different business, but he's a huge part of the team and he's part of something bigger that makes him happy. feels like he's connected to something. is that your phone again >> i put it on vibrate i don't understand oh i had it on ring whoops tonight on "the profit," i visit artistic stitch in queens, new york an embroidery and silk screening business >> it's a complex of businesses that work together >> that's called a mall. >> delusions of grandeur >> so this is the restaurant this is is the sports complex. this is our baseball facility. >> is it profitable? >> no. >> if i can't figure out a way to bring this company back to its original roots, artistic stitch will close its doors forever. >> the numbers aren't adding up here i'm this close to going home

>> my name is marcus lemonis and i fix failing businesses if you don't like money, don't follow my process. i make the tough decisions we're closing the store. >> i back them up spending my own money. it's not always pretty >> perfect flavor. >> but this is business. >> i do it to save jobs. and i do it to make money. this is "the profit. this is "the profit. ♪ and it's home to artistic stitch, queens, new york, is a dense and diverse world of cultures and businesses and it's home to artistic stitch an em brobroidery allege silk screening business >> it'll be done today >> today it's become a $2 million a year business. the bulk of that revenue coming

from uniforms, hats, and custom shirts >> there's one down. here we go >> two years ago, sal and nick decided to move their business into a 28,000 square foot warehouse. sal built out the space using his savings. >> i put in half a million dollars of liquid cash >> and he decided to start a few new businesses >> i thought it was a unique business i had $1.5 million >> now with basketball courts and batting cages. but the new businesses have struggled. and the new building and its remodel has the company $1.5 million in debt. >> i got to take from paul to pay peter and move this down here and tfinagle everything >> if they can't find a way to pay down their debt, this company will become unstitched

when i go into artistic stitch, i see racks of clothing, but behind the racks of clothing, i see basketball courts. when i go into artistic stitch, i see racks of clothing. but behind the racks of clothing, i see basketball courts and i look to the right and see an italian restaurant. i feel like i just entered the world's weirdest minimall. their primary business looks like it's shoved in the corner it's an unusual setup to say the least. how you doing? i'm marcus >> fabio nice to meet you >> you doing a big job >> we got jobs. >> sthast really good. >> it's amazing. the machines are amazing >> how long have you been doing this >> 18 years. >> are you a one-man band? >> i am. sometimes it's overwhelming. >> hi, marcus. sal. i'm one of the owners here how are you? >> just getting to meet fabio.

>> fabio's been with me for a long time. he's my brother-in-law started the business when 17 years old in my garage just exploded. and look at this i mean -- >> so it's been a profitable year so far? >> yeah. i mean, when i mean profitable is the businesses do well. the only problem is the debt this place took a lot of money to build >> how much debt's on the books? >> about 1.5 we couldn't pay the contractors and had to use credit cards. there was no financing here. they go to the bank and say what are you building a sports complex, what the hell is going on over there flat out, no too risky. >> fabio, how do you describe the business to people >> the business itself is complicated. there's a lot going on in here it's hard to really just put in a nut schell really quick. >> it's a multiplex of businesses that work together. you get somebody that that wants to do shirts now on a a friday and saturday

night he's coming in with his kids and eat in the restaurant. >> so the family comes in and eat dinner then they realize they have a problem with the sink, there's a plumber here as well that's called a mall vertical integration is growing a business on a common platform. for example, an auto dealership. not only do you buy the car there, you service it, buy parts, get financing, insurance. they all center around the same thing. embroidery and silk screening have nothing to do with batting cages. can i get a tour >> absolutely. this is the production part of the facility >> screening how expensive are these machines >> that machine there a $55,000. >> it's a nice space >> thank you >> this is the sign shop this is nick my partner. >> hi, nick. pleasure to meet you so you're partners in the place. >> yeah. 50/50 across the board >> and how do you split the

activity >> he's the day-to-day guy and i'm sales. >> sales is something i love to do >> and how much revenue is this particular part of the business? >> $170,000. >> and how much did the embroidery do? >> 1.3 but that's with silk screen combined. and the margins are? >> 75%. >> so almost $900,000 in gross profit >> that's a lot of gross let's finish the tour. okay >> yes nice meeting you, sir. >> so this is the restaurant i wanted sort of a unique feel to it. >> what kind of revenue will the restaurant do? >> last year about $300,000. >> less than a thousand dollars a day in sales that's tough it's lunchtime and there's nobody in this restaurant. i'm not that surprised who wants to sit here and watch kids play basketball and pay for fine dining?

