ITEM 1.01 ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT.
On
January 9, 2019, Ethema Health Corporation (the “Company”), entered into a Securities Purchase Agreement with Power
Up Lending Group Ltd., a Virginia corporation (“Power Up”), pursuant to which the Company issued to Power Up a Convertible
Promissory Note (the “Power Up Note I”) in the aggregate principal amount of $53,000 for net proceeds of $50,000 after
expenses. The Power Up Note I has a maturity date of October 30, 2019 and bears interest at the rate of nine percent per annum
from the date on which the Power Up Note I was issued until the same becomes due and payable, whether at maturity or upon acceleration
or by prepayment or otherwise. The Company has the right to prepay the Power Up Note I in terms of agreement. The outstanding
principal amount of the Power Up Note I is convertible at any time and from time to time at the election of the Purchaser during
the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at
a conversion price equal to 61% of the lowest closing bid price of the Company’s common stock for the ten trading days prior
to conversion. On January 28, 2019, the Company repaid the Power Up Lending Group Ltd., convertible note entered into on January
9, 2019, of $53,000, together with interest and early settlement penalty thereon for gross proceeds of $59,623.The foregoing summary
of the terms and conditions of the Power Up Note I does not purport to be complete and is qualified in its entirety by reference
to the full text of the Securities Purchase Agreement by and between the Company and Power Up Lending Group, dated January 9,
2019 and the Power Up Note I which are filed as Exhibits 10.1 and 10.2 hereto, respectively.
Between
January 28, 2019 and March 13, 2019, the Company issued secured convertible promissory Series N notes in the total aggregate amount
of $1,001,000 with interest thereon at the rate of six percent (6%) per annum (the “Series N Note”) pursuant to separate
subscription agreements (the “Subscription Agreements”) with accredited investors, and a three (3) year warrant (the
“Warrants”) to purchase shares of Common Stock at an exercise price of $0.12, subject to adjustment. The Warrants
expire three (3) years from the date of issuance and are evidenced by a form of warrant (“Form of Warrant”). The Series
N Note provides that, at any time after the issuance of the Series N Note, the holder of the Series N Note shall have the option,
from time to time or at any time, to convert all or any portion of the then outstanding and unpaid principal amount and interest
of such Series N Note into duly authorized, validly issued fully paid and non-assessable shares of Company’s common stock,
par value $0.01 per share at a per share conversion price equal to $.08 per share of Common Stock and the range of exchange for
Canadian dollar denominated notes shall be determined on the date of conversion. The issuance of the Series N Note was made in
reliance upon an exemption from registration provided under Section 4(a)(2) of the Securities Act. The foregoing summary of the
terms and conditions of the Series N Note and the Warrants do not purport to be complete and are qualified in its entirety by
reference to the full text of the Series N Note, Form of Warrant and Subscription Agreement which are filed as Exhibit 10.3, Exhibit
10.4 and Exhibit 10.5, respectively, hereto.
On
January 28, 2019, the Company, entered into a Securities Purchase Agreement with Power Up, pursuant to which the Company issued
to Power Up a Convertible Promissory Note (“Power Up Note II”) in the aggregate principal amount of $138,000 for net
proceeds of $135,000 after expenses. Power Up Note II has a maturity date of November 15, 2019 and bears interest at the rate
of nine percent per annum from the date on which the Power Up Note II was issued until the same becomes due and payable, whether
at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the Power Up Note II in terms
of agreement. The outstanding principal amount of the Power Up Note II is convertible at any time and from time to time at the
election of the Power Up during the period beginning on the date that is 180 days following the issue date into shares of the
Company’s common stock at a conversion price equal to 61% of the lowest closing bid price of the Company’s common
stock for the ten trading days prior to conversion. The foregoing summary of the terms and conditions of the Power Up Note II
does not purport to be complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement
by and between the Company and Power Up, dated as of January 28, 2019 and the Power Up Note II, which are filed as Exhibits 10.6
and 10.7 hereto, respectively.
