NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
GreeneStone Healthcare Corporation
(the “Company”) was incorporated under the laws of the state of Colorado, USA, on April 1, 1993. Effective May 2012,
the Company changed its corporate name to GreeneStone Healthcare Corporation from Nova Natural Resources Corporation. As at June
30, 2016, the Company owns 100% of the outstanding shares of Greenstone Clinic Muskoka Inc., which was incorporated in 2010 under
the laws of the Province of Ontario, Canada. Greenstone Clinic Muskoka Inc. provides medical services to various patients in clinics
located in the regional municipality of Muskoka, Ontario, Canada.
The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America for interim consolidated financial information and Rule 8-03 of Regulation S-X. Accordingly, these unaudited
condensed consolidated financial statements do not include all of the information and disclosures required by accounting principles
generally accepted in the United States of America for complete financial statements.
All adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation have been included in these unaudited condensed consolidated
financial statements. Operating results for the three and six month period presented are not necessarily indicative of the results
that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2015 has been derived
from audited consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and footnotes thereto for the year ended December 31, 2015.
|
2.
|
Summary
of Significant Accounting Policies
|
The preparation of unaudited
condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America 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)
|
Principals
of consolidation and foreign currency translation
|
The accompanying unaudited
condensed consolidated financial statements include the accounts of the Company, its subsidiary. All inter company transactions
and balances have been eliminated on consolidation.
The Company’s subsidiary’s
functional currency is the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions
initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, “Foreign Currency Translation"
as follows:
|
•
|
Monetary
assets and liabilities at the rate of exchange in effect at the balance sheet date.
|
|
•
|
Equity
at historical rates.
|
|
•
|
Revenue
and expense items 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: For the six months ended June 30, 2016; a closing rate of CAD$1.0000 equals US$0.7687 and an average exchange
rate of CAD$1.0000 equals US$0.7530.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
2.
|
Summary
of Significant Accounting Policies (continued)
|
The Company recognizes revenue from the rendering of services when they are earned;
specifically, when all of the following
conditions are met:
|
•
|
the
significant risks and rewards of ownership are transferred to customers and the Company
retains neither continuing involvement nor effective control;
|
|
•
|
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.
|
In particular,
the Company recognizes:
|
•
|
Fees
for outpatient counselling, coaching, intervention, psychological assessments and other
related services when patients receive the service; and
|
|
•
|
Fees
for inpatient addiction treatments proportionately over the term of the patient’s
treatment.
|
Deferred revenue represents
monies deposited by the patients for future services to be provided by the Company. Such monies will be recognized into revenue
as the patient progresses through their treatment term.
|
d)
|
Cash
and cash equivalents
|
The Company's policy is
to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to
overdrawn and term deposits with a maturity period of three months or less from the date of acquisition.
The Company has $76,870
(CAD$100,000) in restricted cash held by their bank to cover against the possibility of credit card charge backs, for services
not performed.
|
e)
|
Recent
accounting pronouncements
|
In January 2016, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP
on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting
for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for
financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing
deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for
fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by
means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance
is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities
under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently
evaluating the impact of adopting this guidance.
In February 2016, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-02, which amends the guidance in U.S. GAAP
on accounting for operating leases, a lessee will be required to recognize assets and liabilities for operating leases with lease
terms of more than 12 months on the balance sheet. The new standard is effective for fiscal years and interim periods beginning
after December 15, 2018., and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment
to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not
permitted. The Company is currently evaluating the impact of adopting this guidance.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
2.
|
Summary
of Significant Accounting Policies (continued)
|
|
e)
|
Recent
accounting pronouncements
|
In March 2016, the Financial Accounting
Standards Board (FASB) issued an Accounting Standards Update (ASU) “ASU 2016 – 09 Improvements to Employee Share-Based
Payment Accounting” which is intended to improve the accounting for employee share-based payments. The ASU simplifies several
aspects of the accounting for share-based payment award transactions, including; the income tax consequences, classification of
awards as either equity or liabilities, and the classification on the statement of cash flows. The new standard is effective for
fiscal years and interim periods beginning after December 15, 2016., and upon adoption, an entity should apply the amendments
by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance
is effective. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.
