[Havelock][KCIM] Korb Investments – Establishing my Investment Firm, part 1

[norman]

Are these bonds numbered and prioritized?  How do you know where you sit in the queue?  If you have a high priority share and trade it, does it move to the back of the line?  

I don't understand this well either. This is one reason why I like acorcos' idea to convert the asset into a revenue share, and pay dividends from the mining revenue equally distributed over all outstanding shares, for as long as the mining remains profitable, and then liquidate and pay a final dividend when the mining is no longer profitable. That way, all the shares would be treated equally, and everyone would get part of their investment back

Yes.  This would probably be ideal, if it can work with the group structure.  Otherwise, structuring buybacks as a reverse auction out of after-dividend funds (which is essentially what repurchasing from havelock lowest ask would be) would be the next best alternative.  

[acorcos]

I don't see why you think you deserve special treatment over the person who got a share for .001.  A share is a share.  It doesn't suddenly become worth less because it was traded.  I wasn't under the impression that this is a pyramid scheme where people at the top get all the rewards where people at the bottom are left with nothing.

I don't know what to say Norman except that I'm not sure you understand what constitutes a contractual bond issue. If this wasn't the wild west of bitcoin investing, Korbman would have long ago had to settle his obligations, in court, as a debt default. You seem to be under the impression that you, and others buying at basement prices are purchasing equity in a KCIM mining enterprise. That is not the case at all. You, and others, are buying bond notes at a fire sale (and btw, the trading at this fire sale has picked up considerably; 88 notes have traded since 5 pm yesterday at prices between .02 and .15), hoping to redeem something down the line when settlement occurs. And yes, there is absolutely priority when it comes to settling debt defaults. Larger, long-term investors are recognized preferentially in the settlement. It has nothing to do with a pyramid scheme.

[acorcos]

XBOND was a well-run bond, and it was bought back at 105% of its face value per its contract. So people who were holding it when it was bought back came out of it fine, as long as they had not paid over 105% of face value when they bought it.

True, which is why I got out long ago when it was trading at 115% (having bought at the ipo). It made no sense to me that it was trading at that price when the TAT contract specified that they could buy back at any time at 105% and Havelock even posted a warning to investors to that extent.

[acorcos]

In any case, you've got me thinking. There many be an option here we're not seeing, or at the very least I should be able to find some middle ground. Thanks!

Korbman,

So as I understand it, based on your last distribution of 7.5749 btc, of the 878 bond holders, 7 received 1.005 btc, based on a formula that accounts for size and duration of investment. Alternatively, with an equity agreement, 878 shareholders could have received .00863 btc each. You're giving out .005 btc/mo/share as a dividend anyway and this itself is another problem with the current fire sale. Someone could buy a bond at .02 today and make his money back in 4 months. His only risk is that maybe you don't keep mining that long.

Sorry, Korbman, I admire you and trust that you are fair but it's time to restructure. I'm sure you and James can work something out.

[Korbman]

Are these bonds numbered and prioritized?  How do you know where you sit in the queue?  If you have a high priority share and trade it, does it move to the back of the line?   What's the point of even allowing shares to transfer hands if they suddenly become worth nothing?

The Notes are not numbered, prioritized, and holders aren’t in a queue, since this wasn’t something I was able to set up back in 2012. I’ve put more of a priority on repurchases for the longest holders (November / December 2012 for the most part…they’re the ones who literally got us started), but this was my own decision.

I don't know what to say Norman except that I'm not sure you understand what constitutes a contractual bond issue. If this wasn't the wild west of bitcoin investing, Korbman would have long ago had to settle his obligations, in court, as a debt default.

This is precisely what would have happened, and what I was originally prepared to do, though thankfully there was some agreement when it came to looking for an alternative solution.

Based on what I’ve read so far, there seems to be some agreement on what needs to be done next. I’ll write a formal update over the next few days and we can put it to a vote.

[norman]

The Notes are not numbered, prioritized, and holders aren’t in a queue, since this wasn’t something I was able to set up back in 2012. I’ve put more of a priority on repurchases for the longest holders (November / December 2012 for the most part…they’re the ones who literally got us started), but this was my own decision.

For shares that have traded hands, how does the current owner know where he stands with regards to "longest holders".  I have to assume the shares traded on Havelock are at the bottom of stack since there wouldn't seem to be any way you could possibly track that or know in advance if you are buying a "good" (some chance of being paid out) share or a "bad" (effectively worthless) share. 

If you don't switch to a revenue share model or a more transparent buyback model, I think you should at least update the Havelock investment information to clarify the status of traded shares. 

[Korbman]

Voting to restructure KCIM has closed this afternoon, and I've just finished compiling the results. As with all company voting, the amount of votes cast is proportional to how many units you hold. So, out of a possible 869 total votes, 720 votes were cast, which is quite impressive. 32 users cast their votes, though only 28 were able to be counted. 4 submissions used an email address not associated with Havelock (so I couldn't compare you to my current list of unit holders and tally your votes properly).

