On a related note - those who have already paid and received their shares may of course sell them on GLBSE for whatever they please. While I won't use the going rate on GLBSE to price the 1k shares on May 2nd, I'll definitely keep it in mind when pricing the June shares.

Thanks again, everyone. I couldn't be more pleased with the interest in what I thought was overly-complicated, kludgy, and included a disclaimer that I'm not liable in case of EMP strikes disabling me from allowing BDK to function and pay out as intended.

ETA: Nefario said he'd get around to verifying my identity some time after he wakes up tomorrow (today, for him -- works into the wee hours of the morning improving GLBSE, and the upcoming facelift looks pretty darn slick), fwiw. He already has my ID and a utility bill which he checked out during the spat with Goat.

That was nice and fast. Maybe I under-priced? 


No pre-IPO shares remain unreserved. Remaining 1k shares will be sold @ .055BTC each on May 2nd. After that, 95k shares will remain to be issued at a later time, with the next public offering of 5k shares occurring on June 2nd at a price I haven't figured, yet.

1k of pre-IPO shares remain. Thanks to Nefario & GLBSE team for helping me along the way, answering questions and fixing my screw-ups. 

You can see in detail @ https://docs.google.com/spreadsheet/pub?key=0Ao892S4MOoDZdGZSbjJVd1ZTbFVLZE5aRE95bE91NVE&output=html


%RoE for January (first month of operation) was .22%
%RoE for Feb - .58%
%RoE for Mar - 2.39%
Q1 %RoE - 3.41% (~77.34BTC profits, but with average equity of ~2.25k -- also hadn't begun accepting a large quantity of deposits, yet)
%RoE for April (through the 19th -- should be significantly higher by end of month, and this month saw bad loan write-offs of 84BTC) - 3.6% (~110BTC profits so far)


I believe %RoE for May will be between 7.5% and 10% (possibly lower depending on how quickly I can reinvest capital brought in by this IPO offering), with profits of ~350-400BTC. May should be the month BDK really hits its stride, and I believe %RoE will consistently be ~7.5-10% per month after that. Monthly profits should consistently increase with time as IPOs are put out and profits reinvested. Early purchasers have two fantastic advantages. 1) I will never issue IPO shares for less than I previously issued them. 2) Capital raised from future IPOs can only increase profit potential for earlier shares.


For example:
You buy 5k shares for 250BTC today, owning 4.5% of BDK monthly profits. That 250BTC is immediately invested, and should show returns in ~ a month. We'll say that increases monthly profits from 400BTC to 425BTC.

Someone else buys 5k shares for 300BTC in a month, owning 4.5% of BDK monthly profits -- you still own 4.5% of BDK monthly profits, remember - that didn't devalue. Now, on top of the 25BTC in extra monthly profits your investment brought in, the other person buying 4.5% monthly BDK profits for 300BTC allows for an additional 30BTC of monthly profit for BDK. That 30BTC of profits translates to 1.35BTC increased monthly dividends for you.

This continues on, with BDK shares becoming more expensive and resulting in greater dividends for shareholders.

(9/11/12) BDK is ceasing operations effective immediately due to crushing negative equity. BDK-holders who did not take part of the voluntary recall will receive .02BTC/share under the negative equity provision on 11/26 or ASAP if Nef allows it.



(6/30/12) Current and prospective BDK unit-holders, please read the new contract which will go into effect on September 4th, 2012 at https://bitcointalk.org/index.php?topic=77343.msg999596#msg999596

(7/11/12) BDK suffered massive losses in July as part of a liquidity crisis. Dividends will be "suspended" until early August. Details @ https://bitcointalk.org/index.php?topic=77343.msg1024725#msg1024725

What does BDK do?
The primary goal of BDK is to lend money where needed to stimulate the growth of Bitcoin-associated business. BDK additionally purchases and resells securities as well as invest in various Bitcoin-associated ventures for equity stakes. For details on BDK's finances & operations, go here: https://docs.google.com/spreadsheet/pub?key=0Ao892S4MOoDZdGZSbjJVd1ZTbFVLZE5aRE95bE91NVE&output=html

What is this offering, exactly?
Each share (I'm calling them shares, but this is more of a debt instrument -- it's a share of the profits, but "BDK" does not represent equity) represents .0009% of BDK weekly profit, paid every Monday. I add operating profits, deduct operating expenses, then pay out the amount due to shareholders. After that, I deduct personal expenditure from the amount my shares have earned. Everything leftover goes into BDK coffers. These "units" for sale are non-voting and do not represent equity.

