The short answer is that is says $10 million in the documents, but you may not be looking in the right place.  You will note that the filing or petition for the 363 sale was not made by Liquidbits but by the Hashfast estate (because they are the ones who must do that per court rules).  Accordingly, their filing only address the components which will directly interact with them such and cash, stock, and Notes/IOU’s they will be given and inventory and IP license that they will give.  As such it does not discuss the capitalization of NewCo because they are not directly part of it.  However, if you continue all the way to the end, you will see in exhibit A the Terms Sheet from Liquidbits which covers all the components we will be involved (which gives a more complete picture.  Under the heading of capitalization of the new company, it states quite clearly and specifically that we would provide $8 million to convert the boards which combined with the $2 million identified in the document under “consideration” (article 2) is the $10 million we have been referring to.

Regarding the inventory, the $8 million valuation in the testimony is a fantasy.  You will note that the attorneys specifically noted that the individual was not an expert appraiser and that this was just his opinion.  They could just as easily given “sworn testimony” that in their personal opinion the inventory was worth $25 million.  The fact that this statement is sworn does not provide it any extra credibility, as it would be functionally impossible to prosecute someone for perjury, or hold them civilly liable for offering a personal opinion about the value of something.

I would not ask you to simply trust us however.  Hashfast has been making limited sales of chips to keep the lights on and pay some bankruptcy expenses.  It is our understanding that they are having difficulty selling these chips at $125 each.  Given that there are 27,000 chips remaining for bulk liquidation or transfer to Liquidbits, a valuation of $8 million would equate to a price of just under $300 per chip.  In a bulk liquidation scenario, it is highly probable that the unit cost of the chips would be even lower than the current $125, as people/companies buy in bulk to get a lower unit cost, not a higher one.  Further the price which one might realistically expect to get for these chips is bounded by the competing chips/rigs in the marketplace.  Specifically the BitMain AntMiner S3 is sold in rig form for $0.75 per ghash/s and a power consumption of .77 watts at the wall.  When you factor in the cost of mounting HashFast chips, installing cooling units, and in some cases cutting the wafers into chips of about $400 per unit, what you find is that Hashfast’s estate would need to be selling the chips with a final cost of $100 to achieve a cost per ghash of $0.78 in order to compete with chips already in inventory and being sold. Even at this reduced price, they would still be a difficult sell as they have worse power consumption at 1.1 watt per ghash/s

So using a realistic price of $100 per chip, this equates to approximately $2.7 million in chip inventory.  The intellectual property consists of little more than plans for a 16nm chip, which would take months and millions of dollars to produce, and then would be at best equivalent to what is already coming out now, and likely much lower performance than what would be available then.  Consequently, it would be highly generous to assume a value of $2 million for the intellectual property.  In addition, about $1 million (beyond the debts for Hashfast) is owed on this IP, so that the net value would, using a generous value equate to about $1 million.

This results in a total liquidation value of $3.7 million. From this there would need to be deducted the $2 million in priority/secured claims, which by law get paid before general unsecured creditors.  This then leaves $1.7 million to be split among $12 million in claims.  This would translate to a recovery of about 14% for each general unsecured creditor.  If these chips wind up selling for $80 per chip, or if the IP sells for $1.5 million instead of $2million (both entirely likely situations), then the recovery for each general unsecured creditor drops to 10%.  In the unlikely event that they are able to get $150 per chip, the recovery for general unsecured creditors would be approximately 25%.  This is how we arrived at the estimated recovery rates listed earlier.  We stand by these numbers, and think that anyone who thoroughly investigates this matter will arrive at the same conclusion.

LBS:  I think we are using the term “liquidated” in different contexts with accordingly different meanings.  Since you original question referred to escrow, I assumed that was the context/meaning you were using.  100% of the funds we cite were paid in liquid cash and fully released from escrow, and Hashfast took possession of that money.  If this is not your question, could you specifically identify the usage/citation you are referring to? We see a great deal of documents each day, and guessing or looking through them all would be impractical.  Once you give us the citation, we will reply with an answer.


LBS:  Four points here: 1) Our claims are valid.  This point was vindicated in the arbitration hearing for the injunction/TRO (which we won).   2) As already mentioned their IP is not especially valuable, and other than in Simon’s imagination we cannot find anyone who has concrete reason to think otherwise.  3) As already mentioned the ownership of the IP is under dispute (the developer, claims he was never paid), and if we just wanted our engineers to study it, we could get that for a lot less than $2 million (the developer is already shopping the IP around). 4) Finally, and this should be conclusive, the Note/IOU is backed by all of the assets of the company, including any IP which we might develop from or after looking at Hashfast’s IP, so if we did as you suggest we would still get nothing.


