I make tough decisions. How am i supposed to trust you . And back them up with my own cash. Its not always pretty. I have to know for sure that the partner that i have has the same goals as i do. This is business. I do it to save jobs, and i do it to make money. This the profit. [hiphop music] Sharla Mcbride started planet popcorn with a single cart and 250 bucks. 13 years later, they now have 30 employees, three flavors, products ranging from kettle corn to churros to crepes. Their popcorn sells at fairs and farmers markets all over southern california. But the bulk of her money is generated through Downtown Disney. Planet popcorn generates 2. 5 million in revenue, but it still cant turn a profit. This year, theyre about 200,000 in debt. Sharlas mother has mortgaged her house and loaned the business almost 200,000 to keep planet popcorn afloat. Planet popcorn is an allcash business, and that leaves way too much room for things like missing money and theft. Theres no charges on that. Then that means they werent charging again. Idiots. Because of poor management. Oh, i got more counterfeit twenties. The bank took them from me. And a lack of focus. I got my cheese order right here. Oh, wait, whered all my [bleep]. This business is not as profitable as it should be. If they dont pay down their debt and improve their bottom line, this company will be out of business within a year. I cant [bleep] do everything, okay . But i see the potential to make a lot of money. I want to turn planet popcorn into a mega brand, like mrs. Fields, or garretts in chicago, so it can generate 10 million a year. Im on my way to meet the owner of planet popcorn, and im gonna determine if this is a good deal for me or not. Good morning, im marcus. Nice to meet you. Youre sharla . Yes. Great meeting you. This is a nice setup. Thank you. Id like to taste some of the popcorn. Is that possible . Sure. What would you like me to taste . Well, my caramel corns really good, so well give you a caramel corn. Oh, my god, this is amazing. Thank you. And you know what . The popcorn is big. This is mushroom popcorn, which is made to coat. Its a better coating popcorn. Tell me about that money. You just leave it in there like that . Its petty cash for when they run out of quarters or ones. Do you have a safe . In here . No. Scary, isnt it . Yeah. While i like the popcorn at planet popcorn, one thing i dont like is the lack of controls around inventory and cash. I see cash all over the place, but i dont see the kind of discipline i expect in a good business. How much money does this fair generate for you . My projections for this year are about 70. So youll do 70,000 in business in this one fair, but it obviously costs money to come here. It does. Bring the trailers here and the labor. It does, yes. And if it rains the whole time, you could lose money. If it rains, if we break down, ifa lot of things could go wrong. So unlike disney, that gets Predictable Traffic all the time predictable. Doesnt set up and tear down. Easy. This is harder. This is hard. This is hard work. Sharlas popcorn is the real deal, and its easy for me to see how i can help rebuild her brand and make both of us a lot of money. But before i do, i need to see the rest of this operation and determine if shes willing to make the kind of changes necessary to take this business to the next level. Are you kidding me . This is ridiculous. I mean, anybody could come in here and just take 5,000, 10,000, 20,000. Sharla would never know it. Is this planet popcorn . This is planet popcorn. How you doing . Good. Im marcus. Casey. I came by to see you guys. My name is casey. I do all the accounting here. Id like to see the business more organized. Theres a renewal packet that came from your Insurance Company that is nowhere to be found. Yeah, its over here. It expires today. Id like to see the business grow. So its really good to have the help of somebody like marcus. Is this the whole place right here . This is just the office part. Back there is where we dolike, cook all the popcorn. My name is brittney mcbride, and im sharlas daughter. We need to roll all this and wrap it. Do you want me to count disney first . Yeah, cause we have to do the reports. Okay. I do cash control, i count money, you know, whatever my mother asks me to do. How do you guys function in this . [laughs] its very tight. We just do. I know. Is there, like, another trap door that takes me somewhere . This is my moms desk. Its actually cleaner than normal. You know what . Sharla. Thats the to be filed pile. Walk me through your oh, im sorry. I just stepped all over your money. Thats okay. [laughs] oops. Okay, i am an organized person. I swear to god. Wheres accounting . Shes counting. No, wheres accounting . Oh, wheres accounting . You know, where they count the money. There, maybe . Do you guys just leave money out . Yeah. This would be a cool place to rob. Why dont you have a drop safe . Were very trusting. You cant trust a lot of people in the world. But i really feel if i have the right people on my team, ill be okay. Hi, how are you . This is steve, my fiance. Hi. Marcus. How are you . Nice to meet you, marcus. Nice to meet you. Good to meet you. How are you doing . My names steve caldaronello, and im sharlas fiancee. You know, i want to make sure its the right deal for her. Hes very protective of me. I definitely will protect her and voice my opinion. What department would this be called . I dont know, its stuff. Okay, what is this here . Oh, these are my crepes. So youre in the