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, 20152016

or

[ ] ☐ 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

GreeneStone Healthcare

Ethema Health Corporation

(Exact name of registrant as specified in its charter)

Colorado 84-1227328

(State or other jurisdiction of incorporation or organization)

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

5734 Yonge Street, Suite 300810 Andrews Avenue

North York, Ontario, Canada M2M 4E7Delray Beach, Florida 33483

(Address of principal executive offices)

(416) 222-5501(561) 450-7679

(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 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, 2015,2017, based on a closing share price of $0.03$0.06 was approximately $1,226,511.$2,962,022. As of April 10, 2015,2018, the registrant had 47,738,855122,989,230 shares of its common stock, par value $0.01 per share, outstanding.

GREENESTONE HEALTHCARE CORPORATION

ETHEMA HEALTH CORPORATION

YEAR ENDED DECEMBER 31, 20152017

TABLE OF CONTENTS

PART I

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 Greenestone 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 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.sold.

On May 15, 2010, the Company secured a sublease of space (which was previously the Rothbart Pain Clinic) of approximately 8,000 sq. ft. to be used as the Company’s executive offices and to run an endoscopy clinic. The Endoscopy clinic was subsequently sold. The Company, through its wholly owned subsidiary GreeneStone Clinic Muskoka Inc. (“GreeneStone Muskoka”), also entered into a lease with the owner of the Muskoka premises on April 1, 2011 and provided mental health and addiction treatment services and operated an in patient addiction treatment center at this location.

During December 17, 2014,2016, the 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.

On 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”), which held the real estate on which the Company’s GreeneStone Muskoka operated, an asset purchase agreement (the“APA”)and lease (the “Lease”) whereby the Company sold certain of the GreeneStone Muskoka business assets and leased the real estate to the buyer, and a real estate purchase agreement and asset purchase agreement whereby the Company purchased the real estate and business assets of Seastone Delray (the “Florida Purchase”).

The Share Purchase Agreement

Under theSPA,the Company acquired 100% of the stock of 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 (“Mr. Leon”). CCH owns the real estate on which GreeneStone Muskoka is located. The total consideration paid by the Company was CDN$3,517,062, including the assumption of certain liabilities of CCH, which was funded by the assignment to Leon Developments of certain indebtedness owing to the Company in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments, valued at US$0.0364 per share.

The Asset Purchase Agreement and Lease

Under theAPA,the assets of the GreeneStone Muskoka were sold by the Company, through its subsidiary, GreeneStone Muskoka, to Canadian Addiction Residential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000, plus an additional performance payment of up to CDN$3,000,000 as a performance payment to be received in 2019 if certain clinic performance metrics are met. The Purchaser completed the sale with cash proceeds to the Company of CDN$10,000,000, of which CDN$1,500,000 will remain in escrow for up to two years to cover indemnities given by the Company. The proceeds of the GreeneStone Muskoka asset sale were used to pay down certain tax debts and operational costs of the Company and Jaintheelal Parekh Medicine Professionalto fund the Florida Purchase, mentioned below.

Through the APA, substantially all of the assets of GreeneStone Muskoka were sold, leaving Ethema with only the underlying clinic real estate, which the Company, through its newly acquired subsidiary, CCH concurrently leased to the Purchaser. The Lease is a triple net lease and provides for a five (5) year primary term with three (3) five-year renewal options, annual base rent for the first year at CDN$420,000 with annual increases, an option to tenant to purchase the leased premises and certain first refusal rights.

The Florida Purchase

Immediately after closing on the sale of the assets of the Canadian Rehab Clinic, 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 This business is operated through its wholly owned subsidiary Seastone. The purchase price for the Seastone assets was US$6,070,000 financed with a purchase money mortgage of US$3,000,000, and US$3,070,000 in cash.

On April 4, 2017 the Company changed its Corporate name from Greenestone Healthcare Corporation (“Jaintheelal”). The Company and Jaintheelal entered into a revised Share Purchase Agreement on December 16, 2014.to Ethema Health Corporation.

Recent Developments

JaintheelalOn November 2, 2017, Ethema entered into an Agreement of Purchase and Sale (the “Agreement”) to purchase from AREP 5400 EastAvenueisLLC, a Delaware limited liability company (“Seller”) certain buildings inownedWestbyDr.Jay Parekh,Palm Beach, Florida, totaling approximately 80,000 square feet, on which theCompany’sformerMedical director in chargeofEndoscopy. present tenant operates a substance abuse treatment center (the “Property”). The salepurchase priceof CAD$1,282,002included theassumption Property is $20,530,000, and the Company is obligated under the Agreement to make a series of nonrefundable down payments totaling $2,210,000. The closing of the transaction, which is subject to standard due diligence, conditions to closing and deliverables, is scheduled to occur on May 8, 2018 , or such earlier date as is agreed upon by Jaintheelal of debtthe parties.inthesame 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.

