Information Statement
Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
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Preliminary Information Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
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Definitive Information Statement
KINGOLD JEWELRY, INC.
(Name of Registrant As Specified In Charter)
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Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies: Common Stock, $0.001 par value
2) Aggregate number of securities to which transaction applies:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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INFORMATION STATEMENT
June 23, 2009
GENERAL INFORMATION
This Information Statement has been filed with the Securities and Exchange Commission and is being furnished, pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the holders (the "Stockholders") of the common stock, par value $0.001 per share (the "Common Stock"), of Kingold Jewelry, Inc., a Delaware corporation (the "Company"), to advise you of an action which has already been approved by a majority in interest of the stockholders of the Company (the “Action”), namely, an amendment to the Company's Certificate of Incorporation (the "Amendment") which effects a one-for-two reverse split of our Common Stock.
The Company's Board of Directors, on June 7, 2010, approved the Amendment and the Action, and recommended that the Amendment be approved by written consent of a majority in interest of our stockholders.
In order to accelerate the filing of the Amendment and to reduce the costs of obtaining stockholder approval, our Board of Directors elected to obtain such approval by utilizing the written consent of the holders of a majority in interest of our Common Stock (the “Consent”). The elimination of the need for a special meeting of stockholders to approve the Amendment is made possible by Section 228 of the Delaware General Corporation Law (the "Delaware Law") which provides that the written consent of the holders of outstanding shares of voting capital stock, having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, may be substituted for such a special meeting. Pursuant to Section 228 of the Delaware Law, the Amendment is required to be approved by a majority in interest of our Stockholders. In accordance with Rule 14c-2(b) under the Securities Exchange Act of 1934, as amended, the corporate action can be taken no sooner than 20 calendar days after this Information Statement is first mailed to the stockholders of the Company. If the proposed actions were not adopted by written consent, it would have to be considered by the Company's Stockholders at a special stockholders' meeting convened for the specific purpose of approving the Amendment upon the expiration of the 20-day period set forth above.
On or about June 7, 2010, Stockholders, who own in the aggregate 58,713,668 shares of our Common Stock representing approximately 70.2% of our outstanding shares (the "Majority Stockholders"), gave their written consent to the adoption of the Action. The form of the written Consent is attached hereto as Exhibit “A”. The proposed Amendment will become effective when filed with the Secretary of State of the State of Delaware.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND A PROXY.
ACTION TO BE TAKEN
AMENDMENT OF CERTIFICATE OF INCORPORATION
FOR REVERSE STOCK SPLIT
The Amendment to the Company's Certificate of Incorporation provides that each two (2) shares of our Common Stock outstanding immediately prior to the Effective Date of the Amendment (the "Old Shares") will be automatically converted into one (1) share of our Common Stock (the "New Shares"), thereby reducing the number of outstanding shares of our Common Stock to approximately 41,766,388 shares, subject to rounding or the issuance of additional shares of our Common Stock. The Amendment does not change the par value of our common stock or the number of shares of our Common Stock authorized for issuance. The form of Amendment to the Certificate of Incorporation that will be filed with the Delaware Secretary of State is attached hereto as Exhibit A.
Purpose and Effect of Amendment.
Our Common Stock is currently quoted on the Over-the-Counter Bulletin Board under the symbol "KGJI". On June 7, 2010, the last day on which our Common Stock traded, the last sale price of our common stock was $2.98 per share. Our Board of Directors believes that our relatively low per-share market price of our Common Stock impairs the acceptability of our Common Stock to certain members of the investing public, including institutional investors and may hamper our ability to obtain a listing for our Common Stock on the NASDAQ Global Market.
For these reasons our Board of Directors has chosen to adopt and recommend the Amendment. We can not be certain that the reverse stock split will have a long-term positive effect on the market price of our Common Stock, or increase our ability to obtain a listing for our Common Stock on the NASDAQ Global Market in the future.
The market price of our Common Stock is also based on factors which may be unrelated to the number of shares outstanding. These factors include our performance, general economic and market conditions and other factors, many of which are beyond our control. The market price per new share of the New Shares may not rise or remain constant in proportion to the reduction in the number of Old Shares outstanding before the reverse stock split. Accordingly, the total market capitalization of our Common Stock after the reverse stock split may be lower than the total market capitalization before the reverse stock split. In the future, the market price of Common Stock following the reverse stock split may not equal or exceed the market price prior to the reverse stock split.
