Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number: 001-40199

Greenbrook TMS Inc.

(Translation of the registrant’s name into English)

890 Yonge Street, 7^th Floor

Toronto, Ontario

Canada M4W 3P4

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x

Form 40-F ¨

Exhibits 99.2 and 99.3 of this Form 6-K are incorporated by reference into Greenbrook TMS Inc.’s registration statement on Form F-3 (File No. 333-264067).

EXHIBIT INDEX

The following documents, which are attached as exhibits hereto, are incorporated by reference herein:

Exhibit		Title
99.1		Press release dated August 14, 2023: Greenbrook TMS Reports Second Quarter Operational and Financial Results

99.2		Condensed Interim Consolidated Financial Statements of Greenbrook TMS Inc., for the three and six months ended June 30, 2023 and 2022 (unaudited)

99.3		Management’s Discussion and Analysis of Financial Condition and Results of Operations, for the three and six-month periods ended June 30, 2023 and 2022

99.4		Form 52-109F2 – Certification of Interim Filings (CEO)

99.5		Form 52-109F2 – Certification of Interim Filings (CFO)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GREENBROOK TMS INC.

Date: August 14, 2023	By:	/s/ Bill Leonard
		Name: Bill Leonard
		Title: President & CEO

Exhibit 99.1

GREENBROOK TMS REPORTS Second quarter operational and FINANCIAL RESULTS

August 14, 2023 – Toronto, Ontario – Greenbrook TMS Inc. (NASDAQ: GBNH) (“Greenbrook” or the “Company”) today announced its second quarter 2023 (“Q2 2023”) operational and financial results. All values in this news release are in United States dollars, unless otherwise stated.

SECOND QUARTER 2023 OPERATIONAL AND FINANCIAL HIGHLIGHTS

●

Quarterly revenue increased by 29% to $18.3 million, up $4.1 million as compared to the second quarter of 2022 (“Q2 2022”). For the six-month period ended June 30, 2023 (“YTD 2023”) revenue increased by 40% to $38.3 million, up $11.0 million compared to the six-month period ended June 30, 2022 (“YTD 2022”). Increases in revenues were predominantly due to the acquisition of Success TMS in July 2022.

●

Quarterly revenue proved resilient at approximately 87% of the total quarterly revenue achieved in the fourth quarter of 2022 (“Q4 2022”), despite the closure of 50 treatment centers in connection with the Company’s previously-announced comprehensive restructuring plan (the “Restructuring Plan”) and a significantly reduced marketing spend (marketing spend in Q2 2023 represented less than 10% of marketing spend in Q4 2022).

●

As a result of the Restructuring Plan, the Company eliminated approximately $21 million of annualized costs from the business to date. We believe the Company is on track to achieve its previously-announced target of $22 million to $25 million in cost reductions once the Restructuring Plan is fully implemented.

●

Loss for the period and comprehensive loss increased by 68% in Q2 2023 to $12.3 million, up $5.0 million as compared to Q2 2022 and increased by 41% to $21.6 million for YTD 2023, up $6.2 million as compared to YTD 2022.

●

The Company continued its roll-out of its Spravato® (esketamine nasal spray) offering at select treatment centers to diversify its offering to patients. As of the date of this press release, the Company has expanded its Spravato® offering to 50 treatment centers. We expect to have 70-80 treatment centers offering Spravato® through an accelerated roll-out by the end of Fiscal 2023.

●

The Company began a pilot to roll-out the facilitation of medication management at selection treatment centers. We believe this program will allow us to reach patients earlier in their treatment journey, develop an internal patient pipeline for TMS and Spravato®, while also further optimizing marketing costs.

●

With the recent financing transactions entered into subsequent to Q2 2023, the Company has enhanced its liquidity position and secured access to further capital to continue to execute on its Restructuring Plan and with the objective of achieving sustainable profitability.

