Management's Discussion and Analysis - For the Three-Month period ended June 30, 2021 This Management Discussion and Analysis, prepared by ...
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. Management’s Discussion and Analysis For the Three-Month period ended June 30, 2021 (This Management Discussion and Analysis, prepared by Management, has not been reviewed by the Company’s external auditor)
IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
TABLE OF CONTENTS
INTRODUCTION 2
OVERVIEW OF THE BUSINESS 3
RECENT EVENTS 4
FINANCIAL HIGHLIGHTS FOR Q2 2021 5
FINANCIAL PERFORMANCE SUMMARY 6
WORKING CAPITAL 9
SUMMARY OF QUARTERLY RESULTS 9
LIQUIDITY AND CAPITAL RESOURCES 10
NON-IFRS FINANCIAL MEASURES 11
RISKS AND UNCERTAINTIES 12
1IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
INTRODUCTION
This Management’s Discussion and Analysis (“MD&A”) prepared as at August 27, 2021, reviews the financial condition and
results of operations of Ignite International Brands, Ltd. (the “Company” or “Ignite”) for the period ended June 30, 2021
and all other material events up to the date of this report. The following discussion should be read in conjunction with a)
the consolidated interim financial statements and related notes for the period ended June 30, 2021, and b) the annual
audited financial statements and related notes of the Company for the year ended December 31, 2020. These statements
can be found under the Company’s profile on SEDAR at www.sedar.com.
This MD&A has been prepared in compliance with the requirements of section 2.2.1 of Form 51-102F1, in accordance with
National Instrument 51-102 – Continuous Disclosure Obligations. The financial data included in the discussion provided in
this report has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting
Interpretation Committee (“IFRIC”).
The Company’s certifying officers are responsible for ensuring that the unaudited interim consolidated financial statements
and MD&A do not contain any untrue statement of material fact or omit to state a material fact required to be stated or
that is necessary to make a statement not misleading considering the circumstances under which it was made. Information
is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change
in the market price or value of Ignite’s Subordinate Voting Shares; (ii) there is a substantial likelihood that a reasonable
investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of
information available to investors. Management, in conjunction with the Board of Directors, evaluates the materiality in
this regard referencing all relevant circumstances, including potential market sensitivity.
Unless otherwise indicated, all financial information in this MD&A is reported in Canadian dollars. All references to the
Company contained herein include references to its subsidiaries, as applicable, in the context. Additional information
relating to the Company is available on SEDAR at www.sedar.com
2IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
ACCOUNTING PERIODS
This MD&A is based on information in the unaudited condensed consolidated interim financial statements and
accompanying notes thereto for the period ended June 30, 2021. Comparative amounts in the unaudited consolidated
interim financial statements and accompanying notes thereto are for the period ended June 30, 2020, and the year-ended
December 31, 2020.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
Except for statements of historical fact, information contained in this MD&A constitutes “forward-looking statements”
within the meaning of Canadian securities legislation that involve inherent risks and uncertainties. Forward-looking
statements include, but are not limited to, statements with respect to Ignite's intended business focus and growth strategy;
projected financial performance of the Company; the expected development of the Company’s business, projects and joint
ventures; completion of the Company’s projects that are currently underway, in development or otherwise under
consideration; and future liquidity, working capital and capital requirements. Forward-looking statements are necessarily
based upon several estimates and assumptions that, while considered reasonable by management, are subject to known
and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ
materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited
to: general business, economic, operational, competitive, political and social uncertainties; the effects and impacts of the
coronavirus disease (COVID-19) pandemic; ability of Ignite to give effect to its business plan; reliance on the "IGNITE" brand
which may not prove to be as successful as contemplated; the ability to, and risks associated with unlocking future licensing
opportunities with the "IGNITE" brand and the ability of the Company to capture significant market share. Readers are
cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive, and
undue reliance should not be placed on forward-looking statements. There can be no assurance that any of the forward-
looking statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Ignite
disclaims any intention or obligation to update or revise any forward-looking statements, whether because of new
information, future events or otherwise, except as required by law.
OVERVIEW OF THE BUSINESS
Ignite is a CSE-listed and OTCQX traded company operating in permissible sectors trading under the symbol “BILZ” and
“BILZF”, respectively. The Company’s head office is located at 11 Cidermill Avenue, Unit 200, Vaughan, Ontario, Canada
L4K 4B6 and its registered and records office is located at 700 West Georgia Street, 25th Floor, Vancouver, British Columbia
V7Y 1B3. The Company is a reporting issuer in British Columbia, Alberta, and Ontario.
