UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 6, 2006
CHINA NATURAL GAS, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-31539 98-0231607
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
Tang Xing Shu Ma Building, Suite 418
Tang Xing Road
Xian High Tech Area
Xian, Shaanxi Province
China
(Address of principal executive offices) (zip code)
86-29-88323325
(Registrant's telephone number, including area code)
Copies to:
Marc J. Ross, Esq.
Thomas A. Rose, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Item 3.02 Unregistered Sales of Equity Securities.
On January 6, 2006 and January 9, 2006, China Natural Gas, Inc. (the
"Company"), entered into securities purchase agreements with four accredited
investors and completed the sale of $5,380,000 of units. The units contained an
aggregate of 1,921,428 shares of common stock and 523,055 common stock purchase
warrants. Each common stock purchase warrant is exercisable for a period of
three years at an exercise price of $3.60 per share. Pursuant to the terms of
the warrant, each investor has contractually agreed to restrict its ability to
exercise the warrants to an amount which would not exceed the difference between
the number of shares of common stock beneficially owned by the holder or
issuable upon exercise of the warrant held by such holder and 9.9% of the
outstanding shares of common stock of the Company. New York Global Securities
acted as the placement agent of the transaction.
The Company is obligated to file a registration statement registering the
resale of shares of the Company's common stock and those issuable upon exercise
of the warrants. If the registration statement is not filed within 45 days from
the date of investment, or declared effective within 90 days thereafter (135
days if the registration statement receives a full review by the SEC), or if the
registration is suspended other than as permitted in the registration rights
agreement between the Company and the investors, the Company is obligated to pay
the investors certain fees in the amount of 1% of the aggregate amount invested,
per month, and the obligations may be deemed to be in default.
In connection with the offering, the Company paid a placement fee of 10% of
the proceeds in cash, together with non-accountable expenses in the amount of 3%
of the proceeds, in cash. In addition, the placement agent was issued warrants
to purchase 298,888 shares of common stock on the same terms and conditions as
the investors.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit
Number Description
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10.1 Form of Securities Purchase Agreement
10.2 Form of Common Stock Purchase Warrant
10.3 Form of Registration Rights Agreement
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHINA NATURAL GAS, INC.
Dated: January 12, 2006 By: /s/ MINQING LU
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Minqing Lu,
Chief Executive Officer