10-Q/A

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark one)

x Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2011

or

o Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 000-51364

SINO GAS INTERNATIONAL HOLDINGS, INC.

(Name of small business issuer in its charter)

Utah	90-0438712
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

No. 18 Zhong Guan Cun Dong St. Haidian District Beijing, P. R. China	100083
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number:  86-10-82600527

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x No o

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

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes  o No x

As of June 30, 2011, the Registrant had 27,237,262 shares of common stock outstanding.

Sino Gas International Holdings, Inc.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to Sino Gas International Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011, (“Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and relates notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Item 6.  Exhibits

Exhibit Number:	Description
31.1**	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101	The following materials from Sino Gas International Holdings, Inc.’s Quarterly Report on Form 10-Q for the three months ended June 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited) as of June 30, 2011 and December 31, 2010; (ii) Statements of Operations (unaudited) for the three and six months ended June 30, 2011 and June 30, 2010; (iii) Consolidated Statements of Changes in Shareholders’ Equity (unaudited); (iv) Consolidated Statements of Cash Flows (unaudited) for the three and six months ended June 30, 2011 and June 30, 2010 and (v) Notes to the Unaudited Consolidated Financial Statements (unaudited).
** These exhibits were previously included or incorporated by reference in Sino Gas International Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant certifies that it has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized, in Beijing.

	SINO GAS INTERNATIONAL HOLDINGS, INC.
Date: August 31, 2011	By:	/s/ Yuchuan Liu
		Yuchuan Liu
		Chairman and Chief Executive Officer
		(Principal Executive Officer)
	SINO GAS INTERNATIONAL HOLDINGS, INC.
Date: August 31, 2011	By:	/s/ Baoling Wang
		Baoling Wang
		(Principal Accounting Officer)

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Consolidated Balance Sheets [Parenthetical] (USD $)	Jun. 30, 2011	Dec. 31, 2010
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	27,237,262	27,156,617
Common stock, shares outstanding	27,237,262	27,156,617
Preferred Stock B
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	4,590,094	4,590,094
Preferred stock, shares outstanding	4,590,094	4,590,094
Preferred Stock B-1
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	95,418	95,418
Preferred stock, shares outstanding	95,418	95,418

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Consolidated Statements of Income (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Sales revenue	$ 7,875,152	$ 5,916,218	$ 15,861,422	$ 12,873,879
Cost of revenue	5,472,200	4,010,333	11,038,044	8,843,480
Gross Profit	2,402,952	1,905,885	4,823,378	4,030,399
Operating Expense
Selling expense	501,291	310,661	1,078,152	581,904
General and administrative expense	950,168	698,598	2,186,056	1,605,129
Total operating expense	1,451,459	1,009,259	3,264,208	2,187,033
Operating Income	951,493	896,626	1,559,170	1,843,366
Other Income/(Expense)
Gain on disposal of property and equipment	1,115,903	0	1,115,903	0
Other income	10	4,914	345	10,296
Other expense	(43,257)	(20,197)	(47,220)	(21,497)
Interest income	3,463	4,270	5,528	9,039
Interest expense	(501,687)	(821,709)	(963,409)	(1,746,550)
Total other income/(expense)	574,432	(832,722)	111,147	(1,748,712)
Income before tax	1,525,925	63,904	1,670,317	94,654
Income tax	(316,646)	(204,506)	(354,483)	(443,842)
Gain/(Loss) from discontinued operations, net of tax	105,093	0	105,093	0
Net income	1,314,372	(140,602)	1,420,927	(349,188)
Net income (loss) attributable to:
- Common stockholders	1,336,138	(140,602)	1,456,659	(349,188)
- Non-controlling interest	$ (21,766)	$ 0	$ (35,732)	$ 0
Earnings per share
Basic (in dollars per share)	$ 0.05	$ (0.01)	$ 0.05	$ (0.01)
Diluted (in dollars per share)	$ 0.04	$ (0.01)	$ 0.05	$ (0.01)
Weighted Average Shares Outstanding
Basic (in shares)	27,157,513	26,839,657	27,157,065	26,804,485
Diluted (in shares)	36,501,007	26,839,657	27,157,065	26,804,485

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

15. EARNINGS PER SHARE

Components of basic and diluted earnings per share were as follows:

	Ref		6/30/2011			6/30/2010
Net Income			$	1,420,927		$	(349,188	)
Preferred Dividends				-			-
Constructive Preferred Dividends				-			-
Net loss attributed to non-controlling interest				(35,732	)		-
Income Available to Common Stockholders for Basic EPS			$	1,456,659		$	(349,188	)
Interest Expense for Convertible Bonds, net of tax				573,878			-
Income Available to Common Stockholders for Diluted EPS			$	2,030,536		$	(349,188	)
Original Shares				27,156,617			26,769,313
Addition to Common Stock				448			35,172
Basic Weighted Average Shares Outstanding				27,157,065			26,804,485
Potentially Dilutive Securities:
Addition to Common Stock from Conversion of Preferred Stock B		(1)		-			-
Addition to Common Stock from Conversion of Preferred Stock B-1		(2)		-			-
Addition to Common Stock from Conversion of Convertible Bonds		(3)		-			-
Addition to Common Stock from Exercise of Warrants		(4)		-			-
Diluted Weighted Average Shares Outstanding				27,157,065			26,804,485
Earnings Per Share
- Basic			$	0.05		$	(0.01	)
- Diluted			$	0.05		$	(0.01	)
Weighted Average Shares Outstanding
- Basic				27,157,065			26,804,485
- Diluted				27,157,065			26,804,485

1) The application of conversions’ of preferred stock B to common stock was anti-dilutive for the six months ended June 30, 2011.

2) The application of conversions of preferred stock B-1 to common stock was anti-dilutive for the six months ended June 30, 2011.

3) The average price of the Company’s common stock was $0.42 for the six-month periods ended June 30, 2011, which was lower than the conversion price $0.62 of the convertible bonds. Therefore, the conversion of convertible bonds have been excluded from diluted weighted average shares.

4) The exercise of warrants to common stock was anti-dilutive for the six-month periods ended June 30, 2011.

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Doocument and Entity Information	6 Months Ended
	Jun. 30, 2011
Entity Registrant Name	Sino Gas International Holdings, Inc.
Entity Central Index Key	0001326364
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	sgas
Entity Common Stock, Shares Outstanding	27,237,262
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2011

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RELATED PARTY RECEIVABLE

6 Months Ended

Jun. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

4. RELATED PARTY RECEIVABLE

The related party receivable $417,698 was due from the Company’s founder and CEO Mr. Liu Yuchuan. The Company borrowed $3,024,895 (RMB 20,000,000) from China Development Bank. The loan was securitized by the CEO’s personal home property, which carried a $408,361 (RMB 2,700,000) mortgage. Because the Bank required the mortgage loan to be settled before it would collateralize on it, the Company paid the entire mortgage on behalf of the CEO. This payment was interest free.

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DISCONTINUED OPERATION

6 Months Ended

Jun. 30, 2011

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

17. DISCONTINUED OPERATION

The Company through its indirectly wholly owned subsidiary Beijing Gas to execute share transfer agreements and other related agreements (the “Agreements”) with Hebei Natural Gas Co., Ltd. (“Hebei Gas”) to sell assets and ownership of three of its subsidiaries, a) Xinji Zhongchen Gas Co., Ltd., (“Xinji Gas”) b) Jinzhou Weiye Gas Co., Ltd., (“Jinzhou Gas”) and c) Shenzhou Weiye Gas Co., Ltd. (“Shenzhou Gas”) for total consideration of RMB 44.8 million (approximately USD $6.84 million). Upon the completion of registered capital transfer filed with local government’s industrial and commercial administration, the disposition took effect on June 8, 2011. The Company has accounted for the disposition of the assets of discontinued operation in accordance with SFAS 144 (“FASB ASC 360”), “Accounting for the Impairment or Disposal of Long-Lived Assets”. A total gain of $1,115,903 was recorded in the Company’s statement of income for the six months ended June 30, 2011.

