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Author Topic: [Havelock][KCIM] Korb Investments – Establishing my Investment Firm, part 1  (Read 30649 times)
Korbman
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October 21, 2012, 05:39:47 PM
 #1

Important Update

Noted below is a culmination of several weeks of thought. I've been trying to figure out what the best course of action is in such a turbulent, and slowly centralizing, mining environment. What I've put together represents my thoughts on where we stand and my concerns going forward, but more importantly I'd like to hear from the community.

Formatted PDF Version: https://drive.google.com/file/d/0BxnW49twNMNbZlVRN3Y1WGZXYTQ/edit?usp=sharing


Quote
Previous Thread: https://bitcointalk.org/index.php?topic=112232.0


Ladies and Gentlemen, recently I’ve been seeing that many funds are closing down and liquidating, while others switch to Litecoin mining. With the lack of a prominent exchange and concerns of legality, there’s been a stifling of Funds within our community. It’s a shame to see this all happening just as we began to experience the interesting businesses and creativity that resulted because of a well known Securities Exchange.

I, however, am not normally deterred by such circumstances. I’ve been determined to see my idea through. Instead of letting it fall by the wayside, I’ve reinvigorated my company, changing the corporate structure, writing formal documents for use within my Fund, and updating my old website.

As a result of my persistence, I’m proud to announce my new partnership with Havelock Investments [HavelockInvestments.com] for hosting the renovated, more formal, Korb and Co. Investments Mining Fund [KCIM]!

Most of the posts below this one will be similar to what we saw on my old thread, except now we have formal documents, a website, and greater detail!


NOTE: I figured I should make this clear in the introductory post…this is not an “invest for a perpetual GH/s amount” fund…this is not an “I pay a billion percent per week or month from my Ponzi” fund. This Fund is a “Put money in now, wait 6 months, receive more money back plus monthly interest”. In other words, a short term investment (mostly under 1 year).


!!IMPORTANT!!
After discussing my options with Lightbox (Site Manager of Havelock Investments) and a few of the members on this forum, I have decided to take some advice and limit my Fund a bit. Due to current market conditions and the unease amongst the investing community, I have cut my current market cap from 50,000 to 10,000 Notes, which will allow for the purchase of 2 Mini Rigs. If market conditions improve and the Fund does well over the next two months, I will increase the market cap with another offering.

I have updated all contracts and financials accordingly. Financially, instead of buying back 30% of Notes per month when the time comes, it is actually more feasible to purchase 25% at a time. This means a greater return for investors as they won’t have as many of their Notes purchased back at a time, thus more interest on outstanding principal.

As of 12:00pm (noon) today (October 26th, 2012), my Fund will officially be live! The initial offering has been established for November 1st, 2012 at 9am. This offering will continue until 4pm on December 31st, 2012 or until all Notes are purchased. During this time, all Notes can be purchased for 1.0 BTC each. Interest will begin to be paid to holders on the last day of November.

The sooner investments are made, the sooner I can submit my orders for the mining equipment!

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Korbman
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October 21, 2012, 05:40:08 PM
 #2

Fund Overview:

With the upcoming Butterfly Labs ASIC rigs (set to be launched November 2012), Hashes / sec will begin to make the transition from GH/s to TH/s for typical miners over the next 12 months. Basic devices are set to start out at 4.5GH/s, while full mining rigs will go up to an astounding 1.5TH/s.

To start, I'm looking to make an initial purchase of 2 BFL SC "Mini-Rigs" (highest end @ 1.5TH/s apiece). At the current price of $30,247USD each ($29,899 + $348 shipping), purchasing 2 rigs amounts to $60,494USD, which is a substantial goal to meet under some of the best financial circumstances. If the Fund proves to be popular, the market cap will ultimately be raised back to the original goal of $375,000 for the purchase of 5 Rigs in total.

To reach my initial equipment requirements, I am issuing 10,000 Notes, priced at 1BTC apiece with a buyback period starting at in June 2013 (Four [4] months after rigs are released to market, Two [2] after assumed arrival time) and extending to April 30th, 2014 (based on funds available).

Each Note will have a Coupon Rate of 1% per month until June 2013, during which the rate will increase to 2%, until January 2014 when it goes to 4%. In April 2014, the Rate will increase one last time to 6% to pay back the final Note holders.

The starting buyback price will be 1.10BTC for the first 6 months (June - December 2013), 1.15BTC for 3 months (January 2014 - March 2014), and 1.20BTC for the last month of April. This would mean a 17 month holding (November 1st, 2012 to April 30th, 2014). The largest Note Holders will receive the most return on investment as their holdings will last the longest.

This is all possible as a result of 25% (calculated as the most efficient percent for now) of all remaining Notes being purchased back during the Buyback Period per month. For example, if all 10,000 Notes are in the market during June, then 2,500 Notes will be purchased back, followed by 1,875 during July, and so on. This will continue until April 2014 when all remain Notes will be purchased back with maximum Coupon Rates and Buyback price.

If substantial funds remain during the final 3 months of 2014, up to 75% of all profit will go to current Note holders in the form of a further increased Coupon Rate and Buyback price. The remainder will be reinvested in the company.

Assuming the Bitcoin market stays in stable state during the next 12 months after the transition from GPU/FPGA to ASIC mining and the reward split in December 2012, mining at 7.5TH/s is set to have a payback period of around 6-8 months. This includes accounting for a substantial difficulty increase (1400%), a total network hash rate of 350TH/s, and 25BTC per block. Realistically, the hash rate will start off around 200TH/s and increase to 500TH/s over 12 months.