The reverse stock split will affect all of the holders of our Common Stock uniformly. Any fractional shares existing as a result of the reverse stock split will be rounded to the next higher whole number to those stockholders who are entitled to receive them as a consequence of the reverse stock split. On the Effective Date of the Amendment, each stockholder will own a reduced number of shares of our Common Stock, but will hold the same percentage of the outstanding shares as the stockholder held prior to the Effective Date of the Amendment.
The liquidity of our Common Stock may be adversely affected by the reduced number of shares outstanding after the reverse stock split. In addition, the split will increase the number of stockholders who own odd-lots. An odd-lot is fewer than 100 shares. Such stockholders may experience an increase in the cost of selling their shares and may have greater difficulty in making sales.
The reverse stock split will not affect the par value of our Common Stock. As a result, on the Effective Date of the Amendment, the stated capital on our balance sheet attributable to our Common Stock will be reduced in proportion with the reverse stock split and our additional paid-in capital account will be credited with the amount by which the stated capital is reduced. These accounting entries will have no impact on total stockholders' equity. All share and per share information will be retroactively adjusted following the Effective Date of the Amendment to reflect the reverse stock split for all periods presented in future filings.
The reverse stock split will have the following effects upon our Common Stock:
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The number of shares owned by each holder of Common Stock will be reduced two fold;
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The number of shares of our Common Stock which will be issued and outstanding after the reverse stock split will be reduced from 83,532,777 shares to approximately 41,766,388 shares;
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The per share profit and net book value of our Common Stock will be increased because there will be a lesser number of shares of our common stock outstanding;
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The par value of the Common Stock will remain $0.001 per share;
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The stated capital on our balance sheet attributable to the Common Stock will be decreased two times its present amount and the additional paid-in capital account will be credited with the amount by which the stated capital is decreased; and
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All outstanding options, warrants, and convertible securities entitling the holders thereof to purchase shares of Common Stock, if any, will enable such holders to purchase, upon exercise thereof, two times fewer of the number of shares of Common Stock which such holders would have been able to purchase upon exercise thereof immediately preceding the reverse stock split, at the same aggregate price required to be paid therefor upon exercise thereof immediately preceding the reverse stock split.
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Shares of Common Stock after the reverse stock split will be fully paid and non-assessable. The Amendment will not change any of the other the terms of our Common Stock. The shares of Common Stock after the reverse stock split will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the shares of common stock prior to the reverse stock split.
Because the number of authorized shares of our Common Stock will not be reduced, an overall effect of the reverse split of the outstanding Common Stock will be an increase in authorized but unissued shares of our Common Stock. These shares may be issued by our Board of Directors in its sole discretion. Any future issuance will have the effect of diluting the percentage of stock ownership and voting rights of the present holders of our Common Stock.
Our Common Stock will be quoted on the Over-the-Counter Bulletin Board at the post-split price on and after the Effective Date of the Amendment.
Following the reverse stock split, the share certificates representing the shares will continue to be valid. In the future, new share certificates will be issued reflecting the reverse stock split, but this in no way will affect the validity of your current share certificates. The reverse stock split will occur on the Effective Date of the Amendment without any further action on the part of our stockholders. After the Effective Date of the Amendment, each share certificate representing the shares prior to the reverse stock split will be deemed to represent one-half of the number of shares shown on the certificate. Certificates representing the shares after the reverse stock split will be issued in due course as share certificates representing shares prior to the reverse stock split are tendered for exchange or transfer to our transfer agent. We request that stockholders do not send in any of their stock certificates at this time.
As applicable, new share certificates evidencing New Shares following the reverse stock split that are issued in exchange for share certificate issued prior to the reverse stock split representing Old Shares that are restricted shares will contain the same restrictive legend as on the old certificates. Also, for purposes of determining the term of the restrictive period applicable to the New Shares after the reverse stock split, the time period during which a stockholder has held their existing pre-split Old Shares will be included in the total holding period.
RECORD DATE
The close of business June 23, 2010, has been fixed as the record date for the determination of stockholders entitled to receive this Information Statement.
OUTSTANDING VOTING SECURITIES
As of the date of the Consent by the Majority Stockholders, June 7, 2010, the Company had 83,532,777 shares of Common Stock issued and outstanding. Each share of outstanding Common Stock is entitled to one vote.
On June 7, 2010, the holders of 58,713,668 shares (or approximately 70.2% of the 83,532,777 shares of Common Stock then-outstanding), executed and delivered to the Company the written Consent approving the Amendment. Since the Amendment has been approved by the Majority Stockholders, no proxies are being solicited with this Information Statement.