On December 1, 2017, Ethema and its wholly owned subsidiaries Ethema Clinic Muskoka Inc.(“previously GreeneStone Clinic Muskoka Inc.), an Ontario corporation, CCH, an Ontario corporation and Seastone, a Florida limited liability company (the “Subsidiaries”) closed on a private offering (the “Private Offering”) to raise up to USD$1,500,000 in capital. Pursuant to the Private Offering, the Company and the Subsidiaries jointly and severally issued one senior secured convertible promissory note (the “Note”), bearing a principal amount of up to $1,650,000 in total, to Leonite Capital, LLC, a Delaware limited liability company (the “Investor”). The Note bears interest at the rate of 6.5% per annum. The initial draw under the Note was $300,000 with a $150,000 original issue discount for a total of $450,000. The Company issued the Investor 1,650,000 shares of the Company’s principaloperationscommon stock in connection with the closing and paid $20,000 of the Investor’s legal fees. The Note’s initial maturity date is June 1, 2018. During the term of the Note the Company and the Subsidiaries will be obligated to make monthly payment of accrued and unpaid interest. The Note contains Company and Subsidiary representations and warranties, covenants, events of default, and registration rights. The amounts due under the Note are convertible, at the Investors request, into shares of the Company’s common stock at an initial price of $0.06 per share, subject to adjustment.arenow theprovisionofaddictiontreatment services.

Corporate StructureOn December 29, 2017, effective as of December 1, 2017, the Company and the Subsidiaries entered into an Amended and Restated Senior Secured Convertible Promissory Note (the “A&R Note”), which note amends and restates the Note to (a) extend the maturity date to December 1, 2018; (b) remove CCH as an obligor; (c) increase the interest rate by 2.00% per annum; and (d) issue an additional 250,000 shares of the Company’s common stock to the Investor. In connection with the execution of the A&R Note, the parties entered into (i) a Securities Purchase Agreement; (ii) a Warrant Agreement under which the Investor will have the right to purchase up to 27,500,000 shares of the Company’ common stock for $0.10 per share, subject to adjustment, for a period of five years (the “Warrant”); (iii) a Security and Pledge Agreement and a General Security Agreement under which the Company and the Subsidiaries will grant the Investor a blanket lien on their assets, and the Company will pledge its equity ownership in the Subsidiaries; and (iv) a First Amendment to the A&R Note, effective January 2, 2018 (the “First Amendment” and together with the foregoing agreements the“AncillaryAgreements”). At the execution of the Note, the Investor funded an initial tranche of $300,000. Thereafter the Investor funded a second tranche of $156,136. Upon the execution of the A&R Note the Investor funded a third tranche of $100,000. Upon the execution of the First Amendment the Investor funded a final tranche of $850,000, with the remaining $93,764 of availability under the A&R Note, as amended, serving as a holdback pursuant to the terms of the First Amendment.

TheCorporate Structure

During 2017, the Company currently has one,disposed of its 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 adviseand formed two new subsidiaries, Seastone Delray Healthcare, LLC (“Seastone Delray”) and Delray Andrews RE, LLC (“Delray Andrews”), both Florida limited liability companies. The Company acquired, from Leon Developments, 100% of 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, entered into a lease (the “Bala Lease”) with Cranberry Cove Holdings Ltd. (“Cranberry”),stock of CCH, the owner of the Bala, Ontario property (the “Bala Property”) in orderreal estate which houses Greenestone Muskoka, and subsequently leased the clinic real estate to operate a mental health and addiction treatment center at the property. On April 1, 2011 (the “Purchase Date”), GreeneStone Muskoka purchased allpurchaser of the assets of Greenestone Clinic that were previously used 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”).

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 withassets. The Company also acquired the CAG to refine the missionbusiness of Seastone Delray and protocols for the GreeneStone Muskoka Treatment Centercertain real property in Delray Beach, and worked on the policies and procedures for the operation of the treatmentcenter. 

In August 2011, the GreeneStone Muskoka Treatment Center began providing addiction treatment services and tookis currently operating it through its first paying clients. The GreeneStone Muskoka Treatment Center offers clients 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, with an assessment thereafter and often, a recommendation to extend treatment. The treatment offered is concurrent, with addiction and co-occurring mental health disorders 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 are provided with nutritious food while intreatment.