Ticker Symbol: KCIM
Fund Location: Havelock Investments [HavelockInvestments.com]
Company: Korb and Co. Investments, LLC
Notes to be sold: 10,000
Price (ea.): 1.0 BTC
Monetary Goal to Raise: $80,000 [Any extra funds beyond equipment needs can be used for Early Buybacks]

Blog, Twitter, Forum, and Email
Email: AKorb@korbinvestments.com
Website: www.korbinvestments.com
Twitter: A_Korb (though admittedly I barely ever use twitter)
Blog: www.korbinvestments.com
Google Docs Accounting Info: https://docs.google.com/file/d/0BxnW49twNMNbWlRPV29JZ25HdlE/edit?usp=sharing
Forum Thread: https://bitcointalk.org/index.php?topic=119628.0

Korbman
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October 21, 2012, 05:40:41 PM
 #3

As of December 8th, 2013, the information noted under [OLD] has been voided as a result of switching to a Revenue Sharing model.


[NEW]
::: IMPORTANT NOTE :::
______________________________________________________________________________

As of December 8th, 2013, Korb and Co. Investments Mining Fund has been restructured as per popular vote.
This means KCIM is no longer based on Secured Promissory Notes, and instead has been switched to a Revenue Sharing model.

All previously agreed upon updates, contractual arrangements, and amendments (noted on HavelockInvestments.com, KorbInvestments.com, or on the BitcoinTalk.org forums), have been voided as they no longer apply to the current model of the fund.
______________________________________________________________________________


::: Korb and Co. Investments Revised Agreement :::

Summary:
The Korb and Co. Investments Mining Fund is a small Vermont based operation that provides bi-weekly dividends based on net income from ASIC mining.

Share Details:
There are currently 86900 units outstanding. To stave off dilution, this number will not increase unless a supermajority of votes (viewed as greater than two-thirds) agree to release additional shares. Each share represents a proportional amount of ownership of all mining equipment, granting a similar fraction of the mining net income for each two week period.

Dividends:
The current dividend model is set to distribute 75% of all net income with the remaining 25% set aside for hardware purchases.
Payments will be made every two weeks.
As the network difficulty increases, bi-weekly dividends are expected to decrease until new hardware comes online. The dividend, however, will always be a minimum 0.000025 BTC per two week period for as long as the fund is able to continue its operations.

Purchases:
Hardware purchases will be made solely at the operators discretion. I will always use all available information to make the most logical purchasing decision, including accounting for efficiency, hashing speed, price, size, and the manufacturer's reputation.

Voting Rights:
Each share represents one vote.
For any proposed general motion, a minimum of 60% of all submitted votes must agree with the change.
For any proposed motion pertaining to an increase in fund units, a minimum of 67% of all submitted votes must agree with the change.

Changes:
Any changes to the fund and/or agreement will be voted on prior to going into effect.

Dissolution:
In the event the fund is required to cease operations, either through insolvency, legal force, or an extraordinary circumstance that leaves the operator unable to continue their duties, all mining equipment will be auctioned to the highest bidder(s). Proceeds from the sale, in conjunction with any remaining funds, will be distributed to all investors as a Final Dividend.






[OLD]
Quote
Contracts:

Here’s where we get serious.

The previous contract I had created…though more substantial than most other funds…wasn’t cutting it from my point of view. As a result, I spent about a month drafting, revising, and fine tuning new documents that will help to cover all bases.

The contracts and informational documents I’ve created have one ultimate goal: To Ensure I’m Held to High Standards

To that end, I will link each document in this post and then give an explanation of what the document entails in normal “conversational” speak, compared to the formal language I used when writing up each one. Under each contract area I will denote ‘Section Numbers’ that will correlate to the section in the document. It would probably make the most sense if you read (or reference) the docs so the answers I provide make sense Tongue

NOTE: Each of these documents can be found on my website under the “Investors Area” as well. I reserve the right to modify/update them until the day before the public offering of the Fund.



Letter of Intent
Revision 4.0 – Last updated October 25th, 2012
Though the Letter of Intent may resemble a contract, it’s actually a legally non-binding document that sort of acts as a prelude to my General Agreement. In this case, it’s to give a brief overview of my obligations and what I expect of Investors as well.

Section #:
1.   The proposed transaction lays out details of what is expected from both parties. Essentially saying that after purchasing into the fund I will provide all documentation and manage everything to the best of my ability under any circumstances.
2.   Each transaction (“share”) is valued at 1.00BTC and held in the fund.
3.   The idea here is to invest with the fund before the end of December 2012 (so I can have a solid understanding of how many Notes are left, publicly held, etc). [NOTE: I may extend this date out by a month depending on the general market sentiment].
4.   Essentially states that if you agree to the proposed transaction, then I know you’ve done your due diligence.
5.   States that you will notify me when ready to proceed…but this isn’t necessary since it’s all based on a Fund.
6.   The document is non-binding, but references to the Final Agreement, which is in the Secured Promissory Note agreement.
7.   If you want to know anything about the Fund or my Company, ask and I’ll fill you in.
8.   No matter what happens, we each cover our own expenses.
9.   Again, not legally binding and you can withdrawal at anytime (essentially just not investing in the Fund).



General Agreement
Revision 4.0 – Last updated October 25th, 2012
This is the contract leading up to the Note. The premise here is reaffirming what was stated in the Letter of Intent, but instead as a legally binding document.

Section #:
1.   Describes my Obligations to investors, including transparency, Fund and Company management, and promise fulfillment.
2.   Describes what I am expecting of Investors. Obviously, investing in the Fund is a key part here (otherwise none of these docs would apply to you). IF you are looking to purchase 1,000 or more Notes, I ask for your identifiable information (name, address, phone, etc). The ONLY PURPOSE for this is to make sure my top investors are taken care of first. I want to make sure that I know who you are just as you know who I am, and in case anything goes wrong I know who to get in touch with as quickly as possible.
3.   States that I [Andrew Korb] will represent my company in all dealings.
4.   If an event happens that is outside of either party’s control, neither is liable. Notify the other party of the impact as a result of the event and make a reasonable effort to maintain obligations.
5.   Since I live in Vermont, I will abide by the laws of my State.
6.   No changes to the agreement will be made unless otherwise agreed upon.
7.   Rights/obligations within the agreement can’t be transferred between people unless agreed upon.
8.   The Bitcoin address you use when investing counts as a signature, agreeing to the documents I’ve laid out.
9.   If something happens that makes part of the contract illegal or invalid, the rest of the agreement will continue as long as feasibly possible.
10.   If you want to talk, there’s a ton of different ways to do so.
11.   Nothing can be cancelled unless we both agree on it.
12.   States that this document is agreed upon and you weren’t forced into it.
13.   [Self-explanatory]
14.   Once you invest, the agreement becomes effective.
15.   We’ll both try our best to be awesome.



