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FOLLOW THE MONEY
Webdiary finances in the post-Margo, post-Wayne era:
Expenditures
Content production and editing: $43,499.66
(includes settlements in lieu of notice)Other costs (computer and bank fees, equipment, etc): $2296.83
TOTAL: $45,796.49
Income (before GST deduction): Donations, ads, interest: $8362.05
Income (after GST deduction): Donations, ads, interest: $7601.87
Loss from operations: $38,194.62
Met by: Loans from Directors: Margo Kingston: $42,236.21 (note)
Assets:
Shares: $100
Cash in hand: $3418.59
GST reclaimed as cash in December 05 BAS: $523
Net assets: $4041.59
Note: Loan is non-interest bearing, undated. We feel it right to record in the accounts of the company that Margo met almost all of its costs from August to December 2005, and that we have the obligation to repay her at some future date if the business thrives.
Like that’s ever going to happen, what with global bold tag reserves remaining so low. Any accountants or other business-minded folk are invited to consider these figures (they cover the three months up to December) and calculate just when Webdiary Pty Ltd may have sufficient funds to return Margo’s money.
Sorry, but I can’t help myself.
Both interest and donations are GST free supplies there is no GST on them, the GST Inclusive income is exactly 10% more than the GST exclusive income so apparently GST applied on all the income the company earned.
So looking at the income Inclusive and Exclusive of GST you can conclude one of two things either that they have received no interest and or donations income and or they have no idea what they are doing.
Man this running a company thing must be hard work.
BWHAAAA HA HA HA…
Oh… oh, ye Gods. This is funnier than the Christmas begging from webdiary…
The 40K could have been better spent on oragami boulders.
Future Liabilities
“Contract with Hamish Alcorn, a Director of the company, for editing services in January”When the remaining $3K is gone to Hamish he’ll have to retire as well. So I’m tipping Marilyn Shepherd will be the “Managing Editor” by March.
I missed Wayne Sandersons tearful goodbye. Was it just a coincidence that he left so soon after it became apparent that Margo wasn’t going to be plunging any more cashola in. I thought he was committed.Posted by Hank Reardon on 2006 01 03 at 04:30 AM • permalinkJust having ‘Webdiary’ and ‘finances’ side by side in the same sentence is grotesque. Like ‘ice cream’, and ‘araldite’. You have to ask, in the name of all that’s sane and healthy, what’s the connection?
Posted by SwinishCapitalist on 2006 01 03 at 05:49 AM • permalinkPixy
It seems that Wronwright has… taken a holiday. The fellow minions who hose away
the pools of blood and gobbets of human flesherm, the litter in the VRWC’smoonbat interrogation roomsaaah bingo hall, say that Wron was last seen muttering about his holiday.Something about ‘getting away from it all for a while’, and ‘the fishing over in eastern Pangea’. There was also something about ‘picking up some replacement Sumerian mead’.
Just do not ask about the time machine for a while, OK?
MarkL
Canberra#9. Wayne Sanderson is somebody I knew very little about until his involvement in Webdiary but I’ve now got to say I hold him in absolute contempt as a human being. The guy cons people into subscribing for his “TDB service” which is a copy and paste job from news sources, then gives the service to Webdiary readers for free after suckering Margo into handsomely paying him. While at Webdiary he lifts content from the NYT and passes it off as his own, threatens readers with violence and then pisses off when his meal ticket and money dries up.
Obviously survives in life by finding suckers. Now he’ll be going back to the people he screwed over first. His original subscribers who should now know better.Posted by Hank Reardon on 2006 01 03 at 06:11 AM • permalinkPlease! Somebody give these WD people a Government grant…Stat!
—-#12 MarkL: Did Wron leave a forwarding
addresstime?I’m a bit concerned.
He’s missed alot of the hands-on stuff since the promotion…And he has been a bit haughty since the lake operation.
Nothing a good city lasing wouldn’t cure right up mind you, but still…
Anyway, please send my regards if you happen to see him in some future.
Easy answer, crash.
All the poor deluded fools who “donated” to Webdiary Inc, the People’s Forum destined to crush the Packer/Murdoch hegemony.