>> so this is our baseball facility how much revenue actually comes from the sports complex? >> $350,000 to $400,000. >> sales not profit. so how can you break that down for me is it profitable >> no. >> how about the babble? >> sales to this date probably about $10,000. >> i see how busy the embroidery room is. i see how busy the silk screening is why are you investing in this stuff? the principle business has to be what am i. and right now it feels like an identity crisis. >> it is >> after hearing the embroidery and silk screening business does $1.3 million a year in sales and generates $900,000 in gross profit, 75% margins, and the restaurant, the batting cages, the basketball court don't even equal equal half of that in revenue,

why would you waste your time with anything other than the silk screening and embroidery? how much is the rent here? >> >> about $17,000 a month it's a big facility though. >> right you built it out you paid $17,000 for a ground and empty building >> i'm going to talk to some other people i'll see you in a bit. as i spoke to people working in the company, they were really feeling the pressure especially sal's wife who runs the sports complex >> everything we ever worked for and, you know, saved for is all here >> despite all the problems, there are some really dedicated people that will do anything to make sure this place survives. >> i do what i got to do i'll put this in front of -- sometimes my wife will say you got a family relax. don't run over there i do it because i know how it is right now. it's hard for him. i want to keep this going. >> while their heart may be in the right place, all too often they were very foggy on the

critical details how much money does this business make a year >> i mean, as far as that, i don't know the exact numbers zblec >> even though you're a 50% partner? >> yeah. >> only three were logos, right? >> how are you i'm marcus nice to meet you are you responsible for the books? >> yes, i am. >> is it possible to get a balance sheet and pnl? if i could get that, that'd be great. >> i'm impressed by the fact the embroidery and silkscreening generate $900,000 in gross profit but i have to see how they cannot pay down their debt you add up all the businesses together, do they make money collectively >> yes the most money would be the embroidery and silk screening. >> total revenue a million three. wages and salaries are 276 equipment lease, artistic stitch $3400 a month. even though they generate

$900,000 gross profit in their business, after you factor in operating expenses and all the other businesses, it looks like the actual profitability of the business is around $100,000. how much total debt is on the businesses debt to outsiders, people other than the owner of the business outstanding construction bills which hasn't been paid real estate taxes, you past due on those >> yeah. >> how much? >> $52,000 >> and so between credit cards, kre construction bills that haven't been paid, the real estate taxes, you're $660,000. so made money on paper but once you serviced the interest and the principal payments on all of this debt, it's cash flow negative >> correct >> the current principal and interest payments on the debt are $240,000 a year. but their profit is $100,000 leaving them $140,000 short. there's nowhere to get the money

from what have you sacrificed to this point, sal, to keep the doors open >> it's been a lot is at the hoe my wife, she calls me, sal this is the second electric bill. this is at the house just don't pay it. she comes home, she sees a red sticker on the door, we're going to shut the electric every month that $400, $500 was one more person i could pay. i didn't want to jeopardize my employees. don't worry about me, i say. let's just keep this place going. let's pay everything everybody's got bills. whatever i can do, i'm going to sacrifice. i didn't want nobody at the end of the day to feel uncomfortable and jump ship. it's crazy >> how many weeks away do you think you are from telling the employees they've lost their jobs >> about one month

>> you know, the character of a businessman isn't defined by his bank account it's defined by what he's willing to do for his people you know, you've made a lot of personal sacrifices so that the team can be here you do have something to be proud of how you guys doing >> good. >> well, what's the partnership like between you guys? >> well, we've been partners for 18 years. >> what's that piece of paper there? >> this is the shareholders contract that has me and sal 50/50 shareholders >> you guys are just -- >> well, i haven't seen this yet. >> after 18 years you don't have an agreement between you guys? >> no. >> you're right. this should have probably been done a long time ago. >> feels like he wants to get everything right as of yesterday. which is what this is dated. who owns 100% of the shares

today? >> it's 50/50. >> nothing's signed. >> as we grew, we grew together. gives him interest gives me interest. you know, a lot of artistic stitch ask where it is because of my sales. >> we worked together on this. we've been together 18 years on this we're going to continue to be together on all this >> well, why don't you guys tell me how much money you want from me and what it is that i'll get for it >> wiping out the debt, obviously, that's the biggest problem right now. >> so what does all that total $660,000 >> yeah. >> somewhere around that >> all these contractors $300,000, have they put a lien on the building yet? >> no. >> but they have the right to. >> absolutely. >> why did you think this building was a good idea >> i think the options i had, my negotiator was strong. >> the option you have to buy the building five years from now is $2.5 million.

