Ethema Health Corp (GRST)

[Bubae]

It would be charitable to simply say this CEO has "deceived" shareholders. The PR and FAQ statements about the recent financing are disingenuous at best.

The typical conversion price language for the notes replaced with the financing stated that conversion price was to be a 61% of the lowest closing market price in the previous 10 trading days. The new financing has a stated fixed rate of .005 if, and only if, the price of the common stock is trading above par, which is .01. Assume the stock is trading at .01. The old note converts at .0061 and the new note price is .005. Which is better for the shareholders? Let us exaggerate for the sake of the argument and say the common is trading at .02. Now the old note must convert at .0122 and the new financing still converts at .005.

Now let us get real because this stock is trading at less than 20% of par which is .01. The conversion price now will be adjusted to true up the shares issued as if it was trading at .01. So yes, in my opinion , their intent was to deceive with the language in the PR and the 8Ks since they misrepresent was in the the actual note. Longer maturity was stated in the FAQ and the reality is that the debt replacement note and the other for financing both are eligible to convert from date of issue.



Ethema Repays a Significant Portion of Its Convertible Debt
https://finance.yahoo.com/news/ethema-repays-significant-portion-convertible-155500826.html

Mr. Shawn Leon, the CEO of the Company, stated, “We have dealt with a major portion of the potentially dilutive debt the Company was exposed to and eliminated a portion of the Warrants outstanding. Replacing this dilutive debt with a fixed rate convertible debt was a major vote of confidence by one of our existing lenders. The Company will continue its efforts to reduce or restructure the debt outstanding as a major priority of the Company as we strive to build value for our Shareholders.”

Various notes 8K 12/10/2020
https://sec.report/Document/0001721868-20-000600/

….The outstanding principal amount of the Geneva Note is convertible at any time and from time to time at the election of the Purchaser during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 61% of the lowest closing bid price of the Company’s common stock for the ten trading days prior to conversion.

Ethema FAQ page

https://ethema.wpengine.com/?page_id=683
...The opening took longer than expected and the Company would have been facing a similar situation with its convertible note holders starting at the end of March 2021 but this was avoided by replacing most of the variable rate debt with fixed price convertible debt and a longer maturity allowing some of the convertible debt to be converted by the lenders that had stuck with the Company and had lent the Company the most money. The subsequent conversions were a lot less dilutive than they could have been, which allowed the Company to reduce overall debt and eliminate most of the convertible rate debt. While the situation with the debt is far better than it could have been it is still a work in progress. We cannot tell yet how much more conversion there will be but the rate and amount are in a dramatic decline. We do see an end coming soon since that has been the direction for much of the past three months.

https://sec.report/Document/0001721868-21-000350/#f2sgrst8k060921ex10_02.htm

Par Value for this note is .01 and conversion price is adjusted if the price of the common shares are trading below this value.

Labrys Fund, LP (“Labrys”) $230,000
https://sec.report/Document/0001721868-21-000350/

10.02 Convertible Promissory Note dated June 4, 2021 (Labrys Note)
https://sec.report/Document/0001721868-21-000350/#f2sgrst8k060921ex10_02.htm



Labrys Fund, LP (“Labrys”) $550,000
https://sec.report/Document/0001721868-21-000288/
10.02 Convertible Promissory Note dated May 7, 2021 (Labrys Note)
https://sec.report/Document/0001721868-21-000288/#f2sgrst8k051321ex10_02.htm

1.1 Conversion Right. The holder on any calendar day, at any time on or following the issue date, to convert all or any portion of the then outstanding and unpaid Principle Amount and interest (including any Default Interest) into fully paid and non-assessable shares of Common Stock.
10.02 Convertible Promissory Note dated May 7, 2021 (Labrys Note)

https://sec.report/Document/0001721868-21-000288/#f2sgrst8k051321ex10_02.htm

1.2 Conversion Price

(a) Calculation of Conversion Price The per share conversion price into which Principle Amount and interest (including any Default Interest) under this Note shall be convertible into Common Stock hereunder (the “Conversion Price”) shall equal $0.005. If at any time the Conversion Price as determined hereunder for any conversion would be less than par value of the common stock, then at the sole discretion of the Holder, the conversion price hereunder may equal such par value for such conversion and the Conversion Amount for such conversion may be increased to include Additional Principle, where “Additional Principle” means such additional amount to be added to the conversion amount to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price not been adjusted by the Holder to the par value price.