[GLBSE] It's finally happening - BDK will be on GLBSE on 5/2/12

[Kluge]

First - let me make one point very clear & visible: "BDK" refers to my personal lending operations. "BDK" is comprised entirely of personal loans to and from me. You are not buying a stake in a company. There is no LLC for BDK, no incorporated company for BDK - just me. On GLBSE, I will be raising capital for a portion of my lending operations, which comprises only of personal loans and is called "BDK" exclusively for the sake of simplicity (it's much easier to say "BDK" than "my personal lending operations").

Secondly, I believe BDK will be the first lending-oriented GLBSE asset created which is not a bond. It's messy as Hell, and I can't wait to bury myself in the numbers.


*see posts 13 and 14 for updated details & contract provisions -- original details & provisions removed*


Why May 2nd?

May 2nd marks a few big milestones for BDK. %RoE, even though it'd be just two days into the month, will exceed 5% for that month (that figure excludes revenues & losses from equities, as does the previous high of 2.39%), and ownership equity will exceed 3k BTC. Meeting these milestones makes me feel confident about the stability of BDK.


I Don't Know if I Trust You...

I have successfully engaged in at least many tens of transactions on this forum as a seller, buyer, escrow agent, lender, and (in case of deposits) lendee. I've been here for many months. I pay my deposits on time (frequently, early), deliver what I say I will, and refund generously for any problems along the way. I've even sent PPUSD for BTC without initiating a chargeback. Another lender recently sent me $1000 and said "figure out terms for this loan, I'm heading to the airport." In doing so, we were able to get a much-needed loan to a major producer in this community. In cases where I don't have the ability to tie up cash for a potential lendee, I often offer to co-sign the loan, sometimes without even a fee. I don't start drama, I settle it. Or kill me.


Whew. I think that about covers it. This isn't the contract, but probably the majority of what will be in it. I wrote all that between things in the last couple hours, so if anything in the contract is broken or requires further/better explanation, I'd appreciate knowing. Any interest in it?

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[Kluge]

Bump

[Nefario]

>>What are you selling?
> me essentially

Whore!

[schnell]

Not the best interest rate, but I am interested in investing in a loaner
Expect a few buys from me.

[PatrickHarnett]

hmmm - May 2nd

(Starfish waves to Ben)

[JWU42]

Yeahhhh for BDK!!

[Philj]

So youre going to issue 40k shares, 31k will be "sold" to yourself, and 9k to the general public? Or are you simply reserving those 31k shares for future release? If you are reserving them, then they shouldn't be calculated when issuing a dividend. If they are being "sold" to you, then why are you also taking 10% since you would be getting your executive fee through the shares you own?

Or maybe I missed something.

Anyway, I'll most likely end up with a few of these, diversity and all that.

[Kluge]

So youre going to issue 40k shares, 31k will be "sold" to yourself, and 9k to the general public? Or are you simply reserving those 31k shares for future release? If you are reserving them, then they shouldn't be calculated when issuing a dividend. If they are being "sold" to you, then why are you also taking 10% since you would be getting your executive fee through the shares you own?

Or maybe I missed something.

Anyway, I'll most likely end up with a few of these, diversity and all that.

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.  

[Kluge]

(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.

[Kluge]

Will you sell some of this before the IPO?  Thanks.

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

[Kluge]

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")

[Kluge]

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.

[brendio]

What is your understanding of insolvency?  AFAIU, it's different to having negative equity. My understanding is it is "not being able to meet your liabilities as and when they fall due".

Your insolvency clause sounds scary, but I wonder whether it comes down to word usage. Could you please elaborate, perhaps with some examples.

[Kluge]

What is your understanding of insolvency?  AFAIU, it's different to having negative equity. My understanding is it is "not being able to meet your liabilities as and when they fall due".

Your insolvency clause sounds scary, but I wonder whether it comes down to word usage. Could you please elaborate, perhaps with some examples.

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

[brendio]

I'd avoid the word insolvency then and stick with negative equity. It's less scary. Trading while insolvent is a criminal offence. Negative equity is much more common so long as there are willing creditors who continue to offer credit.

[Kluge]

I'd avoid the word insolvency then and stick with negative equity. It's less scary. Trading while insolvent is a criminal offence. Negative equity is much more common so long as there are willing creditors who continue to offer credit.

Thanks! Fixed.

[Kluge]

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.