Ethema Health Corp (GRST)

[Bubae]

Looks like a few traders loading up for the anticipated press releases. The company will certainly have new shares queued up as usual. Those buyers will likely become sellers into the news.

There are several catalysts that they have signaled to help juice this thing. They also expressed the need for $1.5 million in working capital in the Q3 filing so that could trigger another refinance 8K and a press release once again telling shareholders how good it is for them.

Per the quote, possible another LOI about another treatment center. They have dropped these in the past with little follow through but good for a press release. To take this losing and very expensive business model on the road only ensures more toxic debt in my opinion. But traders love chasing the press release for some reason. The last time traders chased into the .003s from .002 and learned to regret it by the end of that week.

“…exploring several other treatment center options and sources of patients throughout the country…”

The additional 10 beds should be done now and they will likely make a big deal of it in a press release. So an increase to 54 beds total is far from the 174 beds that they had at the previous location that was losing money and building debt.

They are putting a deal together with "off balance sheet investors", their words, to purchase the facility that Evernia is operating out of. We could see a press release to again telling shareholders how good it will be for them. The reality is that the investors make money and shareholder will pay the debt and expenses as usual. They intend to structure the Canadian property the same way according to the last press release. The lease on that property been shown to add more money to the bottom line than Evernia per the Q3 filing.

Q3 2021 10Q filing
https://sec.report/Document/0001721868-21-000835/

Liquidity and Capital Resources

..."Over the next twelve months we estimate that the company will require approximately $1.5 million in working capital as it continues to develop the Evernia facility and it is also exploring several other treatment center options and sources of patients throughout the country. The company may have to raise equity or secure debt. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, the Company’s liquidity risk is assessed as medium."...




Link to globenewswire GRST articles. www.globenewswire.com is an outlet for press releases directly from the company.
https://www.globenewswire.com/search/organization/Ethema%2520Health%2520Corporation?page=3

March 01, 2019 08:00 ET | Source: Ethema Health Corporation
Ethema Signs LOI to Purchase Interest in Long Island Based Mental Health Counseling and Case Management Office
https://www.globenewswire.com/news-release/2019/03/01/1745244/0/en/Ethema-Signs-LOI-to-Purchase-Interest-in-Long-Island-Based-Mental-Health-Counseling-and-Case-Management-Office.html
…has signed a letter of intent to purchase a 33.33% interest in Local Link Wellness, LLC (“Local Link”), a mental health and wellness provider with offices located in Melville, NY and East Mauritius, NY…


MMay 28, 2019 08:00 ET | Source: Ethema Health Corporation
https://www.globenewswire.com/news-release/2019/05/28/1853110/0/en/Ethema-Signs-LOI.html
…has agreed to a letter of intent to purchase an interest in IC Pharma, LLC and its group of companies. IC Pharma has offices in Auburn Hills, Michigan,…


Take the latest Q3 press release excerpt for example. We know that the mortgage for the Canadian property is due in July and that Ethema (GRST) is putting together a deal to purchase the property that Evernia is operating out of. Two deals for real estate will be done as an "off-balance sheet structure". Ethema (GRST) will be the general partner which in my opinion means that they manage the assets but shareholders will be responsible for liabilities. This represents another deal where the real investors are guaranteed a nice return and the debt or related expenses are backstopped by share sales. This has been the business model here over and over again.

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

Ethema Releases Third Quarter Results
November 22, 2021 19:08 ET | Source: Ethema Health Corporation
..."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...."


https://www.investopedia.com/terms/g/generalpartner.asp

Understanding General Partner
A general partner has the authority to act on behalf of the business without the knowledge or permission of the other partners. Unlike a limited or silent partner, the general partner may have unlimited liability for the debts of the business.