Pratik Mante | Aug 13, 2020 | 0
Dan Bilzerian Ignite reports $50 million USD loss
Dan Bilzerian the king of instagram with 34 million followers is extraordinary sensation in himself. His extravagant and controversial lifestyle which is enticing for many people. He is also known for his very much contended cannabis business Ignite.
Dan Bilzerian‘s cannabis enterprise Ignite has just submitted its fiscal report with the Canadian Stock Exchange, and things are not looking good for it: in 2019 alone, it underwent an astonishing net loss of $67 million CAD, that equates to roughly $50 million USD.
Read below to know what went wrong with the cannabis business.
Revenue stream of Ignite:
The company was listed for public trade on Feb. 28, 2019, the cannabis business went from private to pubic on the CSE via a contrary take-over by a virtually active metal-trading firm called ALQ Gold, which puzzlingly decided to give up on excavating business.
Last year Ignite gained revenue in two different ways. The corporation allotted and dumped dividends of its company stock, and the company also raised capital via debt from different financial institutions and other firms.
The cannabis venture claims to operate in countries like Mexico, Canada, Ireland, and the United Kingdom as well as the United States, where Ignite branded CBD products are apparently offered in stores.
In addition to CBD-infused toothpicks and nicotine vape juice, Ignite also promotes water, vodka, and clothing.
How did Dan Bilzerian burn the cash? The million-dollar question
As per Ingnite’s annual reporting, it logged $25 million via “issuing shares of the cannabis business,” $19.9 million from “exchangeable debt,” and $23.7 million from a “short-term promissory memorandum.”
That is, Dan Bilzerian’s cannabis business ran on a lot of another peoples’ money.
With the raised money, Dan Bilzerian’s Ignite went on a joyride of spending, while its stock suffered heavily.
Ignite accommodated wasteful parties and celebrations, threw events, and did all kinds of stuff an enterprise with cash should not indulge into. Parties with squads’ worth of models and celebrities do not come cheap!
In 2019, Ignite lost $43 million on operational expenditures alone, mostly promotion and publicity, office rents, and benefits for staff and executives.
Reporting heavy losses is not entirely uncommon for fledgling companies in Silicon Valley, but what is exceptional is how overstuffed and extravagant Dan Bilzerian’s company accomplished to reach this state in short period one year.
In 2019, Ignite spent $22.26 million under the name of “marketing and promotion”, which is more than double the company sales revenue.
For every dollar in revenue ($9.6 million) earned the company expends around two dollars on general and organizational costs ($18.4 million).
This may offer the best explanation yet for how Dan Bilzerian funds the lifestyle, for which he is famous, fame which in turn funds his lifestyle—the “perpetual status machine” at which he is (for now) the center, as VICE put it in 2015.
Board members comments
Recently the company’s Board of Director wrote that “The Company will need to raise capital in order to fund its operations and continue its existing and prospective expansion into strategic markets. This need may be adversely impacted by uncertain capital market conditions, including those created by the COVID—19 pandemic, an inability to secure strategic partnerships in key markets, and an unfavorable perception of the IGNITE brand”.
The board member also stated that “Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms that are acceptable to the Company”.
The insecurity of the cannabis company Ignite’s capability to accomplish profitable setups and its success in raising additional investment support has cast substantial skepticism on the Company’s ability to stay in the business which is an ongoing concern for the Dan Bilzerian’s cannabis venture.
To summarise in brief, the corporation spent $22.26 million USD on its marketing budget alone, which was already more than twice of its sales income. The confounding expenditures can be supplementary to innumerable branded parties and events with free-flow drinks and celebrity guests. In total, Ignite lost $43 million USD on operating expenditures itself, backing its marketing and publicities while paying for office rents as well as payment for staff members and board members. With poor management of finances and unmeasured expenditures, the outlook of Dan Bilzerian’s cannabis business Ignite is now being called into question.