DJ Models Announcement 01/05/19

[steve45]

2 hours ago, Ravenser said:

 

I'm no accountant, but I would have thought that crowd-funding would have to be shown under creditors (you've taken their money) and the cash received , stored in a bank account, would be current assets.

 

The only other significant creditors should have been factories in China?

 

If the APT crowd-funding was after these figures, then 100 crowdfunders @ £250 each is another £25,000 of money owed. If more than 100 have stumped up , then the figure increases pro-rata.....

 

These are sobering amounts of money at stake.

You are correct, any amounts paid by crowdfunders would be shown under creditors, in particular creditors falling due within one year.

 

For my sins I am a qualified accountant,

[stock_2007]

6 hours ago, arran said:

Never in the Field of Internet forums has so much time been wasted by so many on so few 

Your only saying what everyone is thinking

[JohnGi]

22 hours ago, Hot.In.Sing said:

As a long term observer of RMW I'd like to thank all contributors for the many happy hours I've spent browsing and reading about model railways I can only dream of.

 

As a Man United fan, given tonight's Liverpool v Barcelona game I'm also not writing DJM off just yet.

 

You may interpret that as you please 

 

Well that was a bit off topic, but after Spurs v. Ajax we do seem to be living in an age of surprise turnarounds.

[Roy L S]

1 hour ago, Clearwater said:

 

 

I think, but am not certain, that you’d account for prefunding as a prepayment (so a creditor).  That would then be released to the p&l as a sale at the point of delivery of the model.

 

initially the double entry would book the cash received as a current asset however I’d expect the cash to be used to pay the factory/ongoing costs so cash would reduce and assets increase.    I don’t think you’d keep all the cash on account pending settlement of the production liabilities at completion.

I would have thought the cash held is a current liability as it is not his cash it belongs to Third Parties.

 

Roy

 

 

[antrobuscp]

5 minutes ago, Roy L S said:

I would have thought the cash held is a current liability as it is not his cash it belongs to Third Parties.

 

Roy

 

 

The cash held would be an asset, BUT, a liability would exist, initially of an equal amount, which would be a liability to third parties shown under creditors. That liability would be released when appropriate under the terms of the crowd funding agreement.

Edited May 8, 2019 by antrobuscp

[Clearwater]

3 minutes ago, Roy L S said:

I would have thought the cash held is a current liability as it is not his cash it belongs to Third Parties.

 

Roy

 

 

 

I think that would depend on what the contract says.  In any event, if the cash is an account belonging to DJ, it would still show as cash (ie an asset) which may be balanced by a liability.  If you borrow money from a bank, you’d have the cash in an account but you’d also have a liability (the loan).  I don’t see how “crowdfunding” is any different.

[Roy L S]

Not necessarily an escrow or trust situation may well be assumed in which case would not be DJM's money, it would be held on account pending certain milestones, a lot depends on the T&Cs.

 

 

[Clearwater]

Roy

Sure but hence the point it depends on what the sales agreement/contract says.  If held in third party escrow to be released on a milestone, as the money comes into the company, I’d still expect to see a prepayment.  A product has been contracted for which some cash has been received but not yet delivered.  That’s a prepayment.  The cash that has come in may well have the been spend (cash account credited, an asset account debited.). The prepayment will still exist pending delivery of the goods when the p&l will be credited with the sale and the prepayment account debited back to zero.  No cash impact (assuming not additional payments) at the point of delivery.

[antrobuscp]

20 minutes ago, Roy L S said:

Not necessarily an escrow or trust situation may well be assumed in which case would not be DJM's money, it would be held on account pending certain milestones, a lot depends on the T&Cs.

 

 

If it is not DJM's money it may well not show on the balance sheet,. I have come across similar arguments with regards to the compilation of flat service accounts where frequently the service account company holds the funds of the flat leaseholders "on trust". I retired a few years ago now but the then relatively new advice I think said that some of the similar matters in those accounts should be dealt with by way of notes to the accounts and not on the face of the balance sheet. Personally I didn't agree with that approach due to the way in which flat residents tended to view the company accounts.  

 

Much, particularly timing, would depend on exactly what was defined/agreed in the funding agreement but at some point balances are likely to arise on both sides of the balance sheet as funds are spent.

 

My gut feeling (and not a technical response) would be that I would want to track each crowdfunding project rather like a "Restricted Fund" in a charity until those funds were released into the general business in accordance with the funding agreement.

 

Colin

Edited May 8, 2019 by antrobuscp
grammar correction

[south_tyne]

3 hours ago, blueeighties said:

Well. After what has been announced from Steve at the Little Loco Company today, who it has to be said, was producing quality, regular updates on progress and developments, I wouldn't now consider any venture involving new models that required payment 'up front.' And certainly not from one that seems to announce matters which have nothing to do with customer products.

 

I would concur with that and I think many will have a similar outlook given recent announcements and events. 

[jjb1970]

9 hours ago, njee20 said:

I thought DToS had backed out of the APT entirely (or have been removed), because there was confusion about who people were buying the model from, and who they’d pursue if things went wrong. I don’t know who instigated the split, if there was one...!

 

At the time I thought that the confusion over who was actually selling the model along with some questionable T&Cs raised red flags. After Kernow's experience I was amazed that another retailer was seemingly risking involvement. 

 

I do think that there is a real problem for crowdfunding just now given that people who have paid up for another company's project are now left in limbo wondering what is going on with a project they've funded. Unfortunately those companies doing it well may suffer adverse effects if people lose confidence in the concept of crowdfunding. 

[adb968008]

At least with LLC crowdfunders now have clarity, even if it’s not something they want to hear.

 

Unfortunately I’ve been advising caution on crowdfunding, and getting beaten down for it, for quite sometime.

 

LLC looks attractive from a business perspective, it has 1 tool ready to go and another ready to make.

I guess it’s how attractive the sale is, that determines the crowd funders future, if the price includes a bag of cf funds appropriate to finish the job it could fly.

if it’s a deal on tools only, the liability remains with LLC, and the prognosis isn’t good for cf’s.

 

Maybe the crowd funders could double or quits... if everyone went in to buy the company they get their model and oppourtunity to run it as a business.

Edited May 9, 2019 by adb968008

[wellseasoned]

As this has become so high profile I believe it's in everyone's interest that there is a positive outcome.
Some who read these posts will have paid a deposit/s on the King loco. Obviously we await some clarification from Dave Jones on exactly how things stand. I continue to hope that the King makes it through to delivery.

If it doesn't the fall out will probably deter a fair number of people from taking part in future crowdfunding initiatives...whoever is behind it. 

[njee20]

The King being supported by Digitrains would seem to make it a far less doubtful proposition than the APT, for which some people have thousands invested. 

 

I certainly hope no one loses their money, regardless of project. 

[JSpencer]

13 hours ago, blueeighties said:

Well. After what has been announced from Steve at the Little Loco Company today, who it has to be said, was producing quality, regular updates on progress and developments, I wouldn't now consider any venture involving new models that required payment 'up front.' And certainly not from one that seems to announce matters which have nothing to do with customer products.

 

The risk with one man bands is that they can fall ill overnight or worse, pass on to the next world. What put me off the APT was that there was no 3rd party to manage the funds and pick up the slack should anything happen to the commisioned person.

 

 

 

[royaloak]

20 hours ago, njee20 said:

I thought DToS had backed out of the APT entirely (or have been removed), because there was confusion about who people were buying the model from, and who they’d pursue if things went wrong. I don’t know who instigated the split, if there was one...!

Just had a look on the DToS website and the APT is still showing there if you want to order one.

[Ouroborus]

4 minutes ago, royaloak said:

Just had a look on the DToS website and the APT is still showing there if you want to order one.

 

It isn't.  It redirects to the DJM website.

[royaloak]

1 minute ago, Ouroborus said:

 

It isn't.  It redirects to the DJM website.

Uh it always did, the point I am trying to make (and you appear to be missing) is DToS are still advertising the APT. 

[njee20]

But that’s totally different to what it was. Originally the order page was actually hosted on DToS’s website, and the project was explicitly a joint one, quoting the announcement:

 

DToS are handling the orders as their ordering system is far more efficient than DJM's one is currently.

DToS are doing lots behind the scenes, however, to help the model come to fruition.

 

That doesn’t seem now to be the case. The original link in the thread to DToS is dead, I’ve not seen any posts from Mick after an initial flurry nor have I heard of any involvement from them. It was all triggered by a backlash with people saying “so who am I actually buying a model from”. I don’t know who instigated that split. 

[Markwj]

Yes you are correct my memory is that my order was via the dtos site. I wonder what Mick makes of it all. The plan was that they would do the apt then the remaining overhead electrics I seem to recall. I recall all the excitement and hype and now it's a damp squid!

 

[Colin_McLeod]

1 hour ago, royaloak said:

Uh it always did, the point I am trying to make (and you appear to be missing) is DToS are still advertising the APT. 

 

Better advertising of the APT might have brought in more orders.  Though a simplification of the choices would also have helped as would DJModels getting a website and payment arrangements up to scratch before publishing the project instead of a temporary arrangement with DToS and using Paypal without clearing with them that it would be ok to do so.

[Clearwater]

I can’t help but feel a business plan based around items like an n gauge King, where people may have brought several would have been a better business plan than one based on high price single purchase items like the APT.

[royaloak]

17 minutes ago, Clearwater said:

I can’t help but feel a business plan based around items like an n gauge King, where people may have brought several would have been a better business plan than one based on high price single purchase items like the APT.

Or announcing one or two models AND producing/selling them before announcing 20 others so there was some cash flowing in instead of all the cash flowing out.

Edited May 9, 2019 by royaloak
correct a spelling mistake, why do you always notice the mistake after hitting the submit reply button.

[spikey]

1 hour ago, Markwj said:

 ... now it's a damp squid!

 

Hmmm ... is that better or worse than being a damp squib?

[Markwj]

5 minutes ago, spikey said:

 

Hmmm ... is that better or worse than being a damp squib?

Probably worse as they struggle more and won't stay on the plate!