Unassociated Document

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus.

Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such 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. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Shares will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company has advised each Selling Stockholder that it may not use shares registered on this Registration Statement to cover short sales of Common Stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. If a Selling Stockholder uses this prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement.

The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Roth Capital Partners, LLC is a registered broker-dealer and a FINRA member firm and has indicated to us its willingness to act as selling agent on behalf of certain of the Selling Stockholders named in the prospectus under the section titled “Selling Stockholders” that purchased our privately placed securities. All shares sold, if any, on behalf of Selling Stockholders by Roth Capital Partners, LLC would be in transactions executed by Roth Capital Partners, LLC on an agency basis and commissions charged to its customers in connection with each transaction shall not exceed a maximum of 5% of the gross proceeds. Roth Capital Partners, LLC does not have an underwriting agreement with us and/or the Selling Stockholders and no Selling Stockholders are required to execute transactions through Roth Capital Partners, LLC. Further, other than any existing brokerage relationship as customers with Roth Capital Partners, LLC, no Selling Stockholder has any pre-arranged agreement, written or otherwise, with Roth Capital Partners, LLC to sell their securities through Roth Capital Partners, LLC.

Roth Capital Partners, LLC was granted a right of first refusal to serve as the Company’s exclusive lead managing underwriter or provider of financial advisory or placement agent services in connection with any offering or sale of the Company’s equity securities, whether directly or indirectly through an exchange or conversion or other transaction, or any business combination or transaction involving a change in control of the Company for a period of twelve months commencing on or about the closing date of the private placement.

NASD Rule 2710 requires NASD members firms (unless an exemption applies) to satisfy the filing requirements of Rule 2710 in connection with the resale, on behalf of Selling Stockholders, of the securities on a principal or agency basis. NASD Notice to Members 88-101 states that in the event a Selling Stockholder intends to sell any of the shares registered for resale in this prospectus through a member of the NASD participating in a distribution of our securities, such member is responsible for insuring that a timely filing, if required, is first made with the Corporate Finance Department of the NASD and disclosing to the NASD the following:

	it intends to take possession of the registered securities or to facilitate the transfer of such certificates;

	the complete details of how the Selling Stockholders’ shares are and will be held, including location of the particular accounts;

	whether the member firm or any direct or indirect affiliates thereof have entered into, will facilitate or otherwise participate in any type of payment transaction with the Selling Stockholders, including details regarding any such transactions; and



in the event any of the securities offered by the Selling Stockholders are sold, transferred, assigned or hypothecated by any Selling Stockholder in a transaction that directly or indirectly involves a member firm of the NASD or any affiliates thereof, that prior to or at the time of said transaction the member firm will timely file all relevant documents with respect to such transaction(s) with the Corporate Finance Department of the NASD for review.

No NASD member firm may receive compensation in excess of that allowable under NASD rules, including Rule 2710, in connection with the resale of the securities by the Selling Stockholders, which total compensation may not exceed 8%.

Certain Relationships and Related Transactions

Reverse Merger

On September 7, 2006, we entered into a stock purchase agreement with Gas (BVI) for a consideration of $675,000.00. In return, Gas (BVI) obtained approximately 72% of our common stock. Simultaneously, we consummated a share exchange agreement with GAS (BVI) and its shareholders, in exchange for all of GAS (BVI)’s outstanding capital stock, we issued an aggregate of 14,361,646 shares of our series A convertible preferred stock to the Gas (BVI) shareholders, who were: Eloten Group Ltd. (Yuchuan Liu and his wife own 100% of Eloten), Leading King Investment Limited (Quandong Sun as 50% owner), Zhimin Zhong, Shuwang Li, Si Chen, Shunying Xiang, Shun Ching, Xiaobing Liu, Qinghui Zhuo, Shukui Bian, Fang Chen, Jianzhong Shang and Weidong Wang, or, collectively, the Gas (BVI) shareholders. On November 17, 2006, each share of series A convertible preferred stock was converted automatically into one share of our common stock, par value $0.001 per share, upon the completion of the 304.44-for-1 reverse stock-split of our common stock. After the share exchange and the reverse stock split of 304.44 for 1, Yuchuan Liu was the largest beneficial equity owner of our common stock (44.4%) and Quandong Sun being the second largest, 36.7%. GAS (BVI) owns 1.6% of our company. The original shareholders of the Company immediately prior to the share exchange own 0.6% of the common stock, with Carl Worboys, John Passalaqua, and David Stever among them. The private financing taken place on the same date was expressly conditioned upon the successful execution of this share exchange agreement

The price of $675,000.00 for the share exchange agreement was determined based on prevailing market price to acquire a shell company such as Dolce Ventures. Kuhns’ Brother, Inc. was the financial advisor the placement agent in this transaction. Kuhns’ Brothers was paid 635,822 shares of the Company’s preferred B stock, which was converted into common stock following the reverse stock split of 304.44 for 1. Based on the Company’s preferred B stock price of $2.74/share, the placement agent fee paid to Kuhns’ Brother is approximately $1.7 million. In addition, Kuhns Brother was granted a warrant to purchase an aggregate of 241,708 shares of our common stock at $3.84 per share.

Prior to the share exchange, Dolce Ventures or the Company had no relationship with GAS (BVI) or its shareholders. Kuhns’ Brother was the financial advisor and the placement agent. Prior to the share exchange, the directors for Dolce Ventures were Carl E. Worboys, John F. Passalaqua, and David F. Stever. Yuchuan Liu, Chen Fang Chen, Guowei Chen, John Kuhns and Quandong Sun were nominated to be directors of the Company after the share exchange agreement.

As a result of the consummation of the share exchange transaction, we ceased being a shell company as such term is defined in Rule 12b-2 under the Exchange Act. Gas (BVI) is now our wholly-owned subsidiary, and Beijing Gas is now our indirectly wholly-owned subsidiary in the PRC (such transactions being the “Reverse Merger”).

Beijing Chenguang Agreement

On January 15, 2007, we entered into an equity transfer agreement with Beijing Chenguang Gas Ltd, whereby we acquired all of the equity interest of Beijing Chenguang. One of the selling stockholders of Beijing Chenguang, Mr. Zhicheng Zhou, has been our Chief Operating Officer since October 19, 2006. Mr. Zhou owned 30% of the Beijing Chenguang stock immediately prior to the signing of the Beijing Chenguang Agreement. Mr. Zhou is also a shareholder and legal representative of another selling stockholder, Beijing Chenguang Weizhong Management Technology Consulting Ltd., Co., which owned 10% of the Beijing Chenguang stock immediately prior to the signing of the agreement.

Mr. Zhicheng Zhou, as the Company’s Chief Operating Officer, was not instrumental with the acquisition of Chenguang on behalf of the Company. The acquisition decision was made by the board, of which Mr. Zhou is not a member. The decision to purchase Beijing Chenguang was made before Mr. Zhou joined the Company.

