Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | ETHEMA HEALTH Corp | |
Entity Central Index Key | 0000792935 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Ex Transition Period | true | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,841,090,247 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash | $ 4,073 | $ 2,975 |
Accounts receivable, net | 2,935 | 105,842 |
Prepaid expenses | 17,626 | 26,625 |
Other current assets | 442,893 | 120,000 |
Total current assets | 467,527 | 255,442 |
Non-current assets | ||
Due on sale of business | 4,862 | 4,969 |
Property nd equipment | 2,781,553 | 2,950,668 |
Total non-current assets | 2,786,415 | 2,955,637 |
Total assets | 3,253,942 | 3,211,079 |
Current liabilities | ||
Bank overdraft | 11,079 | |
Accounts payable and accrued liabilities | 795,297 | 1,022,175 |
Taxes payable | 811,834 | 792,915 |
Convertible loans, net of discounts | 4,264,319 | 5,041,113 |
Short term loans | 108,615 | 106,934 |
Mortgage loans | 114,115 | 114,290 |
Federal assistance loans | 87,101 | |
Derivative liability | 19,678,918 | 8,694,272 |
Dividends payable | 14,927 | |
Related party payables | 2,891,126 | 2,793,080 |
Total current liabilities | 28,766,252 | 18,575,858 |
Non-current liabilities | ||
Third party loan | 669,325 | 774,820 |
Federal assistance loans | 69,681 | |
Total non-current liabilities | 4,434,790 | 4,655,765 |
Total liabilities | 33,201,042 | 23,231,623 |
Stockholders' deficit | ||
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, nil outstanding at September 30, 2020 and December 31, 2019. | ||
Preferred Stock - Series B; $1.00 par value, 400,000 authorized, 400,000 and 0 issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | 400,000 | |
Common stock; $0.01 par value,10,000,000,000 shares authorized; 1,841,090,247 and 155,483,897 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively. | 18,410,903 | 1,554,838 |
Common stock discount | (16,429,220) | |
Additional paid-in capital | 23,327,307 | 23,188,527 |
Accumulated other comprehensive income | 697,565 | 727,976 |
Accumulated deficit | (57,053,655) | (45,491,885) |
Controlling stockholders’ deficit | (30,647,100) | (20,020,544) |
Non-controlling interest | 700,000 | |
Total stockholders' deficit | (29,947,100) | (20,020,544) |
Total liabilities and stockholders' deficit | $ 3,253,942 | $ 3,211,079 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common Stock Par Value | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 10,000,000,000 | 10,000,000,000 |
Common Stock Shares Issued | 1,841,090,247 | 155,483,897 |
Common Stock Shares Outstanding | 1,841,090,247 | 155,483,897 |
Preferred Stock, Seriea A Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Series A Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Series A Shares Issued | ||
Preferred Stock, Series A Shares Outstanding | ||
Preferred Stock, Series B Par Value | $ 1 | $ 1 |
Preferred Stock, Series B Shares Authorized | 400,000 | 400,000 |
Preferred Stock, Series B Shares Issued | 400,000 | 0 |
Preferred Stock, Series B Shares Outstanding | 400,000 | 0 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 89,829 | $ 148,042 | $ 255,672 | $ 328,244 |
Operating expenses | ||||
General and administrative | 11,991 | 216,004 | 43,805 | 1,123,207 |
Rental expense | 1,500 | 432,617 | 4,000 | 1,212,042 |
Professional fees | 40,478 | 92,407 | 177,528 | 510,608 |
Salaries and wages | 31,297 | 370,341 | 73,287 | 1,103,054 |
Depreciation | 32,010 | 47,104 | 91,598 | 179,399 |
Total operating expenses | 117,276 | 1,158,473 | 390,218 | 4,128,310 |
Operating loss | (27,447) | (1,010,431) | (134,546) | (3,800,066) |
Other Income (expense) | ||||
Other income | 6,600 | 6,600 | ||
Other expense | (11,729) | (11,729) | ||
Interest income | 1 | 51 | 629 | 15,313 |
Gain on debt extinguishment | 12,683,678 | |||
Loss on debt conversion | (312,836) | |||
Loss on disposal of property | (692,488) | |||
Warrant exercise | (95,868) | |||
Bonus shares issued to investors | (143,500) | |||
Interest expense | (124,972) | (299,022) | (492,984) | (841,160) |
Amortization of Debt discount | (99,202) | (974,084) | (628,892) | (2,564,338) |
Derivative liability movement | (9,841,979) | 1,875,402 | (22,634,549) | 3,130,273 |
Foreign exchange movements | (140,811) | 59,983 | 82,551 | (211,967) |
Net income (loss) before taxation | (10,234,410) | (353,230) | (11,532,817) | (5,113,062) |
Taxation | ||||
Net loss | (10,234,410) | (353,230) | (11,532,817) | (5,113,062) |
Preferred stock dividend | (24,301) | (28,952) | ||
Net loss available to common stockholders | (10,258,711) | (353,230) | (11,561,769) | (5,113,062) |
Foreign currency translation adjustment | 54,071 | (21,394) | (30,411) | (60,720) |
Total comprehensive loss | $ (10,204,640) | $ (374,624) | $ (11,592,180) | $ (5,173,782) |
Loss per share Basic and Diluted | $ (0.01) | $ 0 | $ (0.01) | $ (0.04) |
Weighted average common shares outstanding - Basic and outstanding | 1,841,090,247 | 143,636,081 | 1,498,132,036 | 133,121,771 |
Shareholders Equity
Shareholders Equity - USD ($) | Preferred Series B Stock | Common Stock | Discount to Par Value | Additional Capital | Comprehensive Income | Accumulated Deficit | Controlling Shareholders Interest | Noncontrolling Interest | Total |
Beginning Balance, Shares at Dec. 31, 2018 | 124,300,341 | ||||||||
Beginning Balance, Value at Dec. 31, 2018 | $ 1,243,004 | $ 20,939,676 | $ 630,411 | $ (30,529,044) | $ (7,715,953) | $ (7,715,953) | |||
Fair value of warrants issued | 874,566 | 874,566 | 874,566 | ||||||
Shares issued for commitment fees, Shares | 71,111 | ||||||||
Shares issued for commitment fees, Value | $ 711 | 4,267 | 4,978 | 4,978 | |||||
Foreign currency translation | 43,097 | 43,097 | 43,097 | ||||||
Net loss | (3,088,680) | (3,088,680) | (3,088,680) | ||||||
Ending Balance, Shares at Mar. 31, 2019 | 124,371,452 | ||||||||
Ending Balance, Value at Mar. 31, 2019 | $ 1,243,715 | 21,818,509 | 673,508 | (33,617,724) | (9,881,992) | (9,881,992) | |||
Fair value of warrants issued | 332,209 | 332,209 | 332,209 | ||||||
Share based compensation, Shares | 5,300,000 | ||||||||
Share based compensation, Value | $ 53,000 | 318,000 | 371,000 | 371,000 | |||||
Conversion of convertible notes, Shares | 11,875,000 | ||||||||
Conversion of convertible notes, Amount | $ 118,750 | 831,250 | 950,000 | 950,000 | |||||
Bonus shares issued to investors, Shares | 2,050,000 | ||||||||
Bonus shares issued to investors, Value | $ 20,500 | 123,000 | 143,500 | 143,500 | |||||
Foreign currency translation | 39,017 | 39,017 | 39,017 | ||||||
Net loss | (1,671,152) | (1,671,152) | (1,671,152) | ||||||
Ending Balance, Shares at Jun. 30, 2019 | 143,596,452 | ||||||||
Ending Balance, Value at Jun. 30, 2019 | $ 1,435,965 | 23,422,968 | 712,525 | (35,288,876) | (9,717,418) | (9,717,418) | |||
Fair value of warrants issued | 113,722 | 113,722 | 113,722 | ||||||
Conversion of convertible notes, Shares | 260,416 | ||||||||
Conversion of convertible notes, Amount | $ 2,605 | 15,624 | 18,229 | 18,229 | |||||
Foreign currency translation | (21,394) | (21,394) | (21,394) | ||||||
Net loss | (353,230) | (353,230) | (353,230) | ||||||
Ending Balance, Shares at Sep. 30, 2019 | 143,856,868 | ||||||||
Ending Balance, Value at Sep. 30, 2019 | $ 1,438,570 | 23,552,314 | 691,131 | (35,642,106) | (9,960,091) | (9,960,091) | |||
Beginning Balance, Shares at Dec. 31, 2019 | 155,483,897 | ||||||||
Beginning Balance, Value at Dec. 31, 2019 | $ 1,554,838 | 23,188,527 | 727,976 | (45,491,885) | (20,020,544) | (20,020,544) | |||
Exercise of warrants, Shares | 103,000,000 | ||||||||
Exercise of warrants, Value | $ 1,030,000 | $ (937,048) | 92,952 | 92,952 | |||||
Conversion of convertible notes, Shares | 1,316,679,078 | ||||||||
Conversion of convertible notes, Amount | $ 13,166,792 | (12,635,787) | 531,005 | 531,005 | |||||
Shares issued for commitment fee, Shares | 2,700,000 | ||||||||
Shares issued for commitment fee, Amount | $ 27,000 | 138,780 | 165,780 | 165,780 | |||||
Foreign currency translation | (185,813) | (185,813) | (185,813) | ||||||
Net loss | (10,338,286) | (10,338,286) | (10,338,286) | ||||||
Ending Balance, Shares at Mar. 31, 2020 | 1,577,862,975 | ||||||||
Ending Balance, Value at Mar. 31, 2020 | $ 15,778,630 | (13,572,835) | 23,327,307 | 542,163 | (55,830,171) | (29,754,906) | (29,754,906) | ||
Exercise of warrants, Shares | 81,000,000 | ||||||||
Exercise of warrants, Value | $ 810,000 | (807,084) | 2,916 | 2,916 | |||||
Conversion of convertible notes, Shares | 82,227,272 | ||||||||
Conversion of convertible notes, Amount | $ 822,273 | (793,990) | 28,283 | 28,283 | |||||
Extinguishment of debt, Shares | 400,000 | ||||||||
Extinguishment of debt, Value | $ 400,000 | (280,311) | 119,689 | $ 700,000 | 819,689 | ||||
Settlement of liabilities, Shares | 100,000,000 | ||||||||
Settlement of liabilities, Value | $ 1,000,000 | (975,000) | 25,000 | 25,000 | |||||
Foreign currency translation | 101,331 | 101,331 | 101,331 | ||||||
Net loss | 9,039,879 | 9,039,879 | 9,039,879 | ||||||
Preferred stock dividends accrued | (4,652) | (4,652) | (4,652) | ||||||
Ending Balance, Shares at Jun. 30, 2020 | 400,000 | 1,841,090,247 | |||||||
Ending Balance, Value at Jun. 30, 2020 | $ 400,000 | $ 18,410,903 | (16,429,220) | 23,327,307 | 643,494 | (46,794,944) | (20,442,460) | 700,000 | (19,742,460) |
Foreign currency translation | 54,071 | 54,071 | 54,071 | ||||||
Net loss | (10,234,410) | (10,234,410) | (10,234,410) | ||||||
Preferred stock dividends accrued | (24,301) | (24,301) | (24,301) | ||||||
Ending Balance, Shares at Sep. 30, 2020 | 400,000 | 1,841,090,247 | |||||||
Ending Balance, Value at Sep. 30, 2020 | $ 400,000 | $ 18,410,903 | $ (16,429,220) | $ 23,327,307 | $ 697,565 | $ (57,053,655) | $ (30,647,100) | $ 700,000 | $ (29,947,100) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities | ||
Net loss | $ (11,532,817) | $ (5,113,062) |
Adjustment to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation | 91,598 | 179,399 |
Gain on debt extinguishment | (12,683,678) | |
Non-cash interest accrual on escrow deposit | (24) | (15,280) |
Warrant exercise | 95,868 | |
Loss on debt conversion | 312,836 | 11,729 |
Shares issued for services | 165,780 | |
Loss on disposal of property | 692,488 | |
Bonus shares issued to investors | 143,500 | |
Non-cash compensation for services | 375,978 | |
Amortization of debt discount | 628,893 | 2,564,338 |
Unrealized foreign exchange gain | (146,385) | |
Derivative liability movements | 22,634,549 | (3,130,273) |
Non-cash deferral of operating lease liability expense | 259,299 | |
Movement in receivables reserve | (2,734) | |
Changes in operating assets and liabilities | ||
Accounts receivable | 105,561 | 38,517 |
Prepaid expenses and other current assets | (319,893) | (53,017) |
Accrued purchase consideration | 322,217 | |
Accounts payable and accrued liabilities | 215,004 | 1,202,253 |
Net cash used in operating activities | (435,442) | (2,521,914) |
Investing activities | ||
Proceeds on disposal of property, net of closing costs of $183,344 | 3,318,141 | |
Deposit refunded | 5,995 | 15,592 |
Purchase of fixed assets | (22,868) | |
Net cash used in Investing activities | 5,995 | 3,310,865 |
Financing activities | ||
Proceeds from bank overdraft | 28,062 | |
Repayment in bank overdraft | (11,079) | |
Repayment of mortgage loans | (79,134) | (3,026,653) |
Proceeds from convertible notes | 450,000 | 2,912,355 |
Repayment of convertible notes | (72,412) | (1,123,666) |
Proceeds from federal assistance loans | 156,782 | |
Proceeds from promissory notes | 153,541 | |
Repayment of promissory notes | (7,552) | |
Dividends paid | (14,012) | |
Proceeds from related party notes | 3,174 | 85,484 |
Net cash provided by (used in) financing activities | 433,319 | (978,429) |
Effect of exchange rate on cash | (2,774) | 165,552 |
Net change in cash | 1,098 | (23,926) |
Beginning cash balance | 2,975 | 24,674 |
Ending cash balance | 4,073 | 748 |
Supplemental cash flow information | ||
Cash paid for interest | 251,539 | 683,487 |
Cash paid for income taxes | ||
Non cash investing and financing activities | ||
