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Dippin' Dots Files for Bankruptcy
 

The Inc. 500 honoree lost its patent and has suffered in the current economic climate.

Founded in 1988 by Curt Jones, a microbiologist with a background in cryogenics, Dippin' Dots was born after Jones sold his car and cleaned out his savings.

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Dippin' Dots, which sells flash-frozen ice cream beads, has filed for Chapter 11 bankruptcy protection.

The company, which calls its product "the ice cream of the future," was multiple times an Inc. 5000 honoree. It owes nearly $12 million, nearly $11 million of which is to Regions Bank, which sued the company in February, saying Dippin' Dots had defaulted on its debt.

The Paducah, Kentucky, company has been struggling since 2008.

"Back in 2008, during the turn in the economy, there was a slump in our company," spokesman Steve Heisner told the Los Angeles Times. "We couldn't meet all the obligations, which put us in technical defaults." 

The company also lost a fortune in legal battles, which it lost, about whether founder Curt Jones properly filed the patents that protected its special freezing process. A U.S. patent court in 2007 invalidated the company's patent 5126156, basing the ruling on the fact that Dippin' Dots had sold its product for more than a year prior to filing its patent application. The company is appealing the decision.

In 2007, Dippin' Dots were available at some 2,000 locations, including more than 300 franchises and 400 vending machines at theme parks, malls and theatres. The company had some 200 employees and annual sales of about $40 million. It was founded in 1988 by Curt Jones, a microbiologist with a background in cryogenics. He sold his car and cleaned out his savings to get the company off the ground.

In the past three years, the company has cut its workforce to 170 employees. It's available in 140 Dippin' Dots retail locations, mostly controlled by franchisees, and agreements with 9,952 small vendors who sell it in fairs, festivals and ballparks. (It cannot be sold in grocery stores because extreme cooling of minus 40 degrees Fahrenheit is required.) Sales this year are expected to exceed $31 million but the company will post a loss, Dippin' Dots' controller Michael Milner said.

At the end of October, business was up 6.6 percent from last year, Heisner said, at $27.7 million in revenue, compared to last year's $26.7 million. The company plans to continue operating while going through bankruptcy reorganization.

Food industry consultant Bob Goldin said Dippin' Dots' novelty may have worn off. 

"When it first came out, everyone thought it was so cool," Goldin told the LA Times. "Honestly, though, I had almost forgotten about it.

"I think I saw it in a ballpark this year and thought, 'Oh, I didn't know they were still around.'"

IMAGE: Vivian Mac via Flickr
Last updated: Nov 7, 2011

Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.




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