How many shares are being sold?
Up to 5k shares will be sold on the second day of each month (until after the offering on the second day of August, when a new scheme may be in place). 4k shares may be sold pre-IPO, while at least 1k shares will be reserved for the IPO and sold on the open GLBSE market to the highest bidders. There are 100k shares in total. Since each share represents .0009% profit, that means up to 90% of BDK profit will be sold.

I still don't entirely understand how the offering works.
Until after August 2nd, I will be issuing up to 5,000 shares on the second day of each month. Up to 4,000 of those shares can be pre-purchased early. The remaining 1,000 will be sold on the open market through an ask order at the IPO price I determine before-hand. Nobody's guaranteed to get the 1k shares being offered on GLBSE - they go to the highest bidder at the time I place the ask order.

Why don't you sell all the shares at once and get it over with?
Every time I offer profit shares to the public, equity and (ideally) dividends increase. Each month, this means 4.5% of BDK's profits are more valuable than the previous month's. I'm quite familiar with the effects of compound interest and believe this is the best way to move forward most profitably and fairly. While early adopters will almost certainly be rewarded the most, BDK will, by design, always be growing, and doesn't depreciate in value like mining hardware, so the way I'm doing it, everybody should win.

What happens if BDK loses money?
The losses will carry over until the "profit balance" is positive. There will be no dividends until the "profit balance" is positive. The operator may choose to eat the losses and not roll over losses, just pay nothing for the week where there are losses, but that is entirely at my discretion.

How much of BDK's funds are invested in Pirate?
None.  

I don't know if you're credible...
Then don't invest. I'm not desperate for your money. BDK is already operational and I appreciate all my investors, but there is certainly no necessity to sell BDK's profits for more funds up-front -- this only accelerates BDK's growth and ability to positively impact the economy. Eventually, I will initiate a buyback (see the provision in the contract for details) and operate without accountability to anyone but myself. Talk to enough people and I believe you'll find I've always stuck to my agreements and try to be generous while leaving very healthy margins for myself. A few people have my ID, but I'd rather not post it publicly.[/b]


June 2012 Net Income Expectations
Optimistic estimate: 85BTC
Reasonable estimate: 50BTC
Pessimistic estimate: 25BTC
(Guesstimated weekly dividend payouts -- June 4th: 0.0BTC/share Actual: 0.0BTC/share, June 11th - .00063BTC/share Actual: 0.00121358BTC/share, June 18th - .00014BTC/share Actual: 0.000406688BTC/share, June 25th - .00036BTC/shareActual: 0.00023112BTC/share)

GLBSE page: https://glbse.com/asset/view/BDK

Update: July 2nd IPO is next up. There will be no market order, but up to 4k units can be purchased up until the end of July 2nd @ .22/unit for anyone interested.

Contract:
Ben Malec (referred to within this contract as "me," "myself," "I," and "operator") will issue 100,000 shares of "BDK Hybrid Instrument." Each share not controlled by the operator represents .0009% of BDK's monthly profit.  Dividends will be paid every Monday, starting May 7th, 2012. Dividends will not be paid on the first of the month unless that happens to be on a Monday. 100,000 shares will be issued. Up to 5,000 shares are to be sold on the second day of each month for four months, starting on the month of May, 2012. After that time, shares may be issued at will of the operator.

Additional provisions
"Operator Equity" - The operator holds all equity of BDK. Shares are not tied to equity, and represent only .0009% of BDK monthly profits.

"Shareholder Votes, Non-binding Motions" - While motions may be introduced, they are non-binding. They exist only so the operator may gauge opinion of those invested in BDK's success.

"Change of Contract" - The operator is fully permitted to change the contract at will, without consent of shareholders. However, the modified contract is not permitted to go into effect until sixty days after the changes are made public. When the contract is changed, the operator will honor the ability for shareholders to sell shares back to him at a price of .125 Bitcoins per share between the time a change is made and the time 60 days have elapsed since the change was made public.

"Buyback" - At any time, the operator is permitted to buy back shares issued. The operator will pay .64 Bitcoins per share if the operator buys back BDK shares prior to August 3rd, 2012. If August 3rd, 2012 or later, the operator will pay ((.32 Bitcoins + GLBSE 5 day weighted average of trade transaction amount per share of BDK shares)/2)

"Share Value Protection" - If shares trade for less than ฿.01 on GLBSE for at least 168 hours continuously, the operator MUST issue a bid order of ฿.05 in an amount which equals 50% of shares issued not controlled by the operator. The "168-hour timer" does not again reset for 26 weeks after the "Share Value Protection" provision was last called to action.

