[GLBSE] Kronos Floating Bond, IPO on June 15th

[IOU-PR]

Bonds remaining: 126,000 of 175,000
GLBSE page: https://glbse.com/ipo/84

TL;DR
IPO date: June 15th
Face Value: .1BTC
Dividends: .00011428571% of Kronos net profit per bond unit paid every 14 days
Buyback Value: .115BTC, will be bought back by 12/12/12

Price per unit by order's unit volume
1500-7499 shares: .1125BTC/bond
7500-15000: .11BTC/bond
>15000: .105BTC/bond[/b]

----

Kronos. What is it?
Kronos is Bitcoinica on steroids - a leveraged trade platform built with security and urgency in mind. Kronos does not handle USD and leverages ZipConf for immediate deposits and GoxBTC withdrawals. That is, instead of waiting ~2h to be credited with BTC you deposit, you’ll be credited in 10-15 seconds. ZipConf has been extensively tested, and were a double-spend to successfully be executed, ZipConf is insuring the loss, so it wouldn’t affect Kronos. While it only uses BTC, you are still able to open positions shorting and going long with BTC due to the infrastructure behind Kronos.
 
You can take a look at Kronos by visiting Kronos.io – it’s currently “inner-circle, very early” beta, so very few people are being allowed to test. Large bond-buyers will be permitted an invite code for early use.
 
For investor information on Kronos, please see documentation at [ We'll be providing this as soon as we get it -- before June ]
 
Okay, so I know what Kronos is, now. What’s Kronos.BND and what’s its purpose?
Kronos.BND is a floating bond, paying .00011428571% of Kronos’ bi-weekly net profit per each bond every 14 days (thus, first dividends will be on June 29th), and is what will ensure Kronos has adequate funds to maintain operations (covering leveraged positions, for example) as well as for additional startup costs – paying the attorney, costs of getting everyone where they need to be, dedicated servers, getting the company publicly registered in Iceland, etc. In total, Kronos.BND will be paying out 20% of Kronos net profit. Dividends are not guaranteed, of course -- if Kronos operates at a net loss between last payment period and an upcoming payment period, then no dividends will be issued at the upcoming payment period.

It is likely that more bonds will be issued some time in the near-ish future (likely late June) at a price, date, and in an amount not yet determined.
 
Kronos.BND Buyback Provision
When Kronos management decides to buy back shares, they will pay a flat .115BTC per bond unit. An announcement will be made 15 days prior to the buyback actually happening.


I'm interested in buying pre-IPO. What's the price?
The minimum order is 1,500 shares. For orders with a purchase amount between 1500-7499 bonds, the price is .1125BTC/bond. For orders with an amount between 7500-15000 bonds, the price is .11BTC/bond. For orders with an amount greater than 15000 bonds, the price is .105BTC/bond. Orders of 7,500 bonds or more are welcome to a Kronos.io beta invite code.

Purchasers must pay within 7 days of making the reservation (or on June 14th, whichever is earliest). Those who have already purchased prior to this being implemented (07:30 UTC on 5/28) are not bound by this rule, but it'd be appreciated if they honored it. Anyone who does not pay within that time (excluding previous bond-reservers) will have their reservation invalidated.

There will be an IPO, where the minimum price will be .115BTC/bond. Because the IPO is done with an open-market order, there is no guarantee you will get bonds at the minimum price nor that you'll be able to purchase bonds if there are not enough available to fulfill your order.


Cheers,

IOU

GLBSE Contract:
"Introduction, Issuer, Bondholder, and Operator Liabilities" - 175,000 bonds ("Konos.BND") will be issued on June 15th, 2012. The Issuers of this bond are Ben Malec ("Kluge") and ineededausername, collectively known as "IOU," who are the final purchasers of the bonds hereby listed as part of a private contract between Kronos and IOU. The Issuer (IOU) of this security is not the Underlying Operator (Kronos) for which funds are being raised. Kronos Operators are NOT liable for this contract, the Issuers are. The Issuers are responsible for the entirety of this security's offering and purchasers of "secondary" bonds issued by the Issuer to investors. Investors must be accredited investors (self-certified or otherwise) to purchase this bond. By purchasing this bond and consequently agreeing to this contract, bondholders attest to being an accredited investor who is able to legally purchase this bond.