Secured Promissory Note
Revision 4.0 – Last updated October 25th, 2012
As the Core of the Fund, this contract is the most important because it assigns legally binding obligations to ME and only ME. Each “share” of the Fund is in effect a ‘Note’, granted by this contract.

Section #:
1.   I promise to pay back the original principal plus interest to the Bitcoin Address that you provide me or otherwise update during the lifetime of the Note.
2.   Prior to March 1st, 2013, monthly coupon rates are 1% and distributed on the last day each month. From March through September, the rate increases to 2%. From October through November, it goes up to 4%. Finally in December it goes up to 6%. Interest isn’t distributed on principal already paid. If for some reason I am not able to maintain stable payments (Force Majeure, “Acts of God”, or otherwise), I reserve the right to modify the interest rate to reflect the current circumstances (higher or lower, but will never go below the minimum) as a last resort to maintain financial stability and payments to investors.
3.   I will start paying the principal back after February 28th, 2013 on the first day of each month, starting at 1.10BTC from March through September. October through November warrants a 1.15BTC Note buyback. December through the beginning of January increases the buyback to 1.20BTC per Note, and all Notes will be bought back by then. If for some reason I am not able to maintain stable payments (Force Majeure, “Acts of God”, or otherwise), I reserve the right to modify the principal rate to reflect the current circumstances (higher or lower, but will never go below the minimum) as a last resort to maintain financial stability and payments to investors.
4.   First interest payment is the end of November, and the first principal payment is the first of March 2013.
5.   Should I have excess funds, I reserve the right to buyback any outstanding Notes before maturity (March 2013) at a rate 1.005x the Par Value [1.00 BTC].
6.   Everything will be paid back and finalized by or before the last day of January 2014.
7.   Details of how the Secured Promissory Note is “Secured” are detailed in the Security Agreement.
8.   In the event of default the Investors are notified….
9.   …and everything is liquidated to pay them back.
10.   In short – I mess up, I can get sued.
11.   [Self-explanatory]
12.   This agreement applies to any successors should something happen to either Party.
13.   If you want to talk, there’s a ton of different ways to do so.
14.   I’m abiding by the laws of my State.
15.   This Note is the Final Agreement, superseding all others.
16.   Just because the Investor doesn’t do anything, doesn’t mean they gave up their right.
17.   I’ll cover any costs associated with Investors getting their payment.
18.   If something happens that makes part of the contract illegal or invalid, the rest of the agreement will continue as long as feasibly possible.
19.   [Self-explanatory]
20.   [Not a Section] – By investing in the Fund, your Bitcoin Address represents your signature, stating your agreement to the terms herein.



Security Agreement
Revision 3.0 – Last updated October 25th, 2012
This is sub-agreement to the Secured Promissory Note, detailing how the assets purchased with Investor funds will be “Secured”.

Section #:
1.   Investors have a secured interest in all assets (inventory, equipment, etc) purchased as a result of the Note. I value the 2 Mini Rigs at the Fund value of 10,000 BTC, which I am obligated to secure.
2.   The collateral will be kept at a datacenter (TechVault) near me unless otherwise not feasible (financially, logistically, or as a result of outside influence). I will not do anything with the assets unless agreed upon. I will maintain all assets to the best of my ability.
3.   Should the Company go into default, the assets will be liquidated to cover Investor expenses.



Amendment to the Secured Promissory Note
Revision 2.0 - Last updated December 30th, 2012
This is an amendment to the Secured Promissory Note, detailing the payment schedule changes and extensions as a result of ASIC manufacturer delays.

Section #:
1.   States that this is the first amendment to the original contract. I briefly describe the purpose and reason for the change, noting Third Party influences (delays) and current financial infeasibility.
2.   Here is where I describe the changes I propose, which focuses on the second and third sections of the original contract.
...a.   Interest at 1% has been extended by three [3] months, going from November 2012 to the end of May 2013. Interest is at 2% from June 2013 to the end of December 2013. Interest is increased to 4% from January 2014 through March 2014. Interest is increased one last time to 6% for the final months of April and May (though everything should be purchased back in April).
...b.   Principal payments no longer begin in March 2013. Instead, they have been pushed back to June 2013, where they start at the normal 1.10BTC per Note until the end of December 2013. January 2014 starts the purchase at 1.15BTC per Note, and April 2014 marks the final purchase of 1.20BTC per Note.
...c.   An error in the third section has been corrected to note that the Principal rate (previously said “Interest”, which voided that part of the section) will never go below the minimum, which is 1.005x the Par Value (1.0BTC).
3.   The Amendment is valid as of January 7th, 2013, which marks seven [7] days after I give notice (as per the original contract).
4. In the event of a conflict between the original document and the Amendment, the Amendment governs.
5. The other unchanged parts of the original contract are still valid.
6. The original document and the included Amendment now constitute the Final Agreement.
7. This Amendment may be modified after agreeing with both parties.
8. In the event of illegality, unenforceability, invalidity, etc, the remainder of the contract and its Amendments are still valid.
9. Electronic communication (or other forms of communication) is valid statements of agreement, recognized in the same effect as a signature.
10. You confirm you have the power to agree and bind to the contracts outlined.
11. [Self Explanatory]



Second Amendment to the Secured Promissory Note
Revision 2.0 - Last updated April 15th, 2013
This is the second amendment to the Secured Promissory Note, further detailing the payment schedule changes and extensions as a result of ASIC manufacturer delays.