Do you approve of the proposed change to a Revenue Sharing model?:
600 [22 Unit Holders] -- Yes
120 [6 Unit Holders]  -- No
149                        -- Abstained

Here's a link to the results (email addresses are censored for privacy) :: https://docs.google.com/spreadsheet/ccc?key=0AhnW49twNMNbdG41VXBlRFFramxOdnJlb3JzNjhvVnc&usp=sharing

With these results, I will begin drafting up a summary and terms of the change. Thank you to all who voted, and also those of you who submitted comments/suggestions (on here, through email, and through voting). There are a few suggestions that have been seriously considered and will most likely be included in the change.

I'll have another update to all this coming between today and tomorrow, but I wanted to let everyone know where we stand first.

[enygma]

Thanks for the update.

[Korbman]

Transition update:


::: 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.

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.

[zevtiefenbach]

Hi Korbman,

Could you clarify how the 869 shares have turned into 86900 units.

Is there a 100 to 1 split?

[Korbman]

Hi Korbman,

Could you clarify how the 869 shares have turned into 86900 units.

Is there a 100 to 1 split?

That's correct, a 100:1 split will be happening shortly. With the change in structure comes a change in the way investors are able to trade. The split allows for greater liquidity as investors are now able to work with smaller buy/sell quantities. I should note that splitting does NOT effect the underlying operations and payments to investors, and overall it is pretty common practice.

Splitting the previous Notes wasn't a viable option; though it wasn't against the agreements, it did create more complexity with buybacks and payments.

[Korbman]

Also, I've got a bit of a surprise for everyone. A few people mentioned to me that they'd like to see a monthly update in a similar fashion to Havelock's HMF.
With that, I present the first rendition of the KCIM Newsletter: https://drive.google.com/file/d/0BxnW49twNMNbNFdSZUFBaGdyb2M/edit?usp=sharing

The goal of the newsletter is to give an update as to where the fund stands, how operations went for the previous month, and a forecast for what's to come.

This will be going out through the Havelock 'Fund Reports' system soon, but I wanted to post it here first. Let me know what you think.

[acorcos]

This will be going out through the Havelock 'Fund Reports' system soon, but I wanted to post it here first. Let me know what you think.

Great newsletter Korbman and great job managing the fund under some very difficult circumstances. I, for one, appreciate how open and responsive you have been throughout the process.

Also, good move on ordering the TerraMiner IV. Early entry wins the day when hash rates surge. Let's hope they come through.

[zevtiefenbach]

moving forward it seems like you'll be paying dividends every two weeks. is this case, will that be December 14th and December 28th as your report suggests?

thanks for all the work you've done.

[freedomno1]

Also, I've got a bit of a surprise for everyone. A few people mentioned to me that they'd like to see a monthly update in a similar fashion to Havelock's HMF.
With that, I present the first rendition of the KCIM Newsletter: https://drive.google.com/file/d/0BxnW49twNMNbWDNSbXptUWVydUU/edit?usp=sharing

The goal of the newsletter is to give an update as to where the fund stands, how operations went for the previous month, and a forecast for what's to come.

This will be going out through the Havelock 'Fund Reports' system soon, but I wanted to post it here first. Let me know what you think.

Well done and to the point a bit genesis block in format.
I like it

[Korbman]

Thanks for the feedback everyone, I always appreciate it.

Another brief update:
Tomorrow (December 11th, 2013) at 12:00pm EST, KCIM trading will be temporarily halted in order to implement the 100:1 share split. This usually doesn't take long, but I did want to make everyone aware.

[acorcos]

Hey Korbman,

Any updates on the TerraMiner IV? I saw this on the Cointerra website:

http://cointerra.com/update-production-news-janfeb-batch-customer-offer/

[Korbman]

Hey Korbman,

Any updates on the TerraMiner IV? I saw this on the Cointerra website:

http://cointerra.com/update-production-news-janfeb-batch-customer-offer/

Other than what they've posted on their site, I haven't heard/seen anything else unfortunately. Hopefully they beginning shipping shortly, though they'll need to get through December orders before our January one.

Another disappointing fact is the power consumption. I'll need to get in touch with my CoLo manager and see how large the circuit is that I'm using... a few BFLs and a KnC is one thing, but 4kW over 2 4U units will undoubtedly raise my monthly rates. Ugh.

[acorcos]

Hey Korbman,

Thanks for the newsletter.

What are your thoughts on the second batch Neptune from KcNMiner? Not sure what's available in the "kitty" for additional equipment purchases, and then there's the energy cost, etc. Just wondering.

[Korbman]

Hey Korbman,

Thanks for the newsletter.

What are your thoughts on the second batch Neptune from KcNMiner? Not sure what's available in the "kitty" for additional equipment purchases, and then there's the energy cost, etc. Just wondering.

I'm a fan of KnC equipment, but the uncertainty behind the Neptune is really what's holding me back from considering a purchase. A "Q2" ship date and unconfirmed specs are my primary causes for hesitation, especially given what I've seen with CoinTerra so far. Hopefully new info comes out soon so I'll be in a better position to make a decision.