or exchangeable  for,
      and  any  right  to  subscribe  for,  shares  of  Common  Stock  that  are
      outstanding at such time.

            "Person"  means  an  individual,   corporation,   limited  liability
      company,   partnership,   joint  stock  company,   trust,   unincorporated
      organization,  joint  venture,  Governmental  Authority or other entity of
      whatever nature.

            "Per Share Market Value" means on any  particular  date (a) the last
      closing  price  per  share of the  Common  Stock  on such  date on the OTC
      Bulletin Board or another registered  national stock exchange on which the
      Common Stock is then listed, or if there is no closing price on such date,
      then the  closing  bid price on such date,  or if there is no closing  bid


                                      -14-


      price on such date,  then the closing  price on such exchange or quotation
      system on the date nearest preceding such date, or (b) if the Common Stock
      is not listed then on the OTC Bulletin  Board or any  registered  national
      stock exchange,  the last closing price for a share of Common Stock in the
      over-the-counter  market,  as reported by the OTC Bulletin Board or in the
      National Quotation Bureau  Incorporated or similar  organization or agency
      succeeding to its functions of reporting  prices, at the close of business
      on such  date,  or if there is no  closing  price on such  date,  then the
      closing  bid price on such date,  or (c) if the  Common  Stock is not then
      reported  by the OTC  Bulletin  Board  or the  National  Quotation  Bureau
      Incorporated  (or  similar   organization  or  agency  succeeding  to  its
      functions  of  reporting  prices),  then the  average of the "Pink  Sheet"
      quotes for the five (5) Trading Days preceding such date of determination,
      or (d) if the Common  Stock is not then  publicly  traded the fair  market
      value of a share of Common Stock as determined by an Independent Appraiser
      selected in good faith by the Majority Holders;  provided,  however,  that
      the  Issuer,  after  receipt  of the  determination  by  such  Independent
      Appraiser,  shall  have the  right to  select  an  additional  Independent
      Appraiser,  in which  case,  the fair  market  value shall be equal to the
      average of the  determinations  by each such  Independent  Appraiser;  and
      provided,  further that all  determinations  of the Per Share Market Value
      shall be appropriately  adjusted for any stock dividends,  stock splits or
      other similar  transactions  during such period. The determination of fair
      market  value by an  Independent  Appraiser  shall be based  upon the fair
      market value of the Issuer  determined on a going concern basis as between
      a willing buyer and a willing  seller and taking into account all relevant
      factors  determinative  of value,  and shall be final and  binding  on all
      parties.  In  determining  the fair  market  value of any shares of Common
      Stock, no consideration  shall be given to any restrictions on transfer of
      the Common Stock  imposed by  agreement or by federal or state  securities
      laws,  or to the  existence or absence of, or any  limitations  on, voting
      rights.

            "Purchase Agreement" means the Series B Convertible  Preferred Stock
      Purchase Agreement dated as of September 7, 2006, among the Issuer and the
      Purchasers.

            "Purchasers"  means  the  purchasers  of the  Series  B  Convertible
      Preferred Stock and Warrants issued by the Issuer pursuant to the Purchase
      Agreement.

            "Securities"  means any debt or  equity  securities  of the  Issuer,
      whether now or hereafter  authorized,  any instrument  convertible into or
      exchangeable  for  Securities  or a Security,  and any option,  warrant or
      other right to purchase or acquire any Security.  "Security"  means one of
      the Securities.

            "Securities  Act" means the Securities  Act of 1933, as amended,  or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting  Stock  shall at the time be owned  directly or  indirectly  by the
      Issuer or by one or more of its Subsidiaries,  or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.


                                      -15-


            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on the
      OTC  Bulletin  Board,  a day on which  the  Common  Stock is quoted in the
      over-the-counter  market as  reported  by the  National  Quotation  Bureau
      Incorporated  (or  any  similar  organization  or  agency  succeeding  its
      functions of reporting prices); provided,  however, that in the event that
      the  Common  Stock is not  listed  or  quoted  as set  forth in (a) or (b)
      hereof,  then Trading Day shall mean any day except  Saturday,  Sunday and
      any  day  which  shall  be a  legal  holiday  or a day  on  which  banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting  Stock"  means,  as  applied  to the  Capital  Stock  of any
      corporation,  Capital Stock of any class or classes  (however  designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing  body) of such  corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants"  means  the  Warrants  issued  and sold  pursuant  to the
      Purchase Agreement,  including,  without limitation, this Warrant, and any
      other  warrants of like tenor issued in  substitution  or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

            "Warrant  Price"  initially  means U.S.  $3.84, as such price may be
      adjusted from time to time as shall result from the adjustments  specified
      in this Warrant, including Section 4 hereto.

            "Warrant  Share Number"  means at any time the  aggregate  number of
      shares of Warrant Stock which may at such time be purchased  upon exercise
      of  this  Warrant,  after  giving  effect  to all  prior  adjustments  and
      increases  to such  number  made or  required  to be made  under the terms
      hereof.

            "Warrant  Stock" means Common Stock  issuable  upon  exercise of any
      Warrant or  Warrants  or  otherwise  issuable  pursuant  to any Warrant or
      Warrants.

      9. Other Notices. In case at any time:

                        (A)   the  Issuer  shall make any  distributions  to the
                              holders of Common Stock; or

                        (B)   the Issuer  shall  authorize  the  granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital  reorganization  by the
                              Issuer; or


                                      -16-


                        (E)   there  shall be any (i)  consolidation  or  merger
                              involving  the  Issuer or (ii) sale,  transfer  or
                              other  disposition of all or substantially  all of
                              the Issuer's property,  assets or business (except
                              a merger  or  other  reorganization  in which  the
                              Issuer shall be the surviving  corporation and its
                              shares  of  Capital  Stock  shall  continue  to be
                              outstanding    and    unchanged   and   except   a
                              consolidation,  merger,  sale,  transfer  or other
                              disposition involving a wholly-owned  Subsidiary);
                              or

                        (F)   there   shall  be  a  voluntary   or   involuntary
                              dissolution,  liquidation  or  winding-up  of  the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
(20) days prior to the action in question  and not less than ten (10) days prior
to the record date or the date on which the Issuer's  transfer  books are closed
in respect  thereto.  This Warrant  entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

      10. Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 10 without the consent of the Holder of this  Warrant.
No consideration shall be offered or paid to any person to amend or consent to a
waiver  or  modification  of any  provision  of this  Warrant  unless  the  same
consideration is also offered to all holders of the Warrants.

      11.  Governing  Law;  Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the  application of the substantive  law of another  jurisdiction.  This Warrant
shall not be  interpreted or construed  with any  presumption  against the party
causing this  Warrant to be drafted.  The Issuer and the Holder agree that venue
for any dispute  arising under this Warrant will lie exclusively in the state or
federal courts located in New York County, New York, and the parties irrevocably
waive any right to raise forum non  conveniens  or any other  argument  that New
York is not the proper venue. The Issuer and the Holder  irrevocably  consent to


                                      -17-


personal  jurisdiction in the state and federal courts of the state of New York.
The  Issuer and the Holder  consent  to process  being  served in any such suit,
action or  proceeding  by mailing a copy thereof to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient service of process and notice thereof. Nothing in
this  Section 11 shall  affect or limit any right to serve  process in any other
manner  permitted  by law.  The  Issuer  and the  Holder  hereby  agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the this Warrant or the Purchase  Agreement,  shall be entitled to reimbursement
for  reasonable  legal fees from the  non-prevailing  party.  The parties hereby
waive all rights to a trial by jury.

      12.  Notices.  Any and all notices or other  communications  or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of  mailing,  if sent by  overnight  delivery  by a  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                              Dolce Ventures Inc.
                              _______________________________
                              _______________________________
                              Attention: ________________
                              Tel. No.: (___) ___-____
                              Fax No.: (___) ___-____

with copies (which copies
shall not constitute notice
to the Issuer) to:            GUZOV OFSINK, LLC
                              600 Madison Avenue, 14th Floor
                              New York, New York 10022
                              Attention: Darren Ofsink
                              Tel. No.: (212) 371-8008, ext. 127
                              Fax No.: (212) 688-7273

Copies of notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel
LLP,  1177  Avenue  of the  Americas,  New  York,  New  York  10036,  Attention:
Christopher S. Auguste, Tel. No.: (212) 715-9100,  Fax. No.: (212) 715-8000. Any
party  hereto may from time to time  change its address for notices by giving at
least ten (10) days written  notice of such  changed  address to the other party
hereto.


                                      -18-


      13.  Warrant  Agent.  The Issuer may, by written  notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

      14. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      15.  Successors and Assigns.  This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock.

      16.  Modification and Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

      17.  Registration  Rights.  The Holder of this  Warrant is entitled to the
benefit of certain  registration  rights  with  respect to the shares of Warrant
Stock  issuable  upon the  exercise of this  Warrant  pursuant  to that  certain
Registration Rights Agreement,  of even date herewith,  by and among the Company
and Persons listed on Schedule I thereto (the  "Registration  Rights Agreement")
and the registration rights with respect to the shares of Warrant Stock issuable
upon the exercise of this Warrant by any subsequent  Holder may only be assigned
in  accordance  with  the  terms  and  provisions  of the  Registrations  Rights
Agreement.

      18.  Headings.  The  headings  of the  Sections  of this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -19-


      IN WITNESS  WHEREOF,  the Issuer has executed  this Series A Warrant as of
the day and year first above written.

                                        DOLCE VENTURES INC.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                      -20-


                                  EXERCISE FORM
                                SERIES A WARRANT

                               DOLCE VENTURES INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of  Common  Stock of Dolce
Ventures Inc. covered by the within Warrant.

Dated: _________________                Signature ___________________________

                                        Address   _____________________
                                                  _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________                Signature ___________________________

                                        Address   _____________________
                                                  _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________                Signature ___________________________

                                        Address   _____________________
                                                  _____________________


                                      -21-


                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-___ canceled (or  transferred or exchanged) this _____ day of
___________,  _____,  shares  of Common  Stock  issued  therefor  in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.


                                      -22-

EX-4.5

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  THE  ISSUER  THAT  REGISTRATION  OF  SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                          SERIES B WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                               DOLCE VENTURES INC.

                           Expires September __, 2011

No.: W-B-06- __                                    Number of Shares: ___________
Date of Issuance: September __, 2006

      FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth, the
undersigned,  Dolce  Ventures  Inc.,  a  Utah  corporation  (together  with  its
successors    and   assigns,    the    "Issuer"),    hereby    certifies    that
_______________________________  or its  registered  assigns  (the  "Holder") is
entitled  to  subscribe  for and  purchase,  during  the  Term  (as  hereinafter
defined),  up  to  ____________________________________  (_____________)  shares
(subject to adjustment as hereinafter provided) of the duly authorized,  validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price  per  share  equal to the  Warrant  Price  then in effect on the terms and
conditions  hereinafter set forth. The number of shares of Common Stock issuable
upon  exercise of this Warrant  reflects the number of shares of Common Stock to
which the Holder is entitled following the 1-for-304.4444 reverse stock split to
be effected by the Issuer  following the Original Issue Date (the "Reverse Stock
Split"). Capitalized terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 8 hereof.

      1. Term. The term of this Warrant shall commence on September __, 2006 and
shall expire at 6:00 p.m.,  eastern  time,  on  September  __, 2011 (such period
being the "Term").

      2. Method of  Exercise;  Payment;  Issuance of New  Warrant;  Transfer and
Exchange.

      (a) Time of Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term.

                                      -1-


      (b) Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached  hereto as  Exhibit A duly  executed)  at the  principal  office of the
Issuer, and by the payment to the Issuer of an amount of consideration  therefor
equal to the Warrant Price in effect on the date of such exercise  multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised,  payable at such Holder's election (i) by certified or official
bank check or by wire transfer to an account  designated by the Issuer,  (ii) by
"cashless  exercise" in accordance with the provisions of subsection (c) of this
Section  2, but only when a  registration  statement  under the  Securities  Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

      (c)  Cashless  Exercise.  Notwithstanding  any  provisions  herein  to the
contrary and  commencing  one (1) year following the Original Issue Date, if (i)
the Per Share  Market  Value of one share of Common  Stock is  greater  than the
Warrant  Price  (at the  date of  calculation  as set  forth  below)  and (ii) a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect by the date such  registration  statement is
required to be  effective  pursuant to the  Registration  Rights  Agreement  (as
defined in the  Purchase  Agreement)  or not  effective  at any time  during the
Effectiveness  Period  (as  defined in the  Registration  Rights  Agreement)  in
accordance  with the  terms of the  Registration  Rights  Agreement,  in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless  exercise  and shall  receive the number of shares of Common Stock
equal to an amount (as  determined  below) by  surrender  of this Warrant at the
principal  office of the Issuer  together with the properly  endorsed  Notice of
Exercise in which event the Issuer  shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

                  X = Y - (A)(Y)
                          ------
                             B

Where             X =      the number of shares of Common Stock to be issued to
                           the Holder.

                  Y =      the number of shares of Common Stock purchasable upon
                           exercise of all of the Warrant or, if only a portion
                           of the Warrant is being exercised, the portion of the
                           Warrant being exercised.

                  A =      the Warrant Price.

                  B =      the Per Share Market Value of one share of Common
                           Stock.

      (d)  Issuance of Stock  Certificates.  In the event of any exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and conditions hereof, certificates for the shares of Warrant Stock so purchased
shall be dated the date of such  exercise  and  delivered  to the Holder  hereof
within a  reasonable  time,  not  exceeding  three (3)  Trading  Days after such
exercise (the "Delivery Date") or, at the request of the Holder (provided that a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is then in effect),  issued and delivered to the Depository  Trust
Company ("DTC") account on the Holder's behalf via the Deposit  Withdrawal Agent
Commission  System  ("DWAC")  within a reasonable  time, not exceeding three (3)
Trading Days after such exercise,  and the Holder hereof shall be deemed for all
purposes to be the holder of the shares of Warrant  Stock so purchased as of the
date of such  exercise.  The Holder shall deliver this original  Warrant,  or an
indemnification  undertaking  with  respect  to such  Warrant in the case of its
loss,  theft or destruction,  at such time that this Warrant is fully exercised.
With respect to partial exercises of this Warrant, the Issuer shall keep written
records for the Holder of the number of shares of Warrant Stock  exercised as of
each date of exercise.

                                      -2-


      (e) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the Holder, if the Issuer
fails to cause its  transfer  agent to transmit to the Holder a  certificate  or
certificates representing the Warrant Stock pursuant to an exercise on or before
the Delivery  Date,  and if after such date the Holder is required by its broker
to purchase (in an open market  transaction or otherwise) shares of Common Stock
to deliver in  satisfaction  of a sale by the Holder of the Warrant  Stock which
the Holder  anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
Issuer  shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant  Stock for which such  exercise  was not  honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Issuer shall be required to pay the Holder  $1,000.  The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable  confirmations and
other evidence reasonably requested by the Issuer.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect  to the  Issuer's  failure  to timely  deliver
certificates  representing  shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.

      (f)  Transferability  of Warrant.  Subject to Section  2(h)  hereof,  this
Warrant,  and the rights evidenced  hereby,  may be transferred by a Holder,  in
whole or in part, without the consent of the Issuer. If transferred  pursuant to
this  paragraph,  this Warrant may be  transferred on the books of the Issuer by
the Holder hereof in person or by duly  authorized  attorney,  upon surrender of
this Warrant at the principal  office of the Issuer,  properly  endorsed (by the
Holder  executing an assignment in the form attached hereto) and upon payment of
any  necessary  transfer  tax or other  governmental  charge  imposed  upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants to purchase the same aggregate number of shares of Warrant Stock,  each
new Warrant to represent  the right to purchase such number of shares of Warrant
Stock as the Holder  hereof shall  designate at the time of such  exchange.  All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical  with this  Warrant  except as to the number of shares of
Warrant Stock issuable pursuant thereto.

                                      -3-


      (g) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge  in writing the  extent,  if any, of its  continuing  obligation  to
afford to such  Holder all  rights to which such  Holder  shall  continue  to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

      (h) Compliance with Securities Laws.

            (i) The Holder of this Warrant,  by acceptance hereof,  acknowledges
      that this  Warrant  and the  shares  of  Warrant  Stock to be issued  upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other  party,  and for  investment,  and that the
      Holder will not offer,  sell or  otherwise  dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise  hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph  (iii) below,  this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted  with a legend in  substantially  the
      following form:

         THIS  WARRANT  AND THE SHARES OF COMMON  STOCK  ISSUABLE  UPON
         EXERCISE HEREOF HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES
         ACT OF 1933,  AS AMENDED (THE  "SECURITIES  ACT") OR ANY STATE
         SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED OR OTHERWISE
         DISPOSED OF UNLESS  REGISTERED  UNDER THE  SECURITIES  ACT AND
         UNDER  APPLICABLE  STATE  SECURITIES  LAWS OR THE ISSUER SHALL
         HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
         THE ISSUER  THAT  REGISTRATION  OF SUCH  SECURITIES  UNDER THE
         SECURITIES  ACT AND UNDER THE  PROVISIONS OF APPLICABLE  STATE
         SECURITIES LAWS IS NOT REQUIRED.

            (iii) The Issuer  agrees to  reissue  this  Warrant or  certificates
      representing any of the Warrant Stock,  without the legend set forth above
      if at such time, prior to making any transfer of any such securities,  the
      Holder shall give written  notice to the Issuer  describing the manner and
      terms of such transfer and removal as the Issuer may  reasonably  request.
      Such proposed  transfer and removal will not be effected until: (a) either
      (i) the Issuer has received an opinion of counsel reasonably  satisfactory
      to the Issuer,  to the effect  that the  registration  of such  securities
      under the Securities Act is not required in connection  with such proposed
      transfer,  (ii) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (iii) the Issuer has received other evidence  reasonably  satisfactory  to
      the Issuer that such registration and  qualification  under the Securities
      Act and  state  securities  laws  are not  required,  or (iv)  the  Holder
      provides the Issuer with  reasonable  assurances that such security can be
      sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
      Issuer has received an opinion of counsel  reasonably  satisfactory to the
      Issuer,  to the  effect  that  registration  or  qualification  under  the
      securities  or "blue sky" laws of any state is not required in  connection
      with such proposed  disposition,  or (ii) compliance with applicable state
      securities  or "blue  sky"  laws has been  effected  or a valid  exemption
      exists with  respect  thereto.  The Issuer will respond to any such notice
      from a holder  within three (3) Trading  Days. In the case of any proposed
      transfer under this Section 2(h),  the Issuer will use reasonable  efforts
      to comply with any such  applicable  state  securities or "blue sky" laws,
      but shall in no event be  required,  (x) to qualify to do  business in any
      state where it is not then qualified, or (y) to take any action that would
      subject it to tax or to the general  service of process in any state where
      it is not then subject.  The  restrictions  on transfer  contained in this
      Section 2(h) shall be in addition to, and not by way of limitation of, any
      other  restrictions  on transfer  contained  in any other  section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the  Holder  without  a  legend,  in lieu of  delivering
      physical  certificates  representing  the Warrant Stock  (provided  that a
      registration  statement  under the Securities Act providing for the resale
      of the  Warrant  Stock is then in  effect),  the  Issuer  shall  cause its
      transfer agent to electronically  transmit the Warrant Stock to the Holder
      by crediting the account of the Holder's Prime Broker with DTC through its
      DWAC system.

                                      -4-


      (i) Accredited Investor.  In no event may the Holder exercise this Warrant
in whole or in part unless the Holder is an "accredited  investor" as defined in
Regulation D under the Securities Act.

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and reserved for the purpose of the issuance  upon  exercise of this
Warrant a number of authorized  but unissued  shares of Common Stock equal to at
least  one  hundred  percent  (100%) of the  number  of  shares of Common  Stock
issuable  upon exercise of this Warrant  without  regard to any  limitations  on
exercise.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any Governmental  Authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its best efforts as  expeditiously  as possible at its expense to
cause such shares to be duly  registered or qualified.  If the Issuer shall list
any shares of Common Stock on any securities  exchange or market it will, at its
expense,  list thereon,  and maintain and increase when  necessary such listing,
of, all shares of Warrant  Stock from time to time issued upon  exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has
been  registered  pursuant to a registration  statement under the Securities Act
then in effect),  and, to the extent permissible under the applicable securities
exchange  rules,  all  unissued  shares of Warrant  Stock  which are at any time
issuable  hereunder,  so long as any shares of Common  Stock shall be so listed.
The Issuer will also so list on each  securities  exchange  or market,  and will
maintain such listing of, any other  securities which the Holder of this Warrant
shall be entitled to receive  upon the  exercise of this  Warrant if at the time
any securities of the same class shall be listed on such securities  exchange or
market by the Issuer.

                                      -5-


      (c)  Covenants.  The  Issuer  shall not by any action  including,  without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or  through  any  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other action,  avoid or seek to
avoid the  observance or  performance  of any of the terms of this Warrant,  but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or  appropriate to protect
the rights of the Holder  hereof  against  dilution (to the extent  specifically
provided  herein)  or  impairment.   Without  limiting  the  generality  of  the
foregoing,  the Issuer will (i) not permit the par value,  if any, of its Common
Stock to exceed the then effective  Warrant Price,  (ii) not amend or modify any
provision  of the  Articles  of  Incorporation  or  by-laws of the Issuer in any
manner that would  adversely  affect the rights of the Holders of the  Warrants,
(iii)  take all such  action as may be  reasonably  necessary  in order that the
Issuer may  validly and legally  issue  fully paid and  nonassessable  shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant,  and (iv) use
its best efforts to obtain all such authorizations,  exemptions or consents from
any public  regulatory  body having  jurisdiction  thereof as may be  reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

      (d) Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      (e)  Payment of Taxes.  The Issuer  will pay any  documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided, however, that the Issuer shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any  certificates  representing  Warrant Stock in a name
other than that of the Holder in respect to which such shares are issued.

      4. Adjustment of Warrant Price.  The price at which such shares of Warrant
Stock may be  purchased  upon  exercise  of this  Warrant  shall be  subject  to
adjustment  from time to time as set forth in this  Section 4. The Issuer  shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with the notice provisions set forth in
Section 5.

                                      -6-


      (a)  Recapitalization,  Reorganization,  Reclassification,  Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering  Event"): (a) consolidate or merge with
      or into any other  Person and the Issuer  shall not be the  continuing  or
      surviving  corporation of such  consolidation or merger, or (b) permit any
      other Person to  consolidate  with or merge into the Issuer and the Issuer
      shall be the continuing or surviving  Person but, in connection  with such
      consolidation or merger,  any Capital Stock of the Issuer shall be changed
      into or exchanged for  Securities of any other Person or cash or any other
      property,  or (c) transfer all or  substantially  all of its properties or
      assets to any other  Person,  or (d)  effect a capital  reorganization  or
      reclassification  of its Capital Stock,  other than any event set forth in
      Section 4(b) below,  then, and in the case of each such Triggering  Event,
      proper  provision  shall be made so that, upon the basis and the terms and
      in the manner  provided in this Warrant,  the Holder of this Warrant shall
      be entitled upon the exercise hereof at any time after the consummation of
      such  Triggering  Event, to the extent this Warrant is not exercised prior
      to such Triggering Event, to receive at the Warrant Price in effect at the
      time  immediately  prior to the  consummation of such Triggering  Event in
      lieu of the Common Stock issuable upon such exercise of this Warrant prior
      to such Triggering Event, the Securities,  cash and property to which such
      Holder would have been entitled upon the  consummation  of such Triggering
      Event if such Holder had exercised the rights  represented by this Warrant
      immediately  prior thereto  (including the right of a shareholder to elect
      the  type of  consideration  it will  receive  upon a  Triggering  Event),
      subject to adjustments  (subsequent  to such  corporate  action) as nearly
      equivalent as possible to the  adjustments  provided for elsewhere in this
      Section 4; provided, however, in the event that the Per Share Market Value
      is less than the Warrant Price at the time of such Triggering  Event,  the
      Holder shall  receive an amount in cash equal to the value of this Warrant
      calculated in accordance with the Black-Scholes  formula.  Notwithstanding
      the  foregoing to the contrary,  this Section  4(a)(i) shall only apply if
      the surviving  entity pursuant to any such  Triggering  Event is a company
      that  has  a  class  of  equity  securities  registered  pursuant  to  the
      Securities  Exchange  Act of 1934,  as  amended,  and its common  stock is
      listed or quoted on a national  securities  exchange,  national  automated
      quotation  system  or the  OTC  Bulletin  Board.  In the  event  that  the
      surviving  entity  pursuant to any such  Triggering  Event is not a public
      company  that is  registered  pursuant to the  Securities  Exchange Act of
      1934,  as  amended,  or its  common  stock is not  listed  or  quoted on a
      national securities  exchange,  national automated quotation system or the
      OTC  Bulletin  Board,  then the Holder shall have the right to demand that
      the  Issuer pay to the Holder an amount in cash equal to the value of this
      Warrant calculated in accordance with the Black-Scholes formula.

                                      -7-


            (ii)  Notwithstanding  anything  contained  in this  Warrant  to the
      contrary and so long as the surviving  entity  pursuant to any  Triggering
      Event  is a  company  that  has a class of  equity  securities  registered
      pursuant to the  Securities  Exchange  Act of 1934,  as  amended,  and its
      common  stock is  listed  or quoted  on a  national  securities  exchange,
      national  automated   quotation  system  or  the  OTC  Bulletin  Board,  a
      Triggering  Event shall not be deemed to have  occurred  if,  prior to the
      consummation  thereof,  each Person  (other than the Issuer)  which may be
      required to deliver any Securities,  cash or property upon the exercise of
      this  Warrant as  provided  herein  shall  assume,  by written  instrument
      delivered to, and reasonably  satisfactory to, the Holder of this Warrant,
      (A) the  obligations  of the Issuer  under this Warrant (and if the Issuer
      shall survive the consummation of such Triggering  Event,  such assumption
      shall be in  addition  to,  and shall not  release  the Issuer  from,  any
      continuing  obligations  of the  Issuer  under this  Warrant)  and (B) the
      obligation to deliver to such Holder such Securities, cash or property as,
      in accordance  with the foregoing  provisions of this subsection (a), such
      Holder shall be entitled to receive,  and such Person shall have similarly
      delivered  to such  Holder an opinion of counsel  for such  Person,  which
      counsel  shall  be  reasonably  satisfactory  to  such  Holder,  or in the
      alternative,  a written acknowledgement executed by the President or Chief
      Financial  Officer  of  the  Issuer,   stating  that  this  Warrant  shall
      thereafter  continue  in  full  force  and  effect  and the  terms  hereof
      (including,  without limitation,  all of the provisions of this subsection
      (a)) shall be applicable to the  Securities,  cash or property  which such
      Person may be required to deliver upon any exercise of this Warrant or the
      exercise of any rights pursuant hereto.

      (b) Stock  Dividends,  Subdivisions and  Combinations.  If at any time the
Issuer shall:

            (i) make or issue or set a record date for the holders of the Common
      Stock for the purpose of entitling them to receive a dividend  payable in,
      or other distribution of, shares of Common Stock (other than in connection
      with the  dividend  payable in shares of Common  Stock to be issued by the
      Issuer to the Issuer's stockholders in connection with the spin-off of the
      Issuer's wholly-owned subsidiary, Pegasus Tel, Inc.),

            (ii) subdivide its outstanding  shares of Common Stock into a larger
      number of shares of Common Stock, or

            (iii) combine its outstanding  shares of Common Stock into a smaller
      number of  shares  of Common  Stock(other  than  pursuant  to the  Reverse
      Split),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.

                                      -8-


      (c) Certain Other  Distributions.  If at any time the Issuer shall make or
issue or set a record  date for the  determination  of the holders of the Common
Stock for the  purpose  of  entitling  them to  receive  any  dividend  or other
distribution of:

            (i) cash  (other  than a cash  dividend  payable  out of earnings or
      earned surplus  legally  available for the payment of dividends  under the
      laws of the jurisdiction of incorporation of the Issuer),

            (ii) any evidences of its  indebtedness,  any shares of stock of any
      class or any other securities or property of any nature  whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),
      or

            (iii) any warrants or other rights to subscribe  for or purchase any
      evidences  of its  indebtedness,  any  shares of stock of any class or any
      other  securities or property of any nature  whatsoever  (other than cash,
      Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such  evidences  of  indebtedness,  shares of  stock,  other  securities  or
property or warrants or other  subscription or purchase rights so distributable,
and (2) the  Warrant  Price then in effect  shall be  adjusted  to equal (A) the
Warrant Price then in effect  multiplied by the number of shares of Common Stock
for which  this  Warrant  is  exercisable  immediately  prior to the  adjustment
divided  by (B) the number of shares of Common  Stock for which this  Warrant is
exercisable immediately after such adjustment.  A reclassification of the Common
Stock  (other  than a change in par value,  or from par value to no par value or
from no par value to par value)  into  shares of Common  Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its  Common  Stock of such  shares of such  other  class of stock  within the
meaning of this  Section  4(c) and, if the  outstanding  shares of Common  Stock
shall be changed into a larger or smaller  number of shares of Common Stock as a
part of such  reclassification,  such change  shall be deemed a  subdivision  or
combination,  as the case may be, of the  outstanding  shares  of  Common  Stock
within the meaning of Section 4(b).

      (d) Issuance of Additional Shares of Common Stock. In the event the Issuer
shall at any time within the two (2) year period following the Original Issuance
Date issue any Additional  Shares of Common Stock (otherwise than as provided in
the  foregoing  subsections  (b) through (c) of this  Section 4), at a price per
share less than $2.74 or without consideration, then the Warrant Price upon each
such  issuance  shall be adjusted to the price  equal to the  consideration  per
share paid for such Additional Shares of Common Stock.

                                      -9-


      (e) Issuance of Common Stock Equivalents. In the event the Issuer shall at
any time within the two (2) year period  following  the Original  Issuance  Date
take a record of the holders of its Common  Stock for the  purpose of  entitling
them to receive a distribution  of, or shall in any manner (whether  directly or
by  assumption  in a merger in which the  Issuer is the  surviving  corporation)
issue or sell,  any  Common  Stock  Equivalents,  whether  or not the  rights to
exchange or convert  thereunder are immediately  exercisable,  and the price per
share for which Common Stock is issuable upon such  conversion or exchange shall
be less than $2.74  immediately  prior to the time of such issue or sale, or if,
after any such  issuance of Common  Stock  Equivalents,  the price per share for
which Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted,  and such price as so amended  shall be less than $2.74 at the time of
such  amendment or  adjustment,  then the Warrant  Price then in effect shall be
adjusted as provided in Section  4(d). No further  adjustments  of the number of
shares of Common  Stock for which this  Warrant is  exercisable  and the Warrant
Price then in effect  shall be made upon the actual  issue of such Common  Stock
upon conversion or exchange of such Common Stock Equivalents.

      (f) Other  Provisions  Applicable to Adjustments  under this Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

      (i) Computation of Consideration. To the extent that any Additional Shares
of Common Stock or any Common Stock Equivalents (or any warrants or other rights
therefor) shall be issued for cash consideration,  the consideration received by
the  Issuer  therefor  shall be the  amount of the cash  received  by the Issuer
therefor,  or,  if such  Additional  Shares  of  Common  Stock or  Common  Stock
Equivalents are offered by the Issuer for subscription,  the subscription price,
or, if such  Additional  Shares of Common Stock or Common Stock  Equivalents are
sold to  underwriters  or dealers  for public  offering  without a  subscription
offering,  the initial public  offering price (in any such case  subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation,  discounts or expenses paid or incurred by
the Issuer for and in the  underwriting of, or otherwise in connection with, the
issuance  thereof).  In connection with any merger or consolidation in which the
Issuer is the surviving  corporation  (other than any consolidation or merger in
which the previously  outstanding  shares of Common Stock of the Issuer shall be
changed  to  or  exchanged  for  the  stock  or  other   securities  of  another
corporation),  the amount of consideration  therefore shall be, deemed to be the
fair  value,  as  determined  reasonably  and in good  faith  by the  Board  and
acceptable  to the  Holder,  of such  portion of the assets and  business of the
nonsurviving  corporation as the Board may determine to be  attributable to such
shares of Common  Stock or Common  Stock  Equivalents,  as the case may be.  The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other  rights to  subscribe  for or  purchase  the same shall be the
consideration  received by the Issuer for issuing such  warrants or other rights
plus the  additional  consideration  payable to the Issuer upon exercise of such
warrants or other rights.  The consideration for any Additional Shares of Common
Stock issuable  pursuant to the terms of any Common Stock  Equivalents  shall be
the consideration received by the Issuer for issuing warrants or other rights to
subscribe for or purchase such Common Stock Equivalents,  plus the consideration
paid or payable to the Issuer in respect of the  subscription for or purchase of
such  Common  Stock  Equivalents,  plus the  additional  consideration,  if any,
payable to the Issuer upon the exercise of the right of  conversion  or exchange
in such Common Stock Equivalents. In the event of any consolidation or merger of
the Issuer in which the Issuer is not the surviving  corporation or in which the
previously  outstanding  shares of Common  Stock of the Issuer  shall be changed
into or exchanged for the stock or other securities of another  corporation,  or
in the event of any sale of all or substantially all of the assets of the Issuer
for stock or other securities of any corporation,  the Issuer shall be deemed to
have issued a number of shares of its Common  Stock for stock or  securities  or
other  property  of the other  corporation  computed  on the basis of the actual
exchange ratio on which the transaction was predicated,  and for a consideration
equal to the fair market value on the date of such transaction of all such stock
or  securities  or other  property  of the other  corporation.  In the event any
consideration  received  by the Issuer for any  securities  consists of property
other than cash,  the fair  market  value  thereof at the time of issuance or as
otherwise  applicable  shall be as determined in good faith by the Board. In the
event Common Stock is issued with other shares or  securities or other assets of
the Issuer for consideration  which covers both, the  consideration  computed as
provided in this Section  4(f)(i) shall be allocated  among such  securities and
assets as determined in good faith by the Board.

                                      -10-


      (ii) When Adjustments to Be Made. The adjustments required by this Section
4 shall be made  whenever  and as  often as any  specified  event  requiring  an
adjustment  shall occur,  except that any  adjustment of the number of shares of
Common  Stock for which this  Warrant is  exercisable  that would  otherwise  be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common  Stock,  as  provided  for in Section  4(b)) up to, but not
beyond the date of  exercise if such  adjustment  either by itself or with other
adjustments  not previously made adds or subtracts less than one percent (1%) of
the shares of Common  Stock for which this  Warrant is  exercisable  immediately
prior to the making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid)  which is postponed shall be
carried  forward  and  made  as soon as such  adjustment,  together  with  other
adjustments  required by this Section 4 and not previously made, would result in
a  minimum  adjustment  or on the  date  of  exercise.  For the  purpose  of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

      (iii) Fractional Interests. In computing adjustments under this Section 4,
fractional  interests in Common Stock shall be taken into account to the nearest
one one-hundredth (1/100th) of a share.

      (iv) When  Adjustment  Not Required.  If the Issuer shall take a record of
the holders of its Common Stock for the purpose of  entitling  them to receive a
dividend  or   distribution  or  subscription  or  purchase  rights  and  shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

      (g) Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

                                      -11-



      (h) Escrow of Warrant Stock. If after any property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and the Holder  exercises  this  Warrant,  any shares of Common Stock
issuable  upon  exercise by reason of such  adjustment  shall be deemed the last
shares of Common Stock for which this Warrant is exercised  (notwithstanding any
other provision to the contrary  herein) and such shares or other property shall
be held in escrow for the  Holder by the Issuer to be issued to the Holder  upon
and to the extent  that the event  actually  takes  place,  upon  payment of the
current  Warrant  Price.  Notwithstanding  any other  provision  to the contrary
herein,  if the event  for  which  such  record  was taken  fails to occur or is
rescinded,  then such  escrowed  shares  shall be  cancelled  by the  Issuer and
escrowed property returned.

      5. Notice of  Adjustments.  Whenever  the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the  option  of the  Holder  of this  Warrant  be  submitted  to an  Independent
Appraiser  reasonably  acceptable to the Issuer and the Holder. The Issuer shall
use its  best  efforts  to  cause  the  Independent  Appraiser  to  perform  the
calculations  and notify the Issuer and the Holder of the  results no later than
five (5) business days from the time it receives the disputed calculation.  Such
Independent  Appraiser's  calculation  shall be binding upon all parties  absent
manifest error. The reasonable  expenses of the Independent  Appraiser in making
such  determination  shall be paid by the  Issuer,  in the  event  the  Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was  correct,  or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof,  but in lieu of such fractional  shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

      7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the
contrary  set forth in this  Warrant,  at no time may a Holder  of this  Warrant
exercise  this  Warrant  if the  number of  shares of Common  Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares of
Common  Stock owned by such Holder at such time,  the number of shares of Common
Stock which would result in such Holder  beneficially  owning (as  determined in
accordance  with Section 13(d) of the Exchange Act and the rules  thereunder) in
excess of 9.9% of the then  issued  and  outstanding  shares  of  Common  Stock;
provided,  however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 12 hereof) (the "Waiver Notice")
that such  Holder  would like to waive this  Section 7 with regard to any or all
shares of Common Stock  issuable upon  exercise of this Warrant,  this Section 7
will be of no force or effect  with  regard to all or a portion  of the  Warrant
referenced in the Waiver Notice; provided, further, that this provision shall be
of no  further  force or effect  during  the  sixty-one  (61)  days  immediately
preceding the expiration of the term of this Warrant.