Fair value of warrants issued | $ 1,320,497 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. Nature of business Ethema Health Corporation (the “Company”) was incorporated under the laws of the state of Colorado, USA, on April 1, 1993. Effective April 4, 2017, the Company changed its name to Ethema Health Corporation and prior to that, on May 2012, the Company had changed its name to GreeneStone Healthcare Corporation from Nova Natural Resources Corporation. As of December 31, 2017, the Company owned 100% of the outstanding shares of GreeneStone Clinic Muskoka Inc., incorporated in 2010 under the laws of the Province of Ontario, Canada; Cranberry Cove Holdings Ltd., incorporated on January 9, 2004 under the laws of the Province of Ontario, Canada; Addiction Recovery Institute of America (“ARIA”) (formerly Seastone Delray Healthcare, LLC), incorporated on May 17, 2016 under the laws of Florida, USA; and Delray Andrews RE, LLC, incorporated on May 17, 2016 under the laws of Florida, USA. During December 2016, the Company obtained a license to operate and provide addiction treatment healthcare services in On February 14, 2017, the Company completed a series of transactions (referred to collectively as the “Restructuring Transactions”), including a Share Purchase Agreement (the “SPA”) The “APA”) Under the SPA, 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 CFO of the Company (“Mr. Leon”). CCH owns the real estate on which the Canadian Rehab Clinic 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. Under the APA, the assets of the Canadian Rehab Clinic were sold by the Company, through its subsidiary, GreeneStone Clinic Muskoka Inc. (“Muskoka”), to Canadian Addiction Residential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000, plus an additional 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 was to remain in escrow for up to two years to cover indemnities given by the Company. The proceeds of the Muskoka clinic asset sale were used to pay down certain tax debts and operational costs of the Company and to fund the Florida Purchase, mentioned below. Through the APA, Immediately after closing on the sale of the assets of the Canadian Rehab Clinic, the Company closed on the acquisition of the real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements 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 May 23, 2018, the Company converted a purchase agreement with AREP 5400 East Avenue LLC to a ten year lease agreement for a substance abuse treatment center in properties located at 5400, 5402 and 5410 East Avenue, west Palm Beach, Florida. The Company was also granted an option to purchase the property at a price of $17,250,000, increasing by $750,000 per month. The Company ceased operations in its Delray Beach properties and relocated its treatment facility to the newly leased premises in West Palm Beach. On April 2, 2019, the Company disposed of the real property located at 801 Andrews Avenue, Delray Beach for gross proceeds of $3,500,000, retaining the property at 810 Andrews Avenue Delray Beach, Florida. On October 10, 2019, the Company transferred the real Property located at 810 Andrews Avenue, Delray Beach, Florida to Leonite Capital LLC, for net proceeds of $1,398,510, which proceeds were offset against the convertible loan owing to Leonite. On December 20, 2019 the Company entered into an agreement to terminate the lease agreement with AREP 5400 East Avenue LLC on January 30, 2020, which property was subsequently sold to a third party by the landlord. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of significant accounting policies The (a) unaudited condensed consolidated balance sheets as of September 30, 2020, which have been derived from the unaudited condensed consolidated financial statements, and as of December 31, 2019, which have been derived from audited consolidated financial statements, and (b) the unaudited condensed consolidated statements of operations and cash flows of the Company, have All amounts referred to in the notes to the unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise. a) Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. b) Principles of consolidation and foreign currency translation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation. Certain of the Company’s subsidiaries functional currency is the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, “Foreign Currency Translation” as follows: i. Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. ii. Equity at historical rates. iii. Revenue and expense items and cash flows at the average rate of exchange prevailing during the period. Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ deficit as a component of accumulated other comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss). For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period. The relevant translation rates are as follows: At September 30, 2020, a closing rate of CDN$1.00 equals US$0.7497 and an average exchange rate of CDN$1.00 equals US$0.7507. For the nine months ended September 30, 2019, an average exchange rate of CAD$1.0000 equals US$0.7551 and at December 31, 2019 a closing rate of $0.7699. c) Revenue Recognition ASU 2014-09 requires companies to exercise more judgment and recognize revenue using a five-step process. As a result of certain changes required by ASU 2014-09, the majority of the Company’s provision for doubtful accounts are recorded as a direct reduction to revenue instead of being presented as a separate line item on the condensed consolidated statements of operations. The adoption of ASU 2014-09 has no impact on the Company’s accounts receivable as it was historically recorded net of allowance for doubtful accounts and contractual adjustments, and the Company has eliminated the presentation of allowance for doubtful accounts on the condensed consolidated balance sheets. As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the The Company receives payments from the following sources for services rendered in our U.S. Facility: (i) commercial insurers; and (ii) individual patients and clients. As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and did not adjust for the effects of a significant financing component. The Company derives a significant portion of its revenue from other 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 in-patient facilities and cost settlement provisions. Management estimates the transaction price on a pay or 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. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Settlements under cost reimbursement agreements 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. However, there can be no assurance that any such adjustments and final settlements will not have a material effect on the Company’s financial condition or results of operations. The Company’s accounts receivables were $2,935 and $105,842 for the nine months ended September 30, 2020 and year ended December 31, 2019, respectively, and were included in other current assets in the condensed consolidated balance sheets. Management believes that these receivables are properly stated and are not likely to be settled for a significantly different amount. The net adjustments to estimated accounts receivable settlements resulted in a decrease in revenues of $0 and $414,603 for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. The Company’s revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services, as defined below. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its revenue transactions: i. identify the contract with a customer; ii. identify the performance obligations in the contract; iii. determine the transaction price; iv. allocate the transaction price to performance obligations in the contract; and v. recognize revenue as the performance obligation is satisfied. The Company has two operating segments from which it derives revenues which is recognized on the basis described below. i. Rental Income In terms of the lease agreement, on a monthly basis as long as the facility is utilized by the tenant ii. In-patient revenue The patients have been treated and provided with services by the Company; there is clear evidence that an arrangement exists; the amount of revenue and related costs can be measured reliably; and it is probable that the economic benefits associated with the transaction will flow to the Company. During 2020, the Company’s revenues were solely comprised of rental income. d) Non-monetary transactions The Company’s policy is to measure an asset exchanged or transferred in a non-monetary transaction at the more reliable measurement of the fair value of the asset given up and the fair value of the asset received, unless: ● The transaction lacks commercial substance; ● The transaction is a transfer between entities under common control; ● The transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange; ● Neither the fair value of the asset received nor the fair value of the asset given up is reliably measurable; or ● The transaction is a non-monetary, non-reciprocal transfer to owners that represents a spinoff or other form of restructuring or \ e) Cash and cash equivalents The Company’s policy is to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to overdrawn and term deposits with a maturity period of three months or less from the date of acquisition. The Company had no cash equivalents at September 30, 2020 and December 31, 2019. f) Accounts receivable Accounts receivable primarily consists of amounts due from third-party payors (non-governmental) and private pay patients and is recorded net of allowances for doubtful accounts and contractual discounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s unaudited condensed consolidated financial statements is recorded at the net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimating net revenues at the time of billing that may result in the Company receiving less than the recorded receivable, (ii) the risk of non-payment as a result of commercial insurance companies denying claims, (iii) the risk that patients will fail to remit insurance payments to the Company when the commercial insurance company pays out-of-network claims directly to the patient, (iv) resource and capacity constraints that may prevent the Company from handling the volume of billing and collection issues in a timely manner, (v) the risk that patients do not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients. g) Allowance for Doubtful Accounts, Contractual and Other Discounts The Company derives the majority of its revenues from commercial payors at out-of-network rates. Management estimates the allowance for contractual and other discounts based on its historical collection experience. The services authorized and provided and related reimbursement are often subject to interpretation and negotiation that could result in payments that differ from the Company’s estimates. The Company’s allowance for doubtful accounts is based on historical experience, but management also takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. An account is written off only after the Company has pursued collection efforts or otherwise determines an account to be uncollectible. Uncollectible balances are written-off against the allowance. Recoveries of previously written-off balances are credited to income when the recoveries are made. h) Financial instruments The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions. The Company subsequently measures all its financial assets and financial liabilities at amortized cost. Financial assets measured at amortized cost include cash and accounts receivable. Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, harmonized sales tax payable, withholding taxes payable, convertible notes payable, loans payable and related party notes. Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write- down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income. The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: · Level 1. Observable inputs such as quoted prices in active markets; · Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and · Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. The Company measures its convertible debt and derivative liabilities associated therewith at fair value. These liabilities are revalued periodically and the resultant gain or loss is realized through the Statement of Operations and Comprehensive Loss. i) Property and equipment Property and equipment is recorded at cost. Depreciation is calculated on the straight line basis over the estimated life of the asset: · Buildings 25 years j) Income taxes The Company accounts for income taxes under the provisions of ASC Topic 740, “Income Taxes”. ASC Topic 740 contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal 2001, through 2019 are subject to audit or review by the US tax authorities, whereas fiscal 2010 through 2019 are subject to audit or review by the Canadian tax authority. k) Net income (loss) per Share Basic net income (loss) per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted net income (loss) per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation. Dilution is computed by applying the treasury stock method for options and warrants. Under this method, “in-the money” options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Dilution is computed by applying the if-converted method for convertible preferred stocks. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to common stock. The shares issuable upon conversion will be added share l) Stock based compensation Stock based compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense over the employee’s requisite service period or vesting period on a straight-line basis. Share-based compensation expense recognized in the unaudited condensed consolidated statements of operations and comprehensive loss is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. This estimate will be revised in subsequent periods if actual forfeitures differ from those estimates. We have minimal awards with performance conditions and no awards dependent on market conditions. m) Derivatives The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Black Scholes Option Pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Company’s If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, debt with Conversion and Other Options (subtopic 470-20): and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), certain accounting models for convertible debt instruments with beneficial conversion features or cash conversion features are removed from the guidance and for equity instruments the contracts affected are free standing instruments and embedded features that are accounted for as derivatives, the settlement assessment was simplified by removing certain settlement requirements. This ASU is effective for fiscal years and interim periods beginning after December 15, 2021. The effects of this ASU on the Company’s condensed consolidated financial statements is currently being assessed and is expected to have an impact on the treatment of certain convertible instruments. The FASB issued several updates during the period, none of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the condensed consolidated financial statements upon adoption. o) Financial instruments Risks The Company is exposed to various risks through its condensed consolidated financial instruments. The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet date, September 30, 2020 and December 31, 2019. i. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that subject the Company to credit risk consist primarily of accounts receivable. Credit risk associated with accounts receivable of ARIA is mitigated as only a percentage of the revenue billed to health insurance companies is recognized as income until such time as the actual funds are collected. The revenue is In the opinion of management, credit risk with respect to accounts receivable is assessed as low. ii. Liquidity risk Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. The Company is exposed to liquidity risk through its working capital deficiency of $28,298,725 and an accumulated deficit of $57,053,655. The Company continues to be dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from the prior year. iii. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risk: interest rate risk, currency risk, and other price risk. The Company is exposed to interest rate risk and currency risk. a. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to minimal interest rate risk as there is no overdraft indebtedness as of September 30, 2020. In the opinion of management, interest rate risk is assessed as low, not material and remains unchanged from the prior year. b. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is subject to currency risk as it has subsidiaries that operate in Canada and are subject to fluctuations in the Canadian dollar. A substantial portion of the Company’s financial assets and liabilities are denominated in Canadian dollars. Based on the net exposures at September 30, 2020, a 5% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an approximate $3,722 low, year. c. Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. In the opinion of management, the Company is not exposed to this risk and remains unchanged from the prior year. |
