Dot Dot Smile has filed its Chapter 11 Plan.
The December 2nd submitting gives perception into how and why Dot Dot Smile collapsed.
In 2020 Dot Dot Smile (the “Debtor”) recorded $15 million in income. Then the COVID-19 pandemic occurred.
Sadly, stock shortages brought on by the COVID 19 pandemic impacted DDS’s potential to recruit and construct new groups underneath the MLM mannequin and, after unsuccessful makes an attempt and acquiring financing, the Debtor borrowed from Service provider Money Advance lenders and elevated its orders for product.
By the point the brand new stock arrived, demand underneath the MLM mannequin had waned, a results of the difficulties related to the MLM enterprise mannequin through the pandemic.
Tellingly, Dot Dot Smile doesn’t point out retail gross sales. As famous in BehindMLM’s July 2019 Dot Dot Smile evaluation, distributors having to blindly buy product
is a horrible technique of distribution for associates, because it assumes retail clients will purchase something.
As with LuLaRoe, Dot Dot Smile is incentivized to maintain this mannequin. It provides the corporate a handy out if a product line flops, versus must come clean with creating designs that no person needs.
You’ll be able to’t promote the random patterns we despatched you? Effectively clearly you’re simply not making an attempt arduous sufficient.
In an try to save lots of the enterprise, Dot Dot Smile canned its MLM alternative in Could 2022.
In the long run this didn’t pan out;
On account of these challenges within the retail clothes setting, DDS’s money circulation was impacted leading to lawsuits and assortment efforts by the Service provider Money Lenders and an eviction lawsuit filed by the proprietor of the Debtor’s Riverside location.
Dot Dot Smile’s recorded gross income for 2021 was $16 million. That plummeted to only $3 million in 2022.
Trying ahead, Dot Dot Smile claims it intends to settle its money owed by
transitioning a low over-head, on-line enterprise mannequin and can fund the Plan principally by way of on-line gross sales.
Jeffrey E. Thomson and Nicole Thompson shall stay the co-Managing Members of the Debtor.
Nicole (the founding father of the enterprise) will stay the president of DDS and shall earn a wage of $100,000 every year. Jeffrey will stay the Chief Govt Officer of DDS and he’ll earn a wage of $100,000 every year.
Belongings held by Dot Dot Smile high out at simply over $4 million.
The present market worth of the Debtor’s stock is $4,000,000 (if bought within the atypical course of the Debtor’s enterprise).
The Debtor estimates that the worth of its web site is $5,000 and estimates that the worth of its commerce identify Dot Dot Smile, LLC to be
$100,000.
If every little thing goes in keeping with plan, right here’s Dot Dot Smile’s projected income over the following few years:
There’s no particular timeline however voting on Dot Dot Smile’s Plan will now be voted on.
Pending the result of that vote, which I imagine will happen in Q1 2023, the court docket will both approve or reject the plan.