Kuhns Bothers Consulting Agreement

On August 8, 2006, we entered into a Consulting Agreement with Kuhns’ Brother, Inc., whereby Kuhns’ Bother, Inc. agreed to provide financial advisory and private placement services. As result of the share exchange transaction contemplated thereby, John Kuhns, an executive officer of Kuhns’ Bother, Inc., became a director of our company. Under the terms of the Consulting Agreement, upon the successful completion of reverse merger, and the successful raise of $10 million funds in a private placement, Kuhns’ Brother, Inc. was paid 635,822 shares of the Company’s Series B Preferred Stock, which was converted into 635,822 shares of common stock . Based on the price of $2.74/share paid by the investors, the placement agent fee paid to Kuhns’ Brother’s was approximately $1.7 million. In addition, Kuhns’ Brother, Inc. was granted a warrant to purchase an aggregate of 241,708 shares of our common stock at $3.84 per share.

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 27,312,636 shares issued and outstanding, and (ii) 100,000,000 shares of preferred stock, par value $0.001 per share. Our preferred stock consists of (i) series A convertible preferred stock, of which 20,000,000 shares have been authorized and no shares are issued and outstanding; and (ii) series B and B-1 convertible preferred stock (with same rights and privileges), of which 8,000,000 shares have been authorized (5,000,000 for series B and 3,000,000 for series B-1) and 4,409,097 series B and 95,418 series B-1 preferred shares are issued and outstanding.

Warrants

On September 7, 2007, the Company entered into a Securities Purchase Agreement with a number of accredited investors. As part of the financing, the Company has simplified its capital structure by canceling or repurchasing some its outstanding warrants from the holders. As consideration for the purchase of the Series A, B and D warrants and the cancellation of the Series E & J warrants, the Company will pay to the prior investors $3.5 million in cash, issue a warrant for the purchase of 271,074 common shares, and issue 770,897 shares of Series B preferred stock. In exchange of the prior investors waiving their right to receive shares of Series B preferred stock under anti-dilution provisions of the relevant stock purchase agreement, the Company agreed to issue to them 700,000 additional shares of Series B preferred stock. The above-mentioned 770,897 and 700,000 shares of Series B preferred stock have in fact been issued to the related prior investors at $0.001 par value per share during September 2007.

As a result of the above recapitalization plan, the Company has cancelled most of its outstanding warrants and clarified its capital structure without dilution of its equity base. Now the following warrants are outstanding: (i) series A warrants to purchase an aggregate of 241,708 shares of common stock at $3.84 per share, (ii) series C warrants to purchase an aggregate of 3,083,588 shares of common stock at $3.375 per share, and (iii) series G warrants to purchase an aggregate of 109,489 shares of common stock at $3.84 per share. The series A, C, G warrants are exercisable until September 2012. The warrants have cashless exercise provision entitling the holder to obtain shares based on the product of (1) the nominator is the difference between the market price on the date of exercise and the exercise price of all the shares and (2) the denominator is the market price on the date of exercise.

On November 30, 2009 and December 23, 2009, the Company issued to certain purchasers warrants to purchase 3,898,687 shares of the Company’s common stock accompanying the 8% senior secured convertible notes. The warrants are exercisable until November 30, 2012 at an exercise price of $0.744, and have a cashless exercise feature if a registration statement covering all of the shares of common stock issuable upon exercise of the warrants is not effective upon the 18-month anniversary of the issue date of the warrants.

Common Stock

We are authorized to issue 250,000,000 shares of common stock, with a par value of $0.001. There are 27,312,636 shares of common stock issued and outstanding as of the date of this prospectus. 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. 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.

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 per share. 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.

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 convertible preferred stock and 5,000,000 shares of our preferred stock as series B convertible preferred stock. On August 31, 2006, we filed certificates of designations for the series A and series B convertible preferred 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 convertible preferred stock and we filed an amended certificate of designations for the Series B convertible preferred stock with the Office of the Secretary of State of Utah. Our board of directors created the series A convertible preferred stock to allow us to consummate the share exchange transaction with the Gas (BVI) shareholders and the series B convertible preferred stock in connection with our private financing transactions.

On September 7, 2006, we issued 14,361,646 shares of series A convertible preferred stock in connection with the share exchange transaction with the Gas (BVI) shareholders. Each of the shares of series A convertible preferred stock was automatically converted into one share of our common stock upon the effectiveness of our reverse stock-split on November 17, 2006. Certain series B preferred stock have been converted into our common stock. Therefore, as of the date of this prospectus, we have no shares of series A convertible preferred stock issued and outstanding, and we have 4,409,097 shares of series B preferred stock issued and outstanding. On September 12, 2007, our board of directors designated 3,000,000 shares of series B-1 preferred stock with the same rights and privileges as series B preferred stock. We issued 95,418 shares of series B-1 preferred stock.

The following are the material designations, preferences and rights of the series A convertible preferred stock and the series B convertible preferred stock, which are substantially the same, except as stated below, with respect to liquidation preference and special rights of the series B convertible preferred stock (series B-1 preferred stock has the same rights and privileges as series B preferred stock):

Conversion:

We issued 14,361,646 of our common shares upon the automatic conversion of our series A convertible preferred shares after the 304.44-for-1 reverse stock-split on November 17, 2006. We no longer have any series A convertible preferred shares outstanding.

Each share of the series B convertible preferred stock will be convertible into common stock, at the option of its holder after the 304.44-for-1 reverse stock-split, based on the then applicable conversion rate of one for one share of common stock.

Liquidation Preference and Redemption:

The series B convertible preferred stock 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, known as liquidation event, rank (a) senior to the common stock and to any other class or series of stock issued by us not designated as ranking senior to the series B convertible preferred stock 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 our stock, the terms of which specifically provide that such class or series shall rank pari passu with the series B convertible preferred stock in respect of the right to participate in distributions or payments upon a liquidation event. The series B convertible preferred stock may not be redeemed by us without the express written consent (provided or withheld in their sole discretion) of each holder of the then-outstanding series B convertible preferred stock. In the event of the liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, the holders of shares of series B convertible preferred stock then outstanding shall be entitled to receive, out of the our assets available for distribution to its stockholders, an amount equal to $2.74 per share 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 convertible preferred stock.

Voting:

Shares of series A and series B convertible preferred stock vote together with shares of common stock on all matters upon which stockholders are entitled to vote. On those matters upon which the series A convertible preferred stock votes together with the common stock and series B convertible preferred stock as a single class, each share of series A convertible preferred stock 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 convertible preferred stock votes together with the common stock and series A convertible preferred stock as a single class, each share of series B convertible preferred 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 convertible preferred stock shall be entitled to notice of any stockholders’ meeting in accordance with our bylaws.

Dividends:

The holders of series A and series B convertible preferred stock will not be entitled to dividends unless we pay 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 convertible preferred stock 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 stock-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 convertible preferred stock will have the same record and payment date and terms as the dividend is payable on the common stock. As of the date of this prospectus, there are no issued and outstanding shares of our series A convertible preferred stock.