Section #:
1.   States that this is the second amendment to the original contract and overrules the first amendment. I briefly describe the purpose and reason for the change, noting Third Party influences (delays) and current financial infeasibility.
2.   Here is where I describe the changes I propose, which focuses on the second and third sections of the original contract, but changes are also made to the fourth and sixth sections (which should have been changed before to make sense with the later Amendments).
     a.   Interest at 1% has been extended indefinitely, essentially meaning I will keep paying it until we receive our equipment or I choose to buy back the Notes early. Interest is at 2% starting 2 months after receiving the equipment. Interest is increased to 4% 10 months from the receive date. Interest is increased one last time to 6% for the final months, concluding 14 months after receiving the equipment.
     b.   The minimum Interest rate has been lowered from 1% to 0.5% to grant the Borrower flexibility during extreme financial pressure or other unforeseen events.
     c.   Principal payments no longer begin in June 2013. Instead, they have been pushed back indefinitely, being 100% contingent on when the equipment is received. Two months after receiving the equipment, the previous schedule resumes, where they start at the normal 1.10BTC per month for 7 months. After which starts the purchase at 1.15BTC per Note lasting for 3 months, and the next two months after that marks the final purchase of 1.20BTC per Note.
     d.   The fourth section has been updated, specifically to reflect the change in the Principal payment schedule.
     e.   The sixth section has been updated to reflect the change in End date.
3.   The Amendment is valid as of May 1st, 2013, which marks greater than seven [7] days after I give notice (as per the original contract).
4.   In the event of a conflict between the original document and the Amendment, the Amendment governs.
5.   The other unchanged parts of the original contract are still valid.
6.   The original document and the included Amendment now constitute the Final Agreement.
7.   This Amendment may be modified after agreeing with both parties.
8.   In the event of illegality, unenforceability, invalidity, etc, the remainder of the contract and its Amendments are still valid.
9.   Electronic communication (or other forms of communication) is valid statements of agreement, recognized in the same effect as a signature.
10.   You confirm you have the power to agree and bind to the contracts outlined.
11.   [Self Explanatory]

Korbman
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October 21, 2012, 05:41:07 PM
 #4

Risks and QA:

Risks and Compensation for Investors:
The object here is for me to pay my investors first. They put their hard earned (or mined) money with me, so the least I can do is pay them back in the most efficient manner.
Profits – Investors receive the first cut of any profits. Substantial profits as a result of the equipment will result in increased Buyback and Coupon Rate percentages.
Adjustments – The financial state of the company will be adjusted in the event that our Monetary Goal is not reached for the purchase of Two [2] BFL SC “Mini-Rigs”. Meaning, if I can’t afford 2, then I’ll buy as much as I can that still results in a stable financial sheet over the course of 17 months (November 1st, 2012 to April 30th, 2014).
Fund Failure – In the event that not enough money is raised for any purchases [or if the IPO is no longer feasible given extraordinary circumstances], I plan on buying back Notes at a rate 1.005x the Par Value (initial purchase price).
Transparency – All investors will have access to financial statements and documents regarding the progress of the Parent Company and Notes over the course of the asset’s lifetime.
Risk – All investors, whether in the actual New York Stock Exchange or the guy lending you $20, assume a certain degree of risk. As proprietor of the Notes, it is my job to try and minimize risk. As the investor, it is your job to understand the risks you take.



QA:
I freely admit that I am basing these questions off of Friedcat’s post (https://bitcointalk.org/index.php?topic=99497.0). I thought they were well written and addressed many of the questions a typical investor might have, so why not use them as well  Smiley

Q: Wait, what? What’s a “Note”?
A: A Note is similar to a Bond in that they both pertain to taking on debt for company purchases. A Bond is typically used to finance a large corporate purchase, has a maturity date of over 10 years, and is typically underwritten by an investment bank.

A Note, on the other hand, has a maturity date greater than one year but less than 10, does not need to be underwritten when under $1.5 million in requested funding, and does not need to be registered by the SEC (here in the US) when designed as a Secured Promissory Note. For this reason, a Note is much more aptly applied to my fund compared to a Bond or a Bill (secured debt with a maturity date established for less than one year).

Q: Really? Another Mining Equipment Fund? Why…
A:  I’m not entirely sure why there is so much resentment towards these sorts of Notes. A stock is issued to help grow a company; a Note is issued to help with purchases for said company, particularly for equipment.
 
In all honestly, mining equipment is the easiest way for me to build capital for my firm. Though my revenue stream would be based around block difficulty and BTC/USD value, it will still prove to be relatively stable over the coming year or two. I wrote an analysis on the feasibility of ASIC devices after a mass switch from FPGA, difficulty spike, and reward split, and as it turns out my idea is still quite profitable.

Remember, I’m not trying to be a “one trick pony” here. The object is to build my firm. Once that is set, profits from mining will be folded over into dividends for eventual stock holders.

Q: An investment firm, eh? What do you plan on investing in?
A: There are actually a ton of ideas flowing through my head when asked this. My favorite investments are in technology, clean energy, and property/land. I plan on creating various investment portfolios over time that deal with all of these. I plan on creating portfolios that deal with things like microfinance (through companies such as Kiva [kiva.org], or Lending Club [lendingclub.com]). You name it, if it looks like a solid long term investment, then I will consider it.

In other words, the ‘Too Long; Didn’t Read’ version is:
•   Portfolio Management
•   Venture Capital
•   Microfinance
•   Property Management
You can visit my website [KorbInvestments.com] to learn more.

