Ethema Files Strong Second Quarter Results

WEST PALM BEACH, FL, Aug. 21, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire – Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”), filed its second quarter 10-Q today and reported strong results for the quarter.   Included in the quarter filing was the accounting for the disposition of the Company’s wholly-owned subsidiary, Cranberry Cove Holdings Ltd.

Effective June 30, 2023, Ethema sold its 100% interest in Cranberry Cove Holdings Ltd (“CCH”), a Canadian registered Company, to Leonite Capital, LLC (“Leonite”), the holder of the Series A Preferred Stock in CCH, with a carrying value of $700,000 and Series B Preferred  Stock in Ethema, with a carrying value of $400,000, in exchange for the return of the Series B Preferred Stock and the accrued dividends thereon of $61,184.

Due to Leonite’s preferred shareholdings in both Ethema and CCH as well as other convertible note advances and secured promissory note advances, Leonite was considered a related party and as such the gain realized on the transaction of $1,334,885, and the elimination of the minority interest Series A Preferred stock of $700,000 in CCH, was recorded as a capital transaction reflected in the statement of shareholders equity as a deemed contribution to Ethema of $2,034,885, reflected in additional paid-in-capital.

The exchange of the Series B Preferred stock for the shares in CCH, is regarded as an extinguishment of a debt with a related party and therefore the elimination of the Series B Preferred Stock and the accrued dividends thereon, totaling $461,184, is recorded as a capital transaction with a credit to additional paid-in-capital of $461,184.

The cumulative effect of the above is an increase in additional paid-in-capital of $2,496,069, thereby improving the overall financial position of Ethema by eliminating significant debt, including mortgage debt of $3,525,233, CCH Series A Preferred stock liability of $700,000 and accrued dividends thereon of $184,845 and Series B Preferred Stock liability of $400,000 and accrued dividends thereon of $61,184.

The Company’s ARIA subsidiary continued to perform well with an EBITDA of $506,310 before intercompany charges.   Additionally, tax accruals from previous periods were reversed upon the finalization of prior period tax returns.

Other unusual charges in the quarter were extension fees and professional transaction fees paid during the current quarter for the Florida real estate closing that happened after quarter end which will result in a once-off gain in the third quarter.