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Update:
Over the past month Tangible Cryptography, LLC has aggresively called existing notes to pay down outstanding debt.
Total debt obligations (including all prior auctions) as of 04/04/2013:
Loc C: 400 BTC
Loc D: $45,000 USD
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Topic: [Funded] Tangible Cryptography LLC seeks LoC to expand working capital (Read 2839 times)
April 04, 2013, 06:03:20 PM
February 12, 2013, 03:21:06 PM
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All executed promissory notes have been funded.
We were unable to reach terms with one lender and will not be reopening the bidding.
This resulted in a slight reduction in the amount borrowed.
Total debt obligations (including all prior auctions) as of 2/12/2013:
Loc C: 1,000 BTC
Loc D: $95,000 USD
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Hash: SHA1
All executed promissory notes have been funded.
We were unable to reach terms with one lender and will not be reopening the bidding.
This resulted in a slight reduction in the amount borrowed.
Total debt obligations (including all prior auctions) as of 2/12/2013:
Loc C: 1,000 BTC
Loc D: $95,000 USD
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February 06, 2013, 07:11:04 PM
Closed. Lenders with winning bids will be contacted this evening (probably late EST) with funding instructions and promissory notes. Thank you to all participating lenders.
February 06, 2013, 04:18:23 PM
A lender has placed a bid for Loc D.
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$50,000 @ 24%
Bidding will close in roughly 3 hours at 23:59:59 UTC (http://www.worldtimeserver.com/current_time_in_UTC.aspx).
In the event there is a bid in the final hour the auction will be extended by one hour.
To bid on either Loc a potential lender must underbid the existing offers.
The minimum bid increment is 0.25%
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$50,000 @ 24%
Bidding will close in roughly 3 hours at 23:59:59 UTC (http://www.worldtimeserver.com/current_time_in_UTC.aspx).
In the event there is a bid in the final hour the auction will be extended by one hour.
To bid on either Loc a potential lender must underbid the existing offers.
The minimum bid increment is 0.25%
February 06, 2013, 02:57:35 PM
No it is a good question. Demand is still growing faster than our ability to keep our accounts funded. While the blockchain is instantaneous the fiat world isn't. Funds received from bitcoin sales on exchanges have a lag time. So while the company never "runs out of money" often money is in the wrong place or form. When that happens we have to turn away sales which result in loss profits and reduced customer satisfaction.
So while the company could retain ~500 BTC more in company wallet rather than sell it that would mean ~$10,000 less available to purchase more coins. Since we payout using a variety of mechanism (PayPal, Dwolla, ACH, Bullion, etc) that means to be ready for a sale regardless of which method the client would like to be paid in we need funds available in all those accounts, all the time. Accounts like PayPal have a 4 day lag in funding which means the amount in that account today needs to be sufficient to cover the next four days of sales (which can vary wildly) or we run out and lose potential sales.
If you wanted to look at it as a formula
ideal working capital = (avg daily sales) * (avg lag time in reloading accounts payable)
While our working capital is growing (as the company retains profits. Sales volume is growing faster. Until such time as we catch up the loan enables the company to not lose potential sales.
That was somewhat verbose, right now borrowing 500 BTC has a lower cost then having losing sales due to insufficient amount of funds in the right account.
As an example we ran out of funds in our PayPal account on Monday and lost potential sales. I was being conservative with the funds transfer to PayPal and demand was higher than I projected. By the time we ran out of funds another ACH was already inbound but it didn't clear until just now. I don't like turning away clients.
Eventually growth rate will slow and we will end up in a situation where the company has more capital than it can deploy effectively. At that point it will not longer make sense to borrow funds we can't effectively use, and the company will pay off the lines of credit. In that event the USD line would probably be paid off first as it has a higher cost. It is hard to predict when that will occur which is one reason why the notes are open ended and allow repayment at anytime without penalty.