Bill Leonard, President and Chief Executive Officer of Greenbrook, commented:

“The execution of our Restructuring Plan continues to yield positive results including entity-wide regional operating income and we believe that we are well-positioned to continue to reduce the business cost structure sufficiently to operate profitably. Quarterly revenue in Q2 2023 was impacted by liquidity constraints prohibiting any meaningful investment in marketing to effectively generate an adequate patient pipeline. We are, however, encouraged by our current base level of post-Restructuring Plan quarterly revenue, which we intend to build on through marketing investment, acceleration of the Spravato® Program and roll-out of medication management as we have now strengthened our balance sheet through recent financing transactions including with our supportive insiders and lender. As we continue to implement the Restructuring Plan, we believe that mental health remains a key focus in the United States and the unmet demand for treatment remains at an all-time high. We continue to offer innovative solutions for this unmet need and our leadership position and nationwide footprint continues to serve as a valuable platform to bring the needed help to patients struggling with depression.”

- 2 -

SELECTED SECOND QUARTER FINANCIAL AND OPERATING RESULTS ⁽¹⁾

Selected Financial Results

(US$) (unaudited)	Q2 2023			Q2 2022			YTD 2023			YTD 2022
Total revenue		18,346,799			14,210,309			38,254,850			27,275,455
Regional operating income (loss)		237,003			(71,075	)		966,053			(1,109,124	)
Loss before income taxes		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)
Loss for the year and comprehensive loss		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)
Loss attributable to the common shareholders of Greenbrook		(12,259,994	)		(7,347,849	)		(21,491,876	)		(15,185,832	)
Net loss per share (basic and diluted)		(0.30	)		(0.41	)		(0.60	)		(0.85	)

Note:

(1)

Please note that additional selected consolidated financial information can be found at the end of this press release.

Selected Operating Results

	As at June 30,				As at December 31,
(unaudited)	2023		2022		2022
Number of active Treatment Centers⁽¹⁾		133		144		183
Number of Treatment Centers-in-development⁽²⁾		–		–		–
Total Treatment Centers		133		144		183
Number of management regions		17		13		18
Number of TMS Devices installed		341		234		345
Number of regional personnel		400		328		495
Number of shared-services / corporate personnel⁽³⁾		84		66		134
Number of providers⁽⁴⁾		202		164		225
Number of consultations performed⁽⁵⁾		17,899		7,818		27,831
Number of patient starts⁽⁵⁾		5,501		3,626		9,253
Number of Treatments performed⁽⁵⁾		174,388		121,105		312,940
Average revenue per Treatment⁽⁵⁾	$	219	$	225	$	221

Notes:

(1)

Active Treatment Centers represent Treatment Centers that have performed billable Treatment services during the applicable period.

(2)

Treatment Centers-in-development represents Treatment Centers that have committed to a space lease agreement and the development process is substantially complete.

(3)

Shared-services / corporate personnel is disclosed on a full-time equivalent basis. The Company utilizes part-time staff and consultants as a means of managing costs.

(4)

Number of providers represents clinician partners that are involved in the provision of Treatment services from our Treatment Centers.

(5)

Figure calculated for the applicable year or period ended.

For more information, please refer to the Management’s Discussion & Analysis of Financial Condition and Results of Operations (the “Q2 2023 MD&A”) and the unaudited condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2023 and 2022. These documents will be available on the Company’s website at www.greenbrooktms.com, under the Company’s SEDAR+ profile at www.sedarplus.ca and under the Company’s EDGAR profile at www.sec.gov.

- 3 -

CONFERENCE CALL AND WEBCAST

Second Quarter Conference Call Details:

Bill Leonard, President and Chief Executive Officer, and Erns Loubser, Chief Financial Officer, will host a conference call at 10:00 a.m. (Eastern Time) on August 15, 2023 to discuss the financial results for Q2 2023.

Toll Free North America: 1-888-396-8049

Toronto: 416-764-8646

Webcast:

For more information or to listen to the call via webcast, please visit:

www.greenbrooktms.com/investors/events.htm

For those that plan on accessing the conference call or webcast, please allow ample time prior to the call time.

Conference Call Replay:

Following the live call, a replay will be available on the Investor Relations section of the Company’s website and www.greenbrooktms.com/investors/events.htm

About Greenbrook TMS Inc.

