LOL, what is this CEO going to tell me about the balance sheet that would cause me to suspend common sense? Maybe that violating the terms of the note agreements results in debt defaults in excess of $4 million. That a OTC listed company by definition doesn't need the ability to convert equity for debt? That a regulation "A" offering at twice the current market and nearly 4 billion shares outstanding won't require a share structure reset. That trying to sell the very same growth story as a year ago is not problematic? That the market liquidity conditions are getting much worse and the cost of capital is rising quickly.
I believe they will struggle even with the qualified offering and the reverse split because this business model isn't a great wealth generator. Forget the past two failed treatment centers, this current one wouldn't be running is not for the constant cash infusions from new debt obligations. Total new debt obligations for Q2 was $1.2 million with settlement of $596K in two Labrys defaulted notes. In a couple of weeks we will have more data to really drive home what is happening.
Effective June 1, 2022, The Company entered into a Note Exchange Agreement whereby
..., were exchanged for a new Senior Secured Convertible Promissory note in the principal amount of $745,375,... .
...The Note matures on March 1, 2023, and bears interest at the minimum of 10% per annum or the Wall Street Journal quoted prime rate plus 5.75%.
The convertible note is secured by all of the assets of Ethema Health Corporation and Addiction Recovery Institute of America, LLC.
14. Receivables Funding
On May 31, 2022 the Company, through its 75% held subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $240,000 the Receivables of Evernia were sold to Itria, for gross proceeds of $200,000. The Company also incurred fees of $4,500, resulting in net proceeds of $195,500. The Company is obliged to pay 6.5% of the receivables until the amount of $240,000 is paid in full, with periodic repayments of $5,000 per week. The guarantor of the funding is a minority shareholder in ATHI.
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.
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