In April
2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) “ASU 2016 – 10 Revenue
from Contract with Customers: identifying Performance Obligations and Licensing”. The amendments in this Update clarify
the two following aspects (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining
whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual
property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied
over time). The amendments in this Update are intended to reduce the degree of judgement necessary to comply with Topic 606. This
guidance has no effective date as yet. The Company is currently evaluating the impact of adopting this guidance.
Any new accounting standards, not
disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to
have a material impact on the financial statements upon adoption.
The Company is exposed to
various risks through its financial instruments. The following analysis provides a measure of the Company’s risk exposure
and concentrations at the balance sheet date, June 30, 2016 and December 31, 2015.
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 Greenestone Clinic Muskoka Inc. is mitigated due to balances from many customers, as well as through
credit checks and frequent reviews of receivables to ensure timely collection. In addition, there is no concentration risk with
the Greenestone Clinic Muskoka Inc. accounts receivable balance since balances are due from many customers.
In the opinion of management,
credit risk with respect to accounts receivable is assessed as low, not material and remains unchanged from the prior year.
Liquidity risk is the
risk the Company will not be able to meet its financial obligations as they fall due. The Company is exposed to liquidity risk
through its working capital deficiency of $(3,246,708) and accumulated deficit of $(20,508,791). As disclosed in note 3, the Company
will be dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the
Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse
effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material
and remains unchanged from the prior year.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
2.
|
Summary
of Significant Accounting Policies (continued)
|
|
f)
|
Financial
instruments (continued)
|
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.
Interest rate risk is the
risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company is exposed to minimal interest rate risk on its bank indebtedness as there is a balance of $31,635 at June 30, 2016.
This liability is based on floating rates of interest that have been stable during the current reporting period. In the opinion
of management, interest rate risk is assessed as low, not material and remains unchanged from the prior year.
Currency risk is the risk
that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is subject to currency risk as its subsidiaries operate in Canada and are subject to fluctuations in the Canadian
dollar. Most of the Company’s financial assets and liabilities are denominated in Canadian dollars. Based on the net exposures
at June 30, 2016, a 5% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an approximate
$15,754 increase or decrease in the Company’s after-tax net income from continuing operation. The Company has not entered
into any hedging agreements to mediate this risk. In the opinion of management, currency risk is assessed as low, material and
remains unchanged from the prior year.
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.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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
at June 30, 2016 the Company has a working capital deficiency of $(3,246,708) and accumulated deficit of $(20,508,791). Management
believes that current available resources will not be sufficient to fund the Company’s planned expenditures, including past
due payroll and sales tax payments, as well as estimated penalties and interest, over the next 12 months. Accordingly, the Company
will be dependent upon the raising of additional capital through placement of common shares, and, or debt financing in order to
implement its business plan, and, or generating sufficient revenue in excess of costs. If the Company raises additional capital
through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such
securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes.
If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt
covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic
partners, the Company may be required to relinquish its rights to certain geographical areas, or techniques that it might otherwise
seek to retain. There is no assurance that the Company will be successful with future financing ventures, and the inability to
secure such financing may have a material adverse effect on the Company’s financial condition. These unaudited condensed
consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities
that might be necessary should the Company be unable to continue operations.
The ability of the Company
to continue as a going concern is dependent on the Company generating cash from the sale of its common stock or obtaining debt
financing and attaining future profitable operations. Management's plans include selling its equity securities and obtaining debt
financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be
successful in these efforts.
|
4.
|
Due from
sale of subsidiary
|
A net amount of CAD$617,960
is due to the Company on the sale of the Endoscopy Clinic in December 2014. This debt is in the form of an interest bearing note
with a coupon of 5% per annum. The note was originally due on June 30, 2015 which was recently extended to December 31, 2015.
The amount outstanding of CAD$617,960 was revalued at US$475,026 as of June 30, 2016 and US$446,476 as of December 31, 2015. Management
evaluated this receivable as of December 31, 2015 and a provision for the full value of the note was raised as of June 30, 2016
and December 31, 2015.