Senior Secured Convertible Notes

On November 30, 2009 and December 23, 2009, the Company issued to certain purchasers $6,042,966 of the 8% Senior Secured Convertible Notes (the “Notes”). The Notes bear interest at 8% per annum payable quarterly, and have a maturity date of November 30, 2012. At maturity, subject to certain exceptions, the Company will be required to repay the accreted principal amount of the Notes. The Notes are convertible at the option of the holders into shares of common stock. On or prior to the maturity date, the number of shares of common stock issuable upon a conversion equals the quotient obtained by dividing (x) the outstanding principal amount of the Notes as of the conversion date by (y) the conversion price of $0.62, subject to certain adjustments. After the Maturity Date, the number of shares of Common Stock issuable upon a conversion equals the quotient obtained by dividing (x) the then outstanding principal amount of the Notes together with all accrued and unpaid interest thereon as of the conversion date by (y) the conversion price of $0.62, subject to certain adjustments.

The Notes are secured by the pledge of 100% of the shares of Gas Investment China Co., Ltd., a wholly owned subsidiary of the Company pursuant to a pledge agreement dated November 30, 2009 and a guaranty dated November 30, 2009 from Mr. Yuchuan Liu, the Chairman of the Board of Directors and the Chief Executive Officer of the Company.

Upon an event of default (including default in any payment of interest on or principal of the Notes, failure to observe any other covenant or agreement in the Notes or other transaction documents and certain events of bankruptcy and insolvency), the principal and accrued and unpaid interest, including any additional amounts owing in respect of the Notes, will be due and payable at the option of the holder of the Notes. In addition, the Notes shall bear interest at a rate equal to the lower of eighteen percent (18%) or the highest rate permitted by law upon the occurrence of an event of default on the unpaid principal amount of the Note outstanding from time to time through the date on which the event of default ceases to exist.

Holders of the Notes may require the Company to repurchase the Notes in whole or in part at an amount equal to 100% of the aggregate principal amount of the Notes plus a premium such that the total cash yield to maturity of the Note is 15% per annum, subject to certain adjustments (the “Early Redemption Amount”), upon the occurrence of any change of control transaction or if the common stock of the Company ceases to be quoted for trading or listed for trading on either the OTC Bulletin Board or a subsequent market and such delisting is not cured within 30 days. In addition, the Company may redeem either 50% or 100% of the outstanding principal amount of the Notes on or after November 30, 2010 at the Early Redemption Amount.

Dividends

We have never declared or paid any cash dividends or distributions on our common stock. We currently intend to retain our future earnings to support operations and to finance future growth and expansion and, therefore, do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Transfer Agent

The transfer agent for our common stock is Fidelity Transfer Company located at 1800 S. West Temple, Suite 301, Salt Lake City, Utah, 84115

Legal Matters

Certain legal matters with respect to the shares of common stock offered hereby will be passed upon for us by Lewis, Hansen, Waldo & Pleshe LLC.

Experts

Samuel H. Wong & Co., LLP have audited, as set forth in their report appearing elsewhere in this prospectus, our consolidated financial statements for the years ended December 31, 2008 and 2009. We have included our consolidated financial statements in the prospectus in reliance on Samuel H. Wong & Co., LLP’s report, given on their authority as experts in accounting and auditing.

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 as our new registered independent certified public accounting firm. Samuel H. Wong & Co., LLP is located at Room 703, Nan Dao Commercial Building, 359-361 Queen’s Road Central, Hong Kong.

Beijing Gas’s operating businesses have previously been audited by Samuel H. Wong & Co., LLP 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.

The audit opinions of Robison, Hill & Co. 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, Hill & Co. for the fiscal years ended December 31, 2004 and 2005 indicated conditions which raised substantial doubt about our ability to continue as a going concern.

Material Changes

There have been no material changes in our affairs that have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K and that have not been described in a Form 10-Q or Form 8-K filed under the Exchange Act.

Incorporation of Certain Information by Reference

The SEC allows us to “incorporate by reference” the information we file with them, which means that we can disclose important information to you by referring you to those documents instead of having to repeat the information in this prospectus. The information incorporated by reference is considered to be part of this prospectus. We incorporate by reference the documents listed below:

Our Annual Report on Form 10-K, for the year ended December 31, 2009, filed on March 31, 2010 as amended;

Our Quarterly Reports on Form 10-Q, for the quarter ended March 31, 2010, filed on May 14, 2010, for the quarter ended June 30, 2010, filed on August 16, 2010, and for the quarter ended September 30, 2010, filed on November 15, 2010.

Our Current Reports on Form 8-K dated May 20, 2010, dated August 19, 2010, dated December 17, 2010, filed on December 23, 2010, and dated December 29, 2010, filed on January 3, 2011.

We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the reports or documents that have been incorporated by reference in the prospectus contained in the registration statement but not delivered with the prospectus. We will provide these reports or documents upon written or oral request and at no cost to the requester. You can request copies of such document if you call or write us at the following address or telephone number: Mr. Yugang Zhang, CFO, Sino Gas International Holdings, Inc., No.18 Zhong Guan Cun Dong St., Haidian District, Beijing, P. R. China 100083.

Unless specifically stated elsewhere in this prospectus, the information contained on, or accessible through, our website is not incorporated by reference into this registration statement.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports, proxy statements and other information with the SEC. Our reports, proxy statements and other information filed pursuant to the Securities Exchange Act of 1934 may be inspected and copied at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Room of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s web site is http://www.sec.gov.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 with respect to the common stock offered hereby. As permitted by the rules and regulations of the SEC, this prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement. Copies of the registration statement and the exhibits are on file with the SEC and may be obtained from the SEC’s Web site or upon payment of the fee prescribed by the SEC, or may be examined, without charge, at the offices of the SEC set forth above. For further information, reference is made to the registration statement and its exhibits.

Sino Gas International Holdings, Inc.

Consolidated Financial Statements

(Stated in US Dollars)


SINO GAS INTERNATIONAL HOLDINGS, INC. FINANCIAL STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2010 (UNAUDITED)		Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009		F-3
Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2010 and 2009		F-5
Consolidated Statements of Stockholders’ Equity (Unaudited) for the Nine Months Ended September 30, 2010		F-6
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2010 and 2009		F-8
Notes to Consolidated Financial Statements		F-9

SINO GAS INTERNATIONAL HOLDINGS, INC. FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Report of Independent Registered Public Accounting Firm		F-45
Consolidated Balance Sheets		F-46
Consolidated Statements of Income		F-48
Consolidated Statements of Stockholders’ Equity		F-49
Consolidated Statements of Cash Flows		F-51
Notes to Consolidated Financial Statements		F-52

F-1

To: The Board of Directors and Stockholders of

Sino Gas International Holdings, Inc.

Report of Independent Registered Public Accounting Firm

We have reviewed the accompanying consolidated interim balance sheets of Sino Gas International Holdings, Inc. as of September 30, 2010 and December 31, 2009, and the related consolidated statements of income, stockholders’ equity, and cash flows for the three-month and nine-month periods ended September 30, 2010 and 2009. These consolidated interim financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

San Mateo, California	Samuel H. Wong & Co., LLP

November 4, 2010	Certified Public Accountants

F-2

Sino Gas International Holdings, Inc.

