This prospectus relates to the offering and sale, from time to time, of up to 8,611,836, shares of our common stock held by the stockholders named in the table below, which amount includes 271,074 shares of common stock issuable upon the exercise of Placement Agent Warrants held by Roth Capital Partners, LLC, which may exercise its warrants at any time in its sole discretion. All of the selling stockholders named below acquired their shares of our common stock directly from us in private transactions.

Set forth below is information, to the extent known to us, setting forth the name of each Selling Shareholder and the amount of Common Stock owned by each (including shares that can be acquired on the exercise of outstanding warrants) prior to the offering, the shares to be sold in the offering, and the amount and percentage of Common Stock to be owned by each (including shares that can be acquired on the exercise of outstanding warrants) after the offering. The percentages are calculated assuming the conversion of the Series B Convertible Preferred Stock and exercise of any class of warrants but not the receipt of the “2008 Make Good Shares”. The footnotes provide information about persons who have investment voting power for the Selling Shareholders and about material transactions between the Selling Shareholders and the Company.

The selling shareholders may sell all or some of the shares of common stock they are offering. The table below assumes that each selling shareholders exercises all of its warrants and each selling stockholder sells all of the shares registered pursuant to this prospectus. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur.

	Shares Beneficially Owned Prior to the Offering (18)		Shares to		Shares Beneficially Owned After the Offering
Selling Shareholders	Number		be Sold		Number		Percent
Ancora Greater China Fund, LP (1) (6)		155,555		155,555		0		*
SEI Private Trust FAO - The JM Smucker Co Master Trust (1) (2) (5) (7)		517,504		111,111		406,393		1.2	%
Enable Opportunity Partners LP (1) (8)		151,111		151,111		0		*
Enable Growth Partners LP (1) (8)		1,290,000		1,290,000		0		*
Pierce Diversified Strategy Master Fund LLC, Ena (1) (8)		70,000		70,000		0		*
Heller Capital Investments (1) (9)		444,444		444,444		0		*
CGM as C/F Ronald I. Heller IRA (1) (9)		222,222		222,222		0		*
Jayhawk Private Equity Co-Invest Fund, LP (1) (10)		53,309		53,309		0		*
Jayhawk Private Equity Fund, LP (1) (10)		846,691		846,691		0		*
MidSouth Investor Fund LP (1) (11)		222,222		222,222		0		*
Precept Capital Master Fund, GP (1) (12)		155,555		155,555		0		*
Straus Partners LP (1) (13)		225,000		225,000		0		*
Straus-GEPT Partners LP (1) (13)		275,000		275,000		0		*
T. Rowe Price Small-Cap Value Fund, Inc. (1) (14)		2,444,444		2,444,444		0		*
Vision Opportunity Master Fund, Ltd. (1) (2) (3) (4) (5) (15)		10,259,048		1,340,765		8,918,283		26.21	%
Whitebox Intermarket Partners, LP (1) (16)		333,333		333,333		0		*
Roth Capital Partners, LLC (17)		271,074		271,074		0		*

*	denotes less than 1%

On September 13, 2007, pursuant to a Securities Purchase Agreement dated September 13, 2007, the Company issued 8,340,765 units at $2.25 per share.

On September 7, 2006, pursuant to a Series B Convertible Preferred Stock Purchase Agreement dated as of September 7, 2006, the Company issued 11,986,083 units consisting of 2,509,782 Series B Convertible Preferred Stocks, 2,509,782 Series A Warrants, 1,254,891 Series B Warrants, 2,284,651 Series J Warrants, 2,284,651 Series C Warrants and 1,142,326 Series D Warrants. The Company’s Series B Convertible Preferred Stocks convertible into shares of the Company’s common stock at the rate of one for one. Series A Warrants, Series J Warrants and Series C Warrants to purchase the number of shares of Common Stock equal to one hundred percent (100%) of the number of Series B Convertible Preferred Stock. Series B Warrants and Series D Warrants to purchase the number of shares of Common Stock equal to fifty percent (50%) of the number of Series B Convertible Preferred Stock. Each of the Series A, Series B, Series C and Series D Warrants shall expire five (5) years following the September 7, 2006 (“Closing Date”). The Series J Warrants shall expire one (1) year following the Closing Date. Each of the Warrants shall have an exercise price per share equal to the Warrant Price.

On October 20, 2006, pursuant to a Series B Convertible Preferred Stock Purchase Agreement dated as of October 20, 2006, the Company issued 4,191,504 units consisting of 877,664 Series B Convertible Preferred Stocks, 877,664 Series A Warrants, 438,833 Series B Warrants, 798,938 Series J Warrants, 798,938 Series C Warrants and 399,469 Series D Warrants. The Company’s Series B Convertible Preferred Stocks convertible into shares of the Company’s common stock at the rate of one for one. Series A Warrants, Series J Warrants and Series C Warrants to purchase the number of shares of Common Stock equal to one hundred percent (100%) of the number of Series B Convertible Preferred Stock. Series B Warrants and Series D Warrants to purchase the number of shares of Common Stock equal to fifty percent (50%) of the number of Series B Convertible Preferred Stock. Each of the Series A, Series B, Series C and Series D Warrants shall expire five (5) years following the October 20, 2006 (“Closing Date”). The Series J Warrants shall expire one (1) year following the Closing Date. Each of the Warrants shall have an exercise price per share equal to the Warrant Price.

On May 15, 2007, Vision exercised 1,094,891 of Series J Warrants, and in consideration thereof, received 1,094,891 new Series E Warrants to purchase Common Stock.

On September 13, 2007, pursuant to a Warrant Purchase Agreement, Amendment and Waiver dated September 13, 2007, all of the Class A and Class B Warrants will be purchased for $3,500,000, the exercise price of Class C Warrants shall be $3.375 (or 150% of the purchase price of a new financing), all of the Class D Warrants will be purchased for a purchase price of 770,897 shares of Series B Preferred Stock, all of the outstanding Class J Warrants (1,988,698) and all of the outstanding Class E Warrants (1,094,891) will be cancelled in exchange for the right to participate in a new financing and purchase up to 3,083,589 shares of Common Stock.

John P. Micklitsch has dispositive powers with respect to the securities to be offered for resale

Zach Easton has dispositive powers with respect to the securities to be offered for resale

Mitch Levine has dispositive powers with respect to the securities to be offered for resale

Ronald I. Heller has dispositive powers with respect to the securities to be offered for resale

10.

Kent C. McCarthy has dispositive powers with respect to the securities to be offered for resale

11.

Lyman O. Heidtke has dispositive powers with respect to the securities to be offered for resale

12.

D. Blair Baker has dispositive powers with respect to the securities to be offered for resale

13.

Melville Straus has dispositive powers with respect to the securities to be offered for resale

14.

T. Rowe Price Associates, Inc. (“T. Rowe Price”) is investment adviser to T. Rowe Price Small-Cap Value Fund, Inc. (the “Fund”) and has been delegated voting authority by the Fund. No one individual at T. Rowe Price will be responsible for the voting decisions and investment control over the securities to be offered. The T. Rowe Price Proxy Committee, comprised of portfolio managers, investment operations managers, and internal legal counsel analyzes proxy policies based on whether they would adversely affect shareholders’ interests and make a company less attractive to own. Once the Proxy Committee establishes its recommendations, they are distributed to the firm’s portfolio’s managers as voting guidelines. Preston G. Athey is the portfolio manager for the T. Rowe Price Small-Cap Value Fund, Inc. For purposes of reporting requirements of the Securities Exchange Act of 1934, T. Rowe Price may be deemed to be the beneficial owner of all of the securities offered for resale, however, T. Rowe Price expressly disclaims that it is, in fact, the beneficial owner of such securities. T. Rowe Price is the wholly owned subsidiary of T. Rowe Price Group, Inc., which is a publicly traded financial services holding company.

15.

Adam Benowitz has dispositive powers with respect to the securities to be offered for resale

16.

Andrew J. Redleaf has dispositive powers with respect to the securities to be offered for resale

17.

On September 13, 2007, pursuant to a Series R Warrant Purchase Shares Of Common Stock of Sino Gas International Holdings, Inc. (Expires September 12, 2010) dated September 13, 2007, the company issued 271,075 shares at an exercise price per share equal to the Warrant Price (US $4.84).

18.

Includes shares that may be acquired on the exercise of presently exercisable warrants.

