UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

      For the fiscal year ended December 31, 2005

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                        Commission File Number: 000-31539


                             CHINA NATURAL GAS, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


--------------------------------------------------------------------------------
               Delaware                                     98-0231607
--------------------------------------------------------------------------------
     State or other jurisdiction of                      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 office)


                    Issuer's telephone number: 86-29-88323325


       Securities registered under Section 12(b) of the Exchange Act: None

       Securities registered under Section 12(g) of the Exchange Act: None

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.) Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes |_| No |X|

The Issuer's revenues for the year ending December 31, 2005 were $4,850,699.
As of March 17, 2006 the number of shares outstanding of the Issuer's common
stock was 23,918,516.
As of March 17, 2006 the aggregate number of shares held by non-affiliates was
approximately 15,227,500.
As of March 17, 2006 the aggregate market value of the Issuer's common stock
held by non-affiliates was $65,478,250, based on the average high and low price
of $4.30 per share as of March 17, 2006.

DOCUMENTS INCORPORATED BY REFERENCE None


                                       1
<PAGE>

                                   FORM 10-KSB

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                                      INDEX

                                                                            Page

PART I........................................................................ 4
      ITEM 1.  DESCRIPTION OF BUSINESS........................................ 4
      ITEM 2.  DESCRIPTION OF PROPERTY........................................ 7
      ITEM 3.  LEGAL PROCEEDINGS.............................................. 8
      ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS............. 8

PART II....................................................................... 9
      ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
               MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
               SECURITIES..................................................... 9
      ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......10
      ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................15
      ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
               AND FINANCIAL DISCLOSURE.......................................16
      ITEM 8A. CONTROLS AND PROCEDURES........................................16
      ITEM 8B. OTHER INFORMATION..............................................16

PART III......................................................................17
      ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
               COMPLIANCE  WITH SECTION 16(a) OF THE EXCHANGE ACT.............17
      ITEM 10. EXECUTIVE COMPENSATION.........................................18
      ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT AND RELATED STOCKHOLDER MATTERS.....................19
      ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................20
      ITEM 13. EXHIBITS.......................................................21
      ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................21


                                       2
<PAGE>

                 STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

In this annual report, references to "China Natural Gas," "CHNG," "the Company,"
"we," "us," and "our" refer to China Natural Gas, Inc.

Except for the historical information contained herein, some of the statements
in this Report contain forward-looking statements that involve risks and
uncertainties. These statements are found in the sections entitled "Business,"
"Management's Discussion and Analysis or Plan of Operation," and "Risk Factors."
They include statements concerning: our business strategy; expectations of
market and customer response; liquidity and capital expenditures; future sources
of revenues; expansion of our proposed product line; and trends in industry
activity generally. In some cases, you can identify forward-looking statements
by words such as "may," "will," "should," "expect," "plan," "could,"
"anticipate," "intend," "believe," "estimate," "predict," "potential," "goal,"
or "continue" or similar terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including, but
not limited to, the risks outlined under "Risk Factors," that may cause our or
our industry's actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking
statements. For example, assumptions that could cause actual results to vary
materially from future results include, but are not limited to: our ability to
successfully develop and market our products to customers; our ability to
generate customer demand for our products in our target markets; the development
of our target markets and market opportunities; our ability to manufacture
suitable products at competitive cost; market pricing for our products and for
competing products; the extent of increasing competition; technological
developments in our target markets and the development of alternate, competing
technologies in them; and sales of shares by existing shareholders. Although we
believe that the expectations reflected in the forward looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Unless we are required to do so under US federal securities
laws or other applicable laws, we do not intend to update or revise any
forward-looking statements


                                       3
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Organizational History

      We were incorporated in the state of Delaware on March 31, 1999, as Bullet
Environmental Systems, Inc. and on May 25, 2000 we changed our name to
Liquidpure Corp. and on February 14, 2002 we changed our name to Coventure
International Inc. On December 6, 2005, we closed a Share Purchase Agreement
with Xian Xilan Natural Gas Co., Ltd., a corporation formed under the laws of
the People's Republic of China on January 8, 2000, and the shareholders of Xian
Xilan Natural Gas Co., Ltd. Pursuant to the Agreement, we acquired all of the
issued and outstanding capital stock of Xian Xilan Natural Gas Co., Ltd. from
the shareholders of Xian Xilan Natural Gas Co., Ltd. On December 19, 2005 we
changed our name to China Natural Gas, Inc.

Overview of Business

      We primarily engage in the transmission and distribution of natural gas to
commercial, industrial and residential customers. As well as the distribution of
compressed natural gas as a vehicular fuel to retail end users.

Business

End User Delivery of Natural Gas

      We are the sole authorized provider of natural gas to residential
customers in certain parts of the Xian area, including Lantian County and the
Baqiao District. We are currently supplying natural gas to approximately 50,000
households in the Xian area. Via a connecting point with a high pressure
pipeline network from the government operated Shaanxi Natural Gas Company,
natural gas with much lower pressure is delivered to our residential, commercial
and industrial customers. We own approximately 120 km of high pressure pipeline.
We are the only private company in Shaanxi province to own this type of high
pressure pipeline.

      Our management is seeking to expand supply services to the Shangluo and
Ankang areas of Shaanxi province. Upon approval from the government, we would
also have the exclusive right to provide natural gas to residential and
commercial end users in those areas. In order to obtain such approval, we were
required to submit a project proposal for the feasibility of supplying gas to
each area. In Ankang, we applied to the Urban and Rural Construction Bureau. In
Shangluo, applications were made to the Municipal Administration Bureau. The
approval process takes approximately four to six months and is pending.

Wholesale to Filling Stations

      We sell compressed natural gas to filling stations on a wholesale basis.
The stations, in turn, sell natural gas to taxis and buses in Xian which operate
on compressed natural gas (CNG) technology. Government statistics indicate that
there are currently 5,000 buses and 20,000 taxis using natural gas in Xian. Each
bus uses an average of 70 cubic meters of CNG per day and taxis use an average
of 30 cubic meters of CNG per day (source: Xian Clean Fuel Vehicles Commission
2005).

      In July 2005, we purchased a Compressor Station which is operated in
proximity to our pipeline and which allows us to compress and transport natural
gas via truck to retail gas stations. We also plan to develop a liquefied form
of natural gas (LNG) that can be transported over longer distances by gas tanker
truck and which could expand our geographical sales. We are currently conducting
a feasibility study with regard to LNG production. This study should be
completed in June 2006. In order to construct an appropriate LNG plant, we will
require approximately US$19 million (RMB 150 million), with construction of the
plant completed by year end 2006, testing in October 2007 and production
commencing in December 2007, assuming appropriate financing can be obtained. We
can begin the process with our current licenses but in the future will require
approval from Shaanxi Development and Reform Commission for LNG production.


                                       4
<PAGE>

Retail Filling Stations

      Based on company estimates, by the end of June 2005, the total demand for
compressed natural gas vehicular fuel in the Xian area was approximately one
million cubic meters per day. We expect demand for natural gas as a transport
fuel to continue to increase based on government clean energy policy as
expressed in the proposal for the Eleventh Five Year Plan (2006-2010) and the
end-user cost advantages of CNG fuel over gasoline. We estimate that the average
filling station in Xian pumps approximately 12,000 cubic meters of natural gas
per day. Based on a survey we conducted, as of November 1, 2005, there were 31
filling stations in Xian pumping approximately 372,000 cubic meters of CNG fuel
per day, a figure well below estimated total demand.

      As of February 9, 2006 we have completed construction and are operating
two natural gas filling stations in the Xian metropolitan area. Currently, we
purchase natural gas for 1.16 RMB/cubic meter and sell each cubic meter for
1.90RMB net of VAT. The construction time for each filling station is 45-60 days
and the cost is approximately US$600,000. As of March 17, 2006, we are in the
process of constructing our third natural gas filling station. We continue to
evaluate additional sites for natural gas filling stations in the Xian
metropolitan area.

      Our management believes that our vertically integrated operation should
allow us to be able to surpass the average sales volume of competing stations,
estimated at 12,000 cubic meters per day, based on our proprietary supply of CNG
from our own pipeline.

