SUBSEQUENT EVENTS |
6 Months Ended |
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Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On July 31, 2015, as an additional step in demonstrating the viability of the digital securities trading system we are developing, we issued additional privately-placed digital cryptobond debt to an unaffiliated purchaser for $5.0 million in cash and concurrently made a $5.0 million loan to the purchaser. The debt we issued to the unaffiliated purchaser has a 7.0% annual interest rate and is subject to put and call rights that allow us to redeem the debt at 105.0% of the principal amount, and allow the holder to require us to repurchase the debt at 102.5% of the principal amount, in each case at any time after November 1, 2015. The purchaser also has the right to require us to repurchase the debt prior to November 2, 2015 at 96% of the principal amount. The $5.0 million loan we made to the purchaser has a 3.0% annual interest rate, resulting in an effective net interest rate payable by us to the purchaser of the $5.0 million digital cryptobond debt of 4%. Both instruments have 5-year terms. The terms of our loan to the purchaser require repayment of the loan concurrently with the repayment of the digital cryptobond debt, whether at maturity or pursuant to the exercise of the put or call features. In order to avoid having cryptobonds outstanding with different terms, in connection with the $5.0 million issuance to the unaffiliated purchaser, we modified the terms of the $500,000 of cryptodebt we had previously issued to our Chief Executive Officer, Dr. Patrick M. Byrne, to match the interest rate, maturity and put and call options of the debt to the unaffiliated purchaser. We did not and will not make any loan to Dr. Byrne. Dr. Byrne has further agreed to be bound by the terms of the unaffiliated debt in the event it is modified in the future. We issued the digital cryptobond debt for the purpose of further demonstrating the viability of the digital securities trading system, and made the offsetting loan to the purchaser in order to demonstrate the trading system without the complications of a normal financing and to reduce the borrowing cost. We expect that the two transactions will both be simultaneously repaid in or prior to the fourth quarter of 2015. |