With its huge net assets of $4K.
About 900 lattes, a month’s worth for all the directors.
Posted by Pedro the Ignorant on 2006 01 03 at 09:22 AM • permalinkDamn. There goes my New Year resolution not to gloat at lefty idiots in public.
Oh well.Posted by Pedro the Ignorant on 2006 01 03 at 09:24 AM • permalinkIn comments, someone expressed concern that Webdiary’s financial ineptitude would “make Margo a laughingstock.” David Roffey’s response includes the casual mention of the fact that “I’m currently in the UK discussing, inter alia, possibly being chief financial adviser on the privatisation of Telekom Srbija.”
Lefties complain about the evils of “cowboy capitalism” in Eastern Europe as if it’s worse than what was there before. Here is a horrifying glimpse into why privatisation can go so wrong. It’s not because of an inherent flaw in capitalism itself . . .
Posted by dsmith_michigan on 2006 01 03 at 09:50 AM • permalinkOk, I’m back. Has anything changed, anything? Bush still President? France still a braying pest? Europe and the UN still feckless constructs of ninnny-like proportions? Greenland still the warm garden-like tourist destination of choice?
Posted by wronwright on 2006 01 03 at 10:58 AM • permalinkwronwright—And just WHO told the UN about our Dark Master’s discreet little chats with the aliens…?
Posted by richard mcenroe on 2006 01 03 at 11:16 AM • permalinkTo actually predict future financial events - including breaking even or, in this case, liquidity, the barest minimum you would need is results from at least two different periods.
But from what I see, the equity of Webdiary Pty Ltd is AU$100, but the long-term debts are AU$42,236.21 - that’s shows very bad financial gearing (or leverage, for the Yanks): a debt-to-equity ratio of 38295%.
Plus, there is a very bad Return on Assets (-95%), Return on Equity (-3819%), and Return on Capital (-90%, assuming Margo’s loan is capital).
“The Cash in Hand and income in hand but not yet cashed are sufficient to cover the company’s immediate contracted liabilities, which are limited to…” - without a Balance Sheet, I can say the company’s liquidity is very bad. How bad? If Webdiary posts the Balance Sheet, or relevant parts - Current Assets and Current Liabilities, I can tell you how.
In other words, to the people owning that AU$100 shares - sell!
Good for Margo, doing the right thing and putting her own money where her mouth is. Now the Australian government needs to do the right thing and pick up the tab for the whole project.
Posted by Mystery Meat on 2006 01 03 at 11:51 AM • permalinkOn the David guy, how smart is it of a esteem financial manager to discuss would-be business agreements in public? Plus, you would think he would be in Belgrade instead of London for that Telekom Srbija deal - it shows that his involvement in Serbia and Montenegro’s privatization of their telecomunication company is still very shallow.
He claims to be registered of “UK SFA”, unless he means the Scottish Football Association, I think he means FSA (Financial Something Authority, part of the Bank of England, lazy to look it up). Which means his field would be in banking (i.e. a banking advisor) - odd he would be looking for a job in a telecommunications company. Now, if he’s a professional in this business in the UK, wouldn’t he be, with all his experience, a ACCA,ICAEW,CIMA,ICSA,or etc. fellow?
If not, how qualified is he to do Webdiary’s accounts? Being registered at the Bank of England’s FSA doesn’t quite allow one to do company accounts for the purpose of taxation both in the UK and Australia.
Oh, Looneyc (opps), can companies accept donations? I’m not sure about Australia, but elsewhere it’s a no and is liable to the same taxes as any other income. Though it is interesting GST paid for payments involving no transfer of goods nor services…
Content production and editing: $43,499.66
(includes settlements in lieu of notice)Jeezuz - 43K for producing and “editing” mindless lefty drivel? Who knew.
But I note that the total includes the cost of firing some folks sans notice. Must be that editor they caught sneaking out the back with 30k worth of italic tags in his pocket…
My expert opinion is anything Margo is associated with has to be considered a hobby. Consequently, she needs to keep her expenses as low as possible, regardless of the effect on whatever she produces.
Case in point: Tim Blair’s web log. I would bet he spends less than $200 a year. Most of what makes it entertaining is supplied by his loyal readers/commenters. At no expense.
