UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended:December 31 2015, 2023

or

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

For the transition period from ______to _________to ___________

Commission file number:000-15078

GreeneStone HealthcareEthema Health Corporation

(Exact name of registrant as specified in its charter)

Colorado84-1227328

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

5734 Yonge950 Evernia Street Suite 300

North York, Ontario, Canada M2M 4E7West Palm Beach, Florida33401

(Address of principal executive offices)

(416) 222-5501(416) 500 0020

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

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  [ ] ☐  No [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  [ ] ☐  No [X]  ☒ 

Indicate by check mark whether the registrant:issuer: (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 lastpast 90 days. Yes[X]☒  Yes  No  [ ]☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,website, if any, every Interactive Data Fileinteractive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§(section 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). Yes [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’sissuer’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 any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D.1(b).  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,file, a non-accelerated filer, orfile, a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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  [ ] ☐  No [X]  ☒

The aggregate market value of the voting and nonvotingregistrant’s common equitystock held by non-affiliates of the registrant onas of June 30, 2015,2023, based on a closing share price of $0.03$0.0006 was approximately $1,226,511. $2,073,714.

As of April 10, 2015,May 6, 2024, the registrant had 47,738,8553,729,053,805 shares of its common stock, par value $0.01 per share, outstanding.

ETHEMA HEALTH CORPORATION

YEAR ENDED DECEMBER 31, 20152023

TABLE OF CONTENTS

PART I

Special Note Regarding Forward-Looking Statements

Many of the matters discussed within this Annual Report contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on our current expectations and projections about future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. Such risks and uncertainties include the risks noted under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere. We do not undertake any obligation to update any forward looking statements. Unless the context requires otherwise, references to “we,” “us,” “our,” and “Ethema,” refer to Ethema Health Corporation and its subsidiaries.

Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.

Item 1. Business.

Company History

GreeneStone HealthcareEthema Health Corporation (the “Company” or “Ethema”), a Colorado 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 year consulting agreement with GreenestoneGreeneStone Clinic Inc., a Canadian corporation (“Greenestone Clinic”), whereby Greenestone Clinic provided consulting services for the Company’s development and operation of medical clinics in the province of Ontario, Canada. Specifically, Greenestone Clinic provided medical and business expertise in the initial startup of private clinics and technical assistance to ensure that the clinics were 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 a subleaseofspace (whichwaspreviouslytheRothbart PainClinic) ofapproximately 8,000 sq. ft. tobeused astheCompany’sexecutiveoffices and to run anendoscopy clinic,whichwas subsequently sold.services. The Company started offering medical services in June2010,offering various medical services,includingendoscopy,cardiologyandexecutivemedicals, which services were subsequently sold as part ofsold.

During December 2016, the sale of our subsidiary, 1816191 Ontario (“1816191”) duringDecember2014.Company obtained a license to operate and provide addiction treatment healthcare services in Florida, USA. The company commenced operations under this license with effect from January 2017.

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,February 14, 2017, the Company completed a series of transactions (referred to collectively as 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“Restructuring Transactions”), including a Share Purchase Agreement dated October 6, 2014,(the “SPA”) whereby the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and betweenCFO of the Company, for an assignment to Leon Developments of CDN$659,918 owing to the Company and Jaintheelal Parekh Medicine Professional Corporation (“Jaintheelal”).the issuance of 60,000,000 shares of the Company’s common stock valued at $2,184,000. CCH held the real estate on which the Company’s GreeneStone Muskoka operated. The Company and Jaintheelal entered into a revised Sharean Asset Purchase Agreement on December 16, 2014.

JaintheelalisownedbyDr.Jay Parekh,(the “APA”) whereby theCompany’sformerMedical director in chargeofEndoscopy. The sale priceassets of CAD$1,282,002included theassumptionGreeneStone Muskoka were sold by Jaintheelal of debtinthesame amount asthesale price,whichdebt wasowedby1816191GreeneStone Muskoka, totheCompany intheamountof CAD$895,496and toJaintheelal ofCAD$386,542. Atclosing, Jaintheelaloffsettheassumeddebttotheregistrantof CAD$895,496 by US$277,500 throughthecancellation of2,408,268 sharesoftheCompany’s commonstock, Canadian Addiction Residential Treatment LP (the “Purchaser” or “CART”), for a net amountduetotheCompanytotal consideration of US$493,807.CDN$10,000,000. The remainderoftheassumeddebtowedby1816191totheCompanywas originallyduetotheCompanyonJune30,2015,which duedate was extendedto December31,2015,thisloanhasnotbeenextendedbeyond thisdateasofthedatehereof, is intheformofan interest bearingnote withacouponof 5%per annum.