popcorn business, the crepe business, and the funnel cake business. So my staple is really popcorn. Thats how i started. And then as i started getting bigger, ive learned more locations, more money, so. More locations, more revenue. Not more locations, more money. More revenueoh, okay. Sharlas business generates well over 2 million a year in revenue, but she still makes zero profit. What she needs to do is really analyze her business to understand where the gross profit is coming from. Which one has better margins . Popcorn. So let me understand this. Popcorn does more business. It has more profits. But youre in the crepe business . Youre correct. Look, the bulk of the earnings are coming from the popcorn business, but she continues to be distracted with funnel cakes and crepes. If she just focuses on the popcorn business and nothing else, she will make money immediately. This is thy kitchen. This is where we make popcorn. When you have a cash business, you better have tight inventory controls. In this kitchen, i see inventory everywhere, bags of popcorn with no codes on them, no tracking mechanism so i know what we have and what we dont have. See, they look at it as popcorn, but i look at it as bags of money. My mother works here, sharry. Hi, sharry. Im marcus. Im so happy to meet you. Nice to meet you. How much money has she borrowed from you . Oh, i took a she took a second out on her house, and the total was about 100,000. Well, i dont know. I owed 125,000 on my home, and now i owe 250something. So thats more than 100. And then she owes me 10,000 from my personal account. The most alarming thing thats happened to me early on in this discovery is learning that the debt thats on sharlas books is actually from her mother. Her mother went out and took a mortgage on her house to keep this business open. They make banks for that. Dont borrow money from your mother, cause if your business fails, your mother loses her house. How do you sleep with that . So lets say that we check the box, sharlapeople, process, product. Your products fantastic. But you got to have at least two of the three to survive. Okay. So tell me about your people and your process. My people are amazing. They work very hard for me. Okay. My process could use improvement. But i can tell you this. I think i have a great business, because even though its like this, i went from zero to 2 million somehow. Sharla, i understand that. But this business is only as big as you will allow it to be. I came here because i believe that we can take this business from 2 million to 10 million very quickly. You have to get a website, and you have to get it up and running and you have to be able to fulfill orders. And i believe that theres an opportunity to grow the disney business, and the best way to do that is to get a retail storefront inside of disney, because what you have in that particular case of disney is builtin traffic. Absolutely. In order to take your business to a national brand, you have to control the money and then control the inventory. But more importantly, you have to have a single focus on one product. You should become known as the popcorn lady. If sharla wants to be profitable, shes got to get out of other things, like crepes and funnel cakes. And she cant be doing this fair business. I mean, its a total time and money distraction. I would agree with you that popcorn is the staple of my company. The crepes, on the other hand, to me, is a pretty significant part of my business. How much revenue will you do . Probably about 600,000. Of the 2. 5 . And whats the margin on it . 9 , at most, on that. Netting 9 . Hes always wanted me to sell the crepes out of the business. He thinks its not profitable. I just think that letting go of that responsibility would make the most sense. Thats right. We have two sides of business here. We have the disney business, which is wildly profitable. Mmhmm. Good margins, good revenue. Yes. And we have the concession business, which is low margin, high expense, high labor, high debt. Youre correct. Sharla suffers from what i call the 80 20 rule. Sharla today generates 80 of her revenue from the popcorn business. The crepe and the funnel cake business makes up 20 . The problem is, is shes spending 80 of her time and her money on what generates 20 of her revenue. If she can get out of the fairs and the crepe business, her business would double because she would have 100 of her time and 100 of her money focused on the popcorn business. You have to have a different game plan. You should sell all these gypsy vans outside, stop traveling around to fairs, open a storefront, launch a website, and become an iconic brand like mrs. Fields. And im here to give you the money to do that, with the understanding that were getting out of the carnival business. Those are my roots. And thats my social life. The social life are my fairs. I am not comfortable selling off the concession side of my business. Sharla, you shouldnt be putting your mom at risk every single day, wondering at 70 years old, am i gonna make this . Am i gonna lose this . I may never get my 100,000 back. Its a frightening situation. But, you know, youd almost do anything for your children. So i dont like doing deals unless i have control for at least a short period of time, at least for a week. Im open to positive changes, but i just dont want to lose control of my company. This is my baby. I really dont want him coming in here and doing, like, all these changes to my company. How about we do this . Im in charge for the next week. And then at the end of the week, if you had operational control and i had financial control, how would you feel about that . But you have all the financial controls. Well, its all me. The risk for me in doing this deal is that my moneys gonna end up the same place as everything else, on the floor. My offer is 200,000 for 50 of the business. So although the business does 2. 