Going concern
Going concern | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 3. Going concern The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the normal course of business. As of September 30, 2020 the Company has a working capital deficiency of approximately $28,300,000 and accumulated deficit of approximately $57,100,000. Management believes that current available resources will not be sufficient to fund the Company’s planned expenditures over the next 12 months. Accordingly, the Company will be dependent upon the raising of additional capital through placement of common shares, and/or debt financing in order to implement its business plan, and generating sufficient revenue in excess of costs. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These factors create substantial doubt about the Company’s ability to |
Prepaid expenses and other curr
Prepaid expenses and other current assets | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid expenses and other current assets | 4. Prepaid expenses and other current assets Prepaid expenses and other current assets includes the following: On February 25, 2019, the Company entered into a Letter of Intent whereby it would purchase a 33.33% interest in Local Link Wellness, LLC (“LLW”) for gross proceeds of $400,000. LLW plans to provide a comprehensive addiction treatment program to large employee groups. The company has advanced LLW a total of $120,000 as at September 30, 2020. These funds were advanced as short-term promissory notes that are immediately due and payable and are classified as other current assets on our unaudited condensed consolidated balance sheet. The company invested funds in Evernia Health Services, LLC (“Evernia”), a newly formed entity which is 100% owned by American Treatment Holdings, Inc. (“ATHI”), a newly formed entity to hold the investment in Evernia. On June 30, 2020, the Company entered into a loan agreement with Evernia whereby it had advanced Evernia $290,075, the loan is non-interest bearing per annum and is repayable in instalments which are equal to the cash receipts collected during the previous month less ordinary business expenses and management fees paid to Ethema and Hawkins, which management fee is a maximum of $20,000 per month. The instalments commence on the earlier of; (i) December 31, 2020 and; (ii) the date that Evernia accumulates cash reserves of $200,000. The loan will remain in place until repaid in full. The repayment proceeds will be repaid directly to Leonite in reduction of the loan funds advanced by Leonite to the Company. |
Property plant and equipment
Property plant and equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property plant and equipment | 5. Property and equipment Property and equipment consists of the following: September 30, December 31, 2019 Cost Accumulated depreciation Net book value Net book value Land $ 161,181 $ — $ 161,181 $ 165,537 Property 3,049,063 (428,691 ) 2,620,372 2,785,131 $ 3,210,244 $ (428,691 ) $ 2,781,553 $ 2,950,668 Depreciation expense for the three months ended September 30, 2020 and 2019 was $32,010 and $47,104, respectively and for the nine months ended September 30, 2020 and 2019 was $91,598 and $179,399 respectively. |
Other Investments
Other Investments | 9 Months Ended |
Sep. 30, 2020 | |
Other Investments [Abstract] | |
Other Investments | 6. Other investments On June 30, 2020, the Company entered into an agreement whereby the Company will acquire 51% of American Treatment Holdings, Inc. (“ATHI”) from The Q Global Trust (“Seller”) and Lawrence B Hawkins (“Hawkins”), which in turn owns 100% of Evernia Health Services LLC. (“Evernia”), which operates drug rehabilitation facilities. The consideration for the acquisition is a loan to be provided by the purchaser to Evernia in the amount of $500,000. As of September 30, 2020, the Company had advanced Evernia approximately $290,100 including accrued interest thereon and the Company has agreed to advance an additional amount of approximately $10,000 (“the First Tranche”) within a reasonable time of concluding the loan agreements. The timing of the balance of the advance of approximately $200,000 will be mutually agreed upon between the parties. The Company has a 180 day option from the advancement of the First Tranche to purchase an additional 9% of ATHI for a purchase consideration of $50,000, payable to the Seller. On June 30, 2020, the Company entered into an agreement whereby the Company will acquire 51% of Behavioral Health Holdings, Inc. (“BHHI”) from The Q Global Trust (“Seller”) and Lawrence B Hawkins, which in turn owns 100% of Peace of Mind Counseling Services, Inc. (“PMCS”), which operates drug rehabilitation facilities. The consideration for the acquisition is still to be determined. The Company has a 180 day option, from the advancement of the first tranche to Evernia, to purchase an additional 9% of BHHI for a purchase consideration still to be determined, payable to the Seller. On July 12, 2020, the Company entered into a five year option agreement with Leonite Capital LLC (“Leonite”) and other investors (collectively the “Transferees”), the Company agreed to sell to the Transferees 20% of the total outstanding shares of ATHI from the shares of ATHI held by the company. The Company provided Leonite an option to purchase 2,666,667 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $267), based on the advances that Leonite and others made to the Company totaling $300,000. Leonite shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Leonite to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option. |
Taxes Payable
Taxes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Taxes Payable | 7. Taxes Payable The taxes payable consist of: · A payroll tax liability of $136,884 (CDN$182,589) in Greenestone Muskoka which has not been settled as yet. · The Company has assets and operates businesses in Canada and is required to disclose these operations to the US taxation authorities, the requisite disclosure has not been made. Management has reserved the maximum penalty due to the IRS in terms of · Estimated income taxes payable in certain of the Canadian operations. September 30, December 31, Payroll taxes $ 136,884 $ 140,583 HST/GST payable 59,031 26,524 US penalties due 250,000 250,000 Income tax payable 365,919 375,808 $ 811,834 $ 792,915 |
Short term convetible notes
Short term convetible notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Short term convertible notes | 8. Short term convertible notes The short-term convertible notes consist of the following: Interest Maturity date Principal Interest Debt Discount September 30, December 31, Leonite Capital LLC 6.5 % On demand $ 370,000 $ 6,776 $ (165,151 ) $ 211,625 $ 1,213,148 Power Up Lending Group — — — — — 33,707 — — — — — 51,827 First Fire Global Opportunities Fund 12.0 % August 1, 2020 — — — — 247,361 Auctus Fund, LLC 10.0 % June 1 , 2021 225,000 — — 225,000 129,016 10.0 % August 13, 2021 100,000 1,333 (86,849 ) 14,484 — Labrys Fund, LP 12.0 % January 8, 2020 200,000 — — 200,000 286,057 Ed Blasiak 6.5 % September 14, 2021 55,000 159 (52,589 ) 2,570 — Joshua Bauman 6.5 % September 14, 2021 110,000 318 (105,178 ) 5,140 — Series N convertible notes 6.0 % May 17, 2019 to September 16, 2020 3,229,000 376,500 - 3,605,500 3,079,997 $ 4,264,319 $ 5,041,113 Leonite Capital LLC On December 1, 2017, the Company closed on a private offering to raise US $1,500,000 in capital. The Company issued one senior secured convertible promissory note with a principal amount of $1,650,000 to Leonite Capital LLC (“Leonite”). The note is convertible into shares of common stock at a conversion price of $0.06 per share, subject to anti-dilution and price protection. The Note bears interest at the rate of 8.5% per annum. The Note’s amended maturity date was December 1, 2018. During the term of the Note the Company and the Subsidiaries was 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 Company paid a commitment fee of $132,000 settled through the issue of 1,650,000 shares of common stock and paid $20,000 towards the lenders legal fees. In conjunction with this note, the Company issued a five year warrant to purchase 27,500,000 shares of common stock at an exercise price or $0.10 per share, subject to anti-dilution and price protection. The Note provided that the parties use reasonable best efforts to close on the remaining $1,200,000 of availability under the Note by January 1, 2018. As a condition to the closing of the Balance Tranche, the parties must finalize and enter into additional agreements related to the Private Offering, including, but not limited to, (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; (iii) a Securities Pledge Agreement under which the Company and the Subsidiaries will grant the lender a blanket lien on their assets, and the Company will pledge its equity ownership in the Subsidiaries. Upon the closing of the Balance Tranche the maturity date of the Note was to become December 1, 2018. On 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, which note amended and restated 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, to 8.5% 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 amendment, 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; (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; effective January 2, 2018. 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. On March 29, 2018, the Company, entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $165,000, including an Original Issue Discount of $15,000, for net proceeds of $150,000. The note had a maturity date of December 1, 2018 and bears interest at a rate of 8.5% per annum. The outstanding principal amount of the note is convertible at any time and from time to time at the election of the purchaser following the issue date into shares of the Company’s common stock at a conversion price equal to $0.06 per share subject to anti-dilution and price protection. The Company paid a commitment fee of $11,550 settled through the issue of 165,000 shares of common stock. In conjunction with this note the Company issued a five year warrant to purchase 5,500,000 shares of common stock at an exercise price of $0.10 per share, subject to anti-dilution and price protection. On April 17, 2018, the Company, entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $605,000, including an Original Issue Discount of $55,000, for net proceeds of $550,000. The note had a maturity date of December 1, 2018 and bears interest at 8.5% per annum. The outstanding principal amount of the note is convertible at any time and from time to time at the election of the purchaser following the issue date into shares of the Company’s common stock at a conversion price equal to $0.06 per share subject to price protection and anti-dilution protection. The Company paid a commitment fee of $42,350 settled through the issue of 10,083,333 shares of common stock. In conjunction with this note the Company issued a five year warrant to purchase 10,083,333 shares of common stock at an exercise price of $0.10 per share, subject to anti-dilution and price protection. On January 17, 2019, the Company, entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $71,111, including an Original Issue Discount of $7,111, for net proceeds of $64,000. The note had a maturity date of July 25, 2019 and bears interest at 11.0% per annum. The outstanding principal amount of the note was convertible at any time and from time to time at the election of the purchaser following the issue date into shares of the Company’s common stock at a conversion price equal to $0.06 per share subject to price protection and anti-dilution protection. The Company paid a commitment fee of $4,978 settled through the issue of 71,111 shares of common stock. In conjunction with this note the Company issued a five year warrant to purchase 1,185,183 shares of common stock at an exercise price of $0.10 per share, subject to anti-dilution and price protection. Effective March 19, 2019, the Company entered into a note extension agreement with Leonite, whereby the convertible notes outstanding to Leonite, amounting to $2,420,000, for consideration of $75,000 added to the principal outstanding on the note on January 1, 2019, a further $75,000 added to the principal outstanding on the note on February 1, 2019 and a further $100,000 added to the principal of the note on March 15, 2019, the maturity date of all of the convertible notes above were extended to December 31, 2019 and has subsequently been partially settled by the transfer of the property located at 810 Andrews Avenue, Delray Beach, Florida, valued at $1,500,000. On August 26, 2019, the Company, entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $60,000, including an Original Issue Discount of $10,000, for net proceeds of $47,000. The note had a maturity date of September 10, 2019 and bears interest at 1.0% per annum. The outstanding principal amount of the note is convertible at any time and from time to time at the election of the purchaser following the issue date into shares of the Company’s common stock at a conversion price equal to $0.06 per share subject to price protection and anti-dilution protection. In conjunction with this note the Company issued a five year warrant to purchase 1,000,000 shares of common stock at an exercise price of $0.10 per share, subject to anti-dilution and price protection. On October 10, 2019, the Company transferred a warranty deed to the real property located at 810 Andrews Avenue, Delray Beach, Florida to Leonite Capital LLC, in settlement of indebtedness of $1,398,514 and additional expenses related to the disposal of the property of $36,470. These expenses of $36,470 were provided for resulting in net proceeds recognized on the transfer of the property of $1,362,044. On July 12, 2020, the company entered into a debt extinguishment agreement with Leonite whereby the following occurred: 1. The total amount outstanding under the note, including principal and interest was reduced to $150,000 2. $700,000 of the note was converted into Series A Redeemable Preferred shares in the Company’s subsidiary, Cranberry Cove Holdings, accruing dividends at 10% per annum. 