The Company’s principaloperationsarenow theprovisionofaddictiontreatment services.

Corporate Structure

The Company currently has one, wholly owned, operating subsidiary, GreeneStone Muskoka.

GreeneStone Muskoka Treatment Center

On February 1, 2011,Dr.Paul Garfunkel was retained on a six-month consulting contract to advise the Company on its plan to go into the addiction treatment business.Dr.Garfunkel formed a Clinical Advisory Group (“CAG”) including himself,Dr.Clive Chamberlain,Dr.Greg Donahue and Janice Harris R.N. The CAG created the mission and protocols for the addiction treatment business and was tasked to hire a leader for the addiction treatmentbusiness.

On April 1, 2011, the Company through GreeneStone Muskoka,company also entered into a lease (the “Bala Lease”)agreement whereby the Company leased the real estate to Cart for an initial 5 year period with Cranberry Cove Holdings Ltd. (“Cranberry”),three 5 year renewal options.

On February 14, 2017, immediately after closing on 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”), GreeneStone Muskoka purchased allsale of the assets of Greenestone Clinic that were previously usedGreeneStone Muskoka, the Company closed on the acquisition of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements through its wholly owned subsidiary, Addiction Recovery Institute of America, LLC (“ARIA”). The purchase price for the operation of the executive medical center located at the Bala Property. This gave GreeneStone Muskoka a turnkey opportunity to start up its addiction treatment business (the “GreeneStone Muskoka TreatmentCenter”).ARIA assets was US$6,070,000.

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

On April 4, 2017 the Company changed its Corporate name from Greenestone Healthcare Corporation to Ethema Health Corporation.

On November 2, 2017, the Company entered into an Agreement to purchase certain buildings in West Palm Beach, Florida, totaling approximately 80,000 square feet, on which the Company planned to operate a substance abuse treatment center. The purchase price of the Property was $20,530,000. The Company made a series of nonrefundable down payments totaling $2,940,546 in 2017 and 2018. On May 23, 2018, the Company converted the agreement to purchase the buildings from the Landlord into a real property lease agreement with a purchase option. The lease was for an initial 10 years and provided for two additional 10 year extensions. In June 2018, the Company moved its ARIA operations into the West Palm Beach properties and in September 2018 received a license to operate in-patient detoxification and residential treatment services. On December 20,2019, the Company entered into an agreement with the landlord to terminate the lease agreement on January 31, 2020.

On April 2, 2019, the Company disposed of the real estate assets in ARIA located at 801 Andrews Avenue, Delray Beach for gross proceeds of $3,500,000, and on October 10, 2019, the Company transferred the remaining real estate asset located at 810 Andrews Avenue, Delray Beach, Florida to Leonite Capital, LLC, for net proceeds of $1,398,510, which proceeds were offset against the convertible loan owing to Leonite.

On June 30, 2020, the Company entered into an agreement (“the Stock Purchase Agreement”), whereby the Company agreed to acquire 51% of American Treatment Holdings, Inc. (“ATHI”) from The Q Global Trust (“Seller”) and Lawrence B Hawkins (“Hawkins”), which owned 100% of Evernia Health Services LLC. (“Evernia”), which operates drug rehabilitation facilities. The consideration for the acquisition was a loan to be provided by the Company to Evernia in the amount of $500,000. The Company has an option to acquire an additional 24% of ATHI for 100,000,000 shares of common stock and $50,000, on the condition that a probationary license was approved by the Florida Department of Family and Child Services, which was received on June 30,2021, upon which the Company exercised its option to acquire the additional 24% of ATHI, resulting in a 75% ownership of ATHI.

On December 30, 2022, the company entered into two agreements whereby it sold two non-operating subsidiaries, Greenstone Muskoka and ARIA to the Company Chairman and CEO for gross proceeds of $0, after Greenstone Muskoka forgave its intercompany receivable owing from the Company of $6,690,381 and the Company forgave its intercompany balance owing from ARIA of $9,605,315.

On June 30, 2023, the Company entered into an exchange agreement with Leonite Capital, LLC, whereby it exchanged 400,000 Series B shares with a value of $400,000 plus accrued dividends thereon of $61,184 for its entire shareholding in its property owning subsidiary, CCH. The Series B shares were cancelled upon consummation of the transaction.