5 million a year in sales, it doesnt make any money. And anytime i make an offer, its based on how much money the business makes, not how much money it generates in revenue. I want to have operational control for a week, and i want to have financial control past that week. No. Its ridiculous. Im gonna go. Steves flipping about the fact that she shouldnt do this deal. I would prefer that he would be more constructive. I dont think he realizes that this business will not survive without a cash infusion. Theres no money in the account today. Where are they gonna get it from . Youve done really good for a long time. You basically have a living for your mom, your daughter. And youre gonna have some guy come in thats gonna take control of your finances, and hes gonna own 50 of your business . You think you want to argue with a billionaire about what actually full financial control means . I mean, he might cause lots of havoc. I cant give full financial control. Of course not. Its ridiculous. Youre right. I cant do that. If you think that i can launch you in a direction to finally start to make real profits, then you should do a deal with me. And later. So what i was doing before you so rudely interrupted any interruption is not rude when this is my company. 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So if you want to talk to me about moving fast and giving opportunities if you were my partner and this thing failed, you would still be a rich man tomorrow and i would be broke. But if you fail by yourself. Right. Youre still failing. True. So whats the difference . Itsthe control thing is hard for me. Ive always prided myself on being a womanowned business, 100 . Yes, sharla, you could exist by yourself as an independent, strong woman for the rest of your life. I came here today to give you money. If you think that you have the i. T. , the marketing, and the publicity resources that i have, then dont do a deal with me. Well, of course i dont think that. If you think that i can launch you in a direction to finally start to make real profits, then you should do a deal with me. Do we have a deal . Ive worked really hard to get here, and i dont want to lose my company, and i dont want somebody to take it over. I would do it in a heartbeat. Would you really . Without a shadow of a doubt. Do we have a deal . We have a deal. Thank you. [cheers and applause] whoohoo come on, give me a hug. Dont let me down. I wont let you down. Do you remember, sharla, that for the week, i was in charge . Im ready to pass out right now. Okay, so go have a drink. Im gonna need a few. Okay, everybody go rest tonight, because, you know, the next weeks gonna be unbelievably intense. Have a good night. Thank you. Partner. Okay, ill see you guys in the morning. Thank you, marcus. Sharla and i made a deal. I know that some of you arent happy about it. But one of the things that i wanted to do today is make sure that everybody understood that i was now in full control, and that were gonna fix some things that we think are broken. My ultimate goal with this investment is to make planet popcorn a national brand. In order to do that, were gonna launch a website so we have a national presence. Were gonna open up a storefront in Downtown Disney. But before any of that happens, i want to open up a storefront outside of Downtown Disney so disney knows we know how to run one. The goal is to go from a 2 Million Company to a 10 Million Company. Right now, two carts at disney generates 1. 2 million. And adding a storefront at Downtown Disney will do about 3 1 2 times what two carts do. Thats close to 4 million or 5 million. This storefront will have thousands of square feet at one of the best theme parks in the entire world. It allows us to generate more revenue because the amount of foot traffics significantly greater, and well be able to expand our flavors and the way we merchandise them differentsized tins, differentsized bags, differentsized boxes. That gets me to 10 million very quickly. Cash, to me, is the most important thing in business, and protecting it is the most important thing. I want to make sure that when we take cash in, we put it away properly. In order for me to be comfortable, i want to put the controls in place so that i know that my cash and my inventory is safe. Anything else . Nope. Lets get to work. Sharla and i are in newport beach, looking for locations for our first store. Ive chosen a location and so has she. This ought to be interesting. Lets find a parking space. Okay. Its busy. Wow, its really crowded here. When i had the realtor find me places. Yeah . I knew i was looking for medium income. Right. I knew i was looking for traffic. Yes. And i knew that i wanted to make sure there was a coffee place, a gas station. Oh. And an ice cream place. Interesting. The Ice Cream Store will get traffic at night, coffees morning and night. Yes. And the gas is repetitive traffic. I dont know. I kind of like the spot, though, because its right on the entrance. Do you agree . My gut says no. First of all, nobody buys popcorn in the mornings. But its packed. No, but i dont want to be in a boring spot. I dont want a