The following tabulation summarized the financial positions and result of operations of disposal subsidiaries as of and for the period ended June 8, 2011:

	Condensed Balance Sheets
	Jinzhou Gas		Shenzhou Gas		Xinji Gas		Total
Current assets	$	318,870	$	309,043	$	434,016	$	1,061,929
Non-current assets		2,946,728		1,068,812		1,221,403		5,236,943
Total assets		3,265,598		1,377,855		1,655,419		6,298,872
Current liabilities		1,202,229		485,274		215,890		1,903,393
Non-current liabilities		-		-		-		-
Total liabilities		1,202,229		485,274		215,890		1,903,393
Net assets		2,063,369		892,581		1,439,529		4,395,479
Total liabilities & net assets	$	3,265,598	$	1,377,855	$	1,655,419	$	6,298,872

	Condensed Income Statements
	Jinzhou Gas			Shenzhou Gas			Xinji Gas			Total
Revenue	$	355,684		$	274,289		$	9,460		$	639,433
Cost of revenue		214,835			221,852			8,130			444,817
Gross profit		140,849			52,437			1,330			194,616
Operating expenses		18,039			15,826			34,737			68,602
Operating income		122,810			36,611			(33,407	)		126,014
Other income/(expenses)		(239	)		(223	)		(3,181	)		(3,643	)
Earnings before tax		122,571			36,388			(36,588	)		122,371
Income tax		(6,127	)		(11,039	)		(112	)		(17,278	)
Net income	$	116,444		$	25,349		$	(36,700	)	$	105,093

The follows presented the calculation of gain from the disposal of property and equipment:

	Valuation of Disposition		Acquisition Price		Gain/(Loss)
Jinzhou Gas	$	3,130,470	$	2,958,639	$	(171,831	)
Shenzhou Gas		1,320,031		1,276,126		(43,905	)
Xinji Gas		1,275,192		2,606,831		1,331,639
	$	5,725,693	$	6,841,596	$	1,115,903

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LOANS

6 Months Ended

Jun. 30, 2011

Loan [Abstract]

Loans Disclosure [Text Block]

9. LOANS

a.          SHORT-TERM BANK LOANS

Name of Bank	Due Date	Interest Rate			6/30/2011		12/31/2010
China Minsheng Banking Corp., Ltd. - Pinganli Branch	11/15/2011		6.67	%	$	1,082,921	$	1,058,713
Bank of Dalian - Beijing Branch	12/14/2011		4.63	%		4,641,089		4,537,343
Bank of Communications - Zhongguancun Branch	12/14/2011		5.94	%		2,320,545		2,268,671
Bank of China - Huanghe Boulevard Branch	0 1/31/2012		6.391	%		1,547,030		-
China Construction Bank - Baishan Chengqu Branch	06/02/2012		8.20	%		1,392,326		-
China Merchants Bank- Beijing Shouti Branch	06/28/2011		7.57	%		1,547,030		-
Total					$	12,530,941	$	7,864,727

1) The loan provided by China Minsheng Bank Corp., Ltd. was guaranteed by the CEO Mr. Liu Yuchuan’s personal credit.

2) The loans provided by Bank of Dalian were secured by the Company’s subsidiary Chengguang Gas’ registered capital, CEO Mr. Liu Yuchuan and COO Mr. Zhou Zhicheng’s personal home properties, which have been appraised at total fair market value of $933,254 (RMB 6,380,854)

3) The loan provided by Bank of China was guaranteed by Hebei Desheng Guarantee Co., Ltd. (“Hebei Desheng”). In connection with this collateralization, the Company was required to pay approximately $45,000 (RMB 300,000) as financial service to Hebei Desheng.

4) The loan provided by China Construction Bank was secured by the Company’s real estate and vehicles.

5) The loan provided by China Merchants Bank was guaranteed by the CEO Mr. Liu Yuchuan with unlimited liability, and the management Mr. Wang Weidong and Ms. Song Erxin with $154,703 (RMB 1,000,000) liabilities respectively.

b.          LONG-TERM BANK LOANS

Name of Bank	Due Date	Interest Rate			6/30/2011		12/31/2010
China Development Bank - Beijing Branch	12/24/2012		5.40	%	$	3,094,059	$	3,024,895
Total					$	3,094,059	$	3,024,895

1) The Company obtained the loans from Bank of Communications and China Development Bank via a collateralized agent Zhongyuan Guoxin Credit Guarantee Co., Ltd (“Guarantor”). Guarantor guaranteed to the Banks the entire principal and accrued interest. The Company pledged all Beijing Gas’ subsidiaries and deposited $1,028,464 (RMB 6,800,000), which was classified as non-current asset deposits, to the guarantor, and was required to pay 2% of the outstanding loans as financial service to the guarantor per annum. Because the Company lacked the favorable credit history to directly establish credit facility with the banks, the pursuance of a credit collateralization from guarantor was a financing solution of choice.

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Consolidated Statements of Cash Flows (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Cash Flows from Operating Activities
Net Income	$ 1,314,372	$ (140,602)	$ 1,420,927	$ (349,188)
Bad debt provision	25,347	0	34,404	0
Depreciation expense	349,957	383,177	707,167	722,094
Amortization expense of intangible assets	15,866	9,439	42,493	16,865
Amortization expense of convertible bonds	170,022	529,593	332,159	1,209,949
Loss/(gain) on disposal of property and equipment	1,115,903	0	1,115,903	0
Withdraw/(deposit) in restricted time deposits	0	95,425	0	126,400
Decrease/(increase) in accounts and other receivables	(2,073,677)	791,824	(3,881,538)	(560,158)
Decrease/(increase) in inventory	(60,590)	45,110	(269,144)	(114,067)
Decrease/(increase) in prepaid expenses	(736,914)	(443,484)	104,842	299,136
Decrease/(Increase) in related party receivable	(6,745)	0	(9,337)	0
Increase/(decrease) in accounts and other payables	1,849,302	(12,197)	1,673,932	(3,017,201)
Cash Sourced/(Used) in Operating Activities of Continued Operation	1,962,842	1,285,285	1,271,807	(1,666,170)
Cash Sourced/(Used) in Operating Activities of Discontinued Operation	181,859	0	181,859	0
Cash Sourced/(Used) in Operating Activities	2,144,701	1,258,285	1,453,666	(1,666,170)
Cash Flows from Investing Activities
Decrease in deposit	(12,085)	0	135,079	0
Proceeds from disposal of discontinued operation	4,504,950	0	4,504,950	0
Increase of investment in equity	(312,130)	(28,404)	(599,486)	(29,536)
Purchase of property, plant & equipment	(3,836,495)	(238,624)	(5,762,152)	(1,828,932)
Purchase of other intangible assets	(9,957)	(4,406)	(11,406)	(4,564)
Increase in construction in progress	(1,943,522)	(2,434,392)	(1,948,480)	(2,449,315)
Cash Sourced/(Used) in Investing Activities of Continued Operation	(1,609,239)	(2,705,826)	(3,681,495)	(4,312,347)
Cash Sourced/(Used) in Investing Activities of Discontinued Operation	(307,707)	0	(307,707)	0
Cash Sourced/(Used) in Investing Activities	(1,916,946)	(2,705,826)	(3,989,202)	(4,312,347)
Cash Flows from Financing Activities
Increase/(decrease) of bank loans	3,144,216	47,738	4,735,378	2,243,030
Cash Sourced/(Used) in Financing Activities	3,144,216	47,738	4,735,378	2,243,030
Net increase in cash & cash equivalents for the periods	3,371,971	(1,399,805)	2,199,842	(3,735,487)
Effect of currency translation	101,299	254,902	74,185	275,307
Cash & cash equivalents at the beginning of periods	2,383,087	7,505,613	3,582,330	9,820,890
Cash & cash equivalents at the end of periods	5,856,357	6,360,710	5,856,357	6,360,710
Supplementary cash flows information
Interest received	3,463	4,269	5,528	9,039
Interest paid	409,781	290,787	952,418	536,601
Income tax paid	$ 219,829	$ 204,507	$ 712,661	$ 443,842