On October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida (“950”), the property in which it operates its treatment center, for gross proceeds of $5,500,000. (“Purchase Agreement”). The closing was originally scheduled for February 1, 2023, however through a series of 6 addendums to the Purchase Agreement requiring the payment of a total $180,000 in extension fees, the Closing was extended to August 2011,3, 2023.

Simultaneously with the GreeneStone Muskoka Treatment Center began providing addiction treatment servicesclosing of the purchase and took its first paying clients. The GreeneStone Muskoka Treatment Center offers clientssale agreements, on August 4, 2023, the Company entered into a 45day program that costs between CAD$27,000 and CAD$37,000 per treatment period. Treatment is individualized, providing the first two weeks of treatment,long term lease for 950 with an assessment thereafterinitial term of twenty years, and often,two ten year extension options. The lessor is Pontus EHC Palm Beach, LLC , a recommendation to extend treatment.Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The treatment offeredlease is concurrent, with addictionabsolutely net and co-occurring mental health disorders treatedthe lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the same time. initial twenty-year term.

Corporate Structure

The center has a 36 bed capacity and can easily be expanded beyond that capacity. TreatmentCompany consists of groupthe following entities:

Ethema is the publicly traded investment holding company, registered in Colorado, U.S.

ATHI owns 100% of the members interest of Evernia.

Evernia operates a treatment center in West Palm Beach Florida and individual therapy, as well as recreation therapy. Clients are taught about nutrition and are provided with nutritious food while intreatment.is a wholly owned subsidiary of ATHI which was acquired by Ethema effective July 1, 2021. The Company has been actively involved in the operation of this treatment center since June 30, 2020.

In November of 2011, the CAG was disbanded after achieving its 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.DARE has remained dormant since inception.

Employees

As of December 31, 2015, GreeneStone Healthcare Corporation2023, Ethema had no employees and its subsidiary GreeneStone Clinic Muskoka had approximately 3265 employees.

Marketing

Marketing

The addiction treatment business in the USA operates as a private payan insured healthcare service. The customers get no government or OHIP subsidy to attend our treatment facility. The decision to attend the treatment center is made by each individual, making it important to market our services to the individual. There are a large number of mental health professionals that refer to the treatment center and we ensure that we maintain contact with and market to these professionals. Our marketing efforts are long termlong-term processes of establishing relationships with relevant professionals and our treatment staff. We use industry specific conferences and functions to network with these professionals.

Approximately 70%Through Evernia, the Company has an in-network relationship with several health care providers and the majority of ourthe Company’s clients are sourced via the Internet. This is the single biggest focus for our marketing team, Search Engine Optimization (SEO) is very important and the Company aggressively seeks the maximum cost/benefit relationships with specialist firms in this field. We believe our marketing efforts are successful and effective.from these health care providers.

Competition

Competition

The private pay addiction treatment business is not well established in Canada and there are only a few 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 with a similar offering to GreeneStone Muskoka, located on the west coast of Canada.

There are hundredsa significant amount of private paidtreatment facilities in the United States, and they collectively, represent a major competitorwe compete with these clinics for those with the ability to pay for addictionpatients who are typically covered by insured healthcare services. Addiction service facilities in the United States that offer the same level of treatment offered by our Company are generally 50% to 100% more expensive than we are. We believe that travel to the United States by potential customers with potential travel restrictions as well as the higher cost eliminates 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.

Not applicable because we are a smaller reporting company.

Item 1B. Unresolved Staff Comments

none.None. 

Item 2. Properties.

GreenestoneEthema Executive Offices and Endoscopy Unit

The Company’s executive offices are located at 5734 Yonge950 Evernia Street, Suite 300, Toronto, Ontario, Canada M2M 4E7, consistingWest Palm Beach, Florida, 33406.

West Palm Beach Treatment Operations

The Company, through its acquisition of approximately 8,000 sq. ft. and takes up the entire third floorATHI, effectively acquired 75% of the building (the “YongeEvernia treatment facility located at 950 Evernia Street, Facility”). This facility was leased by 1816191 and the primary activity at this facility was endoscopy procedures.West Palm Beach Florida. The Company entered into a sublease for office space at these premises from 1816191 on a month to month basis.

Greenestone Muskoka Treatment Facility

The Bala Facility ishas been actively involved 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 Cove for a term of five years, which commenced on April 1, 2014 and has an option to extend for an additional three years. Further, the Company has an option to purchase the property at any time during the termoperation of the lease for $10.0 million dollars and a right of first refusal in the event of a sale to a third party.Evernia treatment facility since June 2020.