"Description, Dividends" - Kronos.BND is a floating bond, paying .0001142571% of Kronos’ bi-weekly profit per each bond every 14 days (thus, first dividend payment will be on June 29th). In total, these bonds represent 20% of Kronos' bi-weekly net profit which will be paid to bondholders. Each bond has a face value of .1BTC. These bonds ensure Kronos has adequate funds to maintain operations (providing credit for leveraged positions, for example) as well as for additional startup costs – paying the attorney, costs of getting everyone where they need to be, dedicated servers, getting the company publicly registered in Iceland, etc. Dividends rely on Kronos.io having a net profit. Dividends are not guaranteed. If Kronos operates at a loss during the span between payment periods, no dividends will be paid.

"Buyback" - A forced buyback will be initiated *BY* December 12th, 2012. A forced buyback may be initiated any time prior. The Issuer must publicly inform bondholders of a buyback 15 days in advance. At the time of buyback, the Issuer will pay bondholders .115BTC per bond unit.

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[IOU-PR]

Reserved.

[hazek]

Kronos.BND Buyback Provision
When Kronos management decides to buy back shares, they will pay a flat .115BTC per bond unit.

I'm interested in buying pre-IPO. What's the price?
The minimum order is 1,500 shares. For orders with a purchase amount between 1500-7499 bonds, the price is .1125BTC/bond. For orders with an amount between 7500-15000 bonds, the price is .11BTC/bond. For orders with an amount greater than 15000 bonds, the price is .105BTC/bond.

GLBSE Contract:
"Introduction, Issuer, Bondholder, and Operator Liabilities" - 175,000 bonds ("Konos.BND") will be issued on June 15th, 2012.

..."Description, Dividends" - Kronos.BND is a floating bond, paying .000001142571% of Kronos’ bi-weekly profit per each bond every 14 days. ...

I don't get it. You want to raise around ~20k BTC (175000*~0.112 BTC) but you're willing to only pay ~0.20% dividend (175000*0.000001142571%) of your every 14day profits, well that and ~1500 BTC with a buy back? Am I missing something?

[Kluge]

Kronos.BND Buyback Provision
When Kronos management decides to buy back shares, they will pay a flat .115BTC per bond unit.

I'm interested in buying pre-IPO. What's the price?
The minimum order is 1,500 shares. For orders with a purchase amount between 1500-7499 bonds, the price is .1125BTC/bond. For orders with an amount between 7500-15000 bonds, the price is .11BTC/bond. For orders with an amount greater than 15000 bonds, the price is .105BTC/bond.

GLBSE Contract:
"Introduction, Issuer, Bondholder, and Operator Liabilities" - 175,000 bonds ("Konos.BND") will be issued on June 15th, 2012.

..."Description, Dividends" - Kronos.BND is a floating bond, paying .000001142571% of Kronos’ bi-weekly profit per each bond every 14 days. ...

I don't get it. You want to raise around ~20k BTC (175000*~0.112 BTC) but you're willing to only pay ~0.20% dividend (175000*0.000001142571%) of your every 14day profits, well that and ~1500 BTC with a buy back? Am I missing something?

My mistake -- forgot to convert to percentage. The actual percentage is .0001142571% -- in reality, it's something more like .00011428571428571428571428571428571%, or precisely (((1/5)*(1/175000))*100)

Fwiw - This bond is not offered by Kronos. IOU has purchased a bond from Kronos in a private contract and is using funds raised from this offering to pay Kronos.

[IOU-PR]

IPO has been given greenlight by GLBSE and can be viewed on their service @ https://glbse.com/ipo/84

ETA: profit % is correct on description in IPO page (was originally correct), but incorrect in the contract. Only GLBSE team can edit those. Total Kronos net profits being split among 175k shares is 20%.

[IOU-PR]

Is my math right, the value of the company in USD is about $450,000?

$5.10 x (175,000 x 5) x .1BTC  = $446,250

A bond can't be used to valuate a company. This is a temporary fund-raising solution until it becomes preferable for Kronos to buy back the bond.

[BinaryMage]

Subscribed. Are you reserving a certain number of bonds for the GLBSE open market IPO?

[Sukrim]

I find the high discounts in the beginning (below buyback value!) for people with lots of BTC kinda disencouraging personally. Do you have profit estimations already or is this part of the to be released investor information?

All in all you want to borrow ~20k BTC (will be probably a bit less, due to rebates), but you don't pay back a fixed percentage (say 2%/month or so) - only a percentage of profits (which can be 0 as well).
Will you open your books and publish audits, so your claimed profit is actually verifiable or do investors have to trust you that you really earned XXX BTC in the last 2 weeks and not more/less?