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.subsidiary, Seastone Delray.

Employees

As of December 31, 2015, GreeneStone Healthcare2017, Ethema Health Corporation had no14 employees and its subsidiary GreeneStone Clinic Muskoka had approximately 32 employees..

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 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% of our 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.Webelieve our marketing efforts are successful and effective.

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 Commentsnone.

none.

Item 2. Properties.

GreenestoneEthema Executive Offices and Endoscopy Unit

The Company’s executive offices are located in our owned premises at 5734 Yonge Street, Suite 300, Toronto, Ontario, Canada M2M 4E7, consisting of approximately 8,000 sq. ft. and takes up the entire third floor of the building (the “Yonge Street Facility”). This facility was leased by 1816191 and the primary activity at this facility was endoscopy procedures. The Company entered into a sublease for office space at these premises from 1816191 on a month to month basis.810 Andrews Avenue, Delray Beach, Florida, USA.

Greenestone Muskoka Treatment Facility

The BalaGreenestone Muskoka Treatment Facility is located 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 owned by Ethema’s wholly owned Canadian subsidiary CCH and has been leased from Cranberry Coveto the new owner of the Muskoka Clinic for a term of five years, which commencedends on April 1, 2014 and hasFebruary 28, 2022. The Lease gives the tenant an option to extend for anthree additional three years. Further, the Company hasfive (5) year terms, an option to purchase the property at any time duringfor a purchase price of $7,000,000 in the first thirty six (36) months of the term and thereafter at a purchase price increased by $1,500,000 for each successive year up to a maximum of the lease for $10.0 million dollars$10,000,000, and a right of first refusal in the event of a sale to a third party.

Delray Beach Real Estate

The real estate acquired in Delray Beach, Florida consist of two parcels of land. The first parcel is located at 810 Andrews Avenue, Delray Beach, Florida, is 0.34 acres in size and has a two-story, 2,839 square foot CBS office building constructed in 1963. It is in good condition, and is currently used as an office for addiction treatment services. The second parcel, is located at 801 Andrews Avenue, Delray Beach, Florida, is 0.34 acres in size and has a two-story, residential condominium building containing 10 units totaling 8,844 square feet. The improvements were constructed in 1971 with the latest renovation occurring in 2014. The property was being used as a sober home.

Item 3. Legal Proceedings.

A former employee has filed suit against the Company asserting wrongful dismissal, claiming damages between CDN$43,500 and CDN$50,000 this matter was settled for CDN14,070, including applicable legal feews, the settlement remains unpaid as the plaintiff has not signed the minutes of settlement..

WeOther than disclosed above, 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 pendingor,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.

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”“OTCQB”) under the symbol “GRST”. The Company was sponsored by the market maker Wilson Davis & Co. from Salt LakeCity,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.OTCQB. These quotations reflect inter-dealerinterdealer prices, without retail mark-up, mark-downmarkup, markdown or commission and may not necessarily represent actual transactions.

Quotations on the OTCBB reflect bid and ask quotations, may reflect inter-dealerinterdealer 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 April 10, 2015, was approximately 149.11, 2018 is 144.

(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, 2015,2017, there were 10,000,000 common securities authorized for issuance under the Company’s 2013 Stock Option Plan (which was previously approved by securityholders). 

security holders) of which there were 480,000 options outstanding as of December 31, 2017.

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 is a summary of the securities transactions during the year ended December 31, 2015:2017:

On January 15, 2015 the Company issued 300,000 shares of the Company’s common stock to JMJ pursuant to the conversion of a convertible note totaling US$8,117 at a conversion price of US$0.027 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.

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-freetollfree 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.

Item 6. Selected Financial Data.

Not applicable as we are a smaller reporting company.

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

Special Note Regarding Forward-Looking Statements

Forward-Looking Statements

This annual reportMany of the matters discussed within this Annual Report on Form 10-K (“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 other reports filedprojections about future events. In some cases, you can identify forward-looking statements by Greenestone Healthcare Corp. (“we,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 Part 1. “Business,” Part 1A “Risk Factors” and Part II, 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,” or the “Company”) from timeand “Icagen,” refer to time with the SEC contain or may containIcagen, Inc. and its subsidiaries.

Furthermore, if our forward-looking statements and information that are based upon beliefsprove to be inaccurate, the inaccuracy may be material. In light 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 onsignificant uncertainties in these forward-looking statements, which are only predictionsyou should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and speak only as of the date hereof. When usedplans in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,”any specified time frame, 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 doesat all. We do not intendundertake any obligation to update any of the forward-looking statements to conform these statements to actual results.statements.

