Ethema Health Corp (GRST)

[Bubae]

Anyone familiar with this ticker should recognize the familiar narrative in the latest press release. The story since 2020 has been Ethema Health's acquisition of this Evernia treatment center which has a share structure of its own held by American Treatment Holdings, Inc (ATHI). Ethema has claimed 75% ownership but if you distill out what they can actually claim free and clear it doesn't add up to much. The bulk of the 75% ownership in ATHI is used to secure debt with the five year options. Now the story continues the same with Ethema Health claiming to own 100%. This story has always had the added spice on the ever on going letters of intent to acquire a stake in another treatment center. The Globenewswire link below to Ethema's press release history going back to 2018 is littered with these statements and not a one was ever completed.

We need to go back to the Q3 2021 filing to see the percentages assigned to the options because by Q1 2022 they dropped the percentages. The $655,000 listed by Leonite becomes $396,000 by Q1 2022. So part of my question of how Ethema was able to put up all the assets of both Ethema and ATHI to secure the new $1 million in revolving credit line was answered by the buy out of Lawrence Hawkins 25%. Now what about the options that secures debt. These holders are entitled to 50% ownership of the original option after the debt is paid.


Ethema Acquires 25% Minority Stake in ARIA Subsidiary
https://www.streetinsider.com/NewMediaWire/Ethema+Acquires+25%25+Minority+Stake+in+ARIA+Subsidiary/23244310.html#:~:text=WEST%20PALM%20BEACH%2C%20FL%20%2D%20(,it%20did%20not%20already%20own.

...is pleased to announce that on May 16, 2024, it closed on a deal to acquire the 25% share (the “Interest”) of American Treatment Holdings Inc. (“ATHI”) that it did not already own. This brings the total holding in ATHI to 100%.

The cash component of the acquisition was $625,000 and the balance was funded with a promissory note of $475,000 given to the Seller which will be paid over 18 months.


Ethemqa Health Globe News Wire Press Release History
https://www.globenewswire.com/en/search/organization/Ethema%2520Health%2520Corporation?page=1&pageSize=50

For the quarterly period ended September 30, 2021
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000792935/000172186821000835/f2sgrst10q111721.htm

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

22. Commitments and contingencies

c. ATHI Option agreements

On July 12, 2020, the Company entered into a five year option agreement with Leonite Capital LLC (“Leonite”) and other investors (collectively the “Transferees”), the Company agreed to sell to Leonite a portion of the total outstanding shares of ATHI from the shares of ATHI held by the company. The Company provided Leonite an option to purchase 33% of ATHI from the Company for a purchase consideration of $0.0001 per share, based on the advances that Leonite made to the Company totaling $655,000. Leonite shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Leonite to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

On September 14, 2020, the Company entered into a five year option agreement with Ed Blasiak (“Blasiak”) whereby the Company agreed to sell to Blasiak a portion of the total outstanding shares of ATHI. The Company provided Blasiak an option to purchase 2.5% of ATHI from the Company for a purchase consideration of $0.0001 per share, based on the advances that Blasiak made to the Company totaling $50,000. Blasiak shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Blasiak to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

On October 29, 2020, the Company entered into a five year option agreement with First Fire whereby the Company agreed to sell to First Fire a portion of the total outstanding shares of ATHI. The Company provided First Fire an option to purchase 6.25% of ATHI from the Company for a purchase consideration of $0.0001 per share, based on the advances that First Fire made to the Company totaling $125,000. First Fire shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by First Fire to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

On October 29, 2020, the Company entered into a five year option agreement entered into with Bauman, so that the Company agreed to sell to Bauman a portion of the total outstanding shares of ATHI. The Company provided Bauman an option to purchase 6.25% of ATHI from the Company for a purchase consideration of $0.0001 per share, based on the advances that Bauman made to the Company totaling $125,000. Bauman shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Bauman to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.