>> it's obviously worth a lot more money now >> how much is it worth now? >> $4 million to $5 million range. >> wow that's really the business play is the building, isn't it? >> yeah. i the building -- >> there's no way you actually thought that putting meat balls and basketballs and baseballs and embroidery and silk screening and signing was actually a good business idea. you like the real estate play. >> the real estate play is always -- >> this is a real estate play. >> yeah. >> a real estate play is sal working to keep the business alive long enough so that he request have the option to buy the building at or below market. if he is successful and able to turn the building around, he could stand to make millions >> so really if you can figure out how to keep this business open with somebody else's money, that when y-- you said right. you said right, didn't you you think that's funny don't you? because i think it's funny he doesn't realize what he just said to me >> by putting capital into the business, it's going to

stabilize the business >> well, the business that shouldn't be burdened with all this debt. this debt is you guys playing high stakes poker with chase, citi bank, discover so you can have a right to buy a building that you don't own and can't afford that somebody else will finance for you. and if five years from now business isn't doing well whether you'll admit it or not, you won't really care because you'll just sell the building and make yourselves a couple million dollars. i have to tell you why i'm uncomfortable now. you never told me this was a real estate play >> i don't think -- i don't know where you're coming up it's a real estate play >> this is what you just admitted to me keep the business alive to get this to this point i think the challenge that i have, guys, is that my mission is to invest in small businesses, not real estate companies. i just don't think it's

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lemonis: you never told me this was a real-estate play. my mission is to invest in small businesses, you never told me this was a real estate play my mission is to invest in small businesses, not real estate companies. i just don't think it's something that i'm interested in my main focus is making sure that this place stays open, that

these employees get their paychecks, and that the business is successful. sal thought i would fund the business to keep it going while he kept the option to buy the building in his back pocket. that ain't happening in order to move forward, i need to know he's equally committed to fixing this business. so my offer is $660,000 to satisfy this debt on the business and i'll have 50% of the business i'll have fun financial control. >> so how long are you planning to hold financial control? >> forever >> oh, boy >> when the option gets exercised, i'm the first person to get my money out. and so what that's called is last in first out. >> i just don't think that's fair if the building is worth $6 million -- >> i get the money first >> and then from what i understand, half of the profits of that building would become yours. >> half of the profits of everything including the successful

business we're going to have but if it's something that doesn't work for you, i understand we don't have to do it >> let's just do whatever we got to do to get it going. >> can i ask you a question? i feel like obviously there's money invested this is equity i put in. how do i get this money back >> if you think you should have more equity in the business, out of the other 50% because you put more in, we could work it out now. i'm going to have 50%. we are going to factor fabio into this equation, i can tell you right now. for me cutting fabio in the deal is a form of insurance here's a guy running the only business that making any money in this place. the embroidery and silk screening business >> i believe he should at least minimum have 10%. >> me too. there's fabio for 10%. that leaves 40%. how are we splitting it? 25%, 15%, and 10%? >> i'm getting 5% more than fabio. >> fabio's been in business for

how long with you? >> since the beginning >> so he's not any more or less important than you are you're getting more than him which i think is generous. >> that's fine >> 25%, 15%, 10% that's fine. >> agreed. >> the money will be used to satisfy the taxes to the landlord, pay the contractors, and satisfy the credit cards associated with building out the business we have a deal >> we have a deal. >> we have a deal? >> yes, we have a deal >> there's a burden of pressure off me right now i feel like i can now concentrate on the business and not concentrate on my financial debt in the company. >> so for those of you who don't know, i've made a deal to make an investment into this business today the company is kind of a financial mess and so the deal i made was to put $660,000 into the business so that we can pay off the debt.