Marketing

      We market to the end user delivery of the natural gas segment of the
business through advertising in the general media and direct solicitation of
real estate development companies and government officials. We participate in
trade shows and conferences such as the 7th Xian Global Gas Fuels Technology
Equipment and Auto Service Station Exhibition which was held in June 2005. For
the retail filling station segment of the business, we will target advertising
to taxi drivers, who are the largest segment of end-users of the company's CNG
fuel product. A discount loyalty card will be made available to the professional
driving community including taxi and bus drivers. Brochures, radio and newspaper
advertisements and point of sale displays will also be utilized.

Suppliers

      Currently, we have only one natural gas supplier, the Shaanxi Natural Gas
Co., Ltd., a government owned enterprise. In the past, contracts were renewed on
an annual basis. However, as the volume of usage has increased, Shaanxi Natural
Gas has revised their policies, and contract terms are now six months and
subject to review prior to renewal. Our management reports that we do not expect
any issues or difficulty in continuing to renew the supply contracts going
forward. Price points for natural gas are strictly controlled by the government
and have remained stable over the past 3 years.

Customers

Residential/Commercial

      We supply natural gas to approximately 50,000 residential customers in
Lantian County, Lintong and Baqiao Districts in the jurisdiction of Xian. These
residences include apartment blocks and small estates. Commercial customers
include small businesses like restaurants and office buildings.

Industrial

      Within the Xian region there are several industries to which we supply
natural gas as a raw material for their production process including the Xiwei
Aluminum Company.

Wholesale to Filling Stations

      Currently, we supply natural gas to several of the privately owned and
operated CNG filling stations in the Xian area. Upon the completion of
construction of our company-owned filling stations, we will also supply our own
filling stations for sales to retail end users.


                                       5
<PAGE>

Industry Overview

      China's rapidly expanding economy is stretching the limits of its energy
resources. Currently, only 3% of China's total energy usage is natural gas,
while the world's average consumption of natural gas is 24% of total energy
usage. (source: US Energy Information Administration ("EIA"), August 2005) Over
the next 5 years, China's use of natural gas is generally expected to double.
China's domestic reserve of natural gas was estimated to be 53.3 trillion cubic
feet (tcf) at the beginning of 2005 (source: EIA August 2005). The country's
largest reserves are located in western and north central China, including the
Province of Shaanxi, the home of CHNG.

      In order to meet the growth in natural gas demand, the PRC government has
encouraged private companies to invest in and build the natural gas
infrastructure. On December 27, 2002, the Ministry of Construction issued a
memorandum stating that regulation of the public utility industry (including gas
distribution) should be liberalized and foreign and private investment
participation should be encouraged and welcomed. The memorandum encouraged
private investment in the sector and provided a legal framework for private
urban natural gas distribution.

Intellectual Property

      We have applied for a service mark on the "Xilan" name, which is used in
connection with all services.

Research and Development

      We have not had any material research and development expenses over the
past two years. We project expenditures of approximately $100,000 for research
and development in 2006. The funding source for all research and development
expenses is expected to come from operating cash flows.

Governmental and Environmental Regulation

      To date, we have been compliant with all registrations and requirements
for the issuance and maintenance of all licenses required by the applicable
governing authorities in China. These licenses include:

      o     Qualified Urban Fuel Operator Business License authorized by the
            Shaanxi Construction Bureau, the local office of the Ministry of
            Construction, effective from January 2, 2004 to January 2, 2009.
            (License number SHAANRANZHI 166)
      o     License to Supply, Install Equipment and Maintain Gas Fuel Lines
            issued by the local Gas Fuels for Heating Bureau, an agency of the
            Ministry of Construction and the Xian Natural Gas Management Bureau.
            (License number: XIRAN 136)
      o     Safety and Inspection Regulation for Special Equipment Safety
            Inspection Standards for High Pressure Pipeline and Technical Safety
            Inspection Regulations from the Shaanxi Quality and Technology
            Inspection Bureau for compressor stations and pressure storage tank
            system. (Approval letter reference: 2004SHAANGUOCHUHAN033)
      o     Annual Safety Inspection of Lightning Conductor Equipment approved
            by the Shaanxi Meteorology Bureau. (Certificate number 0005274)

      The Citygate and Compressor Stations are approved by the local office of
the Ministry of Construction.

      Fuel service station standards are subject to regulation by the Ministry
of Construction, the General Administration of Quality Supervision, and the
Bureau of Inspection and Quarantine of the People's Republic of China.
Certificates will be issued upon satisfactory inspection of service stations.

      There are various standards that must be met for filling stations
including handling and storage of gas, tanker handling, and compressor
operation. These standards are regulated by the Local Ministry of Construction
and the Gas Field Operation Department of the Municipal Administration
Committee. Inspections will be carried out by the Municipal Development and
Reform Commission which will issue a certificate for the handling of dangerous
chemical agents.


                                       6
<PAGE>

      Standards for the design and construction of filling stations must conform
to GB50156-2202 and technology standard BJJ84-2000.

Competition

      The three largest state owned energy companies, CNPC (China National
Petroleum Corporation) Group, SINOPEC, and CNOOC are principally engaged in the
upstream supply of energy and are major players in exploration and
transportation of oil and gas. They build much of the country's high pressure
pipeline infrastructure. Natural gas is distributed to smaller regional firms
that redistribute the gas to the end user, either through lower pressure
pipeline networks, or via tankers in the form of liquid natural gas (LNG).

      We are aware of two privately owned companies in China which may be
considered to be our direct competitors: Xinjiang Guanghui LNG Development
Corporation Ltd and Xin'Ao Gas Field Ltd. Xinjiang Guanghui LNG Development
Corporation Ltd is primarily involved in the transportation of LNG via tanker
truck to storage facilities from natural gas wells. Xin'Ao Gas Field Ltd. is a
publicly owned company traded on the Hong Kong Exchange, distributing natural
gas via pipeline, doing business in 13 provinces and municipalities that have a
combined population of 31 million. Neither Xinjiang Guanghui nor Xin'Ao is
approved to supply natural gas to any area in which Xilan is currently
operating.

      Currently, there are approximately 31 filling stations in Xian City.
Thirteen of these stations are state owned enterprises. The other 18 stations
are privately owned with the majority of these being single station operators.
We believe that we can effectively compete with the stations based upon our
organization, experience and financial resources.

Employees

      As of March 17, 2006 we had a total of 243 employees in the following
capacities: 6 in management; 16 in administrative; 87 in operations; 5 in sales
department; 38 in R&D ; 16 in finance and 75 employees at the retailing filling
station. We have not experienced any work stoppages and we consider relations
with our employees to be good. We are not a party to any collective bargaining
agreements.

ITEM 2. DESCRIPTION OF PROPERTY

      Our principal executive offices are located at Tang Xing Shu Ma Building,
Suite 418, Tang Xing Road, Xian High Tech Area, Xian, Shaanxi Province, China.
Office #1 consists of approximately 137.9 square meters which are rented on a
monthly basis for $510.11 and office #2 consists of approximately 265.59 square
meters which are rented on a monthly basis for $982.45.

      Our properties are located in Lantian county, Baqiao District and Gaoxin
District of Xian, Shaanxi province. We own a 120km high-pressure underground
pipeline network and two Citygate stations (terminals) with accompanying
buildings and equipment. We lease the main office building where we are
headquartered and three filling station sites.

      We believe that current facilities are adequate for our current and
immediately foreseeable operating needs. We do not have any policies regarding
investments in real estate, securities or other forms of property.


                                       7
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

      From time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. We are currently
not aware of any such legal proceedings or claims that we believe will have,
individually or in the aggregate, a material adverse affect on our business,
financial condition or operating results.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.

      None


                                       8
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
        SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

      On March 17, 2004, our common stock was approved for listing on the
Over-the-Counter Bulletin Board under the symbol "CVNI" and on December 19, 2005
our symbol was changed to "CHNG" and our fiscal year end was changed to December
31. The following table sets forth, for the range of high and low closing bid
quotations for our common stock since our common stock was listed on the
Over-the-Counter Bulletin Board, reflecting the applicable fiscal periods based
on the change in our fiscal year end. The quotations represent inter-dealer
prices without retail markup, markdown or commission, and may not necessarily
represent actual transactions.

