Decibel Cannabis Company Inc. (DB, DBCCF) has successfully concluded the second and final tranche of its previously announced non-brokered private placement. This final closing generated gross proceeds of approximately $1,178,867 through the issuance of 19,647,776 common shares at a price of $0.06 per share. This follows the initial closing in November, which saw the company raise roughly $2,010,232 from the sale of 33,503,864 common shares.
This significant capital injection brings the total raised from the private placement to over $3.1 million. Decibel has clearly outlined its intentions for these funds: accelerating the integration of AgMedica BioScience Inc., a key acquisition that significantly expands the company’s footprint within the Canadian cannabis market. The acquisition of AgMedica, finalized on October 28th via an agreement with Callisto Capital involving a $6.3 million unsecured convertible debenture, represents a strategic move with considerable projected returns.
Decibel’s projections for AgMedica are ambitious yet potentially attainable. The company anticipates AgMedica will contribute $30 million in net revenue and $4 million in EBITDA by 2025. This, combined with Decibel’s existing operations, paints a picture of a pro forma net revenue of $130 million and adjusted EBITDA of $25 million by the same year. These figures underscore the significant growth potential Decibel envisions through this acquisition and its aggressive integration strategy.
Recent financial results offer a glimpse into Decibel’s current performance. The company’s unaudited interim financial results for the third quarter revealed CA$24.1 million ($17.2 million) in net revenue – a sequential increase of 9%, although slightly down 12% year-over-year. However, the gross margin before fair value adjustments improved significantly to 53%, up from 44% in the prior year, showcasing improvements in operational efficiency and cost management. This suggests that despite some year-over-year revenue challenges, Decibel is streamlining operations for enhanced profitability.
The success of this private placement hinges on securing all necessary regulatory approvals, including final approval from the TSX Venture Exchange (TSXV). Once these approvals are in place, Decibel will be well-positioned to execute its integration strategy and capitalize on the projected growth opportunities associated with AgMedica. With the acquisition and subsequent capital raise, Decibel is poised to become a significant player within the evolving landscape of the Canadian cannabis industry. The company’s shares experienced a positive market reaction, closing up 1.45% at $0.0476 per share following the announcement.
