Item 1.01 Entry into a Material Definitive Agreement
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.
Item 3.02 Unregistered Sales of Equity Securities.
On April 1, 2020, the Company entered into the Purchase Agreement described in
Item 1.01 of this Current Report on Form 8-K pursuant to which, among other
things, it agreed to issue the Notes and Warrants to the Investors. The offering
of the Notes and Warrants is being made pursuant to an exemption from the
registration requirements of Section 5 of the Securities Act contained in
Section 4(a)(2) thereof and/or Regulation D promulgated thereunder. The
disclosures in Item 1.01 of this Form 8-K regarding the Notes and Warrants and
the shares of Common Stock issuable upon the exercise or conversion thereof are
incorporated by reference into this Item 3.02.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
4.1 Form of Warrant to purchase Common Stock
4.2 Form of Convertible Note
10.1 Form of Securities Purchase Agreement dated April 1, 2020.
10.2 Placement Agent Agreement dated July 9, 2019 as amended and in effect
© Edgar Online, source Glimpses