                                                   -----------------------------
Period                                                  High*           Low*
                                                   -------------   -------------
December 31, 2005 ...........................         $  3.60        $  0.5275
July 31, 2005 ...............................         $  6.00        $    0.50
April 30, 2005...............................         $  2.90        $    1.05
January 31, 2005 ............................         $  7.25        $    0.45
October 30, 2004 ............................         $  0.45        $    0.45
July 31, 2004 ...............................         $  1.50        $    0.25
April 30, 2004 ..............................         $  0.30        $    0.30

      As of February 13, 2006, there were approximately 50 holders of record and
492 beneficial owners of our common stock.

Dividends

      There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Delaware General Corporation Law,
however, does prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend:

      1. We would not be able to pay our debts as they become due in the usual
      course of business; or

      2. Our total assets would be less than the sum of our total liabilities
      plus the amount that would be needed to satisfy the rights of shareholders
      who have preferential rights superior to those receiving the distribution.

      We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.

Recent Issuances of Unregistered Securities.

      On January 17, 2006, the Company entered into securities purchase
agreements with an accredited investor and completed the sale of $2,824,802 of
units. The units contained an aggregate of 1,008,857 shares of common stock and
274,633 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.

      On January 10, 2006 through January 13, 2006 the Company entered into
securities purchase agreements with four accredited investors and completed the
sale of $2,195,198 of units. The units contained an aggregate of 783,999 shares
of common stock and 213,422 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 and received warrants to purchase 121,955 shares of common stock on
the same terms and conditions as the investors.


                                       9
<PAGE>

      On January 6, 2006 and January 9, 2006, 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 1,921,572
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 and received warrants to purchase 298,888 shares of common stock on
the same terms and conditions as the investors.

      * All of the above offerings and sales were deemed to be exempt under
Section 4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the securities. The offerings and
sales were made to a limited number of persons, all of whom were accredited
investors, business associates of our company or executive officers of our
company, and transfer was restricted by our company in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, we have made independent determinations that all
of the above-referenced persons were accredited or sophisticated investors, and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.

      Pursuant to a Share Purchase Agreement, which closed on December 6, 2005,
we issued an aggregate 4,000,000 shares of common stock to former shareholders
of Xian Xilan Natural Gas Co., Ltd. These shares were issued in reliance upon
the exemption from registration provided by Regulation S under the Securities
Act of 1933, as amended

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

INTRODUCTION

      The following discussion should be read in conjunction with the Financial
Statements and Notes thereto. Our fiscal year ends December 31. This document
contains certain forward-looking statements including, among others, anticipated
trends in our financial condition and results of operations and our business
strategy. (See "Factors Which May Affect Future Results"). These forward-looking
statements are based largely on our current expectations and are subject to a
number of risks and uncertainties. Actual results could differ materially from
these forward-looking statements. Important factors to consider in evaluating
such forward-looking statements include (i) changes in external factors or in
our internal budgeting process which might impact trends in our results of
operations; (ii) unanticipated working capital or other cash requirements; (iii)
changes in our business strategy or an inability to execute our strategy due to
unanticipated changes in the industries in which the Company operates; and (iv)
various competitive market factors that may prevent us from competing
successfully in the marketplace.

Corporate History

      We were incorporated in the state of Delaware on March 31, 1999, as Bullet
Environmental Systems, Inc. and on May 25, 2000 we changed our name to
Liquidpure Corp. and on February 14, 2002 we changed our name to Coventure
International Inc. On December 6, 2005, we closed a Share Purchase Agreement
with Xian Xilan Natural Gas Co., Ltd., a corporation formed under the laws of
the People's Republic of China on January 8, 2000, and the shareholders of Xian
Xilan Natural Gas Co., Ltd. Pursuant to the Agreement, we acquired all of the
issued and outstanding capital stock of Xian Xilan Natural Gas Co., Ltd. from
the shareholders of Xian Xilan Natural Gas Co., Ltd. On December 19, 2005 we
changed our name to China Natural Gas, Inc.


                                       10
<PAGE>

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires us 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 period. Actual results
could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.

Accounts and Other Receivable

We maintain reserves for potential credit losses on accounts receivable. We
review the composition of accounts receivable and analyzes historical bad debts,
customer concentrations, customer credit worthiness, current economic trends and
changes in customer payment patterns to evaluate the adequacy of these reserves.
Reserves are recorded primarily on a specific identification basis.

Inventory

Inventory is stated at the lower of cost, as determined on a first-in, first-out
basis, or market. We compare the cost of inventories with the market value, and
allowance is made for writing down the inventories to their market value, if
lower. Inventory consists of material used in the construction of pipelines.

Property and Equipment

Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method for substantially all assets with estimated lives as follows:

      Office equipment                                             5 years
      Operating equipment                                       5-20 years
      Vehicles                                                     5 years
      Buildings                                                   30 years

Construction In Progress

Construction in progress consists of the cost of constructing building and plant
for our company's use. The major cost of construction in progress relates to
material, labor and overhead.

Contracts in Progress

Contracts in progress consist of the cost of constructing pipelines for
customers. The major cost of construction relates to material, labor and
overhead. Revenue from construction and installation of pipelines is recorded
when the contract is completed and accepted by the customers. The construction
contracts are usually completed within one to two months time.

Revenue Recognition

Our revenue recognition policies are in compliance with Staff accounting
bulletin (SAB) 104. Revenue is recognized when services are rendered to our
customers when a formal arrangement exists, the price is fixed or determinable,
the delivery is completed, no other significant obligations by us exist and
collectibility is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue. Revenue from gas sales is recognized when gas is pumped through
pipelines to the end users. Revenue from construction and installation of
pipelines is recorded when the contract is completed and accepted by the
customers. The construction contracts are usually completed within one to two
months time.


                                       11
<PAGE>

Stock-Based Compensation

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and
related interpretations with pro forma disclosure of what net income and
earnings per share would have been had we adopted the new fair value method. We
use the intrinsic value method prescribed by APB 25 and has opted for the
disclosure provisions of SFAS No.123.

Income Taxes

We utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, 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.

Local PRC Income Tax

Pursuant to the tax laws of China, general enterprises are subject to income tax
at an effective rate of 33%. The Company 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. Accordingly, the Company's income is subject to a reduced tax rate of
15%.

Foreign Currency Transactions and Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Certain statements, however, require
entities to report specific changes in assets and liabilities, such as gain or
loss on foreign currency translation, as a separate component of the equity
section of the balance sheet. Such items, along with net income, are components
of comprehensive income. Our transactions occur in Chinese Renminbi. The unit of
Renminbi is in Yuan.

Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections." This statement applies to all voluntary changes in accounting
principle and requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless this would be
impracticable. This statement also makes a distinction between "retrospective
application" of an accounting principle and the "restatement" of financial
statements to reflect the correction of an error. This statement is effective
for accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005.

In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006.


                                       12
<PAGE>

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's first quarter of fiscal 2006.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides
guidance on determining the amortization period for leasehold improvements
acquired in a business combination or acquired subsequent to lease inception.
The guidance in EITF 05-6 will be applied prospectively and is effective for
periods beginning after June 29, 2005. EITF 05-6 is not expected to have a
material effect on its consolidated financial position or results of operations.

We believe that the adoption of these standards will have no material impact on
our financial statements.

Twelve Months Ended December 31, 2005 compared to Twelve Months Ended December
31, 2004

Revenue. The Company generated revenues of $4,850,699 for the twelve months
ended December 31, 2005, an increase of $3,966,286 or 448%, compared to $884,413
for the twelve months ended December 31, 2004. The increase in revenues was due
to increased construction and installation revenue as the company signed new
residential and commercial customers as well as the sale of natural gas. The
sale of natural gas increased 450% over the previous year. The new households
pay approximately 60% of the construction costs up front and the balance is paid
as part of the monthly natural gas bill.

