The accompanying
notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying
notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying
notes are an integral part of the unaudited condensed consolidated financial statements
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.
Nature of Business
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 September 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 803 of Regulation SX. Accordingly, these
unaudited condensed consolidated financial statements do not include all 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 nine 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 intercompany 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).
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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 nine months ended September 30, 2016; a closing rate of CAD$1.0000 equals US$0.7624 and an
average exchange rate of CAD$1.0000 equals US$0.7663.
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.
Other income includes proceed received on the sale of
mineral rights which are owned by the company in terms of the Company’s previous operations.
|
|
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 $76,240
(CAD$100,000) in restricted cash held by their bank to cover against the possibility of credit card charge backs, for services
not performed.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2. Summary of Significant Accounting
Policies (continued)
|
|
e)
|
Recent
accounting pronouncements
|
In June 2016, the FASB issued
ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." ASU 2016-13 will replace the current incurred
loss approach with an expected loss model for instruments measured at amortized cost and require entities to record allowances
for available-for-sale debt securities rather than reduce the carrying amount under the current other-than-temporary impairment
model. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein.
We are currently evaluating the effect ASU 2016-13 will have on our consolidated financial statements.
In August 2016, FASB issued
ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 is intended to reduce diversity
in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We are currently
evaluating the effect ASU 2016-15 will have on our consolidated statements of cash flows.
In October 2016, Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2016-16, "Intra-Entity
Transfers of Assets Other Than Inventory." ASU 2016-16 requires immediate recognition of income tax consequences of intercompany
asset transfers, other than inventory transfers. Existing GAAP prohibits recognition of income tax consequences of intercompany
asset transfers whereby the seller defers any net tax effect and the buyer is prohibited from recognizing a deferred tax asset
on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying
amount as reported in the consolidated financial statements. ASU 2016-16 specifically excludes from its scope intercompany
inventory transfers whereby the recognition of tax consequences will take place when the inventory is sold to third parties. ASU
2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early
adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or
made available for issuance. We are currently evaluating the effect ASU 2016-16 will have on our consolidated financial statements.
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, September 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.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
2.
Summary of Significant Accounting Policies (continued)
|
|
f)
|
Financial
instruments (continued)
|
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 $(3,080,400) and accumulated deficit of $(20,371,819). 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.
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 $7,144 as of September
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 September 30, 2016, a 5% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an approximate
$17,469 increase or decrease in the Company’s after tax net income from operations. 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
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
at September 30, 2016 the Company has a working capital deficiency of $(3,080,400) and accumulated deficit of $(20,371,819). 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 subsequently extended to December 31, 2015. The amount outstanding of
CAD$617,960 was revalued at US $471,132 as of September 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 September 30, 2016
and December 31, 2015.
5. Plant and equipment
Plant
and equipment consists of the following:
|
|
|
Cost
|
|
Accumulated
depreciation
|
|
Net book value
September 30,
2016
|
|
Net book value
December 31,
2015
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
Computer equipment
|
|
$
|
21,278
|
|
|
$
|
16,672
|
|
|
$
|
4,606
|
|
|
$
|
5,945
|
|
|
Computer software
|
|
|
9,848
|
|
|
|
8,617
|
|
|
|
1,231
|
|
|
|
4,924
|
|
|
Furniture and equipment
|
|
|
360,792
|
|
|
|
279,971
|
|
|
|
80,821
|
|
|
|
94,651
|
|
|
Leasehold improvement
|
|
|
146,216
|
|
|
|
92,507
|
|
|
|
53,709
|
|
|
|
65,382
|
|
|
Medical equipment
|
|
|
4,491
|
|
|
|
3,639
|
|
|
|
852
|
|
|
|
1,047
|
|
|
Vehicles
|
|
|
64,175
|
|
|
|
47,759
|
|
|
|
16,416
|
|
|
|
21,182
|
|
|
|
|
$
|
606,800
|
|
|
$
|
449,165
|
|
|
$
|
157,635
|
|
|
$
|
193,131
|
|
Depreciation expense for the three months ended September 30,
2016 and 2015 was $16,586 and $22,863 and for the nine months ended September 30, 2016 and 2015 was $47,332 and $70,303, respectively.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
6. Loans
payable
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 September 30, 2016 of $12,493.
|
|
|
September 30,
2016
|
|
December 31, 2015
|
|
|
|
Unaudited
|
|
|
|
Automobile loan
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
7,295
|
|
|
$
|
6,684
|
|
|
Long-term portion
|
|
|
3,772
|
|
|
|
8,788
|
|
|
|
|
$
|
11,067
|
|
|
$
|
15,472
|
|
Estimated principal payments are
as follows:
|
|
|
Amount
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
7,295
|
|
|
1 to 2 years
|
|
$
|
3,772
|
|
|
|
|
$
|
11,067
|
|
7. Short term notes
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 September 30, 2016:
|
Description
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JMJ Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
10
|
%
|
|
|
November 13, 2016
|
|
|
$
|
220,000
|
|
|
Accrued interest
|
|
|
|
|
|
|
|
|
|
|
15,701
|
|
|
Unamortized debt discount
|
|
|
|
|
|
|
|
|
|
|
(19,994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
215,707
|
|
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
8. Related Party Transactions
Greenstone Clinic Inc.