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PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2011

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

6. PROPERTY, PLANT AND EQUIPMENT

Property, Plant, and Equipment consisted of the follows at June 30, 2011 and December 31, 2010:

6/30/2011	At Cost		Accumulated Depreciation		Net
Gas Pipelines	$	44,557,695	$	2,913,722	$	41,643,973
Motor Vehicles		6,195,361		2,085,893		4,109,468
Machinery & Equipment		1,527,796		381,851		1,145,845
Buildings		2,331,987		362,305		1,969,682
Leasehold Improvements		556,866		74,424		482,442
Office Equipment		267,571		130,619		136,952
Total	$	55,437,276	$	5,948,814	$	49,488,462

12/31/2010	At Cost		Accumulated Depreciation		Net
Gas Pipelines	$	44,512,342	$	2,563,156	$	41,949,186
Motor Vehicles		6,067,524		1,873,107		4,194,417
Machinery & Equipment		1,542,016		347,088		1,194,928
Buildings		2,316,729		271,630		2,045,099
Leasehold Improvements		475,099		69,242		405,857
Office Equipment		256,419		117,424		138,995
Total	$	55,170,129	$	5,241,647	$	49,928,482

Gas pipelines purchased prior to 2008 were depreciated over their 25 years useful lives. Starting from 2008, the Company purchased new quality of pipelines under a 50 years warranty. The new gas pipelines were depreciated over their 50 years useful lives.

Depreciation expenses included in the consolidated statements of income for the six months ended June 30, 2011 and 2010 were $707,167 and $722,094 respectively.

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CONVERTIBLE BONDS AND BOND WARRANTS

6 Months Ended

Jun. 30, 2011

Convertible Bonds and Bond Warrants [Abstract]

Convertible Bonds and Bond Warrants Disclosure [Text Block]

11. CONVERTIBLE BONDS AND BOND WARRANTS

a.          $5,349,982 Convertible Bond with 3,451,601 Detachable Warrants

On November 30, 2009, the Company completed a financing transaction with certain purchasers issuing (i) $5,349,982 of the 8% senior secured convertible notes (the “Bonds”) with conversion price of $0.62 to purchase an aggregate of 8,629,003 shares of the Company’s common stock and (ii) 3,451,601 warrants to purchase an aggregate of 3,451,601 shares of the Company’s common stock, which will expire in November 30, 2012 (both the “Bonds” and “Warrants”)

b.          $692,984 Convertible Bond with 447,086 Detachable Warrants

On December 23, 2009, the Company completed a financing transaction with certain purchasers issuing (i) $692,984 of the 8% senior secured convertible notes (the “Bonds”) with conversion price of $0.62 to purchase an aggregate of 1,117,716 shares of the Company’s common stock and (ii) 447,086 warrants to purchase an aggregate of 447,086 shares of the Company’s common stock, which will expire in December 23, 2012 (both the “Bonds” and “Warrants”)

· Pledge Agreement and Guaranty

The notes are secured by the pledge of 100% of the shares of the Company’s wholly owned subsidiary Gas Investment China Co., Ltd. and a guaranty from Mr. Liu Yuchuan, the chairman of the board of directors and CEO of the Company.

· Event of Default

Upon an event of default in any payment of interest or principal of the bonds, the principal, accrued and unpaid interest, and any additional amounts owing in respect of the bonds, will be due and payable at the option of the bondholders. In addition, the bondholders have the right to convert these notes and then all accrued and unpaid interest at any time.

· Redemption

Bondholders 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, upon the occurrence of any change of control transaction or if the Company’s common stock 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.

The Company has the right to redeem either 50% or 100% of the outstanding principal amount of these notes on or after one year from the issuance days.

The convertible bonds payable, net consisted of the followings:-

		6/30/2011
Ref.		5.3M Bonds			692K Bonds			Total
(1)	Convertible Bonds Payable - principal	$	5,349,982		$	692,984		$	6,042,966
(2)	Less: Interest Discount - Warrants		(178,950	)		(44,417	)		(223,367	)
(3)	Less: Interest Discount - Beneficial Conversion Feature		(869,270	)		(223,252	)		(1,092,522	)
(4)	Less: Bond Discount - Issuance Cost		(503,766	)		(91,382	)		(595,148	)
(5)	Accretion of Interest Discount - Warrants		82,106			18,962			101,068
(6)	Accretion of Interest Discount - Beneficial Conversion Feature		869,270			223,252			1,092,522
(7)	Accretion of Bond Discount - Issuance Cost		231,138			39,012			270,150
(8)	Accretion of Interest Discount - Redemption		515,482			62,125			577,607
(9)	Conversion of Convertible Bonds into Common Stock		(250,000	)		-			(250,000	)
	Convertible Bonds Payable, net		5,245,992			677,284			5,923,276

		12/31/2010
Ref.		5.3M Bonds			692K Bonds			Total
(1)	Convertible Bonds Payable - principal	$	5,349,982		$	692,984		$	6,042,966
(2)	Less: Interest Discount - Warrants		(178,950	)		(44,417	)		(223,367	)
(3)	Less: Interest Discount - Beneficial Conversion Feature		(869,270	)		(223,252	)		(1,092,522	)
(4)	Less: Bond Discount - Issuance Cost		(503,766	)		(91,382	)		(595,148	)
(5)	Accretion of Interest Discount - Warrants		53,545			12,034			65,579
(6)	Accretion of Interest Discount - Beneficial Conversion Feature		869,270			223,252			1,092,522
(7)	Accretion of Bond Discount - Issuance Cost		150,735			24,758			175,493
(8)	Accretion of Interest Discount - Redemption		336,168			39,426			375,594
(9)	Conversion of Convertible Bonds into Common Stock		(200,000	)		-			(200,000	)
	Convertible Bonds Payable, net	$	5,007,714		$	633,403		$	5,641,117

1) The principal amounts listed above represent the face amount of the convertible notes.

2) The proceeds were allocated between the convertible bonds and warrants based on their relative fair value. See Note 13 Capital Stock for the calculation of fair value of convertible bonds detachable warrants.

3) Because the conversion price of bonds is $0.62, which was lower than the fair market value of common stock at issuance day, beneficial conversion feature was applied.

4) The issuance cost consisted of commission to placement agent and legal expense.

5) The interest discount of warrants was amortized over the whole period applying effective annual interest rate.

6) The bonds were convertible at the option of the holders into shares of common stock. However, Rule 144 minimum of six months holding period requirement for a resale of securities was required, therefore, the beneficial conversion feature was amortized over six months period.

7) The debt issuance cost was amortized over 36 months period applying effective annual interest rate.

8) Based on 15% per annum redemption rate, the redemption values were determined to be $1,123,496 and $145,527 for the $5,349,982 and $692,984 convertible bonds respectively.

9) Principal of $200,000 was converted into 322,581 shares common stock on August 24, 2010. Additional, $50,000 principal was converted into 80,645 shares common stock on June 29, 2011.

Included in interest expense of $963,409, was $241,719 convertible bonds coupon expense, $332,159 non-cash flow amortization expense of convertible bonds, and $389,531 bank loan interest expense.

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GOODWILL

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill Disclosure [Text Block]

7. GOODWILL

Goodwill was related to the acquisitions of Beijing Chenguang Gas Co., Ltd. (“Chengguang Gas”), Yuxian Weiye Gas Co., Ltd. (“Yuxian Gas”) and Guannan Weiye Gas Co., Ltd. (“Guannan Gas”). Management annually reviewed the carrying value of goodwill using the sum of the discounted cash flows to determine if an impairment charge is necessary. The Company has determined no impairment to goodwill as of date.

