Did Inkkas on The Profit Use a Merchant Loan?January 21, 2016 | By: Sean Murray
A Brooklyn-based shoe brand named Inkkas, recently appeared on Season 3 of The Profit. Nearing insolvency, the company’s three partners Dan, Dave and Dave, welcomed Marcus Lemonis to try and fix their problems. As much as the Inkkas team was convinced they had plenty of fight left in them, the company had only $1,000 left in the bank and were faced with an astounding $500,000 in outstanding debt.
The shoemakers had originally raised $500,000 from investors to get started, only to experience a net loss from inception to date of more than $600,000. Between investor funds and the half million in loans, $400,000 was apparently missing, especially since it was not tied up in inventory. Inkkas’ CEO chalked that up to just not being good with money and they assured Lemonis that none of them had stolen it. None of them were even taking salaries and Dan, the CEO, was living off of his credit card.
Despite everything, Lemonis was pleased enough with their 2015 sales of $1.5 million to make them an offer, but it would have to be big bucks. That’s because Inkkas apparently had a $250,000 “merchant servicing loan” outstanding that he would have to pay off. It’s not clear exactly what the loan arrangement is or who it’s from. Inkkas LLC has no UCCs filed against it in New York, which leads one to believe it must be an unsecured merchant loan, perhaps even one with daily payments.
What followed next was a strange negotiation. Lemonis offered the partners $750,000 in exchange for 51% of the business. Unhappy with ceding majority control, they negotiated him down, or at least they thought they did. The final deal was $600,000 in exchange for 40% of the business… and Lemonis would get a 10% return on his money guaranteed (it was implied that this was annually).
After paying off the $250,000 loan, they would actually be netting $350,000. Consider that with the fact that they agreed to also pay Lemonis $60,000 a year (10% of $600,000) on top of making him a 40% partner. Lemonis could hardly believe his luck.
The show finishes with the Brooklyn-based retail store closing down and the company moving to an office/showroom style space in Manhattan. NY retail chain DNA Footwear agreed to stock their newest shoes, proof of which can be found on their website.
One oversight of the episode is perhaps Lemonis’ insistence that the business be moved to the garment district in Manhattan where all of the wholesale buyers would be willing to go. After making a big point of that, he actually moves them to a different neighborhood over on 29th between Park and Madison. That instead puts them just blocks away from a string of businesses they might already be familiar with, merchant lenders.
Only on The Profit…Last modified: September 1, 2016