Item 3. Legal 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 DisclosuresDisclosures..

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-counter Bulletin BoardMarket (the “OTCBB”“OTC PINK”) 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 forFrom March 2012 to January 2020, 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.

Quotationshad been traded 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.OTCQB markets under the symbol “GRST”, in January 2020, the stock was downgraded to the OTC Pink Sheets market.

(b)Holders

The numberlast reported sale price of our common stock on the OTC Pink on May 6, 2024 was $0.0003 per share. As of May 6, 2024, there were approximately 157 holders of record holders of the Company’sour common stock as of April 10, 2015, was approximately 149.stock. 

(c)Dividends

Dividend Policy

We have nevernot paid any cash dividends on our common shares,stock to date, and we do not anticipate that we will pay anyhave no intention of paying cash dividends with respect to those securities in the foreseeable future. Our current business planWhether we declare and pay dividends is determined by our Board of Directors at their discretion, subject to retaincertain limitations imposed under Colorado corporate law. The timing, amount and form of dividends, if any, future earnings to finance the expansion developmentwill depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our business.Board of Directors.

(d)Securities Authorized for Issuance Under Equity Compensation PlansPlan Information

As of December 31, 2015, there were 10,000,000 common securities authorizedSee Item 11 - Executive Compensation for issuance under the Company’s 2013 Stock Option Plan (which was previously approved by securityholders). 

equity compensation plan information.

Recent Sales of Unregistered Securities

In the securities transactions describedOther than as set forth below shares were issued pursuant to the exemptions from the registration requirements ofor as previously disclosed in our filings with the Securities Act of 1933, as amended, afforded the Company under Section 4(a)(2) promulgated thereunder due to the fact that the issuanceand Exchange Commission, we 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 is a summary of thesell any equity securities transactions during the year ended December 31, 2015:2023 in transactions that were none registered under the Securities Act.

 
On January 15, 2015June 28, 2023 the Company entered into a Warrant Exchange Agreement with a previous lender that exchanged a Warrant outstanding to the previous lender originally issued 300,000on June 12, 2020 for a new Warrant dated June 30, 2023. The substantial changes to the warrant affect the number of shares in the warrant, the exercise price and the term. The original warrant provided for the previous lender to have a continuing right to purchase a 20% share of the Company’soutstanding common stockshares until it expired on June 12, 2025 which was originally set at 326,286,847 shares. The new warrant is exercisable for 745,810,761 shares, 20% of the number of common shares outstanding on June 28, 2023, with no allowance for adjustment, except normal adjustments due to JMJ pursuantsplits or consolidations, until the new expiry date of June 30, 2027. The exercise price in the original warrant was $0.10, with allowance for adjustments, which when applied resulted in an exercise price of $0.0004 per share. The exercise price on the new warrant is $0.001 and is only adjustable if the Company issues any shares at a price less than the exercise price during the warrant period except for any issuance of shares to the conversionCompany’s president or related parties on any debt outstanding to those parties as of a convertible note totaling US$8,117 atJune 30, 2023, and limited to a conversion price of US$0.027$0.0005 per share.

On March 31, 2015, the Company cancelled 2,909 shares of the Company’s common stock pursuant to a convertible note conversion to recognize the effect of the currency exchange difference in the note conversion.Penny Stock

On March 31, 2015, the Company issued 250,000 shares of the Company’s common stock and 106,000 of the 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-dealerbroker 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,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;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;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;price; (d) contains a toll-free telephone number for inquiries on disciplinary actions;actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks;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-dealerbroker 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;stock; (b) the compensation of the broker-dealerbroker dealer and its salesperson in the transaction;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;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-dealerbroker 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.

Issuer Purchases of Equity Securities

There were no issuer purchases of equity securities during the fiscal year ended December 31, 2023.

Item 6. Selected Financial Data.Reserved

Not applicable as we are a smaller reporting company.

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

Forward-Looking Statements

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our audited annual financial statements and the related notes thereto, each of which appear elsewhere in this Annual Report. 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 containdiscussion contains certain forward-looking statements that involve risks 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 useduncertainties 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, actualthis Annual Report. Actual results maycould differ significantlymaterially from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflectedprojected in the forward-looking statements are reasonable,statements. The Management Discussion and Analysis of Financial Condition and Results of Operations below is based upon only the Company cannot guarantee future results, levelsfinancial performance 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.Ethema Health Corporation.

Our consolidated 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 consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our consolidated 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’scompany’s consolidated financial statements and accompanying notes to the consolidated financial statements for the year ended December 31, 2015.2023.

