And you keep failing at them. Inkkas will go out of style forever. My name is marcus lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change. Everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. In 2012, dan bennun partnered with his brother, dave, and his childhood friend david malino to launch inkkas, a Footwear Company based in brooklyn, new york. Dan authentic textiles, responsibly sourced, handcrafted. And our new logo. David it looks good. Lemonis inspired by dans travels, the shoes incorporate patterns and fabrics from around the world, giving them a bold and colorful look unlike anything on the market. Dan and the beauty about a printed textile is that you really have unlimited combinations that you can do. Lemonis but while dan has created some real hits, too many of his designs have bombed, leaving the company with big losses. David nobodys buying our new stuff. Its a disaster. Lemonis and with cash running low and debt mounting high, these entrepreneurs can only wait for another shoe to drop. Dan we need to see increases in sales, or we could potentially go out of business. Lemonis the shoe industry does over 48 billion annually, and Everybody Needs a pair of affordable, cool shoes. If i can help these guys overhaul their process and harness their creativity, it wont be long before theyre off to the races. Today, im meeting the inkkas guys at their storefront in greenpoint, which is a trendy neighborhood in brooklyn. Right away, im wondering what sort of retail store this is. I mean, yeah, theres some shoes on a shelf, but behind that, theres a sea of desks and computers. It looks like a Trading Floor of some stock exchanges was parked behind some shoes. Hi. Dan hello. Lemonis hello. How are you . Im marcus. Hi, nice to meet you. Daniel. Lemonis daniel, nice to meet you. Dan this is my older brother. Lemonis how are you . Im marcus. Dave good. Nice to meet you. Lemonis nice to meet you. Dan and this is my best friend, david malino. Weve known each other since we were about 14 years old. Lemonis okay, so, its like a threedimensional experience. Dan three ds. Lemonis so, is this pretty much it . Dan this is the company right here. Youre looking at it. Lemonis can you guys kind of maybe all come out and show me the product and how it started, why it started, give me a little back story . Dan sure. The idea of the company is to use Global Textiles and global inspiration in footwear. In 2012, i was backpacking through south america, and i come across some local artisans that are making footwear using peruvian textiles. And i was like, this is an incredible idea. I was blown away. Lemonis would this be an example of a peruvian textile . Dan correct. But i didnt see it made in a footwear that would be attractive to me or you. But i thought to myself, hey, if you took this and you put this on a shoe form that we love, this could be an incredible idea. And it also occurred to me lemonis how much coffee did you have this morning . Jesus, man. Dan im just like this normally. This is normal. Lemonis is he like this . Is he a little amped up . David yeah. Amped up. Dan because im officially the c. E. O. Lemonis okay. Dan every single product you see in here, ive been involved from start to finish in designing the product, sampling the product. Lemonis so when people come in and like the design, thats attributable to you. Dan correct. And when they dont like it, thats also attributed to me. Lemonis okay. Dave hes the ideas guy, so he comes up with a lot of ideas. Im in charge of operations. I make sure that everything runs in the office. I keep an eye on inventory. I deal with all the finances. Lemonis whats left for you to do . David well, i mean, i handle all the manufacturing, all the sourcing. Lemonis youre picking the factory, as well . David yes, i picked and activated our current manufacturing facilities in mexico. I shipped all the textile from peru to mexico, which is no easy feat. Lemonis and where did you get the experience to do that . David dropped in the fire. Lemonis superimpressive. Great job. David appreciate that. Lemonis yeah, really great job. What id like to do is try some shoes on. So, id like to try the high top, the slipon, and this, as well. Lets try a 10 and an 11. Dave all right. Woman so, we didnt have the specific jogger you wanted. Lemonis not in any size . Woman no. But we do have another jogger. They all pretty much fit the same. Lemonis oh, but i wanted to buy that one and wear it. What size was this one . Dan that was a 10. Lemonis this feels big on me. Im not gonna lie to you. This shoe is not comfortable. The shoe was goodlooking, but the sole was too thin. Its, like, totally flat. Woman the slipon we had in a 9 is the candy pink. Lemonis