Except as otherwise indicated above or in the footnotes to the table, the selling stockholders have not held any position or office or had any material relationship with our company or any of its subsidiaries within the past three years the selling stockholders possess sole voting and investment power with respect to the shares shown, and no selling stockholder is a broker-dealer, or an affiliate of a broker-dealer.

On September 7, 2007, the Company entered into a securities purchase agreement with a number of Investors including Vision Opportunity Master Fund, Inc., providing for the sale to the Investors of a total of 8,340,762 shares of the Company’s Common Stock for an aggregate purchase price of $18,766,700 (or $2.25 per Share).

Simultaneously, the Company entered into a Warrant Purchase Agreement, Amendment and Waiver (“WPA”) with the holders of its outstanding Warrants and Series B Preferred Stock, who acquired those securities in transactions in the September and October private financings of 2006 (the “Prior Investors”). Under the WPA, The Company is to purchase all of its outstanding Class A and Class B Warrants from the Prior Investors for $3,500,000. The Company is to purchase the Class D Warrants from the Prior Investors for a purchase price of 770,897 shares of Series B Preferred Stock. All of the outstanding Class J Warrants (totaling 1,988,698 warrants) and all of the outstanding Class E Warrants (totaling 1,094,891 warrants) are to be exchanged for the right to purchase up to 3,083,589 Shares in the current financing and all the investors did exercise this right by purchasing all the shares granted. In addition, A series R Placement Agent Warrants were granted to Roth Capital Partners, LLC to purchase 271,074 shares of common stock at $4.84 per share.

On October 20, 2006, we entered into and closed a stock purchase transaction with Vision Opportunity Master Fund, Ltd., Nite Capital LP and Ijaz Malik, pursuant to which we issued to the investors, for an aggregate of $2,404,800 in gross cash proceeds, an aggregate of 877,664 shares of our series B convertible preferred stock, at $2.74 per share, and series A, B, J, C and D warrants as described in footnote 3 above.

On September 7, 2006, we entered into and closed a stock purchase transaction with Vision Opportunity Master Fund, Ltd., SEI Private Trust Co. FAO - The JM Smucker Co. Master Fund, and Coronado Capital Partners LP, pursuant to which we issued, for an aggregate of $6,876,800 in gross cash proceeds, to the investors, an aggregate of 2,509,782 shares of our series B convertible preferred stock, and series A, B, J, C and D warrants to purchase shares of our common stock as described above in footnote 2, and to Kuhns Brothers, Inc., the financial advisor and placement agent, and its designees, an aggregate of 635,822 shares of our series B convertible preferred stock.

Plan of Distribution

The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·	an exchange distribution in accordance with the rules of the applicable exchange;

·	privately negotiated transactions;

·	to cover short sales made after the date that this Registration Statement is declared effective by the Securities and Exchange Commission;

·	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

·	a combination of any such methods of sale; and

·	any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

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 registered broker dealer and FINRA member firm and listed as a selling shareholder in this prospectus. Roth Capital Partners, LLC served as placement agent for our private placement offering which was completed on September 13, 2007, and received, in addition to cash commissions and reimbursement of $75,000 for placement agent counsel fees and a portion of its actual out-of-pocket expenses, warrants to purchase 271,075 shares of our Common Stock with an exercise price of $4.84 per share. The registration statement of which this prospectus forms a part includes the shares of Common Stock underlying the warrants held by Roth Capital Partners, LLC.

The warrants held by Roth Capital Partners, LLC expire on September 13, 2010. The 271,075 shares of Common Stock issuable upon conversion of placement agent warrants received by Roth Capital Partners, LLC are restricted from sale, transfer, assignment, pledge or hypothecation or from being the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part, except for transfers of the warrants to officers or partners of Roth Capital Partners, LLC as allowed under NASD Rule 2710 (g)(1) and (2).

Roth Capital Partners, LLC has indicated to us its willingness to act as selling agent on behalf of certain of the selling shareholders named in the prospectus under the section titled "Selling Security Holders" that purchased our privately placed securities. All shares sold, if any, on behalf of selling shareholders 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 shareholders and no selling shareholders 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 shareholder 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 shareholders, of the securities on a principal or agency basis. NASD Notice to Members 88-101 states that in the event a selling shareholder 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 shareholders' 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 shareholders, including details regarding any such transactions; and

in the event any of the securities offered by the selling shareholders are sold, transferred, assigned or hypothecated by any selling shareholder 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 shareholders, 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.

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 shareholders 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 shareholder, 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 Brothers, Inc., whereby Kuhns bothers 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 Bothers, 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 Brothers 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 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.

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 24,877,271 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 4,971,859 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, (iii) series G warrants to purchase an aggregate of 109,489 shares of common stock at $3.84 per share, (iv) series F warrants to purchase an aggregate of 271,074 shares of common stock at $4.84 per share and (v) placement agent series R warrant to purchase an aggregate of 271,074 shares of common stock at $4.84 per share. The series A, C, G warrants are exercisable until September 2012. The placement agent series R warrant and series F warrants are exercisable until September 2010. 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.

Common Stock

We are authorized to issue 250,000,000 shares of common stock, with a par value of $0.001. There are 24,877,271 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. Therefore, as of the date of this prospectus, we have no shares of series A convertible preferred stock issued and outstanding, and we have 4,971,859 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.

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, 2006 and 2005. 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.

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 SB-2 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.

	Page
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F- 2

Consolidated Balance Sheets As of Dec. 31, 2007 and Dec. 31, 2006	F- 3
Consolidated Statements of Income for the Years Ended Dec. 31, 2007 and 2006	F- 5
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended Dec. 31, 2007 and 2006	F- 6
Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2007and 2006	F- 7
Notes to Consolidated Financial Statements	F- 8

Consolidated Balance Sheets As of Mar. 31, 2008 (unaudited) and Dec. 31, 2007	F- 32
Consolidated Statements of Income for the 3 Months Ended Mar. 31, 2008 and 2007 (unaudited)	F- 34
Consolidated Statements of Stockholders’ Equity as of Mar. 31, 2008 (unaudited) and Dec. 31, 2007	F- 35
Consolidated Statements of Cash Flows for the 3 Months Ended Mar. 31, 2008 and 2007 (unaudited)	F- 36
Notes to Consolidated Financial Statements	F- 37

F-1

Report of Independent Registered Public Accounting Firm

To: The Board of Directors and Stockholders of

Sino Gas International Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Sino Gas International Holdings, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sino Gas International Holdings, Inc as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

South San Francisco, California	Samuel H. Wong & Co., LLP
March 25, 2008	Certified Public Accountants

F-2

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2007 AND 2006

(Stated in US Dollars)

			December 31,		December 31,
	Notes		2007		2006
ASSETS
Current assets
Cash and cash equivalents		2(e)	$	10,915,590	$	3,638,673
Restricted cash		3		478,920		3,124,541
Notes receivable				825,119		477,390
Accounts receivable		2(f), 4		7,315,253		6,534,740
Inventory				207,976		-
Advances to suppliers		2(g)		27,372		68,309
Prepayments and others				320,380		141,878
Other receivables		2(f)		3,100,695		1,263,800

Total current assets				23,191,305		15,249,331

Non – current Assets
Investment		2(h), 5		4,007,310		2,939,029
Plant and equipment, net		2(j), 6		24,572,565		10,608,530
Construction in progress		2(l)		11,556,820		4,628,076
Intangible Assets, net		2(k), 7		2,028,250		457,830

Total non-current assets				42,164,945		18,633,465

TOTAL ASSETS			$	65,356,250	$	33,882,796

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Bank Loans		8	$	2,734,444	$	2,430,445
Accounts payable				716,707		3,891,388
Other payable		9		10,383,657		1,790,500
Unearned revenue		2(m)		312,573		37,760
Accrued liabilities				362,263		418,390

Total current liabilities				14,509,644		8,568,483

TOTAL LIABILITIES			$	14,509,644	$	8,568,483

See Accompanying Notes to the Financial Statements and Accountant’s Report

F-3

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (Continued)

AS OF DECEMBER 31, 2007 AND 2006

(Stated in US Dollars)

				December 31,		December 31,
	Notes			2007		2006
STOCKHOLDERS’ EQUITY
Preferred Stock A US$0.001 par value; 20,000,000 authorized; 275,111 and 0 issued and outstanding as of December 31, 2007 and 2006 respectively				$	275		-

Preferred Stock B US$0.001 par value; 5,000,000 authorized; 4,971,859 and 4,023,268 issued and outstanding as of December 31, 2007 and 2006 respectively		10			4,972		4,023