Consolidated Balance Sheets

As of September 30, 2010 and December 31, 2009

(Stated in US Dollars)

		9/30/2010		12/31/2009
ASSETS
Current Assets	Notes
Cash & cash equivalents	2(e)	$	3,708,714	$	9,820,890
Restricted cash	3		-		126,400
Notes receivable			-		351,021
Accounts receivable	2(f),4		6,426,524		5,036,609
Inventory			1,115,042		416,931
Advance to suppliers	2(g)		5,097,456		4,814,420
Prepayment and others			724,901		446,840
Other receivables	2(f)		2,293,646		1,686,115
Total Current Assets			19,366,283		22,699,226

Non-Current Assets
Investment	2(h),5		7,177,354		7,031,333
Property, plant & equipment, net	2(j),6		49,318,297		47,772,011
Construction in progress	2(l)		18,430,433		13,357,395
Intangible assets, net	2(k),7		2,248,347		2,217,699
Total Non-current Assets			77,174,431		70,378,438
Total Assets		$	96,540,714	$	93,077,664

LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES
Current Liabilities
Bank loans	8	$	2,985,921	$	2,925,174
Accounts payable			6,998,869		8,560,120
Other payables – current	9(a)		2,922,571		6,339,571
Accrued liabilities			92,469		453,335
Unearned revenue	2(m)		1,532,575		620,860
Total Current Liabilities			14,532,405		18,899,060

Non-current Liabilities
Long-term bank loans	8		8,957,764		6,581,641
Non-current Convertible Bonds	10		5,486,499		4,329,101
Other payables - non-current	9(b)		2,019,692		-
Total Non-current Liabilities			16,463,955		10,910,742
Total Liabilities		$	30,996,360	$	29,809,802

See Accompanying Notes to Financial Statements and Accountant’s Report

F-3

Sino Gas International Holdings, Inc.

Consolidated Balance Sheets

As of September 30, 2010 and December 31, 2009

(Stated in US Dollars)

		9/30/2010		12/31/2009
	Notes
STOCKHOLDERS' EQUITY
Preferred Stock B US$0.001 par value; 5,000,000 shares authorized; 4,409,097 and 4,579,839 shares issued and outstanding as of September 30, 2010 and December 31, 2009 respectively.	11	$	4,410	$	4,580
Additional paid in capital - Preferred Stock B			5,125,488		5,323,972

Preferred Stock B-1 US$0.001 par value; 3,000,000 shares authorized; 95,418 shares issued and outstanding as of September 30, 2010 and December 31, 2009.	11		95		95
Additional paid in capital - Preferred Stock B-1			132,662		132,662

Common Stock US$0.001 par value; 250,000,000 shares authorized; 27,312,636 and 26,769,313 shares issued and outstanding as of September 30, 2010 and December 31, 2009 respectively.	11		27,312		26,769
Additional paid in capital - Common Stock			23,045,495		22,513,732

Additional paid in capital - Warrants Series: A, B, J, C, D			311,110		311,110
Additional paid in capital - Warrants Series: E, G			47,946		47,946
Additional paid in capital - Warrants Series: F, R			-		107,652
Additional paid in capital - Convertible Bonds Detachable Warrants			223,367		223,367
Additional paid in capital - Beneficial Conversion Feature			8,094,814		8,094,814

Statutory reserve	2(v)		4,626,982		4,612,191
Retained earnings			14,804,529		14,143,089
Accumulated other comprehensive income	2(x)		9,100,144		7,725,883
Total Stockholders' Equity			65,544,354		63,267,862

Total Liabilities & Stockholders' Equity		$	96,540,714	$	93,077,664

See Accompanying Notes to Financial Statements and Accountant’s Report

F-4

Sino Gas International Holdings, Inc.

Consolidated Statements of Income

For the three-month and nine-month periods ended September 30, 2010 and 2009

(Stated in US Dollars)

		Three Months Ended						Nine Months Ended
	Note	9/30/2010			9/30/2009			9/30/2010			9/30/2009
Sales revenues	2(p)	$	8,097,341		$	6,988,621		$	20,971,220		$	19,357,933
Cost of revenues			(4,923,438	)		(4,505,070	)		(13,766,918	)		(14,074,466	)
Gross Profit			3,173,903			2,483,551			7,204,302			5,283,466

Operating Expense
Selling expense			(567,781	)		(288,766	)		(1,149,685	)		(709,256	)
General and administrative expense			(749,396	)		(656,168	)		(2,354,525	)		(1,902,328	)
Total operating expense			(1,317,177	)		(944,935	)		(3,504,210	)		(2,611,584	)

Operating Income			1,856,726			1,538,616			3,700,092			2,671,882

Other Income/(Expense)
Other income			2,099			83,000			12,394			94,206
Other expense			(4,589	)		(11,178	)		(26,087	)		(33,493	)
Interest income			3,011			941			12,050			4,019
Interest expense			(436,223	)		(96,264	)		(2,182,773	)		(180,824	)
Total other income/(expense)			(435,702	)		(23,501	)		(2,184,416	)		(116,092	)

Income before tax			1,421,024			1,515,116			1,515,676			2,555,790

Income tax	2(r),12		(395,166	)		(306,479	)		(839,007	)		(580,383	)
Gain/(loss) from discontinued operation, net of tax	17		(439	)		-			(439	)		-

Net income		$	1,025,418		$	1,208,636		$	676,230		$	1,975,407

Earnings per share	2(z),13
Basic		$	0.038		$	0.045		$	0.025		$	0.076
Diluted		$	0.035		$	0.038		$	0.025		$	0.064

Weighted Average Shares Outstanding
Basic			27,090,770			26,769,313			26,899,913			26,058,202
Diluted			36,514,909			31,444,570			26,899,913			30,733,459

See Accompanying Notes to Financial Statements and Accountant’s Report

F-5

Sino Gas International Holdings, Inc.