Operating through 133 Company-operated Treatment Centers (following completion of the Restructuring Plan), Greenbrook is a leading provider of Transcranial Magnetic Stimulation (“TMS”) and Spravato® (esketamine nasal spray), FDA-cleared, non-invasive therapies for the treatment of Major Depressive Disorder (“MDD”) and other mental health disorders, in the United States. TMS therapy provides local electromagnetic stimulation to specific brain regions known to be directly associated with mood regulation. Spravato® is offered to treat adults with treatment-resistant depression and depressive symptoms in adults with MDD with suicidal thoughts or actions. Greenbrook has provided more than 1.2 million treatments to over 38,000 patients struggling with depression.

For further information please contact:

Glen Akselrod

Investor Relations

Greenbrook TMS Inc.

Contact Information:

investorrelations@greenbrooktms.com

1-855-797-4867

- 4 -

Cautionary Note Regarding Forward-Looking Information

Certain information in this press release, including, but not limited to, information with respect to the Company’s future financial or operating performance, the Company’s expectations regarding the impact of the Restructuring Plan on our business, and the continued roll-out of the Spravato® and medication management offering at additional treatment centers and its potential to enhance profit margins and diversify total revenue, constitute forward-looking information within the meaning of applicable securities laws in Canada and the United States, including the United States Private Securities Litigation Reform Act of 1995. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: macroeconomic factors such as inflation and recessionary conditions, substantial doubt regarding the Company’s ability to continue as a going concern due to recurring losses from operations; inability to increase cash flow and/or raise sufficient capital to support the Company’s operating activities and fund its cash obligations, repay indebtedness and satisfy the Company’s working capital needs and debt obligations; prolonged decline in the price of the Common Shares reducing the Company’s ability to raise capital; inability to satisfy debt covenants under the Company’s credit facility and the potential acceleration of indebtedness; including as a result of an unfavorable decision in respect of the litigation with Benjamin Klein; risks related to the ability to continue to negotiate amendments to the Company’s credit facility to prevent a default; risks relating to the Company’s ability to deliver and execute on the Restructuring Plan and the possible failure to complete the Restructuring Plan on terms acceptable to the Company or its suppliers (including Neuronetics Inc.), or at all; risks relating to maintaining an active, liquid and orderly trading market for Common Shares as a result of the Company’s potential inability to regain compliance with the Nasdaq Stock Market’s listing rules; risks relating to the Company’s ability to realize expected cost-savings and other anticipated benefits from the Restructuring Plan; risks related to the Company’s negative cash flows, liquidity and its ability to secure additional financing; increases in indebtedness levels causing a reduction in financial flexibility; inability to achieve or sustain profitability in the future; inability to secure additional financing to fund losses from operations and satisfy the Company’s debt obligations; risks relating to strategic alternatives, including restructuring or refinancing of the Company’s debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining bankruptcy protection, and the terms, value and timing of any transaction resulting from that process; claims made by or against the Company, which may be resolved unfavorably to us; risks relating to the Company’s dependence on Neuronetics Inc. as its exclusive supplier of TMS devices. Additional risks and uncertainties are discussed in the Company’s materials filed with the Canadian securities regulatory authorities and the United States Securities and Exchange Commission from time to time, available at www.sedarplus.ca and www.sec.gov, respectively. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

- 5 -

Selected Consolidated Financial Information

(US$) (unaudited)	Q2 2023			Q2 2022			YTD 2023			YTD 2022
Total revenue		18,346,799			14,210,309			38,254,850			27,275,455
Direct center and patient care costs		11,281,818			7,645,662			22,945,186			14,986,158
Regional employee compensation		4,107,321			3,361,426			8,772,966			6,836,977
Regional marketing expenses		403,548			1,687,736			816,601			3,404,900
Depreciation		2,317,109			1,586,560			4,754,044			3,156,544
Total direct center and regional costs		18,109,796			14,281,384			37,288,797			28,384,579
Regional operating income (loss)		237,003			(71,075	)		966,053			(1,109,124	)
Center development costs		105,871			186,708			218,062			346,154
Corporate employee compensation		4,109,639			3,437,683			8,250,728			7,055,544
Corporate marketing expenses		25,945			89,617			31,267			224,570
Other corporate, general and administrative expenses		3,648,051			2,085,317			5,357,196			3,456,121
Share-based compensation		513,782			63,882			576,730			313,204
Amortization		343,252			207,500			686,505			415,000
Interest expense		3,810,935			1,220,689			7,450,645			2,450,000
Interest income		(56	)		(9,943	)		(101	)		(12,230	)
Loss before income taxes		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)
Income tax expense		–			–			–			–
Loss for the period and comprehensive loss		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)
Loss attributable to non-controlling interest		(60,422	)		(4,679	)		(113,103	)		(171,655	)
Loss attributable to the common shareholders of Greenbrook		(12,259,994	)		(7,347,849	)		(21,491,876	)		(15,185,832	)
Net loss per share (basic and diluted)		(0.30	)		(0.41	)		(0.60	)		(0.85	)