The Delaware Law provides in substance that unless the Company's Certificate of Incorporation provides otherwise, stockholders may take action without a meeting of stockholders and without prior notice if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to take such action at a meeting at which all shares entitled to vote thereon were present.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning the ownership of Common Stock with respect to stockholders who were known to the us to be beneficial owners of more than 5% of the Common Stock as of the date hereof, and officers and directors as a group. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all securities beneficially owned by them. Beneficial ownership exists when a person has either the power to vote or sell our Common Stock. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options, warrants or otherwise.
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Name and Address of Beneficial Owner
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Title
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Shares
Beneficially
Owned
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Percent
of Class
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Directors and Executive Officers:
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Chief Executive Officer, Director and Chairman
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General Manager and Vice President
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%
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%
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All Officers and Directors as a Group (total of six persons)
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5% Stockholders
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Famous Grow Holdings Limited
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Bright Vision Group Limited
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Eternal Grace Development Limited
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(1)
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The 34,700,387 shares shown as beneficially owned represent shares which can be acquired pursuant to a December 21, 2009 Call Option Agreement pursuant to which the shares can be acquired from Famous Grow Holdings Limited.
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(2)
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The 1,151,498 shares shown as beneficially owned represent shares which can be acquired pursuant to a December 21, 2009 Call Option Agreement pursuant to which the shares can be acquired from Famous Grow Holdings Limited.
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(3)
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The 602,410 shares beneficially owned include 100,402 shares issuable upon exercise of Investor Warrants. Vince Orza has voting and investment power over the shares registered in the name of Great Places LLC.
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(4)
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The 120,000 shares beneficially owned include 120,000 shares issuable upon exercise of options.
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*
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Less than one percent (1%).
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EFFECTIVE DATE OF AMENDMENT
Pursuant to Rule 14c-2 under the Exchange Act, the filing of the Amendment to the Certificate of Incorporation with the Delaware Secretary of State or the effective date of such filing, shall not occur until a date at least twenty (20) days after the date on which this Information Statement has been mailed to the Stockholders (the “Effective Date”). The Company anticipates that the actions contemplated hereby will be effected on or about the close of business on July 12, 2010.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
Except as disclosed elsewhere in this Information Statement, none of the following persons have any substantial interest, direct or indirect, by security holdings or otherwise in any matter to be acted upon:
1. any director or officer of our company since January 1, 2009, being the commencement of our last completed audited financial year;
2. any proposed nominee for election as a director of the Company; and
3. any associate or affiliate of any of the foregoing persons.
The Stockholders have no right under the Delaware Law, the Company's Certificate of Incorporation or By-Laws to dissent from any of the provisions adopted in the Amendment.
FEDERAL TAX IMPLICATIONS
The reverse stock split should not result in any recognition of gain or loss. The holding period of the New Shares will include the stockholder's holding period for the corresponding Old Shares owned prior to the reverse stock split. The adjusted basis of the New Shares (including the original shares) will be equal to the adjusted basis of a stockholder's original shares. Notwithstanding the foregoing, the federal income tax consequences of the receipt of an additional share in lieu of a fractional interest is not clear but may result in tax liabilities which should not be material in amount in view of the low value of the fractional interest. Our beliefs regarding the tax consequence of the reverse stock split are not binding upon the Internal Revenue Service or the courts, and there can be no assurance that the Internal Revenue Service or the courts will accept the positions expressed above. This summary does not purport to be complete and does not address the tax consequences to holders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal holding companies, foreign entities, nonresident foreign individuals, broker-dealers and tax exempt entities. The state and local tax consequences of the reverse stock split may vary significantly as to each stockholder, depending upon the state in which he or she resides.
The foregoing summary is included for general information only. Accordingly, stockholders are urged to consult their own tax advisors with respect to the Federal, State and local tax consequences of the reverse stock split.
EXPENSES OF INFORMATION STATEMENT
The expenses of mailing this Information Statement will be borne by the Company, including expenses in connection with the preparation and mailing of this Information Statement and all documents that now accompany or may hereafter supplement it. It is contemplated that brokerage houses, custodians, nominees, and fiduciaries will be requested to forward the Information Statement to the beneficial owners of the Common Stock held of record, on the Record Date, by such persons and that the Company will reimburse them for their reasonable expenses incurred in connection therewith.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information including annual and quarterly reports on Form 10-K and 10-Q (the "1934 Act Filings") with the Securities and Exchange Commission (the "Commission"). Reports and other information filed by the Company can be inspected and copied at the public reference facilities maintained at the Commission at 100 F Street, NE, Washington, D.C. 20549. Copies of such material can be obtained upon written request addressed to the Commission, Public Reference Section, 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site on the Internet (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission through the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR").