i will own 50% of the business and i'll be 100% in charge sal will be my partner at 25%. nick will be my partner at 15% and going forward fabio will have 10% of the equity >> thank you i really do appreciate it. i always kind of felt like i was a big part of this place so it feels very good. >> the sales organization has to have leaders and if we're not selling, we're closing. we are a sales organization that's going to go back to our roots by embroidery and silk screening and printing whatever it is that customers want. we can't just make it by selling who we have today. we nd the big corporate accounts the benefit of corporate account is they order more often a large corporate account like

at&t may order more four times a year that's a lot of business we're going to repurpose this space to capitalize on what really makes us money here we will not be distracted by things that cost us money and distract us from executing this plan >> i think ultimately, you know, my decision making wasn't proper i feel terrible that they have to sort of deal with my [ bleep ], honestly, for this past two years >> i just -- i feel bad for him. as much as we all argue with each other, he's helped me before he's one of us >> sal put a lot on the line this is a new day. we should be happy we're going to move forward. we're going to kick butt together everybody ready? >> loeet's go. >> okay. let's go to work so what is the process to

actually find new customers? this is your department, right >> yeah. we use this program -- yellow pages.com. we go onto that. and we're still calling on the -- >> yeah. we call specific areas >> no, the other program >> nick, i thought you were answering. >> yeah. basically the biggest tool we use is yellow pages.com. >> who are some of the bigger clients? who's our biggest client >> i'm trying to think >> you've got to have one that says it's big. >> name some just give me a few names >> you pay him his commission on a monthly basibasis? >> i just get a salary >> whether you sell something or not? >> where's fabio at? >> he's downstairs >> nick, can you get fabio for me >> nick is the head of sales and doesn't even seem to understand who his clients are. more importantly, he doesn't even seem toknow how to drum u new business

i mean, this is a real problem the question is who is the biggest account for this business >> i actually just have one that's called skyline restoration. switch a buddy of mine shirts was about 8,000 tees. he gave me his other company which is 500 shirts. it's going to build from there con edison >> delta another one. >> somebody you knew >> it actually is. a good friend of mine. >> maybe we need to hire some salespeople. >> i don't know about that >> you can't even rattle off the customers you have >> i have a lot of relationships with customers >> the relationships seem to be coming from him. >> i have tons of relationships. but they're not big companies. >> have you ever pitched to any big customers? big customers? >> off the top of my head, no. and after seeing that nick doesn't really even know who his customers are, sales in this company are everything and after seeing that nick doesn't really even know who his

customers are, i want to see him in action. i'm taking him to a local busins pitch is like. good morning >> good morning. >> jonah i'm marcus how are you? >> hello nick ashtistic stitch it's nice to be at your company today. >> so what can we do today >> we'd like to sell you some products for your company. >> okay. >> if you're interested, we can show you a few samples of what we have. >> nick doesn't understand the basics of selling. the first thing you do is try to create some sort of common ground with people ask them a little bit about themselves, be a good listener >> the most popular golf shirt we carry is a polo >> first thing nick does, takes a shirt out of his bag >> tell me the quantity you're looking for and i could give you a stern price. the first time there's a charge to digitize your logo. >> nick's way ahead of himself here you don't bring up price right away you establish a rapport. >> one of the things we wanted to tell you is we know this

isn't a price game we don't want to sell just on price. right? >> right >> so at the end, we want you to be happy and so i mean, if you're -- i would -- [ bleep ] i mean, if we could do business together, you know, i just can't do it right now. i need to -- i'm just -- a blur. i just can't concentrate i'm a little nervous coming up -- >> i feel like you're lying to me about something >> you know what >> you told me this was for construction you lied to me >> i lied to you >> yeah. >> the numbers aren't adding up here >> i'm this close to going home.

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business here? >> the organization has been around since 1928. >> wow and you've been here the whole time >> no. i'm not that old no, actually i've been here for 40 years. >> what's interesting is artistic's been around for a long time as well. we know these shirts and hats are commodity. you can get them anywhere. we're going to service the account. you know, when i look at it, i look at a basic sweatshirt i look at your t-shirt and this is kind of in a similar line is this quality something that meets your standards >> the products seem to be well made >> and if we end up doing business together, are there any other fire houses you have relationships with that you could introduce me to? >> sure can. and there is an organization called the firemen's association within the city of new york. >> how big is that organization? >> we're talking about 200, 300 members. >> good. good i appreciate your support. >> and thank you very much >> thanks very much. having a relationship with one small business is going to lead to having a relationship with other businesses

