Item 1.01
Entry
into a Material Definitive Agreement.
Private
Offering
On
May 31, 2018, Ethema Health Corporation, a Colorado corporation (the “
Company
”) closed a private offering
(the “
Private Offering
”) in which it raised $1,450,000 in capital from 4 accredited investors through the
issuance to the investors of the Company’s Series N Convertible Notes, in the total original principal amount of
$1,450,000, which Notes are convertible into the Company’s common stock at a conversion price of $0.08 per share (the
“
Notes
”) together with Warrants to purchase up to a total of 18,125,000 shares of the Company’s
common stock at an exercise price of $0.12 per share the (“
Warrants
”). Both the conversion price under the
Notes and the exercise price under the Warrants are subject to standard adjustment mechanisms. The Notes mature on November
30, 2018, and the Warrants are exercisable until May 31, 2021.
The
Note and Warrants were offered and issued without registration under the Securities Act of 1933, as amended (the “
Securities
Act
”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act, as provided in Rule 506 of Regulation
D promulgated thereunder, and under exemptions from registration under applicable Canadian securities laws. The Note and Warrants,
and the shares of common stock issuable upon exercise and/or conversion thereof, have not been registered under the Securities
Act, or any other applicable securities laws, and unless so registered may not be offered or sold in the United States, except
pursuant to an exemption from the registration requirements of the Securities Act.
The foregoing description of the Note and Warrant does not purport to be complete and is qualified in its
entirety by reference to the form of Note and Warrant, copies of which are attached hereto as Exhibit 10.1 and 10.2 and incorporated
herein by reference.”
Lease
Transaction
On May 23,
2018, the Company entered into a Lease Agreement (the “
Lease
”) pursuant to which it leased from AREP 54000
East Avenue LLC, a Delaware limited liability company (the “
Landlord
”), the premises located at 5400, 5402,
and 5410 East Avenue, West Palm Beach, Florida (the “
Property
”). The Lease has an initial term of 10 years,
and provides for 2 additional 10 year extensions. The Company was previously under agreement to purchase the Property from the
Landlord. The Property is presently used as a rehabilitation treatment center. The current tenant at the property, Alternatives
in Treatment, LLC, a Florida limited liability company, consented to the Lease and concurrent with the execution of the Lease
entered into a Sublease Agreement with the Company (the “
Sublease
”).
The foregoing
description of the Lease and Sublease does not purport to be complete and is qualified in its entirety by reference to the Lease
and Sublease, copies of which are attached hereto as Exhibit 10.1 and 10.2 and incorporated herein by reference.