Ignite is a consumer-packaged goods company, leveraging the IGNITE brand via multiple product platforms in the synthetic
and tobacco derived nicotine e-liquid, spirits, apparel, beverage, cannabidiol (“CBD”), and cannabis sectors. The Company
is in the process of expanding its business operations which currently includes branding, marketing, licensing, sales, and
distribution, across the United Kingdom, the United States, Canada, Mexico, China, South America, the Middle East,
Australia, India, Malaysia, and other strategic global markets. The Company intends to affect its growth through brand
leveraging, product development, targeted marketing, and strategic supply chain partnerships in each of these target
jurisdictions.
3IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
The following table lists the Company’s subsidiaries and percentage of holdings:
Place of Ownership Functional
Name of Subsidiaries Activity
Incorporation Interest Currency
Ignite International Brands (Canada), Ltd. Ontario, Canada 100% CAD Active
Ignite International Brands (U.K.) Ltd. London, United Kingdom 100% GBP Active
Ignite International, Ltd. Wyoming, United States 100% USD Active
Ignite Spirits, Inc. Wyoming, United States 100% USD Active
Ignite Distribution Company, Inc.(1) Wyoming, United States 50.1% USD Active
Ignite International Brands (Luxembourg) S.A. Luxembourg City, Luxembourg 100% EUR Active
Ignite International Brands SDN. BHD. Kuala Lumpur, Malaysia 100% MYR Active
Ignite Distribution, Inc. Delaware, United States 100% USD Active
Ignite Beverages, Inc. Delaware, United States 100% USD Inactive
Ignite Internacional Marcas de Mexico, SA de CV Guadalajara, Jalisco, Mexico 100% MXN Inactive
Ignite International Brands (Ireland), Limited Dublin, Ireland 100% EUR Dissolved
(1)
The Company has Management has assessed the terms and conditions of the joint arrangement under IFRS 10 Consolidated Financial Statements and has established
that control exists under the nature of the agreement and as such the Company has accounted for the investment in Ignite Distribution Company, Inc using the full
consolidation method.
>
4IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
RECENT EVENTS
Subsequent to the period ended June 30, 2021, the Company had the following material events:
On July 17, 2021, the Company sponsored “The KSI Show”, an event featuring KSI who is a UK based YouTube personality,
rapper, comedian and actor, aired to over 127,000 viewers, prominently featuring the Company’s products and a cameo
by its CEO;
On July 25, 2021, it was confirmed that the Company’s US$1MM Paycheck Protection loan was fully forgiven by the lender.
This loan was recognized into Other Income in Q1 2021 after management assessed with reasonable assurance that the
Company had complied with the conditions for loan forgiveness.
On July 30, 2021, the Company elected to dissolve Ignite Distribution Company Inc. after management determined it could
more effectively address the market segments serviced by the joint venture through products wholly owned by the
Company.
On August 26th, 2021, the Company settled the US$1.5M promissory note issued to II on May 25, 2021, along with
US$38,219 in accrued interest.
HIGHLIGHTS FOR Q2 2021
• Revenue of $12.0MM was a significant milestone as it is the strongest performing quarter in the Company’s history.
Revenue was $8.9MM more than Q2 2020, and $10.0MM more than Q2 2019;
• Gross profit as a percentage of revenue was 33% which was an increase of 6 percentage points (“PPT”) from 27%
in Q2 2020 with the improvement driven by improved Wholesale channel margins;
• Operating expenses were $3.8MM which was a decrease of $4.0MM or 52% from $7.8MM in Q2 2020, with the
significant reduction coming from lower headcount costs and reduced marketing spend;
• Income from operations was $0.2MM, an increase of $7.2MM when compared to a loss of $6.9MM for Q2 2020;
• EBITDA of $0.4MM was a significant improvement from the negative $5.0MM EBITDA in Q2 2020. This was the
result of improved sales coupled with significant cost reductions;
• Net loss for Q2 2021 was $0.5MM, an improvement of $7.1MM or 93%, compared to a net loss of $7.6MM in Q2
2020;
• Working Capital for Q2 2021 of $24.2MM was up $10.7MM compared to $13.5MM at December 31, 2020 with the
increase resulting from the issuance of debt, increased inventory purchases, and accounts receivable, and the
conversion of short term convertible debt to long term debentures;
• On May 21, 2021, the Company executed a USD$1.5MM Sponsorship Agreement for an online Pay Per View event
featuring entertainer and social media celebrity KSI and other entertainers and celebrities that was aired on July
17, 2021. The Sponsorship granted the Company certain advertising and promotional rights in connection with the
KSI Event for the IGNITE Brand and its related products. The IGNITE brand was critical to the development,
marketing, and successful activation of the KSI Event.
5IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
FINANCIAL PERFORMANCE SUMMARY
NET LOSS AND COMPREHENSIVE LOSS
Net loss and comprehensive loss in Q2 2021 totaled $0.9MM, a reduction of $6.4MM or 88% compared to the loss of
$7.3MM in Q2 2020. Included in the Q2 2021 net loss and comprehensive loss is $0.4MM in cumulative translation losses
($0.4MM gain; Q2 2020). The $6.4MM reduction in net loss and comprehensive loss is a result of improved sales
contributing an incremental $3.1MM in gross profit along with reduced operating expenses of $4.0MM as a result of
measures largely taken in the second half of fiscal 2020.
REVENUES AND GROSS PROFIT
Revenue for Q2 2021 was $12.0MM, an increase of $8.9MM or 280% from $3.2MM in Q2 2020. In Q2 2021 the Wholesale
channel contributed $10.7MM or 89% ($1.6MM or 51%; Q2 2020) of total revenues, while Ecommerce contributed to
$0.5MM or 4% ($1.5MM or 47%; Q2 2020), and Royalty amounted to $0.8MM or 7% ($0.01MM or 2%; Q2 2020).
Geographically, the US represented 92% of revenue (92% in Q2 2020) while Canada represented 7% (2% in Q2 2020), and
the UK represented the remaining 1% (6% in Q2 2020).
• Wholesale revenue for Q2 2021 was $10.7MM, an increase of $9.1MM or 565% from $1.6MM in Q2 2020. Growth
in the Wholesale channel continues to center around the US market and is a result of the Company continuing to
bring on new chain retailers while also expanding its distribution network facilitating further penetration into local
specialty retail locations.
• Ecommerce revenue for Q2 2021 was $0.5MM, a decrease of $1MM or 50% from $1.5MM in Q2 2020. The
ecommerce channel continues to diminish relative to other channels as the Company continues to improve product
availability through traditional retailers and shifts its product offerings to those better serviced out of traditional
brick and mortar retailers.
• Royalty revenue for Q2 2021 was $0.9MM, an increase of $0.8MM or 1,100% from Q2 2020. The increase is a
result of Ignite branded THC sales in the Canadian market which only began in the latter part of March 2020 and
therefore were minimal in the year ago quarter.
Gross profit for Q2 2021 was $4.0MM or 33% of revenue, an increase of $3.1MM or 360% from $0.9MM or 27% of revenue
in Q2 2020. Of the $4MM increase from prior year, $3.3MM is attributable to higher revenues while $0.7MM is attributed
to an increase in profit margin percentage by 5.8PPT. The increase in profit margin percentage is a result of higher
Wholesale channel margins due to product mix and lower ancillary costs as a result if an expanded distribution network,
and increased royalty revenues in the Canadian market.
6IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
OPERATING EXPENSES
Total operating expenses for Q2 2021 were $3.8MM, a decrease of $4.0MM or 52% compared to $7.8MM for Q2 2020.
Operating expenses for the Company consist of:
General and administrative costs for Q2 2021 totaled $2.7MM, a decrease of $1.7MM or 39% compared to $4.5MM for
Q2 2020. General and administrative primarily include payroll costs, office and facility expenses, consulting fees,
professional fees and travel and accommodation costs. The decrease in costs resulted from the following expenditure
changes:
• Payroll and benefits totaled $1.5MM, a decrease of $1.2MM or 44% from $2.7MM in Q2 2020. The decrease is a
result of the Company undergoing staffing reductions over the previous 12 months. The Company had not yet
realized the full impact of the staffing reductions in Q2 2020 as this was not completed until mid Q3 of that year.
• Facilities expenses totaled $0.1MM, a decrease of $0.2MM or 47% from $0.3MM in Q2 2020. The decrease in
costs is a result of the disposal of two lease properties of the Company in Q3 2020.
• Professional fees totaled $0.4MM, a decrease of $0.1MM or 31% from $0.5MM in Q2 2020. The decrease is
mainly a result of lower audit and legal expenses incurred.