[Vladimir]

paying .00011428571% bi-weekly,

Does this mean that investor will double their money (with reinvestment i.e. with compounding) in about 72/.00011428571 * 14 = 8820000 days or 24500 years?

Please tell me some number here is badly wrong, by four orders of magnitude or so.

What is wrong with all the GLBSE assets on one side there 10% per week ponzi's by proxy, on the other side there are investments that allow one to double his money in only 25 millennia.

Is Bitcoin really such a collection of gullible suckers?

[Garr255]

Is Bitcoin really such a collection of gullible suckers?

We all don't like to think that, so we don't. But the truth is uninformed people are everywhere, and the Bitcoin community, as cool as it is, is not an elite group

[Kluge]

There is now a requirement in place that purchasers must pay within 7 days of making the reservation (or on June 14th, whichever is earliest). Those who have already purchased are not bound by this rule, but it'd be appreciated if they honored it. Anyone who does not pay within that time (excluding previous bond-reservers) will have their reservation invalidated. We're on a fairly tight time schedule to pay Kronos.

Subscribed. Are you reserving a certain number of bonds for the GLBSE open market IPO?

No.

paying .00011428571% bi-weekly,

Does this mean that investor will double their money (with reinvestment i.e. with compounding) in about 72/.00011428571 * 14 = 8820000 days or 24500 years?

Please tell me some number here is badly wrong, by four orders of magnitude or so.

What is wrong with all the GLBSE assets on one side there 10% per week ponzi's by proxy, on the other side there are investments that allow one to double his money in only 25 millennia.

Is Bitcoin really such a collection of gullible suckers?

You've read it wrong, Vlad. .0011428571% of Kronos' net profit, not of face value. As is stated, the 175k bonds, in total, pay 20% of Kronos' monthly net profit. There is no guarantee of dividends. Investor documents with profit estimates will be provided within a few days.

[Vladimir]

Is Bitcoin really such a collection of gullible suckers?

You've read it wrong, Vlad. .0011428571% of Kronos' net profit, not of face value. As is stated, the 175k bonds, in total, pay 20% of Kronos' monthly net profit.

OK got it now. It is good to be wrong.

Now, would you care to justify your valuation of Kronos at 17500 BTC * 5 * 5 = 437500 USD i.e. half a million USD ?

[Kluge]

I find the high discounts in the beginning (below buyback value!) for people with lots of BTC kinda disencouraging personally. Do you have profit estimations already or is this part of the to be released investor information?

All in all you want to borrow ~20k BTC (will be probably a bit less, due to rebates), but you don't pay back a fixed percentage (say 2%/month or so) - only a percentage of profits (which can be 0 as well).
Will you open your books and publish audits, so your claimed profit is actually verifiable or do investors have to trust you that you really earned XXX BTC in the last 2 weeks and not more/less?

Fwiw, almost all BTC-denominated bonds are issued below buyback value. However, none are being issued below face value. This is, after all, a loan, and even in a worst-case scenario, IOU is liable to pay bondholders the "interest" the bond is accruing between time of issuance and time of buyback. Profit estimations will be released by Kronos within a few days. As soon as I have them and give a look-through, I will post. I'm not really asking potential investors to invest in something which they don't have profit estimations on -- I think that'd take people familiar with both I & JRO -- but I believe it's time to make an announcement, because we really don't have much time to raise the necessary funds.

Again though, it should be mentioned that this bond is not being offered by Kronos, but by IOU (INAU and myself). The bond is based on a bond Kronos was sold to us (IOU) for which we're paying with by using payments from Kronos to IOU. Thus, payments from IOU to GLBSE bond-holders also rely on Kronos paying as their contract with us dictates, but ultimately, we (IOU) are liable to bondholders, not Kronos (though they're liable to us). I will insist on Kronos opening their books while the bond is active, but if I were in their shoes, I would be uncomfortable with that and the precedent it sets, though I'm also a fan of transparency simply for the sake of fund-raising, even if it may become regrettable once Kronos is able to self-fund. This is largely a reputation-based bond. You'll have to trust me. While I have a relationship with JRO & Icehill's (effectively, the successor to Ringcoin) projects, I have a reputation to uphold with the community which I believe will net me much more than this single offering.

[Kluge]

Is Bitcoin really such a collection of gullible suckers?

You've read it wrong, Vlad. .0011428571% of Kronos' net profit, not of face value. As is stated, the 175k bonds, in total, pay 20% of Kronos' monthly net profit.

