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1. Name and Address of Reporting Person
*
Vicis Capital, LLC
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2. Issuer Name
and
Ticker or Trading Symbol
China New Energy Group CO
[
CNER
]
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5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director
__
X
__ 10% Owner
_____ Officer (give title below)
_____ Other (specify below)
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(Last)
(First)
(Middle)
445 PARK AVENUE, SUITE 1901
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3. Date of Earliest Transaction
(MM/DD/YYYY)
6/19/2009
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(Street)
NEW YORK, NY 10022
(City)
(State)
(Zip)
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4. If Amendment, Date Original Filed
(MM/DD/YYYY)
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6. Individual or Joint/Group Filing
(Check Applicable Line)
___ Form filed by One Reporting Person
_
X
_ Form filed by More than One Reporting Person
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Explanation of Responses:
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(
1)
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Represents the indirect holdings of Vicis Capital LLC. All of the foregoing represents securities held directly by Vicis
Capital Master Fund. Vicis Capital LLC acts as investment advisor to Vicis Capital Master Fund and therefore has voting and
dispositive power over all the foregoing shares. For the purposes of Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, Vicis Capital LLC may be deemed to be the beneficial owner of, but hereby disclaims such beneficial ownership
of, the foregoing shares.
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(
2)
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Immediately.
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(
3)
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None.
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(
4)
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Each share of Series B Convertible Preferred Stock is convertible, subject to adjustment, into 35 shares of Common Stock.
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(
5)
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Pursuant to the Series B Convertible Preferred Stock Securities Purchase Agreement between the Issuer and China Hand Fund,
LLC, dated April 30, 2009, the Issuer held shares of Series B Convertible Preferred Stock in escrow. On June 19, 2010,
pursuant to the Closing Escrow Agreement dated April 30, 2009 between the Issuer and China Hand Fund, LLC, the escrow agent
delivered 22,327 shares of the Series B Convertible Preferred Stock to Vicis Capital Master Fund, as assignee of China Hand
Fund, LLC, because the Issuer failed to meet certain income targets for the fiscal year ending December 31, 2009.
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(
6)
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On September 14, 2010, the Issuer issued a Convertible Promissory Note to Vicis with an original principal amount of
$1,500,000 due October 15, 2010. In the event the Issuer repays the original principal amount in full by October 15,
2010,Vicis Capital Master Fund will be issued 1.67 shares of the Issuer's Series C Convertible Preferred Stock. In the
event the Issuer does not repay the original principal amount in full by October 15, 2010, the Convertible Promissory Note
will automatically convert into 3.75 shares of Series C Convertible Preferred Stock. Each shares of Series C Convertible
Preferred Stock is currently convertible on a 1-for-5,647,011 basis.
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(
7)
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On September 14, 2010, Vicis entered into an agreement with a private party whereby Vicis purchased from such private party:
(i) 9.365 shares of the Issuer's Series C Convertible Preferred Stock, and (ii) 1 share of the Issuer's Series D Convertible
Preferred Stock, for an aggregate purchase price of $7,500,000. The Issuer's Series C Convertible Preferred Stock currently
converts on a 1-for-5,647,011 basis.
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(
8)
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The Series C Convertible Preferred Stock automatically converts into Common Stock upon the earlier of: (i) 5/31/11 or (ii)
Issuer's acquisition of at least 70% of equity interests in Beijing Century Dadi Gas Engineering Co., Ltd.
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(
9)
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The number of shares of the Issuer's Common Stock issuable upon conversion of each share of Series D Convertible Preferred
Stock is equal to: (219,605,986*(.72/.28) - A - B)/4, whereby A is equal to the number of shares of Common Stock into which
Series C Convertible Preferred Stock may be converted on the date the Series C Convertible Preferred Stock is issued (the
"Issuance Date") plus any shares Common Stock into which shares of Series C Convertible Preferred Stock which may be
converted upon conversion of any convertible promissory notes convertible into such stock outstanding on the date the
Issuance Date, and (cont'd in footnote #9)
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(
10)
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(cont'd from footnote #8) whereby B is equal to the number of shares of Common Stock, plus the number of shares of Common
Stock into which any convertible preferred stock, debt or other convertible securities are convertible, issued to new
investors between October 1, 2010 and April 30, 2011, which result in gross proceeds to the Issuer which do not exceed
$54,500,000.
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(
11)
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The Series D Convertible Preferred Stock automatically converts into Common Stock immediately after the conversion of all
Series C Convertible preferred Stock and upon the latest to occur of: (i) May 31, 2011 or (ii) the date upon which the
Issuer completes the acquisition of at least 70% of the equity interests in Beijing Century Dadi Gas Engineering Co., Ltd.
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(
12)
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Each share of Series A Convertible Preferred Stock is convertible, subject to adjustment, into 35 shares of Common Stock.
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(
13)
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The terms of each of the Series A Convertible Preferred Stock and the Warrants to Purchase Common Stock contain conversion
caps, which prevent the holder from converting such securities into shares of the Issuer's Common Stock if such conversion
would result in such holder owning more than 4.9% of the Issuer's Common Stock.
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(
14)
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The 1,546,183 shares of the Issuer's Series A Convertible Preferred Stock owned by Vicis include 177,936 shares of the
Issuer's Series A Convertible Preferred Stock acquired as a dividend pursuant to the terms of the Series A Convertible
Preferred Stock Certificate of Designations.
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(
15)
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Vicis Capital Master Fund acquired 5,711,031 shares of the Issuer's Common Stock in the aggregate as dividends on the Series
B Convertible Preferred Stock pursuant to the terms of the Series B Convertible Preferred Stock Certificate of Designations.
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