• Travel and accommodations totaled $0.03MM, a decrease of $0.2MM or 82% from $0.2MM in Q2 2020. The
decrease is a result of continued border closures and event cancellations due to COVID-19 limiting the opportunity
for in person meetings and events.
Share based payments for Q2 2021 totaled $0.1MM, a decrease of $0.6MM or 90% from $0.7MM in Q2 2020. The
decrease is due to a lower number of options issued, lower exercise price compared to prior year, and an increase in
forfeitures associated with employee turnover.
Marketing and promotion for Q2 2021 totaled $0.7MM, a decrease of $0.5MM or 42% from $1.3MM in Q2 2020. Costs
in Q2 2021 were predominantly focused on supporting the Wholesale channel expansion in the US through samples and
point of sale materials. Q2 2020 costs were more heavily weighted towards brand awareness activities in social media
through influencer marketing and paid online advertising.
Depreciation and amortization for Q2 2021 totaled $0.05MM, a decrease of $0.9MM or 95% from $0.9MM Q2 2020. The
decrease is due to the disposal of two properties leased by the Company in Q3 2020 and the related leasehold
improvements that were classified as right-of-use assets under IFRS 16.
Bad debt expense for Q2 2021 totaled $0.1MM, a decrease of $0.2MM or 59% from $0.3MM in Q2 2020. The decrease
resulted from tightened credit policies and increased reliance on distributors to fulfill sales into independent retailers.
7IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
Other Income and Expenses
Other income for Q2 2021 totaled $0.1MM, a decrease of $0.2MM or 76% from $0.3MM in Q2 2020. The decrease is
attributed to an investment gain in Q2 2020 associated with equities the Company since disposed of in Q4 2020 and Q1
2021.
Other expenses for Q2 2021 totaled $0.8MM, a reduction of $0.2MM or 20% from $1MM at Q2 2020. The decrease is a
result of lower debt levels compared to prior year driving a reduction in interest related expenses.
ASSETS
Total assets were $34MM at June 30, 2021, an increase of $7.6MM or 29%, compared to $26.4MM at December 31, 2020.
The increase is attributed to rises in accounts receivables, inventories, deposits, and prepaids which offset the reduction
of cash and equivalents.
• Cash and equivalents were $2.8MM at June 30, 2021, a decrease of $2.7MM or 48% from $5.5MM at December
31, 2020. The decrease in cash is a result of increased inventory, deposits, and prepaid expenses. Offsetting part
of this was proceeds from two promissory notes raised in the quarter. The Company does not have any unused
lines of credit or other arrangements in place to borrow funds and has no off-balance sheet arrangements. The
Company does not use hedges or other financial derivatives.
• Receivables were $5.1MM at June 30, 2021, an increase of $3.5MM or 219% from $1.6MM at December 31, 2020.
The increase is attributed to higher sales as well as the timing of those sales which were heavily weighted toward
the last month of the quarter as the Company maintains average credit terms of net 30 days. Included in the
receivables balance are provisions for expected credit losses totaling $0.4MM.
• Inventory was $14.8MM at June 30, 2021, an increase of $2.3MM or 19%, from $12.5MM at December 31, 2020.
The increase is a result of the Company’s joint venture, Ignite Distribution Company, Inc., entered into in Q1 2021
which had in initial inventory purchases of $5MM. Offsetting this is a reduction in purchases during the quarter as
the Company worked through previously existing inventory.
• Deposits and prepaids were $6.3MM at June 30, 2021, an increase of $3.8MM or 155% from $2.5MM at December
31, 2020. The increase in deposits is due to inventory replenishment requirements for products sourced out of
China which have a one-to-two-month lead times, while the increase in prepaid expenses is a result of the Company
sponsoring a UK based event in Q3 2021 to drive awareness in that market.
• Long-term receivables were $3MM at June 30, 2021, largely unchanged from $3MM December 31, 2020. The
receivable is a result of the Company terminating a lease agreement which included an option to purchase at
US$5MM and converting this to a long-term receivable of US$2.5MM. This receivable represents the minimum the
Company is contractually entitled to when the underlying property is sold.
8IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
LIABILITIES
Total liabilities were $19.1MM at June 30, 2021, an increase of $4.5MM or 31% compared to $14.6MM at December 31,
2020. The increase is attributed to an increase in debt related instruments of offset by the reduction of accounts payable.