3. $400,000 of the note was converted into series B Preferred stock in the Company for a 12 month period, mandatorily redeemable by the Company accruing dividends at 6% per annum payable in cash or stock, subject to certain conditions. 4. The remaining balance of $150,000 will accrue interest at 8.5% per annum and is convertible into common stock and repayable in 6 monthly installments of $25,000 commencing after December 12, 2020. 5. The existing warrants were cancelled and a new five year warrant, with a cashless exercise options, exercisable for a minimum of 326,286,847 shares of common stock and a maximum of 20% of the outstanding equity of the Company at an initial exercise price of $0.10 per share subject to adjustment based on new stock issuances or the lowest volume weighted exercise price of the stock for 30 days immediately preceding the exercise was issued to Leonite. On July 12, 2020, the Company entered into a Senior Secured Convertible Note agreement with Leonite for $440,000 with an original issue discount of $40,000 for gross proceeds of $400,000, the initial tranche advanced will be for cash of $200,000 plus the OID of $20,000, the remaining advances will be at the discretion of the Leonite. The loan bears interest at 6.5% per annum and matures on June 12, 2021. The Company is required to make monthly payments of the accrued interest on the advances made. The note is convertible into common shares at the option of the holder at $0.10 per share, or 80% multiplied by the price per share paid in subsequent financings or after a six month period from the effective date at 60% of the lowest trading price during the preceding 21 consecutive trading days. The note has both conversion price protection and anti-dilution protection provisions. As of September 30, 2020, net proceeds of $200,000 was advanced to the Company. Power Up Lending Group LTD On July 8, 2019, the Company entered into a Securities Purchase Agreement with Power Up, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $53,000. The Note had a maturity date of April 30, 2020 and bore interest at the rate of nine percent per annum from the date on which the Note was issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note is convertible at any time and from time to time at the election of Power Up during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 61% of the lowest closing bid price of the Company’s common stock for the ten trading days prior to conversion. Between January 10, 2020 and January 24, 2020, in terms of conversion notices received, Power Up converted the aggregate principal amount of $53,000 and interest thereon of $1,085 into 75,618,509 shares of common stock at an average conversion price of $0.000715 per share. On July 15 2019, the Company, entered into a Securities Purchase Agreement with Power Up, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $83,000. The Note has a maturity date of April 30, 2020 and bears interest at the rate of nine percent per annum from the date on which the Note was issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note is convertible at any time and from time to time at the election of Power Up during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 61% of the lowest closing bid price of the Company’s common stock for the ten trading days prior to conversion. Between January 24, 2020 and February 27, 2020, in terms of conversion notices received, Power Up converted the aggregate principal amount of $41,400 into 453,800,493 shares of common stock at an average conversion price of 0.0000912 per share. On June 1, 2020, The Company repaid the Power Up Lending Group $41,600 in full settlement of the convertible note entered into on July 15, 2019. First Fire Global Opportunities Fund On March 5, 2019, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $200,000, for net proceeds of $192,000 after the payment of legal fees and origination fees amounting to $8,000. The note has a maturity date of December 9, 2019. The outstanding principal amount of the note is convertible at any time and from time to time at the election of the purchaser. 180 days after the issued date into shares of the Company’s common stock at the lower of $0.08 per share or 65% of the lowest trade price during the ten consecutive trading days immediately prior to conversion. The note has certain buyback terms if the Company consummates a registered or unregistered primary offering of securities for capital raising purposes, or an option to convert at a 20% discount to the offering price to investors. Between September 11, 2019 and December 30, 2019, in terms of a conversion notices received, the Company issued 11,887,445 shares of Common stock in settlement of $36,592 of principal outstanding. Between January 6, 2020 and February 26, 2020, in terms of conversion notices received, First Fire converted an aggregate principal amount of $83,902 into 308,100,000 shares of common stock at an average conversion price of $0.000272 per share. On June 3, 2020, the Company entered into an agreement with First Fire whereby the remaining balance of the convertible note of $73,006 would be settled by two payments of $25,000 each. Between July 2, 2020 and August 17, 2020, the Company repaid the remaining principal outstanding of $50,000 plus additional interest charges of $1,500. Auctus Fund, LLC On August 7 2019, the Company, entered into a Securities Purchase Agreement with Auctus Fund, LLC, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $225,000. The Note had a maturity date of May 7, 2020 and bore interest at the rate of ten percent per annum from the date on which the Note was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note is convertible at any time and from time to time at the election of Auctus Fund, LLC during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock for the thirty trading days prior to conversion. On June 15, 2020, The Company entered into an amended agreement with Auctus whereby the Company agreed to discharge the principal amount of the note by nine equal monthly installments of $25,000 commencing in October 2020. On August 13, 2020, the Company entered into a Securities Purchase Agreement with Auctus Fund LLC, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $100,000 for net proceeds of $85,000 after certain fees and expenses of $15,000. The note has a maturity date of August 13, 2021 and bears interest at 10% per annum. The interest due on the note for the full twelve month period is due immediately upon issuance of the note, regardless of acceleration or prepayment. The principal amount of the note is payable in six monthly instalments of $16,666.66 commencing 180 days after the issuance date, the balance outstanding under the note due at maturity date. In the event a default occurs under the Note, the Note is convertible into shares of common stock at a conversion price equal to the lowest trading price over the prior 5 days prior to the date of the note or the five day volume weighted market price prior to the date of conversion. The Company is required to adhere to certain covenants including covenants concerning distributions of capital stock; restrictions on stock repurchases, additional borrowings sales of assets and loans and advances made by the Company. In conjunction with the issuance of the promissory note, the Company issued a five year warrant exercisable for 66,666,666 shares of common stock at an exercisable price of $0.0015 per share subject to anti-dilution and price protection adjustments. The Company also issued a second five year warrant exercisable for 66,666,666 shares of common stock at an exercisable price of $0.0015 per share subject to anti-dilution and price protection adjustments, which warrants will only be exercisable upon an event of default on the convertible note. Labrys Fund, LP On July 8, 2019, the Company, entered into a Securities Purchase Agreement with Labrys Fund, LP, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $282,000 for net proceeds of $253,800 after an original issue discount of $28,200. The Note had a maturity date of January 8, 2020 and bore interest at the rate of twelve percent per annum from the date on which the Note was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company had the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note was convertible at any time and from time to time at the election of Labrys during the period beginning on the date that is 180 days following the issue date into shares of the Company's common stock at a conversion price equal to 60% of the lowest closing bid price of the Company's common stock for the thirty trading days prior to conversion. The Company was also required to transfer 2,764,706 unissued shares of common stock, which shares will be returned to the Company if the note is repaid prior to the expiry of 180 days from the date of issuance. In connection with the issuance of the convertible promissory note to Labrys Fund LP, the Company issued 2,700,000 returnable shares. These shares were returnable if the note was paid prior to maturity date on January 8, 2020. The company had not repaid the note on the maturity date, January 8, 2020, therefore the 2,700,000 shares were expensed as an additional fee amounting to $165,780, the value of the shares on the date of grant. Between January 15, 2020 and February 25, 2020, in terms of conversion notices received, Labrys Fund LP converted the aggregate principal sum of $8,936 and interest of $19,867 into 479,160,076 shares of common stock at an average conversion price of 0.00006 per share. On May 15, 2020 the Company entered into an amended agreement with Labrys Fund LP whereby default interest and penalties were waived, no further conversions will be effectuated and the Company committed to make eight equal payments of $25,000 commencing on October 15, 2020, in full settlement of the balance outstanding. No event of default will occur as long as the Company makes all scheduled payments. Ed Blasiak On September 14, 2020, the Company entered into a Securities Purchase Agreement with Ed Blasiak (“Blasiak”), pursuant to which the Company issued a senior secured convertible promissory note in the aggregate principal amount of $55,000, including an original issue discount of $5,000. The note bears interest at 6.5% per annum and matures on September 14, 2021. The note is senior to any future borrowings and commencing on October 1, 2020 the Company will make monthly payments of the accrued interest under the note. The note may be prepaid at certain prepayment penalties and is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for anti-dilution provisions; or 80% of the price per share of subsequent equity financings or; after six months 60% of the lowest trading price during the preceding six month period. On September 14, 2020, the Company entered into a five year option agreement with Blasiak and other investors (collectively the “Transferees”), the Company agreed to sell to the Transferees 20% of the total outstanding shares of ATHI. The Company provided Blasiak an option to purchase 571,428 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $57), based on the advances that Blasiak and others made to the Company totaling $400,000. Blasiak shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Blasiak to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option. Joshua Bauman On September 14, 2020, the Company entered into a Securities Purchase Agreement with Joshua Bauman (“Bauman”), pursuant to which the Company issued a senior secured convertible promissory note in the aggregate principal amount of $110,000, including an original issue discount of $10,000. The note bears interest at 6.5% per annum and matures on September 14, 2021. The note is senior to any future borrowings and commencing on October 1, 2020 the Company will make monthly payments of the accrued interest under the note. The note may be prepaid at certain prepayment penalties and is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for anti-dilution provisions; or 80% of the price per share of subsequent equity financings or; after six months 60% of the lowest trading price during the preceding six month period. On September 14, 2020, the Company entered into a five year option agreement with Bauman and other investors (collectively the “Transferees”), the Company agreed to sell to the Transferees 20% of the total outstanding shares of ATHI. The Company provided Bauman an option to purchase 1,142,856 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $114), based on the advances that Bauman and others made to the Company totaling $400,000. Bauman shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Bauman to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option. Series N convertible notes Between January 28, 2019 and September 17, 2019, the Company closed several tranches of Series N Convertible notes in which it raised $1,643,894 in principal from accredited investors through the issuance to the investors of the Company’s Series N convertible notes, in the total original principal amount of $1,643,894, which Notes are convertible into the Company’s common stock at a conversion price of $0.08 per share together with three year warrants to purchase up to a total of 20,925,000 shares of the Company’s common stock at an exercise price of $0.12 per share. Both the conversion price under the Notes and the exercise price under the warrants are subject to standard adjustment mechanisms. The notes mature one year from the date of issuance. On May 15, 2019, one investor converted the aggregate principal amount of $950,000 of Series N convertible notes into 11,875,000 shares of common stock at a conversion price of $0.08 per share. |