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, 2015.2017.

Plan of Operation

DuringOn February 14, 2017, and in terms of the next twelve months,agreements entered into on May 19, 2016, GreeneStone completed a series of transactions (referred to collectively as the “Restructuring Transactions”), including a share purchase agreement (the“SPA”)whereby Ethema acquired the stock of the company holding the Muskoka Healthcare Clinic real estate, an asset purchase agreement (the“APA”)and lease (the “Lease”) whereby the Company plans to continue and expand its operations as a provider of addiction and after-care treatment services. The Company plans to focus on the growth of its addiction and aftercare treatment units while simultaneously reducing costs in current operations.

The Company finalized the terms for the acquisitionsold all of the property currentlyMuskoka clinic business assets and leased by the Company. The property, which isclinic building to the locationbuyer, and a real estate purchase agreement and asset purchase agreement whereby Ethema purchased the real estate and business assets 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.Seastone Delray (the “Florida Purchase”).

The Company plans to expand its addiction treatment business with acquisitions. In 2014, the Company entered into an Agreement to purchase certain buildings inWestPalm Beach, Florida, totaling approximately 80,000 square feet, on which the present tenant operates a non-binding lettersubstance abuse treatment center. The purchase price of intent with Venture Academythe Property is $20,530,000. The closing of the transaction, which is subject to acquire teen addition treatment centers in Ontariostandard due diligence, conditions to closing and British Columbia. The Company will needdeliverables, is scheduled to raise additional capital for this acquisition, which would requireoccur on May 8, 2018 , or such earlier date as is agreed upon by the sale of its equity and/or debt securities and securing bank financing.parties.

Results of Operationsoperations for the year ended December 31, 2017 and the year ended December 31, 2016.

ForThe company sold its Greenestone Muskoka Treatment Center effective February 17, 2017, simultaneously with the Fiscal Year Endedpurchase of the assets and real estate of an addiction treatment center in Delray Beach, Florida. The disposal of the Greenestone Muskoka Treatment Center has been reflected as a discontinued operation in the financial statements as of December 31, 2015, Compared to2017 and 2016 and the Fiscal Year Ended December 31, 2014

Revenue

We had revenues totaling $3,138,878results of operations and $3,416,342cash flows for the years ended December 31, 20152017 and 2014, respectively, a decrease of $277,464 or 8.1%. We operate in Canada2016.

Revenue

Revenue was $929,416 and our functional currency is the Canadian Dollar. Our revenue, in Canadian Dollars increased from CAD$3,963,274 to CAD$4,003,090$0 for the years ended December 31, 20142017 and 2015, respectively, an increase of $39,816 or 1.0%.2016, respectively. The decrease in revenue in US$ terms is attributable to the relative strength of the US$ against the CAD$ during the current year, the average exchange rate between the CAD$2017 represents revenues earned from our Seastone operations, located in Delray Beach and the US$ has weekend from $0.9051acquired in February 2017. Revenue in the prior year to $0.7833 inis reflected under discontinued operation described below. Since this is the currentfirst year a decrease in the average exchange rate of 15.5%. The Company believes that revenue will grow over the next year.operations for Seastone, we have no meaningful comparison.

Operating Expenses

Operating expenses totaled $3,459,450was $2,382,573 and $4,757,851$790,880 for the years ended December 31, 20152017 and 2014,2016, respectively, a decreasean increase of $1,298,401$1,591.693 or 27%201.3%. The decreaseincrease in operating expenses in US$ 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.  to:

Operating loss

The operating loss totaled $320,572was $1,453,157 and $1,341,509$790,880 for the years ended December 31, 20152017 and 2014,2016, respectively, a decreasean increase of $1,020,937, primarily due$662,277 or 83.7%. The increase is attributable to the declinemovement in revenue and operating expenses explainedabove.discussed above.

Other expenseincome

Other expenseincome of $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$475,487 and $310,583$72,508 for the years ended December 31, 20152017 and 2014,2016, respectively, a decreasean increase of $118,479$402,979 or 38.1%555.8%. The declineOther income in the current period consists of an approximate declinethe reversal of $29,871 duea provision raised against a receivable on the disposal of the Endoscopy Clinic in prior years amounting to $472,368, the deterioration inreceivable was assigned to Leon Developments as part of the exchange rate and a reduction inpurchase consideration paid on the interest bearing convertible notes which were carriedacquisition of CCH. Other income in the prior year offset byrepresented the proceeds related to the sale of certain oil rights which belonged to the Company prior to changing its operations to that of drug rehabilitation and treatment centers.