not only can nick not tell me about those accounts, he doesn't look like he can't foster any. i would say it was not good. >> i would have to agree with you on that. >> hey, guys how are we doing with this job >> it's coming along it's getting started now >> sal, let me grab you outside for a minute >> sure. >> after seeing nick's performance at the fire house, or lack of performance, i need to talk to sal about nick. he's making over $100,000 a year in salary. something's going to change. i'm concerned that the guy that's leading the sales organization doesn't understand the basic fundamentals of a sales presentation so we're going to have to make some adjustments >> okay. >> hey >> hi. >> how are you doing >> good. >> i thought maybe we could chat for a minute >> sure, sure. >> the three of us >> yeah. >> you know, there's no question

that you put your heart and soul into working but i'm a big believer in working smarter, not necessarily harder >> right >> and in the past, you've been collecting a salary that really isn't connected to what you sell it's whether you sell or not, you collect the salary and so we need to move you onto a different pay plan i'm going to put you on 100% commission plan. >> i know i can do it. it's just about refining myself a little bit >> we're going to help you all along the way. i'm going to give you all the resources you need all right. thank you. thank you. >> i appreciate it >> walk my through, fabio. where is the production happening? >> right here. >> so there's production i'm mapping out a plan to expand the businesses that produce revenue and start to eliminate the ones creating drag so i'm going to expand their

silk screening and embroidery business and not only am i going to increase their corporate sales, but i want to create a retail space where people can come in and create their own custom shirts and hats. when i think about this place, i feel like we're underutilizing the assets we have the machinery, the embroidery, and the facility so i'm going to try to create an artist section here. think how cool this will be. artists could come in here and design their own clothing. but i wanted to create a clothing line. hats, sweatshirts, hoodies, bags, t-shirts maybe have it represent queens an idea for a name queens vibe it's up to you >> i got this. thank you. >> one of the things i wanted to do and i don't know if giovanna can help us with this. i wanted to see on that list, the credit card statements >> i could do that >> because when i see target, it says construction. i don't know what you're building from target so i want to see what actually

went through those credit cards. can you print it out >> yeah. >> okay. come here, guys. so, for example, sal's credit card merchandise >> this is what we use to pay for clothing and stuff in here >> you told me the other day it was construction debt. it says it right here. joanne's credit card, target construction debt. >> you know, i think that's -- >> why would target be construction debt? >> it's not. it's her living expenses that she was using to live. got to go buy the kids' clothes. >> we spoke about it the other day. >> like a personal credit card >> why would you list that under credit card? william sonoma citi card bank this is construction debt as well >> i'm not sure. that i'd have to look at >> is there personal living expense on here? >> i'm sure there. what's the big deal on that? >> i agreed to $660,000 based on what you told me

now i'm finding out it wasn't really construction, living expenses my number shouldn't by 660 >> i'm not 100% sure. >> but you were 100% sure to tell me it was construction debt you put this paper together. >> maybe we need computers and stuff. it could be. i'm not saying no. >> japanese steak house. $230 >> i went out with my family. >> on the company credit card? >> on the company credit card. >> now i'm paying for your meals? this isn't sitting well with me. i feel like you're lying to me >> i'm not >> little by little the story keeps changing now would be a good time, right this moment, to get everything cleared up on this paper this is the right moment >> i'm sure -- >> if not, i'm going to leave and never come back. >> all right you know what? come on. it's -- i know it's all for the show -- >> no, it's not for the show, sal. you told me that this was for construction you lied to me >> i lied to you >> yeah. i mean, the numbers aren't adding up here >> i'm this close to going home.

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lemonyou lied to me. that this was for construction. -sal: i lied to you? -lemonis: yeah. i mean, the numbers aren't adding up here. you told me this was for construction you lied to me >> i lied to you >> yeah. the numbers aren't adding up here >> i'm this close to going home. >> you tell me something and then your story changes, i have a problem with it. it has to do with inconsistenc inconsistencies in your numbers.