                                      -12-


      8. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer  after the  Original  Issue  Date,  and all shares of
      Other Common,  if any, issued by the Issuer after the Original Issue Date,
      except:  (i) securities  issued pursuant to a bona fide firm  underwritten
      public  offering  of  the  Issuer's  securities,  (ii)  securities  issued
      pursuant  to the  conversion  or exercise of  convertible  or  exercisable
      securities issued or outstanding on or prior to the Original Issue Date or
      issued  pursuant to the Purchase  Agreement (so long as the  conversion or
      exercise  price in such  securities  are not  amended  to lower such price
      and/or  adversely  affect the  Holders),  (iii) the  Warrant  Stock,  (iv)
      securities  issued (other than for cash) in connection with an acquisition
      of the Issuer,  (v) any  warrants  issued to the  placement  agent for the
      transactions  contemplated  by the  Purchase  Agreement,  (vi)  securities
      issued  in  connection  with  strategic   license   agreements  and  other
      partnering  arrangements so long as such issuances are not for the purpose
      of raising  capital and the Issuer has received the prior written  consent
      of the Holder,  and (vii) the  issuance of Common Stock or the issuance or
      grants of options to purchase  Common Stock pursuant to the Issuer's stock
      option  plans and  employee  stock  purchase  plans  and  which  have been
      approved by the Issuer's  Board of Directors so long as such  issuances in
      the aggregate do not exceed ten percent  (10%) of the Issuer's  issued and
      outstanding Common Stock as of the Original Issue Date.

            "Articles of  Incorporation"  means the Articles of Incorporation of
      the Issuer as in effect on the Original  Issue Date, and as hereafter from
      time to time  amended,  modified,  supplemented  or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital   Stock"  means  and  includes  (i)  any  and  all  shares,
      interests, participations or other equivalents of or interests in (however
      designated)  corporate stock,  including,  without  limitation,  shares of
      preferred or preference  stock,  (ii) all partnership  interests  (whether
      general  or  limited)  in any  Person  which is a  partnership,  (iii) all
      membership interests or limited liability company interests in any limited
      liability  company,  and (iv) all  equity or  ownership  interests  in any
      Person of any other type.

            "Common Stock" means the Common Stock, par value $.001 per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any  Additional  Shares
      of Common Stock or any Convertible Security.

                                      -13-


            "Convertible Securities" means evidences of Indebtedness,  shares of
      Capital  Stock  or  other  Securities  which  are or  may  be at any  time
      convertible  into or exchangeable  for Additional  Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental  Authority"  means  any  governmental,  regulatory  or
      self-regulatory entity, department, body, official, authority, commission,
      board,  agency or  instrumentality,  whether federal,  state or local, and
      whether domestic or foreign.

            "Holders"  mean the  Persons  who  shall  from  time to time own any
      Warrant. The term "Holder" means one of the Holders.

            "Independent  Appraiser"  means a  nationally  recognized  or  major
      regional  investment banking firm or firm of independent  certified public
      accountants of recognized  standing  (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of  corporations
      or other  entities as going  concerns,  and which is not  affiliated  with
      either the Issuer or the Holder of any Warrant.

            "Issuer"  means Dolce  Ventures  Inc., a Utah  corporation,  and its
      successors.

            "Majority  Holders"  means  at any  time  the  Holders  of  Warrants
      exercisable  for a majority of the shares of Warrant Stock  issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means September __, 2006.

            "OTC Bulletin Board" means the over-the-counter  electronic bulletin
      board.

            "Other  Common"  means any other  Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the  distribution of earnings and assets of the Issuer without  limitation
      as to amount.

            "Outstanding  Common Stock" means,  at any given time, the aggregate
      amount of  outstanding  shares of Common Stock,  assuming  full  exercise,
      conversion or exchange (as applicable) of all options,  warrants and other
      Securities which are convertible into or exercisable or exchangeable  for,
      and  any  right  to  subscribe  for,  shares  of  Common  Stock  that  are
      outstanding at such time.

            "Person"  means  an  individual,   corporation,   limited  liability
      company,   partnership,   joint  stock  company,   trust,   unincorporated
      organization,  joint  venture,  Governmental  Authority or other entity of
      whatever nature.

                                      -14-


            "Per Share Market Value" means on any  particular  date (a) the last
      closing  price  per  share of the  Common  Stock  on such  date on the OTC
      Bulletin Board or another registered  national stock exchange on which the
      Common Stock is then listed, or if there is no closing price on such date,
      then the  closing  bid price on such date,  or if there is no closing  bid
      price on such date,  then the closing  price on such exchange or quotation
      system on the date nearest preceding such date, or (b) if the Common Stock
      is not listed then on the OTC Bulletin  Board or any  registered  national
      stock exchange,  the last closing price for a share of Common Stock in the
      over-the-counter  market,  as reported by the OTC Bulletin Board or in the
      National Quotation Bureau  Incorporated or similar  organization or agency
      succeeding to its functions of reporting  prices, at the close of business
      on such  date,  or if there is no  closing  price on such  date,  then the
      closing  bid price on such date,  or (c) if the  Common  Stock is not then
      reported  by the OTC  Bulletin  Board  or the  National  Quotation  Bureau
      Incorporated  (or  similar   organization  or  agency  succeeding  to  its
      functions  of  reporting  prices),  then the  average of the "Pink  Sheet"
      quotes for the five (5) Trading Days preceding such date of determination,
      or (d) if the Common  Stock is not then  publicly  traded the fair  market
      value of a share of Common Stock as determined by an Independent Appraiser
      selected in good faith by the Majority Holders;  provided,  however,  that
      the  Issuer,  after  receipt  of the  determination  by  such  Independent
      Appraiser,  shall  have the  right to  select  an  additional  Independent
      Appraiser,  in which  case,  the fair  market  value shall be equal to the
      average of the  determinations  by each such  Independent  Appraiser;  and
      provided,  further that all  determinations  of the Per Share Market Value
      shall be appropriately  adjusted for any stock dividends,  stock splits or
      other similar  transactions  during such period. The determination of fair
      market  value by an  Independent  Appraiser  shall be based  upon the fair
      market value of the Issuer  determined on a going concern basis as between
      a willing buyer and a willing  seller and taking into account all relevant
      factors  determinative  of value,  and shall be final and  binding  on all
      parties.  In  determining  the fair  market  value of any shares of Common
      Stock, no consideration  shall be given to any restrictions on transfer of
      the Common Stock  imposed by  agreement or by federal or state  securities
      laws,  or to the  existence or absence of, or any  limitations  on, voting
      rights.

            "Purchase Agreement" means the Series B Convertible  Preferred Stock
      Purchase Agreement dated as of September 7, 2006, among the Issuer and the
      Purchasers.

            "Purchasers"  means  the  purchasers  of the  Series  B  Convertible
      Preferred Stock and Warrants issued by the Issuer pursuant to the Purchase
      Agreement.

            "Securities"  means any debt or  equity  securities  of the  Issuer,
      whether now or hereafter  authorized,  any instrument  convertible into or
      exchangeable  for  Securities  or a Security,  and any option,  warrant or
      other right to purchase or acquire any Security.  "Security"  means one of
      the Securities.

            "Securities  Act" means the Securities  Act of 1933, as amended,  or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting  Stock  shall at the time be owned  directly or  indirectly  by the
      Issuer or by one or more of its Subsidiaries,  or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.

                                      -15-


            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on the
      OTC  Bulletin  Board,  a day on which  the  Common  Stock is quoted in the
      over-the-counter  market as  reported  by the  National  Quotation  Bureau
      Incorporated  (or  any  similar  organization  or  agency  succeeding  its
      functions of reporting prices); provided,  however, that in the event that
      the  Common  Stock is not  listed  or  quoted  as set  forth in (a) or (b)
      hereof,  then Trading Day shall mean any day except  Saturday,  Sunday and
      any  day  which  shall  be a  legal  holiday  or a day  on  which  banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting  Stock"  means,  as  applied  to the  Capital  Stock  of any
      corporation,  Capital Stock of any class or classes  (however  designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing  body) of such  corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants"  means  the  Warrants  issued  and sold  pursuant  to the
      Purchase Agreement,  including,  without limitation, this Warrant, and any
      other  warrants of like tenor issued in  substitution  or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

            "Warrant  Price"  initially  means U.S.  $5.48, as such price may be
      adjusted from time to time as shall result from the adjustments  specified
      in this Warrant, including Section 4 hereto.

            "Warrant  Share Number"  means at any time the  aggregate  number of
      shares of Warrant Stock which may at such time be purchased  upon exercise
      of  this  Warrant,  after  giving  effect  to all  prior  adjustments  and
      increases  to such  number  made or  required  to be made  under the terms
      hereof.

            "Warrant  Stock" means Common Stock  issuable  upon  exercise of any
      Warrant or  Warrants  or  otherwise  issuable  pursuant  to any Warrant or
      Warrants.

            9. Other Notices. In case at any time:

                        (A)   the  Issuer  shall make any  distributions  to the
                              holders of Common Stock; or

                        (B)   the Issuer  shall  authorize  the  granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital  reorganization  by the
                              Issuer; or

                                      -16-


                        (E)   there  shall be any (i)  consolidation  or  merger
                              involving  the  Issuer or (ii) sale,  transfer  or
                              other  disposition of all or substantially  all of
                              the Issuer's property,  assets or business (except
                              a merger  or  other  reorganization  in which  the
                              Issuer shall be the surviving  corporation and its
                              shares  of  Capital  Stock  shall  continue  to be
                              outstanding    and    unchanged   and   except   a
                              consolidation,  merger,  sale,  transfer  or other
                              disposition involving a wholly-owned  Subsidiary);
                              or

                        (F)   there   shall  be  a  voluntary   or   involuntary
                              dissolution,  liquidation  or  winding-up  of  the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
(20) days prior to the action in question  and not less than ten (10) days prior
to the record date or the date on which the Issuer's  transfer  books are closed
in respect  thereto.  This Warrant  entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

      10. Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 11 without the consent of the Holder of this  Warrant.
No consideration shall be offered or paid to any person to amend or consent to a
waiver  or  modification  of any  provision  of this  Warrant  unless  the  same
consideration is also offered to all holders of the Warrants.

      11.  Governing  Law;  Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the  application of the substantive  law of another  jurisdiction.  This Warrant
shall not be  interpreted or construed  with any  presumption  against the party
causing this  Warrant to be drafted.  The Issuer and the Holder agree that venue
for any dispute  arising under this Warrant will lie exclusively in the state or
federal courts located in New York County, New York, and the parties irrevocably
waive any right to raise forum non  conveniens  or any other  argument  that New
York is not the proper venue. The Issuer and the Holder  irrevocably  consent to
personal  jurisdiction in the state and federal courts of the state of New York.
The  Issuer and the Holder  consent  to process  being  served in any such suit,
action or  proceeding  by mailing a copy thereof to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient service of process and notice thereof. Nothing in
this  Section 12 shall  affect or limit any right to serve  process in any other
manner  permitted  by law.  The  Issuer  and the  Holder  hereby  agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the this Warrant or the Purchase  Agreement,  shall be entitled to reimbursement
for  reasonable  legal fees from the  non-prevailing  party.  The parties hereby
waive all rights to a trial by jury.

                                      -17-


      12.  Notices.  Any and all notices or other  communications  or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of  mailing,  if sent by  overnight  delivery  by a  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                                    Dolce Ventures Inc.

                                    ------------------------

                                    ------------------------
                                    Attention: ________________
                                    Tel. No.: (___) ___-____
                                    Fax No.: (___) ___-____

with copies (which copies
shall not constitute notice
to the Issuer) to:                  GUZOV OFSINK, LLC
                                    600 Madison Avenue, 14th Floor
                                    New York, New York 10022
                                    Attention:  Darren Ofsink
                                    Tel. No.:  (212) 371-8008, ext. 127
                                    Fax No.:  (212) 688-7273

Copies of notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel
LLP,  1177  Avenue  of the  Americas,  New  York,  New  York  10036,  Attention:
Christopher S. Auguste, Tel. No.: (212) 715-9100,  Fax. No.: (212) 715-8000. Any
party  hereto may from time to time  change its address for notices by giving at
least ten (10) days written  notice of such  changed  address to the other party
hereto.

                                      -18-


      13.  Warrant  Agent.  The Issuer may, by written  notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

      14. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      15.  Successors and Assigns.  This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock.

      16.  Modification and Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

      17.  Registration  Rights.  The Holder of this  Warrant is entitled to the
benefit of certain  registration  rights  with  respect to the shares of Warrant
Stock  issuable  upon the  exercise of this  Warrant  pursuant  to that  certain
Registration Rights Agreement,  of even date herewith,  by and among the Company
and Persons listed on Schedule I thereto (the  "Registration  Rights Agreement")
and the registration rights with respect to the shares of Warrant Stock issuable
upon the exercise of this Warrant by any subsequent  Holder may only be assigned
in  accordance  with  the  terms  and  provisions  of the  Registrations  Rights
Agreement.

      18.  Headings.  The  headings  of the  Sections  of this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -19-


      IN WITNESS  WHEREOF,  the Issuer has executed  this Series B Warrant as of
the day and year first above written.

                                                  DOLCE VENTURES INC.

                                                  By: __________________________
                                                      Name:
                                                      Title:

                                      -20-

                                  EXERCISE FORM
                                SERIES B WARRANT

                               DOLCE VENTURES INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of  Common  Stock of Dolce
Ventures Inc. covered by the within Warrant.

Dated: _________________            Signature        ___________________________

                                    Address          _____________________
                                                     _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.


Dated: _________________            Signature        ___________________________

                                    Address          _____________________
                                                     _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.


Dated: _________________            Signature        ___________________________

                                    Address          _____________________
                                                     _____________________

                           FOR USE BY THE ISSUER ONLY:

                                      -21-



This Warrant No. W-___ canceled (or  transferred or exchanged) this _____ day of
___________,  _____,  shares  of Common  Stock  issued  therefor  in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                      -22-

EX-4.6

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  THE  ISSUER  THAT  REGISTRATION  OF  SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                          SERIES C WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                               DOLCE VENTURES INC.

                           Expires September __, 2011

No.: W-C-06- __                                    Number of Shares: ___________
Date of Issuance: September __, 2006


FOR VALUE  RECEIVED,  subject  to the  provisions  hereinafter  set  forth,  the
undersigned,  Dolce  Ventures,  Inc.,  a Utah  corporation  (together  with  its
successors    and   assigns,    the    "Issuer"),    hereby    certifies    that
_______________________________  or its  registered  assigns  (the  "Holder") is
entitled  to  subscribe  for and  purchase,  during  the  Term  (as  hereinafter
defined),  up  to  ____________________________________  (_____________)  shares
(subject to adjustment as hereinafter provided) of the duly authorized,  validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price  per  share  equal to the  Warrant  Price  then in effect on the terms and
conditions  hereinafter set forth. The number of shares of Common Stock issuable
upon  exercise of this Warrant  reflects the number of shares of Common Stock to
which the Holder is entitled following the 1-for-304.4444 reverse stock split to
be effected by the Issuer  following the Original Issue Date (the "Reverse Stock
Split"). Capitalized terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 8 hereof.

      1. Term. The term of this Warrant shall commence on September __, 2006 and
shall expire at 6:00 p.m.,  eastern  time,  on  September  __, 2011 (such period
being the "Term").

      2. Method of  Exercise;  Payment;  Issuance of New  Warrant;  Transfer and
Exchange.


                                      -1-


      (a) Time of Exercise.  The purchase rights represented by this Warrant may
be  exercised  in whole or in part  during the Term for such number of shares of
Common  Stock that have been  exercised  by the Holder  pursuant to the Series J
Warrant issued by the Issuer to the Holder pursuant to the Purchase Agreement.

      (b) Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached  hereto as  Exhibit A duly  executed)  at the  principal  office of the
Issuer, and by the payment to the Issuer of an amount of consideration  therefor
equal to the Warrant Price in effect on the date of such exercise  multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised,  payable at such Holder's election (i) by certified or official
bank check or by wire transfer to an account  designated by the Issuer,  (ii) by
"cashless  exercise" in accordance with the provisions of subsection (c) of this
Section  2, but only when a  registration  statement  under the  Securities  Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

      (c)  Cashless  Exercise.  Notwithstanding  any  provisions  herein  to the
contrary and  commencing  one (1) year following the Original Issue Date, if (i)
the Per Share  Market  Value of one share of Common  Stock is  greater  than the
Warrant  Price  (at the  date of  calculation  as set  forth  below)  and (ii) a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect by the date such  registration  statement is
required to be  effective  pursuant to the  Registration  Rights  Agreement  (as
defined in the  Purchase  Agreement)  or not  effective  at any time  during the
Effectiveness  Period  (as  defined in the  Registration  Rights  Agreement)  in
accordance  with the  terms of the  Registration  Rights  Agreement,  in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless  exercise  and shall  receive the number of shares of Common Stock
equal to an amount (as  determined  below) by  surrender  of this Warrant at the
principal  office of the Issuer  together with the properly  endorsed  Notice of
Exercise in which event the Issuer  shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

         X = Y - (A)(Y)
                 ------
                   B

Where    X =    the number of shares of Common Stock to be issued to the Holder.

         Y =    the number of shares of  Common  Stock purchasable upon exercise
                of all of the Warrant or, if  only a  portion  of the Warrant is
                being  exercised, the  portion of the  Warrant  being exercised.

         A =    the Warrant Price.

         B =    the Per Share Market Value of one share of Common Stock.

      (d)  Issuance of Stock  Certificates.  In the event of any exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and conditions hereof, certificates for the shares of Warrant Stock so purchased
shall be dated the date of such  exercise  and  delivered  to the Holder  hereof
within a  reasonable  time,  not  exceeding  three (3)  Trading  Days after such
exercise (the "Delivery Date") or, at the request of the Holder (provided that a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is then in effect),  issued and delivered to the Depository  Trust
Company ("DTC") account on the Holder's behalf via the Deposit  Withdrawal Agent
Commission  System  ("DWAC")  within a reasonable  time, not exceeding three (3)
Trading Days after such exercise,  and the Holder hereof shall be deemed for all
purposes to be the holder of the shares of Warrant  Stock so purchased as of the
date of such  exercise.  The Holder shall deliver this original  Warrant,  or an
indemnification  undertaking  with  respect  to such  Warrant in the case of its
loss,  theft or destruction,  at such time that this Warrant is fully exercised.
With respect to partial exercises of this Warrant, the Issuer shall keep written
records for the Holder of the number of shares of Warrant Stock  exercised as of
each date of exercise.


                                      -2-


      (e) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the Holder, if the Issuer
fails to cause its  transfer  agent to transmit to the Holder a  certificate  or
certificates representing the Warrant Stock pursuant to an exercise on or before
the Delivery  Date,  and if after such date the Holder is required by its broker
to purchase (in an open market  transaction or otherwise) shares of Common Stock
to deliver in  satisfaction  of a sale by the Holder of the Warrant  Stock which
the Holder  anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
Issuer  shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant  Stock for which such  exercise  was not  honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Issuer shall be required to pay the Holder  $1,000.  The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable  confirmations and
other evidence reasonably requested by the Issuer.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect  to the  Issuer's  failure  to timely  deliver
certificates  representing  shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.

      (f)  Transferability  of Warrant.  Subject to Section  2(h)  hereof,  this
Warrant,  and the rights evidenced  hereby,  may be transferred by a Holder,  in
whole or in part, without the consent of the Issuer. If transferred  pursuant to
this  paragraph,  this Warrant may be  transferred on the books of the Issuer by
the Holder hereof in person or by duly  authorized  attorney,  upon surrender of
this Warrant at the principal  office of the Issuer,  properly  endorsed (by the
Holder  executing an assignment in the form attached hereto) and upon payment of
any  necessary  transfer  tax or other  governmental  charge  imposed  upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants to purchase the same aggregate number of shares of Warrant Stock,  each
new Warrant to represent  the right to purchase such number of shares of Warrant
Stock as the Holder  hereof shall  designate at the time of such  exchange.  All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical  with this  Warrant  except as to the number of shares of
Warrant Stock issuable pursuant thereto.


                                      -3-


      (g) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge  in writing the  extent,  if any, of its  continuing  obligation  to
afford to such  Holder all  rights to which such  Holder  shall  continue  to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

      (h) Compliance with Securities Laws.

            (i) The Holder of this Warrant,  by acceptance hereof,  acknowledges
      that this  Warrant  and the  shares  of  Warrant  Stock to be issued  upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other  party,  and for  investment,  and that the
      Holder will not offer,  sell or  otherwise  dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise  hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph  (iii) below,  this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted  with a legend in  substantially  the
      following form:

               THIS  WARRANT  AND THE SHARES OF COMMON  STOCK  ISSUABLE
         UPON  EXERCISE  HEREOF  HAVE NOT  BEEN  REGISTERED  UNDER  THE
         SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT") OR
         ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED OR
         OTHERWISE  DISPOSED OF UNLESS  REGISTERED UNDER THE SECURITIES
         ACT AND UNDER  APPLICABLE  STATE SECURITIES LAWS OR THE ISSUER
         SHALL  HAVE   RECEIVED   AN  OPINION  OF  COUNSEL   REASONABLY
         SATISFACTORY   TO  THE  ISSUER  THAT   REGISTRATION   OF  SUCH
         SECURITIES  UNDER THE  SECURITIES ACT AND UNDER THE PROVISIONS
         OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.


                                      -4-


            (iii) The Issuer  agrees to  reissue  this  Warrant or  certificates
      representing any of the Warrant Stock,  without the legend set forth above
      if at such time, prior to making any transfer of any such securities,  the
      Holder shall give written  notice to the Issuer  describing the manner and
      terms of such transfer and removal as the Issuer may  reasonably  request.
      Such proposed  transfer and removal will not be effected until: (a) either
      (i) the Issuer has received an opinion of counsel reasonably  satisfactory
      to the Issuer,  to the effect  that the  registration  of such  securities
      under the Securities Act is not required in connection  with such proposed
      transfer,  (ii) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (iii) the Issuer has received other evidence  reasonably  satisfactory  to
      the Issuer that such registration and  qualification  under the Securities
      Act and  state  securities  laws  are not  required,  or (iv)  the  Holder
      provides the Issuer with  reasonable  assurances that such security can be
      sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
      Issuer has received an opinion of counsel  reasonably  satisfactory to the
      Issuer,  to the  effect  that  registration  or  qualification  under  the
      securities  or "blue sky" laws of any state is not required in  connection
      with such proposed  disposition,  or (ii) compliance with applicable state
      securities  or "blue  sky"  laws has been  effected  or a valid  exemption
      exists with  respect  thereto.  The Issuer will respond to any such notice
      from a holder  within three (3) Trading  Days. In the case of any proposed
      transfer under this Section 2(h),  the Issuer will use reasonable  efforts
      to comply with any such  applicable  state  securities or "blue sky" laws,
      but shall in no event be  required,  (x) to qualify to do  business in any
      state where it is not then qualified, or (y) to take any action that would
      subject it to tax or to the general  service of process in any state where
      it is not then subject.  The  restrictions  on transfer  contained in this
      Section 2(h) shall be in addition to, and not by way of limitation of, any
      other  restrictions  on transfer  contained  in any other  section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the  Holder  without  a  legend,  in lieu of  delivering
      physical  certificates  representing  the Warrant Stock  (provided  that a
      registration  statement  under the Securities Act providing for the resale
      of the  Warrant  Stock is then in  effect),  the  Issuer  shall  cause its
      transfer agent to electronically  transmit the Warrant Stock to the Holder
      by crediting the account of the Holder's Prime Broker with DTC through its
      DWAC system.

      (i) Accredited Investor.  In no event may the Holder exercise this Warrant
in whole or in part unless the Holder is an "accredited  investor" as defined in
Regulation D under the Securities Act.

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and reserved for the purpose of the issuance  upon  exercise of this
Warrant a number of authorized  but unissued  shares of Common Stock equal to at
least  one  hundred  percent  (100%) of the  number  of  shares of Common  Stock
issuable  upon exercise of this Warrant  without  regard to any  limitations  on
exercise.


                                      -5-


      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any Governmental  Authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its best efforts as  expeditiously  as possible at its expense to
cause such shares to be duly  registered or qualified.  If the Issuer shall list
any shares of Common Stock on any securities  exchange or market it will, at its
expense,  list thereon,  and maintain and increase when  necessary such listing,
of, all shares of Warrant  Stock from time to time issued upon  exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has
been  registered  pursuant to a registration  statement under the Securities Act
then in effect),  and, to the extent permissible under the applicable securities
exchange  rules,  all  unissued  shares of Warrant  Stock  which are at any time
issuable  hereunder,  so long as any shares of Common  Stock shall be so listed.
The Issuer will also so list on each  securities  exchange  or market,  and will
maintain such listing of, any other  securities which the Holder of this Warrant
shall be entitled to receive  upon the  exercise of this  Warrant if at the time
any securities of the same class shall be listed on such securities  exchange or
market by the Issuer.

      (c)  Covenants.  The  Issuer  shall not by any action  including,  without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or  through  any  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other action,  avoid or seek to
avoid the  observance or  performance  of any of the terms of this Warrant,  but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or  appropriate to protect
the rights of the Holder  hereof  against  dilution (to the extent  specifically
provided  herein)  or  impairment.   Without  limiting  the  generality  of  the
foregoing,  the Issuer will (i) not permit the par value,  if any, of its Common
Stock to exceed the then effective  Warrant Price,  (ii) not amend or modify any
provision  of the  Articles  of  Incorporation  or  by-laws of the Issuer in any
manner that would  adversely  affect the rights of the Holders of the  Warrants,
(iii)  take all such  action as may be  reasonably  necessary  in order that the
Issuer may  validly and legally  issue  fully paid and  nonassessable  shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant,  and (iv) use
its best efforts to obtain all such authorizations,  exemptions or consents from
any public  regulatory  body having  jurisdiction  thereof as may be  reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

      (d) Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      (e)  Payment of Taxes.  The Issuer  will pay any  documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided, however, that the Issuer shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any  certificates  representing  Warrant Stock in a name
other than that of the Holder in respect to which such shares are issued.


                                      -6-


      4. Adjustment of Warrant Price.  The price at which such shares of Warrant
Stock may be  purchased  upon  exercise  of this  Warrant  shall be  subject  to
adjustment  from time to time as set forth in this  Section 4. The Issuer  shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with the notice provisions set forth in
Section 5.

      (a)  Recapitalization,  Reorganization,  Reclassification,  Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering  Event"): (a) consolidate or merge with
      or into any other  Person and the Issuer  shall not be the  continuing  or
      surviving  corporation of such  consolidation or merger, or (b) permit any
      other Person to  consolidate  with or merge into the Issuer and the Issuer
      shall be the continuing or surviving  Person but, in connection  with such
      consolidation or merger,  any Capital Stock of the Issuer shall be changed
      into or exchanged for  Securities of any other Person or cash or any other
      property,  or (c) transfer all or  substantially  all of its properties or
      assets to any other  Person,  or (d)  effect a capital  reorganization  or
      reclassification  of its Capital Stock,  other than any event set forth in
      Section 4(b) below,  then, and in the case of each such Triggering  Event,
      proper  provision  shall be made so that, upon the basis and the terms and
      in the manner  provided in this Warrant,  the Holder of this Warrant shall
      be entitled upon the exercise hereof at any time after the consummation of
      such  Triggering  Event, to the extent this Warrant is not exercised prior
      to such Triggering Event, to receive at the Warrant Price in effect at the
      time  immediately  prior to the  consummation of such Triggering  Event in
      lieu of the Common Stock issuable upon such exercise of this Warrant prior
      to such Triggering Event, the Securities,  cash and property to which such
      Holder would have been entitled upon the  consummation  of such Triggering
      Event if such Holder had exercised the rights  represented by this Warrant
      immediately  prior thereto  (including the right of a shareholder to elect
      the  type of  consideration  it will  receive  upon a  Triggering  Event),
      subject to adjustments  (subsequent  to such  corporate  action) as nearly
      equivalent as possible to the  adjustments  provided for elsewhere in this
      Section 4; provided, however, in the event that the Per Share Market Value
      is less than the Warrant Price at the time of such Triggering  Event,  the
      Holder shall  receive an amount in cash equal to the value of this Warrant
      calculated in accordance with the Black-Scholes  formula.  Notwithstanding
      the  foregoing to the contrary,  this Section  4(a)(i) shall only apply if
      the surviving  entity pursuant to any such  Triggering  Event is a company
      that  has  a  class  of  equity  securities  registered  pursuant  to  the
      Securities  Exchange  Act of 1934,  as  amended,  and its common  stock is
      listed or quoted on a national  securities  exchange,  national  automated
      quotation  system  or the  OTC  Bulletin  Board.  In the  event  that  the
      surviving  entity  pursuant to any such  Triggering  Event is not a public
      company  that is  registered  pursuant to the  Securities  Exchange Act of
      1934,  as  amended,  or its  common  stock is not  listed  or  quoted on a
      national securities  exchange,  national automated quotation system or the
      OTC  Bulletin  Board,  then the Holder shall have the right to demand that
      the  Issuer pay to the Holder an amount in cash equal to the value of this
      Warrant calculated in accordance with the Black-Scholes formula.


                                      -7-


            (ii)  Notwithstanding  anything  contained  in this  Warrant  to the
      contrary and so long as the surviving  entity  pursuant to any  Triggering
      Event  is a  company  that  has a class of  equity  securities  registered
      pursuant to the  Securities  Exchange  Act of 1934,  as  amended,  and its
      common  stock is  listed  or quoted  on a  national  securities  exchange,
      national  automated   quotation  system  or  the  OTC  Bulletin  Board,  a
      Triggering  Event shall not be deemed to have  occurred  if,  prior to the
      consummation  thereof,  each Person  (other than the Issuer)  which may be
      required to deliver any Securities,  cash or property upon the exercise of
      this  Warrant as  provided  herein  shall  assume,  by written  instrument
      delivered to, and reasonably  satisfactory to, the Holder of this Warrant,
      (A) the  obligations  of the Issuer  under this Warrant (and if the Issuer
      shall survive the consummation of such Triggering  Event,  such assumption
      shall be in  addition  to,  and shall not  release  the Issuer  from,  any
      continuing  obligations  of the  Issuer  under this  Warrant)  and (B) the
      obligation to deliver to such Holder such Securities, cash or property as,
      in accordance  with the foregoing  provisions of this subsection (a), such
      Holder shall be entitled to receive,  and such Person shall have similarly
      delivered  to such  Holder an opinion of counsel  for such  Person,  which
      counsel  shall  be  reasonably  satisfactory  to  such  Holder,  or in the
      alternative,  a written acknowledgement executed by the President or Chief
      Financial  Officer  of  the  Issuer,   stating  that  this  Warrant  shall
      thereafter  continue  in  full  force  and  effect  and the  terms  hereof
      (including,  without limitation,  all of the provisions of this subsection
      (a)) shall be applicable to the  Securities,  cash or property  which such
      Person may be required to deliver upon any exercise of this Warrant or the
      exercise of any rights pursuant hereto.

      (b) Stock  Dividends,  Subdivisions and  Combinations.  If at any time the
Issuer shall:

            (i) make or issue or set a record date for the holders of the Common
      Stock for the purpose of entitling them to receive a dividend  payable in,
      or other distribution of, shares of Common Stock (other than in connection
      with the  dividend  payable in shares of Common  Stock to be issued by the
      Issuer to the Issuer's stockholders in connection with the spin-off of the
      Issuer's wholly-owned subsidiary, Pegasus Tel, Inc.),

            (ii) subdivide its outstanding  shares of Common Stock into a larger
      number of shares of Common Stock, or

            (iii) combine its outstanding  shares of Common Stock into a smaller
      number of shares of Common  Stock  (other  than  pursuant  to the  Reverse
      Split),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.


                                      -8-


      (c) Certain Other  Distributions.  If at any time the Issuer shall make or
issue or set a record  date for the  determination  of the holders of the Common
Stock for the  purpose  of  entitling  them to  receive  any  dividend  or other
distribution of:

            (i) cash  (other  than a cash  dividend  payable  out of earnings or
      earned surplus  legally  available for the payment of dividends  under the
      laws of the jurisdiction of incorporation of the Issuer),

            (ii) any evidences of its  indebtedness,  any shares of stock of any
      class or any other securities or property of any nature  whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),
      or

            (iii) any warrants or other rights to subscribe  for or purchase any
      evidences  of its  indebtedness,  any  shares of stock of any class or any
      other  securities or property of any nature  whatsoever  (other than cash,
      Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such  evidences  of  indebtedness,  shares of  stock,  other  securities  or
property or warrants or other  subscription or purchase rights so distributable,
and (2) the  Warrant  Price then in effect  shall be  adjusted  to equal (A) the
Warrant Price then in effect  multiplied by the number of shares of Common Stock
for which  this  Warrant  is  exercisable  immediately  prior to the  adjustment
divided  by (B) the number of shares of Common  Stock for which this  Warrant is
exercisable immediately after such adjustment.  A reclassification of the Common
Stock  (other  than a change in par value,  or from par value to no par value or
from no par value to par value)  into  shares of Common  Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its  Common  Stock of such  shares of such  other  class of stock  within the
meaning of this  Section  4(c) and, if the  outstanding  shares of Common  Stock
shall be changed into a larger or smaller  number of shares of Common Stock as a
part of such  reclassification,  such change  shall be deemed a  subdivision  or
combination,  as the case may be, of the  outstanding  shares  of  Common  Stock
within the meaning of Section 4(b).

      (d) Issuance of Additional Shares of Common Stock. In the event the Issuer
shall at any time within the two (2) year period following the Original Issuance
Date issue any Additional  Shares of Common Stock (otherwise than as provided in
the  foregoing  subsections  (b) through (c) of this  Section 4), at a price per
share less than $2.74 or without consideration, then the Warrant Price upon each
such  issuance  shall be adjusted to the price  equal to the  consideration  per
share paid for such Additional Shares of Common Stock.


                                      -9-


      (e) Issuance of Common Stock Equivalents. In the event the Issuer shall at
any time within the two (2) year period  following  the Original  Issuance  Date
take a record of the holders of its Common  Stock for the  purpose of  entitling
them to receive a distribution  of, or shall in any manner (whether  directly or
by  assumption  in a merger in which the  Issuer is the  surviving  corporation)
issue or sell,  any  Common  Stock  Equivalents,  whether  or not the  rights to
exchange or convert  thereunder are immediately  exercisable,  and the price per
share for which Common Stock is issuable upon such  conversion or exchange shall
be less than $2.74  immediately  prior to the time of such issue or sale, or if,
after any such  issuance of Common  Stock  Equivalents,  the price per share for
which Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted,  and such price as so amended  shall be less than $2.74 at the time of
such  amendment or  adjustment,  then the Warrant  Price then in effect shall be
adjusted as provided in Section  4(d). No further  adjustments  of the number of
shares of Common  Stock for which this  Warrant is  exercisable  and the Warrant
Price then in effect  shall be made upon the actual  issue of such Common  Stock
upon conversion or exchange of such Common Stock Equivalents.