Gross profit. The Company achieved a gross profit of $2,446,662 for the twelve
months ended December 31, 2005, an increase of $2,076,295 or 560%, compared to
$370,367 for the twelve months ended December 31, 2004. Gross margin, as a
percentage of revenues, increased to 50.4% for the twelve months ended December
31, 2005, from 41.9% for the twelve months ended December 31, 2004. The increase
in gross profit is due to the increased construction and installation activity
and a 396% increase in the gross profit achieved from the sale of natural gas
over the same period the previous year. The increase in gross margin is
attributable to the margins that are received during construction and
installation, the company works with gross margins that are approximately 50%,
mostly due to the low cost of labor. This segment of our business, although not
a monthly recurring business is highly profitable.

Operating expenses. The Company incurred operating expenses of $975,083 for the
twelve months ended December 31, 2005, an increase of $444,866 or 83.9%,
compared to $530,217 for the twelve months ended December 31, 2004. These
operating expenses are related to increased sales and marketing costs to sign
new residential and commercial customers that were put on line in 2005. In
addition the company began to address the filling station strategy, identifying
possible locations for the filling stations and commencing the process of
applying to the proper governmental agencies for all necessary approvals and
licenses to construct the new filling stations.

Net Income. Net income increased to $1,473,039 for the twelve months ended
December 31, 2005, an increase of $1,634,807, from $(161,768) for the twelve
months ended December 31, 2004. After tax net income was $1,252,083 for the
twelve months ended December 31, 2005, there was no income tax in the year ended
December 2004, the company had a net loss for the year. The increase is
attributed to the growth of construction and installation fees and the sale of
natural gas.

Liquidity and Capital Resources

      As of December 30, 2005 the Company had $675,624 cash and cash equivalents
on hand compared to $62,998 cash and cash equivalents as of December 30, 2004.
Based on past performance and current expectations, we believe our cash and cash
equivalents, cash generated from operations, as well as future possible cash
investments, will satisfy our working capital needs, capital expenditures and
other liquidity requirements associated with our operations. In January 2006, we
entered into securities purchase agreements with several accredited investors
and completed the sale of $10.4 million of units. The proceeds of the financing
are intended for the investment necessary to construct natural gas filling
stations, purchase of raw materials and working capital.


                                       13
<PAGE>

      The Company had net cash flows provided by operations of $1,935,871 for
the twelve months ended December 30, 2005 as compared to net cash provided by
operations of $24,035 in the corresponding period last year. The increase in net
cash flows from operations in the current period as compared to corresponding
period last year was mainly due to the decrease of payables to related parties
in 2004 of $917,642, an increase of $662,950 in other payables during the twelve
months ended December 31, 2005. However, unearned revenue did decrease $642,254
during the twelve months ended December 31, 2005.

      Cash outflows for investing activities increased from $4,773 to $4,871,821
as a result of advance payments made to equipment suppliers for investments
necessary to construct and build the filling stations and for construction
materials used to build the pipelines to individual households. The Company had
inflows from investment activities of $3,504,460 during the year ended December
31, 2005, Xilan issued 29,000,000 shares of common stock prior to the merger
with the company.

      The majority of the Company's revenues and expenses were denominated
primarily in Renminbi ("RMB"), the currency of the People's Republic of China.

      There is no assurance that exchange rates between the RMB and the U.S.
Dollar will remain stable. The Company does not engage in currency hedging.
Inflation has not had a material impact on the Company's business.


                                       14
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENT INDEX

                     China Natural Gas, Inc. and Subsidiary
                        Consolidated Financial Statements
                     Years Ended December 31, 2005 and 2004

                                    Contents

                                                                            Page

Report of Independent Registered Public Accounting Firm                      F-1

Financial Statements:

      Consolidated Balance Sheet as of December 31, 2005                     F-2

      Consolidated Statements of Operations and Other Comprehensive Income
        for the years ended December 31, 2005 and 2004                       F-3

      Consolidated Statement of Stockholders' Equity for the years ended
        December 31, 2005 and 2004                                           F-4

      Consolidated Statements of Cash Flows for the years ended
        December 31, 2005 and 2004                                           F-5

      Notes to Consolidated Financial Statements                             F-6


                                       15
<PAGE>

             Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of
China Natural Gas, Inc.

We have audited the accompanying consolidated balance sheets of China Natural
Gas, Inc. and subsidiary as of December 31, 2005, and the related consolidated
statements of operations and other comprehensive income, stockholders' equity,
and cash flows for the years ended December 31, 2005 and 2004. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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
consolidated 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 consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of China
Natural Gas, Inc. and subsidiary as of December 31, 2005, and the consolidated
results of their operations and their consolidated cash flows for the years
ended December 31, 2005 and 2004, in conformity with U.S. generally accepted
accounting principles.


/s/ Kabani & Company, Inc.,
Certified Public Accountants
Los Angeles, California

February 24, 2006


                                      F-1
<PAGE>

                     CHINA NATURAL GAS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                             AS OF DECEMBER 31, 2005

<TABLE>
                                     ASSETS
<S>                                                                   <C>
CURRENT ASSETS:
     Cash & cash equivalents                                          $      675,624
     Accounts receivable                                                       6,096
     Other receivable                                                        158,584
     Inventory                                                                45,361
     Advances to suppliers                                                    13,712
     Prepaid expense                                                          15,882
                                                                      --------------
           Total current assets                                              915,259

PROPERTY AND EQUIPMENT, net                                                8,267,897

CONSTRUCTION IN PROGRESS                                                   1,726,810

INTANGIBLE ASSETS                                                              1,096
                                                                      --------------
     TOTAL ASSETS                                                     $   10,911,062
                                                                      ==============

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable & accrued expense                               $      193,592
     Other payables                                                          738,745
     Unearned revenue                                                        303,175
                                                                      --------------
           Total current liabilities                                       1,235,512

STOCKHOLDERS' EQUITY:
     Preferred stock, $0.0001 per share; authorized 5,000,000
       shares; none issued
     Common stock, $0.0001 per share; authorized 30,000,000 shares;
       issued and outstanding 20,204,088                                       2,020
     Additional paid-in capital                                            8,331,458
     Cumulative translation adjustment                                       228,747
     Statutory reserve                                                       169,722
     Retained earnings                                                       943,603
                                                                      --------------
           Total stockholders' equity                                      9,675,550
                                                                      --------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $   10,911,062
                                                                      ==============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       F-2
<PAGE>

                     CHINA NATURAL GAS, INC. AND SUBSIDIARY
      CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                            Years Ended December 31,
                                                             2005              2004
                                                        --------------    --------------
<S>                                                     <C>               <C>
Revenue
      Natural gas revenue                               $    1,687,154    $      306,306
      Construction / installation revenue                    3,163,545           578,107
                                                        --------------    --------------
            Total revenue                                    4,850,699           884,413

Cost of revenue
      Natural gas cost                                       1,293,585           226,944
      Construction / installation cost                       1,110,452           287,102
                                                        --------------    --------------
                                                             2,404,037           514,046
                                                        --------------    --------------
Gross profit                                                 2,446,662           370,367

Operating expenses
      Selling expenses                                         474,855           387,768
      General and administrative expenses                      500,228           142,449
                                                        --------------    --------------
            Total operating expenses                           975,083           530,217
                                                        --------------    --------------
Income (loss) from operations                                1,471,579          (159,850)

Non-operating income (expense):
      Interest income                                            2,131             1,618
      Other expense                                               (671)           (3,536)
                                                        --------------    --------------
            Total non-operating income (expense)                 1,460            (1,918)
                                                        --------------    --------------

Income (loss) before income tax                              1,473,039          (161,768)

Income tax                                                     220,956                --
                                                        --------------    --------------
Net income (loss)                                            1,252,083          (161,768)

Other comprehensive income / (loss)
      Foreign currency translation gain                        228,175                --
                                                        --------------    --------------
Comprehensive Income (loss)                             $    1,480,258    $     (161,768)
                                                        ==============    ==============

Basic and diluted weighted average shares outstanding       16,299,469         9,275,362
                                                        ==============    ==============

Basic and diluted earnings (loss) per share             $         0.08    $        (0.02)
                                                        ==============    ==============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       F-3
<PAGE>

