Ignite Cannabis, the company associated with Instagram celebrity Dan Bilzerian is on the brink of a terrible flop. According to a new audit report, the cannabis company lost a staggering USD$50 million in 2019, rendering it bankrupt and unable to run its operations.
Lost C$67 million
The company’s annual report reveals that Ignite lost $67 million in Canadian dollars (about USD$50 million) last year. The report, filed in June at the Canadian Stock Exchange where Ignite shares (BILZ) are publicly traded, also revealed two ways in which the company ‘made’ money last year.
According to the report, Ignite got money by issuing and selling shares of its stock. It also raised money through debt. Its annual filing reveals that it recorded CA$25 million from “proceeds of the issuance of shares” and another CA$19.9 million from “convertible debt.” It also generated CA$23.7 million from a “short-term promissory note.”
Technically, this means much of the money owned by Ignite belonged to other people. With total disregard for this reality, the company went on a spending spree, even as its stock plummeted. It hosted lavish parties with teams of expensive models, threw events, and did virtually everything that ready cash could do.
In 2019, Ignite posted CA$43 million in losses. This money was spent on operational costs alone. Much of it covered marketing and promotion, compensation for staff and executives, and leases on offices.
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 company’s Board of Directors wrote.
Ignite served as an ATM
Reports also emerged that Dan Bilzerian, the Founder of Ignite, also used it to fund his lavish lifestyle. According to a lawsuit filed by Ignite’s recently ousted former President Curtis Heffernan, Bilzerian used company funds to pay for his lavish lifestyle.
Some of the company’s employees who spoke on the condition of anonymity also confirmed much of what Heffernan filed in his suit.
Ignite pays for everything. Models, events, yachts. Dan would just have it wrapped with the Ignite logo, and all of a sudden it was Ignite expense and he would send them the bill. Pools, trampolines, his personal events that had nothing to do with the business, one employee confided.
For now, things are in a bad taste for the cannabis company, as it stares at imminent failure. Ignite was launched in 2018 in a true Bilzerian fashion at a party attended by thousands of guests. The company has been dealing in a wide range of cannabis products including strains, vaporizer cartridges, CBD oils, and concentrates.
“They probably expanded too quickly, had loose spending, bad business decisions—they just look like a failing company,” said Meital Manzuri, a Los Angeles-based cannabis attorney.
News update: Dan Bilzerian made an acquisition of $25 million worth of shares to save Ignite
In the latest press release, Ignite revealed Bilzerian’s plans to acquire 50,000 proportionate voting shares of the company “for an aggregate subscription of $5 million.” Furthermore, He will settle $20 million of convertible debentures with an outside creditor.