UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:December 31, 20132015

or

o[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ _________to _____________________

Commission file number:000-15078

GreenestoneGreeneStone Healthcare Corporation

(Exact name of registrant as specified in its charter)

5734 Yonge Street, Suite 300

North York, Ontario, Canada M2M 4E7

(Address of principal executive offices)

(416) 222-5501

(Registrant’s telephone number, including area code)

Securities registered under Section 12(g) of the Act:

Common Stock, $0.01 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-knownwell known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes¨ [ ] Noþ

[X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes¨ [ ] Noþ

[X]

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days.

Yesþ Yes[X] No¨ [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesþ [X] No¨ [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨ [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨ [ ] Noþ

Issuer’s revenues for its most recent fiscal year were approximately $ 5,962,304. [X]

The aggregate market value of the voting and non-votingnonvoting common equity held by non-affiliates of the registrant on December 31, 2013,June 30, 2015, based on a closing price of $ .30$0.03 was approximately $ 9,518,000.$1,226,511. As of March 19, 2014,April 10, 2015, the registrant had 35,065,24547,738,855 shares of its common stock, par value $0.01 per share, outstanding.

Prepared By:

Sunny J. Barkats, Esq.

JSBarkats, PLLC

18 East 41^st Street, 14^th Floor

New York, NY 10017

P: (646) 502-7001

F: (646) 607-5544

www.JSBarkats.com

GREENESTONE HEALTHCARE CORP.CORPORATION

FOR THE FISCAL

YEAR ENDED

DECEMBER 31, 20132015

TABLE OF CONTENTS

PART I

Item 1. Business.

Company History

GreenestoneGreeneStone Healthcare Corporation (formerly Nova Natural Resources Corporation, a Colorado corporation),corporation was incorporated under the laws of the State of Colorado on April 1, 1993 (“Greenestone” or the “Company”), and is the surviving company of a merger, effective February 1, 1995, between the Company and Nova Natural Resources Corporation, a Delaware corporation (“Nova Delaware”). The merger was effectuated solely for the purpose of changing the Company’s domicile from Delaware to Colorado. At all times prior to 2001, the Company was engaged in the oil and gas exploration business. Nova Delaware was the successor entity to Nova Petroleum Corporation, a Delaware corporation, and Power Resources Corporation, a Delaware corporation, which merged in 1986 (“the 1986 Merger”). Prior to the 1986 Merger, Nova Petroleum Corporation and Power Resources Corporation had operated since 1979 and 1972, respectively. In 2001, the Company entered into the electronics business and this business was active in 2001 and 2002, as part of the Torita Group. After 2002, the Company continued with various stages of development in this business until 2010.

Recent Developments

On December 29, 2015 the Company entered into a nonbinding Letter of Intent (the “LOI”) with Aurora Recovery Centre LP (“ALP” for the purchase of certain assets of ALP. This LOI has expired and the proposed transaction will not proceed.

In February 2015, the Company finalized the terms for the acquisition of the property currently leased by the Company. The property, which is the location of GreeneStone's Muskoka addiction treatment center, encompasses approximately 48,000 square feet of buildings on 43 acres and is adjacent to Lake Muskoka in Ontario. The property has11separate buildings, including five detox suites, 29 residential suites, staff cottages with 13 individual bedrooms, a self-contained fitness center, kitchen and dining facilities, and several meeting and therapy rooms. Additional facilities include an indoor and outdoor pool, a tennis court, a volleyball court, a running track and nature trails. As of the date of this annual report, the Company is addressing certain due diligence items which are being resolved and once the requisite funds have been raised the transaction will be consummated.

The purchase price for the property consists of the following; i) CAD$5,500,000 which will be funded by a mortgage bond over the property; and ii) the issue of 50,000,000 common shares in the Company, at the market price of the shares on the date of closing.

Change in Operations

On April 1, 2010, the Company, pursuant to Board of Directors resolution, changed its principal operations from development stage electronics to healthcare services. On March 29, 2010, the Company entered into a one-yearone year consulting agreement with Greenestone Clinic Inc., a Canadian corporation (“Greenestone Clinic”), whereby Greenestone Clinic was to provideprovided consulting services for the Company’s development and operation of medical clinics in the province of Ontario, Canada. Specifically, Greenestone would provideprovided medical and business expertise in the initial startup of private clinics and technical assistance to ensure that the clinics compliedwere in compliance with governmental policy and procedure requirements as well as any operational requirements. At the time of entering into this consulting agreement, Greenestone Clinic operated a clinic at the Muskoka property now housing its addiction treatment clinic and provided endoscopy services that the Company had planned to offer in its first Ontario medical clinic.

OnMay15,2010,theCompany secured through its wholly-owned subsidiary 1816191 Ontario Ltd. (“1816191”), a subleaseofspace (whichwaspreviouslytheRothbart PainClinic) ofapproximately 8,000 sq. ft. tobeused astheCompany’sexecutiveoffices and to run its first anendoscopy clinic. clinic,whichwas subsequently sold.The Company started offering medical services in June2010,offering various medical services,includingendoscopy,cardiologyandexecutive medicals.medicals, which services were subsequently sold as part of the sale of our subsidiary, 1816191 Ontario (“1816191”) duringDecember2014.

InMarch2011,GreenestoneClinic,aformerCompanyconsultant, gave upthepremises in Bala,Ontario,previously leasedbyGreenestoneClinicand operated as a private medicalresortand alsoallowed theCompany todobusinessusingthe“GreeneStone” name. The Company,through itswholly ownedsubsidiary GreeneStoneClinicMuskokaInc. (“GreeneStoneMuskoka”)enteredintoa leasewith the owneroftheMuskokapremisesonApril1, 2011.The Companyoffersonlymentalhealthandaddictiontreatment services atthis location whichoperates as an in-patientaddictiontreatmentcenter.

On December 17, 2014, the Company completed the sale of all of the outstanding shares of its subsidiary, 1816191, for the sum of CAD$1,282,002, comprised of the agreed purchase price of CAD$1,250,000 and the acquisition of net assets at closing of CAD$32,002. The sale was made pursuant to do business usinga Share Purchase Agreement, dated October 6, 2014, by and between the “GreeneStone” name.Company and Jaintheelal Parekh Medicine Professional Corporation (“Jaintheelal”). The Company through its wholly-owned subsidiary GreeneStone Clinic Muskoka Inc. (“GreeneStone Muskoka”)and Jaintheelal entered into a leaserevised Share Purchase Agreement on December 16, 2014.