So while the company could retain ~500 BTC more in company wallet rather than sell it that would mean ~$10,000 less available to purchase more coins. Since we payout using a variety of mechanism (PayPal, Dwolla, ACH, Bullion, etc) that means to be ready for a sale regardless of which method the client would like to be paid in we need funds available in all those accounts, all the time. Accounts like PayPal have a 4 day lag in funding which means the amount in that account today needs to be sufficient to cover the next four days of sales (which can vary wildly) or we run out and lose potential sales.
If you wanted to look at it as a formula
ideal working capital = (avg daily sales) * (avg lag time in reloading accounts payable)
While our working capital is growing (as the company retains profits. Sales volume is growing faster. Until such time as we catch up the loan enables the company to not lose potential sales.
That was somewhat verbose, right now borrowing 500 BTC has a lower cost then having losing sales due to insufficient amount of funds in the right account.
As an example we ran out of funds in our PayPal account on Monday and lost potential sales. I was being conservative with the funds transfer to PayPal and demand was higher than I projected. By the time we ran out of funds another ACH was already inbound but it didn't clear until just now. I don't like turning away clients.
Eventually growth rate will slow and we will end up in a situation where the company has more capital than it can deploy effectively. At that point it will not longer make sense to borrow funds we can't effectively use, and the company will pay off the lines of credit. In that event the USD line would probably be paid off first as it has a higher cost. It is hard to predict when that will occur which is one reason why the notes are open ended and allow repayment at anytime without penalty.
February 06, 2013, 02:37:18 PM
I'm not clear on the motivation for this. If you've made 3.87% on $600k in the last 30 days, that $23k or 1100 BTC. Why pay interest on a loan for 500 BTC when you could set that amount aside from profits of 1/2 month of business? You could loan that money to yourself.
Apologies if I'm missing something obvious here...
Apologies if I'm missing something obvious here...
February 06, 2013, 02:18:22 PM
If I were you, I would convert LOC D into a BTC LOC as it's clear you can get a lower interest rate and apparently greater fundings. You could always immediately convert BTC to USD if you want a USD LOC. From a business perspective, it would be foolish to pay 24% interest when you're receiving offers in BTC as low as 4.5%.
Best of luck with your loans.
Best of luck with your loans.
By taking out a loan in BTC and converting to USD we would essentially be shorting BTC. While the interest would only be 4.5% if BTC:USD exchange rate were to rise say 70% the true cost of that loan would be very high.
Loc C serves a different purpose. The funds secure will remain as BTC and be kept in the company wallet. We can draw against that and while we technically are going short when doing so, this is a short term action as we have a near continual supply of acquired coins. 1,000 BTC is more than sufficient to cover these short term needs and it wouldn't be in the best interest of the company or lenders to borrow more.
If Loc D doesn't fund fully it doesn't present any significant disruption. The operation currently throws off close to $25,000 a month in free cashflow. We can build out the working capital organically it just means taking things slower. $50K gives us a couple months "head start". Even with a cost of capital at 24% our IRR is closer to 200% annually. That obviously will fall as volume scales up but we have a comfortable margin. If ever capital isn't productive (i.e. our return on borrowed funds is less than what we are paying for them) the note structure gives us the ability to pay it off or down without penalty. Since the funds will be used for working capital and not capital expenditures we don't face any liquidity issues where we could become trapped by a high interest cost and are "equity rich but cash poor".
Thank you for your interest in the loan.
February 06, 2013, 01:55:27 PM
Yes and fixed. It is possible that Loc D will not fund fully. In that case we will not extend the auction and just close on the portion that is funded. Loc D is less critical than Loc C as it is much easier to find alternative sources of USD based financing.
If I were you, I would convert LOC D into a BTC LOC as it's clear you can get a lower interest rate and apparently greater fundings. You could always immediately convert BTC to USD if you want a USD LOC. From a business perspective, it would be foolish to pay 24% interest when you're receiving offers in BTC as low as 4.5%.
Best of luck with your loans.
February 06, 2013, 08:50:54 AM
Yes and fixed. It is possible that Loc D will not fund fully. In that case we will not extend the auction and just close on the portion that is funded. Loc D is less critical than Loc C as it is much easier to find alternative sources of USD based financing.