Common Stock US$0.001 par value; 250,000,000 authorized; 25,282,380 and 14,693,186 issued and outstanding as of December 31, 2007 and 2006 respectively		10			25,283		14,694

Additional paid-in-capital		10			35,247,303		18,488,040
Statutory reserves		2(v	)		3,258,201		2,025,022
Retained earnings					10,524,898		4,050,707
Accumulated other comprehensive income		2(x	)		1,878,142		824,296

					50,939,074		25,406,781
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	65,356,250	$	33,882,796

See Accompanying Notes to the Financial Statements and Accountant’s Report

F-4

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE FISCAL YEARS ENDED DECEMBER 31, 2007 AND 2006

(Stated in US Dollars)

			December 31,			December 31,
	Notes		2007			2006
Net Sales
Revenues			$	20,267,756		$	10,870,718
Cost of revenues				(9,499,752	)		(4,389,142	)
Gross profit				10,768,004			6,481,576

Operating Expenses
Selling and marketing expenses				(608,830	)		(95,779	)
General and administrative expenses				(2,106,389	)		(1,155,849	)
Total operating expenses				(2,715,219	)		(1,251,628	)
Operating Income/(Loss)				8,052,785			5,229,948

Other Income (Expenses)
Investment income		2(q)		212,883
Other income				29,942			438,186
Other expense				(18,890	)		(93,324	)
Interest income				149,270			-
Interest expense				(197,959	)		(78,237	)
Total other income (expense)				187,086			359,093

Earnings before taxation				8,228,032			5,496,573

Income tax		2(r),11		(531,612	)		(423,284	)
Net income			$	7,707,370		$	5,165,757
							5,073,289

Constructive Preferred Dividend - Amortization of Beneficial Conversion				-			6,418,864

Income Available to Common Stock Shareholders			$	7,707,370		$	(1,345,575	)

Earnings per share 2(z)
Basic			$	0.45		$	(0.09	)
Diluted			$	0.35		$	0.33

Weighted average shares outstanding of common stock
Basic				17,165,894			14,693,186
Diluted				22,017,096			15,699,003

EPS excluding effect of Constructive Preferred Dividend
Basic			$	0.45		$	0.35
Diluted			$	0.35		$	0.33

See Accompanying Notes to the Financial Statements and Accountant’s Report

F-5

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

AS OF DECEMBER 31, 2007 AND 2006

(Stated in US Dollars)

																				Accumulated
	Preferred Stock A				Preferred Stock B				Common Stock				Additional							Other
	Shares				Shares				Shares				Paid in		Statutory		Retained			Comprehensive
	Outstanding		Amount		Outstanding		Amount		Outstanding		Amount		Capital		Reserve		Earnings			Income		Total

Balance, January 1, 2006		-		-		-		-		14,361,646		14,362		4,812,650		1,219,720		6,311,794			267,865		12,626,391
Net Income																		5,165,757					5,165,757
Reverse acquisition										331,540		332						(202,678	)				-202,346
Issue of stock and warrant		-		-		4,023,268		4,023		-		-		7,256,526									7,260,549
Constructive Preferred Dividend - Amortization of Beneficial Conversion Feature														6,418,864				(6,418,864	)				-
Appropriations of Retained Earnings																805,302		(805,302	)				-
Foreign Currency Translation Adjustment																					556,431		556,431
Balance, December 31, 2006		-		-		4,023,268		4,023		14,693,186		14,694		18,488,040		2,025,022		4,050,707			824,296		25,406,782

Balance, January 1, 2007		-		-		4,023,268		4,023		14,693,186		14,694		18,488,040		2,025,022		4,050,707			824,296		25,406,782
Net Income																		7,707,370					7,707,370
Issue of stock and warrant		275,111		275		948,591		949		10,589,194		10,589		16,759,263									16,771,076
Appropriations of Retained Earnings																1,233,179		(1,233,179	)				-
Foreign Currency Translation Adjustment																					1,053,846		1,053,846
Balance, December 31, 2007		275,111		275		4,971,859		4,972		25,282,380		25,283		35,247,303		3,258,201		10,524,898			1,878,142		50,939,074

	Accumulated Comprehensive Income
	2006		2007		Total
Comprehensive Income
Net Income		5,073,289		7,707,370		12,873,077

Comprehensive Other Income
Foreign Currency Translation Adjustment		556,431		1,053,846		1,610,277

		5,629,720		8,761,216		14,483,354

See Accompanying Notes to the Financial Statements and Accountant’s Report

F-6

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE FISCAL YEARS ENDED DECEMBER 31, 2007 AND 2006

(Stated in US Dollars)

	2007			2006
Cash flows from operating activities
Net income	$	7,707,370		$	5,073,289

Depreciation expense		1,301,480			155,374
Amortization expense		323,815			-
Invested in restricted time deposits		2,645,622			(3,124,541	)
Equity in investments		-			(495,651	)
Decrease/(increase) in accounts receivables		(2,960,960	)		73,674
Increase in inventory		(207,976	)		-
Increase in prepaid expenses		(178,502	)		-
Increase in accounts payable		5,637,161			447,784

Cash sourced/(used) in operating activities		14,304,770			2,162,767

Cash flows from investing activities
Cash paid for investment and acqusition		(1,068,281	)		-

Purchase of property, plant and equipment		(15,265,515	)		(7,563,222	)
Purchase of intangible assets		(1,894,234	)		(20,565	)
Increase in construction in progress		(6,928,745	)		(1,556,579	)

Cash sourced/(used) in investing activities		(25,156,775	)		(9,140,366	)

Cash flows from financing activities
Bank Loans		303,999			2,430,445
Proceeds of issuance of common stock		16,771,077			7,430,965

Cash Used/(sourced) in financing activities		17,075,076			9,861,410

Net Increase/(Decrease) in Cash & Cash Equivalents for the year		6,223,070			2,883,811

Cash and cash equivalents-beginning of year		3,638,673			571,194

Cash and cash equivalents-end of year	$	10,915,590		$	3,638,673

Supplementary cash flow information
Interest received	149,270
Interest Paid	197,959	78,237
Income tax paid	774,555	615,694

See Accompanying Notes to the Financial Statements and Accountant’s Report

F-7

SINO GAS INTERNATIONAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 24 natural gas distribution systems serving approximately 87,500 residential and five commercial and industrial customers. The Company’s facilities include approximately 700 kilometers of pipeline and delivery networks (including delivery trucks) with a designed daily capacity of approximately 70,000 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-8

Recent Acquisitions

On January 15, 2007, Beijing Gas entered into a stock transfer agreement with the shareholders of Beijing Chenguang Gas Ltd., Co., a limited liability company organized under the laws of the PRC, under which Beijing Gas will acquire all the capital stock of Beijing Chenguang for a purchase price of RMB 26 million (or approximately $3.35 million) in cash. Upon consummation of the transactions contemplated by that agreement, Beijing Chenguang will become a wholly-owned subsidiary of Beijing Gas. Beijing Chenguang is primarily engaged in the development, transfer and licensing of technologies used in natural gas purification, compression and transportation, as well as the installation of natural gas equipment and the supply of natural gas.

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

F-9

(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 soon after its inception and continued to acquire and own the equity interests throughout the reporting periods. The following table depicts the identities of the consolidating subsidiaries as of December 31, 2007 and 2006 (whichever applicable 2006).

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

USD

10,000,000

Sino Gas Construction Limited

The British

Virgin Islands

1/9/2007

100

USD

50,000

Sino Gas Investment Development Limited

The British

Virgin Islands

1/9/2007

100

USD

50,000

Beijing Zhong Ran Wei Ye Gas Co., Ltd

PRC

8/29/2001

100

RMB

150,000,000

Peixian Weiye Gas Co., Ltd

PRC

8/22/2005

100

RMB

5,000,000

Sihong Weiye Gas Co., Ltd

PRC

12/3/2004

100

RMB

10,000,000

Wuhe Weiye Gas Co., Ltd

PRC

1/30/2007

100

RMB

3,000,000

Changli Weiye Gas Co., Ltd

PRC

12/8/2006

100

RMB

3,000,000

Yutian Zhongran Weiye Gas Co., Ltd

PRC

12/19/2003

100

RMB

3,000,000

Yuxian Jinli Gas Co., Ltd

PRC

11/8/2005

100

RMB

9,500,000

Zhangjiakou City Xiahuayuan Jinli Gas Co., Ltd.