	6/30/2011		12/31/2010
Yuxian Gas	$	10,954	$	10,954
Guannan Gas		409,963		409,963
Chengguang Gas		1,257,058		1,257,058
	$	1,677,975	$	1,677,975

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INVESTMENT

6 Months Ended

Jun. 30, 2011

Investment Options [Abstract]

Investment Holdings [Text Block]

5. INVESTMENT

Ref.		6/30/2011		12/31/2010
(1)	Beijing Zhongran Xiangke Oil Gas Technology Co., Ltd.	$	6,192,659	$	6,054,228
(2)	Qujing City Fuel Gas Co., Ltd.		3,490,726		3,490,726
(3)	Tongshan Hengxin Jiaye Gas Co., Ltd.		3,679,545		3,219,181
(4)	China Construction Bank		30,941		30,249
	Total	$	13,393,871	$	12,794,384

(1) The Company through its wholly owned subsidiary Beijing Gas invested $1,642,152 (RMB 13,465,648) on Xiangke Oil Gas in the acquisition of 40% equity position. The $6,192,659 investment as of June 30, 2011 consisted of principal and accumulated post-acquisition investment income attributed to Xiangke Oil Gas’ operation results.

The following tabulation presented the condensed balance sheet and statement of income ofXiangke Oil Gas as of and for the year ended December 31, 2010:

Beijing Zhongran Xiangke Oil Gas Technology Co., Ltd.
Condensed Balance Sheets			Condensed Statements of Income
Assets	12/31/2010			12/31/2010
Current assets	$	11,185,589	Revenue	$	15,534,241
Non-current assets		20,708,416	Cost of revenue		10,946,208
Total assets		31,894,004	Gross profit		4,588,033
Liabilities			Operating expenses		2,404,563
Current liabilities		12,667,599	Operating income		2,183,470
Non-current liabilities		4,537,342	Other income/(expenses)		(357,745	)
Total liabilities		17,204,941	Earnings before tax		1,825,725
Net Assets		14,689,063	Income tax		(404,846	)
Total Liabilities & Net Assets	$	31,894,004	Net income	$	1,420,879

(2) Along with two local partners in Qujing city, the second largest city in Yunnan province of the PRC, Beijing Gas established Qujing City Fuel Gas Co., Ltd. with registered capital of $4,387,761 (RMB 30,000,000). Beijing Gas’ original investment of $1,746,764 (RMB 11,700,000) presented 39% equity ownership of Qujing Gas.

On December 17, 2010, the Company, among with its wholly owned subsidiaries Gas Construction and Beijing Gas, entered into a Subscription Agreement with AMP Capital Asian Giants Infrastructure Fund (“AGIF”), under the terms of which Gas Construction issued to AGIF 48,039 number of ordinary shares that represents 49% of the total issued capital of Gas Construction for a consideration of US$2.0 million. In addition, pursuant to the Subscription Agreement, the equity interest in Qujing Gas held by Beijing Gas was transferred to Gas Construction so that Gas Construction has become the beneficial holder of 39% equity interest in Qujing Gas.

After the close of the equity subscription, shareholders of Qujing Gas amended the Articles of Incorporation to raise the level of registered capital. On December 28, 2010, Gas Construction invested additional $1,525,000 into Qujing Gas. The $3,490,726 investment as of June 30, 2011 consisted of principal and accumulated post-acquisition investment income attributed to Qujin Gas’ operation results.

The following tabulation presented the condensed balance sheet and statement of income ofQujing Gas as of and for the year ended December 31, 2010:

Qujing City Fuel Gas Co., Ltd.
Condensed Balance Sheets			Condensed Statements of Income
Assets	12/31/2010			12/31/2010
Current assets	$	17,792,452	Revenue	$	4,529,481
Non-current assets		9,846,526	Cost of revenue		3,548,119
Total assets		27,638,978	Gross profit		981,362
Liabilities			Operating expenses		149,119
Current liabilities		10,617,997	Operating income		832,243
Non-current liabilities		11,343,356	Other income/(expenses)		5
Total liabilities		21,961,353	Earnings before tax		832,248
Net Assets		5,677,625	Income tax		236,369
Total Liabilities & Net Assets	$	27,638,978	Net income	$	595,880

(3) On April 23, 2008, Beijing Gas entered into an agreement to acquire 100% equity interest in Tongshan Hengxin Jiaye Natural Gas Co., Ltd. (“Tongshan Gas”), for a purchase price of $4,660,000 (RMB 32,600,000). Tongshan is a regional natural gas distributor and developer of natural gas distribution networks in Jiangsu province of PRC. As of June 30, 2011, the Company has not finished the registration of equity transfer with Tongshan City Industrial and Commercial Administration. Therefore, acquisition payments of $3,679,545 for Tongshan Gas was classified as investment as of date.

(4) The investment of $30,941 (RMB 200,000) with China Construction Bank was a long-term investment fund.

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Consolidated Statements of Stockholders' Equity [Comprehensive Income] (USD $)	6 Months Ended	12 Months Ended	18 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Jun. 30, 2011
Comprehensive Income
Net Income	$ 1,420,927	$ 4,041,663	$ 5,462,589
Other Comprehensive Income
Foreign Currency Translation Adjustment	74,185	160,508	234,693
Total	$ 1,495,111	$ 4,202,171	$ 5,697,282

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ORGANIZATION AND PRINCIPAL ACTIVITIES

6 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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 Co., Ltd. (“Gas (BVI)”), an International Business Company incorporated in the British Virgin Islands, and its wholly owned subsidiary Beijing Zhong Ran Weiye Gas Co., Ltd. (“Beijing Gas”), involving an exchange of shares whereby the Company issued an aggregate of 14,361,646 shares to the shareholders of Gas (BVI) in exchange for all of the issued and outstanding shares of Gas (BVI). 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’s primarily business operations are conducted through Beijing Gas. 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 and industrial users, in the construction and operation gas stations, and in the development and application of natural gas related technologies. Beijing Gas develops its operating subsidiaries, known as project companies. Each project company operates as a local natural gas distributor in a city or county. Pursuant to an exclusive franchise agreement with the local government or entities responsible for administering and/or regulating gas utilities, each project company is granted the exclusive right to develop and operate natural gas distribution systems and distribute natural gas at the operational location.

Beijing Gas holds an equity interest of 85% to 100% on its subsidiaries, and an individual shareholder nominally holds the remainder of the equity interest in such project company. Each such individual shareholder has relinquished any and all rights, power and interest of Beijing Gas 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.

The Company owns and operates natural gas distribution systems in 35 small and medium size cities serving approximately 190,500 residential and seven industrial customers. The Company’s facilities include approximately 1,525 kilometers of pipeline and delivery networks (including delivery trucks) with a daily capacity of approximately 120,000 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 People’s Republic of China (“PRC”) 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2011

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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.

(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.

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

(d)          Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries (the “Group”). Significant inter-company 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 investor are accounted for using the equity method.

The Company owned its subsidiaries after inception and continued to acquire equity interest throughout the reporting periods. The following table depicts the identities of the consolidating subsidiaries as of June 30, 2011:-

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	51	51	USD 98,039
Sino Gas Investment Development, Ltd.	The British Virgin Islands	1/9/2007	100	100	USD 50,000
Beijing Zhong Ran Weiye Gas Co., Ltd.	PRC	8/29/2001	100	100	RMB 206,000,000
Beijing Chenguang Gas Co., 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
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 45,694,900
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
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
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 (Group) 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

(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 Receivable

Accounts 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 equity method of accounting was used to account for the Company’s investment in equity securities for which the Company did not have controlling equity interest. Non-controlling equity interest for the Company is typically a position of less than 50% beneficial ownership.

The consolidated statement of income includes the Company’s share of the post-acquisition results of the investment’s performance for the year. In the consolidated balance sheet, investments in equity securities are stated at the Company’s share of the net assets of the investments plus any potential premium, or less discounts paid at the time of acquisition, and less any identified impairment loss.

