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Thursday, August 17, 2023 9:39:08 PM
It is interesting to see that the company's independent accounting firm since 2018 merged with another and they entered into an agreement to service Ethema Health (GRST) at the end of April. Less than a few months later the accounting firm resigns. Interesting timing given this 'off-balance sheet financing for transactions related to leaseback and sale' deal. The filings up to the next annual will be very interesting reads.
Ethema Executes Two Real Estate Transactions and Major Debt Repayment
July 17, 2023 09:34 ET
https://www.globenewswire.com/en/news-release/2023/07/17/2705721/0/en/Ethema-Executes-Two-Real-Estate-Transactions-and-Major-Debt-Repayment.html
The three million dollar spread is profit to the Company before expenses.
Mr. Shawn Leon, Company CEO, reported,
We created three million of cash without issuing debt or equity and improved our balance sheet by $8.7 million.
FORM 8-K
https://www.otcmarkets.com/filing/html?id=16855888&guid=tMN-kWqp5N_TB3h
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On August 4, 2023 the Company entered into a long term lease...
...The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term....
...The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met.
FORM 8-K
https://www.otcmarkets.com/filing/html?id=16796252&guid=tMN-kWqp5N_TB3h
Item 4.01. Changes in Registrant's Certifying Accountant.
On July 14, 2023, the Audit Committee of Ethema Health (the “Company”) was notified by CohnReznick LLP (“CohnReznick”), the Company’s independent registered public accounting firm, of its decision to resign as the independent registered public accounting firm of the Company...
The Company engaged CohnReznick as its independent registered public accounting firm on April 28, 2023 (the “Engagement Date”), following the completion of a business combination agreement with CohnReznick and Daszkal Bolton LLP (“Daszkal”). Daszkal had served as the Company’s auditor since 2018.
What is Off-Balance Sheet Financing?
https://thebusinessprofessor.com/en_US/business-personal-finance-valuation/off-balance-sheet-financing-definition
Changes to Off-Balance Sheet Financing Rules
The Financial Accounting Standards Board (FASB) that governs and regulates GAAP, brought changes in the rules for lease accounting that had a huge impact on the financial statements of retailers, telecommunication firms, hotels, restaurants, etc. This edition was made in February 2016. Generally, balance sheets don't have any records for lease agreements, and this makes it difficult for investors to assess the firms leasing activities and the potential of repaying to the creditors. Public firms that are located in the U.S. and are dealing with operating leases maintain more than $1 trillion in off-balance sheet financing for fulfilling their leasing obligations. However, as soon as the Accounting Standards Update 2016-02 ASC 842 comes into the picture, the concept of off-balance sheet financing will come to an end in 2019. Post off-balance sheet funding, the accountants will record the right-of-use assets and liabilities arising from leases in balance sheets. Also, there will be a requirement of making notes, and providing detailed disclosures in quantitative and qualitative statements. Furthermore, there will be no off-balance sheet financing for transactions related to leaseback and sale.
Furthermore, there will be no off-balance sheet financing for transactions related to leaseback and sale
Everything that I post is just my informed opinion and is simply an invitation to debate. Trade on your own due diligence please..
Recent GRST News
- Form 4/A - Statement of changes in beneficial ownership of securities: [Amend] • Edgar (US Regulatory) • 06/11/2024 06:20:45 PM
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- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 05/07/2024 08:16:35 PM
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- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 11/20/2023 09:55:26 PM
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