OK got it now. It is good to be wrong.

Now, would you care to justify your valuation of Kronos at 17500 BTC * 5 * 5 = 437500 USD i.e. half a million USD ?

A bond cannot be used for company valuation any more than a bank loan made to an individual can, even if the bank bases the max amount to loan as a percentage of profits the individual earns. I'm not implying valuation of Kronos by offering this bond. The bonds have been issued purely for short-term fund-raising. If there's enough demand, however, these bonds may pay a fixed percentage in case of future offerings once Kronos launches publicly and has solid numbers to discover what would be a reasonable price for them to pay.

That said, investor docs will very likely be released within a few days and I'll post them here ASAP.


ETA: I have about 30 minutes of feistiness left in me before I take a nap. It's a great time for a discussion if anyone has additional challenging questions.

[brendio]

Hmm, as an investor, I can't say I'm a fan of this structure. It has equity-like risks, but without the upside potential gains that equity usually has.

I would be more interested in a fixed interest bond.

[Vladimir]

OK I am just trying to wrap my brain about such exotic instruments. Of course it cannot be used for valuation.

I understand it is effectively a redeemable at any moment at option of issuer not preferable not convertible bond for a startup company. The bond pays percent of company profit.


In other words the deal here is: "you give me money, I will pay you some interest eventually, maybe, after a startup company becomes profitable, and right until I decide that the interest is too high and then I will return you your capital plus 15%" (plus December 12th, 2012 limitation). Well, if so this is not such an insane deal as I thought initially. Could you please confirm that I got it right now.

[Kluge]

Hmm, as an investor, I can't say I'm a fan of this structure. It has equity-like risks, but without the upside potential gains that equity usually has.

I would be more interested in a fixed interest bond.

I can understand that. I'll talk with JRO and see if that'd be possible for the expected 2nd offering. I don't think it will be possible until the potential third offering (either for raising additional funds or refinancing current debt existing through current outstanding bonds). The team's not willing to risk the future of Kronos by biting off more than they can chew, and without proven numbers, that could be anything. Offering a % of profits as well as a profitable return at time of buyback, Kronos is dramatically less likely to be exposing themselves to potentially more liabilities than they can cover.

[Kluge]

OK I am just trying to wrap my brain about such exotic instruments. Of course it cannot be used for valuation.

I understand it is effectively a redeemable at any moment at option of issuer not preferable not convertible bond for a startup company. The bond pays percent of company profit.


In other words the deal here is: "you give me money, I will pay you some interest eventually, maybe, after a startup company becomes profitable, and right until I decide that the interest is too high and then I will return you your capital plus 15%" (plus December 12th, 2012 limitation). Well, if so this is not such an insane deal as I thought initially. Could you please confirm that I got it right now.

Yes, that's right. The buyback will certainly occur before December 12th (this is contractually guaranteed), but the estimate is for this bond to be paid in 90 days after it goes live -- but that 90D estimate is not guaranteed. I don't want to give anyone the idea that this will be paid 90D after IPO, because that very well may not happen.


ETA: Heading to sleep. INAU's been gone most the holiday weekend. I should be up within 6h. No pitch-fork mobs without giving me a chance to respond first, please.

[hazek]

No pitch-fork mobs without giving me a chance to respond first, please.

~20% makes more sense and I kind of thought you might have written two zeros too many but man your OP is super confusing..

Can't you do a better job making it clearer what the bond is? That it is in fact just a loan to your BDK hedge fund, a loan that will finance the loan your hedge fund made to Kronos and can't you disclose the details of that loan and be a bit more transparent? I feel like calling yourself IOU and the bond Kronos.BND severely obfuscates who the bond issuer is even though you explained it but it leaves the door open for potential confusion for someone not carefully reading your OP.

What I'd like to read in your OP is this:

Who the borrower is exactly?: Kluge and INAU, or BDK, just don't call your self IOU
What are you borrowing for?: details of the loan you made and details about who you lent to
What deal exactly are you offering?: be clear about how much it will cost, how much it will pay by using a more standardized formulation(if you lend us this much, will pay you back this fast and will add this much of interest) like a loan normally is presented and be clear about how you intend to meet your obligations


Now these are just my suggestions but I'm telling you when I read the OP the first time I was very confused about what exactly I am reading and I bet I'm not the only one.

[Shuai]

This isn't a bond. It's an idiot-tax.