                     CHINA NATURAL GAS, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                            Accumulative
                                                              Additional        Other                     Retained         Total
                                        Common Stock            Paid        Comprehensive   Statutory     Earnings     stockholders'
                                    Shares         Amount     in Capital        Gain         Reserve      (deficit)       equity
                                  -----------   -----------   -----------    -----------   -----------   -----------    -----------
<S>                               <C>           <C>           <C>            <C>           <C>           <C>            <C>
Balance January 1, 2004             9,275,362   $       928   $ 4,831,468    $        --   $     3,457   $    19,553    $ 4,855,406

Cumulative translation
  adjustment                               --            --            --            572                                        572

Net loss for the year ended
  December 31, 2004                        --            --            --             --            --      (161,768)      (161,768)
                                  -----------   -----------   -----------    -----------   -----------   -----------    -----------
Balance December 31, 2004           9,275,362           928     4,831,468            572         3,457      (142,215)     4,694,210

Shares issued for cash              6,724,638           672     3,503,788             --            --            --      3,504,460

Recapitalization on reverse
  acquisition                       4,204,088           420        (3,798)            --            --            --         (3,378)

Cumulative translation adjustment          --            --            --        228,175            --            --        228,175

Net Income for the year ended
  December 31, 2005                        --            --            --             --            --     1,252,083      1,252,083

Retained earning for year 2005
  reserve                                  --            --            --             --       166,265      (166,265)            --
                                  -----------   -----------   -----------    -----------   -----------   -----------    -----------
Balance December 31, 2005          20,204,088   $     2,020   $ 8,331,458    $   228,747   $   169,722   $   943,603    $ 9,675,550
                                  ===========   ===========   ===========    ===========   ===========   ===========    ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       F-4
<PAGE>

                     CHINA NATURAL GAS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                    2005              2004
                                                               --------------    --------------
<S>                                                            <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                        $    1,252,083    $     (161,768)
      Adjustments to reconcile net income (loss)
        to net cash provided in operating activities:
            Loss on disposal of property                                  971             3,242
            Depreciation and amortization                             347,923           314,453
            (Increase) / decrease in assets:
                  Accounts receivable                                  (1,011)           (4,943)
                  Inventory                                             2,234           (46,440)
                  Other receivable                                   (132,553)           (6,525)
                  Advances to suppliers                               (12,773)           14,982
                  Prepaid expense                                     (15,441)              (99)
                  Contract in progress                                381,315           118,537
            Increase / (decrease) in current liabilities:
                  Accounts payable                                     92,427           (64,344)
                  Payable to related party                                 --          (917,642)
                  Other payables                                      662,950            (2,854)
                  Unearned revenue                                   (642,254)          777,436
                                                               --------------    --------------
      Net cash provided by operating activities                     1,935,871            24,035
                                                               --------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES
            Payment  on purchase of property and equipment         (3,170,629)           (5,981)
            Cash acquired in reverse merger transaction                    86                --
            Additions to construction in progress                  (1,700,792)               --
            Additions to Intangible assets                             (1,096)               --
            Proceeds from disposal of property                            610             1,208
                                                               --------------    --------------
      Net cash used in investing activities                        (4,871,821)           (4,773)
                                                               --------------    --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
            Stock issued for cash                                   3,504,460                --
                                                               --------------    --------------

Effect of exchange rate changes on cash and cash equivalents           44,116                --

NET INCREASE IN CASH & CASH EQUIVALENTS                               612,626            19,262

CASH & CASH EQUIVALENTS, BEGINNING BALANCE                             62,998            43,736
                                                               --------------    --------------

CASH & CASH EQUIVALENTS, ENDING BALANCE                               675,624    $       62,998
                                                               ==============    ==============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      Cash paid during the year for:
            Interest                                           $           --    $           --
                                                               ==============    ==============
            Income tax                                         $          969    $          210
                                                               ==============    ==============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       F-5
<PAGE>

Note 1 - Organization and Basis of Presentation

Organization and Line of Business

Xi'an Xilan Natural Gas Co, Ltd. ("XXNGC") was incorporated on January 8, 2000
in Xi'an city in the Shaanxi province, China. The core business of XXNGC is
distribution of natural gas to commercial, industrial and residential customers,
construction of pipeline networks, and installation of natural gas fittings and
parts for end-users. XXNGC has an exclusive permit to provide gas utility
service in Lantian County, Lintong and Baqiao District of Xi'an city, China.

On December 6, 2005, XXNGC entered into and closed a share purchase agreement
with Coventure International, Inc. ("Coventure"), a public shell in the United
States of America. Pursuant to the purchase agreement, Coventure acquired all of
the issued and outstanding capital stock of XXNGC in exchange for 16,000,000
(post-split) shares of Coventure's common stock.

Concurrently with the closing of the purchase agreement and as a condition
thereof, Coventure entered into an agreement with John Hromyk, its President and
Chief Financial Officer, pursuant to which Mr. Hromyk returned 23,884,712
(post-split) shares of Coventure's common stock for cancellation. Upon
completion of the foregoing transactions, Coventure had an aggregate of
20,204,088 (post-split) shares of common stock issued and outstanding.

As a result of the merger, XXNGC's stockholders own approximately 80% of the
combined company and the directors and executive officers of XXNGC became the
directors and executive officers of the Coventure. Accordingly, the transaction
has been accounted for as a reverse acquisition of Coventure by XXNGC resulting
in a recapitalization of XXNGC rather than as a business combination. XXNGC is
deemed to be the purchaser and surviving company for accounting purposes.
Accordingly, its assets and liabilities are included in the balance sheet at
their historical book values and the results of operations of XXNGC have been
presented for the comparative prior period. The historical cost of the net
liabilities of Coventure that were acquired was $3,378. Pro forma information is
not presented as the financial statements of Coventure are insignificant. In
addition, Coventure changed it name to China Natural Gas, Inc. (hereafter
referred to as the "Company") and the stockholders approved a stock dividend of
three shares for each share held, which has been accounted for as a four to one
forward stock split. All shares and per share data have been restated
retrospectively.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of China
Natural Gas, Inc. and its wholly owned subsidiary, XXNGC. All inter-company
accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America. The Company's functional currency is the Chinese Renminbi; however the
accompanying consolidated financial statements have been translated and
presented in United States Dollars ($).

Foreign Currency Translation

As of December 31, 2005 and 2004, the accounts of the Company were maintained,
and their consolidated financial statements were expressed in the Chinese Yuan
Renminbi (CNY). Such consolidated financial statements were translated into U.S.
Dollars (USD) in accordance with Statement of Financial Accounts Standards
("SFAS") No. 52, "Foreign Currency Translation," with the CNY as the functional
currency. According to the Statement, all assets and liabilities were translated
at the exchange rate on the balance sheet date, stockholder's equity are
translated at the historical rates and statement of operations items are
translated at the weighted average exchange rate for the year. The resulting
translation adjustments are reported under other comprehensive income in
accordance with SFAS No. 130, "Reporting Comprehensive Income."


                                      F-6
<PAGE>

Note 2 - Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles 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 period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.

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.
Allowance for uncollectible accounts as of December 31, 2005 is not significant.

The Company maintains reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. Reserves are recorded primarily on a
specific identification basis.

Advances to Suppliers

The Company advances to certain vendors for purchase of its material. The
advances to suppliers are interest free and unsecured.

Inventory

Inventory is stated at the lower of cost, as determined on a first-in, first-out
basis, or market. Management compares the cost of inventories with the market
value, and allowance is made for writing down the inventories to their market
value, if lower. Inventory consists of material used in the construction of
pipelines.

Property and Equipment

Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method for substantially all assets with estimated lives as follows:

      Office equipment                                             5 years
      Operating equipment                                       5-20 years
      Vehicles                                                     5 years
      Buildings                                                   30 years

At December 31, 2005, the following are the details of the property and
equipment:

      Office equipment                                       $      31,167
      Operating equipment                                        7,788,345
      Vehicles                                                     257,847
      Buildings                                                  1,301,555
                                                              ------------
                                                                 9,378,914
      Less accumulated depreciation                             (1,111,017)
                                                              ------------
                                                              $  8,267,897
                                                              ============


                                      F-7
<PAGE>

Depreciation expense for the years ended December 31, 2005 and 2004 was $347,923
and $314,453, respectively.

Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal. Based on its
review, the Company believes that, as of December 31, 2005 there were no
significant impairments of its long-lived assets.

Construction In Progress

Construction in progress consists of the cost of constructing building and plant
for the Company's use. The major cost of construction in progress relates to
material, labor and overhead.

Contracts in Progress

Contracts in progress consist of the cost of constructing pipelines for
customers. The major cost of construction relates to material, labor and
overhead. Revenue from construction and installation of pipelines is recorded
when the contract is completed and accepted by the customers. The construction
contracts are usually completed within one to two months time. As of December
31, 2005, the Company has no contracts in progress.

Fair Value of Financial Instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.

Revenue Recognition

The Company's revenue recognition policies are in compliance with Staff
accounting bulletin (SAB) 104. Revenue is recognized when services are rendered
to customers when a formal arrangement exists, the price is fixed or
determinable, the delivery is completed, no other significant obligations of the
Company exist and collectibility is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue. Revenue from gas sales is recognized when gas is pumped
through pipelines to the end users. Revenue from construction and installation
of pipelines is recorded when the contract is completed and accepted by the
customers. The construction contracts are usually completed within one to two
months time.

Deferred Revenue

Deferred 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.


                                      F-8
<PAGE>

Advertising Costs

The Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising takes place. Advertising costs for the years ended
December 31, 2005 and 2004 were insignificant.

Stock-Based Compensation

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and
related interpretations with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The Company uses the intrinsic value method prescribed by APB 25 and has
opted for the disclosure provisions of SFAS No.123. No options have been granted
for the years ended December 31, 2005.

Income Taxes

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. At December 31, 2005, there was no significant book to
tax differences. There is no difference between book depreciation and tax
depreciation as the Company uses the same method for both book and tax.

Local PRC Income Tax

Pursuant to the tax laws of China, general enterprises are subject to income tax
at an effective rate of 33%. The Company 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. Accordingly, the Company's income is subject to a reduced tax rate of
15%.

A reconciliation of tax at United States federal statutory rate to provision for
income tax recorded in the financial statements is as follows:

                                                            For the Years
                                                          Ended December 31,
                                                          2005          2004
                                                       ----------    ----------

            Tax provision (credit) at statutory rate           34%         (34%)

            Foreign tax rate difference                       (19%)         19%

            Change in valuation allowance                      --           15%
                                                       ----------    ----------
                                                               15%           --
                                                       ==========    ==========

Basic and Diluted Earning Per Share

Earning per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 ("SFAS No. 128"), "Earnings per share". SFAS No.
128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net earning
per share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net earning per share is based upon the weighted average
number of common shares outstanding. Diluted net earning per share is based on
the assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.


                                      F-9
<PAGE>

Statement of Cash Flows

In accordance with Statement of Financial Accounting Standards No. 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.

Segment Reporting

Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure
About Segments of an Enterprise and Related Information" requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company's consolidated financial statements as the
Company consists of one reportable business segment. All revenue is from
customers in The People's Republic of China. All of the Company's assets are
located in The People's Republic of China.

Recent Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections." This statement applies to all voluntary changes in accounting
principle and requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless this would be
impracticable. This statement also makes a distinction between "retrospective
application" of an accounting principle and the "restatement" of financial
statements to reflect the correction of an error. This statement is effective
for accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005.

In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006.

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's first quarter of fiscal 2006.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides
guidance on determining the amortization period for leasehold improvements
acquired in a business combination or acquired subsequent to lease inception.
The guidance in EITF 05-6 will be applied prospectively and is effective for
periods beginning after June 29, 2005. EITF 05-6 is not expected to have a
material effect on its consolidated financial position or results of operations.


                                      F-10
<PAGE>

The Company believes that the adoption of these standards will have no material
impact on its financial statements.

Note 3 - Other Payables

Other payable consists of the following as of December 31, 2005:

            Other accounts payable                        $  350,151
            Welfare payable                                    1,933
            Tax payable                                      377,316
            Other levies                                       5,908
            Other                                              3,437
                                                          ----------
                                                          $  738,745
                                                          ==========

Note 4 - Stockholders' Equity

During the year ended December 31, 2005 the Company sold 6,724,638 shares of
common stock for cash proceeds of $3,504,460. Also, in connection with the
reverse merger transaction with Coventure, the Company issued 4,204,088 shares
(See Note 1). In addition, the Company affected a four to one forward stock
split which was accounted for retrospectively.

Note 5 - Employee Welfare Plan

The Company has established its own employee welfare plan in accordance with
Chinese law and regulations. The Company makes annual contributions of 14% of
all employees' salaries to employee welfare plan. The total expense for the
above plan was $13,275 and $10,045 for the years ended December 31, 2005 and
2004, respectively.

Note 6 - Statutory Common Welfare Fund

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

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

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

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

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

The Company has appropriated $166,265 as reserve for the statutory surplus
reserve and welfare fund for the year ended December 31, 2005 and $3,547 for the
year ended December 31, 2003. No allocation was made for the year ended December
31, 2004 as the Company had net loss from operations.

Note 7 - Earnings Per Share

Earnings (loss) per share for the years ended December 31, 2005 and 2004 is
determined by dividing net income (loss) for the periods by the weighted average
number of both basic and diluted shares of common stock and common stock
equivalents outstanding. At December 31, 2005 and 2004, there were no dilutive
securities.


                                      F-11
<PAGE>

Note 8 - Current Vulnerability Due to Certain Concentrations

For the years ended December 31, 2005 and 2004, the Company purchased all of the
natural gas for resale from one vendor, Shaanxi Natural Gas Co., Ltd., a
government owned enterprise. No amount was owing to this vendor at December 31,
2005. The Company has had annual agreements with Shaanxi Natural Gas that
requires the Company to purchase a minimum amount of natural gas. For the years
ended December 31, 2005 and 2004, the minimum purchases were 2.36 million and
1.60 million cubic meters, respectively. In the past, contracts were renewed on
an annual basis. However, as the volume of usage has increased, Shaanxi Natural
Gas has revised their policies, and contract terms are now six months and
subject to review prior to renewal. The Company's management reports that it
does not expect any issues or difficulty in continuing to renew the supply
contracts going forward. Price points for natural gas are strictly controlled by
the government and have remained stable over the past 3 years.

For the year ended December 31, 2005, two supplier accounts for 51.5% and 13.3%
of the total equipment purchased by the Company.

Four customers accounted for 34.7%, 21.2%, 14.0% and 10.8% of the Company's
revenue for the year ended December 31, 2005 and three customers accounted for
37.3%, 36.1% and 10.0% of the Company's revenue for the years ended December 31,
2004.

Three customers accounted for 40%, 17% and 17%, respectively, of
construction/installation revenue for 2005. Two customers accounted for 36% and
37%, respectively, of construction/installation revenue in 2004.

The Company's operations are carried out in the People's Republic of China.
Accordingly, the Company's business, financial condition and results of
operations may be influenced by the political, economic and legal environments
in the People's Republic of China, by the general state of the People's Republic
of China`s economy. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.

Note 9 - Related Party Transactions

Included in other payables in the accompanying balance sheet at December 31,
2005 is $349,916 due to stockholder of the Company.

Note 10 - Subsequent Events

On January 6, 2006 and January 9, 2006, 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. The warrants issued to the placement agent are being treated as a
cost of raising capital. The warrants were valued using the Black Scholes
pricing model; however, recording the value of the warrants in the financial
statements has no impact as the value of the warrants is both debited and
credited to additional paid in capital.


                                      F-12
<PAGE>

On January 10, 2006 through January 13, 2006, the Company entered into
securities purchase agreements with four accredited investors and completed the
sale of $2,195,198 of units. The units contained an aggregate of 783,999 shares
of common stock and 213,422 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 121,955 shares of common stock on the same terms and conditions as the
investors. The warrants issued to the placement agent are being treated as a
cost of raising capital. The warrants were valued using the Black Scholes
pricing model; however, recording the value of the warrants in the financial
statements has no impact as the value of the warrants is both debited and
credited to additional paid in capital.