Mortgage Loans
Mortgage Loans | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Mortgage Loans | 9. Mortgage loan Mortgage Loan payable is disclosed as follows: Interest rate Maturity date Principal Outstanding Accrued interest September 30, 2020 December 31, 2019 Cranberry Cove Holdings, Ltd. Pace Mortgage 4.2 % July 19, 2022 $ 3,805,081 $ 4,818 $ 3,809,899 $ 3,995,235 Disclosed as follows: Short-term portion $ 114,115 $ 114,290 Long-term portion 3,695,784 3,880,945 $ 3,809,899 $ 3,995,235 The aggregate amount outstanding at September 30, 2020 is payable as follows: Amount Within 12 months 114,115 Within 12 to 24 months 3,695,784 Total $ 3,809,899 Cranberry Cove Holdings, Ltd. On July 19, 2017, CCH, a wholly owned subsidiary, closed on a loan agreement in the principal amount of CDN$5,500,000. The loan is secured by a first mortgage on the premises owned by CCH located at 3571 Muskoka Road 169, Bala, Ontario (the “Property”). The loan bears interest at the fixed rate of 4.2% with a 5-year primary term and a 25-year amortization. The Company has guaranteed the loan and the Company’s chief executive officer and controlling shareholder also has personally guaranteed the Loan. CCH and the Company have granted the Lender a general security interest in its assets to secure repayment of the Loan. The loan is amortized with monthly installments of CDN $29,531. |
Third party loan
Third party loan | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Third party loan | 10. Third party loan On April 12, 2019, Eileen Greene, a related party assigned CDN1,000,000 of the amount owed by the Company to her to a third party. The loan bears interest at 12% per annum which the Company agreed to pay. On September 18, 2020, CDN$202,000 (approximately $153,193)of the principal balance was repaid to the third party. |
Derivative Liabilities
Derivative Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Derivative Liabilities | 11. Derivative liability The short-term convertible notes, together with certain warrants issued to Leonite and the short term convertible notes and warrants disclosed in note 8 above and note 13 below, have variable priced conversion rights with no fixed floor price and will reprice dependent on the share price performance over varying periods of time. This gives rise to a derivative financial liability, which was initially valued at inception of the convertible notes at $2,209,959 using a Black-Scholes valuation model. In terms of various debt extinguishment agreements entered into with convertible note holders, as disclosed in note 8 above, the Company agreed to settle certain convertible debt for a fixed cash price, resulting in a debt extinguishment, which included the extinguishment of the derivative liability which was previously recorded on the variable priced conversion feature of the convertible debt. In addition, the Company entered into an agreement with Leonite Capital LLC whereby certain warrants held by Leonite Capital LLC were cancelled and new warrants were issued with new pricing terms. The derivative liability associated with these warrants was included in the extinguishment calculations. The derivative liability is marked-to-market on a quarterly basis. As of September 30, 2020, the derivative liability was valued at $19,678,918. The following assumptions were used in the Black-Scholes valuation model: Nine months ended Calculated stock price $ 0.0001 to 0.0034 Risk free interest rate 0.05% to 0.33% Expected life of convertible notes and warrants 1 to 60 months expected volatility of underlying stock 193.9% to 779.0% Expected dividend rate 0 % The movement in derivative liability is as follows: September 30, December 31, Opening balance $ 8,694,272 $ 4,618,080 Derivative liability mark-to-market on convertible debt extinguishment 126,444,276 — Derivative liability on revised convertible notes and warrants arising from convertible debt extinguishment 6,349,265 — Derivative liability cancelled on debt extinguishment (144,893,444 ) — Derivative liability on issued convertible notes and variable priced warrants 450,000 1,477,163 Fair value adjustments to derivative liability 22,634,549 2,599,029 Closing balance $ 19,678,918 $ 8,694,272 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related party transactions Shawn E. Leon As of September 30, 2020 and December 31, 2019 the Company had a payable of $324,804 and $293,072, respectively to Shawn E. Leon. Mr. Leon is a director and CEO of the Company. The balances payable is non-interest bearing and has no fixed repayment terms. Mr. Leon was paid management fees of $0 for the nine months ended September 30, 2020 and 2019. Mr. Leon is entitled to management fees of $240,000 per annum, the fee is not accrued and will not be paid in arears. Leon Developments, Ltd. As of September 30, 2020 and December 31, 2019, the Company owed Leon Developments, Ltd., $869,850 and $904,121, respectively. The balance owing to Leon Developments, Ltd. Is non-interest bearing and has no fixed terms of repayment. Eileen Greene As of September 30, 2020 and December 31, 2019, the Company owed Eileen Greene, the spouse of Mr. Leon, $1,565,109 and $1,696,473, respectively. The amount owing to Ms. Greene is non-interest bearing and has no fixed repayment terms. |
Stockholders' deficit
Stockholders' deficit | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' deficit | 13. Stockholders' deficit Effective August 10, 2020, the Company amended its Articles of Incorporation whereby the authorized share capital was amended to the following: · Ten billion shares of common stock, par value $0.01 per share; · Ten million shares of Series A Preferred stock, par value $0.01 per share; and · Four hundred thousand Series B Preferred stock, par value $1.00 per share. Series A Preferred stock The salient terms of the Series A Preferred stock is summarized as follows: · Convertible into ten shares of common stock six months after the date of issue · No participation in the profits and losses of the corporation · No dividend entitlement · Upon redemption, repurchase or conversion, the Series A Preferred shares shall be cancelled and will not be eligible for reissue. Series B Preferred stock The salient terms of the Series B Preferred stock is summarized as follows: · Series B Preferred stock will rank senior to all other classes of stock · Entitled to cumulative dividends at 6% per annum payable in cash or in kind, monthly on the last day of each month, calculated on 360 day year consisting of 12, 30-day periods. · No voting rights other than on (i) amendment to the articles of incorporation; (ii) mergers, consolidations or reorganizations; (iii) a sale of substantially all of the assets of the Company; (iv) change of the rights and preferences of the Series B preferred stock; (v) fundamental transactions entered into or liquidation of the Company; · Redeemable at the option of the Company, one year from date of issue; · Mandatorily redeemable one year after the date of issuance; · Entitled to participate in any future debt or equity offerings as longs as 10% of the Series B Preferred stock is outstanding. a) Common shares Authorized, issued and outstanding The Company has authorized 10,000,000,000 shares with a par value of $0.01 per share. The company has issued and Between January 6, 2020 and June 9, 2020, the Company issued 1,398,906,350 shares of common stock in terms of conversion notices received from convertible note holders. The shares issued were issued below par based on the market price of the stock on the date of conversion and were valued at $559,285. On January 8, 2020, the Company recorded the issuance of 2,700,000 shares to Labrys Fund. These shares were originally issued to Labrys fund as shares returnable to the Company dependent on settlement of the convertible note at maturity. The Company did not settle the convertible note or interest thereon at maturity. Between January 6, 2020 and May 2, 2020, the Company issued 184,000,000 shares of common stock to Leonite Capital LLC in terms of the exercise of 224,390,247 warrants valued at $95,868 at an average exercise price of 0.00043 per share, based on the price protection afforded to the warrant holder. b) Series A Preferred shares Authorized, issued and outstanding The Company has authorized 10,000,000 Series A preferred shares with a par value of $0.01 per share, with 0 shares issued and outstanding. c) Series B Preferred shares With effect from June 12, the Company designated $400,000 of the Leonite Capital LLC convertible loan as Series B Preferred Stock issuable at a par value of $1.00 per share. d) Warrants The Company issued warrants to Leonite Capital LLC with an initial exercise price of $0.10 per share. The terms of these warrants included a price protection in the form of a reduction in the exercise price should the Company issue any stock at a price below the exercise price. The Company subsequently issued common stock at a price of $0.0000324 per share thereby triggering the price protection clause in the warrant agreement, resulting in an additional 152,017,272,726 warrants exercisable over shares of common stock. Leonite exercised warrants over 224,338,247 shares of common stock resulting in the issue of 184,000,000 shares of common stock. The remaining Leonite warrants exercisable for 154,300,675,861 shares of common stock were cancelled in terms of the debt extinguishment agreement entered into with Leonite and a further five year warrant exercisable for 326,286,847 shares of common stock, exercisable at $0.10 per share or the lowest volume weighted average price over a 30 day period preceding the date of issuance, exercise or twenty four month anniversary of issuance. A summary of all of the Company’s warrant activity during the period January 1, 2019 to September 30, 2020 is as follows: No. of shares Exercise price per Weighted average exercise price Outstanding as of January 1, 2019 97,499,908 $0.003 to $0.12 $ 0.0910000 Granted 27,700,652 $0.10 to $0.12 0.1177300 Adjustment due to price protection 2,456,534,397 $ 0.00204 0.0020400 Forfeited/cancelled (15,633,709 ) 0.03 0.0300000 Exercised — — — Outstanding as of December 31, 2019 2,566,101,248 $0.00204 to $0.12 $ 0.0044700 Granted - - - Adjustment due to price protection 152,017,272,726 0.0000324 0.0000324 Forfeited/cancelled (2,366,666 ) 0.03 0.0300000 Granted in terms of debt extinguishment 326,286,847 0.000675 0.0006750 Cancelled as part of debt extinguishment (154,300,675,861 ) 0.0000324 0.0000324 Granted 133,333,332 0.0015000 0.0015000 Exercised (224,388,247 ) 0.0004 0.0004000 Outstanding as of September 30, 2020 515,561,379 $0.000675 to $0.12 $ 0.0131892 The following table summarizes information about warrants outstanding at September 30, 2020: Warrants outstanding Warrants exercisable Exercise price No. of shares Weighted average remaining years Weighted average exercise price No. of shares Weighted average exercise price $0.000675 326,286,847 4.78 326,286,847 $0.001500 133,333,332 4.87 133,333,332 $0.030000 3,703,700 0.53 3,703,700 $0.120000 52,237,500 1.14 52,237,500 515,561,379 4.41 $ 0.0131892 515,561,379 $ 0.0131892 All of the warrants outstanding as of September 30, 2020 and December 31, 2019 are vested. The warrants outstanding as of September 30, 2020 have an intrinsic value of $1,280,351. e) Stock options Our board of directors adopted the Greenestone Healthcare Corporation 2013 Stock Option Plan (the “Plan”) to promote our long-term growth and profitability by (i) providing our key directors, officers and employees with incentives to improve stockholder value and contribute to our growth and financial success and (ii) enable us to attract, retain and reward the best available persons for positions of substantial responsibility. A total of 10,000,000 shares of our common stock have been reserved for issuance upon exercise of options granted pursuant to the Plan. The Plan allows us to grant options to our employees, officers and directors and those of our subsidiaries; provided that only our employees and those of our subsidiaries may receive incentive stock options under the Plan. No options were issued, exercised or cancelled during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. |
Debt Extinguishment
