Ethema Health Corp (GRST)

[Bubae]

It isn’t much of a stretch to believe that the past for this company may catch up with it. The company created an acquisition narrative at the beginning of 2020 while pursuing a separate business plan that creates a newly formed entity called American Treatment Holdings, Inc. (“ATHI”) to launch the new Evernia treatment center. This Evernia treatment center would later be referred to as doing business as ARIA. It is as if ARIA never went out of business when it ceased operation at the at 5400 East Avenue, West Palm Beach location. The first earnings from this doesn’t hit the books until the last earnings release for Q3. This is a very long and costly story that only delivered an EBITDA number of $47K.

Ethema (GRST) release the letter of intent December 24th announcing acquisition target will have approximately $20 million in revenue for 2019 and an EBITDA of $3.6 Million. They then release the January 16th press release referring to the “previously announced LOI” and fund raising efforts. The January 16th press release also announced that the ARIA treatment center at 5400 East Avenue, West Palm Beach would cease operation by January 30th 2020. The January press release appears to continue the December LOI narrative with the reported financing efforts. . No mention yet of the Evernia location that they intent to move to and the real reason for the financing efforts.

The first mention of Evernia comes with the press release dated June 12th. The still refer to the previously announced letter of intent and if you follow the narrative a trader would be led to believe that this Evenia entity had approximately $20 million in revenue for 2019 and an EBITDA of $3.6 Million. In the June 12th press release is a short paragraph that claimed the company entered into 2 letters of intent when the reality is that 3 letters of intent were announced in 2019 press releases. They conveniently aren’t specific as to which LOIs expired.

So why does this matter? It continues to demonstrate the willingness of this management to create deceptive and manipulative narratives over the years in my opinion. At the time they promoted the acquisition purported to have approximately $20 million in revenue for 2019 and an EBITDA of $3.6 Million they were also dumping 1.3 billion new shares on traders in Q1 2020.

Traders at the time suffered heavy losses on this story and often referred to the December letter of intent in their postings on this board at the time. Between January 6th and February 27th over 1.3 billion new shares were issued according to the Q1 filing for 2020 and the price stayed at .0001 for four months until this story gained traction again. Unfortunately traders had to rely on deceptive press releases until September 28th 2020 when they finally got around to releasing the quarterly report for Q1 2020. This filing is when they reveal the true nature of what they have been up to. In my opinion this series of events points to a serious basis for complaint for those traders who lost money in early 2020.

Ethema to Focus on Acquisitions for Growth Strategy
December 24, 2019 10:01 ET | Source: Ethema Health Corporation
https://www.globenewswire.com/news-release/2019/12/24/1964449/0/en/Ethema-to-Focus-on-Acquisitions-for-Growth-Strategy.html

West Palm Beach, FL, Dec. 24, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Ethema Health Corporation (OTCQB: GRST) (“Ethema” “GRST” or the “Company”), a provider of healthcare services, has announced that it has signed a non-binding Letter of Intent to acquire a majority interest in an addiction treatment company. The acquisition target will have approximately $20 million in revenue for 2019 and an EBITDA of $3.6 Million. Under the terms of the LOI the Company would be required to enter into a binding agreement by February 29, 2020 and be closed by April 30, 2020. The purchase price will be determined during the due diligence process and is subject to agreement by both parties.




Ethema Working on Acquisition Financing and Debt Reduction for 1st Quarter
January 16, 2020 15:31 ET | Source: Ethema Health Corporation
https://www.globenewswire.com/news-release/2020/01/16/1971711/0/en/Ethema-Working-on-Acquisition-Financing-and-Debt-Reduction-for-1st-Quarter.html

Ethema Health Corporation (“Ethema” “GRST” or the “Company”), a provider of healthcare services, previously announced an LOI for the acquisition of a majority interest in an addiction treatment company. Efforts are underway to secure financing for the acquisition.

Efforts are underway to secure financing for the acquisition. Ethema is working with funders the Company is familiar with, having dealt with many over the last several years. There is a high level of interest in the quality of the acquisition and the Company expects to know which group they will be working with by the end of January 2020.

The Company has agreed to vacate its existing West Palm Beach property by January 31, 2020.

The termination of the operation in West Palm Beach will dramatically reduce the negative cash flow of the Company and allow it to focus on cleaning up the debt on the balance sheet as it works towards completing the acquisition.

“There is a complete restructuring underway which we expect to stabilize the Company and get it prepared to take on new initiatives in the addiction treatment business




Ethema Restructures Debt and Raises New Financing to Acquire Interest in New Facility
June 12, 2020 09:00 ET | Source: Ethema Health Corporation
https://www.globenewswire.com/news-release/2020/06/12/2047461/0/en/Ethema-Restructures-Debt-and-Raises-New-Financing-to-Acquire-Interest-in-New-Facility.html

The acquisition announced in January 2020 is scheduled to close immediately after closing the new financing. The new facility will be licensed for all levels of care. There is capacity for 60 beds on the property.

Other Acquisitions
The company entered into two LOI’s before the end of 2019 and both of those LOIs expired before the Company could raise any financing to complete those acquisitions. There is still an effort ongoing on a non-exclusive basis in both cases to participate in a financing for an acquisition for a portion of these businesses. There is no concrete development in either of these cases.


For the quarterly period ended March 31, 2020
https://sec.report/Document/0001721868-20-000426/

3. Going concern
… As of March 31, 2020 the Company has a working capital deficiency of approximately $28,200,000 and accumulated deficit of approximately $55,800,000…

The company invested $15,500 in Evernia Health Services, LLC (“Evernia”), a newly formed entity which is 100% owned by American Treatment Holdings, Inc. (“ATHI”), a newly formed entity to hold the investment in Evernia. Subsequent to March 31, 2020, the Company acquired 51% of ATHI by providing a loan of a maximum of $500,000 to Ervernia. As of June 30, 2020, the Company had advanced Evernia approximately $98,000 including accrued interest thereon and the Company has agreed to advance an additional amount of approximately $202,000 (“the First Tranche”) within a reasonable time of concluding the loan agreements. The timing of the balance of the advance of approximately $200,000 will be mutually agreed upon between the parties.



For the fiscal year ended: December 31, 2020
https://sec.report/Document/0001721868-21-000220/

On December 20, 2019, the Company entered into an agreement with the landlord to terminate the lease agreement on January 31, 2020.

The Company has signed a Letter of intent to acquire a new facility at another location nearby which has been delayed by the Corona Virus pandemic and a delay in obtaining the licensing for this facility. The Company has been actively involved in the operation of the treatment center operated by Evernia Health Center LLC (“Evernia”) at 950 Evernia Street, West Palm Beach Florida. The Company is under contract to purchase a majority interest in this company and has been financing the start up operations of this facility. This operation will be the Company’s only treatment center operating and expects the purchase of the majority interest to close in the second quarter of 2021.

In June 2018, the Company moved its operations out of the Delray Beach properties and into the leased property at 5400 East Avenue in West Palm Beach.

On August 3, 2018, the Company changed the name of its subsidiary Seastone Delray Healthcare, LLC to Addiction Recovery Institute of America, LLC (“ARIA”).

West Palm Beach Treatment Operations

The Company treatment operations were based in our leased premises at 5400 East Avenue, West Palm Beach, Florida, USA.

This facility was operated until January 30, 2020, we have subsequently ceased operations at this facility and are currently exploring new treatment facility options.