"Negative Equity and Operator Liability" - BDK is permitted to operate while having negative equity so long as BDK has not had negative equity for 90 consecutive days. On the 90th day of having negative equity, the operator will be held personally liable to pay shareholders $.10/share (or ฿.02/share, whichever value is lesser). In cases where BDK is unable to achieve due to reasons unrelated to BDK experiencing prolonged negative equity (operator experiencing imprisonment, debilitating illness, GLBSE being hacked and made unusable, EMP strikes, police raid, or death, for example), the operator is not liable.

"IPO Value Preservation, Operator Trading" - The operator is not permitted to ever sell shares for less than he previously sold them for. However, he may sell shares for an amount equal to or greater than the amount he previously sold them for at will.

Oddly enough, I've received >$10k in deposits and never registered for the damned thing.

God and friends, fear your life, as mine is unfair and nothingness. I am drunk, causing me to write insubstantial posts. Soon, I will shock you by writing posts which if manifested, would be a frightful hobgoblin stalking Europe. For friends and Bitcoin!

Anymore comments or questions? It's a great time to ask since I can still change the contract around. I'm creating the asset tomorrow and will start offering pre-IPO shares. That way, I can ensure Nef & crew are fine with my ID verification and everything's all set for a smooth IPO.


ETA: Official thread @ https://bitcointalk.org/index.php?topic=77343.0


Locking this one.

I've received as many deposits as I'd like for now.

CDs will now pay 4%/32D, 9%/63D, likely at least until ~ the end of May. I'm not sure whether or not it will increase or decrease in rate at that time -- depends on how loans are doing and how many people renew and how the public offering of BDK monthly profit goes.

The rate change does NOT affect active CDs, and CDs may be renewed at the rate they were originally given at. For most, this is 5%/32D after the rate of all CDs was increased retroactively a month or so ago. Any rate above 5.5%/32D or 12%/63D is NOT permitted to be renewed at that rate (if currently active, however, they'll obviously still pay that at date of maturity). If you have CDs out above that rate, I am willing to renew @ 5.5%/32D or 12%/63D, but not a hundredth of a % higher.

There will be some major shifts in loan diversity in the next few months. Increasingly, I'm getting out of Pirate (will be reduced to 500-1000 BTC on June first -- there's currently ~1.1k with him which isn't insured by a middle-man - total loans out equal ~3.2k), and have interest in buying IPOs again. By lowering CD rates and relying more on selling BDK profits in the future, I'm hoping BDK will be able to offer more reasonable rates to well-known producers.

No... You deposit USD (either with credit/debit card or Paypal, which can link right to your bank and do it instantly once verified), buy SLL on Virwox, then convert to BTC.

Enter "none" -- problem solved. It appears to only be relevant if you intend to deposit/withdraw from within Second Life.

h/t to whoever mentioned that a day or so ago.

https://www.virwox.com/help.php#_Fees

~5% for the two trades you'll need to do, you pay Paypal's fees if you deposit using a credit card (2.9%+$.30 I believe) - though bank transfers (if not using Paypal) are free, plus a withdrawal fee of .02BTC. One USD buys roughly 265 SLL (Each SLL is worth ~$.00377).

Let's say you want $100 of BTC using a credit card (also applies if doing anything else using Paypal). You'd first pay ~$3.20 for the deposit (edit: looking at chmod's post above, add an additional $.30 in Paypal fees since you'd need to send $52 one day, then $48 the next due to very low deposit limits). Now you have $96.80 You then need to convert USD to SLL (I don't think you can purchase BTC with USD, only SLL). That costs you ~$3. You now have $93.80 (technically, 24,857 SLL). Then you convert SLL to BTC, which costs you ~$2.10. It currently costs ~1357 SLL to buy a BTC. $.00377*1357=~$5.116, which is pretty close to the Gox exchange rate. However, you lose ~.3176 BTC simply due to being unable to purchase bitcents. This is effectively a "fee" of ~$1.60, so with the $2.10 fee to convert SLL to BTC, you now only have $90.10. Then you have the .02BTC withdrawal fee, which gives you ~$90 worth of Bitcoins after all's said and done. So, 10% total fee.

//

Edit: Nevermind. I'll quit being an asshole, now.

Thanks! Fixed.

I consider insolvency as having negative equity. However, if profits are enough for BDK to be solvent again (have positive equity) within ninety days, then I will consider insolvency. It was included just so there'd be a set way to handle it in the extremely unlikely scenario it comes up. I don't like debt being very close to the amount of equity due to inviting in scenarios where BDK becomes insolvent, and am very close to my limit, now. Currently, BDK equity equals 3.033k and liabilities due to deposits equals 2.147k (total assets equal 5.187k). I'm looking for ~350BTC more in deposits, then I'm greatly reducing rates. This currently means I could write off ~60% of all loans and still be able to pay depositors without issue.

