Ethema Health Corp (GRST)

[Bubae]

Lets break down what you call Shawn Leon' "good money" Looks like the Leons needed to acquire more than 50% of Ethema Health for voting control because they need to make some moves here to protect what they call "friendly debt" held by themselves and these series "N" and now "R" note holders. So Shawn Leon takes the debt owed to him and Leon Developments by the company and writes himself a Regulation "D" offering for $1.5 million. Where did this debt owed to Shawn Leon come from? He is claiming the $420K is accrued management fees citing an agreement with Addiction Recovery of America (ARIA) which Shawn Leon took for himself in December 2022 for $0. In the 2023 deal to hand over Cranberry Cove, the holding company for the Canadian to Leonite for debt owed Shawn Leon was awarded "approximately $185,503" in so called accrued management fees. That is $605,503 in management fees. Yet what we see owed to Leon Developments jumped $242K from the end of 2022 to the end of Q2 2023. The balance of the debt owed to Leon Development comes from the sale of assets to Ethema Health by Leon Developments back in 2017.

The Leons use a couple of regulation "D" offerings to move the debt owed them to equity ownership priced at only $0.0005 a share giving them more than 52% ownership. That $0.0005 price exemption for these insiders was carved out in the Leonite warrant exchange agreement in 2023. I have many questions about this including the use of the regulation "D" offering for unregistered shares which is normally used to raise new capital. Questions about management fees which is income being converted full value to equity when there should have been tax consequences. The conversion of debt owed from the sale of the Canadian assets to Ethema Health which should have also had tax consequences at least in Canada. The awarding of management fees to Shawn Leon after years of filings stating that such fees were were "forfeited". Very sloppy, waiting to see if the Leons are going to compound the problems by acting on their majority ownership to the detriment of existing shareholders. Hey, this is only the cliff notes version, this whole deal is layered for a reason and sloppy in my opinion. Take a look at the title of Exhibit 10.02 of the July 2023 8K. It is titled " Management Agreement Completed July 10, 2024'" it is actually the regulation "D" securities purchase agreement.

Shawn Leon is not gonna put his good money into a bad company, he's smarter than that!

https://www.otcmarkets.com/filing/html?id=17679613&guid=aoL-kKMwM2vCJth#ex10_2_htm
SECURITIES PURCHASE AGREEMENT
NOW THEREFORE, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as follows:

• b. Form of Payment. The Buyer agrees to convert $1,500,000.00 in principle of an amount outstanding from the Company to the Buyer for advances to the Company over a period of time between 2017 and 2024 and management fees.

Bubae
Re: pual post# 51205
Sunday, September 08, 2024 10:28:13 AM
Post# 51209 of 51307
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175050042&txt2find=series%2Bnotes

Some of the series "N" notes "friendly debt" was reworked in Q1 using newly created series "R" notes. Looks like one note holder exited with interest while others paid interest from these notes. Excerpts below full text in on page 24 of the filing. The previously defaulted series "N" notes have new expiration dates of December 2024 and December 2025. The series "N: balance as of June 30th $3,701,846 down from $4,228,161 as of December 31st 2023, chart page 17 of Q2 filing. Add in the new series "R" notes totaling $1,081,578 as of June 30th, page 18, we have a new total $4,783,424 of so called "friendly debt".

Bubae
Re: janetcanada post# 50744
Wednesday, July 31, 2024 10:48:11 AM
Post# 50749 of 50826
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174841515&txt2find=management%2Bfees

Filings going back years state that management fees were forfeited. The language is pretty unambiguous concerning this subject in the filings. Looks to me like he is trying to take the $420K as part of the conversions to acquire more than a 52% stake in this to take the sting out of it. They must believe that they need controlling interest to work the plan. That plan is in the interest of those who held more than $7 million in what Shawn Leon calls "friendly debt".

For the quarterly period ended June 30, 2023
https://www.otcmarkets.com/filing/html?id=16878947&guid=aoL-kKMwM2vCJth

14. Related party transactions

Shawn E. Leon
As of June 30, 2023 and December 31, 2022, the Company had a payable to Shawn Leon of $365,126 and $411,611, respectively. Mr. Leon is a director and CEO of the Company. The balances payable are non-interest bearing and have no fixed repayment terms.

On December 30, 2022, the Company sold its wholly-owned subsidiaries, Greenestone Muskoka and ARIA, to Mr. Leon for gross proceeds of $0. The Company realized a gain on disposal of $628,567 which was recorded as an increase in Additional Paid in Capital due to the related party nature of the transaction.

Due to the current financial position of the Group, Mr. Leon forfeited the management fees due to him for the six months ended June 30, 2023 and the year ended December 31, 2022.

Leon Developments, Ltd.

Leon Developments is owned by Shawn Leon, the Company’s CEO and director. As of June 30, 2023 and December 31, 2022, the Company owed Leon Developments, Ltd., $1,092,701 and $850,607, respectively.

The Company paid Leon Developments a management fee of CDN$250,000 (approximately $185,503) and $0 for the six months ended June 30, 2023 and 2022, respectively.

On June 30, 2023, the Company assumed the liability owing to Leon developments of CDN$1,974,012 (approximately $1,490,946) from its subsidiary, CCH, immediately prior to the disposal of CCH to a related party, Leonite Capital LLC.