Golden Bull: Governance Concerns And Questionable Business Value

Apr. 24, 2020 10:34 AM ETBit Digital, Inc. (BTBT)3 Comments
John Gilliam profile picture
John Gilliam


  • DNJR up 1000% three weeks after NASDAQ T12 trading halt lifted.
  • DNJR market cap of $52million w/ revenue of $40k over last 6 months reported.
  • DNJR Peer2Peer lending shut down By Chinese regulators.
  • Roadblocks with new car rental and bitcoin mining pursuits.
  • Fired DNJR executives own 58% of shares outstanding.

Golden Bull Limited (NASDAQ: DNJR) is a Shanghai, China based company that is trading today at a market cap of almost $52 million at today's high despite only generating $40,607 in revenue in the last six months of 2019, the last period for which there has been a report. The company ended 2019 with only $35,000 in cash and its car rental business was likely shuttered for most of the first quarter due to the Covid-19 lockdown that started in China in January. The chart below shows the revenue ($40,606.02) earned by all Golden Bull operations July 1, 2019 through December 31, 2019 - the last period for which the company has reported results.

Period Golden Bull (DNJR) Revenue Reports Per SEC Filings Revenue
January 1 - June 30, 2019 Report $ 4,547,431.78
January 1 - December 31, 2019 Report $ 4,588,038.00
Difference = Revenue July 1 - Dec. 31, 2019 $ 40,606.22

Just a few weeks prior to the Covid-19 outbreak in China, DNJR's stock was halted for several months after the company's CEO went missing (see filing "...the Public Security Bureau has initiated online hunting for Mr. Erxin Zeng, CEO of the Company") and its CFO and other management were arrested by Chinese security authorities on criminal charges related to the company's now shuttered Peer to Peer lending service. The stock reopened for trading March 25 at 33 cents and has since rallied over 1000% to as high as $3.46 this afternoon, equal to a market cap of $51.55 million.

We note that this market cap is based on financial data sources that show 14,899,185 Golden Bull shares outstanding for the period ended December 31, 2019. The company attempted a stock offering at 40 cents per share in October, but NASDAQ halted trading in the weeks that followed that attempt and the final share count for the year indicates that offering did not go through.

DNJR's new management team discussed pursuing a bitcoin mining strategy in addition to the car rental business in a filing (see section titled "the Company's Expertise in Bitcoin Mining" in this filing) in November saying "The Company is planning to purchase bitcoin mining computers in December 2019 when funds are available." Clearly, the shares outstanding (14,899,185) and the $35,000 cash balance reported for year-end 2019 indicate that the stock offering did not go through and this funding shortfall would have left the company unable to pursue the bitcoin mining business in a way that would materially impact their financials.

With the company's only operations now in the car rental business and travel in China still very close to a standstill for most of Q1, we believe that Golden Bull has struggled and will continue to struggle to generate material revenue during the current period. We also believe that the company will have to raise capital to continue as a going concern, but will find that difficult given the NASDAQ's trading halt following the company's last attempt.

We recognize that a stock with such a small float can obviously move substantially higher with no substantive fundamental catalyst, it can do so in a way that is completely disconnected from the trajectory of the company's business and this can continue for days if enough traders decide to play the game. Golden Bull appears to be doing exactly that so we are encouraging investors to take a closer look at the situation before choosing to hold the stock and we believe that even traders entering with eyes wide open should proceed with great caution. Given the economics of the smallish float in play, the stock could run to $4, $5, $10 or pick a number. But we see nothing substantive with the underlying business that would justify any move higher at this point in time as the company's core rental car business most likely has been shuttered for most of the last three months and the bitcoin business did not get the funding they needed to proceed. Additionally, with the company reporting only $35k cash left in the bank December 31 and the company's burn rate we believe that the company will not be able to continue as a going concern absent a capital raise.

The majority of the company's shares are owned by former CEO (Erxin Zheng) and the largest shareholder/board member (Xiaohui Liu), both of whom filings indicate are incommunicado. Mr. Zheng went missing (see here "... several members of Dianniu’s management may have been the subject of such criminal enforcement measures. The Public Security Bureau also has initiated online hunting for Mr. Erxin Zeng, CEO of the Company.") following the Peer2Peer shutdown arrests of fellow DNJR management. DNJR fired (see here - under change in directors) Mr. Liu after trying unsuccessfully to contact him for an extended period of time. The two combined own 8,762,000 shares or 58% of all shares outstanding.

Golden Bull (NASDAQ: DNJR) List of Beneficial Owners
Directors and Executive Officers: #shares % shares outstanding
Erxin Zeng(1) 2,485,500 16.68 %
Jing Leng
Xiaohui Liu(2) 6,276,700 42.13 %
All directors and officers as a group 8,762,200 58.81 %

Given the extremely negative circumstances surrounding the parting of each with the company and the discontinuance of communication mentioned in the filings, we wonder if these shares will soon be (or are already being) sold. Looking at recent trading volumes (particularly Friday's trading volume of 11.75 million DNJR shares) we wonder if the reported public float of 3.5million shares may be a little stale and note that a move to liquidate these two fired executives' holdings would more than triple the public float.

In summary, with Golden Bull only able to deliver $40k in revenue for six months of a normalized environment (pre-Covid-19 shut down) for what will be their core operations going forward, we wonder how much they possibly could have done with the region they serve under lockdown due to the Covid-19 travel restrictions in place starting in January. Additionally, given that the company started January with only $35k in cash, we wonder how the company is able to fund operations generally. And the question of valuation - should investors pay current prices that could ultimately equate to a guano crazy 1000x+ trailing revenue to invest in DNJR? We believe these questions, plus the answer to whether the true public float has been increased by stock sales from the former CEO and board members selling should be understood before anyone should seriously consider making an investment in DNJR shares.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

This article was written by

John Gilliam profile picture
John Gilliam holds a BBA from Millsaps College and a JD from the Cumberland School of Law. He is the manager of Point Clear Strategic Holdings in Point Clear, Alabama. Point Clear Strategic Holdings is a value oriented activist investment group seeking opportunities in small cap technology companies. Visit: Point Clear Strategic Capital (

Disclosure: I am/we are short DNJR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: :My intent in publishing this article is to inform investors about developments related to Golden Bull Ltd (DNJR). I did not and do not intend to suggest any specific action by any investor or shareholder and strongly suggest that any decision made to buy or sell shares of this stock be made after consultation with an investment advisor as to the suitability of such an investment. I intend to establish a small short position in DNJR today in personal accounts. I may buy or sell shares at any time based on market conditions and the trading price of DNJR.

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