Q: Is your company actually real?
A: As a matter of fact, all of the paperwork has been filed and approved, so Korb and Co. Investments is a Limited Liability Company in the State of Vermont.

To that end, I am also currently abiding by all United States Federal and Vermont State laws (where I live). I have also spoken to a public finance lawyer and a business attorney regarding my plans. In short, there shouldn’t be any issue with gathering virtual funds to cover mining equipment costs. This is because A) I’m working 100% in bitcoins (which do not meet the SEC’s definition of a security under current government regulations), B) I’m creating a secured Note to finance the company equipment, and C) my total funds are under $1.5 million. As a result, I shouldn’t run into any problems with the SEC or FINRA because a Secured Note at this value does not need to be registered by the SEC or underwritten by an investment bank.

Q: What about a Securities and Exchange Commission crackdown and regulation change? How would your company and fund react?
A: In the event of a SEC crackdown, I would have a 30 day grace period (soon to be extended under the JOBS Act) to file for a Regulation A exemption. To qualify as an Investment Company, I would need to have more than just “Investments” in my company name. I would also need an investment business plan and I would need to file regulation paperwork to the SEC and to FINRA. If I don’t qualify for Regulation A, I would need to file for a Regulation D.504 exemption instead, which would allow for my existing fund to continue because of its small size.

Q: Why should I trust you?
A: Trust isn’t given, it’s earned. I hope that by letting my investors in on the entire business plan, letting them know who I am, and letting them see what I am doing, they’ll see that is in an actual investment. I want to establish myself as a reputable Financial Manager, and I can’t do that if I go around scamming people  Cheesy

Q: Any other company owners?
A: Nope! I’m the sole owner. This means I have the flexibility to make all of the decisions. If any investors have a particular idea or request, I’d be happy to hear them out!

Q: Are you qualified to run a fund?
A: Technically anyone can run a fund, regardless of experience. I’d like to think I’m a bit ahead of the curve because of my investing background and business familiarity.

Q: Why start your fund before ASICs are on the market and tested?
A: The object is to have funds available and preorders in before the devices are released to market. This way, we can get our Rigs and start mining earlier than others. Otherwise, the Buyback period would need to be extended to compensate for the later delivery dates.
As for whether or not the ASIC Rigs will perform as promised, I trust that they would. Butterfly Labs has proven with their FPGA devices that the specs promised were also delivered. I don’t see why they would lie about their new ASIC products. Plus, imagine the outrage when $150,000 of equipment doesn’t do what it was promised to do!

Q: Why not look toward borrowing money for this venture?
A: I’m pretty sure most lenders would laugh at me while I described making money through mining bitcoins  Undecided ..Not to mention the extensive process, fees, and APR would lead to an unfeasible project…and all the process of explaining what a “Bitcoin” is!

Q: What is your fundraising target?
A: In USD, it would be around $80,000, which is equal to raising all 10,000 Notes at a market rate of $8.00. This would more than cover the cost of equipment and electricity, pay initial Coupon Rates until mining is fully underway, and have enough left over for Buybacks before the March 2013 ‘official’ buyback period.

Q: Why 10,000 Notes at 1BTC each?
A: Sort of an arbitrary number I suppose, but I knew that I wanted more than enough funds by the end of the sale to cover all costs. Not to mention I like working with Integers, so 1BTC each kept things steady.

Q: $60,000 in ASIC assets is quite substantial. How will you secure it?
A: One of the perks of working as a SysAdmin is getting to know people who work in datacenters. The equipment would be run and stored in the center for a monthly price. Under most datacenters, equipment is insured against theft, fires, floods, and/or any other destruction. If anything happens, the insurance would cover the cost of replacing the equipment.
In the event that a datacenter cannot be secured under contract, I will personally run them at my office and purchase equipment insurance to have them covered.

Q: So for each Bitcoin I invest, what sort of return am I looking at?
A: That all depends if your Notes are bought back 100% before the initial Buyback period, or if you make it all the way to April 30th, 2014. HOWEVER! It fully depends on how many Bitcoins are invested in the fund and what the Buyback rate is currently set to (which is 25% at the moment). If you only have 1 Note purchased, then you're looking at achieving the minimum.
Minimum: You’re looking at Seven [7] months of 1% coupon earnings before the Initial Buyback, plus the 1.10BTC June buyback. So that would leave you a return of 17% (1.17BTC on a 1BTC investment).
Maximum: For a full 17 month holding, your return is largely based on how much is invested. To make the full 17 months, the minimum of 36 Notes need to be purchased.

To view my ROI calculator, go here: https://docs.google.com/spreadsheet/ccc?key=0AhnW49twNMNbdDZYUWpjNW93NVJVM0ZKQ3kxVDc2b2c
To edit, you will need to download the spreadsheet and change the starting amount. From what I've [re]calculated, the average for a 14 month holding (before any profit sharing) is approximately 21%.

It is key to remember, however, that this is all calculated under the best circumstances. If Butterfly Labs isn’t able to deliver their products (or is substantially late like the FPGAs), then I will modify the Buyback timeframe to reflect such instances. The same goes for Coupon Rates and actual hashing rates. If the difficulty absolutely skyrockets past even my predicted ‘worst case scenario’, then the Coupon Rate and Buyback costs will reflect as much.

Q: How can I contact you with questions?
A:  Either via my email [AKorb@korbinvestments.com], through the forum PM system, or directly on this thread.

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October 21, 2012, 05:41:35 PM
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[Company Docs and Links]

December 30th, 2012:
Contract Amendment -- Secured Promissory Note: https://docs.google.com/open?id=0BxnW49twNMNbSVhHamJkZ1VtZmM


January 10th, 2013:
Here's a sneak preview to the Company Financials. If anyone has any changes they'd like to see, or corrects to add, please let me know. It's always nice to have a second set of eyes while combing over the data.