Consolidated Statements of Stockholders’ Equity

As of September 30, 2010 and December 31, 2009

(Stated in US Dollars)

	Preferred Stock B									Preferred Stock B-1						Common Stock
	Shares Outstanding			Amount			Additional Paid In Capital-Preferred Stock B			Shares Outstanding		Amount		Additional Paid In Capital-Preferred Stock B-1		Shares Outstanding		Amount		Additional Paid In Capital-Common Stock

Balance at January 1, 2009		4,579,839			4,580			5,323,972			95,418		95		132,662		25,269,313		25,269		23,196,304
Net Income		-			-			-			-		-		-		-		-		-
Issuance of 2007 Make Good Common Stock		-			-			-			-		-		-		1,500,000		1,500		(1,500	)
Re-allocation of Beneficial Conversion Feature		-			-			-			-		-		-		-		-		(681,072	)
Issuance of Convertible Bonds		-			-			-			-		-		-		-		-		-
Appropriate of Retained Earnings		-			-			-			-		-		-		-		-		-
Foreign Currency Translation Adjustment		-			-			-			-		-		-		-		-		-
Balance at December 31, 2009		4,579,839			4,580			5,323,972			95,418		95		132,662		26,769,313		26,769		22,513,732

Balance at January 1, 2010		4,579,839			4,580			5,323,972			95,418		95		132,662		26,769,313		26,769		22,513,732
Net Income		-			-			-			-		-		-		-		-		-
Conversion of Preferred Stock B to Common Stock		(170,742	)		(170	)		(198,484	)		-		-		-		170,742		170		198,484
Conversion of Convertible Bonds into Common Stock		-			-			-			-		-		-		322,581		323		199,677
Shares based compensation		-			-			-			-		-		-		50,000		50		25,950
Expiration of Warrants F&R		-			-			-			-		-		-		-		-		107,652
Appropriation of Retained Earnings		-			-			-			-		-		-		-		-		-
Foreign Currency Translation Adjustment		-			-			-			-		-		-		-		-		-
Balance at September 30, 2010		4,409,097			4,410			5,125,488			95,418		95		132,662		27,312,636		27,312		23,045,495

See Accompanying Notes to Financial Statements and Accountant’s Report

F-6

Sino Gas International Holdings, Inc.

Consolidated Statements of Stockholders’ Equity

As of September 30, 2010 and December 31, 2009

(Stated in US Dollars)

	Common Stock
	Additional Paid in Capital-Warrants Series: A,B,J,C,D		Additional Paid in Capital-Warrants Series: E,G		Additional Paid in Capital-Warrants Series: F,R			Additional Paid in Capital-Convertible Bonds Detachable Warrants		Additional Paid in Capital-Beneficial Conversion Feature		Statutory Reserve		Retained Earnings			Accumulated Other Comprehensive Income		Total

Balance at January 1, 2009		311,110		47,946		107,652			-		7,002,292		3,956,728		10,069,896			7,676,844		57,855,350
Net Income		-		-		-			-		-		-		4,047,584			-		4,047,584
Issuance of 2007 Make Good Common Stock		-		-		-			-		-		-		-			-		-
Re-allocation of Beneficial Conversion Feature		-		-		-			-		-		-		681,072			-		-
Issuance of Convertible Bonds		-		-		-			223,367		1,092,522		-		-			-		1,315,889
Appropriate of Retained Earnings		-		-		-			-		-		655,463		(655,463	)		-		-
Foreign Currency Translation Adjustment		-		-		-			-		-		-		-			49,039		49,039
Balance at December 31, 2009		311,110		47,946		107,652			223,367		8,094,814		4,612,191		14,143,089			7,725,883		63,267,862

Balance at January 1, 2010		311,110		47,946		107,652			223,367		8,094,814		4,612,191		14,143,089			7,725,883		63,267,862
Net Income		-		-		-			-		-				676,230			-		676,230
Conversion of Preferred Stock B to Common Stock		-		-		-			-		-		-		-			-		-
Conversion of Convertible Bonds into Common Stock		-		-		-			-		-		-		-			-		200,000
Shares based compensation		-		-		-			-		-		-		-			-		26,000
Expiration of Warrants F&R		-		-		(107,652	)		-		-		-					-		-
Appropriation of Retained Earnings		-		-		-			-		-		14,791		(14,791	)		-		-
Foreign Currency Translation Adjustment		-		-		-			-		-		-		-			1,374,260		1,374,260
Balance at September 30, 2010		311,110		47,946		-			223,367		8,094,814		4,626,982		14,804,529			9,100,144		65,544,354

	12/31/2009		9/30/2010		Total
Comprehensive Income
Net Income	$	4,047,584	$	676,230	$	4,723,814
Other Comprehensive Income
Foreign Currency Translation Adjustment		49,039		1,374,260		1,423,299
Total	$	4,096,623	$	2,050,490	$	6,147,113

See Accompanying Notes to Financial Statements and Accountant’s Report

F-7

Sino Gas International Holdings, Inc.

Consolidated Statements of Cash Flows

For the three-month and nine-month periods ended September 30, 2010 and 2009

(Stated in US Dollars)

	Three Months Ended						Nine Months Ended
	9/30/2010			9/30/2009			9/30/2010			9/30/2009
Cash Flows from Operating Activities
Net Income	$	1,025,418		$	1,208,636		$	676,230		$	1,975,407
Shares base compensation		26,000			-			26,000			-
Depreciation expense		482,168			337,328			1,204,262			756,862
Loss/(gain) from discontinued operation		439			-			439			-
Amortization expense of intangible assets		12,468			8,653			29,333			42,547
Amortization expense of convertible bonds		147,449			-			1,357,398
Withdraw/(deposit) in restricted time deposits		-			21,683			126,400			72,420
Decrease/(increase) in accounts and other receivables		(1,086,267	)		4,140,180			(1,646,425	)		5,067,040
Decrease/(increase) in inventory		(584,044	)		(83,605	)		(698,110	)		(22,220	)
Decrease/(increase) in prepaid expenses		(860,233	)		13,514			(561,098	)		(1,322,692	)
Increase/(decrease) in accounts and other payables		609,493			(251,509	)		(2,407,708	)		1,636,273
Cash Sourced/(Used) in Operating Activities		(227,111	)		5,394,880			(1,893,279	)		8,205,638

Cash Flows from Investing Activities
Disposal of discontinued operation		74			-			74			-
Increase of investment in equity		(116,998	)		(176,553	)		(146,534	)		(183,637	)
Purchase of property, plant & equipment		(921,616	)		(5,845,643	)		(2,750,548	)		(7,531,104	)
Increase of goodwill		(39,105	)		(1,769	)		(39,105	)		(4,074	)
Purchase of other intangible assets		(16,312	)		(10,113	)		(20,876	)		(147,098	)
Decrease/(increase) in construction in progress		(2,623,722	)		609,251			(5,073,038	)		(1,501,673	)
Cash Sourced/(Used) in Investing Activities		(3,717,679	)		(5,424,827	)		(8,030,027	)		(9,367,585	)

Cash Flows from Financing Activities
Increase/(decrease) of bank loans		193,840			2,308			2,436,870			5,313
Cash Sourced/(Used) in Financing Activities		193,840			2,308			2,436,870			5,313

Net increase in cash & cash equivalents for the periods		(3,750,950	)		(27,640	)		(7,486,436	)		(1,156,635	)

Effect of currency translation		1,098,954			87,368			1,374,260			43,062
Cash & cash equivalents at the beginning of periods		6,360,710			1,854,242			9,820,890			3,027,543

Cash & cash equivalents at the end of periods	$	3,708,714		$	1,913,970		$	3,708,714		$	1,913,970

Supplementary cash flows information
Interest received	$	3,011		$	1,412		$	12,050		$	4,019
Interest paid		290,107			96,264			826,708			180,824
Income tax paid		395,166			306,479			839,007			580,383

See Accompanying Notes to Financial Statements and Accountant’s Report

F-8

Sino Gas International Holdings, Inc.