JaintheelalisownedbyDr.Jay Parekh,theCompany’sformerMedical director in chargeofEndoscopy. The sale priceof CAD$1,282,002included theassumptionby Jaintheelal of debtinthesame amount asthesale price,whichdebt wasowedby1816191totheCompany intheamountof CAD$895,496and toJaintheelal ofCAD$386,542. Atclosing, Jaintheelaloffsettheassumeddebttotheregistrantof CAD$895,496 by US$277,500 throughthecancellation of2,408,268 sharesoftheCompany’s commonstock,for a net amountduetotheCompanyof US$493,807.The remainderoftheassumeddebtowedby1816191totheCompanywas originallyduetotheCompanyonJune30,2015,which duedate was extendedto December31,2015,thisloanhasnotbeenextendedbeyond thisdateasofthedatehereof, is intheformofan interest bearingnote withacouponof 5%per annum.

The Company’s principaloperationsarenow the owner provisionof the Muskoka premises on April 1, 2011. The Company planned to offer only mental health and addictiontreatment services in this location which would be run as an in-patient addiction treatment center.services.

Corporate Structure

The Company currently has twoone, wholly owned, operating subsidiaries, both of which are 100% wholly-owned.subsidiary, GreeneStone Muskoka.

GreeneStone Muskoka Treatment Center

On February 1, 2011,Dr.Paul GarfinkelGarfunkel was retained on a six monthsix-month consulting contract to advise the Company on its plan to go into the addiction treatment business.Dr. GarfinkelGarfunkel formed a clinical advisory group consisting ofClinical Advisory Group (“CAG”) including himself, and Dr.Clive Chamberlain,Dr.Greg O’DonahueDonahue and Janice Harris R.N. The clinical advisory group (the “CAG”) was to createCAG created the mission and valuesprotocols for the addiction treatment business and locate andwas tasked to hire a leader for the addiction treatment business.treatmentbusiness.

On April 1, 2011, the Company through GreenestoneGreeneStone Muskoka, entered into a new lease (the “Bala Lease”) with the Cranberry Cove Holdings Ltd. (“Cranberry”), the owner of the Bala, Ontario property (the “Bala Property”) in order to operate a mental health and addiction treatment center at the property. On April 1, 2011 (the “Purchase Date”), GreenestoneGreeneStone Muskoka purchased all of the assets of Greenestone Clinic that were previously used for the operation of the executive medical center located at the Bala Property. This essentially gave GreenestoneGreeneStone Muskoka a turn-keyturnkey opportunity to start up its addiction treatment business (the “GreeneStone Muskoka Treatment Center”TreatmentCenter”).

On April 1, 2011,Dr.Susan K. Blank was hired onunder a one yearone-year contract to run the GreeneStone Muskoka Treatment Center.Dr.Blank worked with the CAG to refine the mission and valuesprotocols for the GreeneStone Muskoka Treatment Center and worked together on the policies and procedures for the operation of the treatment center.treatmentcenter. 

In August 2011, the GreenestoneGreeneStone Muskoka Treatment Center began providing addiction treatment services and took its first paying clients. The GreeneStone Muskoka Treatment Center offers clients a 45-day45day program that costs between $27,000CAD$27,000 and $37,000 for the stay.CAD$37,000 per treatment period. Treatment is individualized, and afterproviding the first two weeks of treatment, the client is assessedwith an assessment thereafter and extended treatment is often, recommended.a recommendation to extend treatment. The treatment offered is concurrent, and thewith addiction and co-occuringco-occurring mental health disorders are treated at the same time. The center has a 36 bed capacity and can easily be expanded beyond that capacity. Treatment consists of group and individual therapy, as well as recreation therapy. Clients are taught about nutrition and have excellentare provided with nutritious food while in treatment.intreatment.

In November of 2011, the CAG was disbanded after achieving theirits goals. In March 2012, Dr. Blank and two contract therapists, all of whom were from the United States, were replaced by a more permanent team of Canadian doctors and therapists from Canada.

Toronto Aftercare and Intensive Out-Patient Addiction Treatment Program

In March 2012, the Company entered into a lease for premises at 39 Hazelton Avenue in Toronto, Ontario for the operation of an aftercare and intensive out-patient addiction treatment program. The Company, through its subsidiary Greenestone Muskoka, hired addiction therapist Andrew Galloway on April 1, 2012, to run the outpatient operation (“Greenestone Yorkville”). This operation provides follow up and aftercare services for clients of the Greenestone Muskoka Treatment Center, as well as clients that have been to other treatment centers. Clients attend these services twice per week and are billed monthly. Greenestone Yorkville also offers one-on-one counseling for clients that have not been to treatment centers and those that have. The outpatient program for this center is designed for those clients that are able to maintain sobriety while still living at home. The company moved from Hazelton Avenue to Pleasant Boulevard in early 2013, with the same services being offered. Greenestone St. Clair currently has four employees.

North York Endoscopy Unit

The North York Endoscopy unit which runs at the Company’s North York location has been operating since June 25, 2010. The primary business at this location is the performance of gastroscopy and colonoscopy procedures. Patients are referred to the clinic by family physicians for the purpose of exploratory endoscopy services. Patients come to this location for an initial consult with a specialist that will perform the procedure. Once the specialist determines if the patient is a candidate for the out-of-hospital procedure, the patient will be scheduled for a procedure. Approximately 15 patients will be scheduled per specialist each day. The Company has two procedure rooms set up, with a third operational in Q1 2014. The procedure team includes a recovery room nurse, a procedure room nurse, an anesthetist, a specialist and an equipment technologist. This team is assembled from a pool of approximately thirty nurses, doctors and technologists. Procedures may take anywhere from fifteen minutes to one

hour. The procedure team is only scheduled when procedures are scheduled. The clinic employs an office manager and four full time staff that work in reception and manage the administration of the clinic and one full time nurse manager.

The Ontario government established the need to approve out-of-hospital premises for those clinics using any form of sedation. The responsibility was put on to the College of Physicians and Surgeons to approve or license these clinics and the North York clinic was a clinic that would require a Level II certification. This process of certification was instituted after the clinic opened and was inspected in 2012.

Endoscopy Unit at the Albany Medical Clinic

On January 31, 2011, 1816191 entered into an agreement with the Albany Medical Clinic which provided for 1816191 to manage and run the endoscopy unit in the Albany Clinic’s Toronto, Ontario location. The College of Physicians and Surgeons of Ontario inspected and approved the facility in December 2011, and endoscopy procedures at this facility began in January 2012.