LBS: Actually the funding will likely occur prior to us taking physical delivery of the chips.  Specifically, some still need to be cut from wafers into chips, and the $2 million will need to be paid instantly on closing (whereas the chips will need to ship after being processed).  The precise timing and other fine details are generally addressed within the final contracts which are agreed before the sale closes.
Given how much we are paying for these chips, we don’t believe it is fair to characterize them as a “gift.”  Beyond that point, however, you have a number of meaningful and robust protections, including anti-dilution, non-consensual changes to economic terms, rights to inspect the company’s records and books, the right to periodic financial reports, the fiduciary obligations of directors to minority equity holders (which are established by law), and a Note/IOU which specifies payment dates and payment rates which is backed by EVERYTHING the company owns, literally all of the assets.


We are happy to reply in the forums as well, but some things will be better and more quickly handled in an interactive environment.



[/quote]

We still intend to host the telephone meeting because some things are just more quickly and effectively answered in an interactive setting. That said however, we are happy to answer your questions here as well as many of these questions seem to indicate large misunderstandings about what the 363 sale terms document says/means.

The current terms call for the formation of a new company (sometimes called “NewCo” in the documents).  We are not taking over Hashfast, or its estate or anything else; we are forming an new company and it is buying some assets from Hashfast’s estate.

Once this new company (“NewCo”) is formed, Liquidbits/its investors will transfer $10 million to the new company in cash.  This cash will then be used by NewCo to pay $2 million to the Hashfast estate for administrative/priority expenses and to satisfy executory contracts (who by law would be paid ahead of you or us anyway), and $8 million to pay to convert the chips and wafers into usable mining rigs and get them hosted (which is how the money to pay everyone back will be generated).

I think from your question you may have been thinking we were going to do something like give $10 million to the estate, then take over the estate and immediately get our money back.  As you can see from the above explanation, this is simply not the case.

1) How much of your $5M payment is unliquidated, hold in an escrow account? People tells me its a relevant amount, but you look like to be denying it.

LBS: All of our payments were liquidated.  There was originally $1 million in an escrow account, but Hashfast claimed they needed that money to complete our order, and the funds were released from escrow.  Hashfast has received all of the payments we cite directly and in cash, nothing remained in escrow.

 

2) What guarantees us that you would build boards and mine with it for our benefits, apart from your words? You could do nothing, keep the IP and use it for whatever purpose, give the chips back after a few months quoting whatever problem, and we would be all completely screwed with no recourse.

LBS: Please recall that the $2 million paid to the estate for executory contracts, administrative expenses, etc. is non-refundable (i.e. we cannot get it back) as is the $5.3 million claim waiver.  The performance/payment of the Note/IOU is backed by all of the assets of the company; this includes any cash in the company, all the hardware, and all the IP both received and independently developed.  As a result, if we did as you suggest, we would pay $2 million in cash, forfeit our right to ever collet on the $5.3 million Hashfast’s estate would otherwise owe us, and get nothing in return (the hardware and all the IP and everything else would go back to the estate if the note/IOU is defaulted on).  So, short answer what guarantees you that we will build the boards is our own enlightened self-interest; building the  boards is the only way we get paid back, and not building them means we have just given away $7.3 million ($2 million in cash, $5.3 million in waived claims) and get nothing in exchange.

I will propose you a better and simpler company definition:

LBS: As you know, an amount of fixed processing power gets less valuable on the network every day, and we are very nearly at the point where we will have to withdraw the offer. So, it is a little bit late in the game to be making major changes to the proposal, but fortunately most of what you discuss below is already addressed within the context of the terms/offer.

1) You create a new company and send $10M to it. You bind yourself not to withdraw that money in any way other than for board build costs and admistrative expenses.

LBS: This is already the case.  Specifically we are forming  a new company in which this venture will occur (sometimes called “NewCo” in the 363 sale terms), and Liquidbits cannot take any profits or dividends from this company until after the note/IOU and the stock/equity given to the creditors has been totally paid off.

2) You get every chip and asset you want.

LBS: Also part of the current terms.

3) You mine with it and keep 100% of whatever you mine until when you recover the build costs.

LBS: Already part of the current terms except that it is less than 100% which less favorable to us and more favorable to you.

4) Once that you have recovered it, you only get to keep 20% or so of the mined.