Plant and equipment consists of the following:
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
Net
book value
June
30,
2016
|
|
|
Net
book value
December
31,
2015
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
Computer
equipment
|
$
|
21,278
|
|
$
|
16,225
|
|
$
|
5,053
|
|
$
|
5,945
|
|
Computer
software
|
|
9,848
|
|
|
7,386
|
|
|
2,462
|
|
|
4,924
|
|
Furniture
and equipment
|
|
353,431
|
|
|
272,005
|
|
|
81,426
|
|
|
94,651
|
|
Leasehold
improvement
|
|
142,793
|
|
|
87,219
|
|
|
55,574
|
|
|
65,382
|
|
Medical
equipment
|
|
4,491
|
|
|
3,574
|
|
|
917
|
|
|
1,047
|
|
Vehicles
|
|
64,175
|
|
|
46,170
|
|
|
18,005
|
|
|
21,182
|
|
|
$
|
596,016
|
|
$
|
432,579
|
|
$
|
163,437
|
|
$
|
193,131
|
|
Depreciation expense for the three months ended June 30,
2016 and 2015 was $15,412 and $26,446 and for the six months ended June 30, 2016 and 2015 was $30,746 and $47,440, respectively.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company has an
automobile loan payable bearing interest at 4.49% with blended monthly payments of $835 that matures in March 2018. The loan is
secured by the vehicle with a net book value as at June 30, 2016 of $13,715.
|
|
June 30,
2016
|
|
December 31, 2015
|
|
|
Unaudited
|
|
|
Automobile loan
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
7,273
|
|
|
$
|
6,684
|
|
Long-term portion
|
|
|
5,673
|
|
|
|
8,788
|
|
|
|
$
|
12,946
|
|
|
$
|
15,472
|
|
Estimated principal payments are
as follows:
|
|
Amount
|
|
|
|
|
|
Within 1 year
|
|
|
7,273
|
|
1 to 2 years
|
|
$
|
5,673
|
|
|
|
$
|
12,946
|
|
The Company entered into a Securities
Purchase Agreement with JMJ Financial on April 13, 2016, in terms of the agreement the Company borrowed $200,000 in terms of an
unsecured convertible promissory note with a maturity date of seven months from the closing date. The principal amount due under
the promissory note is $220,000, inclusive of an Original Issue discount and a further 10% once-off interest charge of $20,000
is due in terms of this note. The note is only convertible upon a repayment default, at the lower of $0.03 per share of 60% of
the lowest traded price over the preceding 25 day trading period. The Company also issued 3,703,700 warrants exercisable over
common shares at $0.03 per share, which warrants contain a cashless exercise option, in terms of the financing arrangement.
Short term notes consist of the
following at June 30, 2016:
Description
|
|
Interest
Rate
|
|
Maturity
|
|
June
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JMJ Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
10
|
%
|
|
|
November
13, 2016
|
|
|
|
220,000
|
|
Accrued interest
|
|
|
|
|
|
|
|
|
|
|
7,103
|
|
Unamortized
debt discount
|
|
|
|
|
|
|
|
|
|
|
(59,982
|
)
|
|
|
|
|
|
|
|
|
|
|
|
167,121
|
|
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
8.
|
Related Party Transactions
|
Greenstone Clinic Inc.
As of December
31, 2015, the Company had a payable of $5,284. Greenstone Clinic Inc., is controlled
by one of the Company’s directors. The balance payable is noninterest bearing, not secured and has no specific
repayment terms.
The balance owing from Greenstone Clinic, Inc., on June 30, 2016 was offset against
the amount owing to Shawn E. Leon.
The Company incurred management fees from Greenstone
Clinic, Inc., totaling $46,577 and $48,337 and $46,577 and $96,705 for the three months and six months ended June 30, 2016 and
2015, respectively.
1816191 Ontario
As of June 30, 2016 and December 31, 2015,
the Company had a receivable of $15,863 and a payable of $(22,305), respectively, to 1816191 Ontario, the Endoscopy Clinic, which
was sold at the end of the prior year. The receivable and payable is noninterest bearing, and has no specific repayment terms.