The endoscopy clinic spans a 911 sq. ft. area and features one endoscopy suite a recovery area and one office. The North York location administration staff take care of the Albany Clinic and just the procedure team is employed on days when there are procedures at the Albany Clinic. This arrangement allows for 1816191 to pay rent to the Albany Clinic only on days when there are procedures taking place.

The Albany Clinic is a large medical clinic that employs over 20 family physicians. These physicians are the primary referral source for the endoscopy unit at the Albany Clinic.

Castelli Clinic

In August 2013 the Company assumed control of the Castelli clinic from Dr. Mario Castelli. Dr. Castelli, a gastroenterologist, ran his own endoscopy clinic up until 2012 and shut down due to the high cost of CPSO compliance. He continued with his consultations and did his procedures at other clinics including the Company's clinics. His consultation practice is what the Company purchased in 2013. Dr. Castelli continues to do consultations at the clinic and does all of his procedures at the Company's two endoscopy clinics.therapists.

Employees

As of December 31, 2013, the Company2015, GreeneStone Healthcare Corporation had no employees and its subsidiary GreeneStone Clinic Muskoka had approximately 60 employees working for its two subsidiaries, not including doctors. Two management employees were split between the two subsidiaries. There were 5 full time employees working for 1816191 and 15 part time employees working on any procedure day. There were 37 full time employees working for Greenestone Muskoka.32 employees.

Marketing

In 2014, the Company has implemented a formal marketing plan. The two primary lines of business are the endoscopy business and the addiction treatment business. They require unique initiatives for marketing. The endoscopy business relies heavily on family physician referrals. The Company has determined that the most effective method of securing referrals is to form one-on-one relationships between the physicians and the specialists. This is a time consuming process, but since it has started in 2012, the Company has steadily grown the base of referring physicians.

The specialists have made time available to meet with these physicians on a regular basis. The family physicians can be reminded more often what the capabilities of the clinic are and who is working as the specialists in the clinic by way of follow up emails, letters and faxes. It may prove difficult to market to individuals since they may ask their doctor about the services and then their doctor may refer them to another clinic. It is not cost effective to do this. The important distinction between the endoscopy service and the addiction treatment business is that the endoscopy business is an Ontario Health Insurance Plan (“OHIP”) insured service. As such, it can only be approved if there is a referring physician on the case.

The addiction treatment business operates as a private pay service. The customers get no government or OHIP subsidy to come toattend our treatment facility. The decision to attend the treatment center is made by each individual, makes the decision and somaking it is important to market our services to the individual. There are a large number of mental health professionals that refer to the treatment center and it is important towe ensure that we maintain contact with and market to these professionals. This is the same type ofOur marketing efforts are long processterm processes of establishing relationships with theserelevant professionals and our treatment staff. This can be done atWe use industry specific conferences and functions where the treatment professionals come together and make individual contact betweento network with these professionals.

The treatment business gets aboutApproximately 70% of itsour clients are sourced via the Internet. This wasis the single biggest focus for theour marketing team, in 2013 and continues into 2014. Search Engine Optimization (SEO) is very important and the Company aggressively seeks the maximum cost/benefit relationships with specialist firms that can help in this effort.field. We believe our marketing efforts in 2013 wereare successful and effective using this model. We do not believe that it is cost effective to market through traditional channels such as TV, radio or print advertising at this time.effective.

Competition

Endoscopy – There are numerous private endoscopy clinics in the Greater Toronto Area including endoscopy suites in all of the local area hospitals. Referring physicians have choices where they can refer their patients. Most hospitals have very long wait times and most of the private clinics have shorter wait times. The North York, Albany and Bay Street clinics feature traditionally short wait times, which is an important advantage especially to procedures that are urgent. Easy access is also an issue with hospitals as they are not located close to transit and have high parking fees. Both of our endoscopy clinics are next to subway stations and our North York clinic has free parking. The hospitals generally have the newest generation of equipment while many of the private clinics will have third or fourth generation equipment. The Company clinics have 2^nd generation equipment that is no more than three or four years old and well maintained. There is an expectation that government spending cuts will eventually push the endoscopy clinics out of the hospitals into privately run out-of-hospital facilities. The government will want only well established and larger centers to take over this business and the Company is well positioned to grow from this expected trend.

Addiction Treatment –The private pay addiction treatment business is not well established in Canada and there are only a handful offew competitors that provide these services. Two of the biggest providers are also government hospital licensed facilities, that do both OHIP insured services and privately paid services. Most hospitals have a mental health unit that can handle detoxification, but do not provide addiction treatment programs. There is only one large competitor that is verywith a similar offering to GreeneStone Muskoka, and they arelocated on the west coast of Canada. There are hundreds of private paid facilities in the United States and they would be thecollectively, represent a major competitor for those with the highest ability to pay for service. Serviceaddiction services. Addiction service facilities in the United States that offer the same level of treatment that is offered by theour Company isare generally 50% to 100% more expensive.expensive than we are. We believe that travel to the United States by thosepotential customers with potential travel restrictions as well as athe higher cost will eliminateeliminates many U.S. facilities as competition.

Environmental Regulations

The Company is not currently subject to any pending administrative or judicial enforcement proceedings arising under environmental laws or regulations. Environmental laws and regulations may be adopted in the future which may have an impact upon the Company’s operations.

Item 1A. Risk Factors.Factors.

Not applicable because we are a smaller reporting company.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.1B. Unresolved Staff Comments

none.

Item 2. Properties.

Greenestone Executive Offices and Endoscopy Unit

The Company’s executive offices are located at 5734 Yonge Street, Suite 300, Toronto, Ontario, Canada M2M 4E7. The space is4E7, consisting of approximately 8,000 sq. ft. and takes up the entire third floor of the building (the “Yonge Street Facility”). This facility iswas leased by 1816191 and the primary activity at this facility iswas endoscopy procedures with expansion being done in late 2014procedures. The Company entered into a sublease for office space at these premises from 1816191 on a month to enable other surgical procedures such as plastic surgery. The lease expires on July 31, 2018.month basis.

Greenestone Muskoka Treatment Facility

The Bala Facility is in Bala, Ontario at 3571 Highway 169. The property is 43 acres in size and contains approximately 48,000 square feet of buildings. The property is leased from Cranberry and theCove for a term of the lease is for five years, with renewal options at the end of the firstwhich commenced on April 1, 2014 and second years of the five year term. The lease is a net lease and the Company has a non-disturbance agreement from the mortgage lenders on the propertyan option to extend for the whole term.an additional three years. Further, the Company has an option to purchase the property at any time during the term of the lease at appraised values with a minimum purchase value of $4.5for $10.0 million dollars and a maximum purchase valueright of $8.0 million dollars duringfirst refusal in the first two yearsevent of the term and $10.0 million dollars during the last three years of the term.a sale to a third party.

