Ethema Health Corp (GRST)

[Bubae]

The losses associated with the previous two closed treatment centers is entirely under this CEO. Ethema Helath (GRST) didn't buy a business with debt, rather the CEO, (Leon Developments Ltd.) sold Cranberry Cove Holdings to Ethema Health (GRST) which subsequently sold the GreeneStone Muskoka treatment center and retained the property.

Those funds were brought to Florida for the Delray Beach treatment center start-up. By October 2019 the Delray Beach properties were handed over to Leonite for debt. Operations were moved to 5400 East Ave, West Palm beach which was also closed by January 2020 after hemorrhaging losses.

The 75% ownership claimed by Ethema Health of the current treatment center is largely held by investors to secure debt for this start-up. Ultimately these investors will own the treatment center to satisfy at least those lenders in my opinion. Ethema Health is on the hook for the toxic debt obligations and liabilities, not the real investors of the treatment center.

We should know how they settle the Leonite secured debt by the end of Q2. What is left will likely be the convertible debt. They badly need the new debt agreements before moving onto what it will take to make the regulation "A" viable. I believe the subscribers to the offering will actually be Leonite and other debt holders.


For the fiscal year ended: December 31, 2019
https://www.otcmarkets.com/filing/html?id=14268515&guid=Hiu-kFUYuTxmB3h

1. Nature of business

The Share Purchase Agreement

Under the SPA, the Company acquired 100% of the stock of CCH from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of the Company (“Mr. Leon”). CCH owns the real estate on which GreeneStone Muskoka is located. The total consideration paid by the Company was CDN$3,517,062, including the assumption of certain liabilities of CCH, which was funded by the assignment to Leon Developments of certain indebtedness owing to the Company in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments, valued at US$0.0364 per share.


The Florida Purchases and Business

Immediately after closing on the sale of the assets of the Canadian Rehab Clinic, the Company closed on the acquisition of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements. This business is operated through its wholly owned subsidiary, Addiction Recovery Institute of America, LLC (“ARIA”) (formerly Seastone Delray Healthcare, LLC). The purchase price for the ARIA assets was US$6,070,000 financed with a purchase money mortgage of US$3,000,000, and US$3,070,000 in cash.


On May 23, 2018, the Company converted the agreement to purchase AREP 5400 East Avenue LLC. (“the landlord”) into a lease agreement with a purchase option of $17,250,000, increasing August 31, 2018 by $750,000 per month until the purchase option is exercised. The premises is located at 5400, 5402 and 5410 East Avenue, West Palm Beach, Florida (the “Property”). The lease was for an initial 10 years and provided for two additional 10 year extensions.

On October 10, 2019, the Company transferred a warranty deed to the real property located at 810 Andrews Avenue, Delray Beach, Florida to Leonite Capital, LLC, in settlement of indebtedness of $1,398,514 and additional expenses related to the disposal of the property of $36,470. These expenses of $36,470 were provided for resulting in net proceeds recognized on the transfer of the property of $1,362,044.


For the fiscal year ended: December 31, 2020
https://www.otcmarkets.com/filing/html?id=14873406&guid=Hiu-kFUYuTxmB3h

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.

The Company intends to continue its operations at a new location in west Palm Beach. A Letter of Intent ("LOI") was signed on February 7, 2020, with a third party that has a property lease and a pending license at its new location. The Company originally anticipated recommencing operations in February 2020, however it has been adversely affected by the COVID-19 pandemic. The LOI requires the Company to provide a working capital loan of up to $500,000, to date the Company has loaned $690,449 as of December 31, 2020. The Company is expected to close on the acquisition shortly.