PRC

9/30/2005

100

RMB

2,000,000

Wuqiao Gas Co., Ltd

PRC

6/30/2004

100

RMB

2,000,000

Jinzhou Weiye Gas Co., Ltd

PRC

7/19/2004

100

RMB

5,000,000

Shenzhou Weiye Gas Co., Ltd

PRC

12/23/2005

100

RMB

3,000,000

F-10

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

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

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

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

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

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

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

Beijing Chenguang Gas Ltd.	PRC	10/30/2002	100	100	RMB	20,000,000

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

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

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

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

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

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

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

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

Baishan Weiye Gas Co., Ltd	PRC	7/13/1007	100	100	RMB	15,000,000

(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 and Other Receivable

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

F-11

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Stated in US Dollars)

			3/31/2008		12/31/2007
	Note
ASSETS

Current Assets
Cash & cash equivalents		2(e)	$	8,021,212	$	10,915,590
Restricted cash		3		664,061		478,920
Notes receivable				586,710		825,119
Accounts receivable		2(f),4		6,162,418		7,315,253
Inventory				246,891		207,976
Advances to suppliers		2(g)		1,041,556		27,372
Prepayments and others				465,669		320,380
Other receivables		5		9,849,587		3,100,695
Total Current Assets				27,038,104		23,191,305

Non-Current Assets
Investment		2(h)		2,703,156		4,007,310
Property, plant & equipment, net		2(j),6		26,852,967		24,572,565
Construction in progress		2(l)		12,830,941		11,556,820
Intangible assets, net		2(k),7		2,112,337		2,028,250
Total non-current assets				44,499,401		42,164,945

TOTAL ASSETS			$	71,537,505	$	65,356,250

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities
Bank Loans		8	$	7,120,276	$	2,734,444
Accounts payable				1,417,807		716,707
Other payables		9		9,715,659		10,383,657
Unearned revenue		2(m)		640,615		312,573
Accrued liabilities				41,428		362,263

Total current liabilities				18,935,785		14,509,644

TOTAL LIABILITIES			$	18,935,785	$	14,509,644

See accompanying notes to financial statements and accountant’s report

F-32

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS (Continued)

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Stated in US Dollars)

STOCKHOLDERS' EQUITY
Preferred Stock A US $0.001 par value; 20,000,000 shares authorized; 275,111 shares issued and outstanding as of March 31, 2008 and December 31, 2007	10	$	275	$	275

Preferred Stock B US $0.001 par value; 5,000,000 shares authorized; 4,971,859 shares issued and outstanding as of March 31, 2008 and December 31, 2007	10		4,972		4,972

Common Stock US $0.001 par value; 250,000,000 shares authorized; 25,282,380 shares issued and outstanding as of March 31, 2008 and December 31, 2007	10		25,283		25,283

Additional Paid in Capital			35,247,303		35,247,303
Statutory Reserve			3,481,730		3,258,201
Retained Earnings			10,358,228		10,432,430
Accumulated Other Comprehensive Income			3,483,929		1,878,142

TOTAL STOCKHOLDERS' EQUITY			52,601,720		50,846,606

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	71,537,505	$	65,356,250

See accompanying notes to financial statements and accountant’s report

F-33

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Stated in US Dollars)

	3/31/2008			3/31/2007
Net Sales

Revenues	$	4,342,117		$	2,438,227
Cost of revenues		(2,975,472	)		(1,837,630	)
Gross Profit		1,366,645			600,597

Operating Expenses

Selling and marketing expenses		(181,704	)		(56,198	)
General & administrative expenses		(833,451	)		(441,374	)
Total operating expenses		(1,015,155	)		(497,572	)

Operating Income/(Loss)		351,490			103,025

Other Income (Expenses)

Other income		-			36,088
Other expenses		(845	)		(1,495	)
Interest income		33,166			-
Interest expense		(60,467	)		(5,370	)
Total other income (expense)		(28,146	)		29,223

Earnings before tax		323,344			132,248

Income tax		(174,017	)		(16,865	)

Net income	$	149,327		$	115,383

Earnings per share
Basic		0.009			0.008
Diluted		0.007			0.004

Weighted Average Shares Outstanding
Basic		17,165,894			14,730,597
Diluted		22,017,096			28,724,652

See accompanying notes to financial statements and accountant’s report

F-34

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

(Stated in US Dollars)

													Common Stock							Accumulated
	Preferred Stock A				Preferred Stock B				Common Stock				Additional							Other
	Shares				Shares				Shares				Paid in		Statutory		Retained			Comprehensive
	Outstanding		Amount		Outstanding		Amount		Outstanding		Amount		Capital		Reserve		Earnings			Income		Total

Balance, January 1, 2007		-		-		4,023,268		4,023		14,693,186		14,694		18,488,040		2,025,022		3,958,239			824,296		25,314,314
Net Income																		7,707,370					7,707,370
Issue of stock and warrant		275,111		275		948,591		949		10,589,194		10,589		16,759,263									16,771,076
Appropriations of Retained Earnings																1,233,179		(1,233,179	)				-
Foreign Currency Translation Adjustment																					1,053,846		1,053,846
Balance, December 31, 2007		275,111		275		4,971,859		4,972		25,282,380		25,283		35,247,303		3,258,201		10,432,430			1,878,142		50,846,606

Balance, January 1, 2008		275,111		275		4,971,859		4,972		25,282,380		25,283		35,247,303		3,258,201		10,432,430			1,878,142		50,846,606
Net Income																		149,327					149,327
Issue of stock and warrant																							-
Appropriations of Retained Earnings																223,529		(223,529	)				-
Foreign Currency Translation Adjustment																					1,605,787		1,605,787
Balance, March 31, 2008		275,111		275		4,971,859		4,972		25,282,380		25,283		35,247,303		3,481,730		10,358,228			3,483,929		52,601,720

	Accumulated Comprehensive Income
	12/31/2007		3/31/2008		Total
Comprehensive Income
Net Income		7,707,370		149,327		7,856,697
Comprehensive Other Income
Foreign Currency Translation Adjustment		1,053,846		1,605,787		2,659,633
		8,761,216		1,755,114		10,516,330

See accompanying notes to financial statements and accountant’s report

F-35

SINO GAS INTERNATIONAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Stated in US Dollars)

	3/31/2008			3/31/2007
Cash flow from operating activities
Net Income	$	149,327		$	115,383
Depreciation expense		640,248			38,844
Amortization expense		29,532			-
Invested in restricted time deposits		(185,141	)		3,124,541
Decrease/(increase) in accounts receivable		(5,357,649	)		310,419
Increase in inventory		(38,915	)		-
Increase in prepaid expenses		(831,430	)		-
Increase in accounts payable		(287,733	)		3,023,295
Cash sourced/(used) in operating activities		(5,881,761	)		6,612,482

Cash flows from investing activities
Cash received for investment sales proceeds		1,304,154			-
Cash paid for investment and acquisition		-			(930,801	)
Purchase of property, plant & equipment		(2,920,649	)		(3,320,688	)
Purchase of intangible assets		(113,620	)		(172,210	)
Increase in construction in progress		(1,274,121	)		(1,345,436	)
Cash souced/(used) in investing activities		(3,004,236	)		(5,769,135	)

Cash flows from financing activities
Proceeds from bank borrowings		4,385,832			(2,430,445	)
Cash sourced/(used) in financing activities		4,385,832			(2,430,445	)

Net Increase/(Decrease) in Cash & Cash Equivalents for the Year		(4,500,165	)		(1,587,098	)

Effect of Currency Translation on cash and cash equivalents		1,605,787			293,589

Cash & Cash Equivalents - Beginning of Year	$	10,915,590		$	3,638,673

Cash & Cash Equivalents - End of Year	$	8,021,212		$	2,345,164

Supplementary cash flow information
Interest received	$	33,166		$	94,653
Interest paid		60,467			43,617
Income tax paid		-			16,865

See accompanying notes to financial statements and accountant’s report

F-36

SINO GAS INTERNATIONAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

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”).

F-37

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Method of Accounting

(b) Use of estimates

(c) Economic and political risks

(d) Principles of Consolidation

F-38

The Company owned its subsidiaries soon after its inception and continued to acquire and own the equity interests throughout the reporting periods. The following table depicts the identities of the consolidating subsidiaries as of March 31, 2008 and December 31, 2007 (whichever applicable 2007).