Debt Extinguishment | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Debt Extinguishment | 14. Debt extinguishment The Company entered into debt extinguishment agreement with the following convertible debt holders as disclosed in note 8 above. · Auctus Fund, LLC · First Fire Global Opportunities Fund · Labrys Fund LP · Leonite Capital LLC · Power Up Lending Group LTD In terms of the agreements entered into with the convertible debt holders debt the following amounts were recorded as gain on debt extinguishment: Nine months ended Convertible debt extinguished 971,564 New debt issued (668,100 ) Fair value gain on preferred stock issued 280,311 Derivative liability mark-to-market on convertible debt extinguishment (126,444,276 ) Derivative liability on revised convertible notes and warrants arising from convertible debt extinguishment (6,349,265 ) Derivative liability eliminated on debt extinguishment 144,893,444 Gain on debt extinguishment 12,683,678 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Segment Information | 15. Segment information The Company has two reportable operating segments: a. Rental income from the property owned by CCH subsidiary located at 3571 Muskoka Road, #169, Bala, on which the operations of the Canadian Rehab Clinic were located prior to disposal on February 14, 2017 and subsequently leased to the purchasers of b. Rehabilitation Services provided to customers, these services were provided to customers at the Company’s ARIA and Seastone of Delray operations. The segment operating results of the reportable segments is disclosed as follows: Nine months ended September 30, 2020 Rental Operations In-Patient services Total Revenue $ 255,672 $ — $ 255,672 Operating expenditure 103,606 286,612 390,218 Operating income (loss) 152,066 (286,612 ) (134,546 ) Other (expense) income Interest income — 629 629 Gain on debt extinguishment — 12,683,678 12,683,678 Loss on debt conversion — (312,836 ) (312,836 ) Exercise of warrants — (95,868 ) (95,868 ) Interest expense (185,370 ) (307,614 ) (492,984 ) Amortization of debt discount — (628,892 ) (628,892 ) Change in fair value of derivative liability — (22,634,549 ) (22,634,549 Foreign exchange movements (11,318 ) 93,869 ) 82,551 Net loss before taxation (44,622 ) (11,488,195 ) (11,532,817 ) Taxation — — — Net loss $ (44,622 ) $ (11,488,195 ) $ (11,523,817 ) Nine months ended September 30, 2019 Rental Operations In-Patient services Total Revenue $ 248,019 $ 80,225 $ 328,244 Operating expenses 106,393 4,021,917 4,128,310 Operating income (loss) 141,626 (3,941,692 ) (3,800,066 ) Other (expense) income Other income — 6,600 6,600 Other expense — (11,729 ) (11,729 ) Interest income — 15,313 15,313 Loss on disposal of property — (692,488 ) (692,488 ) Bonus shares issued to investors — (143,500 ) (143,500 ) Interest expense (165,614 ) (675,546 ) (841,160 ) Amortization of debt discount — (2,564,338 ) (2,564,338 ) Loss on change in fair value of derivative liability — 3,130,273 3,130,273 Foreign exchange movements (25,752 ) (186,215 ) (211,967 ) Net loss before taxation (49,740 ) (5,063,322 ) (5,113,062 ) Taxation — — — Net loss from operations $ (49,740 ) $ (5,063,322 ) $ (5,113,062 ) The operating assets and liabilities of the reportable segments is as follows: September 30, 2020 Rental Operations In-Patient services Total Purchase of fixed assets $ — $ — $ — Assets Current assets 3,634 463,893 467,527 Non-current assets 2,786,415 — 2,786,415 Liabilities Current liabilities (1,361,264 ) (27,474,669 ) (28,835,933 ) Non-current liabilities (4,365,109 ) — (4,365,109 ) Intercompany balances 1,275,437 (1,275,437 ) — Net liability position $ (1,660,887 ) $ (28,286,213 ) $ (29,947,100 ) September 30, 2019 Rental Operations In-Patient services Total Purchase of fixed assets — 22,868 22,868 Assets Current assets 3,480 397,068 400,548 Non-current assets 2,852,070 20,215,934 23,068,004 Liabilities Current liabilities (1,306,190 ) (12,921,036 ) (14,227,226 ) Non-current liabilities (4,741,441 ) (14,459,976 ) (19,201,417 ) Intercompany balances 765,246 (765,246 ) — Net liability position (2,426,835 ) (7,533,256 ) (9,960,091 ) |
Net loss per common share
Net loss per common share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net loss per common share | 15. Net loss per common share For the three and nine months ended September 30, 2020 and 2019, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the results would have been anti-dilutive. Three and nine months ended Three and nine months ended September 30, Stock options — 480,000 Warrants to purchase shares of common stock 515,561,379 120,610,091 Convertible notes 4,964,723,277 94,933,731 5,480,284,656 216,023,822 |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | 16. Commitments and contingencies a. Contingency related to outstanding penalties The Company has provided for potential US penalties of $250,000 due to non-compliance with the filing of certain required tax returns. The actual liability may be higher due to interest and penalties assessed by these taxing authorities. b. Other The Company has principal and interest payment commitments under the Convertible notes disclosed under Note 8 above. Conversion of these notes are at the option of the investor, if not converted these notes may need to be repaid. From time to time, the Company and its subsidiaries enter into legal disputes in the ordinary course of business. The Company believes there are no material legal or administrative matters pending that are likely to have, individually or in the aggregate, a material adverse effect on its business or results of operations. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent events | 17. Subsequent events In terms of the Senior Secured Convertible Note agreement entered into with Leonite for a total principal amount of $440,000 including an original issue discount (“OID”) of $40,000, As of September 30, 2020, Leonite had advanced the Company net proceeds of $200,000 for a note in the principal amount of $220,000. The following additional advances were received from Leonite in terms of the Senior Secured Note Agreement; (i) On October 20, 2020, Leonite advanced the company a further $25,000 with an OID of $2,500; (ii) on October 23, 2020, Leonite advanced the Company a further $15,000 with an OID of $1,500; and (iii) between October 28, 2020 and October 30, 2020, Leonite advanced the Company a further $60,000 with an OID of $6,000. The total amount outstanding under the Leonite Senior Secured Convertible Note amount to $330,000 including an OID of $30,000. On October 29, 2020, the Company entered into a Securities Purchase Agreement with First Fire Global Opportunities Fund, LLC, (“First Fire”), pursuant to which the Company issued a senior secured convertible promissory note in the aggregate principal amount of $137,500, including an OID of $12,500. The note bears interest at 6.5% per annum and matures on October 29, 2021. The note is senior to any future borrowings and commencing on November 29, 2020 the Company will make monthly payments of the accrued interest under the note. The note may be prepaid at certain prepayment penalties and is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for anti-dilution provisions; or 80% of the price per share of subsequent equity financings or; after six months 60% of the lowest trading price during the preceding six month period. On October 29, 2020, the Company entered into a five year option agreement with First Fire and other investors (collectively the “Transferees”), the Company agreed to sell to the Transferees 20% of the total outstanding shares of ATHI. The Company provided First Fire an option to purchase 1,428,571 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $142.86), based on the advances that First Fire and others made to the Company totaling $600,000. First Fire shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by First Fire to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option. On October 29, 2020, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $88,000, for net proceeds of $85,000 after the payment of legal fees and origination fees amounting to $3,000. The note has a maturity date of August 29,2021 The outstanding principal amount of the note is convertible at any time and from time to time at the election of the purchaser. 180 days after the issued date into shares of the Company’s common stock at 61% of the lowest trade price during the ten consecutive trading days immediately prior to conversion. The principal plus the accrued interest of the Note may be prepaid by the Company prior to the expiry of 180 days from issuance date at a prepayment penalty ranging from 112% to 130%. On October 31, 2020, the Company entered into an amendment to the agreement dated September 14, 2020, pursuant to which the Company issued a senior secured convertible promissory note of $110,000, increasing the principal amount outstanding by $27,500 to $137,500 for additional net proceeds of $25,000 including an OID of $2,500. The five year option agreement entered into with Bauman is also amended, so that Bauman and other investors (collectively the “Transferees”), the Company agreed to sell to the Transferees 20% of the total outstanding shares of ATHI. The Company provided Bauman an additional option to purchase 285,714 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $28.57), based on the advances that Bauman and others made to the Company totaling $600,000. Bauman shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Bauman to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option. Other than disclosed above, the Company has evaluated subsequent events through November 16, 2020, the date the unaudited condensed consolidated financial statements were available to be issued and has concluded that no such events or transactions took place that would require disclosure herein. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Use of Estimates | a) Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Principles of consolidation and foreign currency translation | b) Principles of consolidation and foreign currency translation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation. Certain of the Company’s subsidiaries functional currency is the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, “Foreign Currency Translation” as follows: i. Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. ii. Equity at historical rates. iii. Revenue and expense items and cash flows at the average rate of exchange prevailing during the period. Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ deficit as a component of accumulated other comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss). For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period. The relevant translation rates are as follows: At September 30, 2020, a closing rate of CDN$1.00 equals US$0.7497 and an average exchange rate of CDN$1.00 equals US$0.7507. For the nine months ended September 30, 2019, an average exchange rate of CAD$1.0000 equals US$0.7551 and at December 31, 2019 a closing rate of $0.7699. |
Revenue Recognition | c) Revenue Recognition ASU 2014-09 requires companies to exercise more judgment and recognize revenue using a five-step process. As a result of certain changes required by ASU 2014-09, the majority of the Company’s provision for doubtful accounts are recorded as a direct reduction to revenue instead of being presented as a separate line item on the condensed consolidated statements of operations. The adoption of ASU 2014-09 has no impact on the Company’s accounts receivable as it was historically recorded net of allowance for doubtful accounts and contractual adjustments, and the Company has eliminated the presentation of allowance for doubtful accounts on the condensed consolidated balance sheets. As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the The Company receives payments from the following sources for services rendered in our U.S. Facility: (i) commercial insurers; and (ii) individual patients and clients. As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and did not adjust for the effects of a significant financing component. The Company derives a significant portion of its revenue from other 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 in-patient facilities and cost settlement provisions. Management estimates the transaction price on a pay or 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. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Settlements under cost reimbursement agreements 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. However, there can be no assurance that any such adjustments and final settlements will not have a material effect on the Company’s financial condition or results of operations. The Company’s accounts receivables were $2,935 and $105,842 for the nine months ended September 30, 2020 and year ended December 31, 2019, respectively, and were included in other current assets in the condensed consolidated balance sheets. Management believes that these receivables are properly stated and are not likely to be settled for a significantly different amount. The net adjustments to estimated accounts receivable settlements resulted in a decrease in revenues of $0 and $414,603 for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. The Company’s revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services, as defined below. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its revenue transactions: i. identify the contract with a customer; ii. identify the performance obligations in the contract; iii. determine the transaction price; iv. allocate the transaction price to performance obligations in the contract; and v. recognize revenue as the performance obligation is satisfied. The Company has two operating segments from which it derives revenues which is recognized on the basis described below. i. Rental Income In terms of the lease agreement, on a monthly basis as long as the facility is utilized by the tenant ii. In-patient revenue The patients have been treated and provided with services by the Company; there is clear evidence that an arrangement exists; the amount of revenue and related costs can be measured reliably; and it is probable that the economic benefits associated with the transaction will flow to the Company. During 2020, the Company’s revenues were solely comprised of rental income. |
Non-monetary transactions | d) Non-monetary transactions The Company’s policy is to measure an asset exchanged or transferred in a non-monetary transaction at the more reliable measurement of the fair value of the asset given up and the fair value of the asset received, unless: ● The transaction lacks commercial substance; ● The transaction is a transfer between entities under common control; ● The transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange; ● Neither the fair value of the asset received nor the fair value of the asset given up is reliably measurable; or ● The transaction is a non-monetary, non-reciprocal transfer to owners that represents a spinoff or other form of restructuring or |