Albany Medical Clinic

On January 11, 2011, 1816191 (dba Greenestone Clinic) entered into a lease with Albany Building Corporation, pursuant to which the Company leases an approximate 1,000 sq. ft. space at the Albany Medical Clinic, located at 807 Broadway Avenue in Toronto, Ontario, on Saturdays of each week for the performance of endoscopy procedures. According to the terms of the three-year lease, the Company pays $500 per day of use, such lease payment to increase over the term of the lease.

Castelli Clinic

The company has a month to month agreement with the Lockwood Clinic.

Toronto Aftercare and Addiction Treatment Program

The Company entered into a 5 year lease commencing July 1, 2013 at 39 Pleasant Boulevard in Toronto, this space will house the addiction treatment center, which was previously at Yorkville location, and also serve as head office for executive staff of the addiction treatment team.

Item 3. Legal Proceedings.Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 4. Mine Safety Disclosures.

Not applicable.

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)Market Information

The Company’s common stock is quoted on the Over-the-CounterOver-the-counter Bulletin Board (the “OTCBB”) under the symbol “GRST”. The Company was sponsored by the market maker Wilson Davis & Co. from Salt Lake City, Utah, which filed a Form 15c2-11 application with the Financial Industry Regulatory Authority (“FINRA”) for the Company in 2011. This application was approved by FINRA in February 2012, and Wilson Davis & Co. first quoted the stock in March 2012.

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Quotations on the OTCBB reflect bid and ask quotations, may reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.

(b)Holders

The number of record holders of the Company’s common stock as of December 31, 2013,April 10, 2015, was approximately 472. The Depository Trust and Clearing Corporation held 3,671,326 shares for approximately 228 shareholders as of December 31, 2013.149.

(c)Dividends

We have never paid any cash dividends on our common shares, and we do not anticipate that we will pay any dividends with respect to those securities in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion development of our business.\

(d)Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2015, there were 10,000,000 common securities authorized for issuance under the Company’s 2013 Stock Option Plan (which was previously approved by securityholders). 

(d) Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2013, no securities were authorized for issuance under compensation plans previously approved by security holders.

Recent Sales of Unregistered Securities

In the securities transactions described below, shares were issued pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended, afforded the Company under Section 4(a)(2) promulgated thereunder due to the fact that the issuance did not involve a public offering because of the insubstantial number of persons involved in each offering, the size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(a) (2) of the Securities Act for these transactions.

The following summaries areis a summary of the securities transactions during the fiscal year ended December 31, 2013:2015:

On May 13, 2013 the company entered into a promissory note with JMJ Financial where the company received $75,000. If the note was not repaid within 180 days JMJ Financial could convert into company shares the principal amount plus interest based on a formula of the lower of 30 cents or 70% of the lowest trade price in the 25 trading days previous to conversion.In November and December 2013 JMJ converted $28,792 of this note to receive 800,00 shares.

On April 2, 2013,January 15, 2015 the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc., a Delaware corporation (“Asher”) whereby the Company entered into a Convertible Note with Asher. The Note has since been fully paid and the Securities Purchase Agreement terminated and the Convertible Note cancelled.

On July 25, 2013 the Company entered into another Securities Purchase Agreement with Asher which also contained a Convertible Note for $63,000 bearing an interest rate of 8% and is due and payable on April 15, 2014, with the option to prepay. After 180 days from the issuance of the Convertible Note, the principal balance is convertible intoissued 300,000 shares of the Company’s common stock. Thestock to JMJ pursuant to the conversion of a convertible note totaling US$8,117 at a conversion price is equal toof US$0.027 per share.

On March 31, 2015, the Market PriceCompany cancelled 2,909 shares of the Company’s common stock as definedpursuant to a convertible note conversion to recognize the effect of the currency exchange difference in the Convertible Note multiplied by 61%. The Note has since been fully paid and the Securities Purchase Agreement terminated and the Convertible Note cancelled.note conversion.

On December 24, 2013March 31, 2015, the company sold 500,000Company issued 250,000 shares to Kirk Moulton at a share price of 8.5 cents a share and also 500,000 warrants that are exercisable for three years from December 19, 2013, at an exercise price of US$0.15 per share.

On December 24, 2013 the company sold 1,000,000 shares to Irwin Zalcberg at a share price of 8.5 cents a share and also 1,000,000 warrants that are exercisable for three years from December 19, 2013, at an exercise price of US$0.15 per share.

Rule 10B-18 Transactions

During the year ended December 31, 2013, there were no repurchases of the Company’s common stock byand 106,000 of the Company.Company’s Series B Preferred stock to Castelli as compensation for services rendered totaling$56,096.

On April 30, 2015, the Company issued 1,060,000 shares of the Company’ common stock to Castelli upon conversion of the 106,000 Series B Preferred stock, mentioned above, at a conversion ratio of10:1.

Penny Stock

The U.S. Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Item 6. Selected Financial Data.

Not applicable becauseas we are a smaller reporting company.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This annual report on Form 10-K and other reports filed by Greenestone Healthcare Corp. (“we,” “us,” “our,” or the “Company”) from time to time with the SEC contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates. This discussion and analysis should be read in conjunction with the Company’s financial statements and accompanying notes to the financial statements for the year ended December 31, 2013.2015.

Plan of Operation

During the next twelve months, the Company plans to continue and expand its operations as a provider of addiction and after-care treatment services, as well as a provider of endoscopy and other specialized medical procedures at its various locations.services. The Company plans to focus on the growth of its existing businessaddiction and aftercare treatment units while simultaneously paringreducing costs in current operations.

The company has announced plans to merge its addiction treatment sideCompany finalized the terms for the acquisition of the business ( Greenestone Clinicproperty currently leased by the Company. The property, which is the location of GreeneStone's Muskoka ) into a private entity in exchange for cash and shares of the private entity. This letter of intent is non-binding and the company has agreed to that the transaction will be a simultaneous signing and closing once all aspects of the transaction have been agreed to. This could potentially be finalized in Q1 or Q2 of 2014. If this transaction is completed the company will no longer be a direct operator of addiction and mental health services but will be a minority partner in a privately held addiction business which in total will be much larger than it is currently operation. The company will look to potentially operate or hold interest addiction treatment businesses in the United States.