PlanResults of Operationoperations for the year ended December 31, 2023 and the year ended December 31, 2022.

DuringRevenue

Revenue was $5,344,976 and $4,820,747 for the next twelve months,years ended December 31, 2023 and 2022, respectively, an increase of $524,229 or 10.9%.

Revenue from patient treatment was $5,159,680 and 4,411,546 for the Companyyears ended December 31, 2023 and 2022, respectively, an increase of $748,134 or 17.0%. The increase is due to the increase in the number of in-network patients at the facility due to the approval of the facility by a number of health care plans to continueover the current year.

Revenue from rental income was $185,296 and expand its operations as$377,351 for the years ended December 31, 2023 and 2022, respectively, a providerdecrease of addiction and after-care treatment services.$192,055 or 50.4%. The Company plans to focus on the growthdisposed of its addiction and aftercare treatment units while simultaneously reducing costs in current operations.

The Company finalized the termsreal property owning subsidiary, Cranberry Cove Holdings, to a related party , Leonite Capital, LLC on June 30, 2023, revenue was only recognized for the acquisitionfirst half 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 Company expects this deal to close by the second quarter of the 2016 financial year, once the appropriate funding has been raised.current fiscal year.

The Company plans to expand its addiction treatment business with acquisitions. In 2014, the Company entered into a non-binding letter of intent with Venture Academy to acquire teen addition treatment centers in Ontario and British Columbia. The Company will need to raise additional capital for this acquisition, which would require the sale of its equity and/or debt securities and securing bank financing.Operating Expenses

Results of Operations

For the Fiscal Year Ended December 31, 2015, Compared to the Fiscal Year Ended December 31, 2014

Operating expenses was $5,886,896 and $4,331,630 for the years ended December 31, 2023 and 2022, respectively, an increase of $1,555,266 or 35.9%. The increase in operating expenses is attributable to:

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 grow over the next year.

Operating Expenses

Operating expenses totaled $3,409,450 and $4,757,851 for the years ended December 31, 2015 and 2014, respectively, a decrease of $1,348,401 or 28.3%. The decrease in operating expenses in US$ 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 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 and the cessation of aftercare services and a non-currency decrease in rental expense ofapproximately $91,765 due to a re-negotiation of our rental arrangement at our executive offices.

Operating loss(loss) profit

The operating loss totaled $270,572(loss) profit was $(541,920) and $1,341,509$489,117 for the years ended December 31, 20152023 and 2014,2022, respectively, an increase in loss of $1,031,037 or 210.8%. The increase in loss is due to the increase in operating expenses of $1,555,266, discussed in detail above, including once off management fees of $245,503, increased professional fees and capital raising fees which are not expected to incur in future periods, offset by the increase in revenue of $524,229, discussed in detail above.

Other income

Other income was $0 and $15,760 for the years ended December 31, 2023 and 2022, respectively. In 2022 other income consisted of a financial inducement granted to the Company by the previous landlord.

Forgiveness of government relief loan

Forgiveness of government relief loan was $0 and $104,368 for the years ended December 31, 2023 and 2022, respectively, a decrease of $1,070,937, primarily due to$104,368 or 100.0%. The Company received partial forgiveness of the declineGovernment assistance loan in operating expenses explainedabove.the prior year.

Other expenseGain on disposal of property

Other expenseGain on disposal of $457,913 consists primarilyproperty was $2,484,172 and $0 for the year ended December 31, 2023 and 2022, respectively, an increase of $2,484,172 or 100.0%. The Company exercised its option to acquire the property located at 950 Evernia Street, West Palm Beach, Florida, in which its treatment center operations, and subsequently disposed of the provisionproperty to a third party, realizing a profit on disposal of $446,476 raised against$2,484,172, after transaction costs.

Loss on debt extinguishment

Loss on debt extinguishment was $277,175 and $0 for the receivableyears ended December 31, 2023 and 2022, respectively, an increase of $277,175 or 100.0%. The loss on debt extinguishment is related primarily to replacement warrants issued to Leonite Capital as part of the debt settlement reached with Leonite.

Extension fee on property purchase

The extension fee on the saleproperty purchase was $140,000 and $0 for the years ended December 31, 2023 and 2022, respectively, an increase of $140,000 or 100%. The extension fee was levied by the landlord of our West Palm Beach facility to afford us additional time to structure the acquisition of the Endoscopy clinic. This receivablefacility, which we in turn disposed of to a third party lender.

