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Posts: 79 | Thanked: 719 times | Joined on May 2014 @ Buenos Aires, Argentina
Purpose and risks of payments

To make sure we're all on the same page regarding the role and purpose
of the various payments in this project, we'd like to re-state and
summarize them:

Donations: the first financing round consisted of the collection of
donations, to pay for the costs of initial prototype development and
to determine whether the level of community interest was sufficient to
warrant developing the Neo900 in earnest.

For this purpose, donations of EUR 100 or more were informally counted
as an intent of later obtaining a complete device. As far as price
calculations are concerned, donations or EUR 100 or more are
technically considered as if they were loans.

Down payments: further financing towards completion of R&D and the
purchase of materials for production. The down payments let us plan
the number of units to produce - and thus the materials we have to
source - as well providing the funds for the sourcing.

Due to some of the materials being difficult to source and sometimes
having very long lead times, this sourcing has to begin a considerable
amount of time before the projected beginning of production, and it is
generally necessary to be able to execute purchases shortly after
quotes have been obtained. It is standard practice in industry that
such purchases are paid for in advance.

Therefore, the project needs to have access to funds well before
development has completed, with all the risks this entails. This phase
is therefore similar to that of projects crowdfunded at an early
development stage, i.e., that the payments received by the project are
to serve the specific agreed-upon purpose, but that there are still
considerable risks involved that can alter the outcome of the project
or even cause its demise. These risks are shared by both the project
supporters (potential loss of their payments) and the people
developing the product (potential loss of income and intangibles).

We have listed these possible risks in detail in the "terms and
conditions" presented in the Neo900 shop at the time of making down

Final payment: the down payments only cover part of the expected
total cost of the project, as detailed here:

We therefore plan a third and final financing phase when the project
is ready to move to production, and it is time to purchase the
remaining materials, to pay for the production services, and to set up
the logistics for distribution.

This will be a low-risk phase, similar to that of projects that seek
crowdfunding at a very mature development stage.

The final payment will be the difference between the total cost of the
selected product(s) (i.e., NeoN or Neo900, in the respective
configuration) and the total of the payments made that far, including
the loan-like interest we calculate on the original donation.

The reason for separating the final payment from the down payments is
mainly that we cannot accurately predict the final cost before
completing R&D and subsequently obtaining quotes for the remaining
steps. An accurate cost figure is necessary because this
community-driven project operates with essentially no profit margin
and therefore cannot accommodate unexpected budget excursions.

We hope to have communicated all these points with sufficient clarity
in the past, and that the expectations of our supporters are thus in
line with the above.

If you have any questions or concerns, please post here or contact us

- Werner (on behalf of the Neo900 team)

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