Dependant on the merger occurring, a non binding letter of intent to acquire and hold the Bala property that its addiction treatment center, encompasses approximately 48,000 square feet of buildings on 43 acres and is operatedadjacent to Lake Muskoka in which will be leased outOntario. The Company expects this deal to new private entity.

In 2014,close by the Company plans to aggressively market the current endoscopy segmentsecond quarter of the business to family practitioners, as they are a major referral source for2016 financial year, once the Company’s business. The Company also plans to begin a marketing campaign focused on corporations and insurance companies as referral sources, as well as create an internet-based marketing campaign. Further, the Company plans to add additional specialist offices at the Company’s North York location, as well as an operating room, thereby providing the opportunity to deliver additional services to patients and increase overall revenue.appropriate funding has been raised.

The Company believes thatplans to expand its addiction treatment business with acquisitions. In 2014, the planned mergerCompany entered into a non-binding letter of intent with Venture Academy to acquire teen addition treatment centers in Ontario and acquisition of the real estate, together,British Columbia. The Company will provide approximately $4.5 million of new financingneed to the company. This is a combination of cash from the merger and new debt on the acquired property. This will be enough to address the working deficiency thereby stabilizing the business and itraise additional capital for acquisitions.

Ifthis acquisition, which would require the merger and property acquisition does not happen the company believes it will need $3.5m to fund operations for the next 12 months, this estimate includes (i) $500,000 for marketing; (ii) 2,500,000 for tax obligations; and (iii) $500,000 for general costs .

The Company, in an attempt to hire top talent in the addition treatment segmentsale of its business, hired excess employees in the start-up phase in 2012. The Company has already replaced its initial U.S. based clinical team with a permanent Canadian based team, the best of which have been retained as the core of the Company’s current clinical team. We believe that the additional reductions in staffing the Company plans to make to its existing operations in 2014 in order to increase operational efficiency will result in a net reduction in payroll of approximately $500,000 in 2014 compared to 2013. This plan is what will take place if planned mergerequity and/or debt securities and acquisition does not happen.

If the merger and property acquisition do not happen then In addition to planned staff reductions, the Company plans to reduce the rent expenses in 2014. On May 1, 2014 the company plans to reduce the rent it is paying on the Bala facility by a renegotiation on the existing lease agreement.securing bank financing.

Results of Operations

For the Fiscal Year Ended December 31, 2013,2015, Compared to the Fiscal Year Ended December 31, 20122014

Revenue

During the year ended December 31, 2013, revenues increased to $ 5,962,304 from $ 5,540,909 during the year ended December 31, 2012, an increase of $ 421,395. This increase is mainly attributable to a steady increase in business volume since the Company began operations. A large portion of revenue earned was through endoscopy procedures paid for by the Ontario Health Insurance Plan (“OHIP”), a provincially funded health plan backed by the

Ontario government.Revenue

We had revenues totaling $3,138,878 and $3,416,342 for the years ended December 31, 2015 and 2014, respectively, a decrease of $277,464 or 8.1%. We operate in Canada and our functional currency is the Canadian Dollar. Our revenue, in Canadian Dollars increased from CAD$3,963,274 to CAD$4,003,090 for the years ended December 31, 2014 and 2015, respectively, an increase of $39,816 or 1.0%. The decrease in revenue in US$ terms is attributable to the relative strength of the US$ against the CAD$ during the current year, the average exchange rate between the CAD$ and the US$ has weekend from $0.9051 in the prior year to $0.7833 in the current year, a decrease in the average exchange rate of 15.5%. The Company believes that revenue will continuegrow over the next year.

Operating Expenses

Operating expenses totaled $3,459,450 and $4,757,851 for the years ended December 31, 2015 and 2014, respectively, a decrease of $1,298,401 or 27%. The decrease in operating expenses in US$ terms is attributable to grow steadilythe relative strength of the US$ against the CAD$ during the current year, the average exchange rate between the CAD$ and the Company will become more profitable as mostUS$ has weekend from $0.9051 in the prior year to $0.7833 in the current year, a decrease in the average exchange rate of its15.5%. The decline in the currency exchange rate accounts for approximately $530,156 of the differential. The non-currency decrease is primarily attributed to a reduction in labor of $903,217 due to a reduction in labor overhead costs such as rent and salariesthe cessation of aftercare services.  

Operating loss

The operating loss totaled $320,572 and wages are relatively fixed,$1,341,509 for the years ended December 31, 2015 and therefore will reduce as2014, respectively, a percentage as business volume grows.decrease of $1,020,937, primarily due to the decline in operating expenses explainedabove.

CostOther expense

Other expense of Revenue$457,913 consists primarily of the provision of $446,476 raised against the receivable on the sale of the Endoscopy clinic. This receivable was fully provided for as there were no payments received in accordance with the agreement or any payments received as of the date hereof.

Interest expense

Interest expense totaled $192,104 and $310,583 for the years ended December 31, 2015 and 2014, respectively, a decrease of $118,479 or 38.1%. The costdecline consists of revenue represents payments madean approximate decline of $29,871 due to the doctorsdeterioration in the exchange rate and a reduction in the interest bearing convertible notes which were carried in the prior year, offset by an increase in interest expense attributable to interest on payroll and Harmonized SalesTax(“HST”), and accruals for endoscopy procedures performed. These amounts are calculated based on amounts billed to the Ontario Ministry of Health under the Ontario Health Insurance Plan (OHIP). In general, the doctor performing the actual medical procedure will receive approximately 55% of the amount received from OHIP adjusted for amounts deducted received in facility fees.income taxpenalties.

Gross ProfitForeign exchange movements

Foreign exchange movements of $184,586, represent the realized exchange loss on monetary assets and liabilities settled during the current year as well as mark to market adjustments on monetary assets and liabilities reflected on the balance sheet and denominated in Canadian Dollars.

Net loss from discontinued operations

During the prior year, the Company disposed of its Endoscopy Clinic to a related party. The net loss from discontinued operations amounted to $248,181.

Net Loss

Net loss totaled $1,155,176 and $1,900,273 for the years ended December 31, 2013, gross profits increased2015 and 2014, respectively, a decrease of $745,097, primarily due to $ 4,705,820 from $ 4,490,907 during the decrease in operating expenses, the sale of the Endoscopy unit in the prior year endedand the decline in interest expense, discussed above.

Contingency related to outstanding payroll tax liabilities:

The Company was delinquent in filing previous payroll tax returns resulting in taxes, interest and penalties payable at December 31, 2012, an increase2015 and 2014. As of $ 214,913. This increase is mainly attributable to an increase in business volume sinceDecember 31, 2015 and 2014 as part of Taxes Payable, the Company began operations.