• Accounts payable and accrued liabilities totaled $2.0MM at June 30, 2021, a decrease of $1.3MM or 40% from
$3.3MM at December 31, 2020. The decrease is a due to lower trade payables as the Company continues to incur
lower operating expenses as a result of previously disclosed cost savings initiatives.
• Debt related instruments include convertible debenture liabilities, long term loans, and notes payable which were
$17.2MM at June 30, 2021, an increase of $5.9MM or 27% from $11.3MM at December 31, 2020. The increase is
a result of the Company issuing additional convertible debt in Q1 2021 for proceeds of $5.2MM, and two short
term promissory notes for proceeds of $1.9MM in Q2 2021. Offsetting part of this is a recognition of loan
forgiveness for the Company’s PPP loans totaling $1.6MM (US$1.2MM) with the remaining variance attributed to
discounting of the new consolidated instrument as per fair value accounting.
SHAREHOLDERS EQUITY
Shareholder’s equity totaled $14.9MM at June 30, 2021, an increase of $3.1MM or 26% from $11.8MM at December 31,
2020. The increase is mainly due to the inclusion of non-Controlling interests of $3.2MM associated with the Ignite
Distribution Company, Inc. joint venture entered into in Q1 2021.
WORKING CAPITAL
Working capital of the Company (defined as current assets less current liabilities) was $24.2MM at June 30, 2021, an
increase of $10.7MM or 80%, compared to $13.5MM at December 31, 2020. The increase is due to a reduction in current
liabilities of $3.7MM from a short term debt reclassification to long term in Q1 2021 of net $2.4MM ($5.2MM in Q1 2021
offset by new short term debt of $2.8MM in Q2 2021) and reduced trade payables of $1.3MM, and an increase in current
assets of $7MM facilitated by the issuance of new debt in Q1 and Q2 of 2021.
>
9IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
SUMMARY OF QUARTERLY RESULTS
The following table summarizes information derived from the Company’s financial statements for each of the nine most
recently completed quarters:
Cost of Net income (loss)
Quarter Ended Revenues Gross profit Net income (loss)
goods sold per share (1)
$ $ $ $ $
June 30, 2021 12,049,900 8,067,319 3,982,581 (524,525) 0.00
March 31, 2021 3,651,029 2,648,288 1,002,741 118,786 0.00
December 31, 2020 10,078,631 5,736,460 4,342,171 3,011,790 0.01
September 30, 2020 1,729,843 1,238,578 491,265 (5,842,118) (0.02)
June 30, 2020 3,170,827 2,305,591 865,236 (7,636,004) (0.03)
March 31, 2020 1,694,658 1,066,191 628,467 (9,061,040) (0.03)
December 31, 2019 2,673,368 2,722,783 (49,415) (33,626,303) (0.13)
September 30, 2019 3,388,238 2,571,821 816,417 (13,069,025) (0.12)
June 30, 2019 2,074,819 1,271,543 803,276 (10,849,606) (0.10)
(1) Fully diluted loss per share amounts are not shown as they would be anti-dilutive.
The Company has incurred significant operating costs relating to the start-up of its operations over the last nine quarters
including expenses related to commercial activations, brand development and brand awareness initiatives. During the
period ended June 30, 2021, the Company continued to generate revenues from sales of various IGNITE branded products
and through licensing the use of the Ignite trademark.
LIQUIDITY AND CAPITAL RESOURCES
The main sources of liquidity are the Company’s cash and cash equivalents, other working capital, and debt issuances.
During the period ended June 30, 2021, the Company generated negative cash flows from operations totaling $12.0MM, a
improvement of $1.8MM from $13.8MM for the period ended June 30, 2020. The negative cashflow is driven by increases
to current asset accounts resulting from higher sales volumes as cash from operations has positive contribution of $2.8MM
as at June 30, 2021 (-$11.2MM; June 30, 2020).
At June 30, 2021, the Company had $16MM in convertible debt outstanding that matures on June 30, 2022 and accrues
interest at a rate of 10% per annum, with interest due quarterly commencing June 30, 2021. While outstanding, the lender
has the right to convert the balance of principal and accrued interest outstanding into subordinate voting shares of the
Company at $1.25 per subordinate voting share.
At June 30, 2021, the Company had two short term loans outstanding for a net amount of $2.9MM ($1MM and US$1.5MM).
The principal balance accrues interest at a rate of 10% per annum on both loans, with the principal and interest due on
August 31 and September 30, 2021, respectively.