ETA: editing wording in contract

Contract, version 2.1b (now with content in the Buyback provision!)

Ben Malec (referred to within this contract as "me," "myself," "I," and "operator) will issue 100,000 shares of "BDK Hybrid Instrument." Each share not controlled by the operator represents .0009% of BDK's monthly profit.  Dividends will pay the previous month's profits on the first of each month (i.e. dividends for profits made in March will be issued on April 1st). 100,000 shares will be issued. Up to 5,000 shares are to be sold on the second day of each month for four months, starting on the month of May, 2012. After that time, shares may be issued at will of the operator.

Additional provisions
"Operator Equity" - The operator holds all equity of BDK. Shares are not tied to equity, and only represent only .0009% of BDK monthly profits.

"Shareholder Votes, Non-binding Motions" - While motions may be introduced, they are non-binding. They exist only so the operator may gauge opinion of those invested in BDK's success.

"Change of Contract" - The operator is fully permitted to change the contract at will, without consent of shareholders. However, the contract is not permitted to go into effect until sixty days after the changes are made public. When the contract is changed, the operator will honor the ability for shareholders to sell shares back to him at a price of .045 Bitcoins per share.

"Buyback" - At any time, the operator is permitted to buy back shares issued. The operator will pay .07 Bitcoins per share if the operator buys back BDK shares prior to August 3rd, 2012. If August 3rd, 2012 or later, the operator will pay ((.05 Bitcoins + GLBSE 5 day weighted average of trade transaction amount per share of BDK shares)/2)

"Share Value Protection" - If shares trade for less than ฿.01 on GLBSE for at least 168 hours continuously, the operator MUST issue a bid order of ฿.05 in an amount which equals 50% of shares issued not controlled by the operator. The "168-hour timer" does not again reset for 26 weeks after the "Share Value Protection" provision was last called to action.

"IPO Value Preservation, Operator Trading" - The operator is not permitted to ever sell shares for less than he previously sold them for. However, he may sell shares for an amount equal to or greater than the amount he previously sold them for at will.

"Negative Equity and Operator Liability" - BDK is permitted to operate while having negative equity so long as BDK has not been had negative equity for 90 consecutive days. On the 90th day of insolvency, the operator will be held personally liable to pay shareholders $.10/share (or ฿.02/share, whichever value is lesser). In cases where BDK is unable to achieve due to reasons unrelated to BDK experienced prolonged negative equity (operator experiencing imprisonment, debilitating illness, GLBSE being hacked and made unusable, EMP strikes, police raid, or death, for example), the operator is not liable.

Alright -- here's the new way I'm planning on doing it, for the sake of simplicity. I've stricken tying shares to equity, eliminated the messy "Petty Cash" clause, will simplify the buyback provision, and changed how and when shares will be sold.


On May 2nd, I will be creating 100k shares. 80k of those will be held by me. 5k will be sold each month for four months (5k sold on May 2nd, 5k June 2nd, 5k July 2nd, 5k August 2nd). In total, 20k of 100k shares will be held by non-operator shareholders. Until all shares are sold, the remaining shares to be sold will be held by me.

Every share represents .0009% of BDK's monthly profits. In total, I will be selling 18% of BDK's monthly profits, 4.5% per month for four months. The IPO share price will be arbitrary and set by me. Each month's shares issued will not be issued at a price less than the price they were issued at last month. However, they may be issued at a rate lower than GLBSE market value.

BDK stock in no way represents equity. This was done for legal reasons and for the sake of simplicity. As such, I allow myself to take out of BDK as much as I like for personal use, contingent on BDK always holding equity in excess of 3,000BTC until a buyback is initiated, which will be outlined in the modified contract terms in the post below. Keep in mind any money I use for personal expenses is not counted as a loss in spreadsheets -- if BDK makes a 400BTC profit, and I spend 100BTC on USB humping dogs, shareholders will still be paid as if BDK increased equity by 400BTC. Also note that when I create the IPO, this messy thread will be locked, and a new one created which lists the "in-stone" details of the offering.