no, i wanted the lightblue one. Woman that we dont have. [ chuckles ] lemonis [ chuckles ] ive asked for three different shoes, and you dont have them. Dan and thats because weve continuously had problems with inventory since the beginning. Lemonis you probably shouldnt be in the retail business. How much revenue is generated out of this store . Dave its definitely not significant. I would say 3 . Online stores 30 . And then wholesale accounts 70 . Lemonis its no wonder to me that the Retail Stores making up a fraction of what their wholesale and their Internet Business is. When you come to a retail store, you expect them to have inventory. Every time i asked for a shoe, they were out of stock. It would be like going into starbucks and them saying, sorry, we dont have coffee. How many different skus do you have . Dan online, we probably have close to 100 skus. But we launch 50 new skus each season. Lemonis and so what does it cost to create one new shoe . David to launch a completely new sku with a new form, uh, i think it would be around 2,000. Dan hes just talking about making a sample, which is 2,000 for one shoe. So if you want to make a full size run 10 sizes you may need to pay somewhere around 16,000 to 20,000. Lemonis and so you guys have spent hundreds upon hundreds of thousands of dollars, through trial and error, building a certain amount of constructs, and it is taking you down a path thats spreading you so thin youre not executing your primary business. Like, how did converse make a lot of money . Dan with one high top. Lemonis with one shoe that they sold that they knocked the cover off the ball. Inkkas makes so many different models that it actually scares me. You compare it to a company like converse that made the chuck taylor, and they came up with a good model and they sold the heck out of it. Inkkas, on the other hand, has dozens of different models, and then when you add fabrics and colors, it ends up being over 100 skus. This lack of focus could be fatal. How much moneys in the bank account today. Literally . Dan [ groans ] not a lot. Not too much. About 1,000. Lemonis and how much money have you burned through since you started . Dan well, i mean, were talking about investment youre the c. E. O. , right . Dan i am the c. E. O. Lemonis how much moneys come in to the company . Dan were talking about a total of 500,000. And then on top of that, we have approximately 500,000 in debt. Lemonis and thats 1 million. So thats gone. Dan right. And there you can see our spread. Lemonis in 2013, it says you did 1. 1 million. Dan correct. 2014, you did 1. 8 million. Dan correct. Lemonis 2015, youre projected to do 3 million. Dan those numbers are not going to be correct. Lemonis how much revenue are you gonna do for the year . Dan we are gonna do 1. 5 million this year. Lemonis so youre gonna miss your revenue estimate. Dan we are going to miss our revenue estimate. Lemonis by half. Dan by half. Correct. Lemonis do you feel like youre kind of on deaths doorstep right now . Dan we are on very thin ice very, very thin. Lemonis no, but if you just cut through all the b. S. Dan were in a tough spot. Were in a tough spot. Theres no denying that. Lemonis three months from now, if you dont raise money, what happens . David potentially go out of business. Dan we could potentially go out of business. I do have to say that we are just, like, fighters, and, like, we would fight till the day and to the lemonis i get that. Im down with you. I get it. Dan to the end end of the day, until they killed us, before we go out of business. Dave this is not gonna end this way, its just not. Lemonis can you and i take a walk . Dan absolutely. Lemonis great. I want to take dan aside and have a bit of a gutcheck conversation with him. Hes the leader of this business. Its obvious that this company is his dream. Hes taken his brother and his best friend down this path. And right now theyre totally lost. Its got to be bothering him. Why do you stick with this business, of all the things you could be doing . Dan this is me, you know. We want this so badly, and weve worked so hard. And its just so frustrating to think that it could all be in vain. Lemonis you spend a lot of time thinking about that . Dan every day. Its hard to sleep. The only money i have left is in a house, and i know that thats the house theyre gonna come after if this thing does go down and they need their money back. Its not gonna leave me or my brother much. Lemonis well, it seems like your brothers really committed to it. Dan my brother is a golden brother, you know. Hes the best thing i have in this world. And without him, i could never have started this. Lemonis hes put a lot of money in here. Dan hes put a tremendous amount of money. He has a child. He has a wife. Newly married. And im so proud of what weve been able to create, but on the other hand, im so sad that what we created could all go down the drain, you know . Dave marcus, good to see you. Lemonis good to see you. Dan good to see you. Lemonis what i wanted to do now is go over the financials. Dave this is, like, q1 through q3 of this year. Everythings accurate till september 30, 2015. Lemonis okay. In 2014, you generated 1,800,000 in revenue. In 2015, youre going to be down almost. 