As of September 30, 2018 and December 31, 2017, the Company allocated a total of 57,476 and 59,523 kilograms of Au9999 gold in its inventories with carrying value of approximately $1,953.6 million and $2,131.6 million, respectively, as investments in gold for obtaining various loans from banks and financial institutions. (See Note 5)

As of September 30, 2018 and December 31, 2017, the Company pledged a total of 2,655 and 10,225 kilograms of gold, respectively, as guarantee for Wuhan Kangbo Biotech Limited (“Kangbo”), a related party which is controlled by the CEO and Chairman of the Company, for obtaining total amount of RMB 500 million and 2 billion loan from Evergrowing Bank Huanshan Road Branch, respectively. (See Note 7)

As of September 30, 2018 and December 31, 2017, the Company pledged a total of 523 kilograms of gold and pledged as collateral for obtaining total amount of RMB 100 million loan from Wuhan Huayuan Technology Development Limited (“Huayuan”), a related party which is controlled by the CEO and Chairman of the Company. (See Note 7)

As of September 30, 2018, a total of 32,593 kilograms of Au9999 gold with fair market value of approximately $1,071 million was pledged for long term loans, and therefore classified as non-current investments in gold. The remaining investments in gold of 28,061 kilograms of Au9999 gold with fair market value of approximately $922.1 million was classified as current assets as of September 30, 2018.

As of December 31, 2017, the total of 26,689 kilograms of Au9999 gold with fair market value of approximately $957.1 million was pledged for long-term bank loans, and therefore classified as non-current investments in gold. The remaining investments in gold of 43,582 kilograms of Au9999 gold with fair market value of approximately $1,562.9 million was classified as current assets as of December 31, 2017.

As of September 30, 2018, the fair market value of a total of 60,654 kilograms of Au9999 gold investments decreased by $77.0 million, which resulted in net unrealized loss of $56.9 million, net of tax for the nine months ended September 30, 2018. The Company recorded the change in unrealized gain (loss) as other comprehensive income (loss), net of tax.