Notes to Consolidated Financial Statements

As of September 30, 2010 and December 31, 2009

And for the three-month and nine-month periods ended September 30, 2010 and 2009

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

Sino Gas International Holdings, Inc. (the “Company”) was incorporated under the laws of the State of Utah on August 19, 1983 as Evica Resources, Inc. The Company changed its name to American Arms, Inc. on April 5, 1984, and then changed its name to Dolce Ventures, Inc. on May 21, 2002, and ultimate changed its name to Sino Gas International Holdings, Inc. on November 17, 2006.

On September 7, 2006, the Company underwent a reverse-merger with Gas Investment China Ltd. (“GIC”), an International Business Company incorporated in the British Virgin Islands, and its wholly-owned subsidiaries, involving an exchange of shares whereby the Company issued an aggregate of 14,361,646 shares to the shareholders of GIC in exchange for all of the issued and outstanding shares of GIC. For financial reporting purposes, this transaction is classified as a recapitalization of Sino Gas International Holdings, Inc. (Legal acquirer, accounting acquiree) and the historical financial statements of Gas Investment China Co. Ltd. (Legal acquiree, accounting acquirer).

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 gas stations, and in the development and application of natural gas related technologies. The Company owns and operates natural gas distribution systems in 35 small and medium size cities serving approximately 167,750 residential and seven industrial customers. The Company’s facilities include approximately 1040 kilometers of pipeline and delivery networks (including delivery trucks) with a daily capacity of approximately 110,000 cubic meters of natural gas.

The common stock of the Company is currently quoted on the National Association of Securities Dealers' Over-the-Counter Bulletin Board under the symbol “SGAS”.

Basis of Presentation and Organization

The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company’s principal subsidiaries, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in the PRC (“PRC GAAP”) or in the accounting standards used in the places of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company’s subsidiaries to present them in conformity with US GAAP.

F-9

Sino Gas International Holdings, Inc.

Notes to Consolidated Financial Statements

As of September 30, 2010 and December 31, 2009

And for the three-month and nine-month periods ended September 30, 2010 and 2009

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 notes 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) Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ materially from those estimates.

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 law and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

F-10

	Year ended
	December 31,				December 31,		December 31,		December 31,
	2005		2006		2007		2008		2009

Net revenue	$	10,907,289		10,870,718		20,267,756		21,448,488		27,591,501
Net Income (Loss)		5,702,433		5,165,757		7,707,370		1,600,493		4,047,584

	HIGH		LOW
CALENDAR QUARTER ENDED	BID(S)		BID(S)
First Quarter of, 2008	$	4.0	$	2.10
Second Quarter of, 2008	$	2.45	$	1.35
Third Quarter of, 2008	$	1.45	$	0.77
Fourth Quarter of 2008	$	0.80	$	0.30
First Quarter of 2009	$	0.40	$	0.06
Second Quarter of 2009	$	0.50	$	0.13
Third Quarter of 2009	$	0.50	$	0.31
Fourth Quarter of 2009	$	1.21	$	0.46
First Quarter of 2010	$	1.05	$	0.72
Second Quarter of 2010	$	0.95	$	0.53
Third Quarter of 2010	$	0.58	$	0.29
Fourth Quarter of 2010	$	0.50	$	0.38

	For the 9 months ended September 30,
	2010					2009					Change
(In $ million)	US$		%			US$		%			%
Net Revenues		20.97		100	%		19.36		100	%		8.33	%
Connection Fees		8.31		40	%		7.49		39	%		10.84	%
Gas Sales		12.66		60	%		11.86		61	%		6.75	%

	For the 9 months ended September 30,
(in US$ millions)	20 10					2009					Change
	US$		%			US$		%			%
Connection Fees		8.31		100	%		7.49		100	%		10.84	%
Residential Users		8.31		99.96	%		7.41		98.83	%		12.11	%
Industrial Users		0.003		0.04	%		0.08		1.17	%		-	%

	For the 9 months ended September 30,
	2010					2009					Change
($ million)	US$		%			US$		%			%
Gas Sales		12.66		100	%		11.86		100	%		6.75	%
Residential Users		6.78		54	%		4.76		40	%		42.57	%
Industrial and Commercial Users		5.88		46	%		7.10		60	%		-17.21	%

	Page
Prospectus Summary		3
Cautionary Statement Concerning Forward-Looking Information		3
Risk Factors		4
Use of Proceeds		12
Management’s Discussion and Analysis or Plan of Operation		13
Business of the Company		23
Management		40
Executive Compensation		42
Principal Stockholders		45
Selling Stockholders		46
Plan of Distribution		49
Description of Securities		52
Legal Matters		54
Experts		54
Available Information		55
Index to Consolidated Financial Statements		F-1

	For the 9 months ended
	September 30,
	2010			2009			Change
	US$			US$			%
Net Revenues		20,971,220			19,357,933			8.33	%
Gross Profit		7,204,302			5,283,466			36.36	%
Operating Income		3,700,092			2,671,882			38.48	%
Net Income		676,230			1,975,407			-65.77	%
Gross Margin		34.35	%		27.29	%		25.87	%
Net Margin		3.22	%		10.20	%

	2010			2009
At Cost
Gas Pipelines	$	45,268,608		$	43,518,519
Motor Vehicles		5,901,486			5,775,903
Machinery & Equipment		1,522,892			1,482,599
Buildings		1,822,746			1,005,517
Leasehold Improvements		82,752			80,113
Office Equipment		253,388			238,673
Less Accumulated depreciation		(5,533,575	)		(4,329,313	)
	$	49,318,297		$	47,772,011

	For the 12 months ended December 31,
	2009			2008			Change
	US$			US$			%
Net Revenues		27,591,501			21,448,488			28.64	%
Gross Profit		9,474,001			7,469,980			26.83	%
Operating Income		5,066,476			2,689,582			88.37	%
Net Income		4,047,584			1,600,493			152.90	%
Gross Margin		34.34	%		34.83	%
Net Margin		14.67	%		7.46	%

	For the 12 months ended December 31,
	2009					2008					Change
(In $ million)	US$		%			US$		%			%
Net Revenues		27.59		100	%		21.45		100	%		28.64	%
Connection Fees		11.89		43.08	%		9.29		43.31	%		27.99	%
Gas Sales		15.70		56.92	%		12.16		56.69	%		29.13	%

	At and for the year ended December 31
	2009		2008
Total gas distributed and supplied (US$ millions)		15.7		12.2
Distribution network (km)		1,040		710
Number of industrial customers		7		5
Number of residential customers		145,000		110,900

	For the year ended Dec 31
(US$ millions)	2009		2008
Gas costs		14.8		11.1
Connection costs		3.3		2.9