Company Financials   <--- [Not so..] Regularly updated


April 15th, 2013:
Second Contract Amendment -- Secured Promissory Note: https://docs.google.com/file/d/0BxnW49twNMNbX01vV0ZmSVN0N0k/edit?usp=sharing

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October 21, 2012, 05:41:56 PM
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[Updates]

October 22nd, 2012
Updated my Network Analysis from August to incorporate new data released by BFL, Avalon, bASIC, and a new average of mining pool worker speeds. As I expected, there was nearly a 70TH/s increase from my original minimum of 150TH/s, up to 217TH/s now. As a result, I've updated my financials to reflect profitability at a rate of 350TH/s (I try to maintain over a 100TH/s difference to ensure profitability can be achieved at much higher difficulties).

Due to the increase, I've reduced my buyback percentage from 32% per month to 30%, which maintains a stable balance sheet.

EDIT: October 24th, 2012 -- Updated my October Analysis to include the new data BFL posted for their preorders, including the "Mini Single".

Here's my latest October Analysis.
Here are my updated Company Financials.




October 26nd, 2012
After discussing my options with Lightbox (Site Manager of Havelock Investments) and a few of the members on this forum, I have decided to take some advice and limit my Fund a bit. Due to current market conditions and the unease amongst the investing community, I have cut my current market cap from 50,000 to 10,000 Notes, which will allow for the purchase of 2 Mini Rigs. If market conditions improve and the Fund does well over the next two months, I will increase the market cap with another offering.

I have updated all contracts and financials accordingly. Financially, instead of buying back 30% of Notes per month when the time comes, it is actually more feasible to purchase 25% at a time. This means a greater return for investors as they won’t have as many of their Notes purchased back at a time, thus more interest on outstanding principal.

As of 12:00pm (noon) today (October 26th, 2012), my Fund will officially be live! The initial offering has been established for November 1st, 2012 at 9am. This offering will continue until 4pm on December 31st, 2012 or until all Notes are purchased. During this time, all Notes can be purchased for 1.0 BTC each. Interest will begin to be paid to holders on the last day of November.

The sooner investments are made, the sooner I can submit my orders for the mining equipment!

EDIT: We're Official!



November 1st, 2012
Ladies and Gentlemen, we are LIVE! The offering has officially started!



November 2nd, 2012
Forum user Aahzman has pointed out an error in my ROI calculations and they have been updated accordingly. Because of the current buyback method, a set percentage of Notes will be purchased back from EACH user per month. What this means is that I should have done a weighted ROI calculation based on how much was purchased back per month, etc. As a result, your ROI varies based on how much was invested.

I've created a quick Google spreadsheet that will help you calculate your return on investment.. This sheet will need to be downloaded to be edited.
NOTE: These calculations DO NOT include increased interest or buybacks due to mining profit.



November 8th, 2012
Congratulations to everyone for a successfully first week! We currently have 619 Notes outstanding, which is more than enough to purchase 4 Single SCs. But why go for the Singles when you can go for the Rig!  Cheesy
Let's keep it up everyone Smiley



November 30th, 2012
Dividends have been paid to all unit holders.



December 30th, 2012
New Amendment to the Secured Promissory Note Agreement has been proposed.
An ASIC Survey has been sent out regarding where to purchase company equipment.



January 7th, 2013
I'm happy to report all users have agreed to the contractual amendment, which has gone into effect. Buybacks will now start on June 1st, 2013 unless another amendment comes into effect as a result of more delays (definitely not something I want either).

There has also been an overwhelming amount of input to purchase from Butterfly Labs. Investors have noted they prefer BFL to other competitors because of their history delivering a product, warranty, trade-in program, and efficiency. All of which are valid reasons Smiley

We have enough funding to purchase eight [8] Butterfly Labs Single SC units @ 60GH/s a piece. Purchases will be made starting this evening, January 7th, 2013.

Also, I updated the introductory and informational paragraphs to reflect the changes that have gone into effect.



January 8th, 2013
First purchase of four [4] Butterfly Labs Single SCs has been made. Receipt has been gone out in an email to all current unit holders.



January 10th, 2013
Thanks to the nice price rally to $14.28 today, I purchased the final four BFL Singles. All that awaits is news of shipping...

Here's my latest January Analysis
Based on available data, I've increased my prediction by nearly 60TH/s. If anyone has any solid data on bASIC and Avalon preorders, please let me know and I"ll update the analysis again!



March 1st, 2013
On March 8th, 2013, Lightbox (James, the Havelock manager) has agreed to pull any remaining Notes off the open market for KCIM. <-- You can read more on this here.



April 15th, 2013
The second Contractual Amendment has been proposed and the full update can be read here.
A survey has been sent out to all current investors to gather required responses. This survey will be sent out twice more as May 1st, 2013 approaches.



June 12th, 2013
A KnC Jupiter Rig has been purchased, pay dated June 4th, 2013. Our current position is #855, though that may be changed for the better once the queues are sorted out in the coming weeks.
You can keep up with the KnC news through this thread: https://bitcointalk.org/index.php?topic=170332.0
..And with more or less up to date info from the Open Day here: https://bitcointalk.org/index.php?topic=232852.0



August 28th, 2013
Critical Update: https://bitcointalk.org/index.php?topic=119628.msg3028093#msg3028093

Current structure of the Notes are no longer sustainable as the result of constant delays and unforeseen circumstances. Interest has been cut to the minimum (0.5%) and repurchasing has been switched to a 1.005x model. Mining Revenue will be paid out immediately, instead of on a monthly basis.



September 23rd, 2013
We've recently sold one of our Single SC batches, and the proceeds have been rolled into purchasing a Cointerra TerraMiner IV (January order). The purpose of this was to A) further diversify our holdings, and B) increase our total hashrate, putting us in a better position as the months go on. Read more on the update here



FUND RESTRUCTURED
December 8th, 2013
Voting to restructure the fund has ended, and by popular vote the new Revenue Sharing model will be implemented.
More on the update can be found here: https://bitcointalk.org/index.php?topic=119628.msg3881359#msg3881359



December 9th, 2013
Havelock Summary updated, agreements reworked and the first public draft has been released. December newsletter is in the final stages of development and will be released over the next few days.