February 06, 2013, 12:32:10 AM
A lender has placed a bid for Loc D.
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$5,000 @ 24%
$47,000 - open
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$5,000 @ 24%
$47,000 - open
Shouldn't this be $45,000?
February 05, 2013, 09:48:16 PM
A lender has placed a bid for Loc D.
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$5,000 @ 24%
$45,000 - open
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$5,000 @ 24%
$45,000 - open
February 04, 2013, 08:08:40 PM
A lender has placed a bid for Loc C.
150 BTC @ 4.5%.
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$3,000 @ 24%
$47,000 - open
150 BTC @ 4.5%.
LOC C current bids:
150 BTC @ 4.5%
350 BTC @ 12.0%
LOC D current bids:
$3,000 @ 24%
$47,000 - open
February 04, 2013, 04:33:16 PM
Links to prior loans:
Loc C & D (currently open) 9/30/2012
https://bitcointalksearch.org/topic/funded-tangible-cryptography-seeks-line-of-credit-to-expand-working-capital-114507
Loc A & B (paid in full) 8/7/2012
https://bitcointalksearch.org/topic/funded-tangible-cryptography-llc-seeks-loc-to-expand-working-capital-99034
Loc C & D (currently open) 9/30/2012
https://bitcointalksearch.org/topic/funded-tangible-cryptography-seeks-line-of-credit-to-expand-working-capital-114507
Loc A & B (paid in full) 8/7/2012
https://bitcointalksearch.org/topic/funded-tangible-cryptography-llc-seeks-loc-to-expand-working-capital-99034
February 04, 2013, 04:31:41 PM
As requested included below is a sample promissory note. The note below is for USD based loans. The note for BTC based loans is similar.
Quote
PROMISSORY NOTE
Borrower:
Tangible Cryptography LLC a Virginia Limited Liability Company
237 HANBURY ROAD E SUITE 17-165
CHESAPEAKE, VA 23322
Lender:
[LENDER NAME]
Principal Amount: $xx,xxx.xx USD
1. FOR VALUE RECEIVED, the Borrower promises to pay the Lender, the principal sum of [PRINCIPAL AMOUNT] ( $xx,xxx.xx USD ) USD, with interest payable on the unpaid principal at the rate of [INTEREST RATE/12] percent per month, calculated monthly.
2. For periods of less than one Month due to disbursement, transfer, sale, or repayment in full, the interest payable on the unpaid balance shall be [INTEREST RATE / 365.25] per day.
3. Lender will disburse the principal amount to the Borrower by [Bank Wire | Local Branch Cash deposit | Bitcoin transfer | MtGox USD Code]. Loan is deemed funded and interest will accrue when Lender is in possession of certified funds. If Bitcoin transfer is utilized the USD equivalent of the bitcoins transferred will be based on the 'Mt Gox 24 hour Volume Weighted Average Price' at the time of the transfer.
4. Borrower will make monthly periodic interest payment to Lender in a manner, and to an address designated by the Lender as may be provided in writing to the Borrower.
5. This Note will be repaid in consecutive monthly installments of interest only on the first day of each Month commencing the Month following the execution of this Notes until the Lender has provided the Borrower with written notice (“Notice of Demand”).
6. Upon Notice of Demand Borrower will repay the outstanding Principal amount in full to include any accrued and unpaid interest. Principal Repayment will be completed no later than thirty days after Notice of Demand.
7. At any time while not in default under this Note, the Borrower may pay some or all of the outstanding balance then owing under this Note to the Lender without further bonus or penalty.
8. This Note will be construed in accordance with and governed by the laws of the Commonwealth of Virginia.
9. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by The Lender in enforcing this Note as a result of any default by the Borrower, will be added to the principal then outstanding and will immediately be paid by the Borrower.