Shawn E. Leon
As of June 30, 2016 and December 31, 2015
the Company had a payable of $135,006 and $159,551, respectively to Shawn E. Leon, a director and CEO of the Company. The balance
payable is noninterest bearing and have no fixed repayment terms.
The balance owing from Greenstone Clinic, Inc., on June 30, 2016 was offset against
the amount owing to Shawn E. Leon.
Cranberry Cove Holdings Ltd.
The Company entered into an agreement to lease premises from Cranberry Cove
Holdings Ltd. at market related terms. The Company had rental expense amounting to $105,721 and $168,469 and $180,112
and $179,392 for the three months and six months ended June 30, 2016 and 2015, respectively. Cranberry Cove Holdings Ltd. is
related to the Company by virtue of its shareholder owning 1816191 Ontario.
As of June 30, 2016 and December
31, 2015, the Company owed Cranberry Cove Holdings $308,625 (CAD $401,490) and $87,356 (CAD$120,908) in accrued rent and utility
charges.
All related party transactions occur in the
normal course of operations and in terms of agreements entered into between the parties.
The Company
issued 1,000,000 common shares valued at $50,000 to a third party in terms of an investor relations consulting agreement entered
into on June 17, 2016.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
9.
|
Stockholders’
deficit (continued)
|
In terms of the short term loan entered into, as disclosed under note 7 above, on
April 13, 2016, the Company issued 3,703,700 five year warrants exercisable at $0.03 per share, these warrants have a
cashless exercise option.
The movement in warrants outstanding is summarized
below:
|
|
Number
of warrants outstanding
|
|
Weighted
average exercise price per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2015
|
|
|
|
6,300,000
|
|
|
$
|
0.143
|
|
|
Granted
|
|
|
|
—
|
|
|
|
—
|
|
|
Cancelled/forfeited
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding at December
31, 2015
|
|
|
|
6,300,000
|
|
|
|
0.143
|
|
|
Granted
|
|
|
|
3,703,700
|
|
|
|
0.030
|
|
|
Cancelled/forfeited
|
|
|
|
(4,500,000
|
)
|
|
|
0.150
|
|
|
Exercised
|
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding at June 30,
2016
|
|
|
$
|
5,503,700
|
|
|
$
|
0.041
|
|
The following table summarizes information
about warrants outstanding at June 30, 2016
E
xercise
Price
|
|
Number
of warrants
|
|
Weighted
average remaining life
|
|
Weighted
average exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.003
|
|
|
|
300,000
|
|
|
|
*
|
|
|
$
|
0.003
|
|
$
|
0.030
|
|
|
|
3,703,700
|
|
|
|
4,79
|
|
|
|
0.030
|
|
$
|
0.150
|
|
|
|
1,500,000
|
|
|
|
0.47
|
|
|
|
0.150
|
|
|
|
|
|
|
5,503,700
|
|
|
|
3.35
|
|
|
$
|
0.041
|
|
|
*
|
In terms of an agreement entered into with an investor relations
company, 300,000 warrants were to be issued as part of the Investor Relations Agreement.
These warrants have not been issued as yet, therefore the warrant terms are uncertain.
|
As of June 30, 2016 the 5,503,700 warrants were
all vested, there were no unrecognized compensation costs related to these warrants and the intrinsic value of the warrants as
of June 30, 2016 is $48,038.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
9.
|
Stockholders’
deficit (continued)
|
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. We have granted a total of 480,000 options as of June 30, 2016 under the Plan.
No options were issued, exercised or cancelled
for the period under review.
The following table
summarizes information about options outstanding at June 30, 2016.