      (f) Other  Provisions  Applicable to Adjustments  under this Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

            (i) Computation of Consideration.  To the extent that any Additional
      Shares of Common Stock or any Common Stock Equivalents (or any warrants or
      other  rights  therefor)  shall  be  issued  for cash  consideration,  the
      consideration  received by the Issuer  therefor shall be the amount of the
      cash received by the Issuer  therefor,  or, if such  Additional  Shares of
      Common  Stock or Common  Stock  Equivalents  are offered by the Issuer for
      subscription,  the subscription  price,  or, if such Additional  Shares of
      Common  Stock or Common  Stock  Equivalents  are sold to  underwriters  or
      dealers for public offering without a subscription  offering,  the initial
      public  offering price (in any such case  subtracting  any amounts paid or
      receivable  for accrued  interest or accrued  dividends and without taking
      into account any  compensation,  discounts or expenses paid or incurred by
      the Issuer for and in the  underwriting  of, or  otherwise  in  connection
      with,   the  issuance   thereof).   In  connection   with  any  merger  or
      consolidation in which the Issuer is the surviving corporation (other than
      any consolidation or merger in which the previously  outstanding shares of
      Common Stock of the Issuer shall be changed to or exchanged  for the stock
      or other securities of another  corporation),  the amount of consideration
      therefore shall be, deemed to be the fair value, as determined  reasonably
      and in good  faith by the  Board and  acceptable  to the  Holder,  of such
      portion of the assets and business of the nonsurviving  corporation as the
      Board may determine to be  attributable  to such shares of Common Stock or
      Common Stock  Equivalents,  as the case may be. The  consideration for any
      Additional  Shares of Common  Stock  issuable  pursuant to any warrants or
      other  rights  to  subscribe  for  or  purchase  the  same  shall  be  the
      consideration  received by the Issuer for issuing  such  warrants or other
      rights  plus the  additional  consideration  payable  to the  Issuer  upon
      exercise  of such  warrants or other  rights.  The  consideration  for any
      Additional  Shares of Common Stock  issuable  pursuant to the terms of any
      Common Stock Equivalents shall be the consideration received by the Issuer
      for issuing  warrants or other  rights to subscribe  for or purchase  such
      Common Stock  Equivalents,  plus the consideration  paid or payable to the
      Issuer in respect of the subscription for or purchase of such Common Stock
      Equivalents,  plus the additional  consideration,  if any,  payable to the
      Issuer upon the  exercise of the right of  conversion  or exchange in such
      Common Stock  Equivalents.  In the event of any consolidation or merger of
      the  Issuer in which the  Issuer is not the  surviving  corporation  or in
      which the  previously  outstanding  shares of Common  Stock of the  Issuer
      shall be changed into or exchanged  for the stock or other  securities  of
      another  corporation,  or in the event of any sale of all or substantially
      all of the  assets  of the  Issuer  for stock or other  securities  of any
      corporation,  the Issuer shall be deemed to have issued a number of shares
      of its Common Stock for stock or securities or other property of the other
      corporation  computed on the basis of the actual  exchange  ratio on which
      the transaction was predicated,  and for a consideration equal to the fair
      market  value  on the  date of  such  transaction  of all  such  stock  or
      securities or other  property of the other  corporation.  In the event any
      consideration  received  by the  Issuer  for any  securities  consists  of
      property  other than cash,  the fair market  value  thereof at the time of
      issuance or as otherwise  applicable  shall be as determined in good faith
      by the Board.  In the event  Common  Stock is issued with other  shares or
      securities  or other assets of the Issuer for  consideration  which covers
      both, the consideration computed as provided in this Section 4(f)(i) shall
      be allocated  among such securities and assets as determined in good faith
      by the Board.


                                      -10-


            (ii) When  Adjustments to Be Made. The adjustments  required by this
      Section  4 shall be made  whenever  and as often  as any  specified  event
      requiring an  adjustment  shall occur,  except that any  adjustment of the
      number of shares of Common  Stock for which this  Warrant  is  exercisable
      that would otherwise be required may be postponed (except in the case of a
      subdivision or combination of shares of the Common Stock,  as provided for
      in  Section  4(b)) up to,  but not  beyond  the date of  exercise  if such
      adjustment  either by itself or with other adjustments not previously made
      adds or subtracts less than one percent (1%) of the shares of Common Stock
      for which this Warrant is exercisable  immediately  prior to the making of
      such  adjustment.  Any adjustment  representing a change of less than such
      minimum amount (except as aforesaid)  which is postponed  shall be carried
      forward  and  made  as  soon  as  such  adjustment,  together  with  other
      adjustments  required by this  Section 4 and not  previously  made,  would
      result in a minimum adjustment or on the date of exercise. For the purpose
      of any adjustment, any specified event shall be deemed to have occurred at
      the close of business on the date of its occurrence.

            (iii)  Fractional  Interests.  In computing  adjustments  under this
      Section  4,  fractional  interests  in Common  Stock  shall be taken  into
      account to the nearest one one-hundredth (1/100th) of a share.

            (iv) When Adjustment Not Required. If the Issuer shall take a record
      of the holders of its Common  Stock for the purpose of  entitling  them to
      receive a dividend or  distribution or subscription or purchase rights and
      shall,  thereafter and before the  distribution to  stockholders  thereof,
      legally  abandon its plan to pay or deliver such  dividend,  distribution,
      subscription or purchase  rights,  then thereafter no adjustment  shall be
      required  by reason of the taking of such  record and any such  adjustment
      previously made in respect thereof shall be rescinded and annulled.

      (g) Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.


                                      -11-


      (h) Escrow of Warrant Stock. If after any property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and the Holder  exercises  this  Warrant,  any shares of Common Stock
issuable  upon  exercise by reason of such  adjustment  shall be deemed the last
shares of Common Stock for which this Warrant is exercised  (notwithstanding any
other provision to the contrary  herein) and such shares or other property shall
be held in escrow for the  Holder by the Issuer to be issued to the Holder  upon
and to the extent  that the event  actually  takes  place,  upon  payment of the
current  Warrant  Price.  Notwithstanding  any other  provision  to the contrary
herein,  if the event  for  which  such  record  was taken  fails to occur or is
rescinded,  then such  escrowed  shares  shall be  cancelled  by the  Issuer and
escrowed property returned.

      5. Notice of  Adjustments.  Whenever  the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the  option  of the  Holder  of this  Warrant  be  submitted  to an  Independent
Appraiser  reasonably  acceptable to the Issuer and the Holder. The Issuer shall
use its  best  efforts  to  cause  the  Independent  Appraiser  to  perform  the
calculations  and notify the Issuer and the Holder of the  results no later than
five (5) business days from the time it receives the disputed calculation.  Such
Independent  Appraiser's  calculation  shall be binding upon all parties  absent
manifest error. The reasonable  expenses of the Independent  Appraiser in making
such  determination  shall be paid by the  Issuer,  in the  event  the  Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was  correct,  or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof,  but in lieu of such fractional  shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

      7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the
contrary  set forth in this  Warrant,  at no time may a Holder  of this  Warrant
exercise  this  Warrant  if the  number of  shares of Common  Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares of
Common  Stock owned by such Holder at such time,  the number of shares of Common
Stock which would result in such Holder  beneficially  owning (as  determined in
accordance  with Section 13(d) of the Exchange Act and the rules  thereunder) in
excess of 9.9% of the then  issued  and  outstanding  shares  of  Common  Stock;
provided,  however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 12 hereof) (the "Waiver Notice")
that such  Holder  would like to waive this  Section 7 with regard to any or all
shares of Common Stock  issuable upon  exercise of this Warrant,  this Section 7
will be of no force or effect  with  regard to all or a portion  of the  Warrant
referenced in the Waiver Notice; provided, further, that this provision shall be
of no  further  force or effect  during  the  sixty-one  (61)  days  immediately
preceding the expiration of the term of this Warrant.


                                      -12-


      8. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer  after the  Original  Issue  Date,  and all shares of
      Other Common,  if any, issued by the Issuer after the Original Issue Date,
      except:  (i) securities  issued pursuant to a bona fide firm  underwritten
      public  offering  of  the  Issuer's  securities,  (ii)  securities  issued
      pursuant  to the  conversion  or exercise of  convertible  or  exercisable
      securities issued or outstanding on or prior to the Original Issue Date or
      issued  pursuant to the Purchase  Agreement (so long as the  conversion or
      exercise  price in such  securities  are not  amended  to lower such price
      and/or  adversely  affect the  Holders),  (iii) the  Warrant  Stock,  (iv)
      securities  issued (other than for cash) in connection with an acquisition
      of the Issuer,  (v) any  warrants  issued to the  placement  agent for the
      transactions  contemplated  by the  Purchase  Agreement,  (vi)  securities
      issued  in  connection  with  strategic   license   agreements  and  other
      partnering  arrangements so long as such issuances are not for the purpose
      of raising  capital and the Issuer has received the prior written  consent
      of the Holder,  and (vii) the  issuance of Common Stock or the issuance or
      grants of options to purchase  Common Stock pursuant to the Issuer's stock
      option  plans and  employee  stock  purchase  plans  and  which  have been
      approved by the Issuer's  Board of Directors so long as such  issuances in
      the aggregate do not exceed ten percent  (10%) of the Issuer's  issued and
      outstanding Common Stock as of the Original Issue Date.

            "Articles of  Incorporation"  means the Articles of Incorporation of
      the Issuer as in effect on the Original  Issue Date, and as hereafter from
      time to time  amended,  modified,  supplemented  or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital   Stock"  means  and  includes  (i)  any  and  all  shares,
      interests, participations or other equivalents of or interests in (however
      designated)  corporate stock,  including,  without  limitation,  shares of
      preferred or preference  stock,  (ii) all partnership  interests  (whether
      general  or  limited)  in any  Person  which is a  partnership,  (iii) all
      membership interests or limited liability company interests in any limited
      liability  company,  and (iv) all  equity or  ownership  interests  in any
      Person of any other type.

            "Common Stock" means the Common Stock, par value $.001 per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any  Additional  Shares
      of Common Stock or any Convertible Security.


                                      -13-


            "Convertible Securities" means evidences of Indebtedness,  shares of
      Capital  Stock  or  other  Securities  which  are or  may  be at any  time
      convertible  into or exchangeable  for Additional  Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental  Authority"  means  any  governmental,  regulatory  or
      self-regulatory entity, department, body, official, authority, commission,
      board,  agency or  instrumentality,  whether federal,  state or local, and
      whether domestic or foreign.

            "Holders"  mean the  Persons  who  shall  from  time to time own any
      Warrant. The term "Holder" means one of the Holders.

            "Independent  Appraiser"  means a  nationally  recognized  or  major
      regional  investment banking firm or firm of independent  certified public
      accountants of recognized  standing  (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of  corporations
      or other  entities as going  concerns,  and which is not  affiliated  with
      either the Issuer or the Holder of any Warrant.

            "Issuer"  means Dolce  Ventures  Inc., a Utah  corporation,  and its
      successors.

            "Majority  Holders"  means  at any  time  the  Holders  of  Warrants
      exercisable  for a majority of the shares of Warrant Stock  issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means September __, 2006.

            "OTC Bulletin Board" means the over-the-counter  electronic bulletin
      board.

            "Other  Common"  means any other  Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the  distribution of earnings and assets of the Issuer without  limitation
      as to amount.

            "Outstanding  Common Stock" means,  at any given time, the aggregate
      amount of  outstanding  shares of Common Stock,  assuming  full  exercise,
      conversion or exchange (as applicable) of all options,  warrants and other
      Securities which are convertible into or exercisable or exchangeable  for,
      and  any  right  to  subscribe  for,  shares  of  Common  Stock  that  are
      outstanding at such time.

            "Person"  means  an  individual,   corporation,   limited  liability
      company,   partnership,   joint  stock  company,   trust,   unincorporated
      organization,  joint  venture,  Governmental  Authority or other entity of
      whatever nature.


                                      -14-


            "Per Share Market Value" means on any  particular  date (a) the last
      closing  price  per  share of the  Common  Stock  on such  date on the OTC
      Bulletin Board or another registered  national stock exchange on which the
      Common Stock is then listed, or if there is no closing price on such date,
      then the  closing  bid price on such date,  or if there is no closing  bid
      price on such date,  then the closing  price on such exchange or quotation
      system on the date nearest preceding such date, or (b) if the Common Stock
      is not listed then on the OTC Bulletin  Board or any  registered  national
      stock exchange,  the last closing price for a share of Common Stock in the
      over-the-counter  market,  as reported by the OTC Bulletin Board or in the
      National Quotation Bureau  Incorporated or similar  organization or agency
      succeeding to its functions of reporting  prices, at the close of business
      on such  date,  or if there is no  closing  price on such  date,  then the
      closing  bid price on such date,  or (c) if the  Common  Stock is not then
      reported  by the OTC  Bulletin  Board  or the  National  Quotation  Bureau
      Incorporated  (or  similar   organization  or  agency  succeeding  to  its
      functions  of  reporting  prices),  then the  average of the "Pink  Sheet"
      quotes for the five (5) Trading Days preceding such date of determination,
      or (d) if the Common  Stock is not then  publicly  traded the fair  market
      value of a share of Common Stock as determined by an Independent Appraiser
      selected in good faith by the Majority Holders;  provided,  however,  that
      the  Issuer,  after  receipt  of the  determination  by  such  Independent
      Appraiser,  shall  have the  right to  select  an  additional  Independent
      Appraiser,  in which  case,  the fair  market  value shall be equal to the
      average of the  determinations  by each such  Independent  Appraiser;  and
      provided,  further that all  determinations  of the Per Share Market Value
      shall be appropriately  adjusted for any stock dividends,  stock splits or
      other similar  transactions  during such period. The determination of fair
      market  value by an  Independent  Appraiser  shall be based  upon the fair
      market value of the Issuer  determined on a going concern basis as between
      a willing buyer and a willing  seller and taking into account all relevant
      factors  determinative  of value,  and shall be final and  binding  on all
      parties.  In  determining  the fair  market  value of any shares of Common
      Stock, no consideration  shall be given to any restrictions on transfer of
      the Common Stock  imposed by  agreement or by federal or state  securities
      laws,  or to the  existence or absence of, or any  limitations  on, voting
      rights.

            "Purchase Agreement" means the Series B Convertible  Preferred Stock
      Purchase Agreement dated as of September 7, 2006, among the Issuer and the
      Purchasers.

            "Purchasers"  means  the  purchasers  of the  Series  B  Convertible
      Preferred Stock and Warrants issued by the Issuer pursuant to the Purchase
      Agreement.

            "Securities"  means any debt or  equity  securities  of the  Issuer,
      whether now or hereafter  authorized,  any instrument  convertible into or
      exchangeable  for  Securities  or a Security,  and any option,  warrant or
      other right to purchase or acquire any Security.  "Security"  means one of
      the Securities.

            "Securities  Act" means the Securities  Act of 1933, as amended,  or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting  Stock  shall at the time be owned  directly or  indirectly  by the
      Issuer or by one or more of its Subsidiaries,  or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.


                                      -15-


            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on the
      OTC  Bulletin  Board,  a day on which  the  Common  Stock is quoted in the
      over-the-counter  market as  reported  by the  National  Quotation  Bureau
      Incorporated  (or  any  similar  organization  or  agency  succeeding  its
      functions of reporting prices); provided,  however, that in the event that
      the  Common  Stock is not  listed  or  quoted  as set  forth in (a) or (b)
      hereof,  then Trading Day shall mean any day except  Saturday,  Sunday and
      any  day  which  shall  be a  legal  holiday  or a day  on  which  banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting  Stock"  means,  as  applied  to the  Capital  Stock  of any
      corporation,  Capital Stock of any class or classes  (however  designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing  body) of such  corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants"  means  the  Warrants  issued  and sold  pursuant  to the
      Purchase Agreement,  including,  without limitation, this Warrant, and any
      other  warrants of like tenor issued in  substitution  or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

            "Warrant  Price"  initially  means U.S.  $4.22, as such price may be
      adjusted from time to time as shall result from the adjustments  specified
      in this Warrant, including Section 4 hereto.

            "Warrant  Share Number"  means at any time the  aggregate  number of
      shares of Warrant Stock which may at such time be purchased  upon exercise
      of  this  Warrant,  after  giving  effect  to all  prior  adjustments  and
      increases  to such  number  made or  required  to be made  under the terms
      hereof.

            "Warrant  Stock" means Common Stock  issuable  upon  exercise of any
      Warrant or  Warrants  or  otherwise  issuable  pursuant  to any Warrant or
      Warrants.

9. Other Notices. In case at any time:

                  (A)   the Issuer shall make any  distributions  to the holders
                        of Common Stock; or

                  (B)   the Issuer shall  authorize  the granting to all holders
                        of its  Common  Stock  of  rights  to  subscribe  for or
                        purchase  any  shares of  Capital  Stock of any class or
                        other rights; or

                  (C)   there shall be any reclassification of the Capital Stock
                        of the Issuer; or

                  (D)   there shall be any capital reorganization by the Issuer;
                        or


                                      -16-


                  (E)   there shall be any (i) consolidation or merger involving
                        the Issuer or (ii) sale,  transfer or other  disposition
                        of all or  substantially  all of the Issuer's  property,
                        assets   or   business   (except   a  merger   or  other
                        reorganization   in  which  the  Issuer   shall  be  the
                        surviving  corporation  and its shares of Capital  Stock
                        shall  continue  to be  outstanding  and  unchanged  and
                        except a consolidation,  merger, sale, transfer or other
                        disposition involving a wholly-owned Subsidiary); or

                  (F)   there shall be a voluntary or  involuntary  dissolution,
                        liquidation  or  winding-up of the Issuer or any partial
                        liquidation of the Issuer or  distribution to holders of
                        Common Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
(20) days prior to the action in question  and not less than ten (10) days prior
to the record date or the date on which the Issuer's  transfer  books are closed
in respect  thereto.  This Warrant  entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

      10. Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 10 without the consent of the Holder of this  Warrant.
No consideration shall be offered or paid to any person to amend or consent to a
waiver  or  modification  of any  provision  of this  Warrant  unless  the  same
consideration is also offered to all holders of the Warrants.

      11.  Governing  Law;  Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the  application of the substantive  law of another  jurisdiction.  This Warrant
shall not be  interpreted or construed  with any  presumption  against the party
causing this  Warrant to be drafted.  The Issuer and the Holder agree that venue
for any dispute  arising under this Warrant will lie exclusively in the state or
federal courts located in New York County, New York, and the parties irrevocably
waive any right to raise forum non  conveniens  or any other  argument  that New
York is not the proper venue. The Issuer and the Holder  irrevocably  consent to
personal  jurisdiction in the state and federal courts of the state of New York.
The  Issuer and the Holder  consent  to process  being  served in any such suit,
action or  proceeding  by mailing a copy thereof to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient service of process and notice thereof. Nothing in
this  Section 11 shall  affect or limit any right to serve  process in any other
manner  permitted  by law.  The  Issuer  and the  Holder  hereby  agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the this Warrant or the Purchase  Agreement,  shall be entitled to reimbursement
for  reasonable  legal fees from the  non-prevailing  party.  The parties hereby
waive all rights to a trial by jury.


                                      -17-


      12.  Notices.  Any and all notices or other  communications  or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of  mailing,  if sent by  overnight  delivery  by a  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                                    Dolce Ventures Inc.

                                    _____________________

                                    _____________________

                                    Attention: ________________
                                    Tel. No.: (___) ___-____
                                    Fax No.: (___) ___-____

with copies (which copies
shall not constitute notice
to the Issuer) to:                  GUZOV OFSINK, LLC
                                    600 Madison Avenue, 14th Floor
                                    New York, New York 10022
                                    Attention:  Darren Ofsink
                                    Tel. No.:  (212) 371-8008, ext. 127
                                    Fax No.:  (212) 688-7273


                                      -18-


Copies of notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel
LLP,  1177  Avenue  of the  Americas,  New  York,  New  York  10036,  Attention:
Christopher S. Auguste, Tel. No.: (212) 715-9100,  Fax. No.: (212) 715-8000. Any
party  hereto may from time to time  change its address for notices by giving at
least ten (10) days written  notice of such  changed  address to the other party
hereto.

      13.  Warrant  Agent.  The Issuer may, by written  notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

      14. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      15.  Successors and Assigns.  This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock.

      16.  Modification and Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

      17.  Registration  Rights.  The Holder of this  Warrant is entitled to the
benefit of certain  registration  rights  with  respect to the shares of Warrant
Stock  issuable  upon the  exercise of this  Warrant  pursuant  to that  certain
Registration Rights Agreement,  of even date herewith,  by and among the Company
and Persons listed on Schedule I thereto (the  "Registration  Rights Agreement")
and the registration rights with respect to the shares of Warrant Stock issuable
upon the exercise of this Warrant by any subsequent  Holder may only be assigned
in  accordance  with  the  terms  and  provisions  of the  Registrations  Rights
Agreement.

      18.  Headings.  The  headings  of the  Sections  of this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -19-



      IN WITNESS  WHEREOF,  the Issuer has executed  this Series C Warrant as of
the day and year first above written.


                                   DOLCE VENTURES INC.



                                   By:___________________________________
                                      Name:
                                      Title:


                                      -20-


                                 EXERCISE FORM
                                SERIES C WARRANT

                               DOLCE VENTURES INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of  Common  Stock of Dolce
Ventures Inc. covered by the within Warrant.

Dated: _________________            Signature  ___________________________

                                    Address    _____________________

                                               _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________            Signature  ___________________________

                                    Address    _____________________

                                               _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________            Signature  ___________________________

                                    Address    _____________________

                                               _____________________


                          FOR USE BY THE ISSUER ONLY:


                                      -21-


This Warrant No. W-___ canceled (or  transferred or exchanged) this _____ day of
___________,  _____,  shares  of Common  Stock  issued  therefor  in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.


                                      -22-

EX-4.7

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  THE  ISSUER  THAT  REGISTRATION  OF  SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                          SERIES D WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                               DOLCE VENTURES INC.

                           Expires September __, 2011

No.: W-D-06- __                                  Number of Shares: ___________
Date of Issuance: September __, 2006


      FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth, the
undersigned,  Dolce  Ventures,  Inc.,  a Utah  corporation  (together  with  its
successors    and   assigns,    the    "Issuer"),    hereby    certifies    that
_______________________________  or its  registered  assigns  (the  "Holder") is
entitled  to  subscribe  for and  purchase,  during  the  Term  (as  hereinafter
defined),  up  to  ____________________________________  (_____________)  shares
(subject to adjustment as hereinafter provided) of the duly authorized,  validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price  per  share  equal to the  Warrant  Price  then in effect on the terms and
conditions  hereinafter set forth. The number of shares of Common Stock issuable
upon  exercise of this Warrant  reflects the number of shares of Common Stock to
which the Holder is entitled following the 1-for-304.4444 reverse stock split to
be effected by the Issuer  following the Original Issue Date (the "Reverse Stock
Split"). Capitalized terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 8 hereof.

      1. Term. The term of this Warrant shall commence on September __, 2006 and
shall expire at 6:00 p.m.,  eastern  time,  on  September  __, 2011 (such period
being the "Term").

      2. Method of  Exercise;  Payment;  Issuance of New  Warrant;  Transfer and
Exchange.


                                      -1-


      (a) Time of Exercise.  The purchase rights represented by this Warrant may
be  exercised  in whole or in part  during the Term for such number of shares of
Common  Stock that have been  exercised  by the Holder  pursuant to the Series J
Warrant issued by the Issuer to the Holder pursuant to the Purchase Agreement.

      (b) Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached  hereto as  Exhibit A duly  executed)  at the  principal  office of the
Issuer, and by the payment to the Issuer of an amount of consideration  therefor
equal to the Warrant Price in effect on the date of such exercise  multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised,  payable at such Holder's election (i) by certified or official
bank check or by wire transfer to an account  designated by the Issuer,  (ii) by
"cashless  exercise" in accordance with the provisions of subsection (c) of this
Section  2, but only when a  registration  statement  under the  Securities  Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

      (c)  Cashless  Exercise.  Notwithstanding  any  provisions  herein  to the
contrary and  commencing  one (1) year following the Original Issue Date, if (i)
the Per Share  Market  Value of one share of Common  Stock is  greater  than the
Warrant  Price  (at the  date of  calculation  as set  forth  below)  and (ii) a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect by the date such  registration  statement is
required to be  effective  pursuant to the  Registration  Rights  Agreement  (as
defined in the  Purchase  Agreement)  or not  effective  at any time  during the
Effectiveness  Period  (as  defined in the  Registration  Rights  Agreement)  in
accordance  with the  terms of the  Registration  Rights  Agreement,  in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this Warrant
by a cashless  exercise  and shall  receive the number of shares of Common Stock
equal to an amount (as  determined  below) by  surrender  of this Warrant at the
principal  office of the Issuer  together with the properly  endorsed  Notice of
Exercise in which event the Issuer  shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

            X = Y - (A)(Y)
                    ------
                       B

Where       X =   the number of shares of Common Stock to be issued to the
                  Holder.

            Y =   the number of shares of Common Stock purchasable upon
                  exercise of all of the Warrant or, if only a portion of the
                  Warrant is being exercised, the portion of the Warrant
                  being exercised.

            A =   the Warrant Price.

            B =   the Per Share Market Value of one share of Common Stock.

      (d)  Issuance of Stock  Certificates.  In the event of any exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and conditions hereof, certificates for the shares of Warrant Stock so purchased
shall be dated the date of such  exercise  and  delivered  to the Holder  hereof
within a  reasonable  time,  not  exceeding  three (3)  Trading  Days after such
exercise (the "Delivery Date") or, at the request of the Holder (provided that a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is then in effect),  issued and delivered to the Depository  Trust
Company ("DTC") account on the Holder's behalf via the Deposit  Withdrawal Agent
Commission  System  ("DWAC")  within a reasonable  time, not exceeding three (3)
Trading Days after such exercise,  and the Holder hereof shall be deemed for all
purposes to be the holder of the shares of Warrant  Stock so purchased as of the
date of such  exercise.  The Holder shall deliver this original  Warrant,  or an
indemnification  undertaking  with  respect  to such  Warrant in the case of its
loss,  theft or destruction,  at such time that this Warrant is fully exercised.
With respect to partial exercises of this Warrant, the Issuer shall keep written
records for the Holder of the number of shares of Warrant Stock  exercised as of
each date of exercise.


                                      -2-


      (e) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the Holder, if the Issuer
fails to cause its  transfer  agent to transmit to the Holder a  certificate  or
certificates representing the Warrant Stock pursuant to an exercise on or before
the Delivery  Date,  and if after such date the Holder is required by its broker
to purchase (in an open market  transaction or otherwise) shares of Common Stock
to deliver in  satisfaction  of a sale by the Holder of the Warrant  Stock which
the Holder  anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
Issuer  shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant  Stock for which such  exercise  was not  honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Issuer shall be required to pay the Holder  $1,000.  The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable  confirmations and
other evidence reasonably requested by the Issuer.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect  to the  Issuer's  failure  to timely  deliver
certificates  representing  shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.

      (f)  Transferability  of Warrant.  Subject to Section  2(h)  hereof,  this
Warrant,  and the rights evidenced  hereby,  may be transferred by a Holder,  in
whole or in part, without the consent of the Issuer. If transferred  pursuant to
this  paragraph,  this Warrant may be  transferred on the books of the Issuer by
the Holder hereof in person or by duly  authorized  attorney,  upon surrender of
this Warrant at the principal  office of the Issuer,  properly  endorsed (by the
Holder  executing an assignment in the form attached hereto) and upon payment of
any  necessary  transfer  tax or other  governmental  charge  imposed  upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants to purchase the same aggregate number of shares of Warrant Stock,  each
new Warrant to represent  the right to purchase such number of shares of Warrant
Stock as the Holder  hereof shall  designate at the time of such  exchange.  All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical  with this  Warrant  except as to the number of shares of
Warrant Stock issuable pursuant thereto.


                                      -3-


      (g) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge  in writing the  extent,  if any, of its  continuing  obligation  to
afford to such  Holder all  rights to which such  Holder  shall  continue  to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

      (h) Compliance with Securities Laws.

            (i) The Holder of this Warrant,  by acceptance hereof,  acknowledges
      that this  Warrant  and the  shares  of  Warrant  Stock to be issued  upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other  party,  and for  investment,  and that the
      Holder will not offer,  sell or  otherwise  dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise  hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph  (iii) below,  this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted  with a legend in  substantially  the
      following form:

            THIS WARRANT AND THE SHARES OF COMMON  STOCK  ISSUABLE
            UPON EXERCISE  HEREOF HAVE NOT BEEN  REGISTERED  UNDER
            THE   SECURITIES   ACT  OF  1933,   AS  AMENDED   (THE
            "SECURITIES  ACT") OR ANY  STATE  SECURITIES  LAWS AND
            MAY NOT BE SOLD,  TRANSFERRED OR OTHERWISE DISPOSED OF
            UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
            APPLICABLE  STATE  SECURITIES LAWS OR THE ISSUER SHALL
            HAVE   RECEIVED  AN  OPINION  OF  COUNSEL   REASONABLY
            SATISFACTORY  TO THE ISSUER THAT  REGISTRATION OF SUCH
            SECURITIES  UNDER  THE  SECURITIES  ACT AND  UNDER THE
            PROVISIONS OF APPLICABLE  STATE SECURITIES LAWS IS NOT
            REQUIRED.


                                      -4-


            (iii) The Issuer  agrees to  reissue  this  Warrant or  certificates
      representing any of the Warrant Stock,  without the legend set forth above
      if at such time, prior to making any transfer of any such securities,  the
      Holder shall give written  notice to the Issuer  describing the manner and
      terms of such transfer and removal as the Issuer may  reasonably  request.
      Such proposed  transfer and removal will not be effected until: (a) either
      (i) the Issuer has received an opinion of counsel reasonably  satisfactory
      to the Issuer,  to the effect  that the  registration  of such  securities
      under the Securities Act is not required in connection  with such proposed
      transfer,  (ii) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (iii) the Issuer has received other evidence  reasonably  satisfactory  to
      the Issuer that such registration and  qualification  under the Securities
      Act and  state  securities  laws  are not  required,  or (iv)  the  Holder
      provides the Issuer with  reasonable  assurances that such security can be
      sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
      Issuer has received an opinion of counsel  reasonably  satisfactory to the
      Issuer,  to the  effect  that  registration  or  qualification  under  the
      securities  or "blue sky" laws of any state is not required in  connection
      with such proposed  disposition,  or (ii) compliance with applicable state
      securities  or "blue  sky"  laws has been  effected  or a valid  exemption
      exists with  respect  thereto.  The Issuer will respond to any such notice
      from a holder  within three (3) Trading  Days. In the case of any proposed
      transfer under this Section 2(h),  the Issuer will use reasonable  efforts
      to comply with any such  applicable  state  securities or "blue sky" laws,
      but shall in no event be  required,  (x) to qualify to do  business in any
      state where it is not then qualified, or (y) to take any action that would
      subject it to tax or to the general  service of process in any state where
      it is not then subject.  The  restrictions  on transfer  contained in this
      Section 2(h) shall be in addition to, and not by way of limitation of, any
      other  restrictions  on transfer  contained  in any other  section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the  Holder  without  a  legend,  in lieu of  delivering
      physical  certificates  representing  the Warrant Stock  (provided  that a
      registration  statement  under the Securities Act providing for the resale
      of the  Warrant  Stock is then in  effect),  the  Issuer  shall  cause its
      transfer agent to electronically  transmit the Warrant Stock to the Holder
      by crediting the account of the Holder's Prime Broker with DTC through its
      DWAC system.

      (i) Accredited Investor.  In no event may the Holder exercise this Warrant
in whole or in part unless the Holder is an "accredited  investor" as defined in
Regulation D under the Securities Act.

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and reserved for the purpose of the issuance  upon  exercise of this
Warrant a number of authorized  but unissued  shares of Common Stock equal to at
least  one  hundred  percent  (100%) of the  number  of  shares of Common  Stock
issuable  upon exercise of this Warrant  without  regard to any  limitations  on
exercise.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any Governmental  Authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its best efforts as  expeditiously  as possible at its expense to
cause such shares to be duly  registered or qualified.  If the Issuer shall list
any shares of Common Stock on any securities  exchange or market it will, at its
expense,  list thereon,  and maintain and increase when  necessary such listing,
of, all shares of Warrant  Stock from time to time issued upon  exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has
been  registered  pursuant to a registration  statement under the Securities Act
then in effect),  and, to the extent permissible under the applicable securities
exchange  rules,  all  unissued  shares of Warrant  Stock  which are at any time
issuable  hereunder,  so long as any shares of Common  Stock shall be so listed.
The Issuer will also so list on each  securities  exchange  or market,  and will
maintain such listing of, any other  securities which the Holder of this Warrant
shall be entitled to receive  upon the  exercise of this  Warrant if at the time
any securities of the same class shall be listed on such securities  exchange or
market by the Issuer.


                                      -5-


      (c)  Covenants.  The  Issuer  shall not by any action  including,  without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or  through  any  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other action,  avoid or seek to
avoid the  observance or  performance  of any of the terms of this Warrant,  but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or  appropriate to protect
the rights of the Holder  hereof  against  dilution (to the extent  specifically
provided  herein)  or  impairment.   Without  limiting  the  generality  of  the
foregoing,  the Issuer will (i) not permit the par value,  if any, of its Common
Stock to exceed the then effective  Warrant Price,  (ii) not amend or modify any
provision  of the  Articles  of  Incorporation  or  by-laws of the Issuer in any
manner that would  adversely  affect the rights of the Holders of the  Warrants,
(iii)  take all such  action as may be  reasonably  necessary  in order that the
Issuer may  validly and legally  issue  fully paid and  nonassessable  shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant,  and (iv) use
its best efforts to obtain all such authorizations,  exemptions or consents from
any public  regulatory  body having  jurisdiction  thereof as may be  reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

      (d) Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      (e)  Payment of Taxes.  The Issuer  will pay any  documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided, however, that the Issuer shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any  certificates  representing  Warrant Stock in a name
other than that of the Holder in respect to which such shares are issued.


                                      -6-


      4. Adjustment of Warrant Price.  The price at which such shares of Warrant
Stock may be  purchased  upon  exercise  of this  Warrant  shall be  subject  to
adjustment  from time to time as set forth in this  Section 4. The Issuer  shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with the notice provisions set forth in
Section 5.

      (a)  Recapitalization,  Reorganization,  Reclassification,  Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering  Event"): (a) consolidate or merge with
      or into any other  Person and the Issuer  shall not be the  continuing  or
      surviving  corporation of such  consolidation or merger, or (b) permit any
      other Person to  consolidate  with or merge into the Issuer and the Issuer
      shall be the continuing or surviving  Person but, in connection  with such
      consolidation or merger,  any Capital Stock of the Issuer shall be changed
      into or exchanged for  Securities of any other Person or cash or any other
      property,  or (c) transfer all or  substantially  all of its properties or
      assets to any other  Person,  or (d)  effect a capital  reorganization  or
      reclassification  of its Capital Stock,  other than any event set forth in
      Section 4(b) below,  then, and in the case of each such Triggering  Event,
      proper  provision  shall be made so that, upon the basis and the terms and
      in the manner  provided in this Warrant,  the Holder of this Warrant shall
      be entitled upon the exercise hereof at any time after the consummation of
      such  Triggering  Event, to the extent this Warrant is not exercised prior
      to such Triggering Event, to receive at the Warrant Price in effect at the
      time  immediately  prior to the  consummation of such Triggering  Event in
      lieu of the Common Stock issuable upon such exercise of this Warrant prior
      to such Triggering Event, the Securities,  cash and property to which such
      Holder would have been entitled upon the  consummation  of such Triggering
      Event if such Holder had exercised the rights  represented by this Warrant
      immediately  prior thereto  (including the right of a shareholder to elect
      the  type of  consideration  it will  receive  upon a  Triggering  Event),
      subject to adjustments  (subsequent  to such  corporate  action) as nearly
      equivalent as possible to the  adjustments  provided for elsewhere in this
      Section 4; provided, however, in the event that the Per Share Market Value
      is less than the Warrant Price at the time of such Triggering  Event,  the
      Holder shall  receive an amount in cash equal to the value of this Warrant
      calculated in accordance with the Black-Scholes  formula.  Notwithstanding
      the  foregoing to the contrary,  this Section  4(a)(i) shall only apply if
      the surviving  entity pursuant to any such  Triggering  Event is a company
      that  has  a  class  of  equity  securities  registered  pursuant  to  the
      Securities  Exchange  Act of 1934,  as  amended,  and its common  stock is
      listed or quoted on a national  securities  exchange,  national  automated
      quotation  system  or the  OTC  Bulletin  Board.  In the  event  that  the
      surviving  entity  pursuant to any such  Triggering  Event is not a public
      company  that is  registered  pursuant to the  Securities  Exchange Act of
      1934,  as  amended,  or its  common  stock is not  listed  or  quoted on a
      national securities  exchange,  national automated quotation system or the
      OTC  Bulletin  Board,  then the Holder shall have the right to demand that
      the  Issuer pay to the Holder an amount in cash equal to the value of this
      Warrant calculated in accordance with the Black-Scholes formula.


                                      -7-


            (ii)  Notwithstanding  anything  contained  in this  Warrant  to the
      contrary and so long as the surviving  entity  pursuant to any  Triggering
      Event  is a  company  that  has a class of  equity  securities  registered
      pursuant to the  Securities  Exchange  Act of 1934,  as  amended,  and its
      common  stock is  listed  or quoted  on a  national  securities  exchange,
      national  automated   quotation  system  or  the  OTC  Bulletin  Board,  a
      Triggering  Event shall not be deemed to have  occurred  if,  prior to the
      consummation  thereof,  each Person  (other than the Issuer)  which may be
      required to deliver any Securities,  cash or property upon the exercise of
      this  Warrant as  provided  herein  shall  assume,  by written  instrument
      delivered to, and reasonably  satisfactory to, the Holder of this Warrant,
      (A) the  obligations  of the Issuer  under this Warrant (and if the Issuer
      shall survive the consummation of such Triggering  Event,  such assumption
      shall be in  addition  to,  and shall not  release  the Issuer  from,  any
      continuing  obligations  of the  Issuer  under this  Warrant)  and (B) the
      obligation to deliver to such Holder such Securities, cash or property as,
      in accordance  with the foregoing  provisions of this subsection (a), such
      Holder shall be entitled to receive,  and such Person shall have similarly
      delivered  to such  Holder an opinion of counsel  for such  Person,  which
      counsel  shall  be  reasonably  satisfactory  to  such  Holder,  or in the
      alternative,  a written acknowledgement executed by the President or Chief
      Financial  Officer  of  the  Issuer,   stating  that  this  Warrant  shall
      thereafter  continue  in  full  force  and  effect  and the  terms  hereof
      (including,  without limitation,  all of the provisions of this subsection
      (a)) shall be applicable to the  Securities,  cash or property  which such
      Person may be required to deliver upon any exercise of this Warrant or the
      exercise of any rights pursuant hereto.