Monthly reports will look roughly as outlined below:

Monthly Profit - ฿100
Monthly Non-Operator Shareholder Dividends - ฿18
Dividends/Non-Op-Share - ฿.0009


Income - ฿200
Loan income - ฿150
Sales of bad debt - ฿5
Dividends from equities - ฿40
Equities sold at a gain - ฿5

Outgo -฿100
Interest paid on deposits - ฿5
IBB donation - ฿5
BTC100 donation - ฿.5
Loan write-offs - ฿84.5
Misc - ฿5
Equities sold at a loss - ฿0


(Outside of a new contract which I'll list in a post below -- any comments or questions? Did I leave anything out? I'm expecting to price each share @ .05BTC for the first round. The lending group's been trying to help me classify this, but we're struggling a bit. It's a share, but there are no real voting rights or equity. It's a bond, but the interest is not a flat % of total bonds out, but a variable % of profits. It's a fund, but I own the fund's funds. The working name will be "Klass 'S' Super-Hybrid Instruments")

Not decided for sure on that, yet. Will try to get all the angles figured out within a week and let everyone know.

(This is not a real dividend, but is based on real figures from April halfway in and assumes 30k shares would've been issued [6k would be held by people other than myself] -- this is roughly how things will be broken down on the first of each month)

March 2012

Monthly Profit - ฿91.92268
Earnings/Share - ฿.004064089
Amount of profit paid out to non-operator shareholders as dividend: ฿9.192668 (฿.0015321113/non-operator-share)
Amount of profit which went toward Operator Petty Cash: ฿20 (฿75.3765976 allotted)
Amount of profit which went toward growth: {total} ฿62.7307344 {non-operator shares} ฿7.3541344 (฿.0012256891/non-operator-share) {operator shares} 55.3766 (฿.002307358/operator-share)

Total non-operator growth: 7.3541344 (this number increases each month when 40% of profits are reinvested in BDK as growth and will be repaid by the operator in case of a buyback)
Total remaining Operator Petty Cash: ฿55.3765976 (this is the amount I'm contractually permitted to spend on business-unrelated goods/services)

Income - ฿199.15973
Loan income - ฿144.025
Sales of bad debt - ฿2.1
Dividends from equities - ฿36.36473
Equities sold at a gain - ฿16.67

Outgo - 107.23705
Interest paid on deposits - ฿7.5
IBB donation - ฿5.15675
BTC100 donation - ฿.1045
Loan write-offs - ฿84.31
Misc - ฿10
Equities sold at a loss - ฿.1658

Out of date -- look down a couple posts for how it will look in the revised version.

The 31k shares I keep @ IPO is not value created on paper, as I already have equity in the company in the amount of roughly 3.1k BTC at the time the IPO will be issued. The 31k shares represent money I have already put into the company. I did not want to issue just 9k shares and give the idea that those 9k shares worth 900BTC @ IPO represent the entirety of BDK's equity. Instead, I'm choosing to peg shares directly to BDK equity, which will be 4k BTC at the time the IPO completes (3.1k from me, .9k from those who purchase IPO shares).

The "Executive fee" then, is broken up into two parts, because I also do not want to hint at BDK being any type of legal organization. Under the IPO contract, I am allowed to spend up to the entirety of my shares' split of profits (with how the IPO will work out, this comes to 80% of BDK's total monthly profits). I'm also allotting myself 10% of other shareholders' split of profits as an operator's fee (this works out to an additional 2% of total monthly profits directed to me). With that said, all money I don't spend on personal stuff goes toward growth -- the amount I spend on personal stuff is limited by my shares' split of profits + the operator's fee (in total, this is ~82% of total BDK monthly profits). I think it would be reasonable to expect ~70-85% of my shares' profits (+ the entirety of the "operator's fee") to go toward growth of BDK. BDK funds are, ultimately, my personal funds, and this is the most organized way I could think of offering while making it clear that BDK is not an entity in itself, but represents my personal loans & investments. Doing otherwise would be significantly more legally dubious.

In a buyout scenario (and here's where there's a catch to my shares going toward growth), I will effectively only be paying back the 40% which went toward growth, and the initial value of the shares (which will be averaged against the last trade on GLBSE, so it's an average of "real" value and what the market values it at) -- I keep the 10% operator's fee in case of a buyback.

Maybe the best way to explain my offering is that I'm selling 18% of BDK monthly profits. Now that I'm thinking of it, though, I'm thinking I'll offer three public offerings of ~3k shares each. The first round would value shares @ .1BTC, their "real" worth. In a month or two, I can guage how the market's going, allow people to better see how dividends are set up, then offer another set of 3k shares at a price higher than face value, but which the market will accept.

I think on the first of May, I will issue "fake" stats on what investors would have earned per share. I think that will clear things up better than I can, because I'm struggling to explain.