320,000. Dan we went to a dozen trade shows in 2015, but the existing models did not have a good enough sellthrough. Lemonis okay. So thats a product issue. Dan right. Lemonis so the total loss for the company, since the beginning of time to now, is how much . Dan 606,000. Lemonis and how much capital did you say came into the business . Dan roughly 1 million. Lemonis okay. 1 million comes into the company. A loss of 600,000. That leaves you with 400,000. Dan mmhmm. Lemonis so, do you have 400,000 in cash sitting somewhere . Dan we do not. Lemonis do you have 400,000 of inventory sitting somewhere . Dan we do not. So wheres the 400,000 . Dan so, hold on. Let me think of this. All i can say with 100 certainty is that not one of us has touched any. Lemonis no one thinks that. Dan okay. Okay. I got worried. Lemonis thats not where im going with this. Dan okay, yeah. Lemonis where im going with this is you guys really dont know your numbers. Dan we could know our numbers better, yes. That is 100 true. Lemonis well, you, specifically, as the c. E. O. Of the business, should know the numbers like [snaps fingers] dan that is true. Lemonis one of the main reasons these guys are out of cash is that dan basically spent every single penny launching new products and new styles and new fabrics. Any sku that sort of popped in his head ended up getting made. In order for this company to survive, its gonna have to have real laser focus. What is your equity alignment again . Dan mine is approximately 46 . Lemonis okay. Dan dave is approximately 27 . And, david malino, youre approximately 21 . David should be like 22 . Lemonis are you getting paid . Dave no. Lemonis are you getting paid . Are you getting paid . And how are you paying your bills . Dave you know, dipping into savings, basically. My wife was working. Shes no longer working. Shes on unpaid maternity leave. Dan you know, i have a creditcard bill. Thats how ive been getting by lately. Had to ask for some help from my mom and dad. Its been tough through some debt about that. I definitely [clears throat] [ voice breaking ] i always wanted to be a c. E. O. I thought it would be the best job in the world, and i still do, and when i know that my [clears throat] Financial Decisions negatively impacted the company, it was very, very difficult. You got be responsible for everything in the company. I failed in making good Financial Decisions at different points; numbers isnt my specialty. You know, there was failures in there. Lemonis i give you a lot of credit for being able to take responsibility for the decisions that were made and own it. I compliment the three of you being a team and kind of defending each other. That kind of makes me believe that if i did business with you guys, i dont feel like im gonna have to solve the problems by myself. Dave absolutely. Dan absolutely. Lemonis i like the product because i think that youre headed in the right direction. So im willing to make an offer. Its 750,000 for 51 of the business. Dan whoo dave yes. Dan wow lemonis you guys taking a 60,000 each salary. I want to resolve the debts that i think are gonna present a risk for the business going forward. Would it be nice to pay off the merchant servicing loan for 250,000 . Dave yes, it would. Lemonis would it be nice to have 200,000 in inventory . Dan yes. Lemonis would it be nice to have some money for Product Development . Dan oh, my god it would be revolutionary. Lemonis and i would redo the equity so that you guys are all a third because the three of you all contribute equally to the company. Dave okay, so, i dont see any benefit. Its been three years of our lives. We have put everything on the line. It has strained countless relationships. For me to sit here and sign away control, its just something that i have difficulty digesting. Thats all. David you know, i think its a low valuation considering the revenue that we can generate. Lemonis the amount of work that has to happen from here and the resources and the amount of time that has to be committed to this business isnt gonna be small. And based on the losses for the last two years, the 750,000 feels like a bit of a crapshoot because there are no assets for me to hold on