KGJI Kingold Jewelry Inc

On April 1, 2020, Kingold Jewelry Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with two private investors (the “Investors”) pursuant to which the Company agreed to sell to the Investors, and the Investors agreed to purchase from the Company, in an unregistered private transaction, convertible promissory notes (the “Notes”) with an aggregate principal amount of $515,000. The Notes feature an initial issuance discount of 3%, bear interest at 5% annual rate and mature in one year. The conversion price for the Notes is initially set at $3.00 per share for the first 180 days following issuance. Thereafter, the Notes may be converted by the Investors for a price equal to 70% of the lowest closing price of the Company’s common stock, $0.001 par value per share (the “Common Stock”) during the ten trading days immediately prior to the delivery of an exercise notice.

The Company also agreed to sell to the Investors warrants to purchase up to an aggregate of 200,000 shares of Common Stock at an exercise price of $1.25 per share (the “Warrants”). The Warrants are exercisable from issuance and expire two years from the date of issuance. The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment in the event of stock splits or dividends, or other similar transactions, but not as a result of future securities offerings at lower prices.

Net proceeds to the Company from the sale of the Shares and the Warrants (such transaction, the “Offering”), after deducting estimated offering expenses and placement agent fees, are approximately $445,000. The Offering closed on April 1, 2020.

Network 1 Financial Securities, Inc. (the “Placement Agent”) acted as exclusive placement agent in connection with the Offering pursuant to a placement agent agreement between the Company and the Placement Agent dated July 9, 2019 (the “Placement Agreement”). The Placement Agreement provides that the Placement Agent will receive a cash commission fee equal to 8% of the aggregate gross proceeds of the Offering.

The foregoing descriptions of the forms of Purchase Agreement, Note and Warrant are not complete and are qualified in their entirety by references to the full text of the form of Purchase Agreement, the Placement Agreement, the form of Warrant and the form of Note, which are attached hereto as Exhibits 10.1, 10.2, 4.1 and 4.2, respectively, and are incorporated herein by reference.