      (b) Stock  Dividends,  Subdivisions and  Combinations.  If at any time the
Issuer shall:

            (i) make or issue or set a record date for the holders of the Common
      Stock for the purpose of entitling them to receive a dividend  payable in,
      or other  distribution of, shares of Common Stock(other than in connection
      with the  dividend  payable in shares of Common  Stock to be issued by the
      Issuer to the Issuer's stockholders in connection with the spin-off of the
      Issuer's wholly-owned subsidiary, Pegasus Tel, Inc.),

            (ii) subdivide its outstanding  shares of Common Stock into a larger
      number of shares of Common Stock, or

            (iii) combine its outstanding  shares of Common Stock into a smaller
      number of shares of Common  Stock  (other  than  pursuant  to the  Reverse
      Split),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.


                                      -8-


      (c) Certain Other  Distributions.  If at any time the Issuer shall make or
issue or set a record  date for the  determination  of the holders of the Common
Stock for the  purpose  of  entitling  them to  receive  any  dividend  or other
distribution of:

            (i) cash  (other  than a cash  dividend  payable  out of earnings or
      earned surplus  legally  available for the payment of dividends  under the
      laws of the jurisdiction of incorporation of the Issuer),

            (ii) any evidences of its  indebtedness,  any shares of stock of any
      class or any other securities or property of any nature  whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),
      or

            (iii) any warrants or other rights to subscribe  for or purchase any
      evidences  of its  indebtedness,  any  shares of stock of any class or any
      other  securities or property of any nature  whatsoever  (other than cash,
      Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such  evidences  of  indebtedness,  shares of  stock,  other  securities  or
property or warrants or other  subscription or purchase rights so distributable,
and (2) the  Warrant  Price then in effect  shall be  adjusted  to equal (A) the
Warrant Price then in effect  multiplied by the number of shares of Common Stock
for which  this  Warrant  is  exercisable  immediately  prior to the  adjustment
divided  by (B) the number of shares of Common  Stock for which this  Warrant is
exercisable immediately after such adjustment.  A reclassification of the Common
Stock  (other  than a change in par value,  or from par value to no par value or
from no par value to par value)  into  shares of Common  Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its  Common  Stock of such  shares of such  other  class of stock  within the
meaning of this  Section  4(c) and, if the  outstanding  shares of Common  Stock
shall be changed into a larger or smaller  number of shares of Common Stock as a
part of such  reclassification,  such change  shall be deemed a  subdivision  or
combination,  as the case may be, of the  outstanding  shares  of  Common  Stock
within the meaning of Section 4(b).

      (d) Issuance of Additional Shares of Common Stock. In the event the Issuer
shall at any time within the two (2) year period following the Original Issuance
Date issue any Additional  Shares of Common Stock (otherwise than as provided in
the  foregoing  subsections  (b) through (c) of this  Section 4), at a price per
share less than $2.74 or without consideration, then the Warrant Price upon each
such  issuance  shall be adjusted to the price  equal to the  consideration  per
share paid for such Additional Shares of Common Stock.


                                      -9-


      (e) Issuance of Common Stock Equivalents. In the event the Issuer shall at
any time within the two (2) year period  following  the Original  Issuance  Date
take a record of the holders of its Common  Stock for the  purpose of  entitling
them to receive a distribution  of, or shall in any manner (whether  directly or
by  assumption  in a merger in which the  Issuer is the  surviving  corporation)
issue or sell,  any  Common  Stock  Equivalents,  whether  or not the  rights to
exchange or convert  thereunder are immediately  exercisable,  and the price per
share for which Common Stock is issuable upon such  conversion or exchange shall
be less than $2.74  immediately  prior to the time of such issue or sale, or if,
after any such  issuance of Common  Stock  Equivalents,  the price per share for
which Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted,  and such price as so amended  shall be less than $2.74 at the time of
such  amendment or  adjustment,  then the Warrant  Price then in effect shall be
adjusted as provided in Section  4(d). No further  adjustments  of the number of
shares of Common  Stock for which this  Warrant is  exercisable  and the Warrant
Price then in effect  shall be made upon the actual  issue of such Common  Stock
upon conversion or exchange of such Common Stock Equivalents.

      (f) Other  Provisions  Applicable to Adjustments  under this Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

         (i)  Computation  of  Consideration.  To the extent that any Additional
Shares of Common Stock or any Common Stock Equivalents (or any warrants or other
rights  therefor)  shall be issued  for cash  consideration,  the  consideration
received by the Issuer  therefor shall be the amount of the cash received by the
Issuer therefor,  or, if such Additional  Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription,  the subscription price,
or, if such  Additional  Shares of Common Stock or Common Stock  Equivalents are
sold to  underwriters  or dealers  for public  offering  without a  subscription
offering,  the initial public  offering price (in any such case  subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation,  discounts or expenses paid or incurred by
the Issuer for and in the  underwriting of, or otherwise in connection with, the
issuance  thereof).  In connection with any merger or consolidation in which the
Issuer is the surviving  corporation  (other than any consolidation or merger in
which the previously  outstanding  shares of Common Stock of the Issuer shall be
changed  to  or  exchanged  for  the  stock  or  other   securities  of  another
corporation),  the amount of consideration  therefore shall be, deemed to be the
fair  value,  as  determined  reasonably  and in good  faith  by the  Board  and
acceptable  to the  Holder,  of such  portion of the assets and  business of the
nonsurviving  corporation as the Board may determine to be  attributable to such
shares of Common  Stock or Common  Stock  Equivalents,  as the case may be.  The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other  rights to  subscribe  for or  purchase  the same shall be the
consideration  received by the Issuer for issuing such  warrants or other rights
plus the  additional  consideration  payable to the Issuer upon exercise of such
warrants or other rights.  The consideration for any Additional Shares of Common
Stock issuable  pursuant to the terms of any Common Stock  Equivalents  shall be
the consideration received by the Issuer for issuing warrants or other rights to
subscribe for or purchase such Common Stock Equivalents,  plus the consideration
paid or payable to the Issuer in respect of the  subscription for or purchase of
such  Common  Stock  Equivalents,  plus the  additional  consideration,  if any,
payable to the Issuer upon the exercise of the right of  conversion  or exchange
in such Common Stock Equivalents. In the event of any consolidation or merger of
the Issuer in which the Issuer is not the surviving  corporation or in which the
previously  outstanding  shares of Common  Stock of the Issuer  shall be changed
into or exchanged for the stock or other securities of another  corporation,  or
in the event of any sale of all or substantially all of the assets of the Issuer
for stock or other securities of any corporation,  the Issuer shall be deemed to
have issued a number of shares of its Common  Stock for stock or  securities  or
other  property  of the other  corporation  computed  on the basis of the actual
exchange ratio on which the transaction was predicated,  and for a consideration
equal to the fair market value on the date of such transaction of all such stock
or  securities  or other  property  of the other  corporation.  In the event any
consideration  received  by the Issuer for any  securities  consists of property
other than cash,  the fair  market  value  thereof at the time of issuance or as
otherwise  applicable  shall be as determined in good faith by the Board. In the
event Common Stock is issued with other shares or  securities or other assets of
the Issuer for consideration  which covers both, the  consideration  computed as
provided in this Section  4(f)(i) shall be allocated  among such  securities and
assets as determined in good faith by the Board.


                                      -10-


         (ii) When  Adjustments  to Be Made.  The  adjustments  required by this
Section 4 shall be made whenever and as often as any specified  event  requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common  Stock for which this  Warrant is  exercisable  that would  otherwise  be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common  Stock,  as  provided  for in Section  4(b)) up to, but not
beyond the date of  exercise if such  adjustment  either by itself or with other
adjustments  not previously made adds or subtracts less than one percent (1%) of
the shares of Common  Stock for which this  Warrant is  exercisable  immediately
prior to the making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid)  which is postponed shall be
carried  forward  and  made  as soon as such  adjustment,  together  with  other
adjustments  required by this Section 4 and not previously made, would result in
a  minimum  adjustment  or on the  date  of  exercise.  For the  purpose  of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

         (iii) Fractional Interests. In computing adjustments under this Section
4,  fractional  interests  in Common  Stock  shall be taken into  account to the
nearest one one-hundredth (1/100th) of a share.

         (iv) When Adjustment Not Required. If the Issuer shall take a record of
the holders of its Common Stock for the purpose of  entitling  them to receive a
dividend  or   distribution  or  subscription  or  purchase  rights  and  shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

      (g) Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.


                                      -11-


      (h) Escrow of Warrant Stock. If after any property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and the Holder  exercises  this  Warrant,  any shares of Common Stock
issuable  upon  exercise by reason of such  adjustment  shall be deemed the last
shares of Common Stock for which this Warrant is exercised  (notwithstanding any
other provision to the contrary  herein) and such shares or other property shall
be held in escrow for the  Holder by the Issuer to be issued to the Holder  upon
and to the extent  that the event  actually  takes  place,  upon  payment of the
current  Warrant  Price.  Notwithstanding  any other  provision  to the contrary
herein,  if the event  for  which  such  record  was taken  fails to occur or is
rescinded,  then such  escrowed  shares  shall be  cancelled  by the  Issuer and
escrowed property returned.

      5. Notice of  Adjustments.  Whenever  the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the  option  of the  Holder  of this  Warrant  be  submitted  to an  Independent
Appraiser  reasonably  acceptable to the Issuer and the Holder. The Issuer shall
use its  best  efforts  to  cause  the  Independent  Appraiser  to  perform  the
calculations  and notify the Issuer and the Holder of the  results no later than
five (5) business days from the time it receives the disputed calculation.  Such
Independent  Appraiser's  calculation  shall be binding upon all parties  absent
manifest error. The reasonable  expenses of the Independent  Appraiser in making
such  determination  shall be paid by the  Issuer,  in the  event  the  Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was  correct,  or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof,  but in lieu of such fractional  shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

      7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the
contrary  set forth in this  Warrant,  at no time may a Holder  of this  Warrant
exercise  this  Warrant  if the  number of  shares of Common  Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares of
Common  Stock owned by such Holder at such time,  the number of shares of Common
Stock which would result in such Holder  beneficially  owning (as  determined in
accordance  with Section 13(d) of the Exchange Act and the rules  thereunder) in
excess of 9.9% of the then  issued  and  outstanding  shares  of  Common  Stock;
provided,  however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 12 hereof) (the "Waiver Notice")
that such  Holder  would like to waive this  Section 7 with regard to any or all
shares of Common Stock  issuable upon  exercise of this Warrant,  this Section 7
will be of no force or effect  with  regard to all or a portion  of the  Warrant
referenced in the Waiver Notice; provided, further, that this provision shall be
of no  further  force or effect  during  the  sixty-one  (61)  days  immediately
preceding the expiration of the term of this Warrant.


                                      -12-


      8. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer  after the  Original  Issue  Date,  and all shares of
      Other Common,  if any, issued by the Issuer after the Original Issue Date,
      except:  (i) securities  issued pursuant to a bona fide firm  underwritten
      public  offering  of  the  Issuer's  securities,  (ii)  securities  issued
      pursuant  to the  conversion  or exercise of  convertible  or  exercisable
      securities issued or outstanding on or prior to the Original Issue Date or
      issued  pursuant to the Purchase  Agreement (so long as the  conversion or
      exercise  price in such  securities  are not  amended  to lower such price
      and/or  adversely  affect the  Holders),  (iii) the  Warrant  Stock,  (iv)
      securities  issued (other than for cash) in connection with an acquisition
      of the Issuer,  (v) any  warrants  issued to the  placement  agent for the
      transactions  contemplated  by the  Purchase  Agreement,  (vi)  securities
      issued  in  connection  with  strategic   license   agreements  and  other
      partnering  arrangements so long as such issuances are not for the purpose
      of raising  capital and the Issuer has received the prior written  consent
      of the Holder,  and (vii) the  issuance of Common Stock or the issuance or
      grants of options to purchase  Common Stock pursuant to the Issuer's stock
      option  plans and  employee  stock  purchase  plans  and  which  have been
      approved by the Issuer's  Board of Directors so long as such  issuances in
      the aggregate do not exceed ten percent  (10%) of the Issuer's  issued and
      outstanding Common Stock as of the Original Issue Date.

            "Articles of  Incorporation"  means the Articles of Incorporation of
      the Issuer as in effect on the Original  Issue Date, and as hereafter from
      time to time  amended,  modified,  supplemented  or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital   Stock"  means  and  includes  (i)  any  and  all  shares,
      interests, participations or other equivalents of or interests in (however
      designated)  corporate stock,  including,  without  limitation,  shares of
      preferred or preference  stock,  (ii) all partnership  interests  (whether
      general  or  limited)  in any  Person  which is a  partnership,  (iii) all
      membership interests or limited liability company interests in any limited
      liability  company,  and (iv) all  equity or  ownership  interests  in any
      Person of any other type.

            "Common Stock" means the Common Stock, par value $.001 per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any  Additional  Shares
      of Common Stock or any Convertible Security.


                                      -13-


            "Convertible Securities" means evidences of Indebtedness,  shares of
      Capital  Stock  or  other  Securities  which  are or  may  be at any  time
      convertible  into or exchangeable  for Additional  Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental  Authority"  means  any  governmental,  regulatory  or
      self-regulatory entity, department, body, official, authority, commission,
      board,  agency or  instrumentality,  whether federal,  state or local, and
      whether domestic or foreign.

            "Holders"  mean the  Persons  who  shall  from  time to time own any
      Warrant. The term "Holder" means one of the Holders.

            "Independent  Appraiser"  means a  nationally  recognized  or  major
      regional  investment banking firm or firm of independent  certified public
      accountants of recognized  standing  (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of  corporations
      or other  entities as going  concerns,  and which is not  affiliated  with
      either the Issuer or the Holder of any Warrant.

            "Issuer"  means Dolce  Ventures  Inc., a Utah  corporation,  and its
      successors.

            "Majority  Holders"  means  at any  time  the  Holders  of  Warrants
      exercisable  for a majority of the shares of Warrant Stock  issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means September __, 2006.

            "OTC Bulletin Board" means the over-the-counter  electronic bulletin
      board.

            "Other  Common"  means any other  Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the  distribution of earnings and assets of the Issuer without  limitation
      as to amount.

            "Outstanding  Common Stock" means,  at any given time, the aggregate
      amount of  outstanding  shares of Common Stock,  assuming  full  exercise,
      conversion or exchange (as applicable) of all options,  warrants and other
      Securities which are convertible into or exercisable or exchangeable  for,
      and  any  right  to  subscribe  for,  shares  of  Common  Stock  that  are
      outstanding at such time.

            "Person"  means  an  individual,   corporation,   limited  liability
      company,   partnership,   joint  stock  company,   trust,   unincorporated
      organization,  joint  venture,  Governmental  Authority or other entity of
      whatever nature.


                                      -14-


            "Per Share Market Value" means on any  particular  date (a) the last
      closing  price  per  share of the  Common  Stock  on such  date on the OTC
      Bulletin Board or another registered  national stock exchange on which the
      Common Stock is then listed, or if there is no closing price on such date,
      then the  closing  bid price on such date,  or if there is no closing  bid
      price on such date,  then the closing  price on such exchange or quotation
      system on the date nearest preceding such date, or (b) if the Common Stock
      is not listed then on the OTC Bulletin  Board or any  registered  national
      stock exchange,  the last closing price for a share of Common Stock in the
      over-the-counter  market,  as reported by the OTC Bulletin Board or in the
      National Quotation Bureau  Incorporated or similar  organization or agency
      succeeding to its functions of reporting  prices, at the close of business
      on such  date,  or if there is no  closing  price on such  date,  then the
      closing  bid price on such date,  or (c) if the  Common  Stock is not then
      reported  by the OTC  Bulletin  Board  or the  National  Quotation  Bureau
      Incorporated  (or  similar   organization  or  agency  succeeding  to  its
      functions  of  reporting  prices),  then the  average of the "Pink  Sheet"
      quotes for the five (5) Trading Days preceding such date of determination,
      or (d) if the Common  Stock is not then  publicly  traded the fair  market
      value of a share of Common Stock as determined by an Independent Appraiser
      selected in good faith by the Majority Holders;  provided,  however,  that
      the  Issuer,  after  receipt  of the  determination  by  such  Independent
      Appraiser,  shall  have the  right to  select  an  additional  Independent
      Appraiser,  in which  case,  the fair  market  value shall be equal to the
      average of the  determinations  by each such  Independent  Appraiser;  and
      provided,  further that all  determinations  of the Per Share Market Value
      shall be appropriately  adjusted for any stock dividends,  stock splits or
      other similar  transactions  during such period. The determination of fair
      market  value by an  Independent  Appraiser  shall be based  upon the fair
      market value of the Issuer  determined on a going concern basis as between
      a willing buyer and a willing  seller and taking into account all relevant
      factors  determinative  of value,  and shall be final and  binding  on all
      parties.  In  determining  the fair  market  value of any shares of Common
      Stock, no consideration  shall be given to any restrictions on transfer of
      the Common Stock  imposed by  agreement or by federal or state  securities
      laws,  or to the  existence or absence of, or any  limitations  on, voting
      rights.

            "Purchase Agreement" means the Series B Convertible  Preferred Stock
      Purchase Agreement dated as of September 7, 2006, among the Issuer and the
      Purchasers.

            "Purchasers"  means  the  purchasers  of the  Series  B  Convertible
      Preferred Stock and Warrants issued by the Issuer pursuant to the Purchase
      Agreement.

            "Securities"  means any debt or  equity  securities  of the  Issuer,
      whether now or hereafter  authorized,  any instrument  convertible into or
      exchangeable  for  Securities  or a Security,  and any option,  warrant or
      other right to purchase or acquire any Security.  "Security"  means one of
      the Securities.

            "Securities  Act" means the Securities  Act of 1933, as amended,  or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting  Stock  shall at the time be owned  directly or  indirectly  by the
      Issuer or by one or more of its Subsidiaries,  or by the Issuer and one or
      more of its Subsidiaries.

                  "Term" has the meaning specified in Section 1 hereof.


                                      -15-


            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on the
      OTC  Bulletin  Board,  a day on which  the  Common  Stock is quoted in the
      over-the-counter  market as  reported  by the  National  Quotation  Bureau
      Incorporated  (or  any  similar  organization  or  agency  succeeding  its
      functions of reporting prices); provided,  however, that in the event that
      the  Common  Stock is not  listed  or  quoted  as set  forth in (a) or (b)
      hereof,  then Trading Day shall mean any day except  Saturday,  Sunday and
      any  day  which  shall  be a  legal  holiday  or a day  on  which  banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting  Stock"  means,  as  applied  to the  Capital  Stock  of any
      corporation,  Capital Stock of any class or classes  (however  designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing  body) of such  corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants"  means  the  Warrants  issued  and sold  pursuant  to the
      Purchase Agreement,  including,  without limitation, this Warrant, and any
      other  warrants of like tenor issued in  substitution  or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

            "Warrant  Price"  initially  means U.S.  $6.03, as such price may be
      adjusted from time to time as shall result from the adjustments  specified
      in this Warrant, including Section 4 hereto.

            "Warrant  Share Number"  means at any time the  aggregate  number of
      shares of Warrant Stock which may at such time be purchased  upon exercise
      of  this  Warrant,  after  giving  effect  to all  prior  adjustments  and
      increases  to such  number  made or  required  to be made  under the terms
      hereof.

            "Warrant  Stock" means Common Stock  issuable  upon  exercise of any
      Warrant or  Warrants  or  otherwise  issuable  pursuant  to any Warrant or
      Warrants.

      9. Other Notices. In case at any time:

                  (A)   the Issuer shall make any  distributions  to the holders
                        of Common Stock; or

                  (B)   the Issuer shall  authorize  the granting to all holders
                        of its  Common  Stock  of  rights  to  subscribe  for or
                        purchase  any  shares of  Capital  Stock of any class or
                        other rights; or

                  (C)   there shall be any reclassification of the Capital Stock
                        of the Issuer; or

                  (D)   there shall be any capital reorganization by the Issuer;
                        or


                                      -16-


                  (E)   there shall be any (i) consolidation or merger involving
                        the Issuer or (ii) sale,  transfer or other  disposition
                        of all or  substantially  all of the Issuer's  property,
                        assets   or   business   (except   a  merger   or  other
                        reorganization   in  which  the  Issuer   shall  be  the
                        surviving  corporation  and its shares of Capital  Stock
                        shall  continue  to be  outstanding  and  unchanged  and
                        except a consolidation,  merger, sale, transfer or other
                        disposition involving a wholly-owned Subsidiary); or

                  (F)   there shall be a voluntary or  involuntary  dissolution,
                        liquidation  or  winding-up of the Issuer or any partial
                        liquidation of the Issuer or  distribution to holders of
                        Common Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
(20) days prior to the action in question  and not less than ten (10) days prior
to the record date or the date on which the Issuer's  transfer  books are closed
in respect  thereto.  This Warrant  entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

      10. Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 10 without the consent of the Holder of this  Warrant.
No consideration shall be offered or paid to any person to amend or consent to a
waiver  or  modification  of any  provision  of this  Warrant  unless  the  same
consideration is also offered to all holders of the Warrants.

      11.  Governing  Law;  Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the  application of the substantive  law of another  jurisdiction.  This Warrant
shall not be  interpreted or construed  with any  presumption  against the party
causing this  Warrant to be drafted.  The Issuer and the Holder agree that venue
for any dispute  arising under this Warrant will lie exclusively in the state or
federal courts located in New York County, New York, and the parties irrevocably
waive any right to raise forum non  conveniens  or any other  argument  that New
York is not the proper venue. The Issuer and the Holder  irrevocably  consent to
personal  jurisdiction in the state and federal courts of the state of New York.
The  Issuer and the Holder  consent  to process  being  served in any such suit,
action or  proceeding  by mailing a copy thereof to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient service of process and notice thereof. Nothing in
this  Section 11 shall  affect or limit any right to serve  process in any other
manner  permitted  by law.  The  Issuer  and the  Holder  hereby  agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the this Warrant or the Purchase  Agreement,  shall be entitled to reimbursement
for  reasonable  legal fees from the  non-prevailing  party.  The parties hereby
waive all rights to a trial by jury.


                                      -17-


      12.  Notices.  Any and all notices or other  communications  or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of  mailing,  if sent by  overnight  delivery  by a  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                        Dolce Ventures Inc.

                        ___________________________

                        ___________________________
                        Attention: ________________
                        Tel. No.: (___) ___-____
                        Fax No.: (___) ___-____

with copies (which copies
shall not constitute notice
to the Issuer) to:            GUZOV OFSINK, LLC
                              600 Madison Avenue, 14th Floor
                              New York, New York 10022
                              Attention:  Darren Ofsink
                              Tel. No.:  (212) 371-8008, ext. 127
                              Fax No.:  (212) 688-7273

Copies of notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel
LLP,  1177  Avenue  of the  Americas,  New  York,  New  York  10036,  Attention:
Christopher S. Auguste, Tel. No.: (212) 715-9100,  Fax. No.: (212) 715-8000. Any
party  hereto may from time to time  change its address for notices by giving at
least ten (10) days written  notice of such  changed  address to the other party
hereto.


                                      -18-


      13.  Warrant  Agent.  The Issuer may, by written  notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

      14. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      15.  Successors and Assigns.  This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock.

      16.  Modification and Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

      17.  Registration  Rights.  The Holder of this  Warrant is entitled to the
benefit of certain  registration  rights  with  respect to the shares of Warrant
Stock  issuable  upon the  exercise of this  Warrant  pursuant  to that  certain
Registration Rights Agreement,  of even date herewith,  by and among the Company
and Persons listed on Schedule I thereto (the  "Registration  Rights Agreement")
and the registration rights with respect to the shares of Warrant Stock issuable
upon the exercise of this Warrant by any subsequent  Holder may only be assigned
in  accordance  with  the  terms  and  provisions  of the  Registrations  Rights
Agreement.

      18.  Headings.  The  headings  of the  Sections  of this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -19-



      IN WITNESS WHEREOF,  the Issuer has executed this Series D Warrant as of
the day and year first above written.


                                     DOLCE VENTURES INC.



                                     By:______________________________________
                                        Name:
                                        Title:


                                      -20-


                                  EXERCISE FORM
                                SERIES D WARRANT

                               DOLCE VENTURES INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of  Common  Stock of Dolce
Ventures Inc. covered by the within Warrant.

Dated: _________________      Signature   ___________________________

                              Address     _____________________

                                          _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________      Signature   ___________________________

                              Address     _____________________

                                          _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________      Signature   ___________________________

                              Address     _____________________

                                          _____________________

                           FOR USE BY THE ISSUER ONLY:


                                      -21-


This Warrant No. W-___ canceled (or  transferred or exchanged) this _____ day of
___________,  _____,  shares  of Common  Stock  issued  therefor  in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                      -22-

EX-4.8

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  THE  ISSUER  THAT  REGISTRATION  OF  SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                          SERIES J WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                               DOLCE VENTURES INC.

                           Expires September __, 2007

No.: W-J-06- __                                      Number of Shares: 1,661,129
Date of Issuance: September __, 2006

      FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth, the
undersigned,  Dolce  Ventures,  Inc.,  a Utah  corporation  (together  with  its
successors and assigns, the "Issuer"),  hereby certifies that Vision Opportunity
Master  Fund,  Ltd. or its  registered  assigns  (the  "Holder")  is entitled to
subscribe for and purchase,  during the Term (as hereinafter defined), up to One
Million Six Hundred  Sixty One  Thousand  One  Hundred  Twenty Nine  (1,661,129)
shares (subject to adjustment as hereinafter  provided) of the duly  authorized,
validly issued, fully paid and non-assessable  Common Stock of the Issuer, at an
exercise  price per share equal to the Warrant Price then in effect on the terms
and  conditions  hereinafter  set forth.  The  number of shares of Common  Stock
issuable upon  exercise of this Warrant  reflects the number of shares of Common
Stock to which the Holder is entitled following the 1-for-304.4444 reverse stock
split to be  effected  by the  Issuer  following  the  Original  Issue Date (the
"Reverse Stock Split"). Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section 8 hereof.

      1. Term. The term of this Warrant shall commence on September __, 2006 and
shall expire at 6:00 p.m.,  eastern  time,  on  September  __, 2007 (such period
being the "Term").

      2. Method of  Exercise;  Payment;  Issuance of New  Warrant;  Transfer and
Exchange.

      (a) Time of Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term.

                                      -1-


      (b) Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached  hereto as  Exhibit A duly  executed)  at the  principal  office of the
Issuer, and by the payment to the Issuer of an amount of consideration  therefor
equal to the Warrant Price in effect on the date of such exercise  multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election by certified or official bank
check or by wire transfer to an account designated by the Issuer.

      (c) Intentionally Omitted.

      (d)  Issuance of Stock  Certificates.  In the event of any exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and conditions hereof, certificates for the shares of Warrant Stock so purchased
shall be dated the date of such  exercise  and  delivered  to the Holder  hereof
within a  reasonable  time,  not  exceeding  three (3)  Trading  Days after such
exercise (the "Delivery Date") or, at the request of the Holder (provided that a
registration  statement under the Securities Act providing for the resale of the
Warrant Stock is then in effect),  issued and delivered to the Depository  Trust
Company ("DTC") account on the Holder's behalf via the Deposit  Withdrawal Agent
Commission  System  ("DWAC")  within a reasonable  time, not exceeding three (3)
Trading Days after such exercise,  and the Holder hereof shall be deemed for all
purposes to be the holder of the shares of Warrant  Stock so purchased as of the
date of such  exercise.  The Holder shall deliver this original  Warrant,  or an
indemnification  undertaking  with  respect  to such  Warrant in the case of its
loss,  theft or destruction,  at such time that this Warrant is fully exercised.
With respect to partial exercises of this Warrant, the Issuer shall keep written
records for the Holder of the number of shares of Warrant Stock  exercised as of
each date of exercise.

      (e) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the Holder, if the Issuer
fails to cause its  transfer  agent to transmit to the Holder a  certificate  or
certificates representing the Warrant Stock pursuant to an exercise on or before
the Delivery  Date,  and if after such date the Holder is required by its broker
to purchase (in an open market  transaction or otherwise) shares of Common Stock
to deliver in  satisfaction  of a sale by the Holder of the Warrant  Stock which
the Holder  anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
Issuer  shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant  Stock for which such  exercise  was not  honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Issuer shall be required to pay the Holder  $1,000.  The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable  confirmations and
other evidence reasonably requested by the Issuer.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect  to the  Issuer's  failure  to timely  deliver
certificates  representing  shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.

                                      -2-


      (f)  Transferability  of Warrant.  Subject to Section  2(h)  hereof,  this
Warrant,  and the rights evidenced  hereby,  may be transferred by a Holder,  in
whole or in part, without the consent of the Issuer. If transferred  pursuant to
this  paragraph,  this Warrant may be  transferred on the books of the Issuer by
the Holder hereof in person or by duly  authorized  attorney,  upon surrender of
this Warrant at the principal  office of the Issuer,  properly  endorsed (by the
Holder  executing an assignment in the form attached hereto) and upon payment of
any  necessary  transfer  tax or other  governmental  charge  imposed  upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants to purchase the same aggregate number of shares of Warrant Stock,  each
new Warrant to represent  the right to purchase such number of shares of Warrant
Stock as the Holder  hereof shall  designate at the time of such  exchange.  All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date
and shall be identical  with this  Warrant  except as to the number of shares of
Warrant Stock issuable pursuant thereto.

      (g) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge  in writing the  extent,  if any, of its  continuing  obligation  to
afford to such  Holder all  rights to which such  Holder  shall  continue  to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

      (h) Compliance with Securities Laws.

            (i) The Holder of this Warrant,  by acceptance hereof,  acknowledges
      that this  Warrant  and the  shares  of  Warrant  Stock to be issued  upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other  party,  and for  investment,  and that the
      Holder will not offer,  sell or  otherwise  dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise  hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph  (iii) below,  this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted  with a legend in  substantially  the
      following form:

            THIS  WARRANT  AND THE SHARES OF COMMON  STOCK  ISSUABLE
            UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED  UNDER THE
            SECURITIES  ACT OF 1933,  AS  AMENDED  (THE  "SECURITIES
            ACT") OR ANY STATE  SECURITIES LAWS AND MAY NOT BE SOLD,
            TRANSFERRED OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED
            UNDER  THE  SECURITIES  ACT AND UNDER  APPLICABLE  STATE
            SECURITIES  LAWS OR THE ISSUER  SHALL HAVE  RECEIVED  AN
            OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER
            THAT   REGISTRATION   OF  SUCH   SECURITIES   UNDER  THE
            SECURITIES  ACT AND UNDER THE  PROVISIONS  OF APPLICABLE
            STATE SECURITIES LAWS IS NOT REQUIRED.

                                      -3-



            (iii) The Issuer  agrees to  reissue  this  Warrant or  certificates
      representing any of the Warrant Stock,  without the legend set forth above
      if at such time, prior to making any transfer of any such securities,  the
      Holder shall give written  notice to the Issuer  describing the manner and
      terms of such transfer and removal as the Issuer may  reasonably  request.
      Such proposed  transfer and removal will not be effected until: (a) either
      (i) the Issuer has received an opinion of counsel reasonably  satisfactory
      to the Issuer,  to the effect  that the  registration  of such  securities
      under the Securities Act is not required in connection  with such proposed
      transfer,  (ii) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (iii) the Issuer has received other evidence  reasonably  satisfactory  to
      the Issuer that such registration and  qualification  under the Securities
      Act and  state  securities  laws  are not  required,  or (iv)  the  Holder
      provides the Issuer with  reasonable  assurances that such security can be
      sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
      Issuer has received an opinion of counsel  reasonably  satisfactory to the
      Issuer,  to the  effect  that  registration  or  qualification  under  the
      securities  or "blue sky" laws of any state is not required in  connection
      with such proposed  disposition,  or (ii) compliance with applicable state
      securities  or "blue  sky"  laws has been  effected  or a valid  exemption
      exists with  respect  thereto.  The Issuer will respond to any such notice
      from a holder  within three (3) Trading  Days. In the case of any proposed
      transfer under this Section 2(h),  the Issuer will use reasonable  efforts
      to comply with any such  applicable  state  securities or "blue sky" laws,
      but shall in no event be  required,  (x) to qualify to do  business in any
      state where it is not then qualified, or (y) to take any action that would
      subject it to tax or to the general  service of process in any state where
      it is not then subject.  The  restrictions  on transfer  contained in this
      Section 2(h) shall be in addition to, and not by way of limitation of, any
      other  restrictions  on transfer  contained  in any other  section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the  Holder  without  a  legend,  in lieu of  delivering
      physical  certificates  representing  the Warrant Stock  (provided  that a
      registration  statement  under the Securities Act providing for the resale
      of the  Warrant  Stock is then in  effect),  the  Issuer  shall  cause its
      transfer agent to electronically  transmit the Warrant Stock to the Holder
      by crediting the account of the Holder's Prime Broker with DTC through its
      DWAC system.

      (i) Accredited Investor.  In no event may the Holder exercise this Warrant
in whole or in part unless the Holder is an "accredited  investor" as defined in
Regulation D under the Securities Act.

                                      -4-


      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and reserved for the purpose of the issuance  upon  exercise of this
Warrant a number of authorized  but unissued  shares of Common Stock equal to at
least  one  hundred  percent  (100%) of the  number  of  shares of Common  Stock
issuable  upon exercise of this Warrant  without  regard to any  limitations  on
exercise.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any Governmental  Authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its best efforts as  expeditiously  as possible at its expense to
cause such shares to be duly  registered or qualified.  If the Issuer shall list
any shares of Common Stock on any securities  exchange or market it will, at its
expense,  list thereon,  and maintain and increase when  necessary such listing,
of, all shares of Warrant  Stock from time to time issued upon  exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has
been  registered  pursuant to a registration  statement under the Securities Act
then in effect),  and, to the extent permissible under the applicable securities
exchange  rules,  all  unissued  shares of Warrant  Stock  which are at any time
issuable  hereunder,  so long as any shares of Common  Stock shall be so listed.
The Issuer will also so list on each  securities  exchange  or market,  and will
maintain such listing of, any other  securities which the Holder of this Warrant
shall be entitled to receive  upon the  exercise of this  Warrant if at the time
any securities of the same class shall be listed on such securities  exchange or
market by the Issuer.

      (c)  Covenants.  The  Issuer  shall not by any action  including,  without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or  through  any  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other action,  avoid or seek to
avoid the  observance or  performance  of any of the terms of this Warrant,  but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or  appropriate to protect
the rights of the Holder  hereof  against  dilution (to the extent  specifically
provided  herein)  or  impairment.   Without  limiting  the  generality  of  the
foregoing,  the Issuer will (i) not permit the par value,  if any, of its Common
Stock to exceed the then effective  Warrant Price,  (ii) not amend or modify any
provision  of the  Articles  of  Incorporation  or  by-laws of the Issuer in any
manner that would  adversely  affect the rights of the Holders of the  Warrants,
(iii)  take all such  action as may be  reasonably  necessary  in order that the
Issuer may  validly and legally  issue  fully paid and  nonassessable  shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant,  and (iv) use
its best efforts to obtain all such authorizations,  exemptions or consents from
any public  regulatory  body having  jurisdiction  thereof as may be  reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

                                      -5-


      (d) Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      (e)  Payment of Taxes.  The Issuer  will pay any  documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided, however, that the Issuer shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any  certificates  representing  Warrant Stock in a name
other than that of the Holder in respect to which such shares are issued.

      4. Adjustment of Warrant Price.  The price at which such shares of Warrant
Stock may be  purchased  upon  exercise  of this  Warrant  shall be  subject  to
adjustment  from time to time as set forth in this  Section 4. The Issuer  shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with the notice provisions set forth in
Section 5.