(unaudited) (US$)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
Revenue		18,346,799			19,908,051			21,076,886			20,752,105			14,210,309			13,065,146			14,047,452			13,130,245
Regional operating income (loss)		237,003			729,050			(141,846	)		(849,472	)		(71,075	)		(1,038,049	)		43,741			249,057
Net loss attributable to common shareholders of Greenbrook		(12,259,994	)		(9,231,882	)		(30,179,216	)		(16,361,426	)		(7,347,849	)		(7,837,983	)		(6,831,859	)		(3,517,250	)
Net loss per share – Basic		(0.30	)		(0.30	)		(1.22	)		(0.59	)		(0.41	)		(0.44	)		(0.34	)		(0.22	)
Net loss per share – Diluted		(0.30	)		(0.30	)		(1.22	)		(0.59	)		(0.41	)		(0.44	)		(0.34	)		(0.22	)

Exhibit 99.2

Condensed Interim Consolidated Financial Statements

(Expressed in U.S. dollars)

Greenbrook TMS Inc.

Three and six months ended June 30, 2023 and 2022

(Unaudited)

Greenbrook TMS Inc.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in U.S. dollars, unless otherwise stated)

(Unaudited)

	June 30,			December 31,
	2023			2022
Assets
Current assets:
Cash	$	1,078,347		$	1,623,957
Restricted cash		1,000,000			1,000,000
Accounts receivable, net (note 19(b))		14,192,351			13,898,305
Prepaid expenses and other		3,839,633			2,520,676
Total current assets		20,110,331			19,042,938

Property, plant and equipment (note 6)		3,947,115			3,719,621
Intangible assets (note 7)		17,465,160			18,151,665
Goodwill		7,694,111			7,694,111
Right-of-use assets (note 8)		37,927,272			51,838,022
Total assets	$	87,143,989		$	100,446,357

Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable and accrued liabilities (note 9)	$	22,127,826		$	20,271,623
Current portion of loans payable (note 10(a))		4,321,853			2,376,335
Current portion of lease liabilities (note 8)		8,110,502			11,123,391
Current portion of shareholder loans (note 11)		2,415,793			46,995
Other payables (note 12)		722,819			2,234,810
Non-controlling interest loans (note 10(b))		98,943			94,136
Deferred and contingent consideration (note 13)		1,000,000			1,000,000
Total current liabilities		38,797,736			37,147,290

Loans payable (note 10(a))		61,611,743			50,027,818
Lease liabilities (note 8)		30,827,408			41,802,231
Shareholder loans (note 11)		1,392,514			2,065,443
Total liabilities		132,629,401			131,042,782

Shareholders’ deficit:
Common shares (note 14)		120,259,624			114,120,362
Contributed surplus (note 15)		5,128,797			4,552,067
Deficit		(168,625,503	)		(147,015,575	)
Total shareholders’ deficit excluding non-controlling interest		(43,237,082	)		(28,343,146	)
Non-controlling interest (note 23)		(2,248,330	)		(2,253,279	)
Total shareholders’ deficit		(45,485,412	)		(30,596,425	)

Basis of preparation and going concern (note 2(a))
Contingencies (note 16)
Subsequent events (note 25)
Total liabilities and shareholders’ deficit	$	87,143,989		$	100,446,357

See accompanying notes to condensed interim consolidated financial statements.

1

Greenbrook TMS Inc.

