Medipharm Labs (TSX: LABS) issued a typical Friday evening release today, identifying that the company has filed a statement of claim in the Ontario Superior Court of Justice. The claim is being made against a licensed producer with which the company has been working with since February 2019.
The claim is being made against the undisclosed producer in regards to outstanding amounts of $9.8 million under a private label cannabis oil sales agreement. While undisclosed, Medipharm revealed that it is in relation to a private label arrangement that the firm entered into on February 11, 2019.
The initial news release in relation to the supply agreement identifies that the private label deal was valued at a total figure of $35 million in the first year. The contract was to consist of an initial $7.66 million order for cannabis oil concentrate from that of Medipharm Labs, with a subsequent supply agreement beginning in March 2019 that was to see a minimum of $27 million in concentrate sold over a 12 month time frame. An additional option for $13.5 million was also available if the undisclosed producer required further product.
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As of September 30, 2019, Medipharm Labs had $40.7 million in outstanding trade receivables, a significant increase from the second quarter wherein the firm had receivables of $25.3 million. While aging data was not provided by the firm, the company identified that it carried “significant concentration of credit risk on outstanding receivables.” The firm perceived however that its customers were a low credit risk.
Medipharm Labs last traded at $3.72 on the TSX.
Information for this briefing was found via Sedar and Medipharm Labs.. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