                                      -6-



      (a)  Recapitalization,  Reorganization,  Reclassification,  Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering  Event"): (a) consolidate or merge with
      or into any other  Person and the Issuer  shall not be the  continuing  or
      surviving  corporation of such  consolidation or merger, or (b) permit any
      other Person to  consolidate  with or merge into the Issuer and the Issuer
      shall be the continuing or surviving  Person but, in connection  with such
      consolidation or merger,  any Capital Stock of the Issuer shall be changed
      into or exchanged for  Securities of any other Person or cash or any other
      property,  or (c) transfer all or  substantially  all of its properties or
      assets to any other  Person,  or (d)  effect a capital  reorganization  or
      reclassification  of its Capital Stock,  other than any event set forth in
      Section 4(b) below,  then, and in the case of each such Triggering  Event,
      proper  provision  shall be made so that, upon the basis and the terms and
      in the manner  provided in this Warrant,  the Holder of this Warrant shall
      be entitled upon the exercise hereof at any time after the consummation of
      such  Triggering  Event, to the extent this Warrant is not exercised prior
      to such Triggering Event, to receive at the Warrant Price in effect at the
      time  immediately  prior to the  consummation of such Triggering  Event in
      lieu of the Common Stock issuable upon such exercise of this Warrant prior
      to such Triggering Event, the Securities,  cash and property to which such
      Holder would have been entitled upon the  consummation  of such Triggering
      Event if such Holder had exercised the rights  represented by this Warrant
      immediately  prior thereto  (including the right of a shareholder to elect
      the  type of  consideration  it will  receive  upon a  Triggering  Event),
      subject to adjustments  (subsequent  to such  corporate  action) as nearly
      equivalent as possible to the  adjustments  provided for elsewhere in this
      Section 4; provided, however, in the event that the Per Share Market Value
      is less than the Warrant Price at the time of such Triggering  Event,  the
      Holder shall  receive an amount in cash equal to the value of this Warrant
      calculated in accordance with the Black-Scholes  formula.  Notwithstanding
      the  foregoing to the contrary,  this Section  4(a)(i) shall only apply if
      the surviving  entity pursuant to any such  Triggering  Event is a company
      that  has  a  class  of  equity  securities  registered  pursuant  to  the
      Securities  Exchange  Act of 1934,  as  amended,  and its common  stock is
      listed or quoted on a national  securities  exchange,  national  automated
      quotation  system  or the  OTC  Bulletin  Board.  In the  event  that  the
      surviving  entity  pursuant to any such  Triggering  Event is not a public
      company  that is  registered  pursuant to the  Securities  Exchange Act of
      1934,  as  amended,  or its  common  stock is not  listed  or  quoted on a
      national securities  exchange,  national automated quotation system or the
      OTC  Bulletin  Board,  then the Holder shall have the right to demand that
      the  Issuer pay to the Holder an amount in cash equal to the value of this
      Warrant calculated in accordance with the Black-Scholes formula.

                                      -7-


            (ii)  Notwithstanding  anything  contained  in this  Warrant  to the
      contrary and so long as the surviving  entity  pursuant to any  Triggering
      Event  is a  company  that  has a class of  equity  securities  registered
      pursuant to the  Securities  Exchange  Act of 1934,  as  amended,  and its
      common  stock is  listed  or quoted  on a  national  securities  exchange,
      national  automated   quotation  system  or  the  OTC  Bulletin  Board,  a
      Triggering  Event shall not be deemed to have  occurred  if,  prior to the
      consummation  thereof,  each Person  (other than the Issuer)  which may be
      required to deliver any Securities,  cash or property upon the exercise of
      this  Warrant as  provided  herein  shall  assume,  by written  instrument
      delivered to, and reasonably  satisfactory to, the Holder of this Warrant,
      (A) the  obligations  of the Issuer  under this Warrant (and if the Issuer
      shall survive the consummation of such Triggering  Event,  such assumption
      shall be in  addition  to,  and shall not  release  the Issuer  from,  any
      continuing  obligations  of the  Issuer  under this  Warrant)  and (B) the
      obligation to deliver to such Holder such Securities, cash or property as,
      in accordance  with the foregoing  provisions of this subsection (a), such
      Holder shall be entitled to receive,  and such Person shall have similarly
      delivered  to such  Holder an opinion of counsel  for such  Person,  which
      counsel  shall  be  reasonably  satisfactory  to  such  Holder,  or in the
      alternative,  a written acknowledgement executed by the President or Chief
      Financial  Officer  of  the  Issuer,   stating  that  this  Warrant  shall
      thereafter  continue  in  full  force  and  effect  and the  terms  hereof
      (including,  without limitation,  all of the provisions of this subsection
      (a)) shall be applicable to the  Securities,  cash or property  which such
      Person may be required to deliver upon any exercise of this Warrant or the
      exercise of any rights pursuant hereto.

      (b) Stock  Dividends,  Subdivisions and  Combinations.  If at any time the
Issuer shall:

            (i) make or issue or set a record date for the holders of the Common
      Stock for the purpose of entitling them to receive a dividend  payable in,
      or other distribution of, shares of Common Stock (other than in connection
      with the  dividend  payable in shares of Common  Stock to be issued by the
      Issuer to the Issuer's stockholders in connection with the spin-off of the
      Issuer's wholly-owned subsidiary, Pegasus Tel, Inc.),

            (ii) subdivide its outstanding  shares of Common Stock into a larger
      number of shares of Common Stock, or

            (iii) combine its outstanding  shares of Common Stock into a smaller
      number of shares of Common  Stock  (other  than  pursuant  to the  Reverse
      Split),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.

                                      -8-


      (c) Certain Other  Distributions.  If at any time the Issuer shall make or
issue or set a record  date for the  determination  of the holders of the Common
Stock for the  purpose  of  entitling  them to  receive  any  dividend  or other
distribution of:

            (i) cash  (other  than a cash  dividend  payable  out of earnings or
      earned surplus  legally  available for the payment of dividends  under the
      laws of the jurisdiction of incorporation of the Issuer),

            (ii) any evidences of its  indebtedness,  any shares of stock of any
      class or any other securities or property of any nature whatsoever, or

            (iii) any warrants or other rights to subscribe  for or purchase any
      evidences  of its  indebtedness,  any  shares of stock of any class or any
      other securities or property of any nature whatsoever,

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such  evidences  of  indebtedness,  shares of  stock,  other  securities  or
property or warrants or other  subscription or purchase rights so distributable,
and (2) the  Warrant  Price then in effect  shall be  adjusted  to equal (A) the
Warrant Price then in effect  multiplied by the number of shares of Common Stock
for which  this  Warrant  is  exercisable  immediately  prior to the  adjustment
divided  by (B) the number of shares of Common  Stock for which this  Warrant is
exercisable immediately after such adjustment.  A reclassification of the Common
Stock  (other  than a change in par value,  or from par value to no par value or
from no par value to par value)  into  shares of Common  Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its  Common  Stock of such  shares of such  other  class of stock  within the
meaning of this  Section  4(c) and, if the  outstanding  shares of Common  Stock
shall be changed into a larger or smaller  number of shares of Common Stock as a
part of such  reclassification,  such change  shall be deemed a  subdivision  or
combination,  as the case may be, of the  outstanding  shares  of  Common  Stock
within the meaning of Section 4(b).

      (d) Intentionally Omitted.

      (e) Intentionally Omitted.

      (f) Other  Provisions  Applicable to Adjustments  under this Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

                                      -9-


      (i)  Computation  of  Consideration.  In  connection  with any  merger  or
consolidation in which the Issuer is the surviving  corporation  (other than any
consolidation  or merger in which the  previously  outstanding  shares of Common
Stock of the  Issuer  shall be changed  to or  exchanged  for the stock or other
securities of another corporation),  the amount of consideration therefore shall
be, deemed to be the fair value,  as determined  reasonably and in good faith by
the Board and  acceptable  to the  Holder,  of such  portion  of the  assets and
business  of the  nonsurviving  corporation  as the  Board may  determine  to be
attributable  to such  shares of Common  Stock or any  Convertible  Security  or
warrant, option or other right to subscribe for or purchase any shares of Common
Stock or any  Convertible  Security,  as the case  may be.  In the  event of any
consolidation  or merger of the Issuer in which the Issuer is not the  surviving
corporation or in which the previously outstanding shares of Common Stock of the
Issuer shall be changed into or exchanged  for the stock or other  securities of
another corporation,  or in the event of any sale of all or substantially all of
the assets of the Issuer for stock or other securities of any  corporation,  the
Issuer shall be deemed to have issued a number of shares of its Common Stock for
stock or securities or other property of the other  corporation  computed on the
basis of the actual exchange ratio on which the transaction was predicated,  and
for a  consideration  equal  to the  fair  market  value  on the  date  of  such
transaction  of all such  stock or  securities  or other  property  of the other
corporation.  In the event any  consideration  received  by the  Issuer  for any
securities  consists of property  other than cash, the fair market value thereof
at the time of issuance or as otherwise  applicable  shall be as  determined  in
good faith by the Board.  In the event  Common Stock is issued with other shares
or securities or other assets of the Issuer for consideration which covers both,
the  consideration  computed  as  provided  in this  Section  4(f)(i)  shall  be
allocated  among such  securities  and assets as determined in good faith by the
Board.

      (ii) When Adjustments to Be Made. The adjustments required by this Section
4 shall be made  whenever  and as  often as any  specified  event  requiring  an
adjustment  shall occur,  except that any  adjustment of the number of shares of
Common  Stock for which this  Warrant is  exercisable  that would  otherwise  be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common  Stock,  as  provided  for in Section  4(b)) up to, but not
beyond the date of  exercise if such  adjustment  either by itself or with other
adjustments  not previously made adds or subtracts less than one percent (1%) of
the shares of Common  Stock for which this  Warrant is  exercisable  immediately
prior to the making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid)  which is postponed shall be
carried  forward  and  made  as soon as such  adjustment,  together  with  other
adjustments  required by this Section 4 and not previously made, would result in
a  minimum  adjustment  or on the  date  of  exercise.  For the  purpose  of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

      (iii) Fractional Interests. In computing adjustments under this Section 4,
fractional  interests in Common Stock shall be taken into account to the nearest
one one-hundredth (1/100th) of a share.

      (iv) When  Adjustment  Not Required.  If the Issuer shall take a record of
the holders of its Common Stock for the purpose of  entitling  them to receive a
dividend  or   distribution  or  subscription  or  purchase  rights  and  shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

                                      -10-


      (g) Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

      (h) Escrow of Warrant Stock. If after any property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and the Holder  exercises  this  Warrant,  any shares of Common Stock
issuable  upon  exercise by reason of such  adjustment  shall be deemed the last
shares of Common Stock for which this Warrant is exercised  (notwithstanding any
other provision to the contrary  herein) and such shares or other property shall
be held in escrow for the  Holder by the Issuer to be issued to the Holder  upon
and to the extent  that the event  actually  takes  place,  upon  payment of the
current  Warrant  Price.  Notwithstanding  any other  provision  to the contrary
herein,  if the event  for  which  such  record  was taken  fails to occur or is
rescinded,  then such  escrowed  shares  shall be  cancelled  by the  Issuer and
escrowed property returned.

      5. Notice of  Adjustments.  Whenever  the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the  option  of the  Holder  of this  Warrant  be  submitted  to an  Independent
Appraiser  reasonably  acceptable to the Issuer and the Holder. The Issuer shall
use its  best  efforts  to  cause  the  Independent  Appraiser  to  perform  the
calculations  and notify the Issuer and the Holder of the  results no later than
five (5) business days from the time it receives the disputed calculation.  Such
Independent  Appraiser's  calculation  shall be binding upon all parties  absent
manifest error. The reasonable  expenses of the Independent  Appraiser in making
such  determination  shall be paid by the  Issuer,  in the  event  the  Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was  correct,  or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof,  but in lieu of such fractional  shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.

                                      -11-


      7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the
contrary  set forth in this  Warrant,  at no time may a Holder  of this  Warrant
exercise  this  Warrant  if the  number of  shares of Common  Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares of
Common  Stock owned by such Holder at such time,  the number of shares of Common
Stock which would result in such Holder  beneficially  owning (as  determined in
accordance  with Section 13(d) of the Exchange Act and the rules  thereunder) in
excess of 9.9% of the then  issued  and  outstanding  shares  of  Common  Stock;
provided,  however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 12 hereof) (the "Waiver Notice")
that such  Holder  would like to waive this  Section 7 with regard to any or all
shares of Common Stock  issuable upon  exercise of this Warrant,  this Section 7
will be of no force or effect  with  regard to all or a portion  of the  Warrant
referenced in the Waiver Notice; provided, further, that this provision shall be
of no  further  force or effect  during  the  sixty-one  (61)  days  immediately
preceding the expiration of the term of this Warrant.

      8. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Articles of  Incorporation"  means the Articles of Incorporation of
      the Issuer as in effect on the Original  Issue Date, and as hereafter from
      time to time  amended,  modified,  supplemented  or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

      "Board" shall mean the Board of Directors of the Issuer.

            "Capital   Stock"  means  and  includes  (i)  any  and  all  shares,
      interests, participations or other equivalents of or interests in (however
      designated)  corporate stock,  including,  without  limitation,  shares of
      preferred or preference  stock,  (ii) all partnership  interests  (whether
      general  or  limited)  in any  Person  which is a  partnership,  (iii) all
      membership interests or limited liability company interests in any limited
      liability  company,  and (iv) all  equity or  ownership  interests  in any
      Person of any other type.

            "Common Stock" means the Common Stock, par value $.001 per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Convertible Securities" means evidences of Indebtedness,  shares of
      Capital  Stock  or  other  Securities  which  are or  may  be at any  time
      convertible  into or  exchangeable  for shares of Common  Stock.  The term
      "Convertible Security" means one of the Convertible Securities.

            "Governmental  Authority"  means  any  governmental,  regulatory  or
      self-regulatory entity, department, body, official, authority, commission,
      board,  agency or  instrumentality,  whether federal,  state or local, and
      whether domestic or foreign.

            "Holders"  mean the  Persons  who  shall  from  time to time own any
      Warrant. The term "Holder" means one of the Holders.

            "Independent  Appraiser"  means a  nationally  recognized  or  major
      regional  investment banking firm or firm of independent  certified public
      accountants of recognized  standing  (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of  corporations
      or other  entities as going  concerns,  and which is not  affiliated  with
      either the Issuer or the Holder of any Warrant.

                                      -12-


            "Issuer"  means Dolce  Ventures  Inc., a Utah  corporation,  and its
      successors.

            "Majority  Holders"  means  at any  time  the  Holders  of  Warrants
      exercisable  for a majority of the shares of Warrant Stock  issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means September __, 2006.

            "OTC Bulletin Board" means the over-the-counter  electronic bulletin
      board.

            "Person"  means  an  individual,   corporation,   limited  liability
      company,   partnership,   joint  stock  company,   trust,   unincorporated
      organization,  joint  venture,  Governmental  Authority or other entity of
      whatever nature.

            "Per Share Market Value" means on any  particular  date (a) the last
      closing  price  per  share of the  Common  Stock  on such  date on the OTC
      Bulletin Board or another registered  national stock exchange on which the
      Common Stock is then listed, or if there is no closing price on such date,
      then the  closing  bid price on such date,  or if there is no closing  bid
      price on such date,  then the closing  price on such exchange or quotation
      system on the date nearest preceding such date, or (b) if the Common Stock
      is not listed then on the OTC Bulletin  Board or any  registered  national
      stock exchange,  the last closing price for a share of Common Stock in the
      over-the-counter  market,  as reported by the OTC Bulletin Board or in the
      National Quotation Bureau  Incorporated or similar  organization or agency
      succeeding to its functions of reporting  prices, at the close of business
      on such  date,  or if there is no  closing  price on such  date,  then the
      closing  bid price on such date,  or (c) if the  Common  Stock is not then
      reported  by the OTC  Bulletin  Board  or the  National  Quotation  Bureau
      Incorporated  (or  similar   organization  or  agency  succeeding  to  its
      functions  of  reporting  prices),  then the  average of the "Pink  Sheet"
      quotes for the five (5) Trading Days preceding such date of determination,
      or (d) if the Common  Stock is not then  publicly  traded the fair  market
      value of a share of Common Stock as determined by an Independent Appraiser
      selected in good faith by the Majority Holders;  provided,  however,  that
      the  Issuer,  after  receipt  of the  determination  by  such  Independent
      Appraiser,  shall  have the  right to  select  an  additional  Independent
      Appraiser,  in which  case,  the fair  market  value shall be equal to the
      average of the  determinations  by each such  Independent  Appraiser;  and
      provided,  further that all  determinations  of the Per Share Market Value
      shall be appropriately  adjusted for any stock dividends,  stock splits or
      other similar  transactions  during such period. The determination of fair
      market  value by an  Independent  Appraiser  shall be based  upon the fair
      market value of the Issuer  determined on a going concern basis as between
      a willing buyer and a willing  seller and taking into account all relevant
      factors  determinative  of value,  and shall be final and  binding  on all
      parties.  In  determining  the fair  market  value of any shares of Common
      Stock, no consideration  shall be given to any restrictions on transfer of
      the Common Stock  imposed by  agreement or by federal or state  securities
      laws,  or to the  existence or absence of, or any  limitations  on, voting
      rights.

                                      -13-


            "Purchase Agreement" means the Series B Convertible  Preferred Stock
      Purchase Agreement dated as of September 7, 2006, among the Issuer and the
      Purchasers.

            "Purchasers"  means  the  purchasers  of the  Series  B  Convertible
      Preferred Stock and Warrants issued by the Issuer pursuant to the Purchase
      Agreement.

            "Securities"  means any debt or  equity  securities  of the  Issuer,
      whether now or hereafter  authorized,  any instrument  convertible into or
      exchangeable  for  Securities  or a Security,  and any option,  warrant or
      other right to purchase or acquire any Security.  "Security"  means one of
      the Securities.

            "Securities  Act" means the Securities  Act of 1933, as amended,  or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting  Stock  shall at the time be owned  directly or  indirectly  by the
      Issuer or by one or more of its Subsidiaries,  or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.

            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on the
      OTC  Bulletin  Board,  a day on which  the  Common  Stock is quoted in the
      over-the-counter  market as  reported  by the  National  Quotation  Bureau
      Incorporated  (or  any  similar  organization  or  agency  succeeding  its
      functions of reporting prices); provided,  however, that in the event that
      the  Common  Stock is not  listed  or  quoted  as set  forth in (a) or (b)
      hereof,  then Trading Day shall mean any day except  Saturday,  Sunday and
      any  day  which  shall  be a  legal  holiday  or a day  on  which  banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting  Stock"  means,  as  applied  to the  Capital  Stock  of any
      corporation,  Capital Stock of any class or classes  (however  designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing  body) of such  corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants"  means  the  Warrants  issued  and sold  pursuant  to the
      Purchase Agreement,  including,  without limitation, this Warrant, and any
      other  warrants of like tenor issued in  substitution  or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

            "Warrant  Price"  initially  means U.S.  $3.01, as such price may be
      adjusted from time to time as shall result from the adjustments  specified
      in this Warrant, including Section 4 hereto.

                                      -14-


            "Warrant  Share Number"  means at any time the  aggregate  number of
      shares of Warrant Stock which may at such time be purchased  upon exercise
      of  this  Warrant,  after  giving  effect  to all  prior  adjustments  and
      increases  to such  number  made or  required  to be made  under the terms
      hereof.

            "Warrant  Stock" means Common Stock  issuable  upon  exercise of any
      Warrant or  Warrants  or  otherwise  issuable  pursuant  to any Warrant or
      Warrants.

      9. Other Notices. In case at any time:

                        (A)   the  Issuer  shall make any  distributions  to the
                              holders of Common Stock; or

                        (B)   the Issuer  shall  authorize  the  granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital  reorganization  by the
                              Issuer; or

                        (E)   there  shall be any (i)  consolidation  or  merger
                              involving  the  Issuer or (ii) sale,  transfer  or
                              other  disposition of all or substantially  all of
                              the Issuer's property,  assets or business (except
                              a merger  or  other  reorganization  in which  the
                              Issuer shall be the surviving  corporation and its
                              shares  of  Capital  Stock  shall  continue  to be
                              outstanding    and    unchanged   and   except   a
                              consolidation,  merger,  sale,  transfer  or other
                              disposition involving a wholly-owned  Subsidiary);
                              or

                        (F)   there   shall  be  a  voluntary   or   involuntary
                              dissolution,  liquidation  or  winding-up  of  the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
(20) days prior to the action in question  and not less than ten (10) days prior
to the record date or the date on which the Issuer's  transfer  books are closed
in respect  thereto.  This Warrant  entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

                                      -15-


      10. Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 10 without the consent of the Holder of this  Warrant.
No consideration shall be offered or paid to any person to amend or consent to a
waiver  or  modification  of any  provision  of this  Warrant  unless  the  same
consideration is also offered to all holders of the Warrants.

      11.  Governing  Law;  Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the  application of the substantive  law of another  jurisdiction.  This Warrant
shall not be  interpreted or construed  with any  presumption  against the party
causing this  Warrant to be drafted.  The Issuer and the Holder agree that venue
for any dispute  arising under this Warrant will lie exclusively in the state or
federal courts located in New York County, New York, and the parties irrevocably
waive any right to raise forum non  conveniens  or any other  argument  that New
York is not the proper venue. The Issuer and the Holder  irrevocably  consent to
personal  jurisdiction in the state and federal courts of the state of New York.
The  Issuer and the Holder  consent  to process  being  served in any such suit,
action or  proceeding  by mailing a copy thereof to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient service of process and notice thereof. Nothing in
this  Section 11 shall  affect or limit any right to serve  process in any other
manner  permitted  by law.  The  Issuer  and the  Holder  hereby  agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the this Warrant or the Purchase  Agreement,  shall be entitled to reimbursement
for  reasonable  legal fees from the  non-prevailing  party.  The parties hereby
waive all rights to a trial by jury.

      12.  Notices.  Any and all notices or other  communications  or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of  mailing,  if sent by  overnight  delivery  by a  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                                      -16-


                                    Dolce Ventures Inc.
                                    ------------------------
                                    ------------------------
                                    Attention: ________________
                                    Tel. No.: (___) ___-____
                                    Fax No.: (___) ___-____

with copies (which copies
shall not constitute notice
to the Issuer) to:                  GUZOV OFSINK, LLC
                                    600 Madison Avenue, 14th Floor
                                    New York, New York 10022
                                    Attention:  Darren Ofsink
                                    Tel. No.:  (212) 371-8008, ext. 127
                                    Fax No.:  (212) 688-7273

Copies of notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel
LLP,  1177  Avenue  of the  Americas,  New  York,  New  York  10036,  Attention:
Christopher S. Auguste, Tel. No.: (212) 715-9100,  Fax. No.: (212) 715-8000. Any
party  hereto may from time to time  change its address for notices by giving at
least ten (10) days written  notice of such  changed  address to the other party
hereto.

      13.  Warrant  Agent.  The Issuer may, by written  notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

      14. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      15.  Successors and Assigns.  This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock.

      16.  Modification and Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

                                      -17-


      17.  Registration  Rights.  The Holder of this  Warrant is entitled to the
benefit of certain  registration  rights  with  respect to the shares of Warrant
Stock  issuable  upon the  exercise of this  Warrant  pursuant  to that  certain
Registration Rights Agreement,  of even date herewith,  by and among the Company
and Persons listed on Schedule I thereto (the  "Registration  Rights Agreement")
and the registration rights with respect to the shares of Warrant Stock issuable
upon the exercise of this Warrant by any subsequent  Holder may only be assigned
in  accordance  with  the  terms  and  provisions  of the  Registrations  Rights
Agreement.

      18.  Headings.  The  headings  of the  Sections  of this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -18-


      IN WITNESS  WHEREOF,  the Issuer has executed  this Series J Warrant as of
the day and year first above written.

                                        DOLCE VENTURES INC.

                                        By:_____________________________________
                                           Name:
                                           Title:


                                      -19-


                                  EXERCISE FORM
                                SERIES J WARRANT

                               DOLCE VENTURES INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of  Common  Stock of Dolce
Ventures Inc. covered by the within Warrant.

Dated: _________________                Signature    ___________________________

                                        Address      _____________________
                                                     _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.


Dated: _________________                Signature    ___________________________

                                        Address      _____________________
                                                     _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.


Dated: _________________                Signature    ___________________________

                                        Address      _____________________
                                                     _____________________

                           FOR USE BY THE ISSUER ONLY:

                                      -20-


This Warrant No. W-___ canceled (or  transferred or exchanged) this _____ day of
___________,  _____,  shares  of Common  Stock  issued  therefor  in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                      -21-

EX-10.1

                            SHARE EXCHANGE AGREEMENT

                         GAS INVESTMENT CHINA CO., LTD.

                               FOR THE EXCHANGE OF

                                  CAPITAL STOCK

                                       OF

                              DOLCE VENTURES, INC.

                          DATED AS OF SEPTEMBER 7, 2006



                            SHARE EXCHANGE AGREEMENT

      This  SHARE  EXCHANGE  AGREEMENT,  dated  as of  September  7,  2006  (the
"Agreement")  by and among,  GAS INVESTMENT  CHINA CO.,  LTD., an  International
Business  Company  incorporated  in the British  Virgin Islands  ("GIC"),  DOLCE
VENTURES,  INC., a Utah  corporation  ("Dolce"),  and all of the members of GIC,
whose names are set forth on Exhibit A attached hereto ("SHAREHOLDERS").

      WHEREAS, SHAREHOLDERS own 100% of the issued and outstanding capital stock
of GAS (the "GIC Shares");

      WHEREAS, SHAREHOLDERS believe it is in their best interest to exchange the
GIC Shares for shares of Series A Convertible  Preferred  Stock, par value $.001
per share,  of Dolce  ("Dolce  Shares"),  and Dolce  believes  it is in its best
interests to acquire the GIC Shares in exchange for Dolce Shares, upon the terms
and subject to the conditions set forth in this Agreement; and

      WHEREAS,  it the  intention of the parties  that:  (i) Dolce shall acquire
100% of the GIC Shares in  exchange  solely  for the amount of Dolce  Shares set
forth  herein;  (ii)  said  exchange  of  shares  shall  qualify  as a  tax-free
reorganization  under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended (the "Code");  and (iii) said exchange shall qualify as a transaction
in securities exempt from registration or qualification under the Securities Act
of 1933, as amended and in effect on the date of this Agreement (the "Securities
Act").

      NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:

                                    ARTICLE I

                       EXCHANGE OF SHARES FOR COMMON STOCK

      Section 1.1  Agreement  to Exchange  GIC Shares for Dolce  Shares.  On the
Closing  Date (as  hereinafter  defined)  and upon the terms and  subject to the
conditions  set  forth  in this  Agreement,  SHAREHOLDERS  shall  sell,  assign,
transfer,  convey and deliver the GIC Shares,  to Dolce,  and Dolce shall accept
the GIC  Shares  from the  SHAREHOLDERS  in  exchange  for the  issuance  to the
SHAREHOLDERS  of the number of Dolce Shares set forth  opposite the names of the
SHAREHOLDERS on Exhibit A hereto.

      Section 1.2  Capitalization.  On the Closing Date,  immediately before the
transactions  to be  consummated  pursuant to this  Agreement,  Dolce shall have
authorized (a) 250,000,000 shares of Common Stock, par value $.001 per share, of
which 100,770,140 shares shall be issued and outstanding,  all of which are duly
authorized,  validly  issued  and  fully  paid;  and (b)  100,000,000  shares of
Preferred Stock,  $.001 par value, of which no shares are issued or outstanding,
but  20,000,000  shares  shall  have been  designated  as  Series A  Convertible
Preferred  Stock and  5,000,000  shares shall have been  designated  as Series B
Convertible Preferred Stock, par value $.001 per share ("Series B Stock").



      Section 1.3 Closing.  The closing of the  exchange to be made  pursuant to
this Agreement (the "Closing")  shall take place at 10:00 a.m. E.D.T. on the day
the  conditions to closing set forth in Articles V and VI have been satisfied or
waived,  or at such other time and date as the  parties  hereto  shall  agree in
writing (the "Closing Date"),  at the offices of Guzov Ofsink,  LLC, 600 Madison
Avenue, 14th Floor, New York, New York 10022. At the Closing, SHAREHOLDERS shall
deliver to Dolce the stock  certificates  representing  100% of the GIC  Shares,
duly endorsed in blank for transfer or accompanied  by appropriate  stock powers
duly executed in blank. In full  consideration  and exchange for the GIC Shares,
Dolce shall issue and exchange with SHAREHOLDERS  14,599,942 Dolce Shares as set
forth on Exhibit A.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF PARALLEL

      Dolce hereby represents, warrants and agrees as follows:

      Section 2.1 Corporate Organization

            a. Dolce is a corporation  duly organized,  validly  existing and in
good standing under the laws of Utah, and has all requisite  corporate power and
authority  to own its  properties  and assets and to conduct its business as now
conducted  and is  duly  qualified  to do  business  in  good  standing  in each
jurisdiction  in which the  nature  of the  business  conducted  by Dolce or the
ownership or leasing of its  properties  makes such  qualification  and being in
good standing necessary, except where the failure to be so qualified and in good
standing will not have a material  adverse  effect on the business,  operations,
properties,  assets,  condition  or  results  of  operation  of Dolce (a  "Dolce
Material Adverse Effect");

            b. Copies of the Articles of  Incorporation  and By-laws of Dolce as
well as the  Certificates  of Designation of the Series A Stock and the Series B
Stock,  with all amendments  thereto to the date hereof,  have been furnished to
GIC and the  SHAREHOLDERS,  and such copies are  accurate and complete as of the
date hereof.  The minute books of Dolce are current as required by law,  contain
the minutes of all meetings of the Board of Directors and  shareholders of Dolce
from its date of  incorporation  to the date of this  Agreement,  and adequately
reflect all material actions taken by the Board of Directors and shareholders of
Dolce.

      Section 2.2 Capitalization of Dolce. The authorized capital stock of Dolce
consists of (a) 250,000,000  shares of Common Stock,  par value $.001 per share,
of which  100,770,140  shares are issued and outstanding,  all of which are duly
authorized,  validly  issued  and  fully  paid;  and (b)  100,000,000  shares of
Preferred Stock,  $.001 par value, of which no shares are issued or outstanding,
but of which 20,000,000  shares of Series A Stock and 5,000,000 shares of Series
B Stock have been designated.  The parties agree that they have been informed of
the issuances of these Dolce Shares, and that all such issuances of Dolce Shares
pursuant to this  Agreement  will be in accordance  with the  provisions of this
Agreement.  All of the Dolce Shares to be issued pursuant to this Agreement have



been duly authorized and will be validly issued,  fully paid and  non-assessable
and no personal liability will attach to the ownership  thereof.  As of the date
of this  Agreement  there  are and as of the  Closing  Date,  there  will be, no
outstanding  options,  warrants,  agreements,  commitments,  conversion  rights,
preemptive  rights or other  rights to  subscribe  for,  purchase  or  otherwise
acquire  any shares of capital  stock or any  un-issued  or  treasury  shares of
capital stock of Dolce.

      Section 2.3 Subsidiaries and Equity Investments. Dolce has no subsidiaries
or equity interest in any  corporation,  partnership or joint venture other than
as set forth in its filings with the Securities and Exchange Commission.

      Section  2.4  Authorization  and  Validity  of  Agreements.  Dolce has all
corporate power and authority to execute and deliver this Agreement,  to perform
its  obligations  hereunder  and to  consummate  the  transactions  contemplated
hereby.  The  execution  and  delivery  of  this  Agreement  by  Dolce  and  the
consummation  by Dolce of the  transactions  contemplated  hereby have been duly
authorized by all necessary  corporate  action of Dolce,  and no other corporate
proceedings on the part of Dolce are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.

      Section  2.5  No  Conflict  or  Violation.  The  execution,  delivery  and
performance of this Agreement by Dolce does not and will not violate or conflict
with any provision of its Articles of Incorporation or By-laws, and does not and
will not violate any  provision of law, or any order,  judgment or decree of any
court or other governmental or regulatory authority,  nor violate or result in a
breach of or  constitute  (with  due  notice or lapse of time or both) a default
under,  or give  to any  other  entity  any  right  of  termination,  amendment,
acceleration or cancellation of, any contract, lease, loan agreement,  mortgage,
security  agreement,  trust  indenture or other agreement or instrument to which
Dolce is a party or by  which  it is bound or to which  any of their  respective
properties  or  assets  is  subject,  nor  will it  result  in the  creation  or
imposition of any lien, charge or encumbrance of any kind whatsoever upon any of
the  properties  or  assets of  Dolce,  nor will it result in the  cancellation,
modification,  revocation  or  suspension  of any of the  licenses,  franchises,
permits to which Dolce is bound.

      Section 2.6 Consents and Approvals. No consent,  waiver,  authorization or
approval of any governmental or regulatory authority, domestic or foreign, or of
any other  person,  firm or  corporation,  is  required in  connection  with the
execution and delivery of this Agreement by Dolce or the performance by Dolce of
its obligations hereunder.

      Section 2.7  Absence of Certain  Changes or Events.  Since its  inception:

            a. Dolce has operated in the ordinary course of business  consistent
            with  past  practice  and there  has not been any  material  adverse
            change in the assets, properties,  business, operations,  prospects,
            net income or condition,  financial or otherwise of Dolce. As of the
            date of this  Agreement,  Dolce does not know or have reason to know
            of any event,  condition,  circumstance  or prospective  development
            which threatens or may threaten to have a material adverse effect on
            the  assets,  properties,   operations,  prospects,  net  income  or
            financial condition of Dolce;



            b. there has not been any  declaration,  setting aside or payment of
            dividends or  distributions  with respect to shares of capital stock
            of Dolce or any  redemption,  purchase or other  acquisition  of any
            capital stock of Dolce or any other of Dolce's securities; and

            c. there has not been an increase in the compensation  payable or to
            become payable to any director or officer of Dolce.

      Section 2.8 Disclosure. This Agreement and any certificate attached hereto
or  delivered  in  accordance  with the terms hereby by or on behalf of Dolce in
connection with the  transactions  contemplated  by this  Agreement,  when taken
together,  do not contain any untrue  statement  of a material  fact or omit any
material fact necessary in order to make the statements  contained herein and/or
therein not misleading.

      Section 2.9 Survival. Each of the representations and warranties set forth
in this Article II shall be deemed  represented and made by Dolce at the Closing
as if made at such time and shall  survive the Closing for a period  terminating
on the second anniversary of the date of this Agreement.



                                   ARTICLE III

             REPRESENTATIONS AND WARRANTIES OF GIC AND SHAREHOLDERS

      GIC and each of the SHAREHOLDERS,  severally, represent, warrant and agree
as follows:

      Section  3.1  Corporate  Organization.  GIC is a company  organized  as an
International  Business Company under the laws of the British Virgin Islands, is
duly formed or organized,  validly  existing and in good standing under the laws
of its jurisdiction of organization and has the requisite power and authority to
own, lease and operate its assets and properties and to carry on its business as
it is  now  being  or  currently  planned  by  GIC  to be  conducted.  GIC is in
possession  of  all  franchises,  grants,  authorizations,   licenses,  permits,
easements, consents, certificates,  approvals and orders ("Approvals") necessary
to own,  lease and operate the  properties it purports to own,  operate or lease
and to carry on its business as it is now being conducted, and to consummate the
transactions contemplated under this Agreement, except where the failure to have
such  Approvals  could not,  individually  or in the  aggregate,  reasonably  be
expected  to  have  a  material  adverse  effect  on the  business,  operations,
properties,  assets,  condition or results of operation of GIC. GIC has complete
and  correct  copies of the  articles  of  organization  and  bylaws or  similar
governing, organization or charter documents (collectively referred to herein as
"Charter  Documents").  GIC is not in violation of any of the  provisions of its
Charter  Documents.  GIC is in good standing in the British Virgin Islands.  The
minute books or the equivalent  contain true,  complete and accurate  records of
meetings  and  consents in lieu of meetings of its board of  directors  (and any
committees  thereof),  similar  governing  bodies and  stockholders  ("Corporate
Records") of GIC, since the time of its  organization.  The ownership records of
GIC's Shares are true,  complete and  accurate  records of the  ownership of the
Shares as of the date of such  records and contain all  transfers of such Shares
since the time of GIC's organization ("Share Records").

      Section 3.2 Capitalization of GIC; Title to the GIC Shares. On the Closing
Date,  immediately  before the  transactions to be consummated  pursuant to this
Agreement, GIC shall have authorized _________________ (___________) GIC Shares,
of which  ___________ GIC Shares will be issued and outstanding.  The GIC Shares
are the sole  outstanding  shares  of  capital  stock of GIC,  and  there are no
outstanding  options,  warrants,  agreements,  commitments,  conversion  rights,
preemptive  rights or other  rights to  subscribe  for,  purchase  or  otherwise
acquire  any shares of capital  stock or any  un-issued  or  treasury  shares of
capital stock of GIC.

      Section  3.3  Subsidiaries  and Equity  Investments;  Assets.  Each of the
subsidiaries and affiliated companies of GIC are set forth on Schedule 3.3.

      Section  3.4  Authorization  and  Validity  of  Agreements.  GIC  has  all
corporate power and authority to execute and deliver this Agreement,  to perform
its  obligations  hereunder  and to  consummate  the  transactions  contemplated
hereby. The execution and delivery of this Agreement by GIC and the consummation
of the  transactions  contemplated  hereby  have  been  duly  authorized  by all
necessary corporate action and no other corporate proceedings on the part of GIC
are  necessary to authorize  this  Agreement or to consummate  the  transactions



contemplated  hereby. The SHAREHOLDERS have approved this Agreement on behalf of
GIC  and  no  other  stockholder   approvals  are  required  to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
by each SHAREHOLDER which is not a natural person ("Entity Shareholder") and the
consummation of the transactions  contemplated hereby by each Entity Shareholder
have been duly authorized by all necessary action by the Entity  Shareholder and
no other  proceedings  on the part of GIC or any  SHAREHOLDER  are  necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.