Name of Subsidiary	Beijing Gas Equity Interest %
Peixian Weiye Gas Co., Ltd		90

Sihong Weiye Gas Co., Ltd		95

Wuhe Weiye Gas Co., Ltd		100

Changli Weiye Gas Co., Ltd		100

Yutian Zhongran Weiye Gas Co., Ltd		90

Zhangjiakou City Xiahuayuan Jinli Gas Co., Ltd.		100

Wuqiao Gas Co., Ltd		95

Jinzhou Weiye Gas Co., Ltd		95

Shenzhou Weiye Gas Co., Ltd		95

Ningjin Weiye Gas Co., Ltd		95

Linzhang Weiye Gas Co., Ltd		85

Longyao Zhongran Weiye Gas Co., Ltd		95

Xingtang Weiye Gas Co., Ltd		95

Gucheng Weiye Gas Co., Ltd		100

Langfang Development Region Weiye Weihuo Transportation Co., Ltd		95

Beijing Chenguang Gas Ltd.		100

Xinji Zhongchen Gas Co., Ltd		100

Luquan Chenguang Gas Co., Ltd		100

Chengan Chenguang Gas Co., Ltd		100

Nangong Weiye Gas Co., Ltd		100

Sishui Weiye Gas Co., Ltd		95

Guannan Weiye Gas Co., Ltd		100

Sixian Weiye Gas Co., Ltd		100

Baishan Wiye Gas Co., Ltd		100

Hebei Wiye Gas Co., Ltd		100

Yuxian Jinli Gas Co., Ltd.		100

Hengshui Weiye Gas Co., Ltd.		100

Shijiazhuang Chengguang Gas Co., Ltd.		100

Xinhe Weiye Gas Co., Ltd.		100

Gaocheng Weiye Gas Co., Ltd.		100

	Percentage of Connections Fees for the year ended December 31,
Customers	2009			2008
Tongshan Hengxin Co. Ltd.		7.46	%			%
Beijing Huicheng Real Estate Development Co. Ltd.		5.52	%			%
Baishan Huixin Real Estate Co.		5.28	%			%
Oriental Sun-Town Real Estate Co.		4.62	%		5.3	%
Baishan Xingda Real Estate Co.Ltd.		3.5 0	%			%
Total		26.38	%		5.3	%

	Percentage of Sales Fiscal year ended December 31,
Customers	2009			2008
Hebei Zhong Gang Steel		20.46	%		25.23	%
Hongyuan Caituban Factory		6.17	%		-	%
Huabei Machine Factory		2.99	%		3.97	%
Jingzhou Zhongyou Co.		1.13	%		-	%
Elite (Lang Fang) Textile		1.04	%		0.88	%
Total		31.79	%		30.08	%

	Ticker	09 Revenue (in $millions)		09 Net Income (in $millions)
Towngas China Co., Ltd (Panva Gas)(1)	1083.HK		336		34
Xinao Gas Holdings Ltd(2)	2688.HK		1,062		81

China Gas Holdings Limited(3)	0384.HK		813		13

	2003		2004		2005		2006		2007		2008		2009
Wellhead	$	0.09	$	0.09	$	0.08	$	0.11	$	0.11	$	0.12	$	0.12
Pipeline	$	0.09	$	0.09	$	0.09	$	0.09	$	0.09	$	0.09	$	0.09
Purification	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01
Total	$	0.19	$	0.19	$	0.18	$	0.21	$	0.21	$	0.22	$	0.22

	At and for the year ended December 31,
	2009		2008
	(in USD)		(in USD)
Amount of social insurance		350,860		212,327

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	Other		1,520	November 25,	November 25,
	Huang He	commercial			2003	2043
	Road, Cai	use
	Yuan Town,
	Wu Qiao
	County

	Wu Guo Yong
	(2003) Zi
	Di Chu No.
	208

Yu Tian Country Zhong Ran	Between East	Industrial		2,674.5	June 8,	May 21,
Wei Ye Gas Ltd.	side of Yu	use			2004	2054
	Zun West
	Road and
	South side of
	Guan Qu,
	Yu Tian
	County

	Yu Tian Guo
	Yong
	(2004) Zi Di
	No. 097

Xiahuayuan	East	Commercial		3,320	2008	2048
Jinli Gas Ltd.	side of Xinchen	use
	Road in Xiahuayuan
	District of
	Zhangjiakou City

Directors and Executive Officers	Position/Title	Age
Yuchuan LIU	President & Chief Executive Officer, Director and Chairman of the Board	44
Zhicheng ZHOU	Chief Operating Officer/Director	44
Zhimin ZHONG	Marketing Director	53
Shukui BIAN	Vice President & Chief Engineer	44
Yugang ZHANG	Chief Financial Officer	37
Guowei CHEN	Director	52
Quandong SUN	Director	42
Zhongsheng LIU	Director	49

Name and Principal Underlying Positions	Year	Salary		Bonus		Option Awards	Stock Awards	All Other Compensation	Total
Yuchuan Liu-	2009	$	110,000	$	*65,000				$	175,000
President & CEO	2008	$	110,000	$	65,000				$	175,000

Yugang Zhang-CFO	2009	$	131,500	$	*43,500				$	175,000
(effective August 2008)	2008	$	47,500	$	15,500				$	63,000

Zhicheng Zhou-Chief	2009	$	90,000	$	*85,000				$	175,000
Operating Officer	2008	$	116,000	$	59,000				$	175,000

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non- Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Yuchuan Liu		0							0
Zhicheng Zhou		0							0
Guowei Chen		10,000							10,000
Quandong Sun		10,000							10,000
Zhongsheng Liu		10,000							10,000

	Amount and Nature of Beneficial Ownership					Percent of Class
Shareholder	Series B Preferred Stock(1)		Common Stock(2)			Series B Preferred Stock			Common Stock
Owner of More than 5% of Class

Eloten Group Ltd.				6,524,174	(4)(5)					24.0	%
Leading King Investment Limited				5,384,923	(6)(7)					19.8	%
Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund, L.P.		4,380,413		2,451,446	(8)		93.7	%		9.0	%
T. Rowe Price Small-Cap Value Fund, Inc.				1,732,210	(9)					6.4	%
Jayhawk Private Equity Fund, LP				3,614,211	(10)					11.9	%

Directors and Executive Officers
Liu Yuchuan				6,637,043	(4)(5)(11)					24.4	%
Sun Quandong				5,384,923	(6)(7)					19.8	%
Zhong Zhimin				393,581	(3)					1.5	%
Zhou Zhicheng				112,869	(12)					*
Bian Shukui				173,962	(3)					*
Liu Zhongsheng				-						-
Chen Guowei										-
Zhang Yugang				112,847	(13)					*

All Directors and Executive Officers				12,815,225						47.1	%

	Shares Beneficially Owned Prior to the		Shares to		Shares Beneficially Owned After the Offering
Selling Stockholders	Offering (14)		be Sold		Number		Percent

