DJM - Statement of Affairs released

[brack]

3 minutes ago, Ravenser said:

if Dave was telling the truth about reaching the "minimum order number" for these projects

I'd suggest we've seen enough evidence on previous claims regarding progress and development that it would be prudent to doubt the veracity or accuracy of any numbers publically communicated. If you're stuck for cash and your business desperately needs more money then telling people only 7 blokes have actually ordered an APT is more likely to dissuade others from investing, whereas telling people you're on so close might encourage them to open their wallets and get on board. Likewise telling folk it's about to go into production or spawning more and more crowdfunded projects. If theres an acute cash shortage and known issues with accuracy of public statements I'd view everything DJM said as PR/spin/marketing or whatever you want to call it as a series of gambles to keep things running, pay creditors and salaries etc.

 

[Pete 75C]

6 minutes ago, truffy said:

 

Oh poop! That was shaping up to be a nice little spat. I'd even popped corn!

 

Don't worry - there will be another one along shortly.

[Pacific231G]

On 03/07/2019 at 15:30, pheaton said:

Forgive me if im being dumb.....but i cant understand why he was VAT registered in the first place.....i don't recall his turnover exceeding 85k in any one year.....

 

 

You have to register for VAT if your turnover exceeds the limit but you can choose to register at any level if it suits your business.

I'm having to look at that myself just now. Until recently, most of my professional work has been for VAT registered organisations and, though much of what I sell is my own services, I registered when I went freelance so  that I could reclaim the VAT on services like cutting rooms and camera crews. That was very good for my bottom line so long as most of my  clients were also VAT registered. However, if most of my clients are not VAT registered (and as well as consumers, that includes some charities, foundations and publishers) registration is not to my advantage as I have to either absorb the VAT on my sales or increase my rates to cover it  (which comes to much the same thing)

 

In this case VAT registration suggests that he was either expecting a  lot of his overall business to come from other companies or to quickly grow above the threshold. 

Edited July 4, 2019 by Pacific231G

[The Stationmaster]

12 minutes ago, Ravenser said:

 

 

It seems reasonable to assume that the "minimum order number" for the N gauge King was much the same as for the N gauge Mogul. It seems not unreasonable to assume that the "minimum order number" for the N gauge 92 was similar . And you would expect the OO 92 figure to be at least as high as for the N gauge model

 

And you would have expected the "minimum order number" for the OO APT to be similar to the N gauge figure (400) . Given that Dave claimed there was a lot more demand for a OO model you would have expected at least double or triple the number of OO orders compared with N (118).

 

RevolutioN (I think)  in a posting on here referred to a minimum order number of 3000 for an established manufacturer and 1500 units for a crowd-funding project. Those sound like "industry norms" to me

 

So - if Dave was telling the truth about reaching the "minimum order number" for these projects - you can do some quick maths about the approximate sums involved in first instalment crowd-funding. We know how much DJM was charging as the first instalment payment in each case

 

And if the sums that have evaporated are a lot less - then those projects proceeded without meeting their targets, despite what we were told - and probably failed as a result. 

 

And it does look as if DJM was trying to operate on lower numbers than other companies in the trade - making his costings much more stressed

I certainly adopted the APT extrapolation in respect of an example I used in the crowdfunding thread but we haven't got the first idea if the numbers he gave were either correct or if his statements about them were true.  For example in the APT thread things changed within days from moans about faked emails meaning the numbers were short of those required to exultant shouts of not only having enough takers but the fact that there was also a 10% surplus. (DJ post, 8 April 2018).  OK - that could well have happened but it certainly seemed a bit odd that a surplus appeared not long after somebody queried if there was a margin for people dropping out.  So either there were 400 plus crowdfunders or there weren't and we don't really know which unless they all sign up on the new thread.  What we do know, according to DJ's posts, is that at least 22 people, plus the 10% surplus, signed up for the APT between 22 March and 08 April 2018.

 

As far as DJM working on lower numbers is concerned the answer is that it all depends.  If you look back on the thread about the N gauge Voyager which Revolution eventually took elsewhere there is an impression that it was the opposite way round.  I wonder if the 'number required' was as much driven by other reasons as achieving the number of crowdfunders quoted - for instance was anything allowed for potential trade orders and do the factories actually work in multiples of something other than 500?

 

So notwithstanding any extrapolations we might make and any comments about 'the required numbers being achieved' or - in one case - 'the break even number being reached' (whatever that might mean in respect of a 'not for profit' crowd funded project? )

[PenrithBeacon]

3 hours ago, cctransuk said:

 

Correct me if I'm wrong, but aren't OO Works models moulded in small numbers in resin, to a standard of detail that would not be acceptable to most potential purchasers of an N gauge King.

 

Producing resin mouldings in a small workshop cannot be compared to mass-producing plastic injection mouldings.

 

Regards,

John Isherwood.

Thanks for that, I was under the impression that the 00 Works models are injection moulded. As AYMod says apples and oranges.

Edited July 4, 2019 by PenrithBeacon

[Roy L S]

1 hour ago, The Stationmaster said:

This one was published in April this year in respect of N Gauge projects.  I can't recall seeing anything similar for the 00 gauge projects but various comments - rather than real numbers - were made by DJ in several model specific threads on RMweb.

 

Perhaps unsurprisingly this DJM statement is misleading.

 

I expressed an interest in an N Gauge J94 so would be one of the 112/ 800, but at no stage did I place an order, pay any money or entered into a binding commitment. The same is I believe true of the Mogul, expressions of interest were invited but no money was asked for or paid. To describe them as "orders" in the above statement is, in my opinion (and being very generous) a somewhat distorted version of the true position.

 

The above being the case, I am now pondering on how many of the APTs, Kings and 92s had deposits actually been paid on and were some of these "orders" merely expressions of interest? Of course we will probably never know but it may well be unsafe to assume MOQ being described as "reached" means deposits paid on 800 Kings for example.

 

With these points in mind, it is maybe easier to see why (with that marvellous thing called hindsight) models were described as being close to tooling but never quite got there...CADs juuuuust needed a few more tweaks... How many times was that said? 

 

Roy

Edited July 4, 2019 by Roy L S
clarifying edit

[grahame]

8 minutes ago, Roy L S said:

Perhaps unsurprisingly this DJM statement is misleading.

 

I expressed an interest in an N Gauge J94 so would be one of the 112/ 800, but at no stage did I place an order, pay any money or entered into a binding commitment. The same is I believe true of the Mogul, expressions of interest were invited but no money was asked for or paid. To describe them as "orders" in the above statement is, in my opinion (and being very generous) a somewhat distorted version of the true position.

 

The above being the case, I am now pondering on how many of the APTs, Kings and 92s had deposits actually been paid on and were some of these "orders" merely expressions of interest? Of course we will probably never know but it may well be unsafe to assume MOQ being described as "reached" means deposits paid on 800 Kings for example.

 

With these points in mind, it is maybe easier to see why (with that marvellous thing called hindsight) models were described as being close to tooling but never quite got there...CADs juuuuust needed a few more tweaks... How many times was that said? 

 

Roy

 

Agree.

 

And, of course, even for the King the MOQ figure (or whatever number Dave presumed was sufficient to announce he was proceeding to tooling) weren't all crowdfunders who had paid a part payment/deposit or whatever. Apparently the figure was reached by a retailer agreeing to take up the slack of quite a number and it's doubtful whether they paid a deposit.

 

G

[Ravenser]

22 minutes ago, Phil Parker said:

 

Basically, caveat emptor.

 

The problem with all this, is that it becomes tribal. In this case, the DJ fans and DJ haters would try to shout each other down. You see the same in the red box and blue box threads. 

 

As I know only too well, when it goes wrong, there are loads of people rushing to gloat with "told you so" posts. When a model appears, there will be those who say the same to the doubters. Forget calm logic, that left the building a long time ago.

 

Ultimately, "the hobby" can't do anything about it. Decisions as to where people spend their money are personal and up to the individual. If you really want o give your cash to someone selling snake oil, all the people pointing out problems are likely to harden your position, not change it. Nothing you have suggested is unreasonable, but it's up to the individual to decide.

 

If we start with some idea of what has gone wrong with crowd-funding , and what reasonably can be done to guard against it, at least there is a baseline of "reasonable expectations" against which to measure both sides of those arguments 

 

With Kickstarter - as I understand it - you have to declare how much you want to raise, there is a deadline for raising it, the money is paid to a neutral "bag-holder" and not released to the promoter unless the project is fully -funded. Otherwise it's returned to the "investors". I suspect (can someone confirm?) that investors expect some kind of business plan. And I don't think they permit crowd-funding by instalments 

 

We can now see why all of these things are in place. Kickstarter's role as "bag-holder"  means that the promoter can't get his hands on the crowd-funding unless and until the full funding has actually been raised. The deadline ensures that these things can't drift on indefinitely - which in turn means that the costs shouldn't be so vulnerable to escalating away from the  costing

 

Payment by instalments is clearly a significant risk in a crowd-funding structure - Firstly because if crowd-funders drop out at the second and third call the project may collapse (leading to pressure from the "true believers" on those people starting to doubt to stay in and cough up more - something we saw with DJM where expressions of concern became treated as deliberate attempts to bring down the project), and secondly because if the crowd-funding goes on for years , costs in China will escalate - so where's the mechanism to compensate for that increased cost?  That may have been a factor with DJM

 

There was an assumption that model railways didn't need any of this stuff and crowd-funding could be structure - however informal - you wanted

 

The flip side of all this , is that unless promoters start providing reasonable comfort on these issues, we will lurch from one extreme to another, crowd-funding will simply be damned en bloc, and nobody will touch any kind of crowd-funding from anyone with a bargepole, regardless of its merits, reputability or structure. That apparently has happened in other countries 

 

(As an example , the South Sea Bubble left floating companies with shares so badly discredited in Britain  that for the next 100 years any company share flotation was generally regarded as little more than organised fraud by a bunch of crooks . It wasn't really until the early railway companies were established that the idea of a company with shareholders became a respectable form of investment again...)

 

So it is in the interest of crowd-funding promoters to offer project structures that address this. Should promoters really be seeking crowd-funding before they have generated CAD, as DJM did?? The OO APT looks more and more like an extraordinary spur-of-the-moment  scheme. Should the sequence be - Expressions of Interest (with safety margin) / display of CAD / crowd-fund with no more than 2 instalments??

 

We need to know some of what went wrong at DJM before we - and promoters - can  work out what risks need to be guarded against

[Ravenser]

1 hour ago, Pacific231G said:

 

 

In this case VAT registration suggests that he was either expecting a  lot of his overall business to come from other companies or to quickly grow above the threshold. 

 

He would have expected much business to come from other companies - the Kernow + Hattons tie-ups were clearly a substantial part of the original concept of DJM

[Joseph_Pestell]

Another scam e-mail this afternoon from someone who has clearly gained access to the DJ e-mail account contact addresses.

 

Not a sophisticated attempt as the name (Chinese) of the sender was clearly visible - or that name may have been "spoofed" from DJs e-mail account as well.

 

Whatever. Do be careful if you receive any e-mails purporting to be from DJ with links to click on or attachments. Delete and blacklist.

[AY Mod]

2 minutes ago, Joseph_Pestell said:

Another scam e-mail this afternoon from someone who has clearly gained access to the DJ e-mail account contact addresses

 

May I ask how you've pinned that down as the source? 

[The Stationmaster]

We have elsewhere on the forum a thread dealing specifically with crowd funding covering, I think, most of the potential and the sort of questions those putting in money should be asking.  It has been 'done ov der' several times there and some reasonable conclusions reached so perhaps that is the place for further discussions on the subject of crowd funding, the pitfalls, the risks, the questions to ask, and how to avoid them.

 

In this thread we know DJM's crowd funding projects have let down those who contributed to them - nothing, unfortunately for those who have suffered financial loss or had to jump through various hoops to get their money back from a bank or credit card company, will change that.  And we simply don't have the information to know what happened  to the money contributed to DJM crowdfunded projects - those projects have in effect ceased to be relevant to a discussion on crowdfunding except as a stark warning. 

 

So perhaps discussions about crowd funding could be carried on in that thread?

[Joseph_Pestell]

3 minutes ago, AY Mod said:

 

May I ask how you've pinned that down as the source? 

 

Of course (and keep in mind Andy that I am not as IT tech as you are).

 

It says "from Dave Jones" and I don't know any others. His e-mail address is not recorded anywhere on my e-mail server, so it must be him - or someone linked to him by e-mail - that has the worm virus.

 

I will try to screenshot it for you.

[AY Mod]

6 minutes ago, Joseph_Pestell said:

will try to screenshot it for you.

 

Thanks, don't show anything which could give any clues to your details etc. 

 

The source could be someone he's emailed being infected or he's clicked on something surreptitious and it's wormed back up and out but it sounds like a weakness. 

[roythebus]

If anyone on here had bothered to follow the links to Companies House and actually   looked at the figures given in the micro-entity accounts, it's fairly clear what has happened.  I would suggest that the Funding Circle or whoever it was money may have been borrowed from called time on their loan; it could be that was secured against something like somebody's house. Somebody doesn't want to be homeless. How much is in the bank? Oh, just enough to pay the secured loan. job done. Have a look at the accounts, creditors due under 1 year, creditors due more than 1 year; shareholding etc. It all falls into place.

 

Only this week news broke that a medium size coach company near me folded. Lots of shiny new coaches, people's holidays ruined, the usual headlines. But from looking at Companies House it appears that the funder got out a few years ago; things were difficult; an eminent person from the industry was brought in to try to save the business along with someone else who invested £1.5m. Other new directors were involved too. this suggested a fire-fighting party. They all resigned at the end of May. The business folded on July 1st with debts of £3m.

 

As I said in an earlier thread, regardless of what anyone on here puts to the liquidator, I would suggest that nobody will get a penny back. Time would be better spent modelling rather than worrying about what a rotter Mr.X is. Meanwhile, have a look at the Companies House accounts. It isn't rocket science.

[rab]

3 hours ago, Phil Parker said:

 

Then let them get on with it. If you are owed money then tell them. They are there to assimilate all the information, including stuff we aren't party too, to sort all this out.

 

If you haven't then officially, it's none of your (or my) business. If you think fraud has been committed, take your evidence (not conjecture) to the Police.

 

To return to the point I made, which wasn't in reply to anything you said but you've enjoyed taking offence at:

 

"Why do "we" need to get a handle on the issue? As far as I am aware, RMweb is not the body charged with sorting out DJ Models, that is the role of the liquidator and I'm pretty sure they aren't going to appreciate a load of amateurs telling them how to do their job. It might be interesting to know all the details, but realistically, this isn't going happen unless someone wants to fund an extensive and very expensive investigation."

 

That would seem to be the crux of this latest argument.

I'm sure the liquidators would welcome information

which will help them carry out the task assigned to them.

What they will not welcome is being told how to carry out

that task.  

[Dr Gerbil-Fritters]

1 hour ago, AY Mod said:

 something surreptitious and it's wormed back up and out but it sounds like a weakness. 

 

Sounds like the DJM business plan...

[truffy]

1 hour ago, roythebus said:

It all falls into place.

 

I'll take your word for it. I looked at the numbers and they made no sense to me whatsoever. But that's why I use the services of a professional accountant.

[nightstar.train]

9 hours ago, Ravenser said:

 

 

How much would a 14 car APT actually have cost to develop and produce? Would the 400 x £1000 indicated in the case of the N gauge APT really have been enough to carry through the project ?  If not , then DJM was guilty of asking people to subscribe large sums to a project that could never have worked, on the basis that their money was non-returnable if it failed...  And what contingency did he have if it took 2 years to raise the minimum subscribers - and rising costs in China drove up the total costs by 40% in that time??

 

These are extremely “back of an envelope” calculations, but it gives an idea I think. 

 

It’s oft quoted around rmweb that it costs in the region of £100,000 for the development of a small tank engine and £150,000+ for a large tender engine, and maybe £50,000 for a coach. So let’s say the power unit for the APT will be equivalent to a large tender engine, given the need for fiddly things like pantographs and the tilting mechanism. Then 4 different coaches (inner ends, pointy ends, saloon and buffet). Given the need for them to have articulated tilting bogies I’d add another 20% on and say £60,000 per. So you’re looking at fixed development and tooling costs of £390,000. That’s before an production and assembly costs, shipping, VAT etc etc. 

 

If youre only selling 400 sets then you’re starting at a cost of nearly £1000 before any production costs, let alone profit. DJMs cost of £1000 for a 5 car set doesn’t seem good on that, and at £1250 for a 14 car (I think it was), that’s not much margin. Even if we slash my figures by half that’s still about £500 fixed cost per set, then add material cost, production cost, shipping, VAT etc. 

 

It could well be that the factory gave him a bill for tooling (or even an estimate) and he realised he’d never pay for it at whatever level of crowdfunding he had, and decided to quit before he was further behind.  

[Chris116]

Kick-start has been mentioned with reference to how things are organised. Recently Pledge Music, a similar organisation, went bust leaving many musicians and songwriters with little or no funds for works that had been ordered. Indeed I had a CD ordered but thankfully the artist was able to fund its issue and postage so I have not lost anything although I know the artist got so little that she is shy of breaking even on a CD album that should have made a good profit. 

 

There are some very reputable companies using crowd funding but it is not always a safe method and it should be noted that a year ago Pledge Music was thought of as being very reputable so things can change very rapidly. 

Edited July 4, 2019 by Chris116

[etendam]

Crowd funding has become a mess. Lots of projects (if they are released) are dropped in price as compatitors make the same during the project. Companies beggin to get funds to buy a very expensive 3D printer (even with poor quality) and other machines where the "investors" get a discount on work that is made from the machine? If they would have gone to a bank they first should have a proper business plan, and some assets if something goes wrong with the payments.

 

Yes and I know that a bank isn't always giving the needed amount but on the other hand you can do other things first to get the funds realised by yourself in stead of just focussing on the one thing you want!

 

The number of investers on crowd funding projects  is slowly drying out especially as not all promoters have the intention to get projects realised and there are so many projects launched!

 

Ed

[njee20]

Is that based on fact or just your perception? It’s been said repeatedly that crowdfunding is just a mechanism for delivering products. It’s not inherently bad, it’s open to abuse like every other method of funding things.

 

I’ve backed 3 projects on Kickstarter; I got one on time, the other is 3 years late and I doubt I’ll  ever see it, I’m genuinely not sure about the third, it’s about a year late, but may still show up. That’s fine, I know what I was getting into. 

 

I’ve backed Revolution on a lot of their projects and continue to do so with impunity. I would back Cavalex confidently. I didn’t back Dave because I didn’t trust him to deliver. The fact he was crowdfunding isn’t relevant in that frankly, and his demise won’t affect my attitudes to crowdfunding in future. This has been done many times. Don’t tar everyone with the same brush. 

[adb968008]

If the only reason for crowd funding is because a bank won’t lend, then that in itself is a warning.

 

If the idea is sound then a bank would be willing to lend, so crowd funding isn’t needed.

 

if that is the case all your doing is giving money to someone on trust, who can walk away anytime and shrug off the debts leaving you out of pocket.

it becomes a risk free loan for chancers.

 

for me, i’d Want to see someone with some personal risk, after all they reap the rewards. In the current cloud i’d Suggest the best way to offset that would be a partnership with the Chinese manufacturer, their name on the box. “Face”

 

(reputation/presence/persona) in China is immensely important to Chinese business. 

 

Its 2019, the secretive Arthur Daley world of secret suppliers doesn’t apply, indeed that too is a warning.

 

If someone was truly crowdfunding to make a product that is marginal for viability that bank lenders wouldn’t touch, but hearts desires would like, then there’s no real need for any secrecy.. all finances in bound, outbound and normal Projects management reporting could be fully shared with those funding it.. as at that point it really is for fun not for profit, which is what crowd funding is supposedly about.

Edited July 5, 2019 by adb968008

[Joseph_Pestell]

6 minutes ago, adb968008 said:

If the only reason for crowd funding is because a bank won’t lend, then that in itself is a warning.

 

If the idea is sound then a bank would be willing to lend, so crowd funding isn’t needed.

 

 

 

You seem to be a bit out of touch where mainstream banking is concerned - about 30 years out of date. These days banks are very cautious and will only lend to about 70% of project value even on really sound project. And that with lots of guarantees, etc.

[adb968008]

14 minutes ago, Joseph_Pestell said:

 

You seem to be a bit out of touch where mainstream banking is concerned - about 30 years out of date. These days banks are very cautious and will only lend to about 70% of project value even on really sound project. And that with lots of guarantees, etc.

Why does that make a difference ?

if your project is sound, why are you not willing to take a risk, that’s sound to me ?

 

(FYI that’s not true in every case, I know as I’ve just spent 6 months going through it and mine was considerably different)... I there are many other variable factors that impact that determination, invariably based on monetised risk, but achieving greater than 100% at very low rates is possible if the idea is deemed very attractive.

Edited July 5, 2019 by adb968008