      Section  3.5  No  Conflict  or  Violation.  The  execution,  delivery  and
performance  of this Agreement by GIC or any  SHAREHOLDER  does not and will not
violate or conflict with any provision of the constituent  documents of GIC, and
does not and will not violate any  provision  of law, or any order,  judgment or
decree of any court or other governmental or regulatory authority,  nor violate,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under or give to any other entity any right of  termination,  amendment,
acceleration or cancellation of any contract,  lease, loan agreement,  mortgage,
security  agreement,  trust  indenture or other agreement or instrument to which
GIC or any SHAREHOLDER is a party or by which it is bound or to which any of its
respective  properties  or assets is  subject,  nor  result in the  creation  or
imposition of any lien, charge or encumbrance of any kind whatsoever upon any of
the  properties  or  assets  of  GIC  or  any  SHAREHOLDER,  nor  result  in the
cancellation,  modification,  revocation  or  suspension of any of the licenses,
franchises, permits to which GIC or any SHAREHOLDER is bound.

      Section  3.6  Investment  Representations.  (a) The Dolce  Shares  will be
acquired  hereunder solely for the account of the SHAREHOLDERS,  for investment,
and not with a view to the  resale or  distribution  thereof.  Each  SHAREHOLDER
understands  and is  able  to bear  any  economic  risks  associated  with  such
SHAREHOLDER'S  investment in the Dolce  Shares.  Each  SHAREHOLDER  has had full
access  to  all  the  information  such  SHAREHOLDER   considers   necessary  or
appropriate  to make an informed  investment  decision with respect to the Dolce
Shares to be acquired under this Agreement.  Each SHAREHOLDER further has had an
opportunity  to ask  questions  and receive  answers from Dolce's sole  director
regarding  Dolce and to obtain  additional  information  (to the extent  Dolce's
director  possessed such  information  or could acquire it without  unreasonable
effort  or  expense)  necessary  to verify  any  information  furnished  to such
SHAREHOLDER or to which such  SHAREHOLDER had access.  Each  SHAREHOLDER , other
than a  SHAREHOLDER  which is also a  SHAREHOLDER  (as such term is  hereinafter
defined) is an "accredited  investor" (as such term is defined in Rule 501(a) of
Regulation D promulgated  by the Securities  and Exchange  Commission  under the
Securities Act).

      (b) No offer to enter into this Agreement has been made by Dolce to any of
the  SHAREHOLDERS in the United States.  At the times of the offer and execution
of this Agreement, each SHAREHOLDER was domiciled and resided outside the United
States.  No SHAREHOLDER,  nor any affiliate of any  SHAREHOLDER,  nor any person
acting on behalf of any  SHAREHOLDER  or any behalf of any such  affiliate,  has
engaged or will engage in any  activity  undertaken  for the purpose of, or that
reasonably could be expected to have the effect of,  conditioning the markets in
the United States for the Dolce Shares, including, but not limited to, effecting
any sale or short sale of securities through any SHAREHOLDER or any of affiliate
of any SHAREHOLDER prior to the expiration of any restricted period contained in
Regulation S  promulgated  under the  Securities  Act (any such  activity  being
defined herein as a "Directed Selling Effort"). To the best knowledge of each of



the SHAREHOLDERs,  this Agreement and the transactions  contemplated  herein are
not  part of a plan or  scheme  to  evade  the  registration  provisions  of the
Securities Act, and the Dolce Shares are being acquired for investment  purposes
by the SHAREHOLDERs.  Each SHAREHOLDER agrees that all offers and sales of Dolce
Shares from the date hereof and through  the  expiration  of the any  restricted
period set forth in Rule 903 of  Regulation  S (as the same may be amended  from
time to time hereafter)  shall not be made to U.S. Persons or for the account or
benefit of U.S.  Persons  and shall  otherwise  be made in  compliance  with the
provisions of Regulation S and any other applicable provisions of the Securities
Act.  Neither any SHAREHOLDER nor the  representatives  of any SHAREHOLDER  have
conducted any Directed  Selling  Effort as that term is used and defined in Rule
902 of Regulation S and no SHAREHOLDER nor any representative of any SHAREHOLDER
will engage in any such Directed Selling Effort within the United States through
the expiration of any restricted period set forth in Rule 903 of Regulation S.

      Section 3.7 Brokers'  Fees.  No  SHAREHOLDER  has any liability to pay any
fees or commissions or other consideration to any broker,  finder, or agent with
respect to the transactions contemplated by this Agreement.

      Section 3.8  Disclosure.  This  Agreement,  the  schedules  hereto and any
certificate  attached hereto or delivered in accordance with the terms hereby by
or on behalf of GIC or the  SHAREHOLDERS  in  connection  with the  transactions
contemplated by this Agreement,  when taken together,  do not contain any untrue
statement  of a material  fact or omit any material  fact  necessary in order to
make the statements contained herein and/or therein not misleading.

      Section 3.8 Survival. Each of the representations and warranties set forth
in  this  Article  III  shall  be  deemed  represented  and  made by GIC and the
SHAREHOLDERS  at the  Closing  as if made at such  time and  shall  survive  the
Closing for a period  terminating on the second  anniversary of the date of this
Agreement.

                                   ARTICLE IV

                                    COVENANTS

      Section 4.1 Certain Changes and Conduct of Business.

                  a.  From and after  the date of this  Agreement  and until the
            Closing  Date,  Dolce  shall  conduct  its  business  solely  in the
            ordinary  course  consistent  with past  practices  and, in a manner
            consistent  with all  representations,  warranties  or  covenants of
            Dolce, and without the prior written consent of GIC will not, except
            as required or permitted pursuant to the terms hereof:

                  i.    make  any   material   change  in  the  conduct  of  its
                        businesses   and/or   operations   or  enter   into  any
                        transaction   other  than  in  the  ordinary  course  of
                        business consistent with past practices;



                  ii.   make any  change in its  Articles  of  Incorporation  or
                        By-laws; issue any additional shares of capital stock or
                        equity securities or grant any option,  warrant or right
                        to acquire any  capital  stock or equity  securities  or
                        issue any security  convertible into or exchangeable for
                        its capital  stock or alter in any material  term of any
                        of its outstanding  securities or make any change in its
                        outstanding    shares   of   capital    stock   or   its
                        capitalization, whether by reason of a reclassification,
                        recapitalization,  stock split or combination,  exchange
                        or readjustment of shares, stock dividend or otherwise;

                  iii.  A.    incur,  assume or guarantee any  indebtedness  for
                              borrowed money, issue any notes, bonds, debentures
                              or other corporate securities or grant any option,
                              warrant or right to purchase any  thereof,  except
                              pursuant to transactions in the ordinary course of
                              business consistent with past practices; or

                        B.    issue any securities  convertible or  exchangeable
                              for debt or equity securities of Dolce;

                  iv.   make any  sale,  assignment,  transfer,  abandonment  or
                        other  conveyance  of  any  of its  assets  or any  part
                        thereof, except pursuant to transactions in the ordinary
                        course of business consistent with past practice;

                  v.    subject any of its assets,  or any part thereof,  to any
                        lien or suffer such to be imposed  other than such liens
                        as  may  arise  in  the  ordinary   course  of  business
                        consistent with past practices by operation of law which
                        will not have an Dolce Material Adverse Effect;

                  vi.   acquire any assets,  raw  materials  or  properties,  or
                        enter  into any  other  transaction,  other  than in the
                        ordinary   course  of  business   consistent  with  past
                        practices;

                  vii.  enter  into any new (or  amend  any  existing)  employee
                        benefit  plan,  program  or  arrangement  or any new (or
                        amend any existing) employment,  severance or consulting
                        agreement,   grant   any   general   increase   in   the
                        compensation  of officers or  employees  (including  any
                        such   increase   pursuant   to  any   bonus,   pension,
                        profit-sharing or other plan or commitment) or grant any
                        increase  in  the  compensation  payable  or  to  become
                        payable  to any  employee,  except  in  accordance  with
                        pre-existing  contractual  provisions or consistent with
                        past practices;



                  viii. make  or   commit   to   make   any   material   capital
                        expenditures;

                  ix.   pay, loan or advance any amount to, or sell, transfer or
                        lease any  properties  or assets  to, or enter  into any
                        agreement or arrangement with, any of its affiliates;

                  x.    guarantee  any  indebtedness  for borrowed  money or any
                        other obligation of any other person;

                  xi.   fail  to  keep  in  full  force  and  effect   insurance
                        comparable in amount and scope to coverage maintained by
                        it (or on behalf of it) on the date hereof;

                  xii.  take  any  other  action  that  would  cause  any of the
                        representations  and  warranties  made  by  it  in  this
                        Agreement not to remain true and correct in all material
                        aspect;

                  xiii. make any material loan, advance or capital  contribution
                        to or investment in any person;

                  xiv.  make any material  change in any method of accounting or
                        accounting principle, method, estimate or practice;

                  xv.   settle,  release or forgive any claim or  litigation  or
                        waive any right;

                  xvi.  commit itself to do any of the foregoing.

            b. From and after the date of this Agreement, GIC will:

                  1.    continue to  maintain,  in all  material  respects,  its
                        properties  in  accordance  with present  practices in a
                        condition suitable for its current use;

                  2.    file, when due or required,  federal, state, foreign and
                        other tax returns and other reports required to be filed
                        and pay when due all taxes, assessments,  fees and other
                        charges  lawfully levied or assessed  against it, unless
                        the  validity  thereof is contested in good faith and by
                        appropriate proceedings diligently conducted;

                  3.    continue to conduct its business in the ordinary  course
                        consistent with past practices;

                  4.    keep its  books of  account,  records  and  files in the
                        ordinary   course  and  in   accordance   with  existing
                        practices; and



                  5.    continue to  maintain  existing  business  relationships
                        with suppliers.

      Section 4.2 Access to  Properties  and Records.  GIC shall afford  Dolce's
accountants,  counsel and authorized representatives,  and Dolce shall afford to
GIC's  accountants,  counsel and authorized  representatives  full access during
normal  business  hours  throughout the period prior to the Closing Date (or the
earlier  termination  of this  Agreement)  to all of such  parties'  properties,
books, contracts, commitments and records and, during such period, shall furnish
promptly to the  requesting  party all other  information  concerning  the other
party's  business,   properties  and  personnel  as  the  requesting  party  may
reasonably  request,  provided that no  investigation  or receipt of information
pursuant to this Section 4.2 shall affect any  representation  or warranty of or
the conditions to the obligations of any party.

      Section 4.3 Negotiations. From and after the date hereof until the earlier
of the Closing or the termination of this Agreement,  no party to this Agreement
nor its officers or directors (subject to such director's  fiduciary duties) nor
anyone  acting  on  behalf  of any party or other  persons  shall,  directly  or
indirectly,  encourage,  solicit, engage in discussions or negotiations with, or
provide  any  information  to,  any  person,  firm,  or  other  entity  or group
concerning any merger, sale of substantial assets, purchase or sale of shares of
capital stock or similar transaction involving any party. A party shall promptly
communicate  to any other party any inquiries or  communications  concerning any
such transaction which they may receive or of which they may become aware of.

      Section   4.4    Consents    and    Approvals.    The    parties    shall:

                  i.    use their  reasonable  commercial  efforts to obtain all
                        necessary   consents,   waivers,    authorizations   and
                        approvals   of   all    governmental    and   regulatory
                        authorities,  domestic  and  foreign,  and of all  other
                        persons,  firms or  corporations  required in connection
                        with the execution,  delivery and performance by them of
                        this Agreement; and

                  ii.   diligently  assist  and  cooperate  with  each  party in
                        preparing  and  filing  all  documents  required  to  be
                        submitted by a party to any  governmental  or regulatory
                        authority,  domestic or foreign, in connection with such
                        transactions and in obtaining any governmental consents,
                        waivers,   authorizations  or  approvals  which  may  be
                        required  to  be  obtained   connection   in  with  such
                        transactions.

      Section 4.5 Public  Announcement.  Unless otherwise required by applicable
law, the parties  hereto shall consult with each other before  issuing any press
release or otherwise making any public statements with respect to this Agreement
and shall not issue any such  press  release or make any such  public  statement
prior to such consultation.

      Section  4.6 Stock  Issuance.  From and  after the date of this  Agreement
until the Closing Date,  neither Dolce nor GIC shall issue any additional shares
of its capital stock,  except that Dolce may issue up to an aggregate of 216,000
shares of Series B Stock to certain  investors  pursuant to the terms of a Stock
Purchase Agreement among Dolce, Dalian Fushi Bimetallic  Manufacturing Co., Ltd.
and the  investors  to be entered  into on the  Closing  Date,  a draft of which
agreement is attached hereto.



      Section 4.7 Notwithstanding  anything to the contrary contained herein, it
is  herewith  understood  and agreed  that both GIC and Dolce may enter into and
conclude  agreements and/or financing  transactions as same relate to and/or are
contemplated by any separate written  agreements  either:  (a) annexed hereto as
exhibits;  or (b)  entered  into by Dolce  with  GIC  executed  by both  parties
subsequent to the date hereof.  These Agreements shall become,  immediately upon
execution, part of this Agreement and subject to all warranties, representations
and conditions contained herein.

                                    ARTICLE V

                CONDITIONS TO OBLIGATIONS OF GIC AND SHAREHOLDERS

      The obligations of GIC and the SHAREHOLDERS to consummate the transactions
contemplated by this Agreement are subject to the fulfillment,  at or before the
Closing  Date,  of the  following  conditions,  any one or more of which  may be
waived by both GIC and the SHAREHOLDERS in their sole discretion:

      Section 5.1  Representations  and Warranties of Dolce. All representations
and warranties  made by Dolce in this Agreement shall be true and correct on and
as of the Closing Date as if again made by Dolce as of such date.

      Section 5.2  Agreements  and  Covenants.  Dolce shall have  performed  and
complied in all material  respects to all agreements  and covenants  required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.

      Section 5.3 Consents and Approvals. Consents, waivers,  authorizations and
approvals of any governmental or regulatory authority,  domestic or foreign, and
of any other  person,  firm or  corporation,  required  in  connection  with the
execution, delivery and performance of this Agreement shall be in full force and
effect on the Closing Date.

      Section 5.4 No Violation of Orders. No preliminary or permanent injunction
or other order  issued by any court or  governmental  or  regulatory  authority,
domestic or foreign,  nor any  statute,  rule,  regulation,  decree or executive
order  promulgated  or enacted by any government or  governmental  or regulatory
authority,  which declares this Agreement invalid in any respect or prevents the
consummation of the transactions  contemplated  hereby,  or which materially and
adversely affects the assets, properties,  operations,  prospects, net income or
financial  condition  of Dolce shall be in effect;  and no action or  proceeding
before any court or governmental or regulatory  authority,  domestic or foreign,
shall have been  instituted or threatened by any government or  governmental  or
regulatory  authority,  domestic or foreign,  or by any other person,  or entity
which  seeks  to  prevent  or  delay  the   consummation  of  the   transactions
contemplated   by  this   Agreement   or  which   challenges   the  validity  or
enforceability of this Agreement.



      Section 5.5 Other  Closing  Documents.  GIC shall have received such other
certificates,  instruments and documents in confirmation of the  representations
and warranties of Dolce or in furtherance of the  transactions  contemplated  by
this Agreement as GIC or its counsel may reasonably request.

                                   ARTICLE VI

                       CONDITIONS TO OBLIGATIONS OF DOLCE

      The  obligations of Dolce to consummate the  transactions  contemplated by
this Agreement are subject to the fulfillment, at or before the Closing Date, of
the following conditions, any one or more of which may be waived by Dolce in its
sole discretion:

      Section 6.1 Representations and Warranties of GIC. All representations and
warranties  made by GIC in this Agreement shall be true and correct on and as of
the Closing Date as if again made by GIC on and as of such date.

      Section  6.2  Agreements  and  Covenants.  GIC shall  have  performed  and
complied in all material  respects to all agreements  and covenants  required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.

      Section 6.3 Consents and Approvals. All consents, waivers,  authorizations
and approvals of any governmental or regulatory authority,  domestic or foreign,
and of any other person,  firm or  corporation,  required in connection with the
execution,  delivery and  performance  of this  Agreement,  shall have been duly
obtained and shall be in full force and effect on the Closing Date.

      Section 6.4 No Violation of Orders. No preliminary or permanent injunction
or  other  order  issued  by any  court  or  other  governmental  or  regulatory
authority,  domestic or foreign, nor any statute,  rule,  regulation,  decree or
executive  order  promulgated  or enacted by any government or  governmental  or
regulatory authority,  domestic or foreign, that declares this Agreement invalid
or  unenforceable  in any  respect or which  prevents  the  consummation  of the
transactions  contemplated hereby, or which materially and adversely affects the
assets, properties,  operations, prospects, net income or financial condition of
Dolce,  taken as a whole, shall be in effect; and no action or proceeding before
any court or government or regulatory authority, domestic or foreign, shall have
been  instituted or threatened by any government or  governmental  or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks to
prevent  or delay the  consummation  of the  transactions  contemplated  by this
Agreement or which challenges the validity or enforceability of this Agreement.

      Section 6.5. Other Closing Documents. Dolce shall have received such other
certificates,  instruments and documents in confirmation of the  representations
and warranties of GIC or in furtherance of the transactions contemplated by this
Agreement as Dolce or its counsel may reasonably request.



                                   ARTICLE VII

                           TERMINATION AND ABANDONMENT

      SECTION 7.1 Methods of  Termination.  This Agreement may be terminated and
the  transactions  contemplated  hereby may be  abandoned at any time before the
Closing:

                  a. By the  mutual  written  consent of  SHAREHOLDERS,  GIC and
                  Dolce;

                  b. By Dolce,  upon a  material  breach of any  representation,
                  warranty,  covenant  or  agreement  on the  part of GIC or the
                  SHAREHOLDERS   set  forth  in  this   Agreement,   or  if  any
                  representation  or warranty of GIC or the  SHAREHOLDERS  shall
                  become untrue,  in either case such that any of the conditions
                  set forth in Article VI hereof  would not be satisfied (a "GIC
                  Breach"),  and such breach shall,  if capable of cure, has not
                  been cured within ten (10) days after  receipt by the party in
                  breach of a notice from the non-breaching  party setting forth
                  in detail the nature of such breach;

                  c. By  GIC,  upon a  material  breach  of any  representation,
                  warranty, covenant or agreement on the part of Dolce set forth
                  in this Agreement,  or, if any  representation  or warranty of
                  Dolce shall become untrue, in either case such that any of the
                  conditions  set  forth  in  Article  V  hereof  would  not  be
                  satisfied  (a  "Dolce  Breach"),  and such  breach  shall,  if
                  capable  of cure,  not have been  cured  within  ten (10) days
                  after receipt by the party in breach of a written  notice from
                  the non-breaching  party setting forth in detail the nature of
                  such breach;

                  d. By  either  Dolce or GIC,  if the  Closing  shall  not have
                  consummated  before  ninety  (90) days after the date  hereof;
                  provided,  however,  that this  Agreement  may be  extended by
                  written  notice of either GIC or Dolce,  if the Closing  shall
                  not have been  consummated  as a result of Dolce or GIC having
                  failed  to  receive  all  required  regulatory   approvals  or
                  consents with respect to this  transaction or as the result of
                  the entering of an order as described in this  Agreement;  and
                  further  provided,  however,  that the right to terminate this
                  Agreement  under this Section 7.1(d) shall not be available to
                  any party whose failure to fulfill any obligations  under this
                  Agreement  has been the cause of, or resulted  in, the failure
                  of the Closing to occur on or before this date.

                  e. By either GIC or Dolce if a court of competent jurisdiction
                  or  governmental,   regulatory  or  administrative  agency  or
                  commission  shall  have  issued an order,  decree or ruling or
                  taken any other  action  (which  order,  decree or ruling  the
                  parties  hereto  shall use its best  efforts  to lift),  which
                  permanently  restrains,  enjoins or  otherwise  prohibits  the
                  transactions contemplated by this Agreement.



      Section 7.2 Procedure Upon  Termination.  In the event of termination  and
abandonment of this  Agreement by GIC or Dolce pursuant to Section 7.1,  written
notice thereof shall  forthwith be given to the other parties and this Agreement
shall  terminate and the  transactions  contemplated  hereby shall be abandoned,
without further action.  If this Agreement is terminated as provided herein,  no
party to this  Agreement  shall have any liability or further  obligation to any
other party to this Agreement;  provided,  however,  that no termination of this
Agreement  pursuant to this Article VII shall relieve any party of liability for
a breach of any provision of this Agreement occurring before such termination.

                                  ARTICLE VIII

                             POST-CLOSING AGREEMENTS

      Section 8.1 Consistency in Reporting. Each party hereto agrees that if the
characterization  of any  transaction  contemplated  in  this  agreement  or any
ancillary  or  collateral  transaction  is  challenged,  each party  hereto will
testify,  affirm  and  ratify  that the  characterization  contemplated  in such
agreement was the  characterization  intended by the party;  provided,  however,
that nothing  herein shall be construed as giving rise to any  obligation if the
reporting position is determined to be incorrect by final decision of a court of
competent jurisdiction.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

      Section  9.1  Survival  of  Provisions.  The  respective  representations,
warranties,  covenants and  agreements of each of the parties to this  Agreement
(except  covenants and agreements  which are expressly  required to be performed
and are  performed  in full on or before the  Closing  Date)  shall  survive the
Closing  Date and the  consummation  of the  transactions  contemplated  by this
Agreement, subject to Sections 2.9, 3.8 and 8.2. In the event of a breach of any
of such  representations,  warranties  or  covenants,  the  party  to whom  such
representations,  warranties  or covenants  have been made shall have all rights
and  remedies  for such  breach  available  to it under the  provisions  of this
Agreement  or  otherwise,  whether  at  law  or in  equity,  regardless  of  any
disclosure to, or investigation  made by or on behalf of such party on or before
the Closing Date.

      Section 9.2 Publicity.  No party shall cause the  publication of any press
release or other announcement with respect to this Agreement or the transactions
contemplated  hereby  without the consent of the other  parties,  unless a press
release or  announcement  is required by law. If any such  announcement or other
disclosure  is  required  by law,  the  disclosing  party  agrees  to  give  the
non-disclosing  parties  prior  notice  and an  opportunity  to  comment  on the
proposed disclosure.



      Section 9.3  Successors  and Assigns.  This  Agreement  shall inure to the
benefit  of, and be  binding  upon,  the  parties  hereto  and their  respective
successors  and  assigns;  provided,  however,  that no party  shall  assign  or
delegate any of the obligations  created under this Agreement  without the prior
written consent of the other parties.

      Section 9.4 Fees and Expenses.  Except as otherwise  expressly provided in
this  Agreement,  all legal and other  fees,  costs  and  expenses  incurred  in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs or expenses.

      Section 9.5 Notices.  All notices and other  communications  given or made
pursuant  hereto  shall be in writing  and shall be deemed to have been given or
made if in writing and  delivered  personally or sent by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses:

      If to GIC or the SHAREHOLDERS, to:

      _________________________

      with a copy to:

      Guzov Ofsink, LLC
      600 Madison Avenue, 14th Floor
      New York, New York 10022
      Attn: Darren Ofsink, Esq.
      Fax: 212-688-7273

      If to Dolce, to:

      Dolce Ventures, Inc.

or to such other persons or at such other addresses as shall be furnished by any
party by like notice to the others,  and such notice or  communication  shall be
deemed to have been  given or made as of the date so  delivered  or  mailed.  No
change in any of such addresses shall be effective insofar as notices under this
Section 9.5 are concerned  unless such changed  address is located in the United
States of America and notice of such change  shall have been given to such other
party hereto as provided in this Section 9.5



      Section 9.6 Entire Agreement.  This Agreement,  together with the exhibits
hereto,  represents the entire  agreement and  understanding of the parties with
reference  to the  transactions  set  forth  herein  and no  representations  or
warranties  have been made in connection  with this  Agreement  other than those
expressly set forth herein or in the exhibits,  certificates and other documents
delivered  in  accordance   herewith.   This  Agreement   supersedes  all  prior
negotiations, discussions,  correspondence,  communications,  understandings and
agreements  between the parties relating to the subject matter of this Agreement
and all  prior  drafts of this  Agreement,  all of which  are  merged  into this
Agreement.  No prior drafts of this  Agreement  and no words or phrases from any
such  prior  drafts  shall be  admissible  into  evidence  in any action or suit
involving this Agreement.

      Section 9.7 Severability.  This Agreement shall be deemed  severable,  and
the  invalidity or  unenforceability  of any term or provision  hereof shall not
affect the validity or  enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision,  the parties  hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or  unenforceable
provision as may be possible so as to be valid and enforceable.

      Section  9.8  Titles  and  Headings.  The  Article  and  Section  headings
contained in this  Agreement are solely for  convenience  of reference and shall
not affect the meaning or  interpretation  of this  Agreement  or of any term or
provision hereof.

      Section 9.9  Counterparts.  This  Agreement may be executed in two or more
counterparts,  each of  which  shall  be  deemed  an  original  and all of which
together shall be considered one and the same agreement.

      Section 9.10 Convenience of Forum; Consent to Jurisdiction. The parties to
this Agreement,  acting for themselves and for their  respective  successors and
assigns, without regard to domicile,  citizenship or residence, hereby expressly
and  irrevocably  elect as the sole judicial forum for the  adjudication  of any
matters  arising under or in  connection  with this  Agreement,  and consent and
subject  themselves to the  jurisdiction of, the courts of the State of New York
located in County of New York,  and/or the United States  District Court for the
Southern  District  of New York,  in respect of any  matter  arising  under this
Agreement.  Service of  process,  notices and demands of such courts may be made
upon any party to this  Agreement by personal  service at any place where it may
be found or giving notice to such party as provided in Section 9.5.

      Section 9.11  Enforcement of the Agreement.  The parties hereto agree that
irreparable  damage would occur if any of the  provisions of this Agreement were
not  performed  in  accordance  with  their  specific  terms  or were  otherwise
breached.  It is  accordingly  agreed that the  parties  shall be entitled to an
injunction or injunctions  to prevent  breaches of this Agreement and to enforce
specifically  the terms and  provisions  hereto,  this being in  addition to any
other remedy to which they are entitled at law or in equity.

      Section  9.12  Governing  Law.  This  Agreement  shall be  governed by and
interpreted  and enforced in  accordance  with the laws of the State of New York
without giving effect to the choice of law provisions thereof.



      Section 9.13 Amendments and Waivers. No amendment of any provision of this
Agreement  shall be valid  unless the same shall be in writing and signed by all
of  the   parties   hereto..   No   waiver   by  any   party  of  any   default,
misrepresentation,   or  breach  of  warranty  or  covenant  hereunder,  whether
intentional  or not,  shall be  deemed  to  extend  to any  prior or  subsequent
default,  misrepresentation,  or breach of  warranty or  covenant  hereunder  or
affect in any way any rights  arising by virtue of any prior or subsequent  such
occurrence.

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

DOLCE VENTURES, INC.

By:____________________

Title:

GAS INVESTMENT CHINA CO., LTD.

By: ________________________

Title:

SHAREHOLDERS: See Exhibit A



                                    EXHIBIT A

     Name                  Number of GIC Shares           Number of Dolce Shares
of SHAREHOLDER               Being Exchanged                  to be Received
- --------------               ---------------                  --------------

EX-10.2

                            STOCK PURCHASE AGREEMENT

      This Stock Purchase  Agreement (this "Agreement") is made and entered into
as of August  24,  2006 by and  among  the  persons  listed  under  the  heading
"Shareholders"  on the signature page hereto  (collectively,  the "Sellers") and
Gas  Investment  China  Co.,  Ltd.,  a company  organized  under the laws of the
British Virgin Islands("Purchaser").

      WHEREAS,  Sellers are the sole record and beneficial owners of Seventy Two
Million Five Hundred Sixty Nine Thousand  Seven Hundred Sixty Four  (72,569,764)
shares of $.001 par value per share common stock of Dolce Ventures, Inc., a Utah
corporation  (the "Company") and wish to sell all of those shares (the "Stock");
and

      WHEREAS, Purchaser wishes to purchase Stock from Sellers in a private sale
that is not part of a distribution or public offering;

      NOW, THEREFORE, in the parties hereto agree as follows:

1.    Agreement to Purchase  and Sell the Stock.  Sellers will sell to Purchaser
      and  Purchaser  agrees to purchase  the Stock for a purchase  price of Six
      Hundred Seventy Five Thousand Dollars ($675,000)(the  "Purchase Price") in
      a  private  sale  exempt  from  registration  under  Section  4(1)  of the
      Securities Act of 1933, as amended (the "Act").

2.    Closing And Payment.  Subject to the terms and conditions  hereof,  and in
      reliance  upon the written  representations  and  warranties of Purchaser,
      Sellers will sell and, subject to the terms and conditions  hereof, and in
      reliance  upon the  written  representations  and  warranties  of Sellers,
      Purchaser will purchase, at a single closing, the Stock. The closing shall
      be held on September 7, 2006,  or such other date as the Parties may agree
      (the "Closing  Date"),  at the offices of Guzov  Ofsink,  LLC, 600 Madison
      Avenue,  14th  Floor,  New York,  new York 10022 (the  "Closing").  At the
      Closing,  Sellers will deliver to Purchaser  original  stock  certificates
      evidencing  the Stock to be purchased  hereunder,  along with stock powers
      executed  in blank.  At the  Closing,  Purchaser  will  deliver  to Joseph
      Passalaqua,  as  agent  for  all  Sellers,  the  Purchase  Price,  by wire
      transfer, cashier's check, or by such other means as the parties may agree
      upon in writing.

3.    Representations  and Warranties of Sellers.  Sellers hereby  represent and
      warrant to Purchaser  that the  statements in the following  paragraphs of
      this Section 3 are all true and  complete as of the date hereof,  and will
      be true and complete as of the Closing Date as if first made on such date.

      3.1   Authority;  Due  Authorization.  This  Agreement  has been  duly and
            validly  executed and  delivered by Sellers,  and upon the execution
            and delivery by Purchaser of this  Agreement and the  performance by
            Purchaser of its obligations herein, will constitute, a legal, valid
            and binding  obligation of Sellers  enforceable  against  Sellers in
            accordance with its terms, except as such enforcement may be limited
            by bankruptcy or insolvency laws or other laws affecting enforcement
            of creditors' rights or by general principles of equity.


                                       1


      3.2   No  Conflicts.  The  execution  and  delivery  by  Sellers  of  this
            Agreement  does  not,  and  the  performance  by  Sellers  of  their
            obligations  under  this  Agreement  and  the  consummation  of  the
            transactions  contemplated  hereby will not, conflict with or result
            in a  violation  or  breach  of  any  of the  terms,  conditions  or
            provisions of any other agreement to which Sellers are a party.

      3.3   Title to  Securities.  Sellers  are the sole  record and  beneficial
            owner  of  the  Stock  and  have  sole  managerial  and  dispositive
            authority  with  respect to the Stock.  Sellers have not granted any
            person a proxy with  respect  to the Stock  that has not  expired or
            been  validly  withdrawn.  The sale  and  delivery  of the  Stock to
            Purchaser  pursuant to this Agreement  will vest in Purchaser  legal
            and valid title to the Stock, free and clear of all liens,  security
            interests,  adverse  claims or other  encumbrances  of any character
            whatsoever  ("Encumbrances")  (other  than  Encumbrances  created by
            Purchaser and restrictions on resales of the Shares under applicable
            securities laws).

      3.4   Valid  Issuance.  The Common Stock being  purchased by the Purchaser
            hereunder is, and shall be at the Closing,  duly and validly issued,
            fully paid, and non-assessable and in each instance have been issued
            in  accordance  with the  registration  requirements  of  applicable
            securities laws, including,  without limitation,  the Securities Act
            of 1933, as amended (the "Act"), or valid exemptions therefrom.

      3.5   Corporate  Documents.  Copies of the Company's  current  articles of
            incorporation,  all amendments  thereto,  and bylaws, as of the date
            hereof,  other than a  Certificate  of  Correction  filed in August,
            2006,  have been filed as exhibits  to the  Company's  reports  (the
            "Filings") with the Securities and Exchange Commission ("SEC").

      3.6   The Company.  The Company,  and its  subsidiaries,  are corporations
            duly  incorporated,  validly existing and in good standing under the
            laws of its jurisdiction of incorporation.

      3.7   Capitalization of the Company. Immediately prior to the Closing, the
            authorized  capital stock of the Company shall consist of a total of
            250,000,000  (two hundred  fifty  million)  shares of Common  Stock,
            $.001 par value (the "Common  Stock"),  and 100,000,000 (one hundred
            million)  shares of Preferred  Stock,  $.001 par value.  Immediately
            prior to the  Closing  there  will be no shares of  preferred  stock
            outstanding  and no more than  100,770,140  shares  of Common  Stock
            outstanding.  There are no  commitments  to issue,  and there are no
            outstanding  warrants,  options,  convertible  securities  or  debt,
            preferred stock, or any other securities.  In addition, there are no
            conversion  or  exchange  privileges,  preemptive  rights,  or other
            rights or agreements  to purchase or otherwise  acquire or issue any
            securities   of  the   Company,   and  there  is  no   agreement  or
            understanding between any persons and/or entities,  which affects or
            relates to the voting or giving of written  consents with respect to
            any  security  of  the  Company  or  any   instrument   or  security
            exercisable or exchangeable for, or convertible into any security of
            the Company.


                                       2


      3.8   Subsidiaries.  Other than as set forth in the  Filings,  the Company
            does not own,  directly or  indirectly,  any capital  stock or other
            equity  securities of any other  corporation,  partnership,  limited
            liability  company,  association or other business entity other than
            as set forth in the Filings. The Company is not a participant in any
            joint venture, partnership or similar arrangement.

      3.9   Financial  Statements.  The Company's financial statements contained
            in its Filings (the  "Financial  Statements")  have been prepared in
            accordance with U.S. GAAP applied on a consistent  basis  throughout
            the periods indicated and with each other, except that the unaudited
            Financial  Statements do not contain all footnotes  required by U.S.
            GAAP.  The  Financial   Statements   fairly  present  the  financial
            condition and operating  results of the Company as of the dates, and
            for the periods, indicated therein, subject to normal year-end audit
            adjustments.  Except as set forth in the Financial  Statements,  the
            Company has no material liabilities  (contingent or otherwise).  The
            Company is not a guarantor or indemnitor of any  indebtedness of any
            other person,  firm or corporation.  The Company  maintains and will
            continue to maintain a standard system of accounting established and
            administered in accordance with U.S. GAAP until Closing.

      3.10  No  Conflicts.  Neither  the  Company,  nor  any  subsidiary,  is in
            violation of, in conflict with, in breach of or in default under any
            term or  provision  of,  and no  right of any  party to  accelerate,
            terminate,  modify or cancel has come into existence  under, (i) its
            articles of incorporation or by-laws (each as may have been amended,
            supplemented or restated), (ii) any provision of any judgment, writ,
            injunction,  decree or order to which the any of them is a party; or
            (iii) any law,  statute,  rule or  regulation  applicable  to any of
            them.

      3.11  Litigation.  There is no action,  suit,  proceeding or investigation
            pending or, to the best knowledge of Sellers,  currently  threatened
            against the Company or any  subsidiary  that may affect the validity
            of this  Agreement  or the right of the  Sellers  to enter into this
            Agreement or to consummate  the  transactions  contemplated  hereby.
            There is no action, suit, proceeding or investigation pending or, to
            the best  knowledge  of Sellers,  currently  threatened  against the
            Company  or its  subsidiaries,  before any court or by or before any
            governmental body or any arbitration board or tribunal, nor is there
            any judgment, decree, injunction or order of any court, governmental
            department,   commission,   agency,  instrumentality  or  arbitrator
            against the Company or any of its subsidiaries.  The Company and its
            subsidiaries  are not a party or  subject to the  provisions  of any
            order,  writ,  injunction,  judgment  or  decree  of  any  court  or
            government  agency or  instrumentality.  There is no  action,  suit,
            proceeding  or  investigation  by  the  Company  or  any  subsidiary
            currently pending or which the Company intends to initiate. When any
            reference to the  "knowledge" or "best  knowledge" of the Company or
            Sellers  is  made in this  Agreement,  such  terms  shall  mean  the
            knowledge  that would be gained  from due  inquiry  into the matters
            referenced.


                                       3


      3.12  Brokers'  Fees and  Commissions.  Neither the Company nor any of its
            officers,   directors,    employees,    stockholders,    agents   or
            representatives,  nor Seller have  employed any  investment  banker,
            broker,  or finder in connection with the transactions  contemplated
            by this  Agreement and no such person or entity is entitled to a fee
            with respect to the  transactions  contemplated  by this  Agreement,
            except that Sellers are  obligated to pay a commission of $75,000 to
            Belmont Partners, LLC from the Purchase Price.

      3.13  Securities  Laws.  The Company has  complied  in all  respects  with
            applicable federal and state securities laws, rules and regulations,
            including the Sarbanes  Oxley Act of 2002,  as such laws,  rules and
            regulations apply to the Company and its securities;  and all shares
            of capital stock of the Company have been issued in accordance  with
            applicable federal and state securities laws, rules and regulations.
            There  are no stop  orders  in  effect  with  respect  to any of the
            Company's securities.