Exercise Price
|
|
Number
of options outstanding
|
|
|
Number
of options exercisable
|
|
|
Weighted
average remaining life
|
|
|
Weighted
average exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.12
|
|
480,000
|
|
|
400,000
|
|
|
3.34
|
|
$
|
0.12
|
|
As of June 30, 2016 there
was no unrecognized compensation costs related to these options and the intrinsic value of the options is $0.
|
10.
|
Net
income (loss) per common share
|
For the three months ended June
30, 2016 the computation of basic and diluted earnings per share is as follows:
|
|
|
Income
|
|
|
Number
of shares
|
|
|
Per
share amount
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
68,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
68,920
|
|
|
47,991,602
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
1,200,950
|
|
|
|
|
Options
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
68,920
|
|
|
49,192,552
|
|
$
|
0.00
|
|
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
10.
|
Net
income (loss) per common share (continued)
|
For the six months ended June 30,
2016 the computation of basic and diluted earnings per share is as follows:
|
|
|
Income
|
|
|
Number
of shares
|
|
|
Per
share amount
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
212,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
212,414
|
|
|
47,865,229
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
1,200,950
|
|
|
|
|
Options
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
212,414
|
|
|
49,066,179
|
|
$
|
0.00
|
|
For the three months and six
months ended June 30, 2016, options to purchase 480,000 shares of common stock and warrants to purchase 1,500,000 shares of common
stock were excluded from the calculation of diluted earnings per share as the option and warrant exercise prices were greater
than the average market price of the common shares.
For the three months and six months
ended June 30, 2015, the following options and warrants and convertible preferred stock were excluded from the computation of
diluted net loss per shares as the result of the computation was anti-dilutive:
|
|
|
|
|
Three
months and six months ended June 30, 2015
|
|
|
|
|
|
|
|
|
Options to purchase
shares of common stock
|
|
|
|
$
|
480,000
|
|
Warrants to purchase
shares of common stock
|
|
|
|
|
6,300,000
|
|
Outstanding at June
30, 2015
|
|
|
|
$
|
6,780,000
|
|
|
11.
|
Commitments
and contingencies
|
The future minimum annual
rental payments under the operating lease are estimated as follows, using the quarter end exchange rate of CAD $1 equals US $0.7687:
|
|
|
|
|
Amount
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
200,052
|
|
2017
|
|
|
|
|
419,443
|
|
2018
|
|
|
|
|
465,882
|
|
2019
|
|
|
|
|
119,434
|
|
|
|
|
|
$
|
1,204,811
|
|
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
11.
|
Commitments
and contingencies (continued)
|
|
b)
|
Contingency related to outstanding tax liabilities
|
The Company is delinquent
in paying harmonized sales tax, filing and paying payroll taxes and may also be subject to US taxation and penalties.
As of June 30, 2016, the
Company had estimated Canadian tax liabilities outstanding of $2,522,094, which may result in the Canadian tax authorities placing
liens on the Company bank accounts which would impact on the Company’s ability to operate. The Company has also provided
for US penalties of $200,000 due to noncompliance with the filing of certain required returns. The actual liability may be higher
due to interest and penalties assessed by these taxing authorities.
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.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The Company is not current in its
tax filings as of June 30, 2016.
On
May 17, 2016 the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), a Management Services
Agreement (the “Management Agreement” and a Commercial Real Estate Contract to acquire the business and substantially
all of the assets of Seastone of Delray, LLC (“Seastone”).
Seastone’s
business is primarily the practice of providing addiction treatment health care services.
Pursuant
to the terms of the Management Agreement, the Company began operating Seastone’s Business for a 90 day period commencing
on July 1, 2016. During the Management Period, the Company is entitled to the revenues from the Business and will pay Seastone
$20,000 per month to cover certain costs related to the Business, which shall increase to $28,000 per month if the Management
Agreement is extended beyond 90 days. The Management Agreement may be terminated by either party if the Purchase Agreement does
not close by September 15, 2016.
The
Company entered into a commercial real estate contract with Seastone Condominiums of Delray, LLC and 810 Andrews, LLC, both Florida
limited liability companies to acquire certain real property.
The
purchase price for the Transaction is $6,150,000, which is being funded by a purchase money first mortgage in the amount of $3,000,000
at 5% per annum payable at $15,000 per month for three years; and $3,150,000 in cash. The Company has deposited $60,000 in escrow.
The
closing of the Transaction is anticipated to be September 15, 2016 and is contingent upon (i) the Company obtaining the requisite
licenses from the appropriate governmental agencies for the operation of Seastone’s Business.
Other than disclosed above, the
Company has evaluated subsequent events through the date of the consolidated financial statements were available to be issued
and has concluded that no such events or transactions took place that would require disclosure herein.