Cash and cash equivalents | e) Cash and cash equivalents The Company’s policy is to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to overdrawn and term deposits with a maturity period of three months or less from the date of acquisition. The Company had no cash equivalents at September 30, 2020 and December 31, 2019. |
Accounts receivable | f) Accounts receivable Accounts receivable primarily consists of amounts due from third-party payors (non-governmental) and private pay patients and is recorded net of allowances for doubtful accounts and contractual discounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s unaudited condensed consolidated financial statements is recorded at the net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimating net revenues at the time of billing that may result in the Company receiving less than the recorded receivable, (ii) the risk of non-payment as a result of commercial insurance companies denying claims, (iii) the risk that patients will fail to remit insurance payments to the Company when the commercial insurance company pays out-of-network claims directly to the patient, (iv) resource and capacity constraints that may prevent the Company from handling the volume of billing and collection issues in a timely manner, (v) the risk that patients do not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients. |
Allowance for Doubtful Accounts, Contractual and Other Discounts | g) Allowance for Doubtful Accounts, Contractual and Other Discounts The Company derives the majority of its revenues from commercial payors at out-of-network rates. Management estimates the allowance for contractual and other discounts based on its historical collection experience. The services authorized and provided and related reimbursement are often subject to interpretation and negotiation that could result in payments that differ from the Company’s estimates. The Company’s allowance for doubtful accounts is based on historical experience, but management also takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. An account is written off only after the Company has pursued collection efforts or otherwise determines an account to be uncollectible. Uncollectible balances are written-off against the allowance. Recoveries of previously written-off balances are credited to income when the recoveries are made. |
Financial instruments | h) Financial instruments The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions. The Company subsequently measures all its financial assets and financial liabilities at amortized cost. Financial assets measured at amortized cost include cash and accounts receivable. Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, harmonized sales tax payable, withholding taxes payable, convertible notes payable, loans payable and related party notes. Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write- down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income. The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption. FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: · Level 1. Observable inputs such as quoted prices in active markets; · Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and · Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. The Company measures its convertible debt and derivative liabilities associated therewith at fair value. These liabilities are revalued periodically and the resultant gain or loss is realized through the Statement of Operations and Comprehensive Loss. |
Property, plant and equipment | i) Property and equipment Property and equipment is recorded at cost. Depreciation is calculated on the straight line basis over the estimated life of the asset: · Buildings 25 years |
Income taxes | j) Income taxes The Company accounts for income taxes under the provisions of ASC Topic 740, “Income Taxes”. ASC Topic 740 contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal 2001, through 2019 are subject to audit or review by the US tax authorities, whereas fiscal 2010 through 2019 are subject to audit or review by the Canadian tax authority. |
Net income (loss) per share information | k) Net income (loss) per Share Basic net income (loss) per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted net income (loss) per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation. Dilution is computed by applying the treasury stock method for options and warrants. Under this method, “in-the money” options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Dilution is computed by applying the if-converted method for convertible preferred stocks. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to common stock. The shares issuable upon conversion will be added share |
Stock based compensation | l) Stock based compensation Stock based compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense over the employee’s requisite service period or vesting period on a straight-line basis. Share-based compensation expense recognized in the unaudited condensed consolidated statements of operations and comprehensive loss is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. This estimate will be revised in subsequent periods if actual forfeitures differ from those estimates. We have minimal awards with performance conditions and no awards dependent on market conditions. |
Derivatives | m) Derivatives The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Black Scholes Option Pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Company’s If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. |
Recent accounting pronouncements | n) Recent accounting pronouncements Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, debt with Conversion and Other Options (subtopic 470-20): and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), certain accounting models for convertible debt instruments with beneficial conversion features or cash conversion features are removed from the guidance and for equity instruments the contracts affected are free standing instruments and embedded features that are accounted for as derivatives, the settlement assessment was simplified by removing certain settlement requirements. This ASU is effective for fiscal years and interim periods beginning after December 15, 2021. The effects of this ASU on the Company’s condensed consolidated financial statements is currently being assessed and is expected to have an impact on the treatment of certain convertible instruments. The FASB issued several updates during the period, none of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the condensed consolidated financial statements upon adoption. |
Financial instrument Risks | o) Financial instruments Risks The Company is exposed to various risks through its condensed consolidated financial instruments. The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet date, September 30, 2020 and December 31, 2019. i. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that subject the Company to credit risk consist primarily of accounts receivable. Credit risk associated with accounts receivable of ARIA is mitigated as only a percentage of the revenue billed to health insurance companies is recognized as income until such time as the actual funds are collected. The revenue is In the opinion of management, credit risk with respect to accounts receivable is assessed as low. ii. Liquidity risk Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. The Company is exposed to liquidity risk through its working capital deficiency of $28,298,725 and an accumulated deficit of $57,053,655. The Company continues to be dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from the prior year. iii. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risk: interest rate risk, currency risk, and other price risk. The Company is exposed to interest rate risk and currency risk. a. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to minimal interest rate risk as there is no overdraft indebtedness as of September 30, 2020. In the opinion of management, interest rate risk is assessed as low, not material and remains unchanged from the prior year. b. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is subject to currency risk as it has subsidiaries that operate in Canada and are subject to fluctuations in the Canadian dollar. A substantial portion of the Company’s financial assets and liabilities are denominated in Canadian dollars. Based on the net exposures at September 30, 2020, a 5% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an approximate $3,722 low, year. c. Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. In the opinion of management, the Company is not exposed to this risk and remains unchanged from the prior year. |
Property plant and equipment (T
Property plant and equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property Plant And Equipment Tables | |
Schedule of property and equipment | September 30, December 31, 2019 Cost Accumulated depreciation Net book value Net book value Land $ 161,181 $ — $ 161,181 $ 165,537 Property 3,049,063 (428,691 ) 2,620,372 2,785,131 $ 3,210,244 $ (428,691 ) $ 2,781,553 $ 2,950,668 |
Taxes Payable (Tables)
Taxes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Taxation Payable | September 30, December 31, Payroll taxes $ 136,884 $ 140,583 HST/GST payable 59,031 26,524 US penalties due 250,000 250,000 Income tax payable 365,919 375,808 $ 811,834 $ 792,915 |
Short term convertible notes (T
Short term convertible notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Short-term Convertible Loan Tables | |
Short term convertible notes | Interest Maturity date Principal Interest Debt Discount September 30, December 31, Leonite Capital LLC 6.5 % On demand $ 370,000 $ 6,776 $ (165,151 ) $ 211,625 $ 1,213,148 Power Up Lending Group — — — — — 33,707 — — — — — 51,827 First Fire Global Opportunities Fund 12.0 % August 1, 2020 — — — — 247,361 Auctus Fund, LLC 10.0 % June 1 , 2021 225,000 — — 225,000 129,016 10.0 % August 13, 2021 100,000 1,333 (86,849 ) 14,484 — Labrys Fund, LP 12.0 % January 8, 2020 200,000 — — 200,000 286,057 Ed Blasiak 6.5 % September 14, 2021 55,000 159 (52,589 ) 2,570 — Joshua Bauman 6.5 % September 14, 2021 110,000 318 (105,178 ) 5,140 — Series N convertible notes 6.0 % May 17, 2019 to September 16, 2020 3,229,000 376,500 - 3,605,500 3,079,997 $ 4,264,319 $ 5,041,113 |
Mortgage loans (Tables)
Mortgage loans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Mortgage loans | Interest rate Maturity date Principal Outstanding Accrued interest September 30, 2020 December 31, 2019 Cranberry Cove Holdings, Ltd. Pace Mortgage 4.2 % July 19, 2022 $ 3,805,081 $ 4,818 $ 3,809,899 $ 3,995,235 Disclosed as follows: Short-term portion $ 114,115 $ 114,290 Long-term portion 3,695,784 3,880,945 $ 3,809,899 $ 3,995,235 Amount Within 12 months 114,115 Within 12 to 24 months 3,695,784 Total $ 3,809,899 |
Derivative Liablility (Tables)
Derivative Liablility (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Liablility | |
Schedule of assumption used in Black Scholes | Nine months ended Calculated stock price $ 0.0001 to 0.0034 Risk free interest rate 0.05% to 0.33% Expected life of convertible notes and warrants 1 to 60 months expected volatility of underlying stock 193.9% to 779.0% Expected dividend rate 0 % |
Schedule of derivative liability | September 30, December 31, Opening balance $ 8,694,272 $ 4,618,080 Derivative liability mark-to-market on convertible debt extinguishment 126,444,276 — Derivative liability on revised convertible notes and warrants arising from convertible debt extinguishment 6,349,265 — Derivative liability cancelled on debt extinguishment (144,893,444 ) — Derivative liability on issued convertible notes and variable priced warrants 450,000 1,477,163 Fair value adjustments to derivative liability 22,634,549 2,599,029 Closing balance $ 19,678,918 $ 8,694,272 |
Stockholders' deficit (Tables)
Stockholders' deficit (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Options Outstanding | No. of shares Exercise price per Weighted average exercise price Outstanding as of January 1, 2019 97,499,908 $0.003 to $0.12 $ 0.0910000 Granted 27,700,652 $0.10 to $0.12 0.1177300 Adjustment due to price protection 2,456,534,397 $ 0.00204 0.0020400 Forfeited/cancelled (15,633,709 ) 0.03 0.0300000 Exercised — — — Outstanding as of December 31, 2019 2,566,101,248 $0.00204 to $0.12 $ 0.0044700 Granted - - - Adjustment due to price protection 152,017,272,726 0.0000324 0.0000324 Forfeited/cancelled (2,366,666 ) 0.03 0.0300000 Granted in terms of debt extinguishment 326,286,847 0.000675 0.0006750 Cancelled as part of debt extinguishment (154,300,675,861 ) 0.0000324 0.0000324 Granted 133,333,332 0.0015000 0.0015000 Exercised (224,388,247 ) 0.0004 0.0004000 Outstanding as of September 30, 2020 515,561,379 $0.000675 to $0.12 $ 0.0131892 |
Warrants outstanding | Warrants outstanding Warrants exercisable Exercise price No. of shares Weighted average remaining years Weighted average exercise price No. of shares Weighted average exercise price $0.000675 326,286,847 4.78 326,286,847 $0.001500 133,333,332 4.87 133,333,332 $0.030000 3,703,700 0.53 3,703,700 $0.120000 52,237,500 1.14 52,237,500 515,561,379 4.41 $ 0.0131892 515,561,379 $ 0.0131892 |
Debt Extinguishment (Tables)
Debt Extinguishment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Extinguishment Tables Abstract | |
Schedule of debt extinguishment | Nine months ended Convertible debt extinguished 971,564 New debt issued (668,100 ) Fair value gain on preferred stock issued 280,311 Derivative liability mark-to-market on convertible debt extinguishment (126,444,276 ) Derivative liability on revised convertible notes and warrants arising from convertible debt extinguishment (6,349,265 ) Derivative liability eliminated on debt extinguishment 144,893,444 Gain on debt extinguishment 12,683,678 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
