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

[ribuck]

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%"

Where do you get 15% from?

The buyback price is 0.115BTC/bond.

If someone buys after the IPO at 0.115BTC/bond, they get their capital back.
If someone buys 1500 bonds pre-IPO at 0.1125BTC/bond, they get their capital back plus 2.2%.
If someone buys 7500 bonds pre-IPO at 0.11BTC/bond, they get their capital back plus 4.5%.
If someone buys 15001 bonds pre-IPO at 0.105BTC/bond, they get their capital back plus 9.5%.

I'm not sure how buybacks are handled at GLBSE. Are there any GLBSE fees to be taken into account here?

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[Vladimir]

Your numbers are accurate. Anyway, I'd pass on all of this, never really considered as something I'd want to do. Too convoluted scheme for me to take it seriously. If one has 5-10k BTC to invest, one could as well go direct to JRO and get a better deal.

[Sukrim]

Sounds too much like a very cheap loan to me, especially to people with less than 1600 BTC. Why would I want to risk a return of exactly 0 (if kronos.io doesn't have huge income right from the start) if I can't even keep the bond for the future, where it might be more valuable or have higher returns? Worst case scenario for the "average joe" is that he buys at 0.115 (or even a little bit above!), kronos.io pays it's profits as salary/bonus to it's programmer(s) and owner(s) and gives 1 BTC in total to kludge + the bond holders. Then the bond gets bought back for 0.115 BTC and all that happened was that his money was not available for up to half a year.

Imho a nicer approach would have been to sell bonds at e.g. 0.1 each with no pre-IPO and promise to buy them back at 0.115 - dividends_paid_from_profits latest in December. 15% for half a year would be an ok rate on the lending forum, allow for a bidding war when going live and would make sure nobody cuts you for a quick profit just by buying bonds for 1600 BTC, getting an invite (and potential access to maybe very good short/long positions) and just at IPO time selling them for 0.14999999, cutting you out of the loop. 9.5% profit in ~2 weeks, an early invite to a platform that tries to be the next bitcoinica and the only risk is that there will be demand for less than ~1750 BTC worth of shares in total.

Also this kinda forces/expects a startup to make profits right from day 0 onwards - I would disagree that this is a wise move or business practice...

[Kluge]

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.

*The borrower is INAU and myself. This is stated explicitly in the contract. However, money getting to Kronos relies on this bond being purchased.
*If BDK can exist, there's no reason IOU can't.
*I'm not going to disclose the entirety of our private contract with Kronos.
*Because this is a floating bond (which isn't too terribly uncommon), there is no guaranteed amount of interest. This will remain so because there is too much risk to Kronos paying a fixed percentage per month when they cannot make an accurate prediction of future income based on real numbers. I believe the details of this contract are pretty clear for anyone who takes the time to read the entirety of the OP. If someone's not willing to read the entirety of the OP, they probably shouldn't be investing hundreds of BTC in this, anyway.

[Kluge]

Your numbers are accurate. Anyway, I'd pass on all of this, never really considered as something I'd want to do. Too convoluted scheme for me to take it seriously. If one has 5-10k BTC to invest, one could as well go direct to JRO and get a better deal.

I doubt JRO would be interested in having contracts written up for 6 different deals, and this allows people with just a few hundred to help out.

[Kluge]

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%"

Where do you get 15% from?

The buyback price is 0.115BTC/bond.

If someone buys after the IPO at 0.115BTC/bond, they get their capital back.
If someone buys 1500 bonds pre-IPO at 0.1125BTC/bond, they get their capital back plus 2.2%.
If someone buys 7500 bonds pre-IPO at 0.11BTC/bond, they get their capital back plus 4.5%.
If someone buys 15001 bonds pre-IPO at 0.105BTC/bond, they get their capital back plus 9.5%.

I'm not sure how buybacks are handled at GLBSE. Are there any GLBSE fees to be taken into account here?

There are no GLBSE fees for a forced buyback AFAIK. If there were, IOU would cover the fees without expense to bondholders.

