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Item 3.03.
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Material Modification to Rights of Security Holders.
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As previously disclosed,
the Board of Directors and a majority of the shareholders of Kingold Jewelry, Inc. (the “Registrant” or “Company”),
approved on September 26, 2019 and October 7, 2019, respectively, a 1-for-6 reverse stock split of the Company’s issued and
outstanding shares of common stock (the “Reverse Stock Split”).
Reason for the Reverse Stock Split
The Reverse Stock Split
was effected solely to enable the Company to expeditiously meet the NASDAQ continued listing standards relating to the minimum
bid price (which the Company was previously advised it was in non-compliance with) and to reduce the risk of the Company being
automatically delisted from the NASDAQ Capital Market due to the closing bid price of its common stock falling below $1.00 per
share for 30 consecutive business days, which typically triggers the NASDAQ to begin delisting procedures regarding a listed company’s
securities.
Effects of the Reverse Stock Split
Effective Date;
Symbol; CUSIP Number. The Reverse Stock Split became effective on October 21, 2019, and will be reflected with the NASDAQ
Capital Market and in the marketplace at the open of business on October 22, 2019 (the “Effective Date”), whereupon
the shares of common stock begin trading on a split-adjusted basis. In connection with the Reverse Stock Split, the Company’s
shares of common stock continue to trade on the NASDAQ Capital Market under the symbol “KGJI” but trade under a new
CUSIP Number, 49579A 303.
Split Adjustment;
No Fractional Shares. On the Effective Date, the total number of shares of the Company’s common stock held by each
shareholder were converted automatically into the number of whole shares of common stock equal to (i) the number of issued and
outstanding shares of common stock held by such shareholder immediately prior to the Reverse Stock Split, divided by (ii) 6.
No fractional shares
were issued, and no cash or other consideration has been paid. Instead, the Company has issued one whole share of the post-Reverse
Stock Split common stock to any shareholder who otherwise would have received a fractional share as a result of the Reverse Stock
Split.
Non-Certificated
Shares; Certificated Shares. Stockholders who are holding their shares in electronic form at brokerage firms do not have
to take any action as the effect of the Reverse Stock Split will automatically be reflected in their brokerage accounts.
Stockholders holding
paper certificates may (but are not required to) send the certificates to the Company’s transfer agent at the address given
below. The transfer agent will issue a new share certificate reflecting the terms of the Reverse Stock Split to each requesting
shareholder.
Issuer Direct Corporation
Glenwood Ave. Suite 1001
Raleigh, N.C. 27603
Tel: +1.919.481.4000
Fax: +1.919.481.6222
Please contact Issuer
Direct for further information, related costs and procedures before sending any certificates.
State Filing.
The Reverse Stock Split was effected by the Company filing a Certificate of Amendment (the “Certificate”) pursuant
to the Delaware General Corporation Law with the Secretary of State of the State of Delaware on October 21, 2019. A copy of the Certificate is attached hereto as Exhibit 3.1 and incorporated
herein by reference.
Capitalization.
As of October 21, 2019 (immediately prior to the Effective Date), there were 66,113,502 shares of common stock outstanding. As
a result of the Reverse Stock Split, there are approximately 11,018,917 shares of common stock outstanding (subject to adjustment
due to the effect of rounding fractional shares into whole shares). The Reverse Stock Split will not have any effect on the stated
par value of the common stock.
Each shareholder’s
percentage ownership interest in the Company and proportional voting power remains virtually unchanged as a result of the Reverse
Stock Split, except for minor changes and adjustments that will result from rounding fractional shares into whole shares. The rights
and privileges of the holders of shares of common stock will be substantially unaffected by the Reverse Stock Split.
All options, warrants
and convertible securities of the Company outstanding immediately prior to the Reverse Stock Split (to the extent they don’t
provide otherwise) will be appropriately adjusted by dividing the number of shares of common stock into which the options, warrants
and convertible securities are exercisable or convertible by 6 and multiplying the exercise or conversion price thereof by 6, as
a result of the Reverse Stock Split.
