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MGC’s securities suspended from quotation; company seeks $0.5 million plus damages from Varm Cosmo

  • September 25, 2018 05:02 AM AEST
  • Team Kalkine
MGC’s securities suspended from quotation; company seeks $0.5 million plus damages from Varm Cosmo

The securities of MGC Pharmaceuticals stopped trading on ASX today as the company has requested for voluntary suspension from the Australian Securities Exchange on 25 September 2018. Since then the share price of MXC has shown no daily price movement whereas it last traded at $0.048 on 20 September 2018.

In a market announcement, ASX confirmed that the securities of MGC Pharmaceuticals Limited are suspended from quotation immediately, at the request of MXC, pending the release of an announcement regarding a material commercial transaction with a Canadian cannabis company.

Medical cannabis company, MGC Pharmaceuticals has been lying in trading halt since 21 September 2018 which was decided to be removed on the earlier of 25 September 2018 or the release of pending market announcement by the company. Ahead of delay in completion of terms review relating to a material commercial transaction with a Canadian cannabis company for MGC Derma, the company has requested for voluntary suspension of its securities as duly granted later.

Also, early this morning, European-based MGC Pharmaceuticals provided the contract default notice issued to South-Korea based Varm Cosmo. In respect of Varm Cosmo failing to meet the terms of supply contract and binding purchase order of bulk CBD cosmetic products, MGC Pharmaceuticals has demanded $0.5 million plus damages from Varm Cosmo.

This failure comes after the MGC Pharmaceuticals signed a binding sale agreement with Korean cosmetic manufacturer Varm Cosmo on 31 October 2017. Under the terms of contract, Varm Cosmo had to buy a minimum of 15,000kg a month of cannabidiol (CBD) cosmetic products from MGC.

As per the deal it was decided that the white label products including Cannabidiol masks and facial creams will be branded and distributed by Varm Cosmo which would have resulted into a minimum of $40 million annual revenue to MGC’s joint venture MGC Derma. [optin-monster-shortcode id="wxhmli4jjedneglg1trq"]

During the execution of deal, Varm Cosmo chief executive JungYoon Hwang stated that joining hands with MGC gives the opportunity to enhance product line. But after its 10 months, it was seen that Varm Cosmo failed in meeting its commercial obligations to MGC Derma; however, MGC Derma was reportedly ready to deliver the products as per its supply obligation.

At the end, the company assured its shareholders to keep them updated provided any change take place in this process. Meanwhile, the voluntary suspension of MGC’s securities is expected to remain in place until the earlier of 27 September 2018 or the release of market announcement in relation to material commercial transaction with a Canadian cannabis company.

As stated above, there was no daily price movement in MXC as on 25 September 2018 while it last traded at $0.048 after dropping 4% on 20 September 2018. The stock has seen a performance change of +17.07% over the past one year while in the last three months it was seen that the stock performance has been changed by -21.31%.

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