Medipharm Labs Corp T.LABS

Interesting statement made in HEXO's financials

[mdjbrown]

"MediPharm Onerous contract

During the period, the Company’s onerous contract provision related to a fixed price supply agreement for the supply of certain cannabis products was adjusted to the court settlement amount of $1,846, inclusive of $575 of accrued interest. Management has initiated an appeal against the court’s decision and is simultaneously pursuing a settlement with the counterparty."

[Starkicker]

So Hexo owes just $1.8M plus $575k interest instead of $9.8M? Hard to decipher that paragraph on its own. Hopefully that's not the case.

[Stonksonlyup90]

Read their MD&A, under change in A/P: Atransferof$8,530owedtoacannabissupplierintosettlementliabilitiesandonerouscontractsastheresultofale Copy and paste not good on my phone. Maybe someone on a computer can correct 

[Stonksonlyup90]

HEXO F/S are as at Oct/31, LABS as at Sept/30 - did they settle a portion in Sept?

[mdjbrown]

Starkicker, it is difficult to decipher the filings as when searching HEXO documents under Medipharm, very little appears.  Searching under onerous revealed a bit more. The court award included interest, so it would appear the interest accrued was $575,000.  Add that to the Medipharm $9.8 million court award and it is $10.375 million Adding the 2 HEXO reported totals of $8,530 and $1

[checkup]

Thanks for the update about this deal.  LABS was my first and only investment in the MJ space way back in 2019 and I remember the HEXO default.  The court's finding is somewhat a surprise to me although I was always convinced of LABS' strong legal position.... but these days that doesn't seem to always matter. (i.e. the trucker protest)  

[mdjbrown]

You are very welcome checkup It was encouraging to see that HEXO acknowledges the debt owed and that there is willingness to settle this debt owed. HEXO'S appeal filed in August will take time to work its way through the courts, but I would think HEXO is now on the clock for continued interest on the $9.8 million, and even at one percent interest, each passing day adds significantly to that

[Starkicker]

Thanks MDJ, I appreciate it. Launching an appeal and pursuing a settlement at the same time sounds a bit desperate to me. Will definitely be nice to get this sorted, in the books and done with. Have a great weekend.