Unfortunately Leonite does not play well with others and has in fact consistently ensured a superior position over the other lenders. Leonite is a parasite in my opinion and took advantage of this company's weakened state with the June note terms. Buying out the Labrys note helped them consolidate power as the only lender available to leverage such onerous terms. It is also how they get those 30 day notes with the 20% fees built in.
They have the June note with the onerous terms for $745K matures in 6 months. The $700K in series "A" shares of the Cranberry Cove entity which holds the Canadian property. Another $400K in Series "B" preferred shares of Ethema (GRST) which is senior to all other shares of the company. Up to $440K Leonite note in forbearance per the March 1st press release and no mention of its status as of the Q2 filing. The balance of $177K of the note that partially converted February 28th with the 150 million shares. The two notes taken out in Q2 and matured in Q2 totaling $200K. The is $396K note secured by the options in ATHI (AKA ARIA). That is around $3.1 million for Leonite and I doubt that I have captured all that they are owe in notes and doesn't touch on the warrants.
So what is the end game? when does it start?, because cash flow from operations won't touch even what Leonite holds even in the very short term. Leonite holds the power in the relationship and are very good at separating traders from their money in my opinion. What is more is that the Leons have the motivation to cooperate because they are owed around $2.5 million. Series "N" note holders another $3.9 million and those are now listed as being in default as of Q2.
The salient terms of the Series B Preferred stock is summarized as follows:
Series B Preferred stock will rank senior to all other classes of stock · Entitled to cumulative dividends at 6% per annum payable in cash or in kind...
c) Series B Preferred shares
With effect from June 12, the Company designated $400,000 of the Leonite Capital LLC convertible loan as Series B Preferred Stock issuable at a par value of $1.00 per share.
The Company entered into a forbearance agreement with Leonite Capital Inc. (“Leonite”) for their note dated July 12, 2020 which limits certain collection activities for payment defaults until June 28, 2022. The current conversion price being employed on the note is $.001 per share.
On July 12, 2020, the Company entered into a Senior Secured Convertible Note agreement with Leonite for $440,000 with an original issue discount of $40,000 for gross proceeds of $400,000,...
Leonite Capital, LLC
Secured Promissory Notes
On March 1, 2022, the Company entered into a secured Promissory Note in the aggregate principal amount of $124,000 for net proceeds of $100,000 after an original issue discount of $24,000. The Note had a maturity date of April 1, 2022. This note has not been repaid at the date of this report and no default has been declared.
On May 3, 2022, the Company, entered into a secured Promissory Note in the aggregate principal amount of $76,250 for net proceeds of $61,000 after an original issue discount of $15,250. The Note had a maturity date of June 17, 2022 and bears interest at the rate of zero percent per annum from the date on which the Note was issued until the same became due and payable.
We are in discussions with Leonite on the repayment of these notes.
On July 12, 2020, the company entered into a debt extinguishment agreement with Leonite whereby the following occurred:
2. $700,000 of the note was converted into Series A Redeemable Preferred shares in the Company’s subsidiary, Cranberry Cove Holdings, accruing dividends at 10% per annum.
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