My advice to Margo: follow Tim’s example, build up a large viewership, hope that it evolves into something where she can make a profit, and cash out. Until then, keep costs at bare bones minimum. (i.e., no bold tags!)
Posted by wronwright on 2006 01 03 at 12:51 PM • permalinkIf they added in the spell checking costs the loss would exceed the US national debt.
Posted by swassociates on 2006 01 03 at 01:20 PM • permalink#28 Rajan R
The tax law in Australia does not really differentiate between companies and individuals at the basic level and income tax does not apply to donations either, in fact it is not even considered income.
So no there is no reason that I am aware of why a company can not accept donations.
GST, believe it or not is not just a tax on goods and services but a tax on ‘things’, yes that is exactly what the legislation says, but because there is no exchange, that is the company receiving the donation is not making a supply there is no GST.
Actually given the terms of Margo’s loan, isn’t that a form of subordinated debt? If so, can’t that be classed as capital?
I’m only half remembering my accounting but possibly these guys are flush with funds! :-)
Still even with my hazy accounting knowledge - their figures look like they’re mixing up assets, liabilities, shareholder funds and cashflows.
Perhaps Margo’s predilection for foolish wagers was more serious than previously suspected.
A couple of points:
#28 The FSA is the Financial Services Authority, it is not part of the Bank of England.
Business need only register for GST where turnover exceeds $50,000 pa or $100,000 in the case of non-profit organisations. Perhaps Webdiary had delusions of grandeur.
Donations and interest are GST free. So it looks like they sold $5,230 of ad space on Webdiary during the December quarter (it could be $5,230 per month if they report GST on a monthly basis, but given their cash resources I suspect not).
David Roffey is registered at the FSA as individual DER01031. His status is given as “Inactive”. He is previously listed as a Director and holding the position of Customer Trading (whatever that is) at Maple Securities (UK) Ltd. Maple is authorised to undertake a range of activities associated with giving advise in respect of investments, acting as an agent in investments and undertaking investments. It has a clean bill of health.
With liquid assets of $3,419, Webdiary is not technically insolvent (under Australian law) untill they cannot meet a debt as it becomes due and payable. However, with negative net worth of $38,294 a responsible board would wind the company up.
The Corporations Act imposes a positive duty upon directors to ensure that their company does not trade while insolvent. Severe penalties apply for breaching this duty. The test is one of reasonableness. If a director has reasonabe grounds to suspect that the company is insolvent, or will become insolvent as a result of incurring a debt (including from suppliers), they must take steps to cease trading. In my lay opinion that point has been reached.
Looks like Margo made a blue with decision to incorporate. Usually done to protect assets and limit liablity but appears she is picking up the full tab anyway. Now losses stuck in Company and can’t be used against her no doubt extensive other income earned in her own name.
I agree with analysis of all income must have been adverts. Which means all her mates were quite happy to sit by and watch her drown. Including those living off Margo’s teat!!!!! (there’s a concept for you, try not to form a mental picture)
Who needs enemies when you can have lefties for mates.Posted by the nailgun on 2006 01 03 at 08:51 PM • permalinkChrisPer, what if the business venture was based on a really, really stupid idea and supported by a really, really venal fraud and carried out by really, really incompetent buffoons?
Anyone who manages to go broke running a freakin’ blog deserves no sympathy.
I’d put Webdiary down as the second most idiotic internet business idea ever, right after the original Napster (“Hey, let’s all get filthy rich by giving away stuff we don’t even own!”).
Posted by Steve Skubinna on 2006 01 03 at 10:50 PM • permalinkWell, leave it to me to be the lone dissenter but I kind of like Margo. She’s liberal but she’s upfront about it. And she’s a somewhat congenial and earnest person, and that means a great deal to me.
I do think that Margo has a certain niche that might have some value. Approached the right way, she could potentially create a valuable business.
The tricky part of growing a business is understanding that the hard part is sticking through the very lean first years. My advice to Margo is to get a job in academia—they would love her in a university—apply for grants and work on her blog on the side in the same way that Glenn Reynolds does. If blogs can be turned in profitable ventures, she might have a ready made business to cash in.