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October 21, 2012, 05:42:19 PM
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[Reserved -- MISC]

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October 21, 2012, 07:10:02 PM
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Wow dude you are making such a ponzi!!! What a scammer you are... I will warn every person I know of not to invest in you.. I heard from other people you are planning to make this into a scamming project, and now I want to warn them..
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October 21, 2012, 09:43:36 PM
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Wow dude you are making such a ponzi!!! What a scammer you are... I will warn every person I know of not to invest in you.. I heard from other people you are planning to make this into a scamming project, and now I want to warn them..

Oooohhhh, looks like I made someone a bit upset by trashing their Banyan ponzi scheme  Wink

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October 21, 2012, 10:43:47 PM
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you have not trashed anything as far as I know.
 But why would people invest in this company? There are many other mining companies which are MUCH better run then yours. Just to keep their money locked in a project which gives hardly any return?
 I have invested in Pyramining, bitbond och puremining, all these are better then yours and give higher return,
 Should they invest because of "your business plan is incredibly well established" or "because of your rate of return is realistic, because it's based on your own financial analysis" like you said somewhere else before?

 Mining is hardly profitable anymore and everybody knows that so that can not be a reason to invest in your business.
 
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October 21, 2012, 10:59:04 PM
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Realistically, the hash rate will start off around 150TH/s and increase to 300TH/s over 12 months.

That estimate is screwed right off the top, first wave is going to be 150th/s at least if not more second wave will hit couple of months later with I will go a conservative 50% increase in units or 225th/s for total of 375th/s. You have time taking on average two months a pop for each wave arriving so that you can look forward to five more before the end of next year, putting us probably over the 1000th/s range in the year.


Fund Overview:
I'm looking to make a purchase of 5 BFL SC "Mini-Rigs" (highest end @ 1.5TH/s apiece). At the current price of $30,247USD each ($29,899 + $348 shipping), purchasing 5 rigs amounts to $151,235USD, which is a substantial goal to meet under some of the best financial circumstances.

To reach my equipment requirements, I am looking to issue 50,000 Notes, priced at 1BTC apiece with a buyback period starting at in March 2013 (Four [4] months after rigs are released to market, Two [2] after assumed arrival time) and extending to December 31st, 2013 (based on funds available).


Ticker Symbol: KCIM
Fund Location: Havelock Investments [HavelockInvestments.com]
Company: Korb and Co. Investments, LLC
Notes to be sold: 50,000
Price (ea.): 1.0 BTC
Monetary Goal to Raise: $375,000 [Any extra funds beyond equipment needs are used for Early Buybacks]


And this part boy that is some interesting math you want to buy $175k of equipment but the goal raising is $375k and actual 50k of BTC is worth ~$600k on the market, you must have went to the gigavps school of math only you increased your take here well they do say improve on the takings teaching..
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October 21, 2012, 11:30:29 PM
 #12

Realistically, the hash rate will start off around 150TH/s and increase to 300TH/s over 12 months.

That estimate is screwed right of the top, first wave is going to be 150th/s at least if not more second wave will hit couple of months later with I will go a conservative 50% increase in units or 225th/s for total of 375th/s. You have time taking on average two months a pop for each wave arriving so that you can look forward to five more before the end of next year, putting us probably over the 1000th/s range in the year.

Yeah, the predicted rate was established a couple months ago, which I'll be updating over the coming week.

However, I based my profitability and timeframe off of 250TH/s, which still works out quite well. I can't say I see the network rate getting anywhere near 1PH/s, mainly because it would mean over an 18 month ROI. With that in mind, historically we don't normally see people making substantial mining equipment purchases when the return is so long. For example (and excluding the reward half coming up), buying a new 7970 at $400 would mean a 7.5 month 'break even'. But do we see new GPUs hitting the mining pools? Not nearly as much as before..

My guess is that a break even timeframe of under 12 months is usually a good bet. That would mean about a 21x increase in difficulty over the course of 12 months, bringing the network rate to 450TH/s+. That seems a bit more likely to me. Thoughts?

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October 21, 2012, 11:43:24 PM
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That would mean about a 21x increase in difficulty over the course of 12 months, bringing the network rate to 450TH/s+. That seems a bit more likely to me. Thoughts?

Totally unrealistic even if it takes four months for the next wave to hit and each one after that the same at 150th/s as the first then you have 600th/s online at year end. I'm thinking the next and each wave to follow will get better at the process and speedier as well so 1ph/s is totally doable next years end. BTW your math still don't add up.
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October 21, 2012, 11:52:25 PM
 #14

Wow dude you are making such a ponzi!!! What a scammer you are... I will warn every person I know of not to invest in you.. I heard from other people you are planning to make this into a scamming project, and now I want to warn them..

Oooohhhh, looks like I made someone a bit upset by trashing their Banyan ponzi scheme  Wink

+1

I'm into creating universes, smiting people, writing holy books and listening to Prayer Messages (PMs).
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October 22, 2012, 12:52:36 AM
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And this part boy that is some interesting math you want to buy $175k of equipment but the goal raising is $375k and actual 50k of BTC is worth ~$600k on the market, you must have went to the gigavps school of math only you increased your take here well they do say improve on the takings teaching..

Because of the inherent volatility in the bitcoin market, the monetary goal is to establish a baseline outside of Bitcoin. $375,000 covers all equipment purchases, datacenter costs, and insurance leading up to the start of the buybacks in March. This is called a Financial Cushion. It means that I have enough money to cover all expenses related to the Note prior to maturity without needlessly worrying about whether or not I'll be able to make payments.