10. This Note will enure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest and notice of protest.
Borrower:
_______________________________________
Tangible Cryptography LLC
By: ___________, Executive Manager
Lender:
_______________________________________
Borrower:
Tangible Cryptography LLC a Virginia Limited Liability Company
237 HANBURY ROAD E SUITE 17-165
CHESAPEAKE, VA 23322
Lender:
[LENDER NAME]
Principal Amount: $xx,xxx.xx USD
1. FOR VALUE RECEIVED, the Borrower promises to pay the Lender, the principal sum of [PRINCIPAL AMOUNT] ( $xx,xxx.xx USD ) USD, with interest payable on the unpaid principal at the rate of [INTEREST RATE/12] percent per month, calculated monthly.
2. For periods of less than one Month due to disbursement, transfer, sale, or repayment in full, the interest payable on the unpaid balance shall be [INTEREST RATE / 365.25] per day.
3. Lender will disburse the principal amount to the Borrower by [Bank Wire | Local Branch Cash deposit | Bitcoin transfer | MtGox USD Code]. Loan is deemed funded and interest will accrue when Lender is in possession of certified funds. If Bitcoin transfer is utilized the USD equivalent of the bitcoins transferred will be based on the 'Mt Gox 24 hour Volume Weighted Average Price' at the time of the transfer.
4. Borrower will make monthly periodic interest payment to Lender in a manner, and to an address designated by the Lender as may be provided in writing to the Borrower.
5. This Note will be repaid in consecutive monthly installments of interest only on the first day of each Month commencing the Month following the execution of this Notes until the Lender has provided the Borrower with written notice (“Notice of Demand”).
6. Upon Notice of Demand Borrower will repay the outstanding Principal amount in full to include any accrued and unpaid interest. Principal Repayment will be completed no later than thirty days after Notice of Demand.
7. At any time while not in default under this Note, the Borrower may pay some or all of the outstanding balance then owing under this Note to the Lender without further bonus or penalty.
8. This Note will be construed in accordance with and governed by the laws of the Commonwealth of Virginia.
9. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by The Lender in enforcing this Note as a result of any default by the Borrower, will be added to the principal then outstanding and will immediately be paid by the Borrower.
10. This Note will enure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns of the Borrower and Lender. The Borrower waives presentment for payment, notice of non-payment, protest and notice of protest.
Borrower:
_______________________________________
Tangible Cryptography LLC
By: ___________, Executive Manager
Lender:
_______________________________________
February 04, 2013, 01:42:24 PM
A lender has placed a bid for Loc D.
$3,000 @ 24%. $47,000 remaining at current interest rate.
$3,000 @ 24%. $47,000 remaining at current interest rate.
February 04, 2013, 09:58:40 AM
A lender has placed a bid for Loc C.
500 BTC @ 12%
To place a bid for all or part of Loc C you would need to offer 11.75% interest or lower.
500 BTC @ 12%
To place a bid for all or part of Loc C you would need to offer 11.75% interest or lower.
There has to be a more efficient way to be doing this.
February 04, 2013, 07:11:46 AM
A lender has placed a bid for Loc C.
500 BTC @ 12%
To place a bid for all or part of Loc C you would need to offer 11.75% interest or lower.
500 BTC @ 12%
To place a bid for all or part of Loc C you would need to offer 11.75% interest or lower.
February 04, 2013, 07:01:53 AM
Notes proposed:
Line of Credit C (LocC) Current Bid: None
Amount: 500 BTC
Denomination: Bitcoins
Repayment: Interest only payment made monthly. When note is called principal will be repaid within 30 days.
Interest: max of 12% annually - note bidding is a reverse auction which ends 3/6/2012 @ 23:59:59 UTC.
This is a typo, correct?Line of Credit C (LocC) Current Bid: None
Amount: 500 BTC
Denomination: Bitcoins
Repayment: Interest only payment made monthly. When note is called principal will be repaid within 30 days.
Interest: max of 12% annually - note bidding is a reverse auction which ends 3/6/2012 @ 23:59:59 UTC.
Correct. Fixed.
February 04, 2013, 07:01:34 AM
Solid post as usual. Is Mtgox USD accepted for the USD LoC?
Sure that will be fine.
February 04, 2013, 05:56:41 AM
This is how you make a good post.
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