The Chapter 11 Plan for Dot Dot Smile has been turned in.
The filing from December 2 shows how and why Dot Dot Smile fell apart.
Dot Dot Smile (the “Debtor”) made $15 million in sales in the year 2020. Then there was the COVID-19 pandemic.
Inventory shortages caused by the COVID 19 pandemic made it hard for DDS to build and recruit new teams using the MLM model. After trying and failing to get financing, the Debtor borrowed money from Merchant Cash Advance lenders and increased its orders for products.
By the time the new stock came in, a demand under the MLM model had dropped. This was because the MLM business model had been hard to use during the pandemic.
Dot Dot Smile doesn’t say anything about retail sales, which is telling. BehindMLM’s July 2019 Dot Dot Smile review says that distributors have to buy a product without knowing what it is.
is a terrible way for affiliates to get their products to retail customers because it assumes that retail customers will buy anything.
Like LuLaRoe, Dot Dot Smile has a reason to stick with this model. It gives the company an easy way out if a line of products doesn’t sell, instead of having to admit that they made designs that no one wants.
The random patterns we sent you can’t be sold? Well, you’re not trying hard enough.
In May 2022, Dot Dot Smile got rid of its MLM opportunity. This was done to save the business.
This didn’t work out in the end;
Because of these problems in the retail clothing industry, DDS’s cash flow was affected, which led to lawsuits and collection efforts by Merchant Cash Lenders and an eviction lawsuit by the owner of the Debtor’s Riverside location.
In 2021, Dot Dot Smile made $16 million in gross sales. In 2022, it was only worth $3 million.
Looking forward, Dot Dot Smile says that it will pay off its debts by
The Plan will mostly be paid for by online sales, as the company is moving to an online business model with low costs.
Jeffrey E. Thomson and Nicole Thompson will continue to run the Debtor as co-Managing Members.
Nicole, who started the business, will still be the president of DDS and make $100,000 per year. Jeffrey will still be the CEO of DDS, and he will continue to make $100,000 per year.
The most valuable thing that Dot Dot Smile owns is just over $4 million.
If sold in the normal course of business, the current market value of the Debtor’s inventory is $4,000,000.
The Debtor thinks that its website is worth $5,000 and that its trade name, “Dot Dot Smile, LLC,” is worth $100,000.
If everything goes as planned, here’s how much money Dot Dot Smile could make over the next few years:
Voting on Dot Dot Smile’s Plan will now happen, but there is no set date.
Depending on how that vote goes, which I think will happen in the first quarter of 2023, the court will either agree with the plan or not.