There are no off-balance sheet arrangements as at June 30, 2021 ($nil June 30, 2020).
The Company’s financial success is reliant on management’s ability to identify and evaluate opportunities to expand its
business operations which currently includes branding, marketing, licensing, sales and distribution across the United States,
Canada, Mexico, South America, Malaysia, the United Kingdom, China, the Middle East, Australia, and other international
jurisdictions.
10IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
NON-IFRS FINANCIAL MEASURES
Management uses net loss and comprehensive loss as presented in the consolidated statements of net loss and
comprehensive loss as well as "EBITDA" as a measure to assess performance of the Company. EBITDA is another financial
measure and is reconciled to net loss and comprehensive loss below under "Results of Operations".
EBITDA is a supplemental financial measure to further assist readers in assessing the Company’s ability to generate income
from operations before considering the Company's financing decisions, depreciation of property, plant and equipment and
amortization of Right of use assets and intangible assets. EBITDA comprises net income or loss for the period adding back
depreciation and amortization, as well as non-cash expenses such as share-based compensation, interest accretions, and
income tax.
EBITDA does not represent the actual cash provided by the operating activities nor is it a recognized measure of financial
performance under IFRS. Readers are cautioned that this measure should not be considered as a replacement for those as
per the consolidated financial statements prepared under IFRS. The Company's definitions of this non IFRS financial
measure may differ from those used by other companies. As there are no standardized methods of calculating non-IFRS
measures, the Company’s approaches may differ from those used by other companies in the industry and may not be
comparable as a result. Accordingly, these non-IFRS measures are intended to provide additional information and should
not be considered independently or in substitution for measures prepared in accordance with IFRS.
The Company calculates EBITDA as follows:
For the 3 months ended For the 3 months ended For the 6 months ended For the 6 months ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
$ $ $ $
Net Loss for the Period (524,525) (7,636,004) (405,741) (16,702,995)
Less:
Interest income (2,235) (1,625) (3,635) (3,469)
Add back:
Interest expense 23,794 99,958 207,150 209,201
Interest Accretion 776,512 854,022 1,050,086 1,610,633
Depreciation and Amortization 49,184 913,085 100,051 1,797,333
Share based payments 70,924 737,234 (280,495) 1,775,381
EBITDA 393,655 (5,033,330) 667,415 (11,313,916)
11IGNITE INTERNATIONAL BRANDS, LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
For the three and six months ended June 30, 2021
RISKS AND UNCERTAINTIES
Government imposed measures to contain the COVID-19 pandemic including business closures, travel restrictions,
quarantines, and social distancing measures have impacted the Company’s sales, costs, and operating expenses over the
last 5 quarters of operations.
Temporary business closures in the UK and Canada have reduced wholesale sales from existing retailers, and delayed the
Company’s planned expansion in this channel, postponing the introduction of new products, and largely limiting sales of
existing products to the ecommerce channel. The Company continues to develop relationships and product rollout
strategies with retailers in preparation for eased restrictions, but this has lowered managements revenue and profit
expectations for these countries in the current fiscal period.
Aggressive lock-down measures in Malaysia have delayed the Company’s planned expansion into the greater Asian market.
The Company remains confident that its brand and product offerings resonate with the Asian consumers tastes and as such
continues to build relationships for the manufacturing, distribution, and sale of its products in the region in anticipation of
future restriction easing.
Global supply chain and logistics constrains have temporarily increased the cost of the Company’s products sourced out of
China and sold mainly in the US. The Company has experienced lower gross profit contribution as a result. As the products
in question are sold in a highly competitive market segment, the Company has chosen to absorb the temporary costs
increases in order to maintain its pricing.
The Company has recognized temporary cost savings because of global travel restrictions and event cancellations. As
countries ease travel and reduce social distancing measures, the Company intends to increase spend in these areas to
support market development and brand awareness of its products.
The Company has not experienced increased credit risk because of the aforementioned global government actions but has
tightened its credit procedures to further reduce risk, both from default and the increase in fraud that has resulted during
the pandemic.
The Company continues to routinely assess its strategy in response to changes in global governments responses to COVID
19 with the belief the risks noted above will continue beyond Q2 2021.
Additional risks and uncertainties can be referenced in the section entitled "Risk Management” in the Company’s year-end
audited MD&A ending December 31, 2020, which can be found under the Company’s profile on SEDAR at www.sedar.com.
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