Penalty on convertible debt

The penalty on convertible notes was fully provided$34,688 and $60,075 for as there were no payments receivedthe years ended December 31, 2023 and 2022, respectively, an increase of $25,387 or 42.3%. The penalty on convertible note was agreed upon with one of our lenders whose note was in accordance withdefault and was subsequently settled after June 30, 2023.

Interest income

Interest income was $676 and $78 for the agreement or any payments received as of the date hereof.years ended December 31, 2023 and 2022 respectively. Interest income is immaterial.

Interest expense

Interest expense totaled $192,104was $500,226 and $310,583$588,477 for the years ended December 31, 20152023 and 2014,2022, respectively, a decrease of $118,479$88,251 or 38.1%. The decline consists of an approximate decline of $29,87115.0%, primarily due to the deteriorationdecrease in mortgage interest due to the exchange ratedisposal of CCH, our property owning subsidiary on June 30, 2023, and a reductiondecrease in the interest bearingexpense on convertible notes which were carriedand promissory notes settled during the current period.

Debt discount

Debt discount was $281,354 and $624,683 for the years ended December 31, 2023 and 2022, respectively, a decrease of $343,329 or 54.6%. The decrease is primarily due to the full amortization of debt discount on convertible notes in the prior year. The current year offset by an increase in interest expense attributable to interestamortization consists of the amortization of discount on payroll and Harmonized SalesTax(“HST”), and accruals for income taxpenalties.receivables funding.

Foreign exchange movements

Foreign exchange movements of $184,586, representwere $(95,032) and $1,071,320 for the years ended December 31, 2023 and 2022, respectively, Foreign exchange movements represents the realized exchange lossgains and (losses) on monetary assets and liabilities settled during the current year as well as mark to market adjustmentsunrealized gains and losses on monetary assets and liabilities reflected on the balance sheet and denominated in Canadian Dollars. In the prior year, the foreign exchange movements included the realization of significant translation differences on foreign subsidiaries sold and in the current year we disposed of Cranberry Cove Holdings, our last foreign subsidiary denominated in Canadian Dollars, to a related party.

Net income before taxation

Net income before taxation was $614,453 and $407,408 for the years ended December 31, 2023 and 2022, respectively, an increase of $207,045 or 50.8%. The increase is primarily due to the gain on sale of property, and the decrease in debt discount and interest expense, offset by the increase in the operating loss, the loss on debt extinguishment, the extension fee paid on the property purchase and the foreign exchange movements, all discussed in detail above.

Taxation

A taxation expenseTaxation was $391,962 and $(112,220) for the years ended December 31, 2023 and 2022, respectively an increase of $50,000 was provided$504,182 or 449.3%. The increase is due to the completion of tax returns for inour operating subsidiaries during the current year, aswhich resulted in the reversal of previously provided for income taxes, primarily related to accelerated depreciation allowances on property and equipment and the reversal of the deferred tax liability related to intangible assets. The 2022 charge relates to the profitable Evernia operations, which has been subsequently reversed in the 2023 year.

Net income

Net income was $1,006,415 and $295,188 for the years ended December 31, 2023 and 2022, respectively, an estimateincrease of potential US taxes$711,227 or 240.9%. The increase is due to bethe increase in income before taxation and the reversal of prior period taxation charges and deferred tax balances, discussed above.

Liquidity and Capital Resources

Cash used in operating activities was $(0.5) million and cash generated by operating activities was $1.6 million for the years ended December 31, 2023 and 2022, respectively a decrease of $2.1 million or 129.6%. The decrease is primarily due to the following:

Cash provided by investing activities was $2.5 million and cash used in investing activities was $0.7 million for the years ended December 31, 2023 and 2022, respectively. The Company exercised its option to acquire 950 Evernia Street, where it conducts its treatment facility for net proceeds of $5.2 million, net of $0.4 million of deposits previously paid. Upon acquisition, we immediately sold the property for net proceeds of $8.1 million, after fees and expenses related to the disposal. During the current year, we paid a lease deposit of $374,000 for failure to file required US tax returnsthe real property lease entered into immediately upon disposal of the real property. In the prior year we invested $0.4 million in time.deposits for the purchase of the Evernia Street property and a further $0.3 million in property and equipment for the treatment center.