As of September 30, 2016, and
December 31, 2015, the Company had a payable of $510 and $5,284, respectively. 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 Company incurred management fees from Greenstone
Clinic, Inc., totaling $45,742 and $Nil and $92,319 and $96,705 for the three months and nine months ended September 30, 2016
and 2015, respectively.
1816191 Ontario
As of September 30, 2016, and December 31,
2015, the Company had a receivable of $17,345 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 September 30, 2016, and December 31, 2015
the Company had a payable of $Nil 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.
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 $100,203 and $84,176 and $271,364 and $263,568 for the three months and nine months ended September 30, 2016 and 2015, respectively.
Cranberry Cove Holdings Ltd. is related to the Company by virtue of its shareholder owning 1816191 Ontario.
As of September 30, 2016, and December 31, 2015, the Company
owed Cranberry Cove Holdings $37,942 (CAD $49,767) and $87,356 (CAD$120,908).
All related party transactions occur in the normal
course of operations and in terms of agreements entered into between the parties.
GREENESTONE HEALTHCARE CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
9. Stockholders’ deficit
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.
In terms of the short term loan entered into, as
disclosed under note 8 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 September 30, 2016
|
|
5,503,700
|
|
$
|
0.061
|
|
The following table summarizes
information about warrants outstanding at September 30, 2016:
|
Exercise Price
|
|
|
Number of warrants
|
|
|
Weighted average remaining life
|
|
|
Weighted average exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.003
|
|
|
300,000
|
|
|
*
|
|
$
|
0.000
|
|
$0.030
|
|
|
3,703,700
|
|
|
4,54
|
|
|
0.020
|
|
$0.150
|
|
|
1,500,000
|
|
|
0.22
|
|
|
0.040
|
|
|
|
|
5,503,700
|
|
|
|
|
$
|
0.060
|
* 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 September 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 September 30, 2016 is $8,001.
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 September 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 September 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
|
|
|
3.08
|
|
$
|
0.12
|
|
As of September 30, 2016,
there was no unrecognized compensation costs related to these options and the intrinsic value of the options is $0.
10.
Net income per common share
For the three months ended September
30, 2016 the computation of basic and diluted earnings per share is as follows:
|
|
|
Income
|
|
Number of shares
|
|
Per share amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
136,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
136,971
|
|
|
|
48,738,855
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
—
|
|
|
|
266,700
|
|
|
|
|
|
|
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
136,971
|
|
|
|
49,005,555
|
|
|
$
|
0.00
|
|
GREENESTONE
HEALTHCARE CORPORATION
NOTES TO THE
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September
30, 2016 the computation of basic and diluted earnings per share is as follows:
|
|
|
Income
|
|
Number of shares
|
|
Per share amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
349,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
349,386
|
|
|
|
48,158,563
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
—
|
|
|
|
266,700
|
|
|
|
|
|
|
Options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
349,386
|
|
|
|
48,425,263
|
|
|
$
|
0.01
|
|
For the three months and nine
months ended September 30, 2016, options to purchase 480,000 shares of common stock and warrants to purchase 5,203,700 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 nine months
ended September 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 nine months ended September 30, 2015
|
|
|
|
|
|
|
|
Options to purchase shares of common stock
|
|
$
|
480,000
|
|
|
Warrants to purchase shares of common stock
|
|
|
6,300,000
|
|
|
Outstanding at September 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 $0.7624:
|
|
|
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
99,292
|
|
|
2017
|
|
|
|
|
432,102
|
|
|
2018
|
|
|
|
|
478,483
|
|
|
2019
|
|
|
|
|
122,642
|
|
|
|
|
|
|
$
|
1,132,520
|
|
GREENESTONE
HEALTHCARE CORPORATION
NOTES TO THE
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
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 September 30, 2016,
the Company had estimated Canadian tax liabilities outstanding of $2,530,946, 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.
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 purchase agreement is expected to close in November 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, will be funded by a purchase money first mortgage in the amount of $3,750,000 at 5% per annum
payable at $15,000 per month for three years; and $3,150,000 in cash. The Company has deposited $110,000 in
escrow.
The closing of the
Transaction is anticipated to be during November, 2016 and is contingent upon (i) the Company obtaining the
requisite licenses from the appropriate governmental agencies for the operation of Seastone’s Business.
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.
12.
Income taxes
The Company is not current in its
tax filings as of September 30, 2016.
13.
Subsequent events
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.