      3.14  Books and Financial  Records.  All the accounts,  books,  registers,
            ledgers,  Board minutes and financial and other material  records of
            whatsoever  kind of each of the  Company and its  subsidiaries  have
            been fully properly and accurately kept and completed;  there are no
            material  inaccuracies  or  discrepancies  of any kind  contained or
            reflected therein; and they give and reflect a true and fair view of
            the financial, contractual and legal position of each company.

      3.15  Employee  Benefit  Plans.  The Company  does not have any  "Employee
            Benefit  Plan" as defined  in the U.S.  Employee  Retirement  Income
            Security Act of 1974 or similar plans under applicable laws.

      3.16  Tax  Returns,  Payments and  Elections.  Each of the Company and its
            subsidiaries  has timely filed all Tax (as defined  below)  returns,
            statements,  reports,  declarations  and other  forms and  documents
            (including,  without  limitation,  estimated Tax returns and reports
            and  material  information  returns  and  reports)  ("Tax  Returns")
            required  pursuant  to  applicable  law to be  filed  with  any  Tax
            Authority  (as defined  below),  all such Tax Returns are  accurate,
            complete  and  correct  in all  material  respects,  and each  Group
            Company has timely  paid all Taxes due.  Each of the Company and its
            subsidiaries  has  withheld or  collected  from each payment made to
            each of its employees,  the amount of all Taxes (including,  but not
            limited to,  United  States  income taxes and other  foreign  taxes)
            required  to be withheld or  collected  therefrom,  and has paid the
            same to the proper Tax  Authority.  For purposes of this  Agreement,
            the following  terms have the following  meanings:  "Tax" (and, with
            correlative meaning,  "Taxes" and "Taxable") means any and all taxes
            including,  without limitation,  (i) any net income,  alternative or
            add-on minimum tax, gross income,  gross  receipts,  sales,  use, ad
            valorem,  transfer,  franchise,  profits,  value  added,  net worth,
            license, withholding, payroll, employment, excise, severance, stamp,
            occupation, premium, property, environmental or windfall profit tax,
            custom, duty or other tax, governmental fee or other like assessment
            or charge of any kind whatsoever,  together with any interest or any
            penalty,  addition to tax or additional amount imposed by any United
            States, local or foreign  governmental  authority or regulatory body
            responsible for the imposition of any such tax (domestic or foreign)
            (a "Tax  Authority"),  (ii) any  liability  for the  payment  of any
            amounts of the type  described  in (i) as a result of being a member
            of an  affiliated,  consolidated,  combined or unitary group for any
            taxable  period or as the result of being a transferee  or successor
            thereof  and (iii) any  liability  for the payment of any amounts of
            the type  described  in (i) or (ii) as a result  of any  express  or
            implied obligation to indemnify any other person.


                                       4


      3.17  Minute  Books.  The  minute  books  of each of the  Company  and its
            subsidiaries contain a complete summary of all meetings of directors
            and stockholders since the time of incorporation of such company and
            reflect all transactions  referred to in such minutes  accurately in
            all material respects.

      3.18  Labor  Agreements and Actions;  Employee  Compensation.  Neither the
            Company,  nor any of its subsidiaries is bound by or subject to (and
            none of its  assets or  properties  is bound by or  subject  to) any
            written  or  oral,  express  or  implied,  contract,  commitment  or
            arrangement  with any labor union,  and no labor union has requested
            or has sought to represent any of the employees,  representatives or
            agents of any such company.

      3.19  Investment Company.  The Company is not an "investment company" or a
            company "controlled" by an "investment  company," within the meaning
            of the Investment Company Act of 1940, as amended.

      3.20  `34 Act Reports.  To the best knowledge of the Sellers,  none of the
            Company's  Flings,  contains any untrue statement of a material fact
            or omits to state a material fact  necessary to make the  statements
            therein not misleading,  in light of the circumstances in which they
            were made.

      3.21  Material  Agreements.  The Company is not a party to or bound by any
            contracts, including, but not limited to:


                                       5


            3.21.1 employment, advisory or consulting contract;

            3.21.2 plan providing for employee benefits of any nature;

            3.21.3 lease with respect to any property or equipment;

            3.21.4 contract,  agreement,  understanding  or  commitment  for any
                  future expenditure in excess of $1,000 in the aggregate;

            3.21.5 contract  or  commitment  pursuant  to which it has  assumed,
                  guaranteed,  endorsed,  or  otherwise  become  liable  for any
                  obligation of any other person, entity or organization;

            3.21.6 agreement with any person relating to the dividend,  purchase
                  or sale  of  securities,  that  has not  been  settled  by the
                  delivery or payment of securities  when due, and which remains
                  unsettled upon the date of the Agreement.

      3.22  No  Disagreements  with  Accountants  and  Lawyers.   There  are  no
            disagreements  of  any  kind  presently   existing,   or  reasonably
            anticipated  by the Company to arise,  between the  accountants  and
            lawyers formerly or presently  employed by the Company.  The Company
            is current with respect to fees owed to its accountants and lawyers.

4.    Representations  and Warranties of Purchaser.  Purchaser hereby represents
      and warrants to Sellers that the statements in the following paragraphs of
      this Section 4 are all true and complete as of the date hereof:

      4.1   Exempt Transaction. Purchaser understands that the offering and sale
            of the Stock is intended to be exempt  from  registration  under the
            Act and exempt from  registration or  qualification  under any state
            law.

      4.2   Authorization.  Purchaser  represents  that it has  full  power  and
            authority to enter into this Agreement. This Agreement has been duly
            and  validly  executed  and  delivered  by  Purchaser,  and upon the
            execution  and  delivery  by  Sellers  of  this  Agreement  and  the
            performance by Sellers of their obligations herein, will constitute,
            a legal,  valid and  binding  obligation  of  Purchaser  enforceable
            against  Purchaser  in  accordance  with its  terms,  except as such
            enforcement may be limited by bankruptcy or insolvency laws or other
            laws  affecting  enforcement  of  creditors'  rights  or by  general
            principles of equity.

      4.3   Purchase  for Own  Account.  The Stock to be  purchased by Purchaser
            hereunder  will be  acquired  for  investment  for  Purchaser's  own
            account,  not as a  nominee  or  agent,  and not  with a view to the
            public resale or distribution  thereof, and Purchaser has no present
            intention of selling,  granting any  participation  in, or otherwise
            distributing the same.


                                       6


      4.4   Investment  Experience.  The Purchaser understands that the purchase
            of the Stock involves substantial risk.

5.    Conditions to Purchaser's Obligations at the Closing.

      5.1   Conditions  to  Each  Closing.  Subject  to the  terms  hereof,  the
            obligation  of the Purchaser to purchase the Stock at the Closing is
            subject to the fulfillment, prior to the Closing to the satisfaction
            of the Purchaser,  of the following conditions,  the waiver of which
            shall not be effective  against  Purchaser  without  written consent
            thereto:

            5.1.1 Representations   and   Warranties   True  and  Correct.   The
                  representations  and  warranties  made by Sellers in Section 3
                  hereof  shall be true and correct and  complete as of the date
                  hereof,  and shall be true and correct and  complete as of the
                  date of the Closing  with the same force and effect as if they
                  had been made on and as of such date.

            5.1.2 Performance of  Obligations.  The Sellers shall have performed
                  and complied with all  agreements,  obligations and conditions
                  contained in this  Agreement that are required to be performed
                  or complied with by it on or before the Closing.

            5.1.3 Securities  Laws.  The  offer  and  sale of the  Stock  to the
                  Purchaser  pursuant to this Agreement shall be exempt from the
                  registration   and/or   qualification   requirements   of  all
                  applicable securities laws.

            5.1.4 Change in Board of Directors and Management. The Sellers shall
                  cause (i) the  current  members of the Board of  Directors  to
                  appoint  Purchaser's  appointees  to the  Board  and to resign
                  their positions on the Company's  Board,  and (ii) the current
                  officers of the Company to resign their  positions as officers
                  of the Company.

            5.1.5 Assumption  of  Liabilities.  Sellers shall cause Pegasus Tel,
                  Inc. ("Pegasus") to assume all liabilities of the Company, and
                  with respect to any liability as of the Closing Date,  whether
                  contingent  or  otherwise,  which was not  assumed  or paid by
                  Pegasus (collectively "Liabilities"), the Sellers hereby agree
                  to  indemnify,  defend  and hold  harmless  Purchaser  and the
                  Company from and against any and all claims,  expenses  and/or
                  losses  which may be incurred by the Company or  Purchaser  in
                  connection with a Liability.

            5.1.6 Spinoff.  Sellers  shall  cause the  Company  and its Board of
                  Directors to pass such  resolutions as may be necessary to set
                  a record date for a spinoff of Pegasus which shall be no later
                  than October 15, 2006 and to authorize a spinoff of Pegasus to
                  the  shareholders  of the Company in accordance with SEC Staff
                  Legal  Bulletin No. 4 dated  September 16, 1997 and such other
                  laws and regulations as may be applicable to such  transaction
                  (the "Spinoff").


                                       7


6.    Conditions to Sellers' Obligations at the Closing.

      6.1   The  obligations of the Sellers under this Agreement with respect to
            the Investor are subject to the fulfillment at or before the Closing
            of the following conditions:

            6.1.1 Representations   and  Warranties.   The  representations  and
                  warranties  of the  Purchaser  contained  in  Section 4 hereof
                  shall be true and correct as of such Closing.

            6.1.2 Payment of Purchase  Price.  Purchaser shall have delivered to
                  the Sellers the Purchase Price.

7.    Seller's Covenants.

      7.1   Spinoff.  By November 15, 2006,  Sellers  shall have taken all steps
            necessary to effect the Spinoff and Sellers  hereby agree to pay all
            expenses necessary to effect the Spinoff, including, but not limited
            to,  attorney's  fees,  transfer  agent  fees  and  filing  fees and
            expenses.  Purchaser  agrees to cause the  Company  to  provide  any
            assistance  reasonably  necessary to effect the Spinoff which cannot
            be performed by Pegasus or Sellers; provided,  however, that neither
            Purchaser  nor the  Company  shall  have any  obligation  to pay any
            monies to accomplish the Spinoff.

8.    Indemnification.

      8.1   Sellers shall indemnify and hold  Purchasers,  the Company and their
            affiliates,  officers, directors,  employees, agents, successors and
            assigns  harmless  from  and  against  any  claim,   action,   suit,
            proceeding,  loss, liability, damage or expense (including,  without
            limitation,  reasonable  attorneys'  fees),  directly or  indirectly
            arising from or related to any breach by Sellers of this  Agreement,
            including, but not limited to, Sellers' representations,  warranties
            or covenants  hereunder.  Each Seller's  liability  pursuant to this
            indemnification  provision shall be apportioned  based on the number
            of Shares  sold to  Purchaser  as  compared  to the total  number of
            Shares sold to Purchaser.

      8.2   Purchaser shall indemnify and hold Sellers harmless from and against
            any claim,  action, suit,  proceeding,  loss,  liability,  damage or
            expense (including, without limitation,  reasonable attorneys' fees)
            directly  or  indirectly  arising  from or  related to any breach by
            Purchaser  of  this  Agreement,   including,  but  not  limited  to,
            Purchaser's representations, warranties or covenants hereunder.


                                       8


9.    General Provisions.

      9.1   Successors  and Assigns.  The terms and conditions of this Agreement
            shall  inure to the  benefit of and be binding  upon the  respective
            successors and assigns of the parties.

      9.2   Governing Law; Jurisdiction. Any dispute, disagreement,  conflict of
            interpretation   or  claim  arising  out  of  or  relating  to  this
            Agreement, or its enforcement,  shall be governed by the laws of the
            State of New York.  Sellers and  Purchaser  hereby  irrevocably  and
            unconditionally  submit,  for themselves and their property,  to the
            nonexclusive  jurisdiction  of the Supreme Court of the State of New
            York  sitting in New York County and of the United  States  District
            Court of the Southern  District of New York, and any appellate court
            from any  thereof,  in any action or  proceeding  arising  out of or
            relating to this Agreement, or for recognition or enforcement of any
            judgment,  and each of the parties  hereto  hereby  irrevocably  and
            unconditionally agrees that all claims in respect of any such action
            or proceeding may be heard and determined in such New York State or,
            to the extent  permitted by law, in such Federal court.  Each of the
            parties  hereto  agrees that a final  judgment in any such action or
            proceeding  shall  be  conclusive  and  may  be  enforced  in  other
            jurisdictions  by  suit  on  the  judgment  or in any  other  manner
            provided by law. Each party hereby  irrevocably and  unconditionally
            waives,  to the fullest extent it may legally and effectively do so,
            any  objection  which it may now or hereafter  have to the laying of
            venue of any suit,  action or proceeding  arising out of or relating
            to this  Agreement  in any  court  referred  to  above.  Each of the
            parties  hereto hereby  irrevocably  waives,  to the fullest  extent
            permitted  by law,  the  defense  of an  inconvenient  forum  to the
            maintenance  of such action or  proceeding  in any such court.  Each
            party to this Agreement  irrevocably  consents to service of process
            in the manner provided for notices below.  Nothing in this Agreement
            will  affect  the  right  of any  party to this  Agreement  to serve
            process in any other  manner  permitted  by law.  EACH PARTY  HERETO
            HEREBY WAIVES,  TO THE FULLEST EXTENT  PERMITTED BY APPLICABLE  LAW,
            ANY  RIGHT IT MAY HAVE TO A TRIAL  BY JURY IN ANY  LEGAL  PROCEEDING
            DIRECTLY OR INDIRECTLY  ARISING OUT OF OR RELATING TO THIS AGREEMENT
            OR THE TRANSACTIONS  CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
            TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
            REPRESENTATIVE,   AGENT  OR   ATTORNEY   OF  ANY  OTHER   PARTY  HAS
            REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT SUCH OTHER PARTY WOULD
            NOT,  IN THE EVENT OF  LITIGATION,  SEEK TO  ENFORCE  THE  FOREGOING
            WAIVER AND (B)  ACKNOWLEDGES  THAT IT AND THE OTHER  PARTIES  HERETO
            HAVE BEEN  INDUCED  TO ENTER INTO THIS  AGREEMENT  BY,  AMONG  OTHER
            THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


                                       9


      9.3   Counterparts.  This  Agreement  may  be  executed  in  two  or  more
            counterparts,  each of which shall be deemed an original, but all of
            which  together  shall  constitute  one and the  same  agreement.  A
            telefaxed copy of this Agreement shall be deemed an original.

      9.4   Headings.  The headings and captions used in this Agreement are used
            for  convenience  only and are not to be considered in construing or
            interpreting  this  Agreement.  All  references in this Agreement to
            sections, paragraphs, exhibits and schedules shall, unless otherwise
            provided,  refer to sections and paragraphs  hereof and exhibits and
            schedules  attached hereto,  all of which exhibits and schedules are
            incorporated herein by this reference.

      9.5   Costs,  Expenses.  Each  party  hereto  shall  bear its own costs in
            connection  with the  preparation,  execution  and  delivery of this
            Agreement.

      9.6   Amendments  and Waivers.  Any term of this  Agreement may be amended
            and the  observance  of any  term of this  Agreement  may be  waived
            (either   generally   or  in  a   particular   instance  and  either
            retroactively  or  prospectively),  only with the written consent of
            Sellers and the  Purchaser.  No delay or  omission  to exercise  any
            right,  power,  or remedy  accruing to  Purchaser,  upon any breach,
            default or  noncompliance  of Sellers  under  this  Agreement  shall
            impair any such right,  power, or remedy,  nor shall it be construed
            to be a waiver of any such breach, default or noncompliance,  or any
            acquiescence   therein,  or  of  any  similar  breach,   default  or
            noncompliance thereafter occurring. All remedies,  either under this
            Agreement,  by law, or  otherwise  afforded to  Purchaser,  shall be
            cumulative and not alternative.

      9.7   Severability.  If one or more  provisions of this Agreement are held
            to be unenforceable under applicable law, such provision(s) shall be
            excluded from this Agreement and the balance of the Agreement  shall
            be interpreted as if such provision(s) were so excluded and shall be
            enforceable in accordance with its terms.

      9.8   Entire  Agreement.  This  Agreement,  together with all exhibits and
            schedules hereto, constitutes the entire agreement and understanding
            of the  parties  with  respect  to the  subject  matter  hereof  and
            supersedes   any  and  all   prior   negotiations,   correspondence,
            agreements, understandings duties or obligations between the parties
            with respect to the subject matter hereof.

      9.9   Further Assurances.  From and after the date of this Agreement, upon
            the request of the Purchaser or Sellers, Purchaser and Sellers shall
            execute and deliver such instruments, documents or other writings as
            may be  reasonably  necessary  or desirable to confirm and carry out
            and to effectuate fully the intent and purposes of this Agreement.


                                       10


      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the date first written above.

GAS INVESTMENT CHINA CO., LTD.

By:____________________________

Title:_________________________

SHAREHOLDERS:

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                                       11

EX-10.3

                              CONSULTING AGREEMENT

      This Consulting  Agreement (this  "Agreement")  dated as of August 8, 2006
(the "Effective Date"), is by and between Kuhns Brothers,  Inc., with offices at
The Farm House, 558 Lime Rock Road, Lime Rock,  Connecticut 06039 ("Consultant")
and Dolce Ventures, Inc., a Utah corporation,  with offices at 118 Chatham Road,
Syracuse, New York 13203 (the "Company").

                                    RECITALS

      A. The Company  desires to retain the Consultant for the term set forth in
this  Agreement  to assure  itself of the  services of the  Consultant,  and the
Consultant  is willing to be  retained  by the Company for the term on the terms
and conditions set forth below.

      B. The Consultant desires to provide the services under this Agreement and
represents that he is qualified to perform such services.

      NOW,  THEREFORE,  in consideration  of the mutual promises,  covenants and
agreements hereinafter set forth, the parties agree as follows:

      1.  Retention of the  Consultant.  Subject to the terms and conditions set
forth in this  Agreement,  the Company  hereby retains the Consultant to perform
the  services  set forth in this  Agreement,  and the  Consultant  accepts  this
retention on the terms and conditions set forth in this Agreement.

      2. Term. The term of this  Agreement  shall commence on the Effective Date
and continue for six months from the Effective Date.

      3. Scope of Work.  The services to be performed  by the  Consultant  under
this  Agreement  (the "Work")  shall  consist of providing  an  introduction  to
Beijing Zhong Ran Wei Ye Gas Co., Ltd., an company  incorporated  under the laws
of the People's  Republic of China ("BG"),  as well as advice and  counseling to
assist the  Company  in  effecting  a reverse  merger  transaction  with BG (the
"Work").

      4.  Compensation  and Payment.  In  consideration of the Work, the Company
shall compensate  Consultant as follows,  but only in the event that the Company
is successful in completing a reverse merger  transaction with BG, its parent or
subsidiary  companies or an affiliated company of BG and in raising greater than
$10 million  (the  "Reverse  Merger"):  upon the closing of the Reverse  Merger,
Consultant  shall  receive  the same  convertible  preferred  stock  received by
investors in the Reverse Merger which shall be  convertible  into 3.1795% of the
Company's common stock following a reverse split.

            4.1  Whenever  the  Company  shall  propose  to file a  registration
statement  under the Securities Act of 1933, as amended,  relating to the public
offering of Company  common  stock for sale for cash for its own  account,  or a
re-sale registration  statement for the sale of stock held by other shareholders
or by employees or consultants to the Company (a "Registration Statement"),  the
Company  shall give written  notice to Consultant at least fifteen (15) business
days prior to the anticipated filing thereof, specifying the approximate date on
which the Company proposes to file such Registration  Statement and the intended


                                       1


method of distribution in connection  therewith,  and advising the Consultant of
his right to have any or all of the  Registrable  Securities,  as defined below,
then held by  Consultant  included  among the  securities  to be covered by such
Registration  Statement  (the  "Piggy-Back  Rights").  For the  purposes of this
Section,  "Registrable  Securities"  shall mean all  common  stock  issuable  to
Consultant,  upon conversion of any preferred stock issued to it pursuant to the
terms of this Agreement.

      5. Independent  Contractor.  The Consultant agrees to perform his services
hereunder as an  independent  contractor  and not as an employee of the Company,
its  subsidiaries  or  affiliates.  The  Consultant  is not granted any right or
authority or responsibility,  expressed, implied or apparent, on behalf of or in
the name of the Company to bind, or act on behalf of, the Company.

      6. Modifications.  No amendment or modification to this Agreement shall be
effective unless made in writing.

      7. Assignment.  This Agreement and all of the Consultant's rights,  duties
and  obligations  under this  Agreement  are personal in nature and shall not be
subcontracted,  assigned,  delegated or otherwise  disposed of by the Consultant
without the prior written consent of the Company.

      8. Notice. All notices required under this Agreement shall be deemed given
when sent by overnight  courier or registered or certified mail, or when sent by
telecopy,  telegraph  or  other  graphic,  electronic  means  and  confirmed  by
overnight  courier or registered or certified  mail addressed to the address set
forth in the  preamble to this  Agreement.  Either party shall have the right to
change  the  address  or  name of the  person  to whom  such  notices  are to be
delivered by notice to the other party.

      9. Law and Venue.  This Agreement shall be governed in all respects by and
construed in accordance with the laws of the State of New York without regard to
conflicts  of law  provisions.  Any  litigation  between  the  parties  shall be
conducted in the state or federal courts of the State of New York.

      10.  Waiver  of Trial by  Jury.  The  Company  and the  Consultant  hereby
knowingly, voluntarily and intentionally waive the right to a trial by jury with
respect  to any  litigation  based  hereon,  or  arising  out  of,  under  or in
connection with this agreement.  This provision is a material inducement for the
parties entering into this agreement.

      11. Headings.  The headings in this Agreement are provided for convenience
of  reference  only and shall not  affect the  construction  of the text of this
Agreement.

      12.  Non-Waiver.  No waiver of any  provision of this  Agreement  shall be
deemed to be nor shall  constitute a waiver of any other  provision,  whether or
not similar,  nor shall any waiver  constitute a  continuing  waiver.  No waiver
shall be binding unless executed in writing by the party making the waiver.

      13. Cumulative Remedies. All rights and remedies of the parties under this
Agreement shall be cumulative, and the exercise of any one right or remedy shall
not bar the exercise of any other right or remedy.


                                       2


      14.  Severability.  If any  provision of this  Agreement  shall be held or
deemed to be invalid, inoperative or unenforceable, such circumstances shall not
affect the validity of any other provision of this Agreement.

      15.  Survival.  The  obligations of the parties  hereunder  which by their
nature survive the  termination  of this Agreement  and/or the completion of the
Work  hereunder,  shall  survive and inure to the benefit of the parties.  Those
provisions of this  Agreement  which provide for the limitation of or protection
against  liability  shall  apply to the full extent  permitted  by law and shall
survive termination of this Agreement and/or completion of the Work.

      16. Complete  Agreement.  This Agreement  constitutes the entire and final
agreement   and   supersedes   all   prior   and   contemporaneous   agreements,
representations,  warranties and  understandings  of the parties,  whether oral,
written or implied with respect to the subject matter  hereof.  The inclusion of
this  provision has been a material  inducement for each of the parties to enter
into this Agreement.

      17.  Publicity.  The  Consultant  shall  not make any  public  disclosures
regarding the Company,  its  subsidiaries or affiliates or the project for which
he is performing the Work without the prior approval of the Company.

      The parties have executed this Agreement  effective as of the day and year
first above written.


DOLCE VENTURES, INC.

By:__________________________


KUHNS BROTHERS, INC.

By:__________________________


                                       3

EX-10.4

                                     [LOGO]
                                   Since 1842

                                 KUHNS BROTHERS

                                 The Farm House
                               558 Lime Rock Road
                          Lime Rock, Connecticut 06039

                                                                    May 22, 2006

Mr. Liu Yuchuan
Chairman
Beijing Zhong Ran Wei Ye Gas Co., Ltd.
No. 18 Zhongguancundong St.
Haidan District, Beijing  100083
People's Republic of China

         ENGAGEMENT AGREEMENT PROVIDING FOR INVESTMENT BANKING SERVICES

Dear Mr. Liu,

      This  letter  agreement  (the  "Agreement")  is  written  to set forth the
understanding  and  agreement  between  Kuhns  Brothers,  Inc.  and its  related
subsidiaries  (altogether,  "Kuhns  Brothers")  and Beijing Zhong Ran Wei Ye Gas
Co.,  Ltd.  with its  principal  place of  business  in Beijing in the  People's
Republic of China (the "Company") and shall supersede all previous  discussions,
proposals  and  engagement  agreement  between  Kuhns  Brothers and the Company,
including  inter alia,  the  engagement  agreement and the proposal  letter both
dated  February  13, 2006  entered into  between  Kuhns  Brothers,  Inc. and the
Company (the "Previous Engagement Letter and Proposal").

      The Company and Kuhns  Brothers  hereby  agree to  terminate  the Previous
Engagement  Letter and  Proposal  without  recourse  between the parties and the
parties'  obligations  thereunder  shall be fully and finally  released from the
date hereof.



      The Company hereby engages Kuhns Brothers on an exclusive basis,  from the
date hereof until August 13, 2006 (Beijing  time), to provide it with investment
banking services  described in paragraph I hereinafter and Kuhns Brothers hereby
accepts such  engagement.  In the event that as a result of this  engagement  of
Kuhns Brothers a term sheet (the "Term Sheet") representing a commitment between
a lead investor and the Company with respect to the Financing (as defined below)
is obtained before August 1, 2006 (Beijing time),  this Agreement will remain in
force for a period of two years following the closing of such related Financing.
Kuhns Brothers acknowledges that the Company's  representation as to its profits
for  2006 or its  profits  for  2007  will be  adjusted  to the  closing  of the
Financing, and are currently expected to be as set forth in Schedule C.

I. INVESTMENT BANKING SERVICES

1. Financial Advisory Services

      Kuhns  Brothers,  through its  subsidiary  Kuhns Bros.  & Co.,  Inc.  (the
"Financial  Advisor") and its subsidiary Kuhns Brothers  Securities  Corporation
(the  "Placement  Agent"),  will assist the Company with its current  investment
banking  requirements,  including  an equity  financing of  $12,800,000  for the
Company  (the  "Financing")  by way of issuance of common stock and warrants (or
things of equivalent  value  invested in it or its  controlled  subsidiaries  or
affiliates) to institutional and high-net-worth  individual  financial investors
("Financial  Investors") or, at the option of the Company,  strategic  investors
("Strategic  Investors"),  in accordance with the terms and conditions contained
in this  Agreement  and  the  principal  terms  set  out in  Schedule  B to this
Agreement  and the  acquisition  by the Company of a public  shell  listed on an
exchange  in the United  States of  America  (the  "Public  Shell") in a reverse
takeover  merger  (altogether  with  the  Financing,  the  "Transaction),   such
assistance to be provided over the period of this Agreement.

      With respect to the  Financing,  the interest in the Company to be held by
the  Financial   Investors  or  Strategic  Investors  (where  applicable)  shall
represent  27% of the total shares of common  stock (the "Common  Stock") in the
Company  after the  Financing.  The proceeds  receivable by the Company from the
Financing shall not be less than $10,000,000. For such investment, the Financial
Investors or Strategic Investors (where applicable) shall also receive a warrant
(the "Warrant") to subscribe for US$6,300,000 of incremental Common Stock in the
Company at 140% of the subscription price of the shares offered in the Financing
exercisable within five years of the Financing.

      Kuhns  Brothers   assistance   with  respect  to  the  Financing  and  the
Transaction  shall be  provided  in the best  interest  of the Company on a best
efforts basis and shall always be subject to detailed terms and conditions to be
agreed by the Company with the parties involved in the Financing and Transaction
(including  the choice of legal counsel,  auditors and senior  management of the
Company).  In any event,  Kuhns  Brothers  shall  only  provide  assistance  and
consultancy  services to the  Company but have no right to make any  decision in
connection therewith.

                                       2


      With respect to Financial Investors, Kuhns Brothers, through the Financial
Advisor and the Placement Advisor, will provide the following financial advisory
and placement agency services:

            (i) provide advice regarding the financial  structure of the Company
            or its subsidiaries or any projects or programs undertaken by any of
            the foregoing; (ii) assist in structuring the Financing with respect
            to what is usual  and  standard  practice  on terms  and  conditions
            equivalent for organizations in similar financings;  (iii) assist in
            preparing  and  documenting  the  offering  memorandum  and  related
            materials  relating to the Financing;  (iv) when the  structuring of
            the  Financing  has  reached  an  appropriate  stage,  assist in the
            process  to obtain and  execute  such  Financing;  and (v) assist in
            obtaining  and  executing  such  Financing  on terms and  conditions
            consistent with current market  conditions and most favorable to the
            Company in light of the nature of and risks inherent in the Company.

      With respect to Strategic Investors, Kuhns Brothers, through the Financial
Advisor and the Placement Advisor, will provide the following financial advisory
and placement agency services:

            (i)  assist  in  the  evaluation  of a  Strategic  Investor  from  a
            financial  point of view;  (ii) provide advice and  assistance  with
            respect to the form and  structure  of any  transaction  involving a
            Strategic Investor;  and (iii) when the structuring of the strategic
            relationship has reached an appropriate  stage, act as the Company's
            agent to assist the Company in locating and obtaining,  on terms and
            conditions most favorable to the Company, such Strategic Investor(s)
            in the form of Company clients, customers or vendors, and assist the
            parties to enter into sales, vendor,  licensing or related strategic
            agreements.  (Such agreements with Strategic Investors, whether they
            result in a financial investment and or license  arrangement,  sales
            or vendor agreement or otherwise, shall also be considered Financing
            for purposes of this Agreement.)

      With  respect to the purchase of the Public  Shell,  Kuhns  Brothers  will
provide the following financial advisory and placement agency services:

            (i) provide  advice  regarding,  and source and obtain,  alternative
            Public  Shells  to be  purchased  by the  Company;  (ii)  assist  in
            structuring  the  purchase  of  the  Public  Shell  and  the  merger
            agreement  between it and the Company  with respect to what is usual
            and  standard  practice  on  terms  and  conditions  equivalent  for
            organizations in similar transactions; (iii) assist in preparing and
            documenting  the offering  memorandum and related  materials as they
            relate  to  the  purchase  of  the  Public  Shell;   (iv)  when  the
            structuring  of the purchase of the Public Shell and its merger with
            the Company has reached an appropriate stage,  assist in the process
            to purchase  such Public Shell on behalf of the Company and to merge
            the Public Shell with the Company;  and (v) assist in obtaining  and
            executing   such  purchase  and  merger  on  terms  and   conditions
            consistent with current market  conditions and most favorable to the
            Company in light of the nature of and risks inherent in the Company.


                                       3


      Kuhns  Brothers  shall not be required to undertake  duties not reasonably
within the scope of the  financial  advisory  services in which it is  generally
engaged.  In performance of its duties,  Kuhns  Brothers,  through the Financial
Advisor and the Placement Agent,  shall provide the Company with the benefits of
its best judgment and efforts,  but it is  understood  and  acknowledged  by the
parties  that the value of Kuhns  Brothers'  advice may not be  measurable  in a
quantitative manner.

      The Company acknowledges that Kuhns Brothers and its affiliates are in the
business of providing  financial  advisory services of all types contemplated by
this Agreement to others.  Nothing herein  contained shall be construed to limit
or restrict Kuhns  Brothers or its  affiliates in conducting  such business with
respect  to  others  or  rendering  such  advice to  others,  provided  that the
provision  of such  services  will not cause any  conflict  of interest to Kuhns
Brothers and its affiliates nor any prejudice to the interests of the Company.

      The  Company  recognizes  and  confirms  that  Kuhns  Brothers,  in acting
pursuant  to this  Agreement,  will be using  information  in reports  and other
information provided by third parties,  including  information provided by or on
behalf of the Company. Kuhns Brothers does not assume responsibility for and may
rely on, without independent verification,  the accuracy and completeness of any
such reports and  information.  The Company hereby warrants that any information
relating to the Company that is  furnished to Kuhns  Brothers by or on behalf of
the Company will be accurate and will not contain any material  misstatements of
fact or omissions. The Company agrees that any information or advice rendered by
Kuhns Brothers or its  representatives  in connection with this Agreement is for
confidential use of the Company's Board of Directors,  management and employees,
as  well  as  attorneys,  accountants  and  other  agents  of the  Company  on a
need-to-know  basis and,  except as otherwise  required by law, the Company will
not, and will not permit any third party to, disclose or otherwise refer to such
advice or  information  in any manner  without  Kuhns  Brothers'  prior  written
consent.


                                       4


2. Merger and Acquisition Services

      Relating to its assistance  with respect to the Financing,  Kuhns Brothers
shall  provide  the  Company  with  services  related to merger and  acquisition
transactions  in the event that at any time during  which this  Agreement  is in
place,  the  Company or any of its  affiliates  shall enter into any "merger and
acquisition  transaction"  as described  below with any party  introduced to the
Company by Kuhns Brothers, directly or indirectly.

      Kuhns  Brothers'   assistance  with  respect  to  merger  and  acquisition
transactions  shall be  provided  in the best  interest of the Company on a best
efforts basis, and any of such merger and acquisition  transactions shall always
be subject to detailed terms and conditions to be agreed by the Company with the
parties  involved  in the merger and  acquisition  transactions  (including  the
choice of legal counsel,  auditors and senior management of the Company). In any
event, Kuhns Brothers shall only provide assistance and consultancy services but
have no right to make any decision in connection therewith.

      For  purposes  of  this  Agreement,   the  term  "merger  and  acquisition
transaction"  means:  (i) any  merger,  consolidation,  reorganization  or other
business combination including strategic partnerships or joint ventures pursuant
to which the  business  or  businesses  of a third  party,  including  projects,
stand-alone  assets or  technologies,  are combined  with that of the Company in
either a direct ownership, joint venture or strategic alliance fashion; (ii) the
acquisition,  directly or  indirectly,  by the  Company of all or a  substantial
portion of the assets or equity of a third party by way of  negotiated  purchase
or otherwise; or (iii) the acquisition, directly or indirectly, by a third party
of all or a substantial portion of the assets or equity of the Company by way of
negotiated purchase or otherwise (the "Merger and Acquisition Transaction(s)").

      Kuhns Brothers' merger and acquisition  services may include, but will not
necessarily be limited to:

            (i) assistance to the Company for its  acquisition of a public shell
            listed on an exchange in the United  States of America  (the "Public
            Shell")  in  a  reverse   takeover   merger  (the  "Shell   Purchase
            Transaction"),  such  assistance  to be provided  over the period of
            this Agreement in accordance with the terms and conditions contained
            in this  Agreement and the principal  terms set out in Schedule B to
            this Agreement; (ii) assistance in the identification of businesses,
            organizations,  assets or technologies that may constitute potential
            Merger  and  Acquisition  Transactions;   (iii)  assistance  in  the
            evaluation  of such third  parties  from a financial  point of view;
            (iv) assistance with respect to the form and structure of the Merger
            and  Acquisition   Transaction;   (v)  conducting   discussions  and
            negotiations  regarding a Merger and  Acquisition  Transaction;  and
            (vi)  providing  other related  advice and assistance as the Company
            may reasonably  request in connection  with a Merger and Acquisition
            Transaction.


                                       5


      With respect to the Shell Purchase  Transaction,  Kuhns Brothers,  through
the Financial Advisor, will provide the following financial advisory services:

            (i) provide  advice  regarding,  and source and obtain,  alternative
            Public  Shells  to be  purchased  by the  Company;  (ii)  assist  in
            structuring  the  purchase  of  the  Public  Shell  and  the  merger
            agreement  between it and the Company  with respect to what is usual
            and  standard  practice  on  terms  and  conditions  equivalent  for
            organizations in similar transactions; (iii) assist in preparing and
            documenting  the offering  memorandum and related  materials as they
            relate  to  the  purchase  of  the  Public  Shell;   (iv)  when  the
            structuring  of the purchase of the Public Shell and its merger with
            the Company has reached an appropriate stage,  assist in the process
            to purchase  such Public Shell on behalf of the Company and to merge
            the Public Shell with the Company;  and (v) assist in obtaining  and
            executing   such  purchase  and  merger  on  terms  and   conditions
            consistent with current market  conditions and most favorable to the
            Company in light of the nature of and risks inherent in the Company.

            It is understood  that pursuant to this  Agreement,  all  activities
            with respect to sourcing,  selecting and negotiating the purchase of
            the Public Shell shall be assisted by Kuhns  Brothers as an integral
            part  of its  services  provided  to the  Company  pursuant  to this
            Agreement.

      The Company acknowledges that Kuhns Brothers and its affiliates are in the
business of providing merger and acquisition services (of all types contemplated
by this  agreement) to others.  Nothing herein  contained  shall be construed to
limit or restrict Kuhns  Brothers or its affiliates in conducting  such business
with respect to others or in rendering such advice to others,  provided that the
provision  of such  services  will not cause any  conflict  of interest to Kuhns
Brothers and its affiliates nor any prejudice to the interests of the Company.