Operating Expenses

Operating expenses forhas payroll tax liabilities of approximately $2,429,032 and $2,065,000, respectively due to various taxing authorities on the year ended December 31, 2013, were $ 6,336,876, comparedconsolidated balance sheets. If the Company does not satisfy these liabilities, the taxing authorities may place liens on its bank accounts which would have a negative impact on its ability to $ 5,975,260 foroperate. Further, the year ended December 31, 2012, an increase of $ 361,616. This increase in expenses is mainly attributableactual liability may be higher due to increased interest expense incurred on short term debt and interest on payroll and HST. The increase in expenses is also attributable to higher professional fees incurred relating to investor relations. Total operating expenses foror penalties assessed by the year ended December 31, 2013, primarily consisted of salaries and wages to medical support staff of $ 3,118,718; rent payments of $ 1,016,387; management fees of $ 233,016; and general and administrative expenses of $ 601,863.

Net Loss

During the year ended December 31, 2013, the net loss increased to ($ 1,631,056) from ($ 1,484,353) during the year ended December 31, 2012, an increase of $146,703. This increase is attributable to the interest charges and professional fees mentioned above.taxing authorities.

Liquidity and Capital Resources

The following table summarizes working capital at December 31, 2013,2015, compared to December 31, 2012.2014.

Over the next twelve months we believeestimate that the company requires $3.5Mwill require $3.5million to cover the working capital deficit and properly market and promote the company. If the proposed merger does not go through theThe company will have to raise equity or secure debt. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, the Company’s liquidity risk is assessed as high and remains unchanged from the prior year.

Accounts receivable at December 31, 2013 and December 31, 2012, was $440,918 and $ 380,043, respectively, representing an increase of $ 60,875. The Company is economically dependent on and earns a significant portion of revenues from the Ontario Ministry of Health for its ability to carry out its normal activities. These revenues account for approximately 38% of the Company’s consolidated sales in the twelve month period ending December 31, 2013.

GREENESTONE HEALTHCARE CORPORATION

DECEMBER 31, 2013

(Stated in U.S. $)

CONTENTS

REPORT OF INDEPENDANT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of

GreeneStone Healthcare Corporation

We have audited the accompanying consolidated balance sheet of GreeneStone Healthcare Corporation as of December 31, 2013 and December 31, 2012 and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above presents fairly, in all material respects, the consolidated financial position of GreeneStone Healthcare Corporation as of December 31, 2013 and December 31, 2012, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the company will continue as a going concern. As discussed in consolidated financial statement note 2, the company has incurred losses since inception. This raises substantial doubt about the company’s ability to meet its obligations and to continue as a going concern. Management’s plans in regard to this matter are described innote 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“Jarvis Ryan Associates”

Mississauga, Ontario, Canada

Item 8. Financial Statements and Supplementary Data.

GREENESTONE HEALTHCARE CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US$ unless otherwise indicated)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

StockholdersofGreeneStone HealthcareCorporation

Wehave auditedtheaccompanying consolidated balancesheetsofGreeneStone Healthcare Corporation (“the Company”) asofDecember31, 2015and2014andtherelatedconsolidatedstatementsof operationsandothercomprehensive loss, stockholders’ deficit and cash flows fortheyearsendedDecember31, 2015and2014.Theseconsolidatedfinancial statementsaretheresponsibilityoftheCompany’s management.Ourresponsibility is to express anopinionontheseconsolidatedfinancial statements basedonouraudit.

Weconducted our auditin accordancewith thestandardsofthePublic CompanyAccountingOversight Board (United States). Those standards requirethatweplanand performthe audittoobtainreasonable assuranceabout whether thefinancial statementsarefreeofmaterial misstatement. The Company isnotrequired tohave,norwereweengagedtoperform,anauditof itsinternal controloverfinancial reporting.Our audit includedconsiderationofinternal controloverfinancial reporting as a basis fordesigningauditproceduresthatareappropriate inthecircumstances,but notforthepurposeofexpressing anopinionontheeffectivenessoftheCompany’s internal controloverfinancial reporting. Accordingly,weexpressnosuchopinion.An auditalsoincludesexamining, ona test basis,evidence supportingtheamounts and disclosures inthefinancial statements, assessingthe accountingprinciplesused and significant estimates madebymanagement, aswellasevaluating theoverall financial statement presentation.Webelieve thatour auditprovidesa reasonable basis forouropinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of GreeneStone Healthcare Corporation as of December 31, 2015 and 2014 and the results of its operations and its cash flows for the years ended December 31, 2015 and 2014 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has sustained net losses and has a working capital and stockholder’s deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ RBSM LLP

New York, NY 10022

April 14, 2016

The accompanying notes are an integral part of the consolidated financial statements

GREENESTONE HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of the consolidated financial statements                

The accompanying notes are an integral part of the consolidated financial statements

The accompanying notes are an integral part of the consolidated financial statements

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

Notes to Consolidated Interim Financial Statements1.

1. Nature of businessBusiness

GreeneStone Healthcare Corporation (the “Company”) was incorporated under the laws of the state of Colorado, USA, on April 1, 1993. Effective May 2012, the Company changed its corporate name to GreeneStone Healthcare Corporation from Nova Natural Resources Corporation. As at December 31, 2013,2015 and 2014, the Company owns 100% of the outstanding shares of each of 1816191 Ontario Limited and Greenestone Clinic Muskoka Inc., both of which werewas incorporated in 2010 under the laws of the provinceProvince of Ontario, Canada. 1816191 Ontario Limited and Greenestone Clinic Muskoka Inc. provideprovides medical services to various patients in clinicsa clinic located in two regions in Ontario, Canada; the city of Toronto and the regional municipality of Muskoka. These consolidated interim financial statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP").

2.Summary of Significant Accounting Policies

2. Going concern

a)Financial Reporting

The Company’s consolidated interimCompany prepares its financial statements have been prepared in accordanceconformity with US GAAP applicableaccounting principles generally accepted in the United States of America. Revenues and expenses are reported on the accrual basis, which means that income is recognized as it is earned and expenses are recognized as they are incurred.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that i) recorded transactions are valid; ii) valid transactions are recorded; and iii) transactions are recorded in the proper period in a going concern,timely manner to produce financial statements which assumes thatpresent fairly the financial condition, results of operations and cash flows of the Company will be able to meet its obligations and continue its operationsfor the respective periods being presented.

b)Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the normal courseUnited States of business. As at December 31, 2013America requires management to make estimates and assumptions that affect the Company has a working capital deficiency of $3,706,385 ( 2012 : $4,015,405 ) and accumulated deficit of $11,934,958 ( 2012: 10,303,902 ). Accordingly, the Company will be dependent upon the raising of additional capital through placement of common shares, and, or debt financing in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These consolidated interim financial statements do not include any adjustments to thereported amounts and classifications of assets and liabilities that might be necessary shouldand disclosure of contingent assets and liabilities at the Company be unable to continue operations.date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

3. Significant accounting policiesc)Principals of consolidation and foreign currency translation

The accounting policies of the Company are in accordance with US GAAP applied on a basis consistent with that of the preceding year. Outlined below are those policies considered particularly significant.

a) Principals of consolidation

The accompanying consolidated interim financial statements include the accounts of the Company, its two subsidiaries, as noted in note 1.subsidiary. All inter-company transactions and balances have been eliminated on consolidation.

The Company’s subsidiariessubsidiary’s functional currency is the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, "Foreign“Foreign Currency Translation" as follows:

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ deficit as a component of accumulated other comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss).

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

c)Principals of consolidation and foreign currency translation (continued)

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.

3. Significant accounting policies (cont’d)The relevant translation rates are as follows: For the year ended December 31, 2015 a closing rate of CAD$1.0000 equals US$0.72250 and an average exchange rate of CAD$1.0000 equals US$0.7833.

b) d)Revenue recognitionRecognition

The Company recognizes revenue from the rendering of services when they are earned; specifically, when all of the following conditions are met:

In particular, the Company recognizes:

Deferred revenue represents monies deposited by the patients for future services to be provided by the Company. Such monies will be recognized into revenue as the patient progresses through their treatment term.

c) Use of estimates

The preparation of consolidated interim financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the recognition, measurement and disclosure of amounts reported in the consolidated interim financial statements and accompanying notes. The reported amounts, including depreciation, allowance for doubtful accounts, inventory, accounts payable and accrued liabilities and note disclosures are determined using management's best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results will differ from such estimates.e)Non-monetary transactions

d) Non-monetary transactions

The Company’s policy is to measure an asset exchanged or transferred in a non-monetary transaction at the more reliable measurement of the fair value of the asset given up and the fair value of the asset received, unless:

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

e) 2.Summary of Significant Accounting Policies(continued)

f)Cash and cash equivalents

The Company's policy is to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to overdrawn and term deposits with a maturity period of three months or less from the date of acquisition.

The Company has $94,020$72,250 (CAD$100,000) in restricted cash held by their bank to cover against the possibility of credit card charge backs, for services not performed.

f) g)Accounts receivable

The Company's policy is to disclose accounts receivable net of a reserve for doubtful accounts.

3. Significant accounting policies (cont’d)

��

g) Inventory

Inventory is valued at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. At December 31, 2015 and December 31, 2014, the Company has a $0 and $27,294 allowance for doubtful accounts, respectively.

h)Financial instruments

The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm's length transactions. The Company subsequently measures all its financial assets and financial liabilities at amortized cost.

Financial assets measured at amortized cost include cash and accounts receivable.

Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, harmonized sales tax payable, withholding taxes payable, convertible notes payable, loan payable short term loan and related party notes.

Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income. The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

The Company does not have assets or liabilities measured at fair value on a recurring basis at December 31, 20132015 and December 31, 2012.2014. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis during the twelve month periodyear ended December 31, 20132015 and December 31, 2012.2014.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

i) Fixed assetsPlant and equipment

Fixed assets are recorded at cost. Depreciation is calculated on the declining balance method at the following annual rates:

Leasehold improvements are depreciated using the straight-line method over the term of the lease. Half rates are used for all fixed assets in the year of acquisition. Leasehold improvements-work in process are not amortized until fully completed and in use.

3. Significant accounting policies (cont’d)

j)Leases

Leases are classified as either capital or operating leases. Leases that transfer substantially all of the benefits and inherent risks of ownership of property to the Company are accounted for as capital leases. At the time a capital lease is entered into, an asset is recorded together with its related long-term obligation to reflect the acquisition and financing. Equipment recorded under capital leases is amortized on the same basis as described above. Payments under operating leases are expensed as incurred.

k)Income taxes

The Company uses the future income tax method to accountaccounts for income taxes.taxes under the provisions of ASC Topic 740,“Income Taxes”. Under this method, future incomeASC Topic 740, deferred tax assets and liabilities are determined based onrecognized for the differencefuture tax consequences attributable to differences between the financial statement carrying valueamounts of existing assets and liabilities and their respective tax bases. Deferred income taxes are provided using the liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax basisbases of theexisting assets and liabilities. AnyThe tax basis of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in income in the netperiod of change. A valuation allowance is provided to reduce the amount of future incomedeferred tax assets and liabilitiesif it is included in income. Future incomeconsidered more likely than not that some portion of, or all of, the deferred tax assets will not be realized.

ASC Topic 740 contains a two-step approach to recognizing and liabilities are determined based on enactedmeasuring uncertain tax positions taken or substantively enacted tax rates and laws which are expected to applybe taken in a tax return. The first step is to determine if the Company's taxable income for the periods in which the assets and liabilities will be recovered. Future income tax assets are recognized whenweight of available evidence indicates that it is more likely than not that theythe tax position will be realized.sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal 2001, through 2013 are subject to audit or review by the US tax authority, whereas fiscal 2010 through 2013 are subject to audit or review by the Canadian tax authority.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

l) EarningsLoss per share information

FASB ASC 260,260-10, “Earnings Per Share” provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) applicable to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. BasicThe effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted loss per share wasis the same atfor the reporting dates, as there were no common share equivalents outstanding.years ended December 31, 2015 and 2014.

m) ShareStock based expensescompensation

ASC 718718-10 "Compensation - Stock Compensation" codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments awarded to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights that may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "Equity - Based Payments to Non-Employees" which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.

4. Recently adopted accounting pronouncementsn)Legal proceedings

In December 2011 theThe costs of prosecuting and defending legal actions are expensed as incurred.

o)Accounting for uncertainty in income taxes

The Financial Accounting Standards Board “FASB”has issued new guidance on Accounting for Uncertainty in Income Taxes, FASB ASC 740, Income Taxes which prescribes a recognition threshold and a measurement attribute for the disclosures about offsetting assetsfinancial statement recognition and liabilities. The new guidance enhances disclosures required by US GAAP by requiring improved information about financial instruments and derivative instruments. The new guidance ismeasurement of tax positions taken or expected to be adopted for annual reporting periods beginning on or after January 1, 2013 and interim periods withintaken in a tax return. For those annual periods. The new guidance isbenefits to be retrospectively applied for all comparative periods presented.recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Companyamount recognized is measured as the largest amount of benefit that has reviewed and adopted this guidance. The Companya greater than 50% likelihood of being realized upon ultimate settlement. Management has concluded that the result of adoptingCompany has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance does not have a material impact onguidance. When applicable, the consolidated interimCompany will include interest and annual financial statements.penalties related to uncertain tax positions in income tax expense.

5. GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

p)Derivatives

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Black-Scholes Option Pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the statements of operations. Inputs into the Black-Scholes Option Pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk-free interest rate and the estimated life of the financial instruments being fair valued.

If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

q)Recent accounting pronouncements

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01 to have a material effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

In April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, is to simplify presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU does not affect the recognition and measurement guidance for debt issuance costs. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early application is permitted. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

q)Recent accounting pronouncements (continued)

In April 2015, FASB issued Accounting Standards Update No. 2015-05,Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees paid in a Cloud Computing Arrangement, provides guidance to customers about whether a cloud computing arrangement includes a software license. If such an arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account for it as a service contract. For public business entities, the ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early application is permitted. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

In April 2015, FASB issued Accounting Standards Update No. 2015-06,Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions, specifies that, for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a drop down transaction should be allocated entirely to the general partner. In that circumstance, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU 2015-07”). This guidance eliminates the requirement to categorize investments within the fair value hierarchy if their fair value is measured using the net asset value (“NAV”) per share practical expedient in the FASB’s fair value measurement guidance. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015 The Company does not expect the adoption of ASU 2015-07 to have a material effect on its consolidated financial statements.

In July 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost.An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

q)Recent accounting pronouncements (continued)

In August 2015,FASB issued Accounting Standards Update (“ASU”) No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-15, “Interest - Imputation of Interest (Subtopic 835-30).” ASU 2015-15 provides guidance as to the presentation and subsequent measurement of debt issuance costs associated with line of credit arrangements. We do not expect the adoption of ASU 2015-15 to have a material effect on our financial position, results of operations or cash flows.

In September 2015,FASB issued Accounting Standards Update (“ASU”) No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments”requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not been issued. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not yet been made available for issuance. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In November 2015, the FASB issued (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes. Currently deferred taxes for each tax jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability on the balance sheet. To simplify the presentation, the new guidance requires that deferred tax liabilities and assets for all jurisdictions along with any related valuation allowances be classified as noncurrent in a classified statement of financial position. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. The Company has adopted this guidance in the fourth quarter of the year ended December 31, 2015 on a retrospective basis. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows, and did not have any effect on prior periods due to the full valuation allowance against the Company’s net deferred tax assets.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

q)Recent accounting pronouncements (continued)

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance.

Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

r)Financial instruments

The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company'sCompany’s risk exposure and concentrations at the balance sheet date, December 31, 2013.2015 and 2014.

(a) I)Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that subject the Company to credit risk consist primarily of accounts receivable.

With respect to accounts receivable of $440,918 (December 31, 2012: $380,043), the Company receives most of its revenues in 1816191 Ontario Inc. from the Ontario Ministry of Health and Long-Term Care, a provincially regulated program (note 6). The Company performs frequent reviews of billing reports submitted to the Ontario Ministry of Health and Long-Term Care, to ensure accuracy and filing on a timely basis. Allowances are provided for potential losses that have been incurred at the balance sheet date.

Credit risk associated with accounts receivable of Greenestone Clinic Muskoka Inc. is mitigated due to balances from many customers, as well as through credit checks and frequent reviews of receivables to ensure timely collection. In addition, there is no concentration risk with the Greenestone Clinic Muskoka Inc. accounts receivable balance since balances are due from many customers.

In the opinion of management, credit risk with respect to accounts receivable is assessed as low, not material and remains unchanged from the prior year.

(b) II)Liquidity risk

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. The Company is exposed to liquidity risk through its working capital deficiency of $3,706,385$(3,397,266) and accumulated deficit of $11,934,958.$(20,721,205). As disclosed in note 2,3, the Company will be dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from the prior year.

In the opinion of management, liquidity risk associated with bank indebtedness of $ 126,073 (December 31, 2012: $70,803) is assessed as low. The Company ensures that financial liabilities are placed with two financial institutions both with a high credit rating in order to mitigate the risk.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

(c) 2.Summary of Significant Accounting Policies(continued)

r)Financial instruments (continued)

III)Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risk: interest rate risk, currency risk, and other price risk. The Company is exposed to interest rate risk and currency risk.

i. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to minimal interest rate risk on its bank indebtedness as there is a balance of $126,073$15,801 at December 31, 2013.2015. This liability is based on floating rates of interest that have been stable during the current reporting period. In the opinion of management, interest rate risk is assessed as low, not material and remains unchanged from the prior year.

5. Financial instruments (cont’d)

ii. Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is subject to currency risk as its subsidiaries operate in Canada and are subject to fluctuations in the Canadian dollar. Most of the Company’s financial assets and liabilities are denominated in Canadian dollars. Based on the net exposures at December 31, 2013,2015, a 5% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an approximate $80,000$58,200 increase or decrease in the Company’s after-tax net loss respectively.from continuing operation. The Company has not entered into any hedging agreements to mediate this risk. In the opinion of management, currency risk is assessed as low, material and remains unchanged from the prior year.

iii. Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. In the opinion of management, the Company is not exposed to this risk and remains unchanged from the prior year.

6. Accounts receivable

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

3. Going Concern

The Company’s consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the normal course of business. As at December 31, 2015 the Company has a working capital deficiency of $(3,397,266) and accumulated deficit of $(20,721,205). Management believes that current available resources will not be sufficient to fund the Company’s planned expenditures, including past due payroll and sales tax payments, as well as estimated penalties and interest, over the next 12 months. Accordingly, the Company will be dependent upon the raising of additional capital through placement of common shares, and, or debt financing in order to implement its business plan, and, or generating sufficient revenue in excess of costs. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

These factors create substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities or other adjustments that may be necessary should the Company not be able to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock or obtaining debt financing and attaining future profitable operations. Management's plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.

4.Accounts receivable

The accounts receivable balance consists primarily of amounts due from the following parties:

The Company is economically dependent on and earns a significant portion of revenues from the Ontario Ministry of Health for its ability to carry out its normal activities. These revenues account for 38% of the Company’s consolidated revenue in the twelve month period ending December 31, 2013 (December 31, 2012: 35%).

7. Fixed assets