KINGOLD JEWELRY, INC. (NASDAQ:KGJI) Files An 8-K Changes in Registrant’s Certifying Accountant

KINGOLD JEWELRY, INC. (NASDAQ:KGJI) Files An 8-K Changes in Registrant’s Certifying Accountant

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Item 4.01(a) below.

Item 2.02 Results of Operations and Financial
Condition.

The Company incorporates by reference the disclosure below in
Item 4.02(a) and 9.01.

Item 4.02(a) Non-Reliance on Previously Issued Financial
Statements or a Related Audit Report or Completed Interim
Report

In connection with its review of the consolidated financial
statements for the fiscal year ended December 31, 2016,
management of the Company determined that the previously issued
financial statements contained in the Companys Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016
and September 30, 2016 should be amended to correct errors in
those financial statements.

On March 30, 2017, management presented its findings and
recommendation to the Audit Committee of the Board of Directors,
which approved the recommendation of management to restate the
financial statements for the quarters ended March 31, 2016, June
30, 2016 and September 30, 2016. The decision to restate these
financial statements was made after managements discovery and
analysis of several transactions that should have been reflected
in such quarters’ financial statements. Management discussed
these matters with the Audit Committee, which approved the
recommendation of management to restate the financial statements.
The Audit Committee discussed the issues related to the
non-reliance and restatement with the Companys independent
auditor, Friedman LLP. Drafts of the Companys current report on
Form 8-K dated March 30, 2017 and amendment dated April 7, 2017
were provided to such auditor for review prior to filing. These
below corrections had no impact on the Companys financial
statements in periods prior to the quarter ended March 31, 2016.

First, several related and third party loans, gold leases and
pledges were not properly recorded during the quarters in
question. The Company borrowed money to finance its purchase of
gold, which gold was then pledged to secure the loans. In some
cases, the unrestricted gold available for production was
insufficient to provide adequate security for such loans, which
in turn required the Company to lease gold from related parties
to satisfy its loan conditions and conduct its operations.

Second, because bank loans required the Company to pledge gold in
favor of the lenders, such pledged gold should have been
reflected as investment in gold (restricted). The Company
determined that certain gold reflected as inventory for
production in 2016 should instead be reflected as investment in
gold (restricted) since the Company had excess gold not to be
used for production. The result of this reclassification is to
record the value of such gold at the market value of the gold,
rather than at the lower of cost or market value, as would be the
case for inventory used for production. Because the market value
of gold has increased during the affected periods, such
reclassification resulted in an unrealized gain and therefore
caused an increase in equity.

Restated Restated Restated
March 31, 2016 March 31, 2016 June 30, 2016

June 30,

September 30, 2016 September 30, 2016
Restricted cash 46,107,680 233,224,217 111,471,928 295,575,852
Other current assets and prepaid expenses 4,954,662 5,085,631 4,766,011 5,048,363
Inventories 503,893,855 136,963,786 786,485,088 144,999,808 1,097,089,498 164,560,088
Investment in gold- current 63,621,396 218,002,680 248,359,383
Investment in gold- non-current 459,160,847 711,321,165 1,181,039,779
Restricted cash – non-current 1,040,130 3,296,753
Gold lease payable related party 138,287,308 219,495,527 438,349,470
Related party loans payable 150,525,333 149,920,542
Third party loans payable 37,631,334 37,480,135

The Company has made a preliminary determination of the results
of these adjustments, which are subject to change prior to filing
amendments on Form 10-Q for each of the affected quarters.

For Three Months ended March 31,
2016
For Six Months ended June 30,
2016
For Nine Months ended September 30,
2016
Restated Restated Restated
Interest income 683,423 816,488 1,900,120 2,182,472
Change in unrealized gain related to investment in gold 17,564,866 68,343,038 58,520,282
Foreign currency translation (loss) (6,659,687 ) (6,661,783 ) (7,990,100 ) (7,993,962 )

As a result of these corrections, management has recommended and
the Audit Committee has approved the restatement of its
previously issued financial statements through the filing of an
amended Form 10-Q for each of the quarters ended March 31, 2016,
June 30, 2016 and September 30, 2016. These corrections will also
be reflected in the Companys Annual Report on Form 10-K for the
year ended December 31, 2016 (the 2016 Form 10-K). The Company is
working diligently to complete its review of these matters and to
quantify the full impact of the necessary adjustments on each of
the affected prior periods. Due to the time and effort involved
in determining the effect of these adjustments, the Company will
file a Form 12b-25 to delay the filing of its 2016 Form 10-K. The
Company expects to file the 2016 Form 10-K on or before April 17,
2017.

Item 8.01 Other Events.

On March 29, 2017, the Company published a press release
announcing selected financial results for the fourth quarter and
year ended December 31, 2016.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits
Exhibit No. Description
99.1 Press release dated March 29, 2017 announcing selected
financial results for the fourth quarter and year ended
December 31, 2016 (Previously filed).


About KINGOLD JEWELRY, INC. (NASDAQ:KGJI)

Kingold Jewelry, Inc. designs and manufactures 24-karat gold jewelry and Chinese ornaments, through a variable interest entity relationship with Wuhan Kingold Jewelry Company Limited (Wuhan Kingold). The Company develops, promotes and sells a range of products to the jewelry market across the People’s Republic of China (PRC). The Company offers a range of in-house designed products, including, but not limited to, gold necklaces, rings, earrings, bracelets and pendants. The Company also sells gold bars and coins and other products through agreements with various banks in China. The Company sells its products directly to distributors, retailers and other wholesalers, who then sell its products to consumers through retail counters located in both department stores and other traditional stand-alone jewelry stores. The Company’s subsidiary, Wuhan Kingold Internet Co., Ltd., is engaged in online sales of jewelry products.

KINGOLD JEWELRY, INC. (NASDAQ:KGJI) Recent Trading Information

KINGOLD JEWELRY, INC. (NASDAQ:KGJI) closed its last trading session 00.00 at 1.09 with 299,059 shares trading hands.

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