store in a mall. Just because marcus has a billion dollars doesnt mean he knows the best location for a popcorn store. All right, lets just go check this place you want to look at and compare it. Okay. Sharla didnt like the storefront that i chose. Maybe she thought there was too much traffic or too many customers walking around. Over here . Yes. Its a great corner. Its the busiest corner in our neighborhood. People walk every day. Sharla, can i just show you something . Sure. I want you to look this way. What do you see down this sidewalk . Lots of cars. What do you see on the sidewalk . No one. Okay. And what do you see on this sidewalk going this way . A man with a flag. No one. Theres nobody. So i hope this isnt your spot. Its around the corner. Not even on this street . No, i come here every day. I live here. I know what traffic goes through here. So the nectar shop, the ice cream shop, all right here. And this place, in the morning, is nothing but people everywhere. Well, you told me back there people dont buy popcorn in the morning. Im not finished. Okay. Late afternoon, it gets busy again. Theres a possibility that this is busy. But im not gonna make the turn, come back down here. Everybody walks. This is a walking neighborhood. I mean, i walk it every day. I know. Yeah. This would be a terrible popcorn place. Sorry. This is a destination place. Popcorn is an impulse place. There are two different types of purchases. Theres a destination purchase, like a hardware store, cause you know what youre going for, and theres an impulse buy, like an Ice Cream Store. You want to have an impulse buy be in a hightraffic area where people are spending their discretionary money, not in a faroff place where its hard to get to and hard to see. Im gonna be honest with you. When i brought you here today, it wasnt really about popcorn. This is my vision for a creperie. I told you i wasnt interested in the crepe business, and you agreed to those terms. When we made this deal, i was very clear with her that we were out of any business other than popcorn. I dont think shes confused. I just think shes unwilling to follow my lead, and thats not acceptable by me. Once we make a deal, theres no changing the plan. I do business deals on peoples character, their integrity, their honesty. But i have integrity. I dont think thats the question between me and you. You can trust me. So, sharla, i need to be clear about something. What insurance do i have that you wont screw me . How could i screw you . You could take money out of the Company Without telling me, or maybe turn what i think is a popcorn store into a creperie. Well, you know, i guess theres a risk factor on both ends, because you dont really know me and i dont really know you. Mmhmm. All i can say to you is youre gonna have to trust me on this one. Do i have to wonder if youre gonna steal . No. Do i have to wonder if youre gonna undermine me . No. Do i have to wonder if youre gonna go around my back and try to do something to hurt me . No. You have nothing to worry about me as far as integrity or undermining you. You can say that without any reservation . 100 . Okay. You know. Integrity is one of the pillars in business, and based on what ive seen at the storefront, im starting to lose trust. This im not changing. Youve said that 11 times. Were good, we got it. And later. You guys are in trouble. The Balance Sheet is hundreds of thousands of dollars wrong. The [bleep] is gonna hit the fan. Guys, heres what i need help with today. Were gonna start with getting this place cleaned up. Are these clean . You cant run a business if its not clean. Not only are we getting this office cleaned up, but were installing security cameras, both inside the office and out at the popcorn trailer. So the cameras are gonna go inside. Okay. And theyll be able to monitor kind of the workflow and everything. So youll be able to kind of see what people are doing, or what theyre. Not doing . Not doing. Popcorn is now being organized and boxed up in a new Inventory Management system. Next, im giving sharla a pointofsale system, so we can keep detailed records of her sales and her inventory. At the end of the day, you should have this much inventory and this much cash. Hey, guys, lets sit down and have the meeting about the website. Okay. Hi, there. Hey. And what would your name be . Salem. Salem, nice to meet you. Im sharla. Nice to meet you too. Youre the internet web design guy . Thats correct. Okay. So this is a typical storefront. This is just for mockup purposes. Sure, i understand. These are just ideas, so im envisioning two separate websites. Popone. Com the organic, sister brand. Yes, cause youve kind of got a different brand. So you separate theright. And it creates more opportunities to bring in more traffic from the search engines. Somebody might google organic, and if i had a separate web page, it would take them to popone. Popone, exactly. Having a website is the cheapest store you could possibly have. Its a 24hour store, seven days a week, with the lowest cost. The other person that i brought in. Mmhmm. Helped redesign a lot of packaging. Packaging is one of the easiest things to do to increase sales and profit. Great packaging will sell a product before anything else. So im gonna change the design so its less carnivallike, and im gonna change the package itself. What we did basically is we took the logo and we tried to freshen it up, give it a stronger, overall powerful look, at the same time, still staying with the planet theme. We obviously