>> you're helping me out which at the end of the day i appreciate that. and if there's inconsistencies, i'll be more than happy to go over them. >> when people are buried in debt, they sometimes make decisions they shouldn't make. he was desperate he was in a bad place. yes, it's wrong. i'm more pissed that he lied about it i know you've been in a lot of financial duress if you would have told me from the beginning it's not really construction debt, i was trying to survive i would get it honest to god. you cannot misrepresent stuff with me. fabio, can i meet these guys how you doing? i'm marcus >> i'm bill. >> queens has a really cool hip vibe that's why i'm naming the brand queens vibe. you mind sketching out ideas >> yeah. >> i had fabio bring in the best

graffiti artists to lighten up the place and make it fun. and reflect queens the way it really should be while we're stuck with this $80,000 basketball court that's making no money, we're making the best of what we have this is the custom printing area the kids or individuals will draw out what they want. they'll come here. it'll get scanned in and then come out right there i purchased a direct to garment printer for $27,000. i did this so that people could come in and design their own products whether it's local artist who is want to start their own clothing line or kids who just want to come in and have some fun. >> we're going to set up a design center right here >> our primary business is embroidery and silk screen that's where we make the bulk of our money. but these recent changes get us back to our focus. >> looks good. >> good morning, buddy >> morning, marcus getting everything figured out

here >> sal, there's a couple things i wanted to get accomplished are there any other things pressing we need to know about >> the taxes >> the real estate taxes >> he was just here asking for them >> who was here? >> the landlord. >> what did he said? >> i told him i was going to have the taxes ready for him today. he was upset about it. >> how much is that? >> 52 and change >> and so that's past due as well >> yes >> call him. tell him to come back. >> okay. >> hello >> hey, mike this is marcus and sal over at artistic stitch. how are you? >> marcus? >> yeah. i'm sal's new partner. >> doesn't he have to let me know before he does it that he's planning to go partner with someone else? i don't know who you are >> well, that's the my reason for the call and to let you know i have the check for your taxes

>> and what is all that? >> $52,000 >> and accumulated by not asking because he didn't have the money zbp how much is in arrears >> you know, i got to tell you something. i just don't understand why couldn't he be honest with me and tell me this was happening before i didn't expect that from him to be so secretive. >> sir, is it possible that just you and i could meet for a few minutes? >> all right i'll stop by on the way back >> thank you, sir. >> i have to just tell you, this is like a recurring theme. people feel like they're not getting the full story and are we past due on the rent as well? he said we're in arrears what are we past due on? >> so he has -- >> what's this >> is this certified >> yes. >> what is it? >> basically telling what i o' >> so you actually owe him $121,000 this is a lot of money >> i just didn't want you to get involved in something -- >> i have full financial control. if we're partners, i need to

know about this stuff. >> right but having discussed exactly what needed to be done -- >> he told us we owe the landlord $52,000 turns out we owe him $120,000. i'm running out of patience. >> i feel like my life is just >> i feel like my life is just tumblingmatter. coming up -- >> have you caught him lying as well >> i catch him all the time. it's now criminal court. this is a criminal matter.

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it's the most wonderful life on earth. lemonis: mike, i'm marcus. nice to meet you. thank you for coming. i haven't been getting straight answers from sal, so i wanted to meet with the landlord to get a different perspective on what sal's really like to deal with. doesn't it seem odd to you that there's always a disconnect in his story? mike: i find you're never gonna get the truth. lemonis: have you caught him lying a bunch of times, as well? mike: i catch him all the time. lemonis: why does he do that? mike: he doesn't do it maliciously, but there's a little lying in there, there's a little... -lemonis: exaggeration? -mike: exaggeration. why can't he get his c. of o.? lemonis: he doesn't have his certificate of occupancy here? -mike: no, not to my knowledge. -lemonis: how is he operating? mike: he's operating. so, now i got a criminal-court violation for the fire department because he never fixed what he was supposed to fix. lemonis: has he not passed the fire inspection?

mike: they always fail him. my name is on there. his fine is a criminal matter. lemonis: is he in jeopardy of having the right to buy this building from you right now? mike: what do you think? lemonis: yeah. sal is $120,000 past due with his landlord, and he's also violated certain provisions in his lease. the biggest one is that he doesn't have a certificate of occupancy. if we don't get this certificate of occupancy and the landlord closes the building down and he pulls the option away, the money that i've spent is gone. there's no way to get that money back. -hey, sal. -sal: yeah? lemonis: let me grab you for a second. so, the landlord says that you still don't have a certificate of occupancy here. sal: we're using the old certificate because we had a previous c.o. -- it was manufacturing,

so if you have manufacturing, you basically could use the building. lemonis: so, are we clear to be a manufacturer but nothing else? sal: [ stammers ] lemonis: certificate of occupancy means that the city is saying you are not permitted to have people in the building because it is not approved based on fire codes or electrical codes. he wants to terminate your right to the buy the building. sal: yeah, well, why would he -- why would he -- lemonis: he said he got a notice for some criminal charges. sal: no, and i have that notice. it's not a criminal charge, and i think it's -- -lemonis: can i see it? -sal: yeah, sure. lemonis: it says "new york criminal court. are you insane?" sal: yeah, that's what -- he wrote that. lemonis: okay, so he gets a notice. you can see from his perspective. what is this for? what is this court order for? sal: this is for the fire alarm, which is -- lemonis: not in compliance? sal: right, which now it's ready for the next inspection to come in.