LBS: Once that has been recovered, we keep nothing until the note/IOU and the creditor preferred stock/equity has been paid off in full.  Only once all the creditors have been paid back (via the note/IOU and equity which should total about 100% of what Hashfast owes them), do Liquidbits and its investors get to keep the profits.  All of the creditors we spoke to early on in this process, expressed interest in terms which ensured they would get paid first (and therefore minimized down-side risk), rather than increased risk for the possibility of more profits down the road assuming all continues to go well (up-side risk).  Please keep in mind though, our investors are bringing $10 million in cash to the table (and Liquidbits is waving $5.3 in claims), for what would be characterized as a high risk venture.  Accordingly, the ultimate Return on Investment (ROI), has to justify that risk and investment when compared to the other places/ways they could invest it.

5) We get to audit your books and the datacenters continuously and at any time. You will basically give us access cards for the datacenters.

LBS: The right to inspect and audit the company’s books and records is already explicitly stated in the 363 sale terms.  While we cannot give each creditor an access card to the data center (other people have equipment there and it would be a major security violation), we would be happy to provide escorted tours/inspections of the data centers at reasonable intervals on very short notice.

Everyone wins. No one can screw anyone.

LBS: That is what we are aiming for and we like to think that these terms accomplish that.

If you are legitime, those terms should be appealing. If you are not, you need to find a way to screw us, and that document looks quite like it.

LBS: We are legitimate.  As discussed above virtually all of the terms you discuss are already part of our proposal, or even more favorable to you.  We regret that many people are getting the impression that the 363 sale terms document is giving people the wrong conclusion.  We suspect that this may be the result of some unfamiliarity with documents written in heavy Legalese; this is why we are hosting the interactive phone session tomorrow, so that we can explain the terms document more clearly to people.

There seems to be a lot of misinformation and misunderstanding regarding Liquidbits, our offer to Hashfast’s estate, and the bankruptcy process itself.  We would like to take the opportunity here fill in some blanks and correct some errors which seem to be feeding some of the anger and mistrust.  If you have any follow-up questions, please feel free to e-mail us at hashfast(AT)coinware.io (this is a subject name only, Hashfast is not in any way associated with this).  In addition, we will be scheduling a live call in event on July 22 at 10AM PST/1PM EST, so that you can ask any questions or register any complaints directly with the Chief Executive Officer and Chief Strategy Officer of Liquidbits. (Conference #: (712) 432-1500, Participant Access Code: 700281#). 

The chapter 11 bankruptcy law establishes a hierarchy of creditors which determines who gets paid first.  The top tier are secured creditors; they have a security against certain assets of Hashfast’s, and proceeds from the sale of those assets is used to pay them back 100% , before anyone else.  Next comes things like Hashfast’s bankruptcy attorneys, employee wages, court costs, and anyone who needs to be paid to provide services for them after the bankruptcy started.  Next comes the largest category, general unsecured creditors consisting of anyone else Hastfast owes money to who isn’t in a higher tier.  This category includes Liquidbits, and if you paid for equipment (or anything else) and haven’t received it, it includes you too.  At the very tail end, after anyone and everyone has been paid back 100%, are the Hashfast stockholders (basically, unless Hashfast has a drawer full of winning lottery tickets, the Hashfast shareholders won’t see a dime).  This is an important point to recall, as you may see things like “payment to Hashfast or Hashfast’s estate” and this is money which is being used to make good on the people they owe money to, not to go to Simon, Eduardo, or the Hashfast stockholders.

Now, regarding some of the specific comments:

Liquidbits, its officers, and its shareholders, have NO connection to Hashfast, Simon, or Eduardo, except that we paid  over $5 million for mining rigs they never delivered (just like many of you), nor will there ever be a such connection. Simon and Eduardo were not involved in the negotiation or development of this proposal in any way. Liquidbits lost more money to Hashfast than anybody, and we are not looking to let them get off lightly.  You may notice the terms we proposed allowed for the Hashfast estate to sue anyone who stole or mishandled money, but if the estate declines to sue, then we have the right to file that suit precisely because we don’t want anyone who engaged in shady practices to get away with it.
 
The listing of the principals for Liquidbits is available from public domain government sources at: http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail/EntityName/domp-p11000084688-a24cc0de-1b71-4c2d-a0dc-be0acfc07400/liquidbits/Page1

Hashfast has not given Liquidbits any insider information in preparing this offer that was not available to any of the participants or the creditors committee.  In fact, Hastfast stalled us for some weeks while they shopped their assets around.  It was not shared with us to whom they shopped these assets, but rather than customers, it was likely companies which could demonstrate millions of dollars in cash on hand.

