Ethema Health Corp (GRST)

[Bubae]

We know what Shawn Leon is up to. He needed to borrow more funds to cover the old notes because his shares are worthless in terms of debt conversions. Along with the statement of no reverse split in the near term has cleared the field for the one-two-tick flip tango to continue while nearly everyone else here twists in the wind for yet another couple of quarters.

This time he attempting to raise funds with a convoluted property purchase, sale, leaseback scheme. Their newly hired independent accounting firm bailed per the last 8K filing may not be a just a coincidence. If they actually owned the property to begin with it would make sense to sell then lease back. This scheme may not be illegal but I be regulators will find it questionable once they are notified.

What I believe is happening is a lease deal with debt wrapped in it structured as an off balance sheet liability to make the spread sheet look better. They need to attract "qualified" investors for that regulation "A" offering. That offering will need a reverse split and a different narrative to attract retail traders. Without retail trading interest the offing is dead. The question is if they can con a more sophisticated investor with the off balance sheet scheme to hide the huge, and new debt liabilities.

To bottom line this, they need to find a way to get that debt into the hands of OTC retail traders because debt holders and very little cash flow can not get it done. They are trying to set the table here but these guys move at a glacial pace so I believe they will just be running out the clock to bankruptcy. Pick out the very few nuggets in the press releases that may be true and you can figure out what Shawn is up to. That is his history.

None of us knows what Leon is really up to ... or not.

Ethema Signs Contract to Purchase Property
July 26, 2022 13:05 ET
https://www.globenewswire.com/en/news-release/2022/07/26/2486269/0/en/Ethema-Signs-Contract-to-Purchase-Property.html

The Company intends to structure the purchase in an off-balance sheet transaction through a Limited Partnership structure whereby the equity funds required for the purchase will be a direct investment in the property limited partnership.

Off-Balance Sheet Financing (OBSF): Definition and Purpose
https://www.investopedia.com/terms/o/obsf.asp#:~:text=Key%20Takeaways,of%20covenants%20from%20being%20breached.

> Off-balance sheet financing is an accounting practice where companies keep certain assets and liabilities from being reported on balance sheets.

> This practice helps companies keep debt-to-equity and leverage ratios low, resulting in cheaper borrowing and the prevention of covenants from being breached.
Off-balance sheet financing isn't illegal as long as companies abide by accounting rules and regulations.

> Off-balance sheet financing isn't illegal as long as companies abide by accounting rules and regulations.

> Regulators are keen on clamping down on questionable OBSF.

> More stringent reporting rules are in place to give more transparency to controversial operating
leases.


Ethema Health Regulation "A" Offering
https://www.otcmarkets.com/filing/html?id=16623154&guid=3uN-kpvuvtePB3h

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

Our Common Stock is being offered and sold only to “qualified purchaser” (as defined in Regulation A). As a Tier 2 offering pursuant to Regulation A,

To determine whether a potential investor is an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who has:

1. an individual net worth, or joint net worth with the person’s spouse, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person; or

2. earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.