The following documents as filed with the Commission by the Company are incorporated herein by reference:
(1) Quarterly Reports on Form 10-Q for the quarter end March 31, 2010; and
(2) Annual Report on Form 10-K for the year ended December 31, 2009.
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By Order of the Board of Directors
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By:
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/s/ Jia Zhi Hong
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Jia Zhi Hong
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Chairman and Chief Executive Officer
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EXHIBITS
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EXHIBITS
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A
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Form of Written Consent of Majority Stockholders
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B
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Amendment to the Certificate of Incorporation of Kingold Jewelry, Inc.
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EXHIBIT A
Action By Written Consent
of
The Stockholders
of
Kingold Jewelry, Inc.
A Delaware Corporation
June 7, 2010
Pursuant to the authority of Section 228(a) of the General Corporation Law of the State of Delaware (“GCL”), the undersigned, constituting a majority of the stockholders of Kingold Jewelry, Inc. (the “Corporation”) do by this writing consent to the following actions and adopt the following resolutions:
Approval of Reverse Stock Split
WHEREAS, the Corporation’s Board of Directors has determined that a one-for-two reverse split (the “Reverse Stock Split”) of the shares of the Corporation's common stock, $0.001 par value ("Common Stock") is desirable;
WHEREAS, in order to change the effectuate the Reverse Stock Split, the Corporation must file with the Secretary of State of the State of Delaware an amendment to the Corporation’s Certificate of Incorporation reflecting the Reverse Stock Split, in substantially the form attached hereto (the “Amendment”), which Amendment requires an approval by the stockholders of the Corporation;
WHEREAS, the Board of Directors recommends that the stockholders approve the Amendment in the form of a written consent of a majority of the stockholders of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that the Amendment is hereby approved.
RESOLVED, that this Written Consent may be executed in counterparts.
(** signature page follows **)
IN WITNESS WHEREOF, the undersigned hereby adopts, confirms and ratifies in all respects, the foregoing resolution and directs the Secretary of the Corporation to file this Action by Written Consent of Stockholders in the minute book of the Corporation.
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_____________________________
Signature
Print Name: ___________________
Representing __________________ shares of the outstanding stock of the Corporation
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_____________________________
Signature
Print Name: ___________________
Representing __________________ shares of the outstanding stock of the Corporation
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_____________________________
Signature
Print Name: ___________________
Representing __________________ shares of the outstanding stock of the Corporation
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_____________________________
Signature
Print Name: ___________________
Representing __________________ shares of the outstanding stock of the Corporation
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_____________________________
Signature
Print Name: ___________________
Representing __________________ shares of the outstanding stock of the Corporation
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_____________________________
Signature
Print Name: ___________________
Representing __________________ shares of the outstanding stock of the Corporation
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EXHIBIT B
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF
KINGOLD JEWERLY, INC.
It is hereby certified by an officer of the corporation that:
1. The name of the corporation (hereby called the “Corporation”) is KINGOLD JEWERLY, INC.
2. The certificate of incorporation of the Corporation is hereby amended by adding the following to Article 4.1:
"Upon the filing and effectiveness of this Certificate of Amendment of Certificate of Incorporation (this “Amendment”), each share of common stock, par value of one-hundredth of a cent ($0.001) per share (“Common Stock”), of the Corporation issued and outstanding immediately prior to such filing and effectiveness, shall be reclassified, changed and combined into one/half (1/2) of a share of Common Stock. Each holder of record of a certificate representing shares of Common Stock, as of the close of business on the effective date of the filing and effectiveness of this Amendment shall be entitled to receive, as soon as practicable, upon surrender of such certificate, a certificate or certificates representing one (1) share of Common Stock, for every two (2) shares of Common Stock, represented by the certificate or certificates of such holder; provided, however, that no fractional shares of Common Stock shall be issued and in lieu of issuing such fractional shares, the Corporation shall round any fractional shares to the next whole number of shares."
3. This amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its Chief Executive Officer this __ th day of June, 2010.
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Kingold Jewelry, Inc.
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By:
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Name: Jia Zhi Hong
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Title: Chairman and Chief Executive Officer
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