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

USD

10,000,000

Sino Gas Construction Limited

The British

Virgin

Islands

1/9/2007

100

USD

50,000

Sino Gas Investment Development Limited

The British

Virgin

Islands

1/9/2007

100

USD

50,000

Beijing Zhong Ran Wei Ye Gas Co., Ltd

PRC

8/29/2001

100

RMB 150,000,000

Peixian Weiye Gas Co., Ltd

PRC

8/22/2005

100

RMB

5,000,000

Sihong Weiye Gas Co., Ltd

PRC

12/3/2004

100

RMB

10,000,000

Wuhe Weiye Gas Co., Ltd

PRC

1/30/2007

100

RMB3,000,000

Changli Weiye Gas Co., Ltd

PRC

12/8/2006

100

RMB

3,000,000

Yutian Zhongran Weiye Gas Co., Ltd

PRC

12/19/2003

100

RMB

3,000,000

Yuxian Jinli Gas Co., Ltd

PRC

11/8/2005

100

RMB

9,500,000

Zhangjiakou City Xiahuayuan Jinli Gas Co., Ltd.

PRC

9/30/2005

100

RMB

2,000,000

Wuqiao Gas Co., Ltd

PRC

6/30/2004

100

RMB

2,000,000

F-39

Jinzhou Weiye Gas Co., Ltd

PRC

7/19/2004

100

RMB

5,000,000

Shenzhou Weiye Gas Co., Ltd

PRC

12/23/2005

100

RMB

3,000,000

Ningjin Weiye Gas Co., Ltd

PRC

12/3/2003

100

RMB

3,000,000

Linzhang Weiye Gas Co., Ltd

PRC

7/6/2005

100

RMB

1,000,000

Hengshui Weiye Gas Co., Ltd

PRC

12/20/2005

100

RMB

3,000,000

Longyao Zhongran Weiye Gas Co., Ltd

PRC

10/13/2005

100

RMB

3,000,000

Xingtang Weiye Gas Co., Ltd

PRC

2/18/2004

100

RMB

3,000,000

Gucheng Weiye Gas Co., Ltd

PRC

3/21/2007

100

RMB

3,000,000

Langfang Development Region Weiye dangerous Goods Transportation Co., Ltd

PRC

3/22/2005

100

RMB

1,000,000

Beijing Chenguang Gas Ltd.

PRC

10/30/2002

100

RMB

20,000,000

Xinji Zhongchen Gas Co., Ltd

PRC

2/7/2007

100

RMB

3,000,000

Shijiazhuang Chenguang Gas Co., Ltd

PRC

6/14/2007

100

RMB

2,000,000

Luquan Chenguang Gas Co., Ltd

PRC

4/27/2007

100

RMB

2,000,000

Chenan Chenguang Gas Co., Ltd

PRC

1/23/2007

100

RMB

1,500,000

Nangong Weiye Gas Co., Ltd

PRC

6/25/2007

100

RMB

3,000,000

Sishui Weiye Gas Co., Ltd

PRC

12/22/2004

100

RMB

3,000,000

F-40

Guannan Weiye Gas Co., Ltd

PRC

6/19/2003

100

RMB

9,510,000

Sixian Weiye Gas Co., Ltd

PRC

9/3/2007

100

RMB

3,000,000

Baishan Weiye Gas Co., Ltd

PRC

7/13/1007

100

RMB

15,000,000

(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 and Other 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.

Beijing Zhongran Xiangke Oil Gas Technology Co. Ltd is the Company’s 40% owned investment and is principally engaged in sale of compressed natural gas to domestic households and industrial firms around the suburbs of Beijing as well as the suburban areas of the Hebei Province and Tianjin.

F-41

Name of

Associate

Company

Place

Registration

Form of

Business

Structure

Registered

Capital

Nominal

Value of

Registered

Capital

Principal

Activities

Beijing Zhongran

Xiangke Oil Gas

Technology Co.

Ltd

PRC

Sino foreign

equity joint

venture

RMB

20,000,000

Trading of

natural gas

and gas

pipeline

construction

The Company did not record any goodwill when it acquired its equity position in Xiangke. Accordingly, in accordance with SFAS 142, the Company has not taken an amortization expense of goodwill during the time it has carried a 40% stake in Xiangke.

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

The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

During the reporting periods, there was no impairment loss.

(j) Plant and Equipment

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

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

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

F-42

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

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

(l) Construction in Progress

Construction in progress represents the cost of constructing pipelines and is stated at cost. Costs comprise direct and indirect incremental costs of acquisition or construction. Completed items are transferred from construction in progress to the gas pipelines of fixed assets when they are ready for their intended use. The major cost of construction relates to construction materials, direct labor wages and other overhead. Construction of pipeline, through which to distribute natural gas, is one of the Group’s principal businesses. The Group builds city main pipeline network and branch pipeline network to make gas connection to resident users, industrial, and commercial users, with the objective of generating revenue on gas connection and gas usage fees collected from these customers. As of March 31, 2008, the pipelines under construction include mainly the projects in Beijing. These projects, once completed, will significantly increase the gas supply capacity.

(m) Unearned Revenue

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

(n) Financial Instruments

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

F-43

(o) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The consolidated financial statements are translated into United States dollars from RMB at March 31, 2008 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.

	3/31/2008		12/31/2007
Years end RMB : US$ exchange rate		7.0222		7.3141
Average yearly RMB : US$ exchange rate		7.1757		7.6172

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.

(p) Revenue Recognition

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

Net sales consist of gas and connection fee revenue. Cost of sales include gas and connection cost.

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

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

(q) Investment Income

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

F-44

(r) Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2007, there was no significant book to tax differences.

Pursuant to the tax laws of PRC, general enterprises are subject to income tax at an effective rate of 33%. Beijing Gas is in the natural gas industry whose development is encouraged by the government. According to the income tax regulation, any company engaged in the natural gas industry enjoys a favorable tax rate. Also, Beijing Gas is exempt from corporate income tax for its first two years and is then entitled to a 50% tax reduction for the succeeding three years. The Company’s first profitable tax year was 2003. Accordingly, the Company’s income is subject to a reduced tax rate of 7.5%. From 2008 onwards, the Company’s income is subject to a reduced tax rate of 9%. Subsidiaries of Beijing Gas are subject to the effective rate of 25%.

(s) Advertising

The Group expensed all advertising costs as incurred

(t) Concentration of Credit Risk

Concentration of credit risk is limited to accounts receivable and is subject to the financial conditions of major customers. The 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.

(u) Retirement Benefits

Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the statements of income as incurred.

(v) 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 surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;

F-45

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

(w) Statement of Cash Flows

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

(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

In December 2007, the Financial Accounting Standards Board issued FASB Statement No. 141 (Revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R provides additional guidance on improving the relevance, representational faithfulness, and comparability of the financial information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company believes there will be no material impact on its financial statements upon adoption of this standard.

In December 2007, the Financial Accounting Standards Board issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company believes there will be no material impact on its financial statements upon adoption of this standard.

F-46

(Z) Earnings Per Share

Basic earnings per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method for warrants and the as-if method for convertible securities. Dilutive potential common shares include outstanding warrants, and convertible preferred stock.

3. RESTRICTED CASH

Restricted Cash represents compensating balances held at banks to partially secure banking facilities in the form of loans and notes payable. The imposed restrictions dictate that funds cannot be withdrawn when there are outstanding loans and notes payable, and the funds are only allowed to be used to settle bank indebtedness. The funds deposited as compensating balances are interest bearing. The amount of cash restricted varies based on the Bank’s credit policy at the time that the Company requests for increase or extension of credit facilities.

4. ACCOUNTS RECEIVABLE

For natural gas sales, it is due when the gas is sold. Normally, most of them are settled by prepayments from the customers.

In general for construction projects, deposits of 30% of total contract sum are received from client when the project commences. Second payment of 30% is received after the construction is completed for around 6 months. 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 phrase “receivables are due within one year of aging” means the receivable that are within one year of aging.

The “amounts are not due within one year” are mostly retention money from construction sales that are based on contracts. The continued demand from the natural gas sales from them also help assure the amount could be collected. No experience of wholly-unsettled accounts receivable in the year March 31, 2008 and December 31, 2007

Trade accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense is included in the general and administrative expenses.

Outstanding account balances are reviewed individually for collectibles. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To date, the Company has not charged off any balances as it has yet to exhaust all means of collection. The Company does not have any off-balance-sheet credit exposure to its customers, except for outstanding notes receivable discounted with banks that are subject to recourse for non-payment.