Condensed Interim Consolidated Statements of Net Loss and Comprehensive Loss

(Expressed in U.S. dollars, unless otherwise stated)

(Unaudited)

	Three months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Revenue:
Service revenue	$	18,346,799		$	14,210,309		$	38,254,850		$	27,275,455

Expenses:
Direct center and patient care costs		11,281,818			7,645,662			22,945,186			14,986,158
Other regional and center support costs (note 24)		4,510,869			5,049,162			9,589,567			10,241,877
Depreciation (notes 6 and 8)		2,317,109			1,586,560			4,754,044			3,156,544
		18,109,796			14,281,384			37,288,797			28,384,579

Regional operating income (loss)		237,003			(71,075	)		966,053			(1,109,124	)

Center development costs		105,871			186,708			218,062			346,154
Corporate, general and administrative expenses (note 24)		7,783,635			5,612,617			13,639,191			10,736,235
Share-based compensation (note 15)		513,782			63,882			576,730			313,204
Amortization (note 7)		343,252			207,500			686,505			415,000
Interest expense		3,810,935			1,220,689			7,450,645			2,450,000
Interest income		(56	)		(9,943	)		(101	)		(12,230	)

Loss before income taxes		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)

Income tax expense (note 18)		–			–			–			–

Loss for the period and comprehensive loss	$	(12,320,416	)	$	(7,352,528	)	$	(21,604,979	)	$	(15,357,487	)

Loss for the period attributable to:
Non-controlling interest (note 23)	$	(60,422	)	$	(4,679	)	$	(113,103	)	$	(171,655	)
Common shareholders of Greenbrook TMS		(12,259,994	)		(7,347,849	)		(21,491,876	)		(15,185,832	)
	$	(12,320,416	)	$	(7,352,528	)	$	(21,604,979	)	$	(15,357,487	)
Net loss per share (note 22):
Basic	$	(0.30	)	$	(0.41	)	$	(0.60	)	$	(0.85	)
Diluted		(0.30	)		(0.41	)		(0.60	)		(0.85	)

See accompanying notes to condensed interim consolidated financial statements.

2

Greenbrook tms Inc.

Condensed Interim Consolidated Statements of Changes in Equity (Deficit)

(Expressed in U.S. dollars, unless otherwise stated)

(Unaudited)

										Non-			Total
	Common shares				Contributed					controlling			equity
Six months ended June 30, 2022	Number		Amount		surplus		Deficit			interest			(deficit)
Balance, December 31, 2021		17,801,885	$	98,408,917	$	4,204,280	$	(85,285,760	)	$	(738,105	)	$	16,589,332
Net comprehensive loss for the period		–		–		–		(15,185,832	)		(171,655	)		(15,357,487	)
Share-based compensation (note 15)		–		–		313,204		–			–			313,204
Distributions to non-controlling interest		–		–		–		–			(296,250	)		(296,250	)
Balance, June 30, 2022		17,801,885	$	98,408,917	$	4,517,484	$	(100,471,592	)	$	(1,206,010	)	$	1,248,799

										Non-			Total
	Common shares				Contributed					controlling			equity
Six months ended June 30, 2023	Number		Amount		surplus		Deficit			interest			(deficit)
Balance, December 31, 2022		29,436,545	$	114,120,362	$	4,552,067	$	(147,015,575	)	$	(2,253,279	)	$	(30,596,425	)
Net comprehensive loss for the period		–		–		–		(21,491,876	)		(113,103	)		(21,604,979	)
Share-based compensation (note 15)		–		–		576,730		–			–			576,730
Issuance of common shares (note 14)		11,363,635		6,139,262		–		–			–			6,139,262
Acquisition of subsidiary non-controlling interest (note 23)		–		–		–		(118,052	)		118,052			–
Balance, June 30, 2023		40,800,180	$	120,259,624	$	5,128,797	$	(168,625,503	)	$	(2,248,330	)	$	(45,485,412	)

See accompanying notes to condensed interim consolidated financial statements.