lemonis: he's being told that he has to go defend himself in criminal court. i mean, i know why the guy's off the charts. he could go to jail. sal: i could call my architect and see how we could file for the inspections. should we call now? lemonis: yeah. sal: call walter, which is the architect with this violation here. and i'm so confused with all this. lemonis: i don't want to hear that you're confused. this is your primary responsibility, and so you should be doing nothing else than figuring how to keep the cops from locking the door. and your landlord could go to jail. -do you understand that? -sal: yes. lemonis: and so why isn't this the most important thing you're working on right now? sal: i understand what you're saying. lemonis: please. i don't want him to go to jail or the place to get locked. sal: okay.

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lemonis: i know sal, deep down, is not a bad guy, but he's always lying to me about something. i've had enough. i need to figure out what it is that's actually at the root of the problem. well, one of the things that i have to really get my head around is why you're not more clear with me about stuff, 'cause surprises... sal: oh, no, they don't -- lemonis: ...they don't work well in business. sal: that was the fear, and i felt the consequences to me personally were so, uh, large for the company to not have you part of it,

that the fear itself is what didn't make me come out. lemonis: going forward, just so you know, -i can deal with bad news. -sal: right. i can't deal with not knowing news. sal: not knowing, i agree. lemonis: desperate people do do desperate things, and the fact that sal was willing to be vulnerable and said, "i'm lying because i'm scared you're gonna leave," meant a lot to me. you know what one of the challenges is with lying in business? numbers move fast, and that's the easiest place to get caught, is 'cause numbers -- they don't lie. sal: no, you're right. lemonis: i just need to know that it's not gonna continue to happen, okay? -sal: okay. -lemonis: all right. lemonis: the last few months at artistic stitch have been a lot of work... ...but things are progressing well. for the retail store, we've changed the name to queens vibe, and we're landing some very large accounts. that one looks good. the lobby has been transformed into a retail store,

featuring our very own queens vibe product line, and it's really struck a chord with the locals. sal: thank you very much. lemonis: half of the basketball court has been repurposed for a design center. now, you know that whatever you draw is gonna go on the machine and you're gonna be able to wear it? girl: yeah. -lemonis: is that cool? -girl: yeah. lemonis: it feels really good to watch kids come here and draw things out and see them make their own t-shirts. it's like you could wear it to bed. girl: yeah. lemonis: in addition to the original $660,000, i've spent over $100,000 on this renovation, and while the early returns are promising, we're definitely not out of the woods. i think the effort and the intensity of work, i'll give you guys an a-plus, but you have to follow the plan. as for sal, i feel like he's made some progress. -fabio: it's lined up good. -sal: yeah, it looks good. lemonis: anytime you tell somebody that they've made a lot of mistakes and they put their family at risk, it's a humbling experience. sal: queens vibe, here we come. lemonis: i feel like i have a lot of work left to do with him. we're not out of the woods yet. you know that, right?

sal: no, no, not at all. lemonis: it's a work in progress. i leave here encouraged, but i don't leave here totally satisfied. -we got a bright future. -sal: i'm excited. lemonis: let's go. come on. miranda: the lip gloss tis a healing lip gloss... woman: it's so smooth. lemonis: ...a cosmetic company that uses a special ingredient. miranda: this is my original formula, and it's got medical-grade lanolin. lemonis: it's a big idea with huge potential. miranda: and the company's grown from on my stove to a little over $3 million this year. lemonis: i'm impressed. but the owners won't stop developing new products. what is this? miranda: those are light-up tweezers. lemonis: products that no one wants. layne: these right here are all the bottles i can't sell. -lemonis: all the way back here? -layne: yes, sir. lemonis: and their branding is completely chaotic. -interesting? -katia: mnh-mnh. -lemonis: interesting? -katia: no, that's weird. it just feels all over the place. lemonis: if i can't get them to follow my plan... i don't feel like you're trusting me. ...and develop a whole new look...