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 $1,155,176Cash used in financing activities was $(2.1) million and $1,900,273cash provided by investing activities was $0.3 million for the years ended December 31, 20152023 and 2014, respectively,2022, respectively. In the current year, the Company used a decrease of $745,097, primarily due to the decrease in operating expenses, the saleportion of the Endoscopy unit inproceeds from investing activities for the net repayment of convertible notes of $(1.0) million, the net repayment of promissory notes of $(0.1) million and the payment of third party loans of $0.3 million.. The Company also repaid net receivables funding of $0.4 million, mortgage loans of $0.1 million and related party loans of $0.2 million during the current year. In the prior year, we repaid net promissory notes of $0.1 million, mortgage loans of $0.1 million, and the decline in interest expense, discussed above.third party loans of $0.1 million, funded by net receivables funding of $$.4 million and related party loans of $0.3 million.

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, 2015 and 2014. As of December 31, 2015 and 2014 as part of Taxes Payable, the Company has payroll tax liabilities of approximately $2,429,032 and $2,065,000, respectively due to various taxing authorities on the consolidated 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 operate. Further, the actual liability may be higher due to interest or penalties assessed by the taxing authorities.

Liquidity and Capital Resources

The following table summarizes working capital at December 31, 2015, compared to December 31, 2014.

Over the next twelve months we estimate that the company will require $3.5millionapproximately $4.8 million in funding to cover therepay its obligations if these obligations are not converted to equity. We will need funding for working capital deficit and properly market and promoteas we continue to seek opportunities for addiction treatment in the company. The company will have to raise equity or secure debt.US markets. 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 highhigh.

Going Concern

Our consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that we will be able to meet our obligations and remains unchangedcontinue our operations in the normal course of business. At December 31, 2023, we had a working capital deficiency of $7.9 million, and total liabilities in excess of assets in the amount of $6.2 million. We believe that current available resources will not be sufficient to fund our planned expenditures over the next 12 months. Accordingly, we will be dependent upon the raising of additional capital through placement of common shares, and/or debt financing in order to implement our business plan and generate sufficient revenue in excess of costs. If we raise 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 we raise additional funds by issuing debt, we may be subject to limitations on its operations, through debt covenants or other restrictions. If we obtain additional funds through arrangements with collaborators or strategic partners, we may be required to relinquish our rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our 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 we be unable to continue as a going concern.

Critical accounting policies

Revenue recognition

We recognize revenue in terms of ASC 606 which requires us to exercise more judgment and recognize revenue using a five-step process as described under our accounting policies in note 2 to the consolidated financial statements.

We derive substantially all of our revenue from payors that receive discounts from established billing rates. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the prior year.Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management.

Settlements with third-party payors are estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are determined. In the opinion of management, adequate provision has been made for any adjustments and final settlements.

Allowance for Doubtful Accounts, Contractual and Other Discounts

In conjunction with Revenue recognition, we recognize revenue based on historical collections received from healthcare providers, recognizing only a percentage of revenues actually billed. Effectively recognizing revenue net of any expected billing differentials. Based on our collection experience, the percentage of revenue recognized is adjusted on a periodic basis, thereby taking into account expected credit losses in the revenue recognition process. The revenue we recognize is already net of expected credit losses.

Leases

We account for leases in terms of ASC 842. In terms of ASC 842, the Company assesses whether any asset based leases entered into for periods longer than twelve months meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to retain ownership of the asset at the end of the lease term.

Leases which imply that we will not acquire the asset at the end of the lease term are classified as operating leases, our right to use the asset is reflected as a non-current right of use asset with a corresponding operational lease liability raised at the date of lease inception. The right of use asset and the operational lease liability are amortized over the right of use period using the effective interest rate implied in the operating lease agreement.

Long Lived Assets

The Company evaluates the carrying value of its long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

Critical Accounting Estimates

Preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. Our estimates are based on our historical experience, information received from third parties and on various other factors that we believe are reasonable under the circumstances, that results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimated under different assumption or conditions. Significant accounting policies are fundamental to understanding our financial condition and results as they require the use of estimates and assumptions which affect the financial statements and accompanying notes. See Note 2 - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further information.

The Critical accounting policies that involved significant estimation include the following:

Revenue recognition

Management constantly monitors the level of billings and collections on those billings and makes an estimation of the percentage of billings that will ultimately be recorded as revenue. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates.

Since we already make adjustments for expected collections we are constantly taking into account any expected credit losses.

Leases

On August 4, 2023, we entered into an acquisition and immediate disposal transaction with two unrelated third parties for the building which we currently operate our West Palm Beach treatment facility, see note 5 to the consolidated financial statements.