Contrary to some of the comments, Liquidbits does have the money to conduct the proposed deal and we are not getting the chips for free:
 
After selling some to keep the lights on and pay for other bankruptcy expenses, like lawyers and consultants that the creditor’s committee is using and billing to the Hashfast estate, they will have about 27,000 chips.  Some of these chips are in wafer form and will need to be cut before they are really “chips.”  These chips, as many of you may know, are not capable of mining in their current form.  The must be mounted on boards, given a cooling unit, and set up in a data center or other similar environment at a cost of about $400 to $500 each and a month’s time.  As a result of this cost and delay, and the ever increasing network difficulty, these chips keep selling for less and less.  Hashfast had to go back to court to amend the approved pricing list, because they could not sell them at $200 per chip, and our information is that they are now selling at under $175 per chip and falling rapidly.  Even using $200 per chip this means they have an inventory of at $5.4 million under implausibly rosy assumptions.  Talk of $9 million in chips is outlandish and becomes more so each day.  Contrary to Simon’s fantasies, the Intellectual Property (IP) is basically the plans for a chip not noticeably better than the new ones already coming to market and not particularly valuable (and to boot its ownership is contested). Liquidbits just wanted a license so that we would not step on anyone’s toes while using and improving the chips we are getting.   If the Intellectual Property has value, the Hashfast estate can still sell or license it to raise money for the creditors.

Hashfast currently has, we believe, about $12 million in general unsecured creditors, and a further $2 million in secured, administrative and executory contract creditors.  If the chips and IP were sold on the open market, assuming one could even find a buyer for them all, you would be looking at recovery of about 10% to 25% of what you are owed.  As an alternative to this bleak outcome, Liquidbits proposes to pay/provide to the Hashfast estate:
➢   approximately $2 million in cash to handle administrative and executory contract debts (recall, by law, these debts get paid fully before unsecured creditors like Liquidbits, and other Hashfast customers, so this does increase the amount of money you eventually get)
➢   $8 million in cash to convert the 27,000 chips into usable mining rigs
➢   a note (an enforceable IOU) for $3 million which is secured by every asset the company has, with a short maturity date, and minimum repayment rate of 17% of total revenue
➢   preferred stock** in the new company, which get paid out in full before Liquidbits or any other investor can ever get paid a dividend in the amount of $3 million
➢   the waiver of Liquidbits of the approximately $5.3 million debt which Hashfast’s estate would otherwise owe to us (recall, there is currently, we think, about $12 million in unsecured debt, of which we are half, so waiving this means that you and any other unsecured creditors get almost twice as much money as you would otherwise) 

Combined with the IOU and preferred stock**, this should leave all remaining unsecured creditors recovering 100% of what they are owed.

So bottom line, Liquidbits provides $10 million in cash, $6 million in enforceable IOU’s (seller note and stock**), and the only payment we get on our $5.3 million claim is whatever profit remains in the company AFTER you and all these other items are paid off.  How anyone can construe this as “Liquidbits gets paid first” or “Liquidbits is screwing the other creditors” is a mystery to us.  Our lawyers keep advising us, that companies making this type of offer are not usually so generous, but Liquidbits intends to operate in the Bitcoin sphere for a long time to come, and we really are trying to turn another “Bitcoin scandal” into one where the people get their money back at the end.

Please note, for purposes of clarity and brevity, some matters have been condensed, and readers are advised to read the terms of sale and 363 motion for greater detail.

** LLC’s technically use equity units in place of stock.  The preferred equity units for the creditors would have a liquidation value of $3 million.

I've already received most of my order.

-Scared

I have 6912 chip credits for BFL Chips. PM me if you are interested.

More information about BFL chip credit program:
   https://forums.butterflylabs.com/announcements/3272-customer-appreciation-chip-credit-program.html

I'm interested as well.

And for [OSX] /Users//Library/Application Support/Armory

Thanks, that did the job.

I just had this issue happen myself. The bitcoinqt client crash just as I tried to send the bitcoins in Armory. Armory seems to think the transaction was sent but it doesnt exist in the blockchain. Is there a way I can either force armory to resend the transaction or a way to delete it so that I can create a new transaction?

Top Row Right most Rig.. It has two larger grey power connectors...

+1000
It's obvious a few users have made it their goal to destroy this forum. I avoid reading anything from bitcointalk.org anymore. In fact when I find it necessary to read the forums I'm forced to skim through pages of absolute junk from the same hateful people. It used to be a great resource and had a good community. Now it's full of hate mongers.

