Turnaround Strategy

A SCA partner was initially engaged by public company, DubLi to assist with taking the company from “Over-the-Counter” (OTC) status to full NASDAQ qualification. However, after the SCA partner performed a “financial and operational assessment” it was revealed that DubLi had a broken business strategy that culminated in unforeseen and large losses that threatened the existence of the company. The SCA partner, along with the CEO and Board of Directors, formulated a turnaround and a new business strategy that, over a three-year period, saved and resuscitated the company.

CASE DESCRIPTION

In November of 2012, DubLi was operating as a publically held, multi-level marketing company providing online, reverse auction gift cards. Sales of gift cards were believed to be approximately $1.2 billion in the month of September 2012. The Board and the CEO were optimistic they were positioned to meet Nasdaq’s listing requirements in 2013. DubLi needed to replace their current CFO with an experienced Nasdaq-qualified one. DubLi contacted the partners at The SCA Group for this step. The objective was to perform a full assessment and then decide to use The SCA Group experts as either temporary consultants or as a full-time CFO.
However, during the financial assessment, The SCA partner discovered that something was off:

      • There was not nearly enough cash considering the sales
      • Liabilities were growing disproportionately.
      • DubLi was incurring massive losses.
      • The CEO had recently changed the on-line business strategy and the finance function was in disarray to notice.

Something dramatic had to happen and fast!

After the SCA partner’s due diligence uncovered DubLi’s unexpected cash flow disaster, several other problems quickly came to light. The SCA Group’s assessment revealed the following financial complications:

  • Although singed off by a national public accounting firm, DubLi’s revenue recognition was not in accordance with Generally Accepted Accounting Principles (GAAP).
  • Restatements of prior financials with the Securities and Exchange Commission (SEC) were required.
  • The SCA Group’s due diligence also uncovered that DubLi had a failed business model and bloated overhead with extensive losses.
  • Finally, the company was tens of millions of dollars in unanticipated and overlooked debt.

The SCA partner along with the CEO and the Board of Directors developed turnaround strategies, including assuming the role of the CFO and internal CRO position.
Over course of the next three years the SCA partner along with the CEO and Board Directors developed and executed the following solutions:

  • Implemented multi-year survival and turnaround strategies
  • Developed an entirely new business strategy
  • Worked with and maintained relationships with the Multi-level marketing side of the business.
  • Brought new funding in to help company survival.
  • Effectively collaborated the SEC, accountants, lawyers, bankers, and service providers, overseeing cooperation and communication throughout this very complex process.
  • Successfully negotiated with creditors and proficiently managed cash flow generated from the new, more lucrative business model.

  • Reduced overhead expenses by >50%.
  • Restructured the balance sheets by negotiating hundreds of thousands of dollars of debt reduction and forgiveness.
  • Caught up all SEC restatements and filings.
  • Implemented new and financial and operational controls for sound financial structure, strategic planning and profitable growth.

Overall, The SCA Group’s significant role in facilitating the company’s new business strategies led to the long-term success of a company that, just a few years before, was on the brink of financial collapse.

CASE DETAILS

Company:

DubLi


Industry:

Shopping


Loan Type:


Amount:

$


Term:

3 Year