Simultaneously with the acquisition and disposal, on August 4, 2023, we entered into a long term lease for 950 Evernia Street, West Palm Beach, Florida with an initial term of twenty years, and two ten year extension options. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. Due to the initial lease term of twenty years, we are not certain that the extension periods will be exercised at this point in time and accordingly, these have been excluded from the present value of the minimum future lease payments.

To determine the present value of minimum future lease payments for operating leases at August 4, 2023, we were required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment (the "incremental borrowing rate" or "IBR"). Wey determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the Fannie Mae, in excess of $3,000,000 rate based on an 80% value to loan ratio, averaging the 15 and 30 year indicative rates, resulting in a rate of 7.70%. We determined that 7.70% per annum was an appropriate incremental borrowing rate to apply to its real-estate operating lease.

The present value of the future minimum lease payments was valued at $9,333,953 on August 4, 2023.

Long-lived assets

We have significant long-lived assets, including property and equipment, intangible assets, right-of-use assets and deposits. The Company evaluates the carrying value of its long-lived assets for impairment by comparing managements estimates of undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. This requires significant estimation of future revenue streams, based on management’s understanding of the business which may not be accurate and may require re-estimation at a future date. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed by management to be reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

Item 8. Financial Statements and Supplementary Data.

GREENESTONE HEALTHCARE

ETHEMA HEALTH CORPORATION

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US$ unless otherwise indicated)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and StockholdersofGreeneStone HealthcareCorporation

Ethema Health Corporation and Subsidiaries

West Palm Beach, FL 33401

Opinion on the Financial Statements

Wehave auditedtheaccompanying consolidated balancesheets sheet ofGreeneStone Healthcare Ethema Health Corporation (“and Subsidiaries (collectively, the Company”“Company”) as ofDecemberof December 31, 2015and2014and2023, therelatedconsolidatedstatements statement of operations,andothercomprehensive loss, stockholders’ deficit and cash flows for each of theyears year endedDecember31, 20152023, and2014.These consolidated financial statementsaretheresponsibilityoftheCompany’s management.Ourresponsibility is related notes and schedules (collectively referred to express anopinionontheseconsolidatedfinancial statements basedonouraudit.

Weconducted our auditin accordancewithas thestandardsofthePublic Company Accounting Oversight Board (United States) “financial statements”). Those standards requirethatweplanand performthe audittoobtain reasonable assurance about 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 control over financial 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 Corporationthe Company as of December 31, 2015 and 20142023, and the results of its operations and its cash flows for each of the yearsyear ended December 31, 2015 and 20142023 in conformity with accounting principles generally accepted in the United States of America.

The Company's Ability to Continue as a Going Concern

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 accompanying consolidated financial statements, the Company has sustained netsuffered recurring losses from operations, generated negative cash flows from operating activities, has an accumulated deficit and has a working capital and stockholder’s deficit. These conditions raisestated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’sManagement's evaluation of the events and conditions and management’s plans in regards toregarding 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.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

We determined that there are no critical audit matters.

/s/RBSM LLP

587

We have served as the Company’s auditor since 2023.

New York, NY

April 14, 2016May 7, 2024

New York, NY Washington DC Mumbai & Pune, India Boca Raton, FL

San Francisco, CA Las Vegas, NV Beijing, China Athens, Greece

Member: ANTEA International with affiliated offices worldwide

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Ethema Health Corporation

West Palm Beach, Florida

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Ethema Health Corporation (the Company) at December 31, 2022, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ deficit, and cash flows for each of the year ended December 31, 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The accompanying consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the consolidated financial statements, the Company has accumulated deficit of approximately $43.5 million and negative working capital of approximately $12.7 million at December 31, 2022, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Embedded Conversion Features on Convertible Notes – Refer to Notes 9 and 14 to the Financial Statements

The principal considerations for our determination that performing procedures relating to the valuation of derivatives is a critical audit matter are the significant judgment by management when developing the fair value of the derivative liabilities. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the valuation models used and related variable inputs used within those models.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing management’s process for developing the fair value estimate; evaluating the appropriateness of the valuation techniques; testing the completeness and accuracy of underlying data used in the model; and evaluating the significant assumptions used by management, including the values of expected volatility and discount rate. Evaluating management’s assumptions related to the volatility amounts and discount rates involved evaluating whether the assumptions used by management were reasonable considering the current and historical performance, the consistency with external market and industry data, and whether these assumptions were consistent with evidence obtained in other areas of the audit.

ETHEMA HEALTH CORPORATION

CONSOLIDATED BALANCE SHEETS

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

GREENESTONE HEALTHCAREETHEMA HEALTH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

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

ETHEMA HEALTH CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT