Ethema Health Corp (GRST)

[Bubae]

The $10 million valuation for the Canadian property is often quoted and never supported by additional information. Here is where this story really “face plants”.

The $10 million figure is the maximum stated if the current tenant wanted to exercise the purchase option. The 5 year lease ends in February with an option to extend up to 3 more 5 year terms. You are correct that without the revenue from this property the net operating earnings for this last period would have been much less. They make more from that leased property than from the much ballyhooed ARIA deal.

That facility is mortgaged and according to the latest quarterly and the $3.8 million mortgage is due in the next 12 months.

Leonite was given $700K in Series A Redeemable Preferred shares of CCH, Cranberry Cove Holdings, Ltd. They receive an annual 10% dividend.

Now, according to the Q3 press release, it appears that the CEO plans to leverage the Canadian facility to help finance the facility that ARIA is operating out of. The deal will be in the form of an off-balance sheet structure?

Again, traders need to keep in mind that Ethema (GRST) is a self described “investment holding” company with 2 employees. The ownership details across the board for this company is very difficult to unwind and impossible without looking at multiple filings. One thing that is certain in every deal is that debt and expenses are what the virtual share printing press if for.

Ethema 2020 annual 10K
https://sec.report/Document/0001721868-21-000220/

Greenestone Muskoka Treatment Facility
The Greenestone Muskoka Treatment Facility is located in Bala, Ontario at 3571 Highway 169. The property is 43 acres in size and contains approximately 48,000 square feet of buildings. The property is owned by Ethema’s wholly owned Canadian subsidiary CCH and has been leased to the new owner of the Muskoka Clinic for a term of five years, which ends on February 28, 2022. The Lease gives the tenant an option to extend for three additional five (5) year terms, an option to purchase the property at any time for a purchase price of $7,000,000 in the first thirty six (36) months of the term and thereafter at a purchase price increased by $1,500,000 for each successive year up to a maximum of $10,000,000, and a right of first refusal in the event of a sale to a third party.




https://www.otcmarkets.com/filing/html?id=15373092&guid=55ywkew26hwfJth
14. Mortgage loans
Within the next twelve months $ 3,874,157

Cranberry Cove Holdings, Ltd.

On July 19, 2017, CCH, a wholly owned subsidiary, closed on a loan agreement in the principal amount of CDN$5,500,000. The loan is secured by a first mortgage on the premises owned by CCH located at 3571 Muskoka Road 169, Bala, Ontario. The loan bears interest at the fixed rate of 4.2% with a 5-year primary term and a 25-year amortization. The Company has guaranteed the loan and the Company’s chief executive officer and controlling shareholder also has personally guaranteed the Loan. CCH and the Company have granted the Lender a general security interest in its assets to secure repayment of the Loan. The loan is amortized with monthly installments of CDN $29,531.



Debt restructuring 8K December 2020
https://sec.report/Document/0001721868-20-000600/

Leonite Capital LLC

On July 12, 2020, the company entered into a debt extinguishment agreement with Leonite whereby the following occurred:

1. The total amount outstanding under the note, including principal and interest was reduced to $150,000

2. $700,000 of the note was converted into Series A Redeemable Preferred shares in the Company’s subsidiary, Cranberry Cove Holdings, accruing dividends at 10% per annum.

3....

Q3 earnings press release.
https://www.globenewswire.com/news-release/2021/11/23/2339427/0/en/Ethema-Releases-Third-Quarter-Results.html

"…The Company has also made the decision to move forward with the purchase of the property at 950 Evernia Street, West Palm Beach, Florida. The purchase will be an off-balance sheet structure whereby the Company will be the General Partner in a limited partnership which will use debt and equity from Limited partners as the structure to own the property. This will eliminate the need to raise equity in Ethema directly and as the General Partner, Ethema will still benefit from the ownership of the property. Ethema also plans to implement the same structure for its Canadian property which will also improve the Balance sheet. The U.S. limited partnership will be raising $1,500,000 in equity and the Canadian limited partnership will be raising CDN$1,500,000 in equity. Investors interested in participating in the offering may contact the Company CEO for investment disclosure documents. The Company will also be making these disclosures available on its website. … "