It is also key to understand that 50,000 Bitcoins is the market cap. A market cap acts as a sort of ceiling for the Fund, so no more funds can be invested. You're correct when you noted that the current market value of this cap is $600,000, but this can change at any time (hence the much lower baseline goal). I've also noted in my documentation that funds in excess of the baseline goal will be issued as Early Buybacks, which is when I purchase these excess Notes back prior to their normal maturity date.

That would mean about a 21x increase in difficulty over the course of 12 months, bringing the network rate to 450TH/s+. That seems a bit more likely to me. Thoughts?

Totally unrealistic even if it takes four months for the next wave to hit and each one after that the same at 150th/s as the first then you have 600th/s online at year end. I'm thinking the next and each wave to follow will get better at the process and speedier as well so 1ph/s is totally doable next years end. BTW your math still don't add up.

Interesting mathematics. Do you have any proof of work or network analysis to show where you got your data? I'm curious to see what methods you are using to draw your conclusion.

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October 22, 2012, 01:07:51 AM
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That would mean about a 21x increase in difficulty over the course of 12 months, bringing the network rate to 450TH/s+. That seems a bit more likely to me. Thoughts?

Totally unrealistic even if it takes four months for the next wave to hit and each one after that the same at 150th/s as the first then you have 600th/s online at year end. I'm thinking the next and each wave to follow will get better at the process and speedier as well so 1ph/s is totally doable next years end. BTW your math still don't add up.

Interesting mathematics. Do you have any proof of work or network analysis to show where you got your data? I'm curious to see what methods you are using to draw your conclusion.

That would be deduced by direct observation of events as they have unfolded. BFL if shipping by end of year will be just about six months into this the other efforts just started a couple of months ago and look on track to ship within the next month or two. From this One can safely assume that a turn around time of four months is possible. Now four months into next year is April 150th/s hits the market on to the next in August 150th/s more then December a merry christmas extra 150th/s for a total of 600th/s to ring in the new year.
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October 22, 2012, 01:59:33 AM
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That would be deduced by direct observation of events as they have unfolded. BFL if shipping by end of year will be just about six months into this the other efforts just started a couple of months ago and look on track to ship within the next month or two. From this One can safely assume that a turn around time of four months is possible. Now four months into next year is April 150th/s hits the market on to the next in August 150th/s more then December a merry christmas extra 150th/s for a total of 600th/s to ring in the new year.

Unfortunately this is all speculation as you've only provided your opinion instead of data.  Undecided

Not to worry though, I'll be rewriting my initial analysis to incorporate recent data releases and observations. This way, I'll be able to show a more update-to-date trend to back my financials. If you'd like to read my August analysis, it can be found here.


EDIT: I've updated to the latest October analysis, a link to which can be found in the 'Updates' section above.

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October 22, 2012, 02:40:54 AM
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That would be deduced by direct observation of events as they have unfolded. BFL if shipping by end of year will be just about six months into this the other efforts just started a couple of months ago and look on track to ship within the next month or two. From this One can safely assume that a turn around time of four months is possible. Now four months into next year is April 150th/s hits the market on to the next in August 150th/s more then December a merry christmas extra 150th/s for a total of 600th/s to ring in the new year.

Unfortunately this is all speculation as you've only provided your opinion instead of data.  Undecided

Not to worry though, I'll be rewriting my initial analysis to incorporate recent data releases and observations. This way, I'll be able to show a more update-to-date trend to back my financials. If you'd like to read my August analysis, it can be found here.

Opinion yeah right if you can/will not see what is right in front of you well take another hit off that pipe and go further into dream land. Don't worry though these fools are good at throwing their money away you will get some suckers I'm sure.
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October 22, 2012, 03:45:11 AM
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Opinion yeah right if you can/will not see what is right in front of you well take another hit off that pipe and go further into dream land. Don't worry though these fools are good at throwing their money away you will get some suckers I'm sure.

Korbman is anywhere but "dreamland". I can't speak to his profit estimates, but he's clearly done his homework, and lays it out for the benefit of all. We need more people like him involved with Bitcoin, and fewer that spout off "take another hit" at the slightest differing opinion.

His money, investments, and use of the aforementioned should be of no concern to you anyway.

And your concern about my concern is of no concern to you, go sock puppet elsewhere. I have seen enough of these damn scams around here this one the mining bond ponzi in disguise not having the forever payment feature. They all amount to the same thing people being separated from their BTC by these grand visionaries whose plans don't even include what is obvious for anyone to see.
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October 22, 2012, 01:47:55 PM
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And your concern about my concern is of no concern to you, go sock puppet elsewhere. I have seen enough of these damn scams around here this one the mining bond ponzi in disguise not having the forever payment feature. They all amount to the same thing people being separated from their BTC by these grand visionaries whose plans don't even include what is obvious for anyone to see.

I'm sorry you feel that way SAC, but I must say I'm a bit confused by your statement "I have seen enough of these damn scams around here this one the mining bond ponzi in disguise not having the forever payment feature."

How can you make a Ponzi out of a Bond? The purpose of a Bond to begin with is for company purchases. Bonds, Notes and Bills all pay monthly Coupon Rates (interest) and principal payments upon maturity, which is the point. And these types of investments are all paid back by the end of the maturity period.

Plus, the cool part is that I've got contracts. Which means if you invest with me and I "scam" you, you get to take me to court for your money back. Hence my real company with my real information behind it.  Cheesy

Korbman is anywhere but "dreamland". I can't speak to his profit estimates, but he's clearly done his homework, and lays it out for the benefit of all. We need more people like him involved with Bitcoin, and fewer that spout off "take another hit" at the slightest differing opinion.

His money, investments, and use of the aforementioned should be of no concern to you anyway.

Thanks nomorecoin! I have indeed done my homework, and I have the paperwork to show for it Tongue ..my hope is that it will help to separate me from the rest Smiley

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