I was an early adopter. I purchased BFL's FPGA devices in the past and the moment I heard of their new product line purchased a bunch of ASIC devices. I know BFL get's a lot of flack for delivering late but their products are extremely well designed and perform great. I'm thrilled that they are honoring their original commitment for delivering the quoted hashing even though it's costing them a lot to redesign their products for the higher power requirements. Overall I'm happy with what they delivered and looking forward to what they come up with next.

My order number was 1604.

After many, many, many months of waiting I’m glad to report BFL has delivered. I received my first Jalapeño today!

This bad boy is getting 5.6 Gigahash instead of 4.5 Gigahash listed on their website. I'm thrilled about about the speed increase even though it's larger and takes more power.

For a $149 investment it'll repay itself and make $1300 on top in one month of mining.

Here are some pics for your enjoyment... View at imgur: http://imgur.com/a/fHvMm#0

It's most certainly a scam. The picture they used for their product was stolen from - http://chinagenuine.en.made-in-china.com/custom/xJQxmEnAMEhQ/Factory-Info-1.html

likuidxd,

You are being absolutely ridiculous. I have been more than fair by not requiring you to repair the Single and for failing to deliver working items. I did say I would pay for shipping and will do so. I've already paid you $100 in shipping and will send you the remaining $75 as 6.25 BTC.

I have to apologize to anyone reading this message. I find myself writing it wondering how the hell I got involved with someone as unreasonable as likuidxd.

His claim of “failed delivery and unfulfilled payment, and GigaVPS for releasing escrow before a completed sale enabling another forum user to scam another” is completely false. I have outlined the details of the transaction so that everyone is aware. I hope this will be the last time I have to deal with likuidxd over this issue.

On October 11th I put 784 BTC ($9,400 USD) into escrow on October 11th. It included $100 for shipping that likuidxd requested.
On October 26th I received shipping box #2. likuidxd informed me that he underestimated the shipping costs and asked for an additional $75 in shipping. I agreed to pay him.

The boxes were poorly packaged. With many of the motherboard boxes being ripped apart due to the fact that likuidxd did not wrap GPU mounting brackets with packing materials. Luckily little damage was done to the equipment besides scratches.

After setting up all the equipment I found –
  1) BFL Single is not working
  2) 5970 GPU did not work.
  3) Antec HCP-1200 was not shipped

I suggested the following to likuidxd -

"  Credit for BFL: BFL offered to RMA the Single. I will lose the mining (7.4 BTC) of it for the remaining month plus shipping costs (2 BTC) - total -9.4 BTC.
  Credit for GPU (25.58 BTC) and shipping (1 BTC): -26.58 BTC
  Credit for Antec: -18.605 BTC
  Additional Shipping: +16.279 BTC

Total Adjustment: 38.306 BTC to be returned from escrow"

I did not realize until after I sent this offer that I typo’ed the shipping costs. The additional shipping should have been 6.25 BTC for the $75 additional cost and not the 16.279 BTC I offered. It was not relevant, as likuidxd did not accept this resolution.

likuidxd countered with -

"I'll be happy to refund 23BTC for the broken 5970 if it is returned and 16 BTC for the Antec that got overlooked and the 3 BTC for shipping. I based these numbers off the 11.99/BTC quote at the time of our transaction"

Even though the transaction was done at 12.00/BTC and not 11.99/BTC and that the offer had no provision to resolve the issue with the BFL single. I accepted it. I thought at the time I was being generous since I had lost mining time with the BFL Single and that I had to go through the extra grief of RMAing likuidxd's damaged equipment.

I accepted likuidxd's offer and instructed Giga to release the escrow adjusting it by likuidxd's very own message: 23 BTC + 16 BTC + 3 BTC totaling 42 BTC. Giga did exactly what  likuidxd agreed to.

After I accepted likuidxd's terms and Giga released the funds likuidxd demanded an extra 16 BTC for ‘shipping’. likuidxd claimed it was for extra shipping costs but I have a message from him specifically stating it cost $175 for shipping. I already paid $100 into shipping when I paid for the items. Taking this into account the difference in shipping is only 6.25 coins and not the 16 likuidxd is claiming.

To add insult to injury I responded to likuidxd's request for 16 BTC with an offer split the difference since we did not agree. The 8 BTC I offered more than covered the 6.25 of additional shipping.

In order to resolve this issue I am willing to send likuidxd the 8 BTC I offered before. It more than covers the additional shipping costs.

A quick google images search will show you that the PCB image was stolen from another site at http://qpg.turbosquid.com/3d-Models/3ds/max/xsi/c4d/obj. I doubt these guys are genuine.

Congratulations on your new opportunity. I think your a perfect addition to the company.

Cheers
-Scared

I'll be there...