Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
(a) Evergrowing Bank Loans. As previously disclosed, from February 24, 2016 to
March 24, 2016, Wuhan Kingold signed ten loan agreements with the Yantai
Huanshan Road Branch of Evergrowing Bank for loans of approximately $140.1
million (RMB 1 billion) in aggregate. The purpose of the loans was for
purchasing gold. The original terms of loans were two years and bore fixed
interest of 4.75% per year. Based on the loan repayment plan as specified in the
loan agreements, approximately half of the principal loan amount (RMB 500
million) was repaid upon maturity. For the remaining balance of approximately
$70.0 million (RMB 500 million), the Company entered into a loan extension
agreement with the bank to extend the loan borrowing period for seven months
until October 2018, with the new interest rate of 6.5% per year. The loans were
secured by 2,735 kilograms of gold in aggregate with carrying value of
approximately $89.1 million (RMB 635.9 million) and were personally guaranteed
by the CEO and Chairman of the Company, Mr. Zhihong Jia. Upon the maturity of
these loans, the Company entered into a series of supplemental agreements with
Yantai Huanshan Road Branch of Evergrowing Bank to extend the term of the loan
for an additional 12 months, with new maturity dates between October 9, 2019 and
October 21, 2019. From April to September 2019, the Company repaid a total of
$42.1 million (RMB 300.5 million) to the bank. As of September 30, 2019, the
outstanding balance of the loans amounted to approximately $27.9 million (RMB
199.5 million). The loan subsequently matured in October 2019, and the Company
signed a supplemental agreement with the bank to extend the loan's due date to
March 23, 2020. During the fourth quarter of 2019, the Company repaid a portion
of the loan and the unpaid balance was approximately RMB 194.5 million as of
December 31, 2019. As of the date of this report, Wuhan Kingold has not received
from Evergrowing Bank a notice of default or a notice of repayment with respect
to the outstanding balance of the loan due on March 23, 2020.
(b) Sichuan Trust Loans.
On September 7, 2016, the Company entered into two trust loan agreements with
Sichuan Trust Ltd. ("Sichuan Trust") to borrow a maximum of approximately $280.2
million (RMB 2 billion) as working capital loan. The required annual interest
rate was 8.46%. The Company paid the first interest payment equal to 1.21% of
the principal received as loan origination fee on an annual basis. The rest of
the interest payments are calculated based on a fixed interest rate of 7.25%.
The Company pledged 7,258 kilograms of gold with carrying value of approximately
$236.4 million (RMB 1.7 billion) as collateral to secure this loan. The loan was
personally guaranteed by the CEO and Chairman of the Company. The Company also
made a restricted deposit of approximately $2.1 million (RMB 15 million) to
secure these loans. The deposit would be refunded when the loan was repaid upon
maturity. As of September 30, 2019, the Company received an aggregate of
approximately $210.1 million (RMB 1.5 billion) from the loan. These loans
originally had maturity dates between September 20, 2018 and November 30, 2018.
During the year ended December 31, 2018, these loans were extended to have
maturity dates between November 20, 2019 and January 30, 2020. As of September
30, 2019, 7,258 kilograms of gold with carrying value of approximately $236.4
million (approximately RMB 1.7 billion) were pledged as collateral to secure the
loans. The Company stated the parties had agreed to further extend the loans and
Wuhan Kingold had also signed the extension agreements. Sichuan Trust has not,
however, returned its signed extension agreements to Wuhan Kingold. The loan
records Wuhan Kingold obtained from the systems of the People's Bank of China
indicated that the loans were in fact extended with new maturity dates between
December 2020 and January 2021. As of the date of this report, Wuhan Kingold has
not received a notice of default or a notice of repayment due with respect to
the outstanding balance of these loans.
In January 2019, Wuhan Kingold entered into a trust loan agreement in the amount
of approximately $43.4 million (RMB 310 million) with Sichuan Trust. The purpose
of the trust loan was to purchase raw material gold. The loan period was 12
months from receiving the principal amount. The loan bore interest at a fixed
annual rate of 10.7615%. The loan was secured by 1,647 kilograms of gold in
aggregate with carrying value of approximately $56.0 million (RMB 399.6
million). The loan was also personally guaranteed by the CEO and Chairman of the
Company. On March 17, 2020, Wuhan Kingold received written notice from Sichuan
Trust stating that, in light of the impact of COVID-19, Sichuan Trust agreed to
extend the term of the loan for six months to July 27, 2020; and that in the
event that the COVID-19 lockdown terminates before the extended due date, then
Wuhan Kingold is required to repay the loan within one month after the ending of
COVID-19 lockdown. The travel restrictions and lockdown were lifted on April 8,
2020. As of the date of this report, the outstanding principal balance of the
loan is RMB 310 million. Wuhan Kingold has not received a notice of default or a
notice of repayment with respect to this loan.
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KINGOLD JEWELRY, INC. 