Segment information | Nine months ended September 30, 2020 Rental Operations In-Patient services Total Revenue $ 255,672 $ — $ 255,672 Operating expenditure 103,606 286,612 390,218 Operating income (loss) 152,066 (286,612 ) (134,546 ) Other (expense) income Interest income — 629 629 Gain on debt extinguishment — 12,683,678 12,683,678 Loss on debt conversion — (312,836 ) (312,836 ) Exercise of warrants — (95,868 ) (95,868 ) Interest expense (185,370 ) (307,614 ) (492,984 ) Amortization of debt discount — (628,892 ) (628,892 ) Change in fair value of derivative liability — (22,634,549 ) (22,634,549 Foreign exchange movements (11,318 ) 93,869 ) 82,551 Net loss before taxation (44,622 ) (11,488,195 ) (11,532,817 ) Taxation — — — Net loss $ (44,622 ) $ (11,488,195 ) $ (11,523,817 ) Nine months ended September 30, 2019 Rental Operations In-Patient services Total Revenue $ 248,019 $ 80,225 $ 328,244 Operating expenses 106,393 4,021,917 4,128,310 Operating income (loss) 141,626 (3,941,692 ) (3,800,066 ) Other (expense) income Other income — 6,600 6,600 Other expense — (11,729 ) (11,729 ) Interest income — 15,313 15,313 Loss on disposal of property — (692,488 ) (692,488 ) Bonus shares issued to investors — (143,500 ) (143,500 ) Interest expense (165,614 ) (675,546 ) (841,160 ) Amortization of debt discount — (2,564,338 ) (2,564,338 ) Loss on change in fair value of derivative liability — 3,130,273 3,130,273 Foreign exchange movements (25,752 ) (186,215 ) (211,967 ) Net loss before taxation (49,740 ) (5,063,322 ) (5,113,062 ) Taxation — — — Net loss from operations $ (49,740 ) $ (5,063,322 ) $ (5,113,062 ) The operating assets and liabilities of the reportable segments is as follows: September 30, 2020 Rental Operations In-Patient services Total Purchase of fixed assets $ — $ — $ — Assets Current assets 3,634 463,893 467,527 Non-current assets 2,786,415 — 2,786,415 Liabilities Current liabilities (1,361,264 ) (27,474,669 ) (28,835,933 ) Non-current liabilities (4,365,109 ) — (4,365,109 ) Intercompany balances 1,275,437 (1,275,437 ) — Net liability position $ (1,660,887 ) $ (28,286,213 ) $ (29,947,100 ) September 30, 2019 Rental Operations In-Patient services Total Purchase of fixed assets — 22,868 22,868 Assets Current assets 3,480 397,068 400,548 Non-current assets 2,852,070 20,215,934 23,068,004 Liabilities Current liabilities (1,306,190 ) (12,921,036 ) (14,227,226 ) Non-current liabilities (4,741,441 ) (14,459,976 ) (19,201,417 ) Intercompany balances 765,246 (765,246 ) — Net liability position (2,426,835 ) (7,533,256 ) (9,960,091 ) |
Net loss per common share (Tabl
Net loss per common share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net loss per common share (Tables) | Three and nine months ended Three and nine months ended September 30, Stock options — 480,000 Warrants to purchase shares of common stock 515,561,379 120,610,091 Convertible notes 4,964,723,277 94,933,731 5,480,284,656 216,023,822 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | Sep. 30, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Working Capital Deficiency | $ 28,300,000 |
Accumulated Deficit | $ 57,100,000 |
Property plant and equipment (D
Property plant and equipment (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Cost | $ 3,210,244 | |
Accumulated Depreciation | (428,691) | |
Net book value | 2,781,553 | $ 2,950,668 |
Land [Member] | ||
Cost | 161,181 | |
Accumulated Depreciation | ||
Net book value | 161,181 | 165,537 |
Property | ||
Cost | 3,049,063 | |
Accumulated Depreciation | (428,691) | |
Net book value | $ 2,620,372 | $ 2,785,131 |
Taxes payable - Taxes Payable (
Taxes payable - Taxes Payable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Notes to Financial Statements | ||
Payroll taxes | $ 136,884 | $ 140,583 |
HST/GST payable | 59,031 | 26,524 |
US tax penalties | 250,000 | 250,000 |
Income tax payable | 365,919 | 375,808 |
Taxes Payable | $ 811,834 | $ 792,915 |
Short-term Convertible Notes (D
Short-term Convertible Notes (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Total | $ 4,264,319 | $ 5,041,113 |
Leonite Investment LLC [Member] | ||
Interest rate | 6.50% | |
Maturity date | On demand | |
Principal | $ 370,000 | |
Interest | 6,776 | |
Debt Discount | (165,151) | |
Total | 211,625 | 1,213,148 |
Power Up Lending Group LTD 2 [Member] | ||
Principal | ||
Interest | ||
Debt Discount | ||
Total | 33,707 | |
Power Up Lending Group LTD 3 [Member] | ||
Total | 51,827 | |
First Fire Global Opportunities Fund [Member] | ||
Interest rate | 12.00% | |
Maturity date | August 1, 2019 | |
Principal | ||
Interest | ||
Debt Discount | ||
Total | 247,361 | |
Actus Fund, LLC [Member] | ||
Interest rate | 10.00% | |
Maturity date | June 1, 2021 | |
Principal | $ 225,000 | |
Interest | ||
Debt Discount | ||
Total | $ 225,000 | 129,016 |
Labrys Fund, LP [Member] | ||
Interest rate | 12.00% | |
Maturity date | January 8, 2020 | |
Principal | $ 200,000 | |
Interest | ||
Debt Discount | ||
Total | $ 200,000 | 286,057 |
Series N Convertible Notes [Member] | ||
Interest rate | 6.00% | |
Maturity date | May 17, 2019 to September 16, 2020 | |
Principal | $ 3,229,000 | |
Interest | 376,500 | |
Debt Discount | ||
Total | 3,605,500 | $ 3,079,997 |
Power Up Lending Group LTD 3 | ||
Principal | ||
Interest | ||
Debt Discount | ||
Total | ||
Actus Fund LLC 2 | ||
Interest rate | 10.00% | |
Maturity date | August 13, 2021 | |
Principal | $ 100,000 | |
Interest | 1,333 | |
Debt Discount | (86,849) | |
Total | $ 14,484 | |
Ed Blasiak | ||
Interest rate | 6.50% | |
Maturity date | September 14, 2021 | |
Principal | $ 55,000 | |
Interest | 159 | |
Debt Discount | (52,589) | |
Total | $ 2,570 | |
Joshua Bauman | ||
Interest rate | 6.50% | |
Maturity date | September 14, 2021 | |
Principal | $ 110,000 | |
Interest | 318 | |
Debt Discount | (105,178) | |
Total | $ 5,140 |
Mortgage loans - Aggregate Amou
Mortgage loans - Aggregate Amount Outstanding (Details) | Sep. 30, 2020USD ($) |
Mortgage Loans - Aggregate Amount Outstanding | |
Within one year | $ 114,115 |
One to two years | 3,695,784 |
Total | $ 3,809,899 |
Derivative liability - Black Sc
Derivative liability - Black Scholes Valuations (Details) | 9 Months Ended |
Sep. 30, 2020$ / shares | |
Derivative Liability Details | |
Calculated stock price, min | $ 0.0001 |
Calculated stock price, max | $ 0.0034 |
Risk free interest rate, min | 0.05% |
Risk free interest rate, max | 0.33% |
Expected life of convertible notes, minimum | 1 month |
Expected life of convertible notes, maximum | 5 years |
Expected volatility of underlying stock, min | 193.90% |
Expected volatility of underlying stock, max | 779.00% |
Expected dividend rate | 0.00% |
Derivative liability - Movement
Derivative liability - Movement (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Derivative Liability Details 1 | ||
Opening Balance | $ 8,694,272 | $ 4,618,080 |
Derivative liability mark-to-market on convertible debt extinguishment | 126,444,276 | |
Derivative liability on revised convertible notes and warrants arising from convertible debt extinguishment | 6,349,265 | |
Derivative liability cancelled on debt extinguishment | (144,893,444) | |
Derivative liability arising from convertible notes | 450,000 | 1,477,163 |
Fair value adjustment to derivative liability | 22,634,549 | 2,599,029 |
Closing Balance | $ 19,678,918 | $ 8,694,272 |
Stockholders' deficit - Warrant
Stockholders' deficit - Warrants Outstanding (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Stock options | ||
Beginning balance, warrants | 2,566,101,248 | 97,799,908 |
Beginning balance, warrants exercise price | $ 0.0044700 | $ 0.0910 |
Adjustment due to price protection, shares | 152,017,272,726 | 2,456,534,397 |
Adjustment due to price protection, price | $ 0.0000324 | $ 0.0020400 |
Warrants Granted, shares | 133,333,332 | 27,700,652 |
Warrants granted, price | $ 0.0015000 | $ 0.1177 |
Warrants Forfeited, shares | (2,366,666) | (15,633,709) |
Warrants Forfeited, price | $ 0.0300000 | $ 0.0300000 |
Warrant Exercised, shares | (224,388,247) | |
Warrants Exercised, price | $ 0.0004000 | |
Granted in terms of debt extinguishment, shares | 326,286,847 | |
Granted in terms of debt extinguishment, price | $ 0.0006750 | |
Cancelled as part of debt extinguishment, shares | (154,300,675,861) | |
Cancelled as part of debt extinguishment, price | $ 0.0000324 | |
Ending Balance, warrants | 515,561,379 | 2,566,101,248 |
Ending Balance, warrants exercise price | $ 0.0131892 | $ 0.0044700 |
Debt Extinguishment (Details)
Debt Extinguishment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Extinguishment Details Abstract | ||||
Convertible debt extinguished | $ 971,564 | |||
New debt issued | (668,100) | |||
Fair value gain on preferred stock issued | 280,311 | |||
Derivative liability mark-to-market on convertible debt extinguishment | (126,444,276) | |||
Derivative liability on revised convertible notes and warrants arising from convertible debt extinguishment | (6,349,265) | |||
Derivative liability eliminated on debt extinguishment | 144,893,444 | |||
Gain on debt extinguishment | $ 12,683,678 |
Segment information (Details)
Segment information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenues | $ 89,829 | $ 148,042 | $ 255,672 | $ 328,244 | |
Operating expenditure | 117,276 | 1,158,473 | 390,218 | 4,128,310 | |
Operating income (loss) | (27,447) | (1,010,431) | (134,546) | (3,800,066) | |
Other (expense) income | |||||
Other expense | (11,729) | (11,729) | |||
Interest Income | 1 | 51 | 629 | 15,313 | |
Gain on debt extinguishment | 12,683,678 | ||||
Loss on debt conversion | (312,836) | ||||
Exercise of warrants | 95,868 | ||||
Interest expense | (124,972) | (299,022) | (492,984) | (841,160) | |
Foreign exchange movements | (140,811) | 59,983 | 82,551 | (211,967) | |
Loss on disposal of property | (692,488) | ||||
Bonus shares issued to investors | (143,500) | ||||
Net loss before taxation | (10,234,410) | (353,230) | (11,532,817) | (5,113,062) | |
Taxation | |||||
Assets | |||||
Current assets | 467,527 | 467,527 | $ 255,442 | ||
Non-current assets | 2,786,415 | 2,786,415 | 2,955,637 | ||
Liabilities | |||||
Current liabilities | 28,766,252 | 28,766,252 | $ 18,575,858 | ||
Rental Operations | |||||
Revenues | 255,672 | 248,019 | |||
Operating expenditure | 103,606 | 106,393 | |||
Operating income (loss) | 152,066 | 141,626 | |||
Other (expense) income | |||||
Other income | |||||
Other expense | |||||
Interest Income | |||||
Gain on debt extinguishment | |||||
Loss on debt conversion | |||||
Exercise of warrants | |||||
Interest expense | (185,370) | (165,614) | |||
Amortization of debt discount | |||||
Change in fair value of derivative liability | |||||
Foreign exchange movements | (11,318) | (25,752) | |||
Loss on disposal of property | |||||
Bonus shares issued to investors | |||||
Net loss before taxation | (44,622) | (49,740) | |||
Taxation | |||||
Net loss from operations | (44,622) | (49,740) | |||
Purchase of fixed assets | |||||
Assets | |||||
Current assets | 3,634 | 3,480 | 3,634 | 3,480 | |
Non-current assets | 2,786,415 | 2,852,070 | 2,786,415 | 2,852,070 | |
Liabilities | |||||
Current liabilities | (1,361,264) | (1,306,190) | (1,361,264) | (1,306,190) | |
Non-current liabilities | (4,365,109) | (4,741,441) | (4,365,109) | (4,741,441) | |
Intercompany balances | 1,275,437 | 765,246 | 1,275,437 | 765,246 | |
Net (liability) asset position | (1,660,887) | (2,426,835) | (1,660,887) | (2,426,835) | |
In-Patient services | |||||
Revenues | 80,225 | ||||
Operating expenditure | 286,612 | 4,021,917 | |||
Operating income (loss) | (286,612) | (3,941,692) | |||
Other (expense) income | |||||
Other income | 6,600 | ||||
Other expense | (11,729) | ||||
Interest Income | 629 | 15,313 | |||
Gain on debt extinguishment | 12,683,678 | ||||
Loss on debt conversion | (312,836) | ||||
Exercise of warrants | (95,868) | ||||
Interest expense | (307,614) | (675,546) | |||
Amortization of debt discount | (628,892) | (2,564,338) | |||
Change in fair value of derivative liability | (22,634,549) | 3,130,273 | |||
Foreign exchange movements | 93,869 | (186,215) | |||
Loss on disposal of property | (692,488) | ||||
Bonus shares issued to investors | (143,500) | ||||
Net loss before taxation | (11,488,195) | (5,063,322) | |||
Taxation | |||||
Net loss from operations | (11,488,195) | (5,063,322) | |||
Purchase of fixed assets | 22,868 | 22,868 | |||
Assets | |||||
Current assets | 463,893 | 397,068 | 463,893 | 397,068 | |
Non-current assets | 20,215,934 | 20,215,934 | |||
Liabilities | |||||
Current liabilities | (27,474,669) | (12,921,036) | (27,474,669) | (12,921,036) | |
Non-current liabilities | (14,459,976) | (14,459,976) | |||
Intercompany balances | (1,275,437) | (765,246) | (1,275,437) | (765,246) | |
Net (liability) asset position | (28,286,213) | (7,533,256) | (28,286,213) | (7,533,256) | |
Total | |||||
Revenues | 255,672 | 328,244 | |||
Operating expenditure | 390,218 | 4,128,310 | |||
Operating income (loss) | (134,546) | (3,800,066) | |||
Other (expense) income | |||||
Other income | 6,600 | ||||
Other expense | (11,729) | ||||
Interest Income | 629 | 15,313 | |||
Gain on debt extinguishment | 12,683,678 | ||||
Loss on debt conversion | (312,836) | ||||
Exercise of warrants | (95,868) | ||||
Interest expense | (492,984) | (841,160) | |||
Amortization of debt discount | (628,892) | (2,564,338) | |||
Change in fair value of derivative liability | (22,634,549) | 3,130,273 | |||
Foreign exchange movements | 82,551 | (211,967) | |||
Loss on disposal of property | (692,488) | ||||
Bonus shares issued to investors | (143,500) | ||||
Net loss before taxation | (11,532,817) | (5,113,062) | |||
Taxation | |||||
Net loss from operations | (11,523,817) | (5,113,062) | |||
Purchase of fixed assets | 22,868 | 22,868 | |||
Assets | |||||
Current assets | 467,527 | 400,548 | 467,527 | 400,548 | |
Non-current assets | 2,786,415 | 23,068,004 | 2,786,415 | 23,068,004 | |
Liabilities | |||||
Current liabilities | (28,835,933) | (14,227,226) | (28,835,933) | (14,227,226) | |
Non-current liabilities | (4,365,109) | (19,201,417) | (4,365,109) | (19,201,417) | |
Intercompany balances | |||||
Net (liability) asset position | $ (29,947,100) | $ (9,960,091) | $ (29,947,100) | $ (9,960,091) |
Net loss per common share (Deta
Net loss per common share (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Net Loss Per Common Share Details | ||
Stock options | $ 480,000 | |
Warrants to purchase shares of common stock | 515,561,379 | 120,610,091 |
Convertible notes | 4,964,723,277 | 94,933,731 |
Total | $ 5,480,284,656 | $ 216,023,822 |