Partial response to Shuai & Sukrim (got about two hours of sleep, little grouchy) - not only do you get additional funds from buyback value over purchase price, but there's of course the additional dividend payments made in the meantime. If people are expecting Kronos to be the small-time junk sites which Bitcoin (with its very small total worth) tends to attract, they would be mistaken. Profit estimations will come soon. Let's not call it an "idiot tax" without even having profit estimates. Let's say the bond lasts 90D, and the deals made up largely of a few people buying @ .105. 9.5% alone over three months is >3% monthly, and on top of that, add dividends from Kronos net profit (which we don't have an estimate on until JRO/Jered release investor docs). Not Pirate rates, but "idiot tax" is just offensive.

ETA: ^ sorry on that. Only just realized both posts weren't by Sukrim.

Everyone needs to weigh the costs and benefits. No, it's not going to be as profitable for "average Joe" to get in on this. That's not really my problem nor an unwise business practice -- there's an increased cost of doing business with 100 "average Joes" vs 10-20 larger investors who have enough invested to actually read the contract and ask relevant questions.

[Raoul Duke]

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.

And if you notice, both the cases you describe are from the same persons...

[Vladimir]

If someone's not willing to read the entirety of the OP, they probably shouldn't be investing hundreds of BTC in this, anyway.

Also if someone is just trolling and not willing to invest a single bitpenny, he should not try to read the entirety of the OP. Too bad OP had failed to do executive summary.

[farfiman]

Vladimir seems to have a lot of free time lately  

[Vladimir]

Vladimir seems to have a lot of free time lately  

LOL, yep, waiting for ASIC's to be printed do that to people. 

[Kluge]

If someone's not willing to read the entirety of the OP, they probably shouldn't be investing hundreds of BTC in this, anyway.

Also if someone is just trolling and not willing to invest a single bitpenny, he should not try to read the entirety of the OP. Too bad OP had failed to do executive summary.

Super-condensed.

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

I can condense it further....

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

[Raoul Duke]

Doesn't this

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

contradicts this

Face Value: .1BTC

?

Does that mean that for each bond you sell Kronos is only getting 0.1 BTC(the bond face value) and you'll just pocket the difference, hence making a profit, or am I undestanding it wrong?
Care to enlighten a dumb guy about the discrepancy?

[Vladimir]

Also giving annualised minimum interest rates for every tier would be great. You surely do not want to mislead investors, so it must be a good idea.
What kind of risks are there, i.e. what would potentially cause you to default and return nothing or less than invested capital?

[Kluge]

Doesn't this

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

contradicts this

Face Value: .1BTC

?

Does that mean that for each bond you'll sell Kronos is only getting 0.1 BTC(the bond face value) and you'll just pocket the difference, hence making a profit, or am I undestanding it wrong?
Care to enlighten a dumb guy about the discrepancy?

Was I expected to do this out as charity? I have no equity stake in Kronos and Kronos cannot sell bonds to everyone legally or they'd very possibly violate accredited investor laws. Kronos needs funds now - not after launch, and so IOU is liable to Kronos to pay what's needed as needed. There's a tight time-schedule for when funds need to be paid to Kronos which can't be met by releasing all shares on June 15th. What we don't sell, we cover. Additionally, discovering I have lost my sense of humor has ruined my holiday, which JRO & team have been saved from. I will be going to the family picnic in a poor mood!

[Vladimir]

IANAL, but if one knowingly sells bonds to unaccredited investors via proxy, one probably violates those pesky securities laws anyway.

[farfiman]

. Additionally, discovering I have lost my sense of humor has ruined my holiday, which JRO & team have been saved from. I will be going to the family picnic in a poor mood!

Just don't take things so personally.... the trolls are there for 1BTC loans and 1M$ mining companies and everything in between

[Kluge]

IANAL, but if one knowingly sells bonds to unaccredited investors via proxy, one probably violates those pesky security laws anyway.

Kronos is not offering this bond, by proxy or otherwise. I have no equity stake in Kronos. In the contract between IOU & Kronos, the bond sale was a final sale to IOU. It doesn't say "IOU will underwrite a security for Kronos and pay Kronos the proceeds minus a % fee." The contract has been reviewed by a lawyer.

Potential causes of a default: zombie apocalypse, double-suicide, EMP strike, police raid, earthquake. Kronos defaulting on their bond to us isn't relevant to our deal with GLBSE bond-holders, though it would likely take a few months to get all funds due to bond-holders in the event of a Kronos default.