      The Company also  acknowledges that Kuhns Brothers and its affiliates have
or may have ownership interests in businesses, assets or technologies identified
by  them  or  others  to  the  Company  as  potential   Merger  and  Acquisition
Transactions.  Nothing herein  contained shall be construed to limit or restrict
the  ability of Kuhns  Brothers  or its  affiliates  to be  compensated  for its
ownership  interest  in such a Merger  and  Acquisition  Transaction  on a basis
separate and apart from the compensation  described herein,  provided that Kuhns
Brothers  and its  affiliates  shall  have fully  disclosed  then  interests  in
advance.

3. Strategic Planning Services

      Relating to its assistance  with respect to the Financing,  Kuhns Brothers
shall  provide the Company with  strategic  planning  services.  Kuhns  Brothers
strategic planning services shall include, but not be limited to, the following:

            (i) advice  regarding  the  Company's  business  plan;  (ii)  advice
            regarding  formation  of the  Company's  corporate  goals  and their
            implementation;   (iii)  advice  regarding  corporate  organization,
            personnel and the related selection of needed specialty skills; (iv)
            general   corporate   documentation   preparation   and  assistance,
            including  services relating to assisting the Company in preparation
            of its business plan and related materials, including regulatory and
            filing  documentation;  (v)  assistance  regarding  preparation  and
            organization of the Company's corporate paperwork.


                                       6


      Kuhns  Brothers'  assistance  with  strategic  planning  services shall be
provided in the best interest of the Company on a best efforts basis.

II. COMPENSATION

      In  consideration  of rendering such  services,  the Company agrees to pay
Kuhns Brothers on the following basis:

(i) for financial advisory services--

      (a) a non-refundable  signing fee of $50,000,  payable upon the completion
      of the audit for the years  2004 and 2005  (this fee has  previously  been
      paid in full);

      (b) a  non-refundable  documentation  fee of  US$30,000,  payable from the
      closing(s) of the Financing;

      (a)   a financing fee, payable upon closing(s) of the Financing,  equal to
            10% of the total Financing value:

            ------------------------------------------------------------------
            CORPORATE FINANCING                        FEE
            ------------------------------------------------------------------
            Public equity offering                     10.00%, plus warrants
            ------------------------------------------------------------------
            Exercise of Warrants or Subscription       10.00%
            Rights
            ------------------------------------------------------------------

With  respect to warrants  provided as  compensation  as  indicated in the table
above,  the  warrant  "coverage",  that is the  percent of the dollar  amount of
securities  issued for which Kuhns Brothers  shall receive  warrants to purchase
the  Company's  equity  securities,  shall be 10%. For  example,  if the Company
issues $1 million of common stock with warrants  attached,  Kuhns Brothers shall
receive a warrant to buy $100,000 of common stock with warrants  attached of the
Company.  Such warrant will have a strike price that is 140% of the price of the
equity securities, or underlying equity securities, offered in the Financing, or
in the case of compensation not involving a Financing shall be at a strike price
that is 140% of the  price  of the  Company's  common  stock  as set by the most
recent third party sale, and shall be outstanding for a period of 5 years.

         In connection with our financial advisory  services,  you agree that if
during the period Kuhns  Brothers is retained by you a Financing is  consummated
with a third  party,  acting  either as a  Financial  Investor or as a Strategic
Investor,   who  was  introduced   directly  by  Kuhns   Brothers   ("Introduced
Investors"),  or  if  the  Company  enters  into  a  definitive  agreement  with
Introduced  Investors which at any time thereafter  results in a Financing,  you
will pay Kuhns  Brothers  a  financing  fee for the first  time such  Introduced
Investor  participates in a Financing.  For any subsequent Financing from any of
such Introduced Investors during the subsistence of this Agreement,  the Company
will pay Kuhns Brothers a financing fee equal to 3% of such Financing  value. It
is  understood  that for purposes of this  Agreement,  Kuhns  Brothers  shall be
deemed to have introduced  such Introduced  Investors to the Company not only by
physical  introductions  and  meetings,  but also by arranging  or  facilitating
telephonic or correspondence meetings between the parties,  whether or not Kuhns
Brothers participated in such meetings, telephone calls or correspondence.


                                       7


(ii) for merger and acquisition services--

      (a) For the purchase and merger of the Public Shell,  a shell purchase fee
      of US$120,000,  payable upon the successful  purchase of the Public Shell,
      payable from the closing(s) of the Financing;

      (b) For any other  merger or  acquisition,  a merger and  acquisition  fee
      equal to the "Lehman Formula" based on US$5 million  increments,  that is,
      3% of the first US$5 million, 2% of the second US$5 million,  etc., of the
      consideration  paid in the  Merger  and  Acquisition  Transaction,  or the
      Lehman Formula of the equity value of the organization being acquired,  at
      the option of Kuhns Brothers.

      For purpose of this Agreement,  "consideration" means the aggregate value,
whether in cash,  securities,  assumption  (or  purchase  subject to) of debt or
liabilities  (including,  without  limitation,  indebtedness for borrowed money,
pension  liabilities or guarantees) or other property,  obligations or services,
paid or payable  directly or  indirectly  (in escrow or  otherwise) or otherwise
assumed in connection  with the Merger and Acquisition  Transaction,  or the net
present  value of the  estimated  benefits to the Company of any joint  venture,
licensing or marketing agreement  ("Consideration").  The value of Consideration
shall be determined as follows:

      (a)   the value of  securities,  liabilities,  obligations,  property  and
            services  shall be the fair market value as shall mutually be agreed
            upon at the  date  of the  closing  of the  Merger  and  Acquisition
            Transaction;
      (b)   the value of indebtedness,  including indebtedness assumed, shall be
            the face amount; and/or
      (c)   the net present  value of the  estimated  benefits to the Company of
            any joint  venture,  licensing or marketing  agreement,  as mutually
            determined by the parties. If the parties cannot come to such mutual
            determination,  the net  present  value  described  above  shall  be
            determined by arbitration.

      If the  Consideration  payable  in a Merger  and  Acquisition  Transaction
includes  contingent  payments to be calculated by reference to uncertain future
occurrences,  such as future financial or business performance, then any fees of
Kuhns Brothers  relating to such  Consideration  shall be payable at the time of
the receipt of such Consideration.


                                       8


      In connection with the merger and acquisition services, the Company agrees
that if during the period Kuhns  Brothers is retained by the  Company,  a Merger
and  Acquisition  Transaction  is consummated  with a third party  introduced by
Kuhns  Brothers or the Company  enters into a definitive  agreement with a third
party  introduced by Kuhns  Brothers which at any time  thereafter  results in a
Merger  and  Acquisition  Transaction  ("Third  Parties"),  you will  pay  Kuhns
Brothers a transaction fee equal to the Lehman Formula times the Consideration.

      It is understood that for purposes of this Agreement, Kuhns Brothers shall
be deemed to have  introduced  such  Third  Parties to the  Company  not only by
physical  introductions  and  meetings,  but also by arranging  or  facilitating
telephonic or correspondence meetings between the parties,  whether or not Kuhns
Brothers participated in such meetings, telephone calls or correspondence.

(iii) for strategic planning services--

      Upon closing of all the Financing,  a  non-refundable  monthly retainer of
      US$10,000  per month,  payable on the first of the month,  will be paid to
      Kuhns Brothers for 24 months.

(iv) for expenses--

      The Company  shall pay  directly  the  reasonable  out-of-pocket  expenses
      incurred  by  Kuhns  Brothers  in  relation  to the  Financing,  including
      out-of-pocket  expenses related to Kuhns Brothers' due diligence,  subject
      to such expenses  being  authorized in advance by the Company  (including,
      without limitation,  reasonable professional and reasonable legal fees and
      disbursements incurred by Kuhns Brothers in connection with its engagement
      hereunder with respect to services to be rendered by it upon production of
      receipts by Kuhns Brothers).

      All  compensation  and expenses will be  reimbursed to Kuhns  Brothers via
wire transfer. The Firm's wiring instructions are attached as Schedule A.

III. RIGHT TO SUB-CONTRACT OR SYNDICATE

      Subject to the Company's  consent,  Kuhns Brothers may sub-contract any of
its rights to provide services  hereunder to qualified third parties in its sole
discretion,  so long as Kuhns  Brothers  remains  the prime  contractor  of such
services to the Company.  Subject to the Company's  consent,  Kuhns Brothers has
the right to enter into any finder, inter dealer or syndication  agreements with
qualified parties with respect to placing and arranging the Financing.


                                       9


IV. ADDITIONAL INVESTMENT BANKING SERVICES

      The Company agrees that Kuhns  Brothers shall have the right,  but not the
obligation,  which right is exercisable in Kuhns Brothers' sole  discretion,  to
provide  investment  banking services to the Company to provide such services in
relation  to the  Company  during the  subsistence  of this  Agreement  and such
additional  period  of time as may be  necessary  to  complete  any  project  or
transaction  already  commenced  pursuant to the  Company's  written  request or
engagement of Kuhns  Brothers  during the  subsistence of this  Agreement.  Such
services  may  include  underwriting  and  acting as a  placement  agent for the
Company's securities on a lead-managed or co-managed basis,  assisting in merger
or acquisition  transactions  and providing other financial  advisory  services.
Such right shall terminate with respect to any financing, transaction or service
if the Company shall request in writing by certified mail Kuhns Brothers to lead
such  financing or  transaction  or to provide  such service and Kuhns  Brothers
shall fail to notify the Company within fifteen (15) days  thereafter that Kuhns
Brothers will accept the engagement.  In the event that Kuhns Brothers agrees to
provide  such  investment  banking  services,  Kuhns  Brothers  shall be paid in
accordance  with the terms and conditions to be agreed by Kuhns Brothers and the
Company,  and the terms and conditions of such engagement  shall be contained in
specific   engagement   agreements   relating  to  the  specific   financing  or
transaction. Notwithstanding the above or any oral representations or assurances
previously  or  subsequently  made  by the  parties,  this  Agreement  does  not
constitute a commitment by or obligation of Kuhns Brothers to act as underwriter
or  placement  agent in  connection  with any future  offering of the  Company's
securities.  Such a commitment  on the part of Kuhns  Brothers  would exist only
upon the  execution of a final,  written  engagement  agreement and then only in
accordance with the terms and conditions  thereof.  In any event, Kuhns Brothers
may  determine  in its  sole  discretion,  for any  reason  (including,  without
limitation, the results of its due diligence investigation, a material change in
the  Company's  financial  condition;   business  or  prospects,   the  lack  of
appropriate  internal Kuhns Brothers committee  approvals or then current market
conditions) not to participate in such an offering of the Company's  securities.
In the event that Kuhns  Brothers,  with respect to any particular  financing or
transaction,  elects not to provide  investment  banking or  financial  advisory
services to the Company, nothing contained herein shall be deemed to prevent the
Company from utilizing the services of another  investment banking firm for such
financing or transaction,  but such retention of another investment banking firm
shall be without  prejudice to Kuhns Brothers'  rights hereunder with respect to
other transactions.

      Upon the  successful  execution of the Financing,  Merger and  Acquisition
Transaction or any publicly traded equity or debt capital markets financing lead
or  co-managed  by  Kuhns  Brothers,  Kuhns  Brothers,  in  accordance  with its
customary  practices,  will  provide  market  making and  research  services  to
investors in the securities of the Company (subject,  however,  to the Company's
continuation of its engagement of Kuhns Brothers as a financial advisor pursuant
to the terms of this  Agreement) for a period of two years following the closing
of such Financing,  and subject to Kuhns Brothers' customary right not to make a
market in such securities at any time or to suspend research coverage).


                                       10


V. TERMINATION FOR CAUSE

      The Company may terminate  this  Agreement  for cause.  For the purpose of
this  Agreement,  "cause"  means the  failure by Kuhns  Brothers to perform in a
material  respect its  obligations  hereunder in  accordance  with the skill and
diligence   normally  provided  by  recognized   investment  banking  companies;
provided,  however,  that the Company shall first give Kuhns Brothers reasonable
prior written  notice (a minimum of ten days notice) of the Company's  intent to
terminate the engagement (such notice to specify in reasonable  detail the facts
alleged to give rise to the  Company's  right to terminate  for cause) and shall
have provided Kuhns Brothers a reasonable opportunity to cure by performing such
obligations (the  reasonableness  of such opportunity to be measured not only by
Kuhns  Brothers'  ability to perform  during such period but also by the adverse
effect on the Company  resulting from providing such additional period to enable
Kuhns Brothers to perform).

VI. INDEMNIFICATION

      The Company shall  indemnify  Kuhns Brothers and hold it harmless  against
any and all losses,  claims,  damages or liabilities to which Kuhns Brothers may
become subject  arising in any manner out of or in connection with the rendering
of  service  by  Kuhns  Brothers  hereunder,  unless  it is  finally  judicially
determined that such losses,  claims,  damages or liabilities  resulted from the
gross negligence, bad faith and willful misconduct of Kuhns Brothers.

      The Company shall reimburse Kuhns Brothers promptly for any legal or other
expenses reasonably  incurred by it in connection with investigating,  preparing
to defend or  defending,  or  providing  evidence  in or  preparing  to serve or
serving as a witness with respect to, or  otherwise  relating to, any  lawsuits,
investigations,  claims or other proceedings  arising in any manner out of or in
connection with the rendering of services by Kuhns Brothers hereunder (including
without limitation, in connection with the enforcement of this Agreement and the
indemnification  obligations set forth herein);  provided,  however, that in the
event of a final judicial  determination  is made to the effect specified above,
Kuhns  Brothers  will remit to the  Company any  amounts  reimbursed  under such
paragraph.

      The Company agrees that the indemnification and reimbursement  commitments
set forth in this paragraph  shall apply if either the Company or Kuhns Brothers
is a formal party to any such  lawsuits,  claims or other  proceedings  and that
such commitments  shall extend upon the terms set forth in this paragraph to any
controlling person, director,  officer or employee of Kuhns Brothers (each, with
Kuhns  Brothers,  an  "Indemnified  Person").  The Company  further agrees that,
without  Kuhns  Brothers'  prior  written  consent,  which  consent  will not be
unreasonably withheld, it will not enter into any settlement of a lawsuit, claim
or  any  other  proceeding   arising  out  of  the  financings  or  transactions
contemplated by this Agreement  unless such settlement  includes an implicit and
unconditional  release  from the party  bringing  such  lawsuit,  claim or other
proceeding against all indemnified persons.


                                       11


      The Company  further agrees that the  indemnified  persons are entitled to
retain  separate  counsel  of their  choice in  connection  with any  matters in
respect of which  indemnification,  reimbursement  or contribution may be sought
under  this  Agreement.  Fees for  counsel  in such cases will be payable by the
Company only if  management  and counsel to the Company have been  consulted and
allowed to  participate  fully in the  selection of reasonable  and  appropriate
counsel to the indemnified person(s).  Each indemnified person shall give notice
to the Company within thirty (30) days of the assertion against such indemnified
person of any claim or the commencement of any action or proceeding  relating to
any foregoing,  provided further that if the indemnified  person fails to notify
the Company within thirty (30) days of such assertion, then the Company shall be
relieved of any liability that it may have to such indemnified person as to such
claim hereunder.

      t 6 0 The Company and Kuhns Brothers agree that if any  indemnification or
reimbursement   sought  pursuant  to  the  preceding   paragraph  is  judicially
determined to be unavailable for a reason other than the gross  negligence,  bad
faith or  willful  misconduct  of Kuhns  Brothers,  then  whether  or not  Kuhns
Brothers  is the  indemnified  person,  the  Company  and Kuhns  Brothers  shall
contribute to the losses,  claims,  damages,  liabilities and expenses for which
such indemnification or reimbursement is held unavailable (i) in such proportion
as is  appropriate  to reflect the  relative  benefits to the Company on the one
hand, and Kuhns Brothers on the other hand, in connection with the financings or
transactions to which such indemnification or reimbursement  relates, or (ii) if
the allocation  provided by clause (i) above is judicially  determined not to be
permitted, in such proportion as is appropriate to reflect not only the relative
benefits  referred to in clause (i) but also the relative  faults of the Company
on the one hand,  and Kuhns  Brothers  on the other  hand,  as well as any other
equitable considerations;  provided,  however, that in no event shall the amount
to be contributed by Kuhns Brothers pursuant to this paragraph exceed the amount
of the fees actually received by Kuhns Brothers hereunder.

VII. MISCELLANEOUS

      Except as  contemplated  by the terms hereof or subpoena issued by a court
of competent jurisdiction, Kuhns Brothers shall keep confidential all non-public
information  provided  to it  by  the  Company,  and  shall  not  disclose  such
information to any third party, other than such of its employees and advisors as
Kuhns  Brothers  determines  to have a need to know.  This  obligation  of Kuhns
Brothers shall survive termination of this Agreement.


                                       12


      Except as required by  applicable  law, any advice to be provided by Kuhns
Brothers under this Agreement shall not be disclosed  publicly or made available
to any  third  parties  without  the  prior  approval  by  Kuhns  Brothers,  and
accordingly  such advice  shall not be relied upon by any person or entity other
than the Company.

      Kuhns Brothers'  engagement  hereunder shall commence from the date hereof
until the expiration of this Agreement or terminated as set forth below. Subject
to the provisions of this Agreement that shall expressly survive any termination
or  expiration  of the  understanding  between  the  parties,  either  party may
terminate Kuhns Brothers'  engagement  hereunder at any time by giving the other
party at least 10 days written notice without recourse.

      The  Company   agrees  that  Kuhns   Brothers   has  the  right  to  place
advertisements  in financial and other  newspapers  and journals  describing the
Company's  Financing  and  Kuhns  Brothers'  related  services  to  the  Company
hereunder,  provided  that  Kuhns  Brothers  will  submit  a copy  of  any  such
advertisements  to the Company for its prior approval,  which approval shall not
be unreasonably withheld.

      Nothing in this Agreement,  expressed or implied, is intended to confer or
does it confer on any person or entity  other than the  parties  hereto or their
respective successors and assigns, and to the extent expressly set forth herein,
the  indemnified  persons,  any  rights or  remedies  under or by reason of this
Agreement  or as a result  of the  services  to be  rendered  by Kuhns  Brothers
hereunder.

      Neither the  execution  and delivery of this  Agreement by the Company nor
the  consummation  of the financings or transactions  contemplated  hereby will,
directly or  indirectly,  with or without the giving of notice or lapse of time,
or both:  (i) violate any  provisions of the  Certificate  of  Incorporation  or
By-laws of the Company; or (ii) violate, or be in conflict with, or constitute a
default under, any agreement, lease, mortgage or debt of the Company.

      The  invalidity or  unenforceability  of any  provision of this  Agreement
shall not affect the validity or  enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.

      This Agreement may not be amended or modified  except in writing signed by
each of the  parties  and shall be governed  by and  construed  and  enforced in
accordance  with the laws of the State of  Connecticut.  The  Company  and Kuhns
Brothers  hereby  irrevocably  and  unconditionally  consent  to  submit  to the
exclusive  jurisdiction  of the  courts of the State of  Connecticut  and of the
United States District  Courts located in Connecticut for any lawsuits,  actions
or other proceedings  arising out of or relating to this Agreement and agree not
to commence any such lawsuit,  action or other proceeding except in such courts.
Both  parties  further  agree that service of any  process,  summons,  notice or
document by mail,  return receipt  requested,  to the other party's  address set
forth above shall be  effective  service of process for any  lawsuit,  action or
other proceeding brought against such other party in any such court. The Company
and Kuhns Brothers hereby irrevocably and unconditionally waive any objection to
the laying of venue of any lawsuit, action or other proceeding arising out of or
relating  to this  Agreement  in the courts of the State of  Connecticut  or the
United States District  Courts located in the State of  Connecticut,  and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such lawsuit,  action or other proceeding brought in any
such court has been brought in an inconvenient forum. Any right to trial by jury
with  respect  to any  lawsuit,  claim or  other  proceeding  arising  out of or
relating to this  Agreement  or the  services  to be rendered by Kuhns  Brothers
hereunder is expressly and irrevocably waived.


                                       13


      This  Agreement  is subject to the  approval of the board of  directors of
both parties.

      If the  foregoing  correctly  sets forth the  understanding  and agreement
between Kuhns Brothers and the Company, please so indicate in the space provided
for that  purpose  below,  whereupon  this  letter  shall  constitute  a binding
agreement as of the date hereof.

                                           Kuhns Brothers, Inc.

                                           By: ________________________________
                                           Name: John D. Kuhns
                                           Title: Chairman


      AGREED:
      Beijing Zhong Ran Wei Ye Gas Co., Ltd.
      By: ________________________________
      Name: Mr. Liu Yuchuan
      Title: Chairman


                                       14


                                   SCHEDULE A

KUHNS BROTHERS ELECTRONIC WIRE TRANSFER INSTRUCTIONS

Please wire funds to:

Bank: National Iron Bank
      195 Main Street
      Salisbury, Connecticut
Telephone: (860) 435-2581
Account: Kuhns Brothers, Inc.
Account #: 38718
ABA#: 011102638

EX-10.5

                                ESCROW AGREEMENT

      THIS ESCROW AGREEMENT (this  "Agreement") is made as of September 7, 2006,
by and among Gas Investment China Co., Ltd., a company  organized under the laws
of the British Virgin Islands (the "Company"),  Vision  Opportunity Master Fund,
Ltd.  ("Vision") and the other purchasers  signatory hereto  (collectively  with
Vision,  the  "Purchasers"),  and Kramer Levin  Naftalis & Frankel LLP,  with an
address at 1177 Avenue of the  Americas,  New York,  New York 10036 (the "Escrow
Agent").  Capitalized  terms used but not defined herein shall have the meanings
set forth in the Purchase Agreement (as defined below).

                              W I T N E S S E T H:

      WHEREAS,  the  Purchasers  will be purchasing  from Dolce Ventures Inc., a
Utah  corporation  ("Dolce"),  shares of Dolce's Series B Convertible  Preferred
Stock and  certain  warrants  (collectively,  the  "Securities"),  pursuant to a
Series B Convertible  Preferred  Stock Purchase  Agreement to be entered into by
and among Dolce and the Purchasers (the "Purchase Agreement");

      WHEREAS,   simultaneously   with  the  consummation  of  the  transactions
contemplated by the Purchase Agreement,  Dolce will issue shares of its Series A
Preferred Stock to the  shareholders of the Company  pursuant to a certain Share
Exchange Agreement,  and upon the consummation of the transactions  contemplated
by such  Share  Exchange  Agreement,  the  Company  will  become a  wholly-owned
subsidiary of Dolce;

      WHEREAS,  the Company and the  Purchasers  have  requested that the Escrow
Agent  hold  the  subscription  amounts  with  respect  to the  purchase  of the
Securities  in escrow until the Escrow Agent has received all closing  documents
and deliveries required under Article IV of the Purchase Agreement; and

      NOW,  THEREFORE,  in  consideration  of the covenants and mutual  promises
contained  herein and other good and  valuable  consideration,  the  receipt and
legal  sufficiency of which are hereby  acknowledged and intending to be legally
bound hereby, the parties agree as follows:

                                   ARTICLE I

                              TERMS OF THE ESCROW

      1.1. The parties  hereby  agree to  establish  an escrow  account with the
Escrow  Agent  whereby the Escrow Agent shall hold the funds for the purchase of
the Securities as contemplated by the Purchase Agreement.

      1.2. Upon the Escrow Agent's receipt of the aggregate subscription amounts
into its master escrow  account,  together with copies of counterpart  signature
pages of the  Transaction  Documents from each Purchaser and the Company and all
other closing documents and deliveries required under Article IV of the Purchase
Agreement,  it shall advise the Company and Vision, or their designated attorney
or agent, of the amount of funds it has received into its master escrow account.

                                       1


      1.3. Wire transfers to the Escrow Agent shall be made as follows:

           Bank:              Citibank, N.A.
                              666 Fifth Avenue
                              New York, NY 10103
           ABA No.:           021000089
           Account Name:      Kramer Levin Naftalis & Frankel LLP IOLA Account
           Account No.:       37317968
           Reference:         Dolce Ventures Inc. / Christopher S. Auguste

      1.4. The Company and Vision,  promptly  after being  advised by the Escrow
Agent that it has received the subscription  amounts for the Closing,  copies of
counterpart signature pages of the Transaction Documents from each Purchaser and
the  Company and all other  closing  documents  and  deliveries  required  under
Article IV of the  Purchase  Agreement,  shall  deliver  to the  Escrow  Agent a
Release Notice, in the form attached hereto as Exhibit A (the "Release Notice").

      1.5.  Once the Escrow Agent  receives the Release  Notice  executed by the
Company and Vision,  the Escrow Agent shall wire the  subscription  proceeds per
the written  instructions of the Company and Vision,  net of fees,  expenses and
any other disbursements as set forth in the Release Notice.

      1.6.  Wire  transfers  to the  Company  shall be made  pursuant to written
instructions from the Company provided to the Escrow Agent.

      1.7. Upon the written  request from a Purchaser to the Escrow  Agent,  the
Escrow Agent shall promptly return the  subscription  proceeds to each Purchaser
pursuant to written wire  instructions  to be delivered by such Purchaser to the
Escrow Agent.

                                   ARTICLE II

                                 MISCELLANEOUS

      2.1. No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding  breach  thereof,  or of
any other  covenant or  provision  herein  contained.  No  extension of time for
performance  of any  obligation  or act shall be deemed an extension of the time
for performance of any other obligation or act.

      2.2. All notices or other  communications  required or permitted hereunder
shall be in writing, and shall be sent as set forth in the Purchase Agreement.

      2.3.  This Escrow  Agreement  shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.

                                       2


      2.4. This Escrow  Agreement is the final  expression  of, and contains the
entire agreement between,  the parties with respect to the subject matter hereof
and  supersedes  all prior  understandings  with  respect  thereto.  This Escrow
Agreement may not be modified, changed,  supplemented or terminated, nor may any
obligations  hereunder  be waived,  except by written  instrument  signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.

      2.5.  Whenever  required  by the  context of this  Escrow  Agreement,  the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties,  but rather as if both parties had prepared the same.  Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.

      2.6. The parties hereto  expressly agree that this Escrow  Agreement shall
be governed by,  interpreted under and construed and enforced in accordance with
the laws of the State of New York, without regard to conflicts of law principles
that  would  result  in the  application  of the  substantive  laws  of  another
jurisdiction.  Any action to enforce, arising out of, or relating in any way to,
any  provisions  of this  Escrow  Agreement  shall only be brought in a state or
Federal court sitting in New York City, Borough of Manhattan.

      2.7. The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked  only by a writing  signed by the  Company,  each  Purchaser  and the
Escrow Agent.

      2.8. The Escrow Agent shall be obligated only for the  performance of such
duties as are  specifically set forth herein and may rely and shall be protected
in relying or refraining  from acting on any instrument  reasonably  believed by
the  Escrow  Agent to be genuine  and to have been  signed or  presented  by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow  Agent may do or omit to do  hereunder  as the Escrow Agent while
acting in good faith and in the absence of gross  negligence,  fraud and willful
misconduct,  and any act done or  omitted by the Escrow  Agent  pursuant  to the
advice of the Escrow Agent's  attorneys-at-law  shall be conclusive  evidence of
such  good  faith,  in the  absence  of  gross  negligence,  fraud  and  willful
misconduct.

      2.9. The Escrow Agent is hereby expressly  authorized to disregard any and
all  warnings  given by any of the  parties  hereto  or by any  other  person or
corporation,  excepting  only  orders or  process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order,  judgment
or decree,  the Escrow Agent shall not be liable to any of the parties hereto or
to any  other  person,  firm or  corporation  by  reason  of such  decree  being
subsequently reversed,  modified,  annulled, set aside, vacated or found to have
been entered without jurisdiction.

      2.10.  The Escrow  Agent  shall not be liable in any respect on account of
the identity,  authorization or rights of the parties executing or delivering or
purporting  to execute or deliver the  Purchase  Agreement  or any  documents or
papers  deposited or called for  thereunder in the absence of gross  negligence,
fraud and willful misconduct.

                                       3


      2.11.  The Escrow Agent shall be entitled to employ such legal counsel and
other  experts as the Escrow  Agent may deem  necessary  properly  to advise the
Escrow Agent in connection  with the Escrow Agent's duties  hereunder,  may rely
upon  the  advice  of  such  counsel,   and  may  pay  such  counsel  reasonable
compensation  therefor which shall be paid by the Escrow Agent. The Escrow Agent
has acted as legal counsel for one of the  Purchasers and may continue to act as
legal counsel for such Purchaser from time to time,  notwithstanding  its duties
as the Escrow Agent  hereunder.  The Company and the  Purchasers  consent to the
Escrow Agent in such  capacity as legal  counsel for one of the  Purchasers  and
waives any claim that such  representation  represents a conflict of interest on
the part of the Escrow Agent. The Company and the Purchasers understand that the
Escrow Agent is relying  explicitly on the foregoing  provision in entering into
this Escrow Agreement.

      2.12. The Escrow Agent's  responsibilities as escrow agent hereunder shall
terminate  if the Escrow  Agent  shall  resign by giving  written  notice to the
Company and the Purchasers. In the event of any such resignation, the Purchasers
and the Company  shall  appoint a successor  Escrow  Agent and the Escrow  Agent
shall  deliver  to such  successor  Escrow  Agent  any  escrow  funds  and other
documents held by the Escrow Agent.

      2.13. If the Escrow Agent reasonably requires other or further instruments
in connection with this Escrow  Agreement or obligations in respect hereto,  the
necessary parties hereto shall join in furnishing such instruments.

      2.14.  It is  understood  and agreed that  should any  dispute  arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow  funds held by the Escrow  Agent  hereunder,  the Escrow  Agent is
authorized and directed in the Escrow  Agent's sole  discretion (1) to retain in
the Escrow  Agent's  possession  without  liability to anyone all or any part of
said  documents or the escrow funds until such disputes  shall have been settled
either by mutual  written  agreement of the parties  concerned by a final order,
decree  or  judgment  or a court of  competent  jurisdiction  after the time for
appeal has expired and no appeal has been perfected,  but the Escrow Agent shall
be under no duty  whatsoever to institute or defend any such  proceedings or (2)
to deliver the escrow  funds and any other  property and  documents  held by the
Escrow Agent  hereunder to a state or Federal  court  having  competent  subject
matter  jurisdiction and located in the City of New York,  Borough of Manhattan,
in accordance with the applicable procedure therefor.

      2.15.  The Company and each  Purchaser  agree  jointly  and  severally  to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims,  liabilities,  costs or expenses in
any way  arising  from or relating  to the duties or  performance  of the Escrow
Agent  hereunder  or the  transactions  contemplated  hereby or by the  Purchase
Agreement  other than any such claim,  liability,  cost or expense to the extent
the same shall have been determined by final,  unappealable  judgment of a court
of competent  jurisdiction to have resulted from the gross negligence,  fraud or
willful misconduct of the Escrow Agent.

                            [SIGNATURE PAGE FOLLOWS]

                                       4


                      [SIGNATURE PAGE TO ESCROW AGREEMENT]

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
this 7th day of September, 2006.

Gas Investment China Co., Ltd.


By:
   ------------------------------------------
   Name:
   Title:

ESCROW AGENT:

Kramer Levin Naftalis & Frankel LLP

By:
   ------------------------------------------
   Name:
   Title:

                      [PURCHASERS' SIGNATURE PAGE FOLLOWS]


                                       5



                [PURCHASER'S SIGNATURE PAGE TO ESCROW AGREEMENT]

Name of Investing Entity:
                          --------------------------
Signature of Authorized Signatory of Investing Entity:
                                                       -------------------------
Name of Authorized Signatory:
                              ---------------------------
Title of Authorized Signatory:
                               --------------------------

                                       6


                                                                    Exhibit A to
                                                                Escrow Agreement

                                 RELEASE NOTICE

      The UNDERSIGNED, pursuant to the Escrow Agreement dated as of September 7,
2006 among the  Company,  the  Purchasers  signatory  thereto  and Kramer  Levin
Naftalis & Frankel LLP, as Escrow Agent (the "Escrow Agreement"),  hereby notify
the Escrow Agent that each of the conditions  precedent to the purchase and sale
of the Securities have been satisfied or waived in accordance with Article IV of
the Purchase  Agreement.  The Company hereby confirms that all of its respective
representations  and warranties  contained in the Purchase Agreement remain true
and correct  and  authorize  the release by the Escrow  Agent of the funds to be
released as  described  in the Escrow  Agreement  and as set forth  below.  This
Release Notice shall not be effective until executed by the Company and Vision.

      Capitalized  terms used  herein  and not  defined  shall have the  meaning
ascribed to such terms in the Escrow Agreement.

      This  Release  Notice may be signed in one or more  counterparts,  each of
which shall be deemed an original.

      Please  release the  $              that has been  deposited in the escrow
                            ------------
account   pursuant  to  the  Escrow   Agreement   according  to  the   following
instructions:

                                [to be completed]

                                       7


      IN WITNESS WHEREOF,  the undersigned have caused this Release Notice to be
duly executed and delivered as of this 7th day of September, 2006.

Gas Investment China Co., Ltd.

By:
   ------------------------------------------
   Name:
   Title:

ESCROW AGENT:

Kramer Levin Naftalis & Frankel LLP

By:
   ------------------------------------------
   Name:
   Title:

By:
   ------------------------------------------
   Name:
   Title:

 Vision Opportunity Master Fund, Ltd.

By:
   ------------------------------------------
   Name:
   Title:
                                       8

EX-16.1

EX-16.2

EXHIBIT 16.2

September 12, 2006

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Dolce Ventures, Inc.
Commission File No. 000-51364

We have read the statements that we understand Dolce Ventures, Inc. will include
in Item 4.01 of the Form 8-K report it will file  regarding the recent change of
auditors. We agree with such statements made regarding our firm.

We have no basis to agree or disagree with any other statement made in Item 4.01
of such report. Respectfully submitted,


/s/ Robison, Hill & Co.
- -----------------------
Robison, Hill & Co.

EX-21.1

List of Subsidiaries of Dolce Ventures, Inc.

Name of Subsidiaries	Ownership	Place of Incorporation
Direct Subsidiaries of the Company
Pegasus Tel, Inc.	100%	Delaware
Gas Investment China Co., Ltd.	100%	British Virgin Islands
Subsidiary of Gas Investment China Co., Ltd.	Ownership Of Gas Investment China Co., Ltd.
Beijing Gas	100%	PRC
Subsidiaries of Beijing Zhong Ran Wei Ye Gas.	Ownership of Beijing Zhong Ran Wei Ye Gas Co., Ltd.
Yu Tian county Zhong Ran Wei Ye Gas Ltd.	90%	PRC
Ning Jing Wei Ye Gas Ltd.	95%	PRC
Xing Tang County Wei ye Gas Ltd.	95%	PRC
Lin Zhang County Wei Ye Gas Ltd.	85%	PRC
Jin Zhou Wei Ye Gas Ltd.	95%	PRC
Wu Qiao County Gas Ltd.	95%	PRC
Long Yao County Zhong Ran Wei Ye Gas Ltd.	95%	PRC
Shen Zhou Wei Ye Gas Ltd.	95%	PRC
An Ping County Wei Ye Gas Ltd.	95%	PRC
Pei County Wei Ye Gas Ltd.	90%	PRC
Si Hong Wei Ye Gas Ltd.	95%	PRC
Si Shui Wei Ye Gas Ltd.	95%	PRC
Lang Fang Development Zone Wei Ye Dangerous Goods Transportation Ltd.	95%	PRC
Beijing Zhong Ran Xiang Ke Gas Technology Ltd.	40%	PRC

EX-99.1

DOLCE VENTURES, INC. ACQUIRES THE BUSINESS OF BEIJING ZHONG RAN WEI YE GAS CO., LTD.

Beijing, PRC, September 13, 2006 - Dolce Ventures, Inc. (“Dolce”)(OTC: DLCV) today announced the acquisition on September 7, 2006 of the business of Beijing Zhong Ran Wei Ye Gas Co., Ltd. (“Beijing Gas”), through the acquisition of its holding company, Gas Investment China Co., Ltd. Also on September 7, 2006, Dolce completed a private placement of $6,876,800 of its Series B Convertible Preferred Stock and warrants. Full details of the transaction, its structure and the private placement are available in a Form 8-K filed by Dolce on September 13, 2006.

Beijing Gas and its subsidiaries in China are engaged in the development of natural gas distribution systems and the distribution and supply of natural gas primarily in the Hebei, Jiangsu, and Shandong provinces in China. It owns and operates 20 natural gas distribution systems serving approximately 23,000 residential and four commercial and industrial customers. Its facilities include approximately 200 kilometers of pipeline and delivery networks with a designed daily capacity of approximately 40,000 cubic meters of natural gas. Beijing Gas is constructing an additional four natural gas distribution systems and is planning two more natural gas distribution systems.

Chen Fang, the Chief Financial Officer of Dolce stated: “As a utility, our business is very capital intensive. The closing of our reverse merger transaction and financing can provide us with working capital we need now. In addition, we now have access to the U.S. capital markets to continue our expansion and growth.”

Forward-looking Statements

Statements made in this news release, may contain forward looking statements concerning Dolce Ventures, Inc.’s business. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, additional competition from existing and new competitors, changes in technology, government regulation and various other factors beyond its control. The risks inherent in Dolce’s business are detailed under “Risk Factors” in its Form 8-K filed on September 13, 2006. Dolce undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.