3

Greenbrook TMS Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in U.S. dollars, unless otherwise stated)

(Unaudited)

	Six months ended
	June 30,			June 30,
	2023			2022
Cash provided by (used in)

Operating activities:
Loss for the period	$	(21,604,979	)	$	(15,357,487	)
Adjusted for:
Amortization		686,505			415,000
Depreciation		4,754,044			3,156,544
Interest expense		7,450,645			2,450,000
Interest income		(101	)		(12,230	)
Share-based compensation		576,730			313,204
Credit facility amendment fee (note 10(a))		1,000,000			–
Neuronetics Note non-cash transaction costs (note 10(a))		116,356			–
Gain on lender warrants		(34,557	)		(43,098	)
(Gain) loss on deferred share units		(122,854	)		27,544
Gain on performance share units		(42,241	)		(67,014	)
Gain on conversion instruments (note 12(d))		(1,516,786	)		–
Change in non-cash operating working capital:
Accounts receivable		(294,046	)		1,192,294
Prepaid expenses and other		(1,318,957	)		(834,744	)
Accounts payable and accrued liabilities		6,037,826			5,159,227
		(4,312,415	)		(3,600,760	)
Financing activities:
Net proceeds on issuance of common shares (note 14)		6,139,262			–
Interest paid		(4,246,310	)		(2,285,800	)
Financing costs incurred		(819,878	)		–
Loans payable advanced (note 10(a))		6,000,000			–
Loans payable and promissory notes repaid (note 10(a))		(84,665	)		(98,771	)
Promissory notes advanced (note 10(a) and note 11)		1,750,000			–
Principal repayment of lease liabilities		(4,967,822	)		(3,373,284	)
Net non-controlling interest loans advanced		4,807			4,351
Distribution to non-controlling interest		–			(296,250	)
		3,775,394			(6,049,754	)
Investing activities:
Decrease in restricted cash		–			250,000
Deferred and contingent consideration paid (note 13)		–			(250,000	)
Interest received		101			12,230
Purchase of property, plant and equipment		(8,690	)		–
		(8,589	)		12,230

Increase (decrease) in cash		(545,610	)		(9,638,284	)

Cash, beginning of period		1,623,957			10,699,679

Cash, end of period	$	1,078,347		$	1,061,395

See accompanying notes to condensed interim consolidated financial statements.

4

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

1.

Reporting entity:

Greenbrook TMS Inc. (the “Company”), an Ontario corporation along with its subsidiaries, controls and operates a network of outpatient mental health services centers that specialize in the provision of Transcranial Magnetic Stimulation (“TMS”) therapy and other treatment modalities for the treatment of depression and related psychiatric services.

Our head and registered office is located at 890 Yonge Street, 7th Floor, Toronto, Ontario, Canada, M4W 3P4. Our United States corporate headquarters is located at 8401 Greensboro Drive, Suite 425, Tysons Corner, Virginia, USA, 22102.

2.

Basis of preparation:

(a)

Going concern:

These condensed interim consolidated financial statements for the three and six months ended June 30, 2023 have been prepared in accordance with IAS 34 – Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and the basis of presentation outlined in note 2(b) on the assumption that the Company is a going concern and will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company has experienced losses since inception and has negative cash flow from operating activities of $4,312,415 for the six months ended June 30, 2023 ($3,600,760 – six months ended June 30, 2022). The Company’s cash balance, excluding restricted cash, as at June 30, 2023 was $1,078,347 ($1,623,957 as at December 31, 2022) and negative working capital as at June 30, 2023 was $18,687,405 (negative working capital of $18,104,352 as at December 31, 2022).

On December 31, 2020, the Company entered into a credit and security agreement, which was amended on October 29, 2021, for a $30,000,000 secured credit facility (the “Oxford Credit Facility”) with Oxford Finance LLC (“Oxford”). The Oxford Credit Facility funded the $15,000,000 term loan at closing on December 31, 2020. On July 14, 2022, the Company entered into a credit agreement (the “Madryn Credit Agreement”) for a $75,000,000 secured credit facility (the “Madryn Credit Facility”) with Madryn Asset Management, LP (“Madryn”) and its affiliated entities. Upon closing of the Madryn Credit Facility, the Company drew a $55,000,000 term loan under the Madryn Credit Facility. In addition, the Madryn Credit Facility permits the Company to draw up to an additional $20,000,000 in a single draw at any time on or prior to December 31, 2024 for purposes of funding future mergers and acquisition activity. On July 14, 2022, the Company used $15,446,546 of the proceeds from the Madryn Credit Facility to repay in full the outstanding balance owing under the Oxford Credit Facility and also used $15,154,845 of the proceeds from the Madryn Credit Facility to repay various loans previously held by Success TMS (as defined below).

