Delivra’s Revenue Increase Doesn’t Help Negative Cash Flows

Delivra’s Revenue Increase Doesn’t Help Negative Cash Flows

Delivra Health Brands Inc. (TSXV: DHB) (OTCQB: DHBUF) reported total net revenue of $9.7 million for its fiscal year ended June 30, up 20% over the $8.1 million reported for fiscal year 2022.

The company attributed the increase to higher net sales in the U.S.

Delivra reported expenses of $4.7 million in fiscal 2023 compared to $6.1 million in fiscal 2022, representing a 23% year-over-year reduction, which the company said was driven by operational changes and cost reductions.

Despite the rosy description of earnings, the company reported its earnings as a going concern.

Delivra incurred a net loss of $184,000 for the fiscal year, with negative operating cash flows of $1.1million and an accumulated deficit of $170 million. In its management discussion and analysis filing, the company acknowledged that in the absence of securing additional capital there is uncertainty over the company’s ability to meet its funding requirements as they fall due.

Fourth-Quarter Earnings

Net revenue for the fourth quarter of fiscal 2023 increased $1.3 million compared to the same period a year ago. The increase was primarily attributed to higher outbound sales shipments in the U.S. from higher distributor demand, but that was offset by lower sales in Canada as a result of reduction in consumer demand.

The net loss for the quarter fell $2.2 million compared to the fourth quarter of fiscal 2022, primarily due to the prior quarter impairment costs and losses from discontinued operations.

“In fiscal 2023, Delivra Health achieved positive adjusted EBITDA for the first time in the company’s history. This is a commitment we made to our shareholders and other stakeholders at the beginning of the year, and we are delighted to have achieved this milestone,” Gord Davey, president and chief executive officer, said.

“In the coming year, we expect to continue to increase our revenues and profitability through a combined focus on Canada, USA, international and e-commerce markets,” he added.

Certain sales recognized during the fiscal year period were subject to bill-and-hold arrangements, where the customer has been billed for products that are ready for delivery but will not be physically delivered until a later date.

On Aug. 3, Delivra’s wholly owned subsidiary, Dream Water USA Inc., entered into a deal with Treasure Island Hotel & Casino and Circus Circus Hotel and Casino to provide Dream Water products to all participating retail outlets and kiosks within its properties. Dream Water USA will provide the properties with protected pricing, marketing support, in-store programs, social media posts and promotional materials for merchandising of the products.

In addition, Treasure Island Hotel & Casino and Circus Circus Hotel will purchase product from a Dream Water USA distributor to be distributed to all participating retail outlets and certain kiosks.

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