F-47

The credit and billing policy is that, for the residential customer, we collect prepayment from customers; for the industrial customers, we settle the payment based on the contract terms signed, from 10 days to one month; for the construction business, we collect the payment from customer based on the percentage of the construction progress. The risk that business faces from inability to collect account is Operation risk in industrial customers.

	Accounts Receivable
	3/31/2008		12/31/2007
Gross accounts receivable	$	6,193,385	$	7,352,013
Allowance for bad debt		30,967		(36,760	)
Net accounts receivable	$	6,162,418	$	7,315,253

	Allowance for Bad Debt
	3/31/2008			12/31/2007
Beginning balance	$	36,760		$	32,838
Addition		19,939			26,909
Less - write off		(25,732	)		(22,987	)
Ending balance	$	30,967		$	36,760

	Accounts Receivable Aging Report
	3/31/2008		12/31/2007

30 Days	$	4,681,398	$	5,557,172
30-60 Days		1,021,345		1,212,413
60-90 Days		23,157		8,747
90-180 Days		171,660		-
180-360 Days		257,490		27,489
>360 Days		7,368		509,433
Total	$	6,162,418	$	7,315,254

F-48

The followings are the largest ten accounts receivable as of March 31, 2008

Peixian jiangnan development Co., Ltd	$	290,507
Beijing xuancheng Construction Co., Ltd		297,881
Jiangshu honghu farm Co., Ltd		301,558
Sihong jinwan construction Co., Ltd		323,545
Xuzhou shenyuan real property Co., Ltd		351,048
Guannan construction Co., Ltd		359,716
Lianyun port development Co., Ltd		372,533
Huabei oil management machine Co., Ltd		412,549
Shanghai datun energy Co., Ltd		604,771
Hebei zhonggang steel development Co., Ltd		892,056

Total	$	4,206,164

5. OTHER RECEIVABLES

The followings are the ten largest other receivables as of March 31, 2008

	Other receivables
	3/31/2008

Beijing yanfang construction Co., Ltd.	$	15,434
Xisanzhuang Co., Ltd.		21,423
Shenzhen shenqi investment Co., Ltd.		23,732
Peixuan construction service department		28,481
Beijing zhongshi investment Co., Ltd.		42,722
Shangjianzhong		327,533
China gas investment Co., Ltd.		333,939
Tianjin feite zhixun service Co., Ltd.		356,014
Baishan zhaiwu service Co., Ltd.		1,968,852
Baoding city management Co., Ltd.		4,272,165

Total	$	7,390,295

F-49

6. PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment consist of the following as of March 31, 2008 and December 31, 2007

	03/31/08			12/31/07
At Cost
Gas Pipelines	$	20,925,765		$	18,885,735
Motor Vehicles		5,351,869			4,874,686
Machinery & Equipment		867,089			885,998
Buildings		1,748,881			1,405,639
Leasehold Improvements		72,036			68,942
Office Equipment		181,345			105,336

Total	$	29,146,985		$	26,226,336

Less: Accumulated Depreciation		(2,294,018	)		(1,653,771	)

Property, Plant and Equipment, net	$	26,852,967		$	24,572,565

	03/31/08		12/31/07
Accumulated Depreciation
Gas Pipelines	$	1,074,075	$	591,419
Motor Vehicles		821,796		687,354
Machinery & Equipment		170,595		161,703
Buildings		131,312		128,514
Leasehold Improvements		38,269		34,070
Office Equipment		57,971		50,711

Total	$	2,294,018	$	1,653,771

Depreciation expense included in the consolidated statements of income for the period ended March 31, 2008 was $640,247.

F-50

7. INTANGIBLE ASSETS

Intangible assets consist of the following as of March 31, 2008 and December 31, 2007:

	03/31/08			12/31/07
At Cost
Land use rights	$	471,747		$	452,345
Franchises		384,495			359,464
Goodwill		1,627,140			1,562,202
Other		13,813			9,563
Total	$	2,497,195		$	2,383,574

Less: Accumulated Amortization		(384,858	)		(355,324	)

Intangible Assets, net	$	2,112,337		$	2,028,250

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

8. SHORT-TERM BANK LOANS

Short-term bank loans are as follows:

	3/31/2008		12/31/2007
Loans from China Renmin Bank Co.,Ltd. Interest rate at 7.22% per annual plus 10% fluctuation market rate	$	2,848,110	$	2,734,444
Loans from Huashang Bank Co., Ltd.		4,272,166		-
Total	$	7,120,276	$	2,734,444

Interest expenses for the short-term bank loans were $57,877 and $55,405 for the three months ended March 31, 2008, and the twelve months ended December 31, 2007.

F-51

9. OTHER PAYABLES

Other payables at March 31, 2008 and December 31, 2007 consist of the following:

	3/31/2008		12/31/2007
Employees’ welfare payables	$	218,637	$	176,236
Amount due to employees		30,061		150,711
Tax payable		243,439		922,620
Other Payable		9,223,522		9,134,090

Total	$	9,715,659	$	10,383,657

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

The followings are the ten largest other payables as of March 31, 2008:

Beijing chengguang Co., Ltd.	$	19,833
Caiyou erchuang transportation Co.		25,674
Education department Co., Ltd.		38,528
Labor union department		60,757
Heshuchun		71,203
Beijing qianshi technology development Co.		78,602
Social insurance Co., Ltd.		117,263
Employee training program Co., Ltd.		411,860
Chenguang weizhong consultant Co., Ltd.		427,217
Baishan natural gas Co., Ltd		4,010,447

Total	$	5,261,384

10. CAPITAL STOCK

The authorized capital stock consists of (i) 250,000,000 shares of common stock, par value $0.001 per share, of which there are 25,282,380 shares issued and outstanding, and (ii) 100,000,000 shares of preferred stock, par value $0.001 per share. The preferred stock consists of (i) series A convertible preferred stock, of which 20,000,000 shares have been authorized and 275,111 shares are issued and outstanding; and (ii) series B convertible preferred stock, of which 5,000,000 shares have been authorized and 4,971,859 shares are issued and outstanding.

F-52

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 and series B 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 25,282,380 shares of common stock issued and outstanding as of March 31, 2008. 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 authorized $0.001 par value per share 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, although the Company does not have sufficient unissued authorized common stock to allow for a complete conversion. 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. Therefore, as of December 31, 2006, the Company has no shares of series A convertible preferred stock issued and outstanding.

F-53

Conversion

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

Each share of the series B convertible preferred stock will become 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 is initially one share of series B convertible preferred stock for one share of common stock.

Total Capitalization

The Following table depicts an analysis of total capitalization for the issuance of Preferred Stock A, Preferred Stock B, Common Stock, and the related additional Paid in Capital as of March 31, 2008:

	Preferred Stock A				Preferred Stock B				Common Stock
Name of Shareholder	Number of Shares Outstanding		Capital		Number of Shares Outstanding		Capital		Number of Shares Outstanding		Capital		Additional Paid in Capital			% of Equity Holdings

Private Investor		275,111		275		-		-		-		-		1,210,213			0.90	%
Investor Relations firm		-		-		4,971,859		4,972		-		-		6,994,270			16.29	%
Management / Insider		-		-		-		-		12,653,661		12,654		4,252,959			41.45	%
Investor - 1st Round Raising		-		-		-		-		5,628,722		5,629		2,997,371			18.44	%
Less : Cost of Stock Issuance		-		-		-		-		-		-		(412,241	)		-
Investor - 2nd Round Raising		-		-		-		-		6,999,997		7,000		15,743,000			22.93	%
Less : Cost of Stock Issuance		-		-		-		-		-		-		(1,957,133	)		-
Beneficial Conversion Feature		-		-		-		-		-		-		6,418,864			-

		275,111		275		4,971,859		4,972		25,282,380		25,283		35,247,303			100.00	%

F-54

11. 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 gas to that customers through the gas facilities the Company constructs. However, the respective gas facilities contracts and gas supply contracts have separately provided for the basis of revenue recognition and distinctive from each other for the relevant cost-and-revenue to be incurred and hence separate calculation and subsequent payment of fees for respective business without any interdependence on each other in this respect.

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

3/31/2008 Balance Sheet Segment Report

	Gas Distribution		Gas pipeline Installation		Others		Total
Assets
Current Assets	$	14,147,456	$	4,688,771	$	8,201,877	$	27,038,104
Non-Current Assets		11,194,047		33,305,354		-		44,499,401
Total Assets	$	25,341,503	$	37,994,125	$	8,201,877	$	71,537,505

Liabilities
Current Liabilities		1,604,946		17,175,131		155,709		18,935,786
Total Liabilities	$	1,604,946	$	17,175,131	$	155,709	$	18,935,786

Net Assets	$	23,736,557	$	20,818,994	$	8,046,168	$	52,601,719

F-55

3/31/2008 Income Statement Segment Report

	Gas Distribution			Gas pipeline Installation			Others			Total

Sales Revenue	$	2,987,419		$	1,354,698		$	-		$	4,342,117
Cost of Revenue		(2,545,638	)		(429,834	)		-			(2,975,472	)
Gross Profit		441,781			924,864			-			1,366,645

Operating Expense		(232,194	)		(493,412	)		(289,548	)		(1,015,155	)
Other Income		(18,061	)		(38,380	)		28,295			(28,146	)
Earnings before tax		191,526			393,071			(261,253	)		323,344
Income tax		(55,685	)		(118,332	)		-			(174,017	)

Net Income	$	135,841		$	274,739		$	(261,253	)	$	149,327

Balance Sheet Segment Report

As of December 31, 2007

	Gas Distribution		Gas pipeline Installation		Others		Total
Assets
Current Assets		11,509,765		3,814,583		7,866,957		23,191,305
Non-Current Assets		10,606,803		31,558,142		-		42,164,945
Total Assets		22,116,568		35,372,725		7,866,957		65,356,250

Liabilities
Current Liabilities		1,228,727		13,149,074		131,843		14,509,644
Total Liabilities		1,228,727		13,149,074		131,843		14,509,644

Net Assets		20,887,841		22,223,651		7,735,114		50,846,606

F-56

Title of each class of securities to be registered	Amount to be registered⁽¹⁾		Proposed maximum offering price per share⁽²⁾		Proposed maximum aggregate offering price⁽²⁾		Amount of registration fee⁽²⁾
Common Stock, par value $0.001 per share		8,340,762 shares	$	3.20	$	26,690,438.4	$	819.40
Common Stock issuable upon exercise of Placement Agent Warrants⁽³⁾		271,074 shares	$	3.20	$	867,436.8	$	26.63
Total		8,611,836 shares			$	27,557,875.2	$	846.03

	Year ended December 31, 2005		Year ended December 31, 2006		Year ended December 31, 2007		3 Months ended Mar. 31, 2008
Net revenue	$	10,907,289		10,870,718		20,267,756		4,342,117
Net Income (Loss)		5,702,433		5,165,757		7,707,370		149,327

	March 31, 2008		December 31, 2006		December. 31, 2007
Total assets		71,537,505		33,882,796		65,356,250
Total liabilities		18,935,785		8,476,015		14,417,176
Shareholders’ equity		52,601,720		25,406,781		50,939,074

CALENDAR QUARTER ENDED	HIGH BID(S)		LOW BID(S)
September 30, 2006(1)	$	0.04	$	0.014
December 31, 2006	$	5.00	$	3.60
March 31, 2007	$	11.12	$	6.1
June 30, 2007	$	8.0	$	4.0
September 30, 2007	$	6.0	$	3.7
December 31, 2007	$	4.5		2.75
March 31, 2008	$	4.0	$	2.10
Second Quarter of 2008 (as of May 21, 2008)	$	2.35	$	1.62

	For the 3 months ended December 31,
	2008					2007					Change
(In $ million)	US$		%			US$		%			%
Net Revenues		4.34		100	%		2.44		100	%		78.09	%
Connection Fees		1.35		31	%		0.62		25	%		120.16	%
Gas Sales		2.99		69	%		1.82		75	%		63.88	%

(1)	In addition, pursuant to Rule 416 under the Securities Act of 1933, this Registration Statement includes an indeterminate number of additional shares as may be issuable upon any stock split, dividend or other distribution, recapitalization or similar event.

(2)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933 based upon the average of the high and low prices of the registrant’s common stock on December 07, 2007 on the over the counter stock market.

(3)	Placement Agent Warrants are exercisable for three years at the exercise price of $4.84 per share.

	Page
Prospectus Summary		1
Cautionary Statement Concerning Forward-Looking Information		3
Risk Factors		4
Use of Proceeds		15
Management’s Discussion and Analysis or Plan of Operation		16
Our Business
Management		59
Executive Compensation		60
Description of Our Common Stock and Other Stockholder Matters
Principal Stockholders		65
Selling Stockholders		67
Plan of Distribution		71
Legal Matters		78
Experts		78
Available Information		78
Index to Consolidated Financial Statements		F-1

	·		raise adequate capital for expansion and operations;

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

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

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

	·		maintain adequate control of our expenses;

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

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

Weixian Jinli Gas Co., Ltd		100

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

Hengshui Weiye Gas Co., Ltd		100

Longyao Zhongran Weiye Gas Co., Ltd		95

Xingtang Weiye Gas Co., Ltd		95

Gucheng Weiye Gas Co., Ltd		100

Langfang Development Region Weiye Dangerous Goods Transportation Co., Ltd		95

Beijing Chenguang Gas Ltd.		100

Xinji Zhongchen Gas Co., Ltd		100

Tianjin Chenguang Gas Co., Ltd		100

Luquan Chenguang Gas Co., Ltd		100

Cheng’an 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

Tongshan Hengxin Jiaye Natural Gas Co., Ltd.		100

	For the 3 months ended March 31,
	2008			2007			Change
	US$			US$			%
Net Revenues		4,342,117			2,438,227			78.09	%
Gross Profit		1,366,645			600,597			127.55	%
Operating Income		351,490			103,025			241.17	%
Net Income		149,327			115,383			29.42	%
Gross Margin		3.15	%		24.63	%
Net Margin		3.44	%		4.73	%

	For the 3 months ended March 31,
(in US$ millions)	2008					2007					Change
	US$		%			US$		%			%
Connection Fees		1.35		100	%		0.62		100	%		120.16	%
Residential Users		1.35		100	%		0.62		100	%		120.16	%
Industrial Users		0.00		0	%		0.00		0	%		0	%

Customers	Connection Fees: ($ million)
Beijing Xinchengyuanjing Real Estate Development Co. Ltd		0.2748
Tangshan Shunda Real Estate Development Co.		0.2776
Zaoqiang Taihe Real Estate Development Co.		0.223
Baishan Jiacheng Real Estate Development Co.		0.0557
Su Qian Run Cheng Development Co., Ltd.		0.0418

Residential Customers	Gas Usage (million cubic meters)		Gas Usage ($ million)
Hebei Zhonggang Steel Co., Ltd.		1.9407		0.6294
Tangshan Changsheng Ceramic Factory		0.1721		0.0541
Elite (Langfang) Textile Corporation		0.0992		0.0298
The First Machine Factory of Huabei Petrol Bureau		0.391		0.128
Hebei Jihengyuan Group Ltd.		0.1021		0.0428

Gas Supplier	Gas Purchase (million cubic meters)		Gas Purchase ($ million)
North China Oil Field Fourth Oil Extraction Plant of Petro China		1.84		0.41
Tianjin Dagang Oilfield Transportation Co., Ltd.		0.35		0.09
Henan Zhong Yuan Green Energy High-Tech Co., Ltd.		0.15		0.06
Hebei Natural Gas Co. Ltd		0.33		0.07

	For the 12 months ended December 31,
	2007			2006			Change
	US$			US$			%
Net Revenues		20,267,756			10,870,718			86.44	%
Gross Profit		10,768,004			6,481,576			66.13	%
Operating Income		8,052,785			5,229,948			53.97	%
Net Income		7,707,370			5,073,289			53.01	%
Gross Margin		53.12	%		59.62	%
Net Margin		38.03	%		47.52	%

Customers	Connected Household Users (thousand) (thousand)		Connection Fees: ($ million)		Percentage of Connection Fees (%)
Shanghai Datun Energy Holdings		8.7		2.76		38.23	%
Huabei Petrol Bureau		2.5		0.59		8.17	%
Jinshi Real Estate Co.		1.3		0.50		6.93	%
Jiangsu Hongze Lake Farm		1.4		0.40		5.54	%

	For the 12 months ended December 31,
	2007					2006					Change
(In $ million)	US$		%			US$		%			%
Net Revenues		20.27		100	%		10.87		100	%		86.44	%
Connection Fees		12.97		64	%		6.96		64	%		86.35	%
Gas Sales		7.30		36	%		3.91		36	%		86.7	%

Industrial Customers	Gas Usage (million cubic meters)		Gas Usage ($ million)		Percentage of Gas Sales (%)
Hebei Zhonggang Steel Co., Ltd.		7.35		2.21		30	%
Tangshan Changsheng Ceramic Factory		0.97		0.29		4	%
The First Machine Factory of Huabei Petrol Bureau		0.77		0.21		3	%
Elite (Langfang) Textile Corporation		0.22		0.06		1	%
Hebei Jihengyuan Group Ltd.		0.15		0.05		1	%

Beijing Chenguang Gas Ltd.	$	3,413,328
Wuhe Weiye Gas Co., Ltd.	$	393,846
Gucheng Weiye Gas Co., Ltd.	$	393,846
Nangong Weiye Gas Co., Ltd.	$	393,846
Sixian Weiye Gas Co., Ltd.	$	393,846
Baishan Wiye Gas Co., Ltd.	$	1,969,228
Yuxian Jinli Gas Co., Ltd.	$	325,579
Guannan Weiye Gas Co., Ltd.	$	918,973
Xinji Zhongchen Gas Co., Ltd.	$	385,969
Shijiazhuang Chenguang Gas Co., Ltd.	$	257,312
Luquan Chenguang Gas Co., Ltd.	$	257,312
Cheng’an Chenguang Gas Co., Ltd.	$	192,984

Baishan Jiehe Development & Construction Co., Ltd.	$	200,844
Shuqian Mingwei Development & Construction Co., Ltd.		241,998
Peixian Jiannan Real Estate Development Co., Ltd.		313,367
Sihong Jinwan Construction Co., Ltd.		316,101
Xiuzhou Shenyuan Real Estate Development Co., Ltd.		337,038
Guannan Construction Co., Ltd.		345,360
Lianyuangan Baoli Development Co., Ltd.		357,665
Jianshu Province Farms		421,405
Huabei Oil Management & Machine co., Ltd.		553,365
Hebei Zhonggang Steel Co., Ltd.		592,135

	$	3,681,282

	At and for the quarter ended March 31		At and for the year ended December 31
	2008		2007		2006		2005
Total gas distributed and supplied (US$ millions)		2.99		7.3		3.65		2.7
Distribution network (km)		720		700		390		187.8
Number of industrial customers		5		5		5		4
Number of residential customers		98,298		93,708		48,199		23,700

	For the 3 months ended Mar. 31			At and for the year ended December 31
	2008			2007			2006			2005
	(in US$ millions)			(in US$ millions)			(in US$ millions)			(in US$ millions)
Connection fees (as % of total Sales)		1.35	(31)%		13.0	(64)%		7.22	(66)%		8.2	(75.2)%
Gas sales		2.99	(69)%		7.3	(36)%		3.65	(34)%		2.7	(24.8)%
Other sales					—			—			—

	For the 3 months ended Mar. 31		For the year ended Dec 31
	2008		2007		2006		2005
	(in US$ millions)		(in US$ millions)		(in US$ millions)		(in US$ millions)
Gas costs		2.55		6.37		2.84		2.53
Connection costs		0.43		3.13		1.55		1.57

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

Weixian Jinli Gas Co., Ltd		100

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

Hengshui Weiye Gas Co., Ltd		100

Longyao Zhongran Weiye Gas Co., Ltd		95

Xingtang Weiye Gas Co., Ltd		95

Gucheng Weiye Gas Co., Ltd		100

Langfang Development Region Weiye Dangerous Goods Transportation Co., Ltd		95

Beijing Chenguang Gas Ltd.		100

Xinji Zhongchen Gas Co., Ltd		100

Tianjin Chenguang Gas Co., Ltd		100

Luquan Chenguang Gas Co., Ltd		100

Cheng’an 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

Tongshan Hengxin Jiaye Natural Gas Co., Ltd.		100

	Percentage of Connections Fees for the year ended December 31,
Customers	2007			2006
Shanghai Datun Energy Holdings		21.28	%		36.43	%
Huabei Oil Management Bureau		12.06	%		-	%
Hebei Ji Heng Yuan Group		5.47	%		-	%
Shi Jia Zhuang Jin Shi Real Estate Co.		3.84	%		-	%
Jinzhou Real Estate Co.		3.12	%		-	%
Total		46.83	%		*65.24	%

	Percentage of Sales Quarter ended March 31,			Percentage of Sales Fiscal year ended December 31,
Customers	2008			2007			2006
Hebei Zhong Gang Steel		34.53	%		30.4	%		51.78	%
Tang Shan Chang Sheng		2.97	%		4.00	%		9.04	%
Elite (Lang Fang) Textile		1.63	%		0.90	%		0	%
Huabei Machine Factory		7.02	%		2.88	%		0	%
Hebei Ji Heng Yuan		2.35	%		0.76	%		0	%
Total		48.5	%		38.87	%		61.02	%

	Ticker		07 Revenue (in $millions)		07 Net Income (in $millions)
Towngas China Co., Ltd (Panva Gas)(1)		1083.HK		408		18.4
Xinao Gas Holdings Ltd(2)		2688.HK		822		72.5
China Gas Holdings Limited(3)		0384.HK		158		24.3
Zhengzhou Gas Co. Ltd(4)		3928.HK		123		18.4

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

	At and for the year ended December 31,
	2007 (in USD)		2006 (in USD)
Amount of social insurance		233,113.58		77,104.80

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 (since Mar. 14, 2008)	44
Zhimin ZHONG	Marketing Director	53
Shukui BIAN	Vice President & Chief Engineer	44
Yong ZHANG	Chief Financial Officer (effective April 25, 2008)	34
Vincent HU	Chief Financial Officer (resigned effective Mar. 31, 2008)	34
Guowei CHEN	Director	52
Quandong SUN	Director	42
Xinmin ZHANG	Director	53
John D. KUHNS	Director (resigned effective Mar. 8, 2008)	57
Fang CHEN	Director (resigned effective Mar. 6, 2008)	35

Name and Principal Underlying Positions	Year	Salary		Bonus		Option Awards		Stock Awards		All Other Compensation		Total
Yuchuan Liu- President & CEO	2007	$	100,000		60,000							$	160,000
	2006	$	22,800	$	1,913		—		—		—	$	24,713
Vincent Hu CFO (since 11/07, resigned Mar. 08)	2007	$	10,000	$	—						—	$	10,000
Fang Chen CFO (until 11/07)	2007	$	60,000	$	30,000						—	$	90,000
	2006	$	11,691	$	—						—	$	11,691
Zhicheng Zhou-Chief Operating Officer	2007	$	60,000		30,000							$	90,000
Shuwang Li *	2006	$	11691	$	1,913		—				—	$	13604

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		5,000							5,000
Quandong Sun		5,000							5,000
Xinmin Zhang		5,000							5,000

	c/o Beijing Zhong Ran Wei Ye Gas Co., Ltd.
	N0.18 Zhong Guan Cun Dong St.
	Haidian District
	Beijing, China 10083

	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	(5)(6)					26.2	%
Leading King Investment Limited				5,384,923	(7)(8)					21.6	%
Vision Opportunity Master Fund, Ltd.		4,475,831		2,756,824			88.3	%		11.1	%
T. Rowe Price Small-Cap Value Fund, Inc.				2,444,444						9.8	%

Directors and Executive Officers
Liu Yuchuan				6,524,174	(5)(6)					26.2	%
Sun Quandong				5,384,923	(7)(8)					21.6	%
Zhong Zhimin				393,81	(3)					0.16	%
Zhou Zhicheng				-
Bian Shukui				173,962	(3)					0.7	%
Chen Fang				65,604	(3)					0.26	%
Chen Guowei				-	(3)					-
John Kuhns				635,822	(4)					2.56	%

All Directors and Executive Officers				12,823,866				%		51.5	%

	12/31/2007		12/31/2006
Years end RMB : US$ exchange rate		7.3141		7.8175
Average yearly RMB : US$ exchange rate		7.6172		7.9819

	12/31/2007		12/31/2006
At Cost
Land use rights	$	452,345	$	112,565
Franchises		359,464		336,318
Goodwill		1,562,202
Other		9,563		8,947
		2,383,574		457,830

Less: Accumulated amortization		355,324		-

	$	2,028,250	$	457,830