On January
28, 2019, the Company also repaid the Power Up convertible note entered into on July 31, 2018, of $153,000 together with interest
and early settlement penalty thereon for gross proceeds of $207,679.
On March
5, 2019, the Company issued a secured convertible promissory note in favor of FirstFire Global Opportunities Fund, LLC, a Delaware
limited liability company (“FirstFire”), or registered assigns, in the principal amount of $200,000 with interest
thereon at the rate of five percent (5%) per annum (the “FirstFire Note”). The FirstFire Note provides that, at any
time on or after the one hundred eightieth (180
th
) calendar
day following March 5, 2019, the holder of the FirstFire Note shall have the option, from time to time or at any time, to convert
all or any portion of the then outstanding and unpaid principal amount and interest of such FirstFire Note into duly authorized,
validly issued fully paid and non-assessable shares of Company’s common stock, par value $0.01 per share at a per share
conversion price equal to $0.08 (the “Fixed Conversion Price”), provided further, that at any time on or after the
180
th
calendar day following March 5, 2019, the Conversion
Price shall equal the lower of (i) the Fixed Conversion Price or (ii) 65% multiplied by the lowest traded price of the Company’s
common stock during the ten (10) consecutive NASDAQ, NYSE or NYSE American trading day (“Trading Day”) period immediately
preceding the Trading Day that the Company receives a Notice of Conversion. The issuance of the FirstFire Note was made in reliance
upon an exemption from registration provided under Section 4(a)(2) of the Securities Act. The foregoing summary of the terms and
conditions of the FirstFire Note does not purport to be complete and is qualified in its entirety by reference to the full text
of the FirstFire Note which is filed as Exhibit 10.8 hereto.
On September
10, 2018, the Company issued a secured convertible promissory note, dated September 10, 2018, in favor of Power Up, or registered
assigns, in the principal amount of $133,000 with interest thereon at the rate of nine percent (9%) per annum (the “Power
Up Note IV”). Power Up Note IV provides that, at any time on or after the one hundred eightieth (180
th
)
calendar day following September 10, 2018, the holder of the Power Up Note IV shall have the option, from time to time or at any
time, to convert all or any portion of the then outstanding and unpaid principal amount and interest of such Power Up Note IV
into duly authorized, validly issued fully paid and non-assessable shares of Company’s common stock, par value $0.01 per
share at a per share conversion price equal to the Variable Conversion Price, which means 61% multiplied by the Market Price.
Market Price means the lowest closing bid price on a given day in the applicable trading platform of the Company’s common
stock during the ten (10) consecutive trading day period ending on the latest completed trading day prior to the Conversion Date.
The issuance of the Power Up Note IV was made in reliance upon an exemption from registration provided under Section 4(a)(2) of
the Securities Act. On March 11, 2019, the Company repaid the Power Up Note IV entered into on September 10, 2018, of $133,000
together with interest and early settlement penalty thereon for gross proceeds of $180,062. The foregoing summary of the terms
and conditions of the Power Up Note IV does not purport to be complete and is qualified in its entirety by reference to the full
text of the Power Up Note IV which is filed as Exhibit 10.9 hereto.
On
April 3, 2019, Jaggm LLC, a limited liability company, entered into a definitive agreement to (“Agreement”) acquire
Seastone Apartments Condos Units 1-10 located at 801 Andrews Ave., Delray Beach, Florida 33483 from Addiction Recovery Institute
of America, (formerly known as Seastone Delray Healthcare, LLC), a limited liability company, and wholly-owned subsidiary of the
Company for an aggregate purchase price of $3,500,000. The acquisition of the real property is being implemented pursuant to the
terms of an Agreement which contains customary representations, warranties and covenants by the parties to the agreement and is
subject to customary closing conditions except that the property is being sold “As is.” This transaction is expected
to close on April 26, 2019. The foregoing description of the Agreement and the transactions contemplated thereby does not purport
to be complete and is subject to, qualified in its entirety, by the full text of such Agreement, a copy of which is attached hereto
as Exhibit 10.10 and is incorporated herein by reference.
The
description of the grid promissory note under Item 8.01 is incorporated by reference into this Item 1.01.