tried to tie in the planets. And then this look here is obviously a little less outer space, but we still tried to tie in the planets. It looks nice. I like it. Okay, so, before we go any further, this im not changing. I like my brand right there. What i want to make sure you understand, sharla, is where were gonna make more money is the cleanliness of our presentation, the creativeness of the names. Are you okay with the packaging, other than the actual icon itself . If this was here. I agree on the black background, my brand. Uhhuh. As long as its my brand, im good. I mean, youve said that 11 times. Were good, we got it. 12. My brand. We got it. Okay, so what were also gonna do today is talk about the mechanism in which the package is done for retail store consumption. So theres a box, and theres a tin. So just let me ask you, why would i need to have different packaging . I like my bag. The size of the package and the shape of the package make a big difference in determining the profitability. What do you sell this for . That flavor . Seven. What would you charge for the tin . 16. 99. Really . Will you do me a favor . Yeah. Will you fill that . Yeah. Its, like, a bag. What does this bag cost you . 17¢. What would that tin cost . 80¢. Oh. So right around 7 is what you would retail that bag. You pulled 16 out of the air for the tin. I did, but i thought that tin was gonna be pretty expensive. Thats right. Where were gonna make more money is with that perceived value. Perception matters more than anything in retail. And packaging is a big part of perception. Taking the popcorn from a bag that costs 17¢, and taking the same amount of contents and putting them in a tin that costs around 80¢, well, thats only a 63¢ increase in cost. But im able to charge 9 more. Ive just increased my profit dramatically without doing much other than changing the packaging. Would you buy that . I dont know. I mean, you know, i sell a lot of popcorn in my grabandgo bags. I really like this tin. I would buy it. Its reusable. Its resealable. Looks good. And it would be fun to say to somebody, like you do in some of the coffee shops, buy the tin, come back and get a refill for 4. People would come back all the time. Think about the margin on that. Yeah. Okay, thats done. Obviously, you used the petty cash to buy lottery tickets. I did. Thats why the Balance Sheets off by a couple hundred grand. And later. I dont know if somebody else is stealing or youre stealing. I control all of the cash, so if anybodys stealing, it would be me, and i dont steal. Sleep this amazing . Thats a zzzquil pure zzzs sleep. Our liquid has a unique botanical blend, while an optimal melatonin level means no nextday grogginess. Zzzquil pure zzzs. Naturally superior sleep. A lot of folks ask me why their dishwasher doesnt get everything clean. I tell them, it may be your detergent. Thats why more dishwasher brands recommend cascade platinum. With the soaking, scrubbing and rinsing built right in. For sparklingclean dishes, the first time. Cascade platinum. sensei beautiful. But support the leg when i started cobra kai, the lack of control over my business made me a little intense. But now i practice a different philosophy. Quickbooks helps me get paid, manage cash flow, and run payroll. And now im back on top. With koala kai. Hey more mercy. vo save over 40 hours a month with intuit quickbooks. The easy way to a happier business. Our plan is really coming together. Were about to launch a new website, the packaging redesign is underway, and were on the hunt for a new storefront. But now its time to dig deeper into the business. The accounting here is nothing short of a disaster. Okay, so my appointments at 3 00. Before you go, i want to make sure you know that im gonna go over the books with casey. Thats fine. So im gonna need to ask casey for information. Im sure casey will give you the information he has to the best of his knowledge. All right, thanks. Anytime. To go over the books is a basic principle of Due Diligence in any transaction. I need to make sure that whats been represented is actually whats on paper. This is how i want you to think about it. Put that away for just a minute. In order for us to understand the profitability of our business, weve got to work backwards. So were gonna get all the way down to what you actually make on a single cart on a single day. Three carts at the theme park. Correct. Cart a makes, on average . Roughly anywhere from 600,000 to 750,000. For this 750,000, how many bags did we sell . The average sales about 8 bucks. Whats the total volume on a typical day . About 250. Times eight. 2,000. 2,000. Of the 2,000, how much do you have to give away to disney . 35 commission would be 700. Okay. Now we have 1,300 to work with. Whats 250 times 1. 47 . Thats the raw material cost of goods, right . And packaging. 367. How many people does it take to run that cart . 26 working hours. Okay. And how much are we paying per hour . Anywhere from 8. 50 to 11. Lets call it 9. 50 for average, okay . 250. 933 minus 250. 685. 685. Now, how much skimming goes on . Per day . Theres probably a good 35. Lets call it 35. Im gonna exaggerate and say 50. Okay. Okay . Theres maintenance, insurance. So that cart makes, on average, 400 a day, times 365. 