SEI Private Trust FAO - The JM Smucker Co Master Trust (1) (2) (5) (6) (16)		459,326		131,093		328,233		*
Jayhawk Private Equity Co-Invest Fund, LP (1) (7) (15)		243,695		43,068		200,627		*
Jayhawk Private Equity Fund, LP (1) (7) (15)		3,870,458		683,988		3,186,670		6.5	%
MidSouth Investor Fund LP (1) (8) (16)		262,186		262,186		0		*
Precept Capital Master Fund, GP (1) (9)		27,975		27,975		0		*
Straus Partners LP (1) (10) (15) (16)		942,883		265,464		677,419		1.4	%
Straus-GEPT Partners LP (1) (10) (15) (16)		776,069		324,456		451,613		*
T. Rowe Price Small-Cap Value Fund, Inc. (1) (11)		2,185,261		2,185,261		0		*
Vision Opportunity Master Fund, Ltd. (1) (2) (3) (4) (5) (12) (16)		7,939,625		1,071,639		6,867,986		1.4	%
Vision Capital Advantage Fund LP(1) (2) (3) (4) (5) (12) (16)		2,346,601		316,728		2,029,873		4.2	%
Whitebox Intermarket Partners, LP (1) (13) (16)		393,280		393,280		0		*

Name of Company	Place of Incorporation	Date of Incorporation	Beneficiary Interest %	Equity Interest %	Registered Capital
GAS Investment China Co., Ltd.	The British Virgin Islands	6/19/2003	100	100	USD 10,000,000

Sino Gas Construction, Ltd.	The British Virgin Islands	1/9/2007	100	100	USD 50,000

Sino Gas Investment Development, Ltd.	The British Virgin Islands	1/9/2007	100	100	USD 50,000

Beijing Zhong Ran Wei Ye Gas Co., Ltd.	PRC	8/29/2001	100	100	RMB 206,000,000

Beijing Chenguang Gas, Ltd.	PRC	10/30/2002	100	100	RMB 35,239,600

Guannan Weiye Gas Co., Ltd.	PRC	6/19/2003	100	100	RMB 9,510,000

Ningjin Weiye Gas Co., Ltd	PRC	12/3/2003	100	95	RMB 3,000,000

Yutian Zhongran Weiye Gas Co., Ltd.	PRC	12/19/2003	100	90	RMB 3,000,000

Xingtang Weiye Gas Co., Ltd.	PRC	2/18/2004	100	95	RMB 3,000,000

Wuqiao Gas Co., Ltd.	PRC	6/30/2004	100	95	RMB 2,000,000

Jinzhou Weiye Gas Co., Ltd.	PRC	7/19/2004	100	95	RMB 5,000,000

Sihong Weiye Gas Co., Ltd.	PRC	12/3/2004	100	95	RMB 10,000,000

Sishui Weiye Gas Co., Ltd.	PRC	12/22/2004	100	95	RMB 3,000,000

Langfang Weiye Dangerous Goods Transportation Co., Ltd.	PRC	3/22/2005	100	95	RMB 1,000,000

Linzhang Weiye Gas Co., Ltd.	PRC	7/6/2005	100	85	RMB 1,000,000

Peixian Weiye Gas Co., Ltd.	PRC	8/22/2005	100	90	RMB 5,000,000

Zhangjiakou City Xiahuayuan Jinli Gas Co., Ltd.	PRC	9/30/2005	100	100	RMB 2,000,000

Longyao Zhongran Weiye Gas Co., Ltd.	PRC	10/13/2005	100	95	RMB 3,000,000

Yuxian Jinli Gas Co., Ltd.	PRC	11/8/2005	100	100	RMB 9,500,000

Hengshui Weiye Gas Co., Ltd.	PRC	12/20/2005	100	100	RMB 3,000,000

Shenzhou Weiye Gas Co., Ltd.	PRC	12/23/2005	100	95	RMB 3,000,000

Changli Weiye Gas Co., Ltd.	PRC	12/8/2006	100	100	RMB 3,000,000

Chenan Chenguang Gas Co., Ltd	PRC	1/23/2007	100	100	RMB 1,500,000

Wuhe Weiye Gas Co., Ltd.	PRC	1/30/2007	100	100	RMB 3,000,000

Xinji Zhongchen Gas Co., Ltd	PRC	2/7/2007	100	100	RMB 3,000,000

Gucheng Weiye Gas Co., Ltd.	PRC	3/21/2007	100	100	RMB 3,000,000

Luquan Chenguang Gas Co., Ltd.	PRC	4/27/2007	100	100	RMB 2,000,000

Shijiazhuang Chenguang Gas Co., Ltd.	PRC	6/14/2007	100	100	RMB 2,000,000

Nangong Weiye Gas Co., Ltd.	PRC	6/25/2007	100	100	RMB 3,000,000

Sixian Weiye Gas Co., Ltd.	PRC	9/3/2007	100	100	RMB 3,000,000

Baishan Weiye Gas Co., Ltd.	PRC	7/13/2007	100	100	RMB 15,000,000

Xinhe Weiye Gas Co., Ltd.	PRC	7/2/2009	100	100	RMB 1,000,000
Hebei Weiye Gas Co., Ltd.	PRC	12/18/2009	100	100	RMB 75,439,270
Gaocheng Weiye Gas Co., Ltd.	PRC	1/27/2010	100	100	RMB 200,000

Place of Registration	Form of Business Structure	Registered Capital	Nominal Value of Registered Capital	Principle Activities
PRC	Sino-foreign equity joint venture	RMB 20,000,000	40%	Distribution of natural gas and gas pipeline construction
PRC	Equity joint venture	RMB 30,000,000	39%	Distribution of natural gas and gas pipeline construction

Assets Class		Estimated Useful Life
Gas Pipelines (Up to December 31, 2007)		25 years
Gas Pipelines (Starting from January 1, 2008)		50 years
Buildings		25 years
Leasehold Improvements		25 years
Machinery & Equipment		20 years
Motor Vehicles		10 years
Office Equipment		8 years

Asset Class		Estimated Useful Life
Land use rights		20 - 50 years
Franchises		30 years
Accounting software		3 years

	9/30/2010		12/31/2009
Years end RMB: US$ exchange rate		6.6981		6.8372
Average yearly RMB: US$ exchange rate		6.8164		6.8409

Subsidiary	Country of Domicile	Income Tax Rate
PRC Operating Companies (per Note 2. (d) Principals of Consolidation	PRC	25.0%
i. GAS Investment China Co., Ltd.	British Virgin Islands	0.00%
ii. Sino Gas Construction, Ltd.	British Virgin Islands	0.00%
iii. Sino Gas Investment Development, Ltd.	British Virgin Islands	0.00%

Allowance for Bad Debt
	9/30/2010		12/31/2009
Beginning balance	$	50,875	$	35,794
Addition		14,039		15,081
Reversal		-		-
Ending balance	$	64,914	$	50,875

Accounts Receivable Aging Report
	9/30/2010		12/31/2009
<30 Days	$	4,072,606	$	3,639,712
30-60 Days		105,145		276,004
60-90 Days		73,445		118,704
90-180 Days		647,911		422,179
180-360 Days		1,166,794		446,515
>360 Days		425,538		184,370
Total	$	6,491,439	$	5,087,484