5

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

2.

Basis of preparation (continued):

During the six months ended June 30, 2023, the Company received an aggregate of $7,750,000 in debt financings from Madryn, certain significant shareholders and management of the Company, in order to satisfy short-term cash requirements, and the amendments to the Madryn Credit Facility were also effected to amend the Company’s minimum liquidity covenant. See note 10 and note 11.

The terms of the Madryn Credit Facility require the Company to satisfy various financial covenants including a minimum liquidity and minimum consolidated revenue amounts that became effective on July 14, 2022 and September 30, 2022, respectively. A failure to comply with these covenants, or failure to obtain a waiver for any non-compliance, would result in an event of default under the Madryn Credit Agreement and would allow Madryn to accelerate repayment of the debt, which could materially and adversely affect the business, results of operations and financial condition of the Company. On February 21, 2023, March 20, 2023, June 14, 2023, July 3, 2023, July 14, 2023, and August 1, 2023, the Company received waivers from Madryn with respect to the Company’s non-compliance with the minimum liquidity covenant which has been extended to August 15, 2023. As at June 30, 2023, the Company was in compliance with the financial covenants of the Madryn Credit Agreement, as amended.

On March 23, 2023, the Company completed a non-brokered private placement (“Private Placement”), for aggregate gross proceeds to the Company of approximately $6,250,000. The Private Placement included investments by Madryn, together with certain of the Company’s other major shareholders, including Greybrook Health Inc. (“Greybrook Health”) and affiliates of Masters Special Situations LLC (“MSS”). See note 14.

On July 13, 2023, the Company entered into a purchase agreement (the “Alumni Purchase Agreement”) with Alumni Capital LP (“Alumni”). The Alumni Purchase Agreement provides equity line financing for sales from time to time of up to $4,458,156 of common shares. Subsequent to June 30, 2023, the Company has issued an aggregate of 1,461,538 Purchase Shares (as defined below) under the Alumni Purchase Agreement for gross proceeds of $403,024. See note 25.

6

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

2.

Basis of preparation (continued):

On August 1, 2023, the Company received an aggregate of $3,000,000 in debt financings from Madryn and Greybrook Health in order to satisfy the Company’s short-term cash requirements. See note 25.

Although the Company believes it will become cash flow positive in the future, the timing of this is uncertain and is also dependent on the execution of the Restructuring Plan (as defined below) (see note 24). The Company will require additional financing in order to fund its operating and investing activities, including making timely payments to certain vendors, landlords, lenders (including shareholders) and similar other business partners. The delay in such payments may result in potential defaults under the terms of the agreements the Company has with various parties. As such, additional financing is required in order for the Company to repay its short-term obligations. The Company has historically been able to obtain financing from supportive shareholders, its lenders and other sources when required; however, the Company may not be able to access further equity or debt financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. If additional financing is not obtained, the Company will need to obtain additional amendments from Madryn in order to remain compliant with the covenants or waivers from Madryn to waive its rights to accelerate repayment of the debt; however, there can be no assurances that such amendments or waivers will be obtained.

The existence of the above-described conditions indicate substantial doubt as to the Company’s ability to continue as a going concern as at June 30, 2023.

These condensed interim consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumptions were not appropriate. If the going concern basis was not appropriate for these condensed interim consolidated financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses, and the condensed interim consolidated statements of financial position classification used, and these adjustments may be material.

(b)

Statement of compliance:

These condensed interim consolidated financial statements for the three and six months ended June 30, 2023 have been prepared in accordance with IAS 34 – Interim Financial Reporting, as issued by the IASB. The disclosures contained in these condensed interim consolidated financial statements do not include all of the requirements of International Financial Reporting Standards as issued by the IASB (“IFