DJM - Statement of Affairs released

[The Stationmaster]

13 hours ago, roythebus said:

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.

According to their website Funding Circle offer considerably larger unsecured loans than the amount outstanding in DJM's Statement of Affairs so apart from not knowing how much their loan was (possibly £45,000 from the amount that appeared in the micro accounts in 2017 and which some of us wondered about what those accounts first appeared?) we don't know if it was or wasn't a secured loan.  Like many other things about this liquidation there is much more that we don't know than there is that we do know.    It certainly wasn't FC that forced DJM into liquidation although the upcoming need to repay that loan might have been part of the reason DJM went into voluntary liquidation.

[John M Upton]

I would have thought the not inconsiderable number of customers, potential customers, crowd funders, deposit payers, etc. who jumped ship in the light of Dave's 1st of May announcement may have been one of the straws that broke the camels back, the Chinese factories no doubt provided the rest...

[AY Mod]

2 hours ago, etendam said:

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?

 

To which model railway businesses does this sweeping statement apply?

[GWR-fan]

34 minutes ago, John M Upton said:

I would have thought the not inconsiderable number of customers, potential customers, crowd funders, deposit payers, etc. who jumped ship in the light of Dave's 1st of May announcement may have been one of the straws that broke the camels back, the Chinese factories no doubt provided the rest...

 

 

I really think that it could have been quite some time earlier than May 1st.  The May 1st announcement was more like lining up the deck chairs long after the iceberg had been struck.  It seems that Dave was more than likely salvaging whatever "asset" was possible.

[Edwardian]

15 hours 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.

 

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.

 

Why do you assume that the email account has been hacked?

 

If it was an email asking you to part with money in return for a model that might never be produced, it might have been quite genuine.

 

hat .... coat ...

[DavidH]

On 04/07/2019 at 09:12, The Stationmaster said:

 

Make your way via this link (which has been posted previously in this thread - several times) and chose whatever one you wish to to look at.  The Statement of Affairs - for what it's worth - is at the top of the list and every year's micro accounts ...

 

Thanks Mike However, I posted a screenshot from it ages back ... my confusion was why someone would direct us to companies house when that was what we were discussing. It's this cursed writing thing, it doesn't do nuance very well!

[Colin_McLeod]

1 hour ago, John M Upton said:

I would have thought the not inconsiderable number of customers, potential customers, crowd funders, deposit payers, etc. who jumped ship in the light of Dave's 1st of May announcement may have been one of the straws that broke the camels back, the Chinese factories no doubt provided the rest...

 

Shortly after the late accounts fiasco many more took advantage of the PayPal refunds to jump ship. Wish I had.

[AY Mod]

4 minutes ago, Colin_McLeod said:

many more took advantage of the PayPal refunds to jump ship.

 

I think that was a major turning point which could have affected the viability - not saying it would have turned out ultimately any different if it hadn't taken place.

[brittannia]

and unfortunately some of us did not have that possibility, I do wonder what was the deciding factor on the decision not to refund ALL payments, certainly when I asked the question some time ago to PayPal their reply was evasive to say the least, also claiming that DJModels still had an active account at the time

[AY Mod]

1 minute ago, brittannia said:

I do wonder what was the deciding factor on the decision not to refund ALL payments

 

It would depend on what funds were in the account to reverse any transactions.

[Ravenser]

2 hours ago, Edwardian said:

 

Why do you assume that the email account has been hacked?

 

If it was an email asking you to part with money in return for a model that might never be produced, it might have been quite genuine.

 

hat .... coat ...

 

I - and other work colleagues - have had repeated malicious emails purporting to originate from the accounts department of a bankrupt road haulier. These began shortly after the said haulier went bust......

 

I assume someone's done the same with DJM

[wasabi]

The lesson from this saga is that 'crowdfunding' has become (and not just in model railways) a trendy term for an instalment purchase system.  True crowdfunding involves subscribing for shares or loans and is regulated by the Financial Conduct Authority (FCA).  A way of using this for selling products would be to set up a new company  to which the rights to the product could be transferred for shares, at an independent valuation.  Further shares would be sold to the 'crowdfunders', possibly in two instalments and with payment in dollars if that is what the largest part of the costs has to be paid in.  The 'funders would get their model and the founder(s) their costs back (including a salary or equivalent).  If there is scope to sell a further run, all parties would have a share of profits.  I know this is more complex and would cost more, but it gives better protections rather than seemingly falling between consumer and investor protection.  I also appreciate that more work is needed to see if this idea does behave as intended, but perhaps a group of manufacturers could pay the cost of establishing a standard model (and get comments from the FCA).

 

I hope that this will not be regarded as amateurish interference since I have a background of over 35 years in investment management, mainly relating to private companies, and clients of the firms where I worked ranged from large insurance companies (such as AXA) and pension funds (such as Hermes) down to private individuals.  However, I have to admit that we kept well clear of crowdfunding.

 

 

[jjb1970]

Crowdfunding may be either reward or equity crowdfunding and the model used successfully by Revolution and not at all well by DJM is reward crowdfunding. Sometimes it is associated with commercial platforms such as Kickstarter but you don't have to go via one of those platforms to apply a crowdfunding model. It is like any other idea, it can be implemented well or it can be implemented badly, the issue is not whether crowdfunding is good or bad but whether it is well implemented. I'm an engineer and advise people of the same when I hear people claim technology "X" is better than technology "Y" and point out that a well implemented application based on "Y" is often much better than a badly implemented "X" despite marketing spin and "X" having better potential performance. 

 

For all that, I do think that for some people conventional finance probably acted as a filter to stop them either getting into deep trouble or protected others from the probable consequences of letting them loose with a business. There are plenty of examples of business failure and rather questionable practices from those who have prepared a business plan, presented a sound argument and convinced banks and investors to extend support but that process of does weed out the complete no hopers. And the fact that finance comes with a cost and strings tends to impose some discipline on people. This is not to say crowdfunding is bad, because if a capable company or individual with a well formed plan and the right skills to run a business use crowdfunding then it can clearly work very well, but I suspect that such businesses and individuals could in most cases go down the alternative route if they had to or if the option of crowdfunding was removed. And a similar filter can be developed by using crowdfund platforms such as kickstarter which have certain requirements. Those requirements are not a guarantee of anything and there is still risk involved, but again they do filter out the complete dreamers and no hopers.

 

We have a long running thread on crowdfunding to continue this particular discussion though.

Edited July 5, 2019 by jjb1970

[AY Mod]

1 hour ago, jjb1970 said:

Crowdfunding may be either reward or equity crowdfunding and the model used successfully by Revolution and not at all well by DJM is reward crowdfunding. Sometimes it is associated with commercial platforms such as Kickstarter but you don't have to go via one of those platforms to apply a crowdfunding model. 

 

I challenged Dave in 2018 that the scheme did not meet the criteria of pledge and reward models such as Kickstarter.

 

Quote

I would strongly suggest taking legal advice on this as the project is not a pledge and reward model as per Kickstarter but more of a conventional transaction where you are asking for full or part payments and if you cannot supply the goods then you would be liable. 

 

Pointing out that there were no T&C's at that stage precipitated the hasty editing of posts (by DJ) to notify of risk potential. Events prove that such disclaimers do nothing to discharge legal liabilities.

[jjb1970]

6 minutes ago, roythebus said:

I suggest some folk on here should remember the fortunes of Hornby Hobbies. they nearly went down not so long ago. Someone on the previous page gave estimates for costings for locos and coaches. From my rather ancient experience in the model railway business I'd say those estimates are maybe a bit on the low side.

 

The point is with Hornby struggling with their vast catalogue of models, how could someone like Dave expect to buck the trend?

 

I think a competent small company with a good business plan, some vision and with the wortk ethic and resilience required to absord the set backs you can expect can make a success out of producing models. Kernow have a fine record of bringing some cracking models to market, Accurascale are growing rapidly and I can remember when Rapido were a real minnow. The problem does not appear to have been DJM's lack of size but a lack of capability and other necessary attributes to make a business work.

[njee20]

Apples and oranges. We’ve seen plenty of new entrants make a success of it - Revolution, Accurascale, Cavalex etc, Dave didn’t fail because he was a ‘small player’ it was his ineptitude. 

[GWR-fan]

Whether lack of business acumen, or ineptitude or attitude,  it all boils down to whether the crowdfunding idea was a deliverable product or simply a source of income.  Alas, we will most likely never know.

[grahame]

17 minutes ago, GWR-fan said:

Whether lack of business acumen, or ineptitude or attitude,  it all boils down to whether the crowdfunding idea was a deliverable product or simply a source of income.  

 

It doesn't have to be one or the other. It could be both.

 

G

[john new]

1 hour ago, grahame said:

 

It doesn't have to be one or the other. It could be both.

 

G

Agree. Looking at this logically a basic 48 weeks (so allowing holiday time) and a 5 day week = 240 days. Say a 7 hour full time day at £8 per hr (Circa minimum wage) this equals 240x £56 = £13,440. Were I to be looking to use my skills as a magazine/book designer to do a new work project like this commercially  in the publishing arena the expectation would be for drawing more than the minimum wage.

 

Currently, being retired, I am lucky enough to be able to do my work for the SLS* funded by my pension income, we know from a recent quote that what I do saves the Society £9k pa minimum. We aren't talking about doing these models as a Club/Society project voluntarily for love, it was DJ's job. The point of this post, surely no-one would expect him to be doing this for love until the project is completed. DJModels was a business so why wouldn't some % of the crowd-funding money be going to pay him a salary? 

 

Whatever the reason for DJ allowing this project to fail, be it Dave getting his sums wrong or something unforeseeable (as yet we don't know/may never know) I think it is harsh to be saying he wasn't entitled to be drawing an element of the crowd funding income going into DJModels as his salary.

 

*not full-time

Edited July 5, 2019 by john new

[maico]

2 hours ago, GWR-fan said:

Whether lack of business acumen, or ineptitude or attitude,  it all boils down to whether the crowdfunding idea was a deliverable product or simply a source of income.  Alas, we will most likely never know.

 

Seems to me it ended up as an exploding queue scheme. Current production funded by a constant stream of  deposits for new model announcements. Looking the final summary in the Companies house document, DJ Models Ltd didn't have sufficient funds built up to proceed with production hence voluntary insolvency and those at the end of the queue left with nothing.

The matrix element was certainly active in the ATP announcements which claimed the model could be worth more than being charged. An investment....

https://en.wikipedia.org/wiki/Matrix_scheme

 

 

Edited July 6, 2019 by maico

[GWR-fan]

1 hour ago, john new said:

..........................................................The point of this post, surely no-one would expect him to be doing this for love until the project is completed. DJModels was a business so why wouldn't some % of the crowd-funding money be going to pay him a salary? 

 

Whatever the reason for DJ allowing this project to fail, be it Dave getting his sums wrong or something unforeseeable (as yet we don't know/may never know) I think it is harsh to be saying he wasn't entitled to be drawing an element of the crowd funding income going into DJModels as his salary.

 

*not full-time

 

John,

          yes,  of cause his time would be priced, however, his salary and business expenses should have been only a portion of the installment costs allowing additional money to finance the research, tooling and manufacturing of the product,  however, with the kitty apparently empty,  it seems that business expenses were higher than anticipated and coupled with likely underpricing on production costs,  the projects were most likely never feasible at the quoted prices. 

 

Personally,  I believe a realistic cost on a 14-car APT would have been in excess of GBP2000.00 and very, very few funders would have been able to pay this amount.  For the rest of the planned APT range I would have thought at least another 50% increase in overall costs, leading one to wonder if the planned pricing was pie in the sky or actual factory quotes.   

[amwells]

Based on his postings on another forum, life goes on for Dave, as it should.

 

Can’t help feeling though that some form of public apology (even just an acknowledgement) to show contrition would be welcome but I guess that (combined with not even acknowledging the depositors in the statement of affairs, let alone everyone who supported his ambition or actually spent time helping him) shows the real individual. 

[spikey]

1 hour ago, amwells said:

Can’t help feeling though that some form of public apology (even just an acknowledgement) to show contrition would be welcome but I guess that (combined with not even acknowledging the depositors in the statement of affairs, let alone everyone who supported his ambition or actually spent time helping him) shows the real individual. 

 

I would guess that in Mr Jones' opinion, he has nothing to apologise for.  It seems to me that as far as he's concerned, none of it was his fault ...

[The Stationmaster]

7 hours ago, john new said:

Agree. Looking at this logically a basic 48 weeks (so allowing holiday time) and a 5 day week = 240 days. Say a 7 hour full time day at £8 per hr (Circa minimum wage) this equals 240x £56 = £13,440. Were I to be looking to use my skills as a magazine/book designer to do a new work project like this commercially  in the publishing arena the expectation would be for drawing more than the minimum wage.

 

Currently, being retired, I am lucky enough to be able to do my work for the SLS* funded by my pension income, we know from a recent quote that what I do saves the Society £9k pa minimum. We aren't talking about doing these models as a Club/Society project voluntarily for love, it was DJ's job. The point of this post, surely no-one would expect him to be doing this for love until the project is completed. DJModels was a business so why wouldn't some % of the crowd-funding money be going to pay him a salary? 

 

Whatever the reason for DJ allowing this project to fail, be it Dave getting his sums wrong or something unforeseeable (as yet we don't know/may never know) I think it is harsh to be saying he wasn't entitled to be drawing an element of the crowd funding income going into DJModels as his salary.

 

*not full-time

I agree absolutely.  But with anybody's time and cost it has to be judged on a value for money basis and while we haven't got a clue about the actual DJM numbers the size of of crowdfunding project he was talking about meant you could be looking at reasonable amounts for time at 10% or even 20% of the funded total (as I showed in some example numbers in a post in the crowdfunding thread).  

 

So no argument there with what I would consider as a not unreasonable admin fee as part of the total funded amount over the life of the project.  But the rate at which it is taken out if a project does not progress in a timely fashion and indeed what is actually funded compared with implied hints and comments about the amount funded can distort the percentage actually taken.  For example 20% taken from £100k funded = £20K - not at all unreasonable in my view and that's £80K over 4 equal stages of a project.  But if, say, there is a considerable funding shortfall compared with what has been implied and only £40K has been funded taking out half of it is in my view taking the whatsit in a big way.

 

As I said above we do not know the actual figures at DJM and we probably never will - either in terms of what went in let alone where it went and when it went but proportionality can play a critical role especially if funded amounts are constrained.

[njee20]

6 hours ago, maico said:

 

Seems to me it ended up as an exploding queue scheme. Current production funded by a constant stream of  deposits for new model announcements. Looking the final summary in the Companies house document, DJ Models Ltd didn't have sufficient funds built up to proceed with production hence voluntary insolvency and those at the end of the queue left with nothing.

The matrix element was certainly active in the ATP announcements which claimed the model could be worth more than being charged. An investment....

https://en.wikipedia.org/wiki/Matrix_scheme

 

 

Struggling to see the comparison there. It appears it was potentially a Ponzi scheme insofar as deposits from new funders were needed to provide the funds to fulfil the older orders, but that’s different, and also speculative. There was never an expectation that people signing up for a Mermaid would later get an APT, which is what would make it a matrix scheme.