Other expense

Other expense of $5,093,954 and $156,387 for the years ended December 31, 2017 and 2016, an increase of $4,937,567 or 3,157.3%, represents; ; i) $5,074,689 of the excess of the purchase price paid over the carrying value of the assets of CCH. This expenditure is classified as once-off compensation expense to our CEO who owns 100% of Leon Developments, the counterparty to the purchase of the CCH Subsidiary; ii) $19,265 represents the loss realized on disposing of a portion of the mortgage owned by the Company in CCH, at a discount to face value. Other expense in the prior period consists primarily of expenses incurred in operating the Seastone of Delray Clinic, in terms of a management agreement, prior to its acquisition on February 14, 2017.

Interest income

Interest income of $32,074 consists primarily of interest earned on the receivable from the sale of our Endoscopy Clinic in prior years. The interest due on this receivable was reversed in prior periods due to uncertainty as to the collectability of this amount. The receivable was assigned to Leon Developments as part of the purchase consideration for CCH.

Interest expense

Interest expense of $367,547 and $29,504 for the years ended December 31, 2017 and 2016, respectively, an increase of $338,043 or 1,145.8% was primarily due to interest due on the mortgage loans assumed by the Company when it acquired CCH and on the purchase money mortgage loan entered into to acquire the properties associated with Seastone of Delray. In the prior year the interest expense attributable toconsisted primarily of interest on payrollthe short term convertible note advanced to the Company during the prior period and Harmonized SalesTax(“HST”), and accruals for income taxpenalties.subsequently paid off before the prior period end.

Debt discount

Debt discount was $668,916 and $93,244 for the year ended December 31, 2017 and 2016, respectively, an increase of $575,672 or 617.4%. The charge during the current period represents the amortization of the value of the warrants issued in terms of the convertible loan agreements entered into during December 2016 and January 2017 and the amortization of the fair value of the beneficial conversion feature of convertible notes issued to note holders during 2017, the fair value of the warrants and the beneficial conversion feature are amortized over a six to twelve month period, the term of the underlying convertible securities. The $93,244, incurred in the prior period represents the amortization of the value of warrant and original issue discount attached to a short-term loan.

Derivative liability movement

The derivative liability movement during the current year represents the mark to market movements of variably priced convertible notes and warrants issued during the current year. These securities are marked to market on a quarterly basis and the resultant gain or loss is booked as a derivative liability movement in the statement of operations.

Foreign exchange movements

Foreign exchange movements of $184,586, represent$(81,031) and $811 for the years ended December 31, 2017 and 2016, represents the realized exchange lossgains and (losses) 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 lossincome (loss) from discontinued operations

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

Net Loss

Net loss totaled $1,155,176of $6,821,889 and $1,900,273$735,987 for the years ended December 31, 20152017 and 2014,2016, respectively, a decreasean increase of $745,097,$6,085,902 or 826.9%:

The current year income is primarily made up as follows:

Net loss

Net loss of $1,368,487 and $260,709 for the years ended December 31, 2017 and 2016, respectively, an increase of $1,107,778 or 424.98%, is primarily due to the decrease in operating expenses,profit realized on the sale of the Canadian Rehab clinic of $7,494,828, the reversal of the provision raised against the loan on sale of the Endoscopy unit inclinic of $472,368, offset by the prior yearcompensation charge of $5,074,689 relating to the acquisition of CCH, the amortization of $668,916 of debt discount during the current period and the decline in interest expense, discussed above.mark-to-market movements of the derivative financial liabilities.

Contingency related to outstanding payroll tax liabilities:liabilities

The Company wasis delinquent in filing previous payrollits USA tax returns, resulting in taxes, interest andthese returns are currently being prepared by our tax advisors, although we do not anticipate any taxation liability to arise, we may be faced with penalties payable at December 31, 2015 and 2014. As of December 31, 2015 and 2014 as part of Taxes Payable, thefor failing to file tax returns timeously.

The Company has payrollalso not filed certain foreign assets forms due to the US Federal Government. A provision of $250,000 was made for any potential penalties due This issue is being addressed by our tax liabilitiesadvisors together with our tax returns mentioned above. remaining liability of approximately $2,429,032 and $2,065,000, respectively due$250,000 relates 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.filing of certain foreign assets forms. This issue is currently being addressed.

Liquidity and Capital Resources

The following table summarizes working capital at December 31, 2015,2017, compared to December 31, 2014.2016.