Kingold Jewelry Announces First Quarter 2010 Results, Highlighted by a 58.9% Increase in Sales and a 126% Increase in Net Income

Kingold Jewelry, Inc. (OTCBB:KGJI), one of the leading manufacturers of 24-carat gold jewelry in China, today announced financial results for the first quarter of 2010, marked by significant gains in net sales, net income, and earnings per share. Net sales increased 58.9% to $60,512,328, compared to $38,060,670 for the three months ended March 31, 2009. Net income increased to $3,948,892, or $0.05 per diluted share, compared to $1,745,789, or $0.03 per diluted share, for the first quarter of 2009

First Quarter Ended March 31, 2010 Highlights

Revenues for the fiscal year 2010 first quarter increase to $60.5 million, up from $38 million achieved in the first quarter of 2009, representing an increase of $22.5 million, or 58.9%.

Net Income for the first quarter increased 126% to $3.9 million as compared to $1.7 million in the same period a year ago with basic and diluted EPS of $0.05 versus EPS of $0.03 achieved in the same period a year ago, representing a 66.6% increase in earnings per share.

Cash and cash equivalents for the period ended March 31, 2010 was $15,324,203, recognizing a net increase of $7,360,083, or 92.4%, from $7,964,120 at December 31, 2009.

"Kingold performed very well in the first quarter, so we are pleased with our financial results, which we believe demonstrates that the execution of our business plan has been very effective and our brand and products have been well received by the market," said Zhihong Jia, Chairman of the Board and Chief Executive Officer of Kingold.

ABOUT KINGOLD JEWELRY

Kingold Jewelry, Inc. (OTCBB:KGJI), centrally located in Wuhan City, China's fourth largest city, was founded in 2002 and today is one of China's leading designers and manufacturers of 24K gold jewelry sold by weight. The Company sells both directly to retailers and through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. Sales have grown from $29 million in FY 2006 to $250 million in FY 2009 with net income growing from $1.3 million to $8.7 million over the same period.

Forward-Looking Statements

Statements included in this press release include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in the Company's filings with the Securities and Exchange Commission. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," or similar expressions, variations of those terms or the negative of those terms to identify forward-looking statements. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

KINGOLD JEWELRY INC.
(FORMERLY ACTIVEWORLDS CORP.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
	March 31,	December 31,
	2010	2009
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$15,324,203	$7,964,120
Restricted cash	1,465,013	1,462,587
Accounts receivable	235,858	485,399
Inventories	30,278,018	31,756,009
Other current assets and prepaid expenses	71,382	101,189
Value added tax recoverable	4,484,551	5,792,014
Total Current Assets	51,859,025	47,561,318
PROPERTY AND EQUIPMENT, NET	13,856,046	14,126,950
OTHER ASSETS
Other assets	141,433	141,198
Intangible assets, net	495,628	497,572
Total other assets	637,061	638,770
TOTAL ASSETS	$66,352,132	$62,327,038
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short term loans	$8,790,075	$8,775,522
Other payables and accrued expenses	364,304	368,196
Income tax payable	1,356,224	1,347,295
Other taxes payable	19,554	192,415
Total Current Liabilities	10,530,157	10,683,428
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 500,000 shares
authorized, none issued or outstanding
as of March 31, 2010 and December 31, 2009	--	--
Common stock $0.001 par value, 100,000,000 shares
authorized, 83,532,777 shares issued and outstanding
as of March 31, 2010 and December 31, 2009	83,532	83,532
Additional paid-in capital	31,035,352	31,035,352
Retained earnings
Unappropriated	19,601,187	15,669,257
Appropriated	895,873	878,911
Accumulated other comprehensive income	3,214,226	3,156,305
Total Stockholders' Equity	54,830,170	50,823,356
Noncontrolling interest	991,805	820,254
Total Equity	55,821,975	51,643,610
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$66,352,132	$62,327,038
KINGOLD JEWELRY INC.
(FORMERLY ACTIVEWORLDS CORP.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN U.S. DOLLARS)
(UNAUDITED)
	For the three months ended
	March 31,
	2010	2009
NET SALES	$60,512,328	$38,060,670
COST OF SALES
Cost of sales	(54,214,110)	(34,661,813)
Depreciation	(278,815)	(278,269)
Total cost of sales	(54,492,925)	(34,940,082)
GROSS PROFIT	6,019,403	3,120,588
OPERATING EXPENSES
Selling, general and administrative expenses	383,001	395,067
Depreciation	26,664	29,701
Amortization	2,768	2,765
Total Operating Expenses	412,433	427,533
INCOME FROM OPERATIONS	5,606,970	2,693,055
OTHER INCOME (EXPENSES)
Other income	1,758	--
Interest income	1,181	297
Interest expenses	(134,968)	(264,257)
Total Other Expenses, net	(132,029)	(263,960)
INCOME FROM OPERATIONS BEFORE TAXES	5,474,941	2,429,096
PROVISION FOR INCOME TAXES	(1,355,899)	(607,965)
NET INCOME	4,119,042	1,821,131
Less: net income attribute to the noncontrolling interest	(170,150)	(75,342)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	3,948,892	1,745,789
OTHER COMPREHENSIVE INCOME
Total foreign currency translation gains	59,322	18,883
Less: foreign currency translation gains
attributable to noncontrolling interest	(1,401)	(284)
Foreign currency translation gains
attributable to common stockholders	57,921	18,599
COMPREHENSIVE INCOME	$4,006,813	$1,764,388
Earnings per share
Basic	$0.05	$0.03
Diluted	$0.05	$0.03
Weighted average number of shares
Basic	83,532,777	62,208,446
Diluted	86,543,364	62,208,446

This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission. 

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