146,000. All right. We went through the math, looking at each cart individually. Our estimation was that this business makes about 350,000 in profit a year. Thats not too far off. So as i went through the Balance Sheets and the Financial Statements, i discovered that the estimations that were using arent that far off. The Financial Statements show profit somewhere around 319. Based on this Financial Statement, it says that the business makes 319,000. Right. So whats odd about it, casey, is that cash in bank is actually overdrawn. Mmhmm. So what im trying to figure out is where did the 319 go . Because it didnt show up in cash. It didnt show up in additional assets. It didnt show up in a reduction in liabilities. Theres 319,000 on the Financial Statement and theres no cash in the bank. I mean, you dont need to be a math genius. Something doesnt add up here. So if this business makes 300,000, and this is whats reported and deposited, wheres the money . You see why somethings not yeah. And i think that a lot of the questions that i have are similar to yours. Marcus, marcus, im really sorry. But any numbertalkingmmmm. Sharla needs to be here. She knew we were gonna do this, though. But shes texting me. Shes saying, i dont want any accounting discussed . Unless shes here. All were talking about is the Balance Sheet. You want to call her and just tell her . You talk to her, cause im nobody, i mean except youre the lender. Yeah. Just so you know, youve put money in this business. Oh, i know. And it says that the business has made money, except hundreds of thousands of dollars have disappeared. Okay. And the lenders arent getting paid back. All were discussing i just think you just ought totill shes here. Uhhuh. Sharlas mom said that sharla was very uncomfortable with me going through the financials, especially without her there. Whats odd about that is 20 minutes earlier, sharla told me it was okay. Something smells very fishy right now. We stopped. Thank you so much. I appreciate that. Sharla doesnt like for everybody to know her business. Thats obvious. But you know what the bigger issue is . Wheres the money going . I dont know. Every nickel comes in, it goes out. Its just gone. If this business goes away, and if you didnt get your money back, what would happen . Uh. I would have to get somebody in there that can pay me my rent so i can make my house payment. Thats scary. Yeah. Sharlas mom mortgaged her house to keep these doors open. Youre concerned. Very concerned, yeah. You know . If this business fails, her moms gonna lose her house. I dont think sharla realizes that, or she doesnt care. Planet popcorn. Im sitting here talking to marcus. Youre gonna go on speaker. Hold on. Hi, shar. Im really not comfortable having my finances discussed without me there. They stopped, sharla, when i told them. I mean, enough is enough. I mean, sharla, youre uncomfortable with us even understanding your Balance Sheet . If youre gonna be sitting there talking about my Balance Sheets, i want to be there to agree or disagree. Well, we made a deal, and i have to understand if the Balance Sheet is right or wrong. Im investing hundreds of thousands of dollars into sharlas business, and she wont let me look at the books . What the hell is she hiding . All right, well, listen. I dont think we should talk about this on the phone. Well discuss it whenever you get back. Okay. You guys are in trouble. The Balance Sheet is hundreds of thousands of dollars wrong. Somethings got to change, or the [bleep] is gonna hit the fan. Look what i bought today, marcus. Obviously you used the petty cash to buy lottery tickets. I did. Well, thats why the Balance Sheets off by a couple hundred grand. Sharla thinks its funny just to take cash out of the jar to go buy lottery tickets. But we got a problem here. Theres money missing. So what i was sitting down with casey and doing before you so rudely interrupted any interruption is not rude when this is my company. Okay. Because i have to understand the books. Uhhuh. So when i sit down with casey, and i want to present to my partner a Balance Sheet thats clean, so that she knows from this point forward its more like a marriage. Yeah, im getting close to wanting to get counseling, sharla. A divorce. So take all the revenue, all the expenses, it says you made 319,000 for the year. 2012 . Thats right. Okay. The problem is theres 319,000 missing. Then i guess it needs to be found. Why dont you seem alarmed by the fact that moneys missing . I dont think this is all accurate. Im just saying. Do you think you had 1. 2 million in gross profit . I cant say yes or no. No. And you know im not a mathematician. Okay. If someone pointed out to you that you made 319,000 in profit and you had zero cash in the bank, you would think that you would be alarmed. I mean, sharlas acting like its nothing. If you dont know your numbers, you dont know your business. Youre asking me, does this number look right . I dont even know how to get in quickbooks. So do you i mean, i can get in quickbooks, but i, like, barely know how to write a check. Sharla, this isnt quickbooks. This is, like, math 101. Im not an accountant, so i dont understand it. Okay, so how about i bring in an accountant to go over the books with us . Would that be okay with you . Absolutely. Okay, ill see you tomorrow. Adios. Can i talk to her in private for justwithout a mic, or what . Yeah, you do. No, i dont. Im just gonna say this. I might not be able to read my Balance Sheet, but i make two pointwhatever they said Million Dollars a year. So dont be telling me im stupid and dont know what im doing. He didnt say you were stupid. Oh, please, mom. Its my money. But you shooki meanwere only doing i did what . Excuse me . What did you start to say . You shook his hand. So what . Youre