Posted by wronwright on 2006 01 03 at 11:05 PM • permalinkWell, Steve (47) I think that Margo’s business model has been tested in the market and you are right, the stupidity is proven. If it had been volunteer-only it would never have been demonstrated so clearly!
But really, that much personal capital down the poo pipe is a sad sad thing. If it had been left in her super fund it would be working (growing the military-industrial complex) to the benefit of all, especially Margo.
Speaking of making money for blogs, I’ve a question about the PETA ad on Tim’s site.
Do we know if it is a pay per click?
I kinda like the idea of sending them broke and putting funds in Tim’s pocket.
Frankly I’m a little tired of the ad now. If it were a 20something bloke with tight buns, it would be different.
—Nora
Posted by The Thin Man Returns on 2006 01 04 at 03:49 AM • permalinkwronwright: “Business need only register for GST where turnover exceeds $50,000 pa or $100,000 in the case of non-profit organisations.”
Actually a business or individual must register for GST if turnover is merely expected to exceed those limits, as assessed by the proprietor at 1 July each year. If you expect to and don’t exceed the limits, too bad - you don’t get the GST back. This is probably Margo’s case.
On the other hand, if you exceed the limits and didn’t register and the ATO thinks it you did it deliberately you could be up for the GST you didn’t charge plus a penalty.
Posted by walterplinge on 2006 01 04 at 04:49 AM • permalinkThis all smells like a conspiracy to me.
Founder quits & loses their cash, site raised from the dead, new site up in days after 3 months of delays and now has some income, troublesome staff sacked, new managers denying any responsibility, founder can’t do anything to get their loan repaid without incurring insolvent trading.
Perhaps these guys aren’t so dumb at all, that’s as ruthless a busines plan as many; pity the prize isn’t worth fighting that hard for.
Graham.
So it looks like they sold $5,230 of ad space on Webdiary during the December quarter
I highly doubt that. Did they even have any ads on the old site? I don’t think so. And the new site has had exactly one personally procured ad so far (the one from Margo’s mother), the rest of the time they’ve run Google ads.
How did you get to $5,230 as the amount of ad sales anyway? Given that $523 was the amount they reclaimed, it would appear they actually had expenses totalling $5,230 on which GST was levied. (I wonder what the heck that might have been, especially given that “other costs” only total $2,300.)
If the information given above is correct (that donations to a corporation are possible, and aren’t taxed by GST), it would seem that their income statement is utter nonsense. Wonder if they’re just incompetent, or whether somebody actually pocketed those 760 bucks on the side.
That’s as fraudulent a financial statement as I have ever seen.
It conveniently omits from the balance sheet the debts of the company, in the form of the $42,000 owed to Margo, so as to make it look like they have net assets. They seem to have conveniently confused “gross assets” with “net assets.”
Instead, by any rational accounting, they are $38,000 underwater, not $4,000 in the black.
#55 Walterplinge
wronwright
- that would be “noir”. Expected is correct, thus my comment on delusions of grandeur.
#58 Yeah, I think I got that back the front. The $523 GST credit is is respect of GST incurred on expenses. I incorrectly assumed that you could only offset against GST collected from revenue. That is not the case. What the expenditure was is a good question.
The Income pre and post GST deduction infers GST on sales of $760. You can only levy GST on sales for payment (consideration). Consideration is payment you receive for providing goods services or any other sale. It excludes financial transactions such as borrowing or lending and associated interest payments.
Possibly the donations are tied to the provision of some service by Webdiary - pay for comment perhaps? In that case they would incur GST. If not the question is what did Webdiary sell?
Heres a beauty from the same thread on Webdiary.
“It started me thinking that those of us with influence should be championing Margo for an Honour. Which made me ask – for what?
Anybody got some ideas?
Posted by Hank Reardon on 2006 01 04 at 07:14 PM • permalink
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I made a comment in the previous post about how it costs money to have a blog if you are technologically inept, but $43 499 and don’t forget 66 cents.
If I had that sort of money I would blow it on an overseas trip and have nothing left, so be required to set up a Blogger site.