On January 17, 2006, the Company entered into securities purchase agreements
with an accredited investor and completed the sale of $2,824,802 of units. The
units contained an aggregate of 1,008,857 shares of common stock and 274,633
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.

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.


                                      F-13
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

      None

ITEM 8A. CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, we conducted an
evaluation, under the supervision and with the participation of our chief
executive officer and principal financial officer of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based upon this evaluation, our chief executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms. There was no change in our internal controls or in other
factors that could affect these controls during our last fiscal year that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 8B. OTHER INFORMATION

         None.


                                       16
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

      Below are the names and certain information regarding our executive
officers and directors:

--------------------------------------------------------------------------------
Name                         Age     Position
--------------------------------------------------------------------------------
Minqing Lu                   43      Chief Executive Officer and Director
--------------------------------------------------------------------------------
Xiaogang Zhu                 51      Chief Financial Officer
--------------------------------------------------------------------------------
Yuman Chen                   35      Vice President - Marketing
--------------------------------------------------------------------------------
Liangzhong Li                44      Vice President - Construction
--------------------------------------------------------------------------------
Qinan Ji                     48      Chairman of the Board
--------------------------------------------------------------------------------
Bo Chen                      48      Vice Chairman of the Board
--------------------------------------------------------------------------------

      Officers are elected annually by the Board of Directors, at our annual
meeting, to hold such office until an officer's successor has been duly
appointed and qualified, unless an officer sooner dies, resigns or is removed by
the Board.

Background of Executive Officers and Directors

Qinan Ji, Chairman of the Board of Directors - Mr. Ji joined Xilan as the
Chairman of the Board of Directors in 2005. In 1996, he founded the Anxian Hotel
in Weinan City in Shaanxi Province. In 2001, he formed the Xian Sunway
Technology and Industry Co., Ltd. He has more than 20 years experience in the
energy and petroleum industries in operational, administrative, management and
government relations roles. He received a Bachelor of Economy Management from
North West University (Shaanxi).

Bo Chen, Vice Chairman of the Board of Directors - Mr. Chen was named Vice
Chairman of the Board of Directors of Xilan in October 2005. He is currently the
President of Bodisen Biotech, Inc., a publicly listed company on the AMEX
(symbol: BBC), and is one of its original founders and stockholders having
joined that company in 2000. From August 1997 to August 2001, Mr. Chen was Chief
Operations Officer and Chief Technology Officer of Shaanxi Bodisen Chemical Co.,
Ltd. From July 1994 to December 1997, he was the Chief Executive Officer and
President of Yang Ling Shikanglu Chemical Technology Development Co., Ltd. He
received his Bachelor of Science degree from Shaanxi Normal College in July
1984.

Minqing Lu, Chief Executive Officer, Member of the Board of Directors - Mr. Lu
joined Xilan in February 2005. He is Chief Executive Officer and serves on the
Board of Directors. From February 1999 to May 2002, he was the executive
director of Beijing Peixinkenu Investment Consultancy Company. From May 2002 to
July 2004, he was President of Fenghua Aidi Air Service Company in Beijing. He
received a Certificate of Management in July 1994 from Central Party College.

Xiaogang Zhu, Chief Financial Officer - Mr. Zhu joined Xilan as the Chief
Financial Officer in January 2005. He spent 16 years working at the Ministry of
General Logistics 3546 Company and his last position there was manager of the
Finance Department. From September 2000 to December 2004, Mr. Zhu was the Vice
General Manager and CFO of Xian Dapeng Biotech Co., Ltd. He received a Bachelor
of Accounting degree from Xian Jiaotong University.

Yuman Chen, Vice President, Marketing - Ms. Chen joined Xilan in the beginning
of 2000. She has spent the last five years at Xilan serving in the finance
department until January 2001 when she became the manager of the Operations
Department. In January 2005, she became the Vice President of Marketing
Development and Customer Support. She received a Bachelors Degree in Management
from North West University (Shaanxi) in July 1996.

Liangzhong Li, Vice President, Construction - Mr. Li joined Xilan in February
2005. He has 15 years experience in the natural gas industry. He is Vice
President of Construction and oversees the construction pipeline networks and
installation of gas fittings. From 1999 to 2002, he was Vice General Manager of
Leqing Pipeline of Liquefied Oil Gas Company in Zhejiang Province. From 2002 to
2004, he was Vice General Manager and Manager of Construction Department in
Leqing Natural Gas Company. He received a certificate of literature from North
West University (Shaanxi) in July 1986.


                                       17
<PAGE>

Board of Directors

      Our Directors are elected by the vote of a plurality in interest of the
holders of our voting stock and hold office for a term of one year and until a
successor has been elected and qualified.

      A majority of the authorized number of directors constitutes a quorum of
the Board for the transaction of business. The directors must be present at the
meeting to constitute a quorum. However, any action required or permitted to be
taken by the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.

      Directors may receive compensation for their services and reimbursement
for their expenses as shall be determined from time to time by resolution of the
Board.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

      Since we are governed under Section 15(d) of the Exchange Act, we are not
required to file reports of executive officers and directors and persons who own
more than 10% of a registered class of the Company's equity securities pursuant
to Section 16(a) of the Exchange Act.

Code of Ethics

      The Company has adopted a Code of Ethics that applies to all officers,
directors and employees of the Company.

ITEM 10. EXECUTIVE COMPENSATION

      The following table sets forth all compensation paid in respect of our
Chief Executive Officer and those individuals who received compensation in
excess of $100,000 per year (collectively, the "Named Executive Officers") for
our last three completed fiscal years.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                Long Term Compensation
                                                                -------------------------------------------------------
                               Annual Compensation                        Awards                        Payouts
                      --------------------------------------    --------------------------     ------------------------
                                                                                Securities
                                                   Other         Restricted       Under-
Name And                                           Annual          Stock           Lying        LTIP         All Other
Principal                     Salary    Bonus   Compensation    Compensation      Options/     Payouts     Compensation
Position              Year     ($)       ($)        ($)             ($)           SARs (#)       ($)           ($)
-----------------     ----    ------    -----   ------------    ------------    ----------     -------     ------------
<S>                   <C>     <C>        <C>        <C>              <C>             <C>         <C>           <C>
Minqing Lu, Chief     2005    7,500      -0-        -0-              -0-             -0-         -0-           -0-
Executive Officer
and Director

Huai'pu Zhang,        2004    5,000      -0-        -0-              -0-             -0-         -0-           -0-
Former President,     2003    5,000      -0-        -0-              -0-             -0-         -0-           -0-
Chief Executive
Officer and
Director
</TABLE>


                                       18
<PAGE>

Equity Compensation Plan Information

      There has been no common stock authorized for issuance with respect to any
equity compensation plan as of the fiscal year ended December 31, 2005.

Employment Agreements

      There are currently no employment agreements between the Company and any
of its named executive officers.

Option Grants During 2005 Fiscal Year

      There were no options granted to the named executive officers during the
2005 fiscal year. The Company does not have any outstanding stock appreciation
rights.

Aggregated Option Exercises During 2005 Fiscal Year and Fiscal Year-End Option
Values

      There were no options exercised by the named executive officers during the
2005 fiscal year and the named executive officers do not hold an options.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

      The following table sets forth certain information, as of March 17, 2006
with respect to the beneficial ownership of the outstanding common stock by (i)
any holder of more than five (5%) percent; (ii) each of our executive officers
and directors; and (iii) our directors and executive officers as a group. Except
as otherwise indicated, each of the stockholders listed below has sole voting
and investment power over the shares beneficially owned.