asking me to trust you. Marcus. I do not want to do business with you because i dont think i can trust you. Want to freshen your home without using heavy, overwhelming scents . Try febreze one; it eliminates odors with no heavy perfumes, so you can feel good about using it in your home. For a light, naturalsmelling freshness, try febreze one. Think you need to buy expensive skincare products [ ] to see dramatic results . Try olay skin care. Just one jar of microsculpting cream has the hydrating power of 5 jars of a prestige cream, which helps plump skin cells and visibly smooth wrinkles. While new olay retinol24. Provides visibly smoother, brighter skin. For dramatic skincare results, try olay. And now receive 25 off your purchase at olay. Com brand power. Helping you buy better. A lot of folks ask me why their dishwasher doesnt get everything clean. I tell them, it may be your detergent. Thats why more dishwasher brands recommend cascade platinum. With the soaking, scrubbing and rinsing built right in. For sparklingclean dishes, the first time. Cascade platinum. My bladder leak underwear. Orried someone might see so, i switched. To always discreet boutique. Its shapehugging threads smooth out the back. So it fits better than depend. And no one notices. Always discreet. Sleep this amazing . Thats a zzzquil pure zzzs sleep. Our liquid has a unique botanical blend, while an optimal melatonin level means no nextday grogginess. Zzzquil pure zzzs. Naturally superior sleep. Thanks a lot. Sharla . Yes, how are you . I brought a friend of mine. His name is greg. Greg, this is sharla. Sharla, good to meet you. Hi, greg, nice to meet you. Greg has done Forensic Accounting for me on a number of deals. I brought in a forensic accountant to really dig into the books so that i can find out why theres 300,000 missing. Iobviously, its a cash business. So i have cash all the time, cause i have to create tills for all my registers. Right. Right . So i will withdraw money out of the account, meaning boxes of quartersthere you go. Heres a gift. Just in case you want to take a bag of cash. Right, right. See, cash is the most valuable asset cause its the most liquid asset. Sure. So you have to have the most control over your cash and your cash flow. Okay. And frankly, if you dont have control over your cash, you may be losing cash. Well, yeah, im so let me show you guys. So this is income statement for 2011. 67,000. Okay, so thats positive. Both okay. Then, in 2012, sharla. Mmhmm. You made 319,000. Okay. Heres whats most alarming. Theres the cash balance as of december 31st. Theres no cash. Mmhmm. Itsyou can see why its alarming to me. Well, so here is my question. Firestone financial is who finances my carts. Okay, under liabilities, you dont see that anywhere, and i pay it every month. Where is the money coming from . Out of the bank account. Then it would adjust on here. I think its ending up here, cause look at this. 80,000 went here. So you went from 86,000 to 162,000, okay . Okay. Heres the problem, though. We actually expect more profit, cause it was miscoded. Which means the income would be higher, not lower. Exactly. Right now, our expenses are overstated. So we expect a lot more cash. So cash is leaving somewhere. What the forensic accountant found was that there are entries that were wrong on the books. He actually discovered that the profit is even 80,000 higher than we thought, which means theres 400,000 missing, not 319. Money went somewhere. Youre probably not ever gonna be able to make me understand this. Thats why i hate math. Lets just take one year as ayoure a cash business. You get 1 in cash, and you, in fact write a 2 check, youre in debt. No, in this case, you didnt. You wrote a 40¢ check, so were expecting 60¢ in cash, okay . Of course, right. I agree. In this case, were expecting 300,000 in cash, cause you are a cash business. Right, but theres not 300,000 left over after the end of my year. And thats the big mystery right now. The money should be there, cause there are no distributions, no draws, right . Well, theres no distributions because theres no money to distribute. But you have profit. Whats happening is theres leakage somewhere. I dont know if somebody else is stealing or youre stealing. I control all of the cash. So if anybodys stealing, it would be me, and i dont steal. Okay, so wheres the cash . Where is the cash . Couldnt tell you. When greg and i confronted sharla about the numbers, her response led me to believe that shes hiding something. You see the profitability. The cash has got to be going somewhere. It would have to be. Somebodys got to be stealing something. Yeah, theres so many potential opportunities. It could be at the till, at the fair. Or right here. Right here, or somewhere in between. Somebody has to be stealing from this business, and i dont know if its sharla or one of her employees. And when you think back to the cash that was sitting on the floor, it would be easy to walk away with 5,000, 10,000, 15,000. It makes me terribly uneasy about doing this deal. Would you make this investment if you were me . No, i would not do this deal. Use my moms stapler, cause my stapler doesnt work right. Okay. Can we talk about something . I was planning on having a frank discussion with sharla about the money, but something way more pressing came up. I received a disturbing email from salem. This email came from salem. Its, like, a trail. He told me that sharla and steve have been communicating with him on trying to buy a website that i already