DBCCF - Decibel's Revenue Rises But Says It Is Still a Going Concern
Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF) released its first-quarter financial results for the first quarter ending March 31, 2022 . Decibel reported $23 million in total sales for the quarter, with strong growth over the fourth quarter and topping last year’s revenue of $14 million in the same time period in 2021. The company said that net revenue growth was driven by the launch of Decibel’s new infused pre-roll lines and continued growth in demand for flower, vape and concentrate products, despite the first quarter historically being a seasonally weak period.
“Decibel remains on track to achieve its previously communicated targets, which is a testament to the focus on our strategic plan, and particularly our New, Unique and Innovative products and dedication to our customers”, said Paul Wilson , CEO of Decibel. “We see momentum growing in our core business, and at the same time are driving towards creating shareholder value by restructuring our balance sheet. This makes Decibel one of the few in the cannabis space to repay convertible debentures rather than accept shareholder dilution.”
During the quarter, Decibel said it incurred a net loss of $4.37 million, generated funds amounting to $2.86 million in its operations, and has net current assets of $7.3 million.
On May 11, 2022 , the company repaid its 9.5% convertible debentures with the draw-down of a fixed 4.75% $12 million term loan from its credit facilities. This extends the maturity date of Decibel’s $12 million of debt by 4 years, removes approximately 6% of potential shareholder dilution, and results in $0.6 million of annual interest expense savings. As of March 31, 2022, the company is in compliance with all covenants.
Cash flow from operations was $3.0 million in the quarter, an improvement of $8 million over the fourth quarter and $6 million over Q1 2021. In Q4 2021, the company made significant investments in working capital to meet the growing demand for Decibel brands and products and mitigate against supply chain risks.
The company said it anticipates reduced working capital needs in 2022 and is seeing improvements in its supply chain. The company said it has identified various initiatives and capital investments to accelerate cash flow generation and manage working capital levels that are expected to support Q2 2022 onwards.