Min. Annual Interest Rate by tier in worst-case scenario, assuming no dividends paid and buyback not occurring until 180D after bond issued:
.115BTC/bond = 0% APR
.1125BTC/bond = ~4.444% APR
.11BTC/bond = ~9.09% APR
.105BTC/bond = ~19.047619% APR

[Kluge]

Can you please let us know the connection between IOU and BDK?

Thank you.

IOU is considered under the BDK umbrella. All risks, liabilities, assets, gains, and losses of IOU are also BDK's. If there is enough demand, I'd be very happy to consider them separate -- I was worried people'd be pissed if I separated them and then kept all IOU gains for myself. This wasn't in the original scope of BDK when the first 4.5% of BDK monthly profits were sold, so I can understand people wanting to go either way. I'd be happy to take liability of IOU on myself and not subject BDK to the risk nor potential reward, though.

Motion created: https://bitcointalk.org/index.php?topic=77343.msg926629#msg926629

[Raoul Duke]

Doesn't this

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

contradicts this

Face Value: .1BTC

?

Does that mean that for each bond you'll sell Kronos is only getting 0.1 BTC(the bond face value) and you'll just pocket the difference, hence making a profit, or am I undestanding it wrong?
Care to enlighten a dumb guy about the discrepancy?

Was I expected to do this out as charity? I have no equity stake in Kronos and Kronos cannot sell bonds to everyone legally or they'd very possibly violate accredited investor laws. Kronos needs funds now - not after launch, and so IOU is liable to Kronos to pay what's needed as needed. There's a tight time-schedule for when funds need to be paid to Kronos which can't be met by releasing all shares on June 15th. What we don't sell, we cover. Additionally, discovering I have lost my sense of humor has ruined my holiday, which JRO & team have been saved from. I will be going to the family picnic in a poor mood!

So you want to get the biggest part of the profit to yourself by selling your risk, interesting... Shouldn't that be the other way around?(Rethorical question only)
I don't remember who said it before, but it's an idiot-tax indeed.
Good luck with your "IPO". Was planning to buy at least 2000 shares, but forget about it.
The only one with guaranteed profit is you, not your investors.
Sorry if I made you lose your sense of humor. Wasn't intended. You should've expected that people will ask questions when you ask them for money. Or are you keen for clouding things with vague wording instead of explaining things very clearly to potential investors? <--- You don't need to answer this, right now, I'm not a potential investor anymore.

[Kluge]

Doesn't this

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

contradicts this

Face Value: .1BTC

?

Does that mean that for each bond you'll sell Kronos is only getting 0.1 BTC(the bond face value) and you'll just pocket the difference, hence making a profit, or am I undestanding it wrong?
Care to enlighten a dumb guy about the discrepancy?

Was I expected to do this out as charity? I have no equity stake in Kronos and Kronos cannot sell bonds to everyone legally or they'd very possibly violate accredited investor laws. Kronos needs funds now - not after launch, and so IOU is liable to Kronos to pay what's needed as needed. There's a tight time-schedule for when funds need to be paid to Kronos which can't be met by releasing all shares on June 15th. What we don't sell, we cover. Additionally, discovering I have lost my sense of humor has ruined my holiday, which JRO & team have been saved from. I will be going to the family picnic in a poor mood!

So you want to turn a profit by selling your risk, interesting... Shouldn't that be the other way around?
I don't remember who said it before, but it's an idiot-tax indeed.
Good luck with your "IPO". Was planning to buy at least 2000 shares, but forget about it.
The only one with guaranteed profit is you, not your investors.
Sorry if I made you lose your sense of humor. Wasn't intended. You should've expected that people will ask questions when you ask them for money. Or are you keen for clouding things with vague wording instead of explaining things very clearly to potential investors? <--- You don't need to answer this, right now, I'm not a potential investor anymore.

I'll be holding well over 10k bonds myself, fwiw. No, I'm not selling my risk. You're misunderstanding a simple fact I've stated at least four times in this thread, now. IOU (that is, INAU and myself) is liable to bondholders in the event of a problem with Kronos.