own. It says, hey, salem. Just left you a voicemail. Could you please let me know what youre asking for popone. Com . Right, we did have an email with him. But i told you that i already owned it. Popone. Com is an organic popcorn site that i was creating for sharla and i. She knows that i already own it. She has no business going around me, trying to buy it. We wanted to secure it for us so we could do the brand. I mean, were partners. I told you, 5050. Im absolutely telling you the truth. Whatsi dont understand whats wrong. Let me just tell you how this feels. You guys basically were trying to steal it, thinking you were gonna swipe it away. Really, honest to god, you can ask him. You were just gonna bring it to me and say, oh, marcus, you said you owned it, but you mustve been mistaken. Here it is. I mean, come on, guys, i mean youre not gonna convince me that you didnt know what you were doing. I didnt think it was a crime. But, sharla, we had a nice conversation about honesty and integrity, and you told me youd never try to undermine me. How would i screw a billionaire, really . Seriously . Ive never screwed anybody in my life. Well[laughs] sharla, is it possible that you and i can just talk without everybody, just for a minute . Sure. Theres a Million People that make popcorn. What i care about is doing business with people who i believe have their best interest and my best interest. Right. I told you that in the car, that character and integrity is everything for me. Right. Okay, i dont care that all these cameras are here. And please, let me finish. Nookay. I picked your company out of all the i know, but let me finishout of all the calls i got. I had plenty of chances to pick companies. But not everybody has the reputation i have. I thought what i found was a bulldog with a lot of character. I have a lot of character. And i was wrong. Dont make me cry. Youre making me look like a stupid liar, and im not. But you lied to me. I didnt. When did i lie to you . Did you say to me today, are you trying to buy popone . Did you ask me that . How was i supposed to know . You did it behind my back. I didnt how am i supposed to trust you . I mean, i was willing to put in hundreds of thousands of dollars into this. Marcus. And youre asking me to trust you. Marcus, that email im trustworthy. I have integrity. I have all these things. I absolutely do. You did not display it. You did not display it. Integrity is the only thing in business. So you can be very wealthy. You can be very smart. But if you dont have your word, you dont have integrity, none of the other stuffs worth a damn thing. Sharla, right now, i do not want to do business with you because i dont think i can trust you. For Business Advice and extra scenes from the show, go onto cnbc. Com theprofit. Shouldnt you pay less when you use less data . Now you can. Because Xfinity Mobile gives you more flexible data. You can choose to share data between lines, mix with unlimited, or switch it up at any time. All on the most reliable wireless network. Which means you can save money without compromising on coverage. Get more flexible data, the most reliable network, and more savings. Plus, get 300 off when you buy a new Samsung Galaxy s20 ultra. Thats simple. Easy. Awesome. Call, click or visit a store today. After thinking about it, ive made my decision. Im gonna go have a talk with sharla. I feel like i came into this business, i thought i saw something really good, a 2. 5 million business that that could be a 10 million business. Right. And between misleading me about the crepe store. Im gonna be honest with you. When i brought you here today, it wasnt really about popcorn. This is my vision for a creperie. The flipflopping on the books. You didnt want me to look at your books 20 minutes after you told me it was okay to look at your books. Any numbertalkingmmmm. She knew we were gonna do this, though. Between that, between the cash missing from your Balance Sheet, and the forensic accountant coming in and telling me its even worse. Cash is leaving somewhere. I control all of the cash. So if anybodys stealing, it would be me, and i dont steal. And what really got me was the website stuff. Did you say to me today, are you trying to buy popone . Did you ask me that . How was i supposed to know . You did it behind my back. Quite frankly, you blew it. I told you that trust and integrity are everything to me. I have to know for sure that the partner that i have has the same goals and the same vision as i do. Im not gonna do business with you. I wish you a lot of luck, but im not gonna do business with you. Planet popcorn will never be a mega brand like mrs. Fields or garretts popcorn, and its because of sharla. I feel bad for her mom. Shes gonna lose her house if sharla doesnt change her ways. And those employees that work theretheyre gonna be out of jobs. Tonight on the profit, i go inside ecome, an allnatural cleaningproducts company run by two lifelong friends. This business is running on fumes, and it can close its doors any day. Without me, this business doesnt make it. My goal is to turn ecome into a 10 Million Company, and in that process, i have to teach these two that business isnt personal. You cant fire any of my employees. Its a business, robin. If they dont listen. Im saying no. This company will close its doors. My name is marcus lemonis, and i fix failing businesses. Im willing to write a half a Million Dollar check. I make tough decisions. Im not willing to do the deal if youre in charge of sales. Back them up w