to. Dan i would like to just, for one moment, say my point of view on this, okay . We need a grand maestro. Im comfortable with a 51 deal specifically with this investor, and not with any other investor. Dave im gonna say my opinion. Dan okay. Dave i understand where youre coming from 100 . I feel like youre going to regret that yourself at some point, not because marcus does bad work, or hes whatever. Dan im not gonna argue with you guys. Dave okay. I just i know you well. Weve been through this before. You will regret this decision. David daniel, i told you this. Theres too many Lessons Learned from your end after the fact. Dan its hard to be, you know, on the spotlight like this. Lemonis dan, well, youre the c. E. O. And if you cant stand the heat, get out of the kitchen. Tmom didnt want another dog. She said its too much work. Lulus hair just floats. Uhh help me doorbell mom, check this out. Wow. Swiffer sweeper, and dusters. This is what im talking about. Look at that. Sticks to this better than it sticks to lulu. Thats your hair lulu mom, can we have another dog . laughing trap and lock up to 4x more dirt, dust and hair than the store brand stop cleaning. Start swiffer ing you live life your way. We can help you retire your way, too. Financial guidance while youre mastering life. From chase. So you can. Financial guidance while youre mastering life. man that show. T to record woman now we have to wait forever to see it. jon bon jovi with directv, you dont. You see, weve got the power to turn back time. That show you missed, lets just go back and find. And lets go back and choose spicy instead of mild. And maybe reconsider having that second child. See, thats the power to turn back time. vo get the ultimate all included bundle. Call 1800directv. Dan im not gonna argue with you guys. Dave thats honestly how i feel. I feel like sometimes you get a little excited about things, which is your strength, but sometimes also your weakness, and i feel like you will regret this decision. Lemonis i think at the end of the day, what youre really saying is you dont want me to have 51 of the equity. Dave i definitely dont, and thats nothing personal, but its just lemonis we should just cut to that chase. So ill give you two scenarios. 750,000 for 51 , or 600,000 for 40 , but i get a guaranteed 10 return. That allows there to be 20 , 20 , and 20 . And be getting 60,000 a year in return its actually a better deal for me. 51 , 40 it doesnt matter. Im still 100 in charge. Dan im comfortable with this. David yeah. Dan comfortable . Dave definitely. Absolutely. Dan all right. Thank you very much, mr. Lemonis. Its a pleasure to have you on the team. Lemonis marcus. Dave thank you, marcus. Lemonis just so that you guys understand whats happening yesterday the guys and i made a deal for me to invest 600,000 into the business to grow both shortterm and longterm and really take it to the next level. When they took my check, i became 100 in charge, and you guys have to trust that process. As you guys know, i focus on three things people, product, and process. I am very comfortable that we have great people. From the product standpoint, i think the shoes are beautiful. Its not clear to me that theres actually a definitive process from ideas to being on the shelf, and i want to sort of roadmap that. Im really questioning, are we retailers, or are we wholesalers . Dan at the moment, were you know, most of the revenue is being derived from the wholesale market. Lemonis okay. Would you call yourself a successful retailer at this point . Dan i would call ourselves a very Successful Online retailer and a very unsuccessful brickandmortar retailer. Lemonis in order for this company to truly succeed over time, it has to have a very narrow focus fixing the product, focusing on your wholesale account, and growing your business online. The whole retail storefront thing, while it may be sexy and fun, is a loser. Theyre paying a rent. Theyre not generating any sales. And they have no idea what theyre doing. Also, you want to understand the right place for the company to actually be based because the primary buyer of the product, other than the online customer, isnt typically gonna drive to brooklyn. Theyre gonna go to the Garment District in new york city. Were gonna work on comfort and were gonna work on style. We want to work on those things so that we can grow the business. Okay, we have a lot of work to do, okay . All right, guys, thank you. Dan thank you. Thank you very much. Whats going on . Lemonis hey, guys. Dan hey, how you doing, marcus . Lemonis how are you . Today im bringing these guys to dna footwear, a popular retail chain in new york city. Theyre a big wholesale customer for inkkas. Are you daniel .