--------------------------------------------------------------------------------
                                               Number of           Percentage
                                                 Shares             of Shares
                                             Beneficially         Beneficially
Name of Beneficial Owner (1)                    Owned               Owned (2)
--------------------------------------------------------------------------------
Minqing Lu                                   695,652                   2.9%
--------------------------------------------------------------------------------
Xiaogang Zhu                                       0                      *
--------------------------------------------------------------------------------
Yuman Chen                                         0                      *
--------------------------------------------------------------------------------
Liangzhong Li                                      0                      *
--------------------------------------------------------------------------------
Qinan Ji                                   5,931,596(3)               24.8%
--------------------------------------------------------------------------------
Bo Chen                                    2,063,768(4)                8.6%
--------------------------------------------------------------------------------
Yangling Bodisen Biotech
Development Co, Ltd.                       2,063,768(4)                8.6%
--------------------------------------------------------------------------------
Xiang Ji                                   1,456,232                   6.1%
--------------------------------------------------------------------------------
Shaohu Jia                                 1,080,580                   4.5%
--------------------------------------------------------------------------------
Xian Sunway Technology &
Industry Co., Ltd                          2,875,364(3)               12.0%
--------------------------------------------------------------------------------
Amaranth LLC                               1,363,096                   5.7%
--------------------------------------------------------------------------------
All officers and directors
as a group (6 persons)                     8,691,016(3)(4)            36.3%
--------------------------------------------------------------------------------
      *  Less than 1%.
      (1)   Except as otherwise indicated, the address of each beneficial owner
            is c/o Xian Xilan Natural Gas Co., Ltd., Tang Xing Shu Ma Building,
            Suite 418, Tang Xing Road, Xian High Tech Area, Xian, Shaanxi
            Province, China.
      (2)   Applicable percentage ownership is based on 23,918,516 shares of
            common stock outstanding as of February 8, 2006, together with
            securities exercisable or convertible into shares of common stock
            within 60 days of February 8, 2006 for each stockholder. Beneficial
            ownership is determined in accordance with the rules of the
            Securities and Exchange Commission and generally includes voting or
            investment power with respect to securities. Shares of common stock
            that are currently exercisable or exercisable within 60 days of
            February 8, 2006 are deemed to be beneficially owned by the person
            holding such securities for the purpose of computing the percentage
            of ownership of such person, but are not treated as outstanding for
            the purpose of computing the percentage ownership of any other
            person.


                                       19
<PAGE>

      (3)   Of which 2,875,364 shares are owned by Xian Sunway Technology &
            Industry Co., Ltd. ("Sunway"). Qinan Ji owns 42.1% of Xian Sunway
            and may be deemed to beneficially own such shares.
      (4)   Of which 2,063,768 shares are owned by Yangling Bodisen Biotech
            Development Co, Ltd. ("Bodisen"). Mr. Chen is President, a member of
            the Board of Directors and a 23% stockholder of Bodisen and may be
            deemed to beneficially own such shares.

      No Director, executive officer, affiliate or any owner of record or
beneficial owner of more than 5% of any class of voting securities of the
Company is a party adverse to the Company or has a material interest adverse to
the Company.

Securities Authorized for Issuance Under Equity Compensation Plans

      The following table shows information with respect to each equity
compensation plan under which our common stock is authorized for issuance as of
the fiscal year ended December 31, 2005.

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                                         Number of securities
                                       Number of securities                            remaining available for
                                        to be issued upon         Weighted average      future issuance under
                                           exercise of           exercise price of    equity compensation plans
                                       outstanding options,     outstanding options,     (excluding securities
          Plan category                warrants and rights      warrants and rights    reflected in column (a)
---------------------------------------------------------------------------------------------------------------
                                               (a)                     (b)                       (c)
---------------------------------------------------------------------------------------------------------------
<S>                                            <C>                     <C>                       <C>
Equity compensation plans approved             -0-                     -0-                       -0-
by security holders
---------------------------------------------------------------------------------------------------------------
Equity compensation plans not                  -0-                     -0-                       -0-
approved by security holders
---------------------------------------------------------------------------------------------------------------
Total                                          -0-                     -0-                       -0-
---------------------------------------------------------------------------------------------------------------
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In July 2005, we loaned $77,169 to Qinan Ji, Chairman of the Board. The
loan was made on a interest free basis and was repaid in its entirety in October
2005.

      In July 2005, we loaned $94,393 to Xian Sunway Technology & Industry Co.,
Ltd., one of our principal shareholders. The loan was made on an interest free
basis and was repaid in its entirety on November 2005.


                                       20
<PAGE>

ITEM 13. EXHIBITS

Exhibits:

Exhibit
Number         Description of Exhibit

3.1            Articles of Incorporation (incorporated by reference to same
               exhibit filed with the Company's Form 10SB Registration Statement
               filed September 15, 2000, SEC file no. 000-31539).
3.2            Certificate of Ownership of Coventure international Inc. and
               China Natural Gas, Inc., dated December 12, 2005
3.3            Registrant's By-Laws (incorporated by reference to same exhibit
               filed with the Company's Form 10SB Registration Statement filed
               September 15, 2000, SEC file no. 000-31539).
10.1           Share Purchase Agreement made as of December 6, 2005 among
               Coventure International Inc., Xian Xilan Natural Gas Co., Ltd.
               and each of Xilan's shareholders. (incorporated by reference to
               the exhibits to Registrants Form 8-K filed on December 9, 2005).
10.2           Return to Treasury Agreement between Coventure International Inc.
               and John Hromyk, dated December 6, 2005. (incorporated by
               reference to the exhibits to Registrants Form 8-K filed on
               December 9, 2005).
10.3           Purchase Agreement made as of December 19, 2005 between China
               Natural Gas, Inc. and John Hromyk (incorporated by reference to
               the exhibits to Registrants Form 8-K filed on December 23, 2005).
10.4           Form of Securities Purchase Agreement (incorporated by reference
               to the exhibits to Registrants Form 8-K filed on January 12,
               2006).
10.5           Form of Common Stock Purchase Agreement (incorporated by
               reference to the exhibits to Registrants Form 8-K filed on
               January 12, 2006).
10.6           Form of Registration Rights Agreement (incorporated by reference
               to the exhibits to Registrants Form 8-K filed on January 12,
               2006).
31.1           Certification of Principal Executive Officer pursuant to Rule
               13a-14 and Rule 15d-14(a), promulgated under the Securities and
               Exchange Act of 1934, as amended
31.2           Certification of Principal Financial Officer pursuant to Rule
               13a-14 and Rule 15d 14(a), promulgated under the Securities and
               Exchange Act of 1934, as amended
32.1           Certification pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief
               Executive Officer)
32.2           Certification pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief
               Financial Officer)

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees. The aggregate fees billed by our auditors, Kabani & Company, Inc.
for professional services rendered for the audit of our annual financial
statements for the years ended December 31, 2005 and 2004, and for the reviews
of the financial statements included in our Quarterly Reports on Form 10-QSB
during that fiscal year were $32,500, and $32,500, respectively.

The aggregate fees billed for professional services rendered by Manning Elliott
in the fiscal year ended July 31, 2005 were $14,750.

Audit Related Fees. We incurred no audit related fees during the fiscal years
ended December 31, 2005 and 2004.

Tax Fees. We incurred no fees for professional services rendered by Kabani &
Company, Inc., for tax compliance, tax advice and tax compliance services during
the fiscal years ended December 31, 2005 and 2004.

The aggregate fees billed for professional services rendered by Manning Elliott
for tax compliance services in fiscal year 2005 was $1,775. No fees were billed
for tax advice or tax planning. The fees billed relate to the preparation of
income tax returns.

The Audit Committee has considered whether the provision of non-audit services
is compatible with maintaining the principal accountant's independence.


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<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                CHINA NATURAL GAS, INC.


                                By: /s/  Minqing Lu
                                    ---------------------------
                                    Minqing Lu
                                    Chief Executive Officer
                                    (Principal Executive Officer)


                                By: /s/ Xiaogang Zhu
                                    ---------------------------
                                    Xiaogang Zhu
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

        SIGNATURE                        TITLE                         DATE
---------------------------    --------------------------         --------------


/s/ Oinan Ji                   Chairman of the Board              March 21, 2006
---------------------------
Qinan Ji


/s/ Bo Chen                    Vice Chairman of the Board         March 21, 2006
---------------------------
Bo Chen


/s/ Minqing Lu                 Chief Executive Officer            March 21, 2006
---------------------------    and Director
Minqing Lu


/s/ Xiaogang Zhu               Chief Financial Officer            March 21, 2006
---------------------------
Xiaogang Zhu


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