Business Context and Reporting Period
This Form 6-K filing by Golden Bull Limited (d/b/a Bit Digital, Inc.) covers the month of December 2019. The report addresses a Nasdaq trading suspension initiated on November 11, 2019, following the company's disclosure of a criminal investigation into its Chinese variable interest entity, Shanghai Dianniu Internet Finance Information Service Co., Ltd. (Dianniu), regarding suspected illegal collection of public deposits. The filing outlines the company's strategic pivot away from its suspended P2P lending business toward car rental and Bitcoin mining operations.
Key Financial Metrics
The filing text does not provide specific historical financial data such as revenue, profit, cash flow, margins, debt, or liquidity for the reporting period. The document focuses on operational developments and future plans rather than past financial performance.
Material Changes and Operational Developments
- Regulatory Action: The Shanghai Public Security Bureau completed its investigation into Dianniu, taking criminal enforcement measures against 17 suspects, including detaining 6. This resulted in the shutdown of the company's P2P lending business in China due to government policy changes.
- Business Pivot: Management asserts that the company has been preparing for a transition since March 2018, leveraging experience from its P2P auto-loan business to enter the car rental and financing lease sector.
- Car Rental Expansion: The company has signed a contingent purchase contract for 145 cars. It plans to open 12 offices in China's east coastal areas (Yangzi and Pearl triangle regions) and expects to incur $2.4 million in incentive and rebate expenses for the year ended December 31, 2020.
- Bitcoin Mining Entry: In October 2019, the company decided to enter the Bitcoin mining business. It plans to purchase efficient mining computers in December 2019, contingent on fund availability, citing advantages in bulk purchasing discounts and access to cheap electricity.
Guidance, Outlook, and Risks
Outlook and Guidance: Management projects $2.4 million in sales incentives and rebates for the 2020 fiscal year related to the car rental business. The company anticipates profitability in Bitcoin mining based on a clear business model and operational efficiencies.
Risks and Contingencies:
- Liquidity Constraints: Key operational milestones, including the purchase of 145 cars and Bitcoin mining hardware, are explicitly contingent on the company obtaining required funds.
- Regulatory Risk: The suspension of trading and the criminal investigation into the VIE highlight significant regulatory risks associated with the company's operations in China.
- Execution Risk: The success of the new business lines depends on the ability to secure financing and execute marketing plans in competitive markets.
Investor Verification Checklist
- Verify the current status of the Nasdaq trading suspension and any ongoing regulatory proceedings regarding the Dianniu investigation.
- Confirm the company's current cash position and ability to secure the funding required to execute the contingent purchase of 145 cars and Bitcoin mining equipment.
- Assess the progress of the 12 planned car rental office openings and the actual deployment of the sales team in the targeted Chinese provinces.
- Review the specific terms of the contingent purchase contracts for vehicles and mining hardware to understand potential liabilities if funding is not secured.