Ethema Health Corp (GRST)

[Bubae]

Even after acquiring the cash from the crazy lease finance deal to pay a bit more than $2 million on the defaulted debt they still borrowed an additional $720K in Q3 and up to November 15th. They boasted about retiring the convertible notes in the July 17th press release and then turn right around and write a new one for $150K on August 9th. That note is available to convert at 6 months, as soon as February. They lost the Canadian property cash flow to Leonite for debt and now must pay on the new lease deal monthly. Looks like Shawn Leon will very quickly add back that debt and more. Cash balance at the end of Q3 after all of that activity was only $11,728. The cash burn rate appears to be very high and they have a ton of work to do to make that regulation "A" offering viable. What cash flow the treatment center throws off is discounted because of the expensive receivables funding that is servicing the previous receivables funding. Balance on the receivables funding as of September 30th was $425,467 after retiring $267,771 in receivables funding using proceeds from the finance lease deal. An expensive way to operate.

For the quarterly period ended September 30, 2023
https://www.otcmarkets.com/filing/html?id=17070521&guid=ulJ-kK_3v0V0Rch

8. Short-term Convertible Notes (continued)
Joshua Bauman

On August 9, 2023, the Company issued a convertible promissory note to Bauman, in the aggregate principal amount of $150,000. The note bears interest at 10.0% per annum and matures on August 9, 2024. The note is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for anti-dilution provisions. The note is convertible into common stock at the option of the holder after the expiration of six months from the issuance date, in addition, should the note reach its maturity date, August 9, 2024, the note will automatically convert into shares of common stock at the conversion price, subject to anti-dilution provisions.

12. Receivables funding (continued)
September 15, 2022 Funding

On September 15, 2023, the Company, through its 75% held subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $320,000 of the Receivables of Evernia were sold to Itria, for gross proceeds of $250,000. The Company also incurred fees of $3,000, resulting in net proceeds of $247,500. The Company is obliged to pay $6,666.67 per week until the amount of $320,000 is paid in full. The guarantor of the funding is a minority shareholder in ATHI.

The Company made weekly cash payments of $6,667 totaling $13,333 on the September 15, 2022 funding. The balance outstanding at September 30, 2023 was $306,667, less unamortized discount of $70,076.

19. Subsequent events
On November 15, 2023, the Company, entered into a senior secured Promissory Note in the aggregate principal amount of $250,000 for net proceeds of $223,500 after an original issue discount and fees of $26,500. The note earns interest at 10% per annum and matures on March 15, 2024.


Liquidity and Capital Resources
Cash used in financing activities was $(2,099,675) and cash provided by investing activities was $393,185 for the nine months ended September 30, 2023 and 2022, respectively. In the current period the Company repaid convertible notes of $1,124,442, repaid promissory notes of $568,325, third party loans of $361,260 and net repayment of receivables funding of $267,771, primarily out of the net proceeds of the property disposal, offset by proceeds received on convertible notes of $150,000, proceeds from promissory notes of $223,500.