The Company did not record any goodwill when it acquired its equity position in Xiangke Oil Gas and Qujing Gas. Accordingly, in accordance with SFAS 142, the Company has not taken an amortization expense of goodwill during the time it has carried stakes in equity security.

(i) Accounting for the Impairment of Long-Lived Assets

The Company has adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), ASC 360-10-35. The Company evaluates its long lived assets for impairment when indicators of impairment are present or annually, whichever occurs sooner. In the event that there are indications of impairment, the Company will record a loss to statements of income equal to the difference between the carrying value and the fair value of the long lived asset. The Company typically, but not exclusively uses the expected future discounted flows method to determine fair value of long lived asset subject to impairment. The fair value of long lived assets that held for disposition will include the cost of disposal.

The Company’s long-lived assets are grouped by their presentation on the consolidated balance sheets, and further segregated by their operating and asset type. Long-lived assets subject to impairment include buildings, equipment, vehicles, accounting software license, franchise and land use rights. The Company makes its determinations based on various factors that impact those assets.

At June 30, 2011, the Company assessed its buildings, equipment, vehicles, accounting software licenses, franchise and land use rights for production and has concluded its long-lived assets have not experienced any impairment losses because the Company’s long lived assets have enabled the Company to experience significant profit growth during the three months ended June 30, 2011.

(j)          Property, Plant and Equipment

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and impairment loss. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the property, plant and equipment are as follows:

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

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)          Intangible Assets

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

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

(l)          Goodwill

Goodwill impairment tests are performed annually and more frequently whenever events or changes in circumstances indicate goodwill carrying values exceed estimated reporting unit fair values. Upon indication that the carrying values of such assets may not be recoverable, the Company recognizes an impairment loss as a charge against current operations.  

(m)          Construction in Progress

Construction in progress represents the cost of constructing pipelines and is stated at cost. Costs comprise of 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. These projects, once completed, will significantly increase the gas supply capacity.

(n)          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.

(o)          Financial Instruments

The Company adopted ASC 820-10, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements.

ASC 820-10 includes a fair value hierarchy that is intended to increase the consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing an asset or liability based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

Level 1–inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2–observable inputs other than level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3–instrument valuations are obtained without observable market values and require a high-level of judgment to determine the fair value.

The Company’s financial instruments consist mainly of cash, bank notes receivable, and debt obligations. Based on the borrowing rates currently available to the Company for loans and similar terms and average maturities, the fair value of debt obligations also approximates its carrying value due to the short-term nature of the instruments. While the Company believes its valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The following tables present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10:

At June 30, 2011:

	Quoted in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash	$	5,856,357	$	-	$	-	$	5,856,357
Notes receivable		197,246		-		-		197,246
Total financial assets	$	6,053,603	$	-	$	-	$	6,053,603
Financial liabilities:
Notes payable	$	-	$	-	$	-	$	-
Total financial liabilities	$	-	$	-	$	-	$	-

At December 31, 2010:

	Quoted in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash	$	3,582,330	$	-	$	-	$	3,582,330
Restricted cash		226,867		-		-		226,867
Total financial assets	$	3,809,197	$	-	$	-	$	3,809,197
Financial liabilities:
Notes payable	$	-	$	-	$	-	$	-
Total financial liabilities	$	-	$	-	$	-	$	-

(p)          Foreign Currency Translation

The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

	6/30/2011		12/31/2010
Years end RMB : US$ exchange rate		6.4640		6.6118
Average yearly RMB : US$ exchange rate		6.5482		6.7788

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.

(q)          Revenue Recognition

The Company has two sources of revenue: (a) sales of natural gas and (b) connection fees for constructing connections of natural gas distribution network. In accordance to FASB ASC 605-10, the Company recognizes gas distribution revenue when natural gas are rendered to customers, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Connection fee 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.

Payments received before all of the relevant criteria for revenue recognition satisfied are recorded as unearned revenue.

(r)          Cost of Revenue

The cost for distribution of natural gas is comprised of raw materials, delivery cost, and other overhead. The cost of connection fees consists of construction materials, direct labor wages, and other overhead.

(s)          Investment Income

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

(t)          Income Taxes

The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Income tax liabilities computed according to the United States and People’s Republic of China (PRC) tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled.  Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets, whether it is more likely than not that these items will expire either before the Company is able to realize that tax benefit, or that future realization is uncertain.

In respect of the Company’s subsidiaries domiciled and operated in China and British Virgin Islands, the taxation of these entities is summarized below:-

· All of the operating companies are located in the PRC; and GAS Investment China Co., Ltd., Sino Gas Construction, Ltd., and Sino Gas Investment Development, Ltd. are located in the British Virgin Islands. All of these entities are subject to the relevant tax laws and regulations of the PRC, and the British Virgin Islands in which the related entity domiciled. The maximum tax rates of the subsidiaries pursuant to the countries in which they domicile are:

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.	BVI		0.00	%
ii.Sino Gas Construction, Ltd.	BVI		0.00	%
iii.Sino Gas Investment Development, Ltd.	BVI		0.00	%

· Effective January 1, 2008, PRC government implements a new 25% tax rate for all enterprises regardless of whether domestic or foreign enterprise without any tax holiday, which is defined as “two-year exemption followed by three-year half exemption” hitherto enjoyed by tax payers. As a result of the new tax law, standard 15% tax rate preference terminated as of December 31, 2007. However, PRC government has established a set of transition rules to allow enterprises already started tax holidays before January 1, 2008, to continue enjoying the tax holidays until being fully utilized.

· Since Sino Gas International Holdings, Inc. is primarily a holding company without any business activities in the United States, the Company shall not be subject to United States income tax for the six months ended June 30, 2011.

(u)          Advertising

The Company expensed all advertising costs as incurred.

(v)          Risk

· Concentration of Credit Risk

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

· Environmental risks

The Company has procured environmental licenses required by the PRC government. The Company has both a water treatment facility for water used in its production process and secure transportation to remove waste off site. In the event of an accident, the Company has purchased insurance to cover potential damage to employees, equipment, and local environment.

· Inflation Risk

Management monitors changes in prices levels. Historically inflation has not materially impacted the company’s financial statements; however, significant increases in the price of raw materials and labor that cannot be passed on the Company’s customers could adversely impact the Company’s results of operations.

· 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 changes in the political, economic, and legal environments in the PRC.

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.

(w)          Statutory 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 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 to the discretionary surplus reserve, if approved in the shareholders’ general meeting.

(x)          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 Company’s current component of other comprehensive income is the foreign currency translation adjustment.

(y)          Recent Accounting Pronouncements

No New Pronouncement issued since FASB issued in October 2009 ASU No. 2009-13 “Revenue Recognition (Topic 605) that management adopted on January 1, 2011.

(z)          Earnings per Share

The Company computes earnings per share (“EPS”) in accordance with FASB ASC 260 “Earnings per share”.  SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., contingent shares, convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

(AA)          Subsequent Events

The Company evaluates subsequent events that have occurred after the consolidated balance sheet date but before the consolidated financial statements are issued. There are two types of subsequent events:  (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has evaluated subsequent events, and based on this evaluation, the Company did not recognize subsequent event that would require disclosure to the consolidated financial statements.

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OTHER PAYABLES

6 Months Ended

Jun. 30, 2011

Other Payable [Abstract]

Other Payables Disclosure [Text Block]

10. OTHER PAYABLES

a.          Current other payables consisted of the following at June 30, 2011 and December 31, 2010:

Ref.		6/30/2011		12/31/2010
(1)	Amount due to Employees	$	491,281	$	954,455
(2)	Tax Payable		264,132		692,861
(3)	Payables to Subcontractors		2,722,080		2,044,607
	Total	$	3,477,493	$	3,691,923

1) Amounts due to employees included accrual payroll, welfare payable, continued education training program cost and individual travel advance. They were all unsecured, interest free, and have no fixed repayment terms.

2)  The tax payable consisted of value added tax, sales tax, income tax and local tax payables.

3)  Payables to subcontractors were unbilled liabilities.

b.          Non-current other payables at June 30, 2011 and December 31, 2010:

Ref.		6/30/2011		12/31/2010
(1)	Payable for the acquisition of Baishan Gas Co., Ltd.	$	1,884,999	$	1,859,499
	Total	$	1,884,999	$	1,859,499

1) The outstanding payment was related to the acquisition of Baishan Gas Co., Ltd.’s assets on July 9, 2007.

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ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2011

Receivables [Abstract]

Financing Receivables [Text Block]

3. ACCOUNTS RECEIVABLE

For natural gas sales, it is due when the gas is sold. Most of residential customers are settled by prepayments with debit cards, while industrial customers are billed and paid according to the contract terms from 10 days to one month.

For construction projects, connection fees are generally collected in installments. First deposits of 30% of total contract sum are received from client when the project commences. Second payment of 30% is received at milestone set out following the contracts. Third payment of 30% is received after the construction is completed. The final sum of the remaining portion normally acts as retention money for quality warranty to the developer. The retention money would be received by the company after the 1 year warranty period.

The Company believes it has provided adequate provisions for doubtful accounts. Doubtful allowance accounts at June 30, 2011 and December 31 2010 were 1% of gross account receivables. In the situation, the Company uses all its efforts, such as having internal staff call for payment, filing legal pledges, or even hiring collecting agents to collect the outstanding balance. If the collection is no longer probable, the Company will write off the balance against the allowance for doubtful accounts.

The Company has not experienced any material delinquent accounts that were uncollectible, and has not written off material balance against the allowance for doubtful accounts.

Accounts Receivable
	6/30/2011			12/31/2010
Accounts receivable	$	13,040,675		$	9,600,231
Less: Allowance for bad debt		(130,406	)		(96,002	)
Accounts receivable, net	$	12,910,269		$	9,504,229

Allowance for Bad Debt
	6/30/2011			12/31/2010
Beginning balance	$	(96,002	)	$	(50,875	)
Allowance provided		(34,404	)		(45,127	)
Charge against allowance		-			-
Reversals		-			-
Ending balance	$	(130,406	)	$	(96,002	)

Accounts Receivable Aging Analysis
	6/30/2011		12/31/2010
30 Days	$	5,772,559	$	4,894,088
30-60 Days		1,018,878		1,050,245
60-90 Days		144,296		111,355
90-180 Days		228,299		2,265,088
180-360 Days		3,988,287		230,684
>360 Days		1,888,356		1,048,771
Total	$	13,040,675	$	9,600,231

The following are the ten most significant accounts receivable at June 30, 2011:

Hebei Zhonggang Steel Co., Ltd.	$	1,114,568
Tongshan Hengxin Jiaye Gas Co., Ltd.		781,900
Jiangsu Zhonghuang Real Estate Co., Ltd		657,478
Baishan Huixin Real Estate Co., Ltd		633,106
Lianyun Port Zhaolong Home Development Co., Ltd.		598,701
Baishan Xingda Real Estate Co., Ltd.		440,532
Hebei Dihua Longzhou New Town Development Co., Ltd.		389,233
Qinwan Island Yongsheng Qiangwang Real Estate Co., Ltd.		393,564
Baishan Yongsheng Real Estate Co., Ltd.		369,322
Xiahuayuan Mining District		278,465
	$	5,656,869

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INCOME TAX

6 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

13. INCOME TAX

The following tabulation presents the income tax and deferred tax of the Company and its individual subsidiaries for the six months ended June 30, 2011 and 2010:

Description	June 30, 2011			June 30, 2010
Income (loss) before taxes:-
US Federal	$	(839,490	)	$	(1,712,477	)
State					-
BVI		(73,028	)		(135,341	)
PRC		2,582,835			1,942,472
Total income before taxes	$	1,670,317		$	94,654
Provision for taxes:-
Current:
U.S. Federal	$	-		$	-
State		-			-
HK		-			-
PRC		(354,483	)		(443,842	)
		(354,483	)		(443,842	)
Deferred:
U.S. Federal		-			-
State		-			-
HK		-			-
PRC		-			-
Valuation allowance		-			-
		-			-
Total provision for taxes	$	(354,483	)	$	(443,842	)
Effective tax rate		21.22	%		468.91	%

The differences between the U.S. federal statutory income tax rates and the Company’s effective tax rate for the six months ended June 30, 2011 and 2010 are shown in the following table:

	June 30, 2011			June 30, 2010
U.S. federal statutory income tax rate		34.00	%		34.00	%
Lower rates in PRC, net		(9.00	%)		(9.00	%)
Tax holiday		(3.78	%)		-
Accruals in foreign jurisdictions		-			443.91	%
Effective tax rate		21.22	%		468.91	%

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Consolidated Statements of Stockholders' Equity (USD $)	APIC - Preferred Stock B	APIC - Preferred Stock B-1	APIC - Common Stock	APIC - Warrants Series A,B,J,C,D Common Stock	APIC - Warrants Series E,G Common Stock	APIC - Warrants Series F,R Common Stock	APIC - Convertible Bonds Detachable Common Stock	APIC - Beneficial Conversion Feature Common Stock	Statutory Reserve	Retained Earnings	Minority Interest	Accumulated Other Comprehensive Income	Total	Preferred Stock B	Preferred Stock B-1	Common Stock
Balance at Dec. 31, 2009	$ 5,323,972	$ 132,662	$ 22,513,732	$ 311,110	$ 4,794,647,946	$ 107,652	$ 223,367	$ 8,094,814	$ 4,612,191	$ 14,143,089	$ 0	$ 7,725,883	$ 63,267,862	$ 4,580	$ 95	$ 26,769
Balance (in shares) at Dec. 31, 2009														4,579,839	95,418	26,769,313
Net Income	0	0	0	0	0	0	0	0	0	4,041,663	0	0	4,041,663	0	0	0
Conversion of Preferred Stock B	(198,484)	0	198,484	0	0	0	0	0	0	0	0	0	0	(171)	0	171
Conversion of Preferred Stock B (in shares)														(170,742)	0	170,742
Reversal of Common Stock Conversion	210,406	0	(210,406)	0	0	0	0	0	0	0	0	0	0	181	0	(181)
Reversal of Common Stock Conversion (in shares)														180,997	0	(180,997)
Conversion of Convertible Bonds	0	0	199,678	0	0	0	0	0	0	0	0	0	200,000	0	0	322
Conversion of Convertible Bonds (in shares)														0	0	322,581
Shares Based Compensation	0	0	35,925	0	0	0	0	0	0	0	0	0	36,000	0	0	75
Shares Based Compensation (in shares)														0	0	75,000
Cancellation of Common Stock	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Cancellation of Common Stock (in shares)														0	0	(22)
Expiration of IR Firm's Warrants	0	0	92,468	0	0	0	0	0	0	0	0	0	92,468	0	0	0
Expiration of Warrants F and R	0	0	107,652	0	0	(107,652)	0	0	0	0	0	0	0	0	0	0
Issuance of Subsidiary's 49% Equity	0	0	995,500	0	0	0	0	0	0	0	1,004,500	0	2,000,000	0	0	0
Appropriation of Retained Earnings	0	0	0	0	0	0	0	0	207,571	(207,571)	0	0	0	0	0	0
Foreign Currency Translation Adjustment	0	0	0	0	0	0	0	0	0	0	0	160,508	160,508	0	0	0
Balance at Dec. 31, 2010	5,335,894	132,662	23,933,033	311,110	47,946	0	223,367	8,094,814	4,819,762	17,977,181	1,004,500	7,886,391	69,798,501	4,590	95	27,156
Balance (in shares) at Dec. 31, 2010														4,590,094	95,418	27,156,617
Net Income	0	0	0	0	0	0	0	0	0	1,420,927	0	0	1,420,927	0	0	0
Conversion of Convertible Bonds	0	0	49,919	0	0	0	0	0	0	0	0	0	50,000	0	0	81
Conversion of Convertible Bonds (in shares)														0	0	80,645
Appropriation of loss to minority interest	0	0	0	0	0	0	0	0	0	35,732	(35,732)	0	0	0	0	0
Appropriation of Retained Earnings	0	0	0	0	0	0	0	0	694,270	(694,270)	0	0	0	0	0	0
Foreign Currency Translation Adjustment	0	0	0	0	0	0	0	0	0	0	0	74,185	74,185	0	0	0
Balance at Jun. 30, 2011	$ 5,335,894	$ 132,662	$ 23,982,953	$ 311,110	$ 47,946	$ 0	$ 223,367	$ 8,094,814	$ 5,514,032	$ 18,739,569	$ 968,768	$ 7,960,576	$ 71,343,613	$ 4,590	$ 95	$ 27,237
Balance (in shares) at Jun. 30, 2011														4,590,094	95,418	27,237,262

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2011

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

14. SEGMENT INFORMATION

The Company has contracted with customers usually in two revenue segments altogether, one is for the construction and installation of gas facilities and another one is the subsequent sales of natural gas to the 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 company is currently organized into two major operating divisions: (a) sales of natural gas and (b) installation of gas facilities/construction. These principal operating activities are the basis on which the Company reports its primary segment information.

Financial Position Segment Report
As of June 30, 2011
	Gas Distribution		Gas Pipeline Installation		Shell, BVIs, & Eliminations		Total
Assets
Current Assets	$	16,896,266	$	8,105,143	$	511,381	$	25,512,790
Non-Current Assets		27,219,297		56,742,305		3,490,726		87,452,328
Total Assets		44,115,563		64,847,448		4,002,107		112,965,118
Liabilities
Current Liabilities		1,463,279		29,255,892		-		30,719,171
Non-current Liabilities		519,322		10,383,012		-		10,902,334
Total Liabilities		1,982,601		39,638,904		-		41,621,505
Net Assets		42,132,962		25,208,544		4,002,107		71,343,613
Liabilities & Equities	$	44,115,563	$	64,847,448	$	4,002,107	$	112,965,118

Operation Result Segment Report
For the three months ended June 30, 2011
	Gas Distribution			Gas Pipeline Installation			Shell, BVIs, & Eliminations			Total
Sales Revenue	$	15,674,732		$	7,519,172		$	(7,332,482	)	$	15,861,422
Cost of Revenue		15,444,975			2,925,551			(7,332,482	)		11,038,044
Gross Profit		229,757			4,593,621			-			4,823,378
Operating Expense		139,342			2,785,922			338,944			3,264,208
Operating Income/(Loss)		90,415			1,807,699			(338,944	)		1,559,170
Other Income/(Loss)		5,294			(436,476	)		542,329			111,147
Earnings before tax		95,709			1,371,223			203,385			1,670,317
Income tax		(23,128	)		(331,355	)		-			(354,483	)
Gain/(loss) from discontinued operation, net of tax		-			-			105,093			105,093
Net Income	$	72,581		$	1,039,868		$	308,478		$	1,420,927

Financial Position Segment Report
As of December 31, 2010
	Gas Distribution		Gas Pipeline Installation		Shell, BVIs, & Eliminations		Total
Assets
Current Assets	$	10,911,426	$	6,825,815	$	1,480,749	$	19,217,990
Non-Current Assets		31,563,653		50,456,168		3,490,726		85,510,547
Total Assets		42,475,079		57,281,983		4,971,475		104,728,537
Liabilities
Current Liabilities		3,202,219		21,202,306		-		24,404,525
Non-current Liabilities		1,381,096		9,144,415		-		10,525,511
Total Liabilities		4,583,315		30,346,721		-		34,930,036
Net Assets		37,891,764		26,935,262		4,971,475		69,798,501
Liabilities & Equities	$	42,475,079	$	57,281,983	$	4,971,475	$	104,728,537

Operation Result Segment Report
For the six months ended June 30, 2010
	Gas Distribution			Gas Pipeline Installation			Shell, BVIs, & Eliminations			Total
Sales Revenue	$	12,124,888		$	5,569,178		$	(4,820,187	)	$	12,873,879
Cost of Revenue		11,693,588			1,970,079			(4,820,187	)		8,843,480
Gross Profit		431,300			3,599,099			-			4,030,399
Operating Expense		191,614			1,598,973			396,446			2,187,033
Operating Income/(Loss)		239,686			2,000,126			(396,446	)		1,843,366
Other Income/(Loss)		(187,132	)		(110,208	)		(1,451,372	)		(1,748,712	)
Earnings before tax		52,554			1,889,918			(1,847,818	)		94,654
Income tax		(12,008	)		(431,834	)		-			(443,842	)
Net Income	$	40,546		$	1,458,084		$	(1,847,818	)	$	(349,188	)

The Company’s operations are located in the PRC. All revenue is from customers in the PRC. All of the Company’s assets are located in the PRC. Sales of natural gas and gas pipeline construction are carried out in the PRC. Accordingly, no analysis of the Company’s sales and assets by geographical market is presented. No other measures of segment profit or loss and assets have been provided or reviewed by the company’s chief operating decision maker.

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SHARE COMPENSATION

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

16. SHARE COMPENSATION

For the year ended December 31, 2010, the Company recorded an expense of $36,000 under the general and administrative account for the issuance of 50,000 and 25,000 shares common stock at $0.52 and $0.40 per share on July 7, 2010 and October 15, 2010 respectively. The shares were issued to investor relation firm for services rendered in connection with the investor relationship activities.

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Consolidated Statements of Stockholders' Equity [Parenthetical]	12 Months Ended
	Dec. 31, 2010
Percentage of subsidiary equity interest issued	49.00%

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

8. INTANGIBLE ASSETS

Intangible assets consisted of the follows at June 30, 2011 and December 31, 2010:

6/30/2011	At Cost		Accumulated Amortization		Net
Land Use rights	$	486,752	$	73,683	$	413,069
Franchises		425,433		395,137		30,296
Accounting Software		102,851		43,573		59,278
	$	1,015,036	$	512,393	$	502,643

12/31/2010	At Cost		Accumulated Amortization		Net
Land Use Rights	$	559,082	$	69,649	$	489,433
Franchises		405,214		372,035		33,179
Accounting Software		39,334		28,216		11,118
	$	1,003,630	$	469,900	$	533,730

Land use rights represent the right to use and develop land in accordance to zoning laws granted by the local PRC government less accumulated amortization. Under PRC law, the company is permitted to sell, transfer, or mortgage its land use rights.

Under exclusive franchises agreements between the Company and PRC local government and entities in charge of gas utility, the Company operated as a local natural gas distributor in a city or county. Amortization expenses included in the consolidated statements of income for the six months ended June 30, 2011 and 2010 were $ 42,493 and $16,865 respectively.

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CAPITAL STOCK

6 Months Ended

Jun. 30, 2011

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

12. CAPITAL STOCK

The authorized capital stock consists of (i) 250,000,000 shares of common stock, par value $0.001 per share, of which 27,237,262 shares are issued and outstanding, and (ii) 100,000,000 shares of preferred stock, par value $0.001 per share. The preferred stock consists of (a) series A convertible preferred stock, with 20,000,000 shares authorized and 0 share is issued and outstanding; (b) series B convertible preferred stock, with 5,000,000 shares authorized and 4,590,094 shares are issued and outstanding; and (c) series B-1 convertible preferred stock, with 3,000,000 shares authorized and 95,418 shares are issued and outstanding.

The following is a summary of the material terms of its capital stock. This summary is subject to and qualified in its entirety by its Articles of Incorporation, as amended and corrected, certificates of designations for its series A, series B, and series B-1 convertible preferred stock, its by-laws and by the applicable provisions of Utah law.

Common Stock

The Company is authorized to issue 250,000,000 shares of common stock, with a par value of $0.001. There are 27,237,262 shares of common stock issued and outstanding at June 30, 2011. 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.

Preferred Stock

In addition to the 250,000,000 shares of common stock, the Company is 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.

On August 30, 2006, the Company’s board of directors designated 20,000,000 shares of its preferred stock as series A convertible preferred stock and 5,000,000 shares of its preferred stock as series B convertible preferred stock. On August 31, 2006, the Company 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, the board of directors amended the designations of the Series B convertible preferred stock and the Company filed an amended certificate of designations for the Series B convertible preferred stock with the Office of the Secretary of State of Utah. The board of directors created the series A convertible preferred stock to allow the Company to consummate the share exchange transaction with the Gas (BVI) Shareholders and the series B convertible preferred stock in connection with its private financing transactions. Each of the shares of series A convertible preferred stock was automatically converted into one share of its common stock upon the effectiveness of its reverse stock-split on November 17, 2006. Each share of the series B convertible preferred stock became 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, which was initially one share of series B convertible preferred stock for one share of common stock.

On September 12, 2007, the Company’s board of directors designated 3,000,000 shares of its preferred stock as series B-1 convertible preferred stock with the same right and privilege as series B convertible preferred stock.

Financing Transactions

The tabulation below presents the financial transactions occurred in the years 2006 and 2007:

	Financial Transactions
	9/7/2006			10/20/2006			5/15/2007			9/7/2007
Gross proceeds	$	6,876,800		$	2,404,800		$	3,000,000		$	18,766,700
Used to Purchase Shell		(675,000	)		-			-			-
Commissions to Placement Agent		(673,786	)		(235,000	)		(265,867	)		(1,241,805	)
Legal & Related Expenses		(426,978	)		(10,000	)		(146,374	)		(232,028	)
Used to Purchase Back Warrants A & B		-			-			-			(3,500,000	)
Net proceeds	$	5,101,036		$	2,159,800		$	2,587,759		$	13,792,867

The following table depicts the Company’s outstanding securities at June 30, 2011:

	Authorized Shares		Shares issued and outstanding
Common Stock		250,000,000		27,237,262
Convertible Preferred Stock A		20,000,000		-
Convertible Preferred Stock B		5,000,000		4,590,094
Convertible Preferred Stock B-1		3,000,000		95,418

	Strike Price		Contractual Life	Expiration Date	Shares issued and outstanding		Weighted Average Fair Value
Series A Warrants	$	3.84	60 Months	9/6/2011		241,708	$	0.70
Series C Warrants	$	3.38	60 Months	9/6/2011		3,083,589	$	0.81
Series G Warrants	$	3.84	48 Months	9/6/2011		109,489	$	0.44
5.3 M Convertible Bonds Detachable Warrants	$	0.744	36 Months	11/30/2012		3,451,601	$	0.05
692K Convertible Bonds Detachable Warrants	$	0.744	36 Months	12/23/2012		447,086	$	0.11

a.           271,074 and 271,074 shares Series F and R warrants have been expired on September 6, 2010.

b.          100,000 shares warrants to IR firm CCG Elite have been expired on November 1, 2010.

The Company used the Black-Scholes model to calculate the values of Warrants. The following shows the assumptions that were employed in the model:

	Warrants A			Warrants C			Warrants G			5.3M CB Warrants			692K CB Warrants
Weighted average fair value	$	0.70		$	0.81		$	0.44		$	0.05		$	0.11
Strike price	$	3.84		$	3.38		$	3.84		$	0.744		$	0.744
Risk-free interest rate		4.18	%		4.18	%		4.18	%		1.12	%		1.51	%
Expected volatility		40.00	%		40.00	%		40.00	%		12.84	%		12.84	%
Years to maturity		5.00			5.00			4.00			3.00			3.00

Since there is no net cash settlement arrangement for the warrants, they should be classified as equity instrument in accordance with EITF 00-19. Thus, subsequent changes in fair value should not be recognized.

Total Capitalization

The following table depicts an analysis of total capitalization for the issuance of Preferred Stock B, Preferred Stock B-1, Common Stock, and the related additional Paid in Capital at June 30, 2011:

	Preferred Stock B				Preferred Stock B-1				Common Stock
Name of Shareholders	Number of Shares outstanding		Capital		Number of Shares outstanding		Capital		Number of Shares outstanding		Capital		Additional Paid in Capital		% of Equity Holdings
Manager / Insider		-	$	-		-	$	-		12,653,661	$	12,653	$	4,064,862		46	%
Investors		4,590,094		4,590		95,418		95		14,583,601		14,584		25,969,070		54	%
Beneficial Conversion Feature		-		-		-		-		-		-		8,094,814		-
		4,590,094	$	4,590		95,418	$	95		27,237,262	$	27,237	$	38,128,746		100	%

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Consolidated Balance Sheets (USD $)	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 5,856,357	$ 3,582,330
Notes receivable	197,246	226,867
Accounts receivable	12,910,269	9,504,229
Other receivables	1,598,696	1,127,981
Related party receivable	417,698	408,361
Inventory	751,738	482,594
Advance to suppliers	3,158,862	3,621,147
Prepaid expenses and taxes	621,924	264,481
Total Current Assets	25,512,790	19,217,990
Non-Current Assets
Investment	13,393,871	12,794,384
Property, plant & equipment, net	49,488,462	49,928,482
Construction in progress	21,284,908	19,336,428
Intangible assets, net	502,643	533,730
Goodwill	1,677,975	1,677,975
Deposit	1,104,469	1,239,548
Total Non-current Assets	87,452,328	85,510,547
Total Assets	112,965,118	104,728,537
LIABILITIES & STOCKHOLDERS' EQUITY
Bank loans	12,530,941	7,864,727
Accounts payable	12,087,544	11,105,790
Other payables - current portion	3,477,493	3,691,923
Accrued liabilities	117,859	1,635,217
Unearned revenue	2,505,334	106,868
Total Current Liabilities	30,719,171	24,404,525
Non-current Liabilities
Long-term bank loans	3,094,059	3,024,895
Convertible Bonds	5,923,276	5,641,117
Other payables - non-current portion	1,884,999	1,859,499
Total Non-current Liabilities	10,902,334	10,525,511
Total Liabilities	41,621,505	34,930,036
STOCKHOLDERS' EQUITY
Common Stock US$0.001 par value; 250,000,000 shares authorized; 27,237,262 and 27,156,617 shares issued and outstanding as of June 30, 2011 and December 31, 2010	27,237	27,156
Statutory reserves	5,514,032	4,819,762
Retained earnings	18,739,569	17,977,181
Minority Interest	968,768	1,004,500
Accumulated other comprehensive income	7,960,576	7,886,391
Total Stockholders' Equity	71,343,613	69,798,501
Total Liabilities & Stockholders' Equity	112,965,118	104,728,537
Preferred Stock B
STOCKHOLDERS' EQUITY
Preferred stock value	4,590	4,590
Additional paid in capital	5,335,894	5,335,894
Preferred Stock B-1
STOCKHOLDERS' EQUITY
Preferred stock value	95	95
Additional paid in capital	132,662	132,662
Common Stock
STOCKHOLDERS' EQUITY
Additional paid in capital	23,982,953	23,933,033
Warrants Series A, B, J, C, D
STOCKHOLDERS' EQUITY
Additional paid in capital	311,110	311,110
Warrants Series E, G
STOCKHOLDERS' EQUITY
Additional paid in capital	47,946	47,946
Warrants Series F, R
STOCKHOLDERS' EQUITY
Additional paid in capital	0	0
Convertible Bonds Detachable Warrants
STOCKHOLDERS' EQUITY
Additional paid in capital	223,367	223,367
Beneficial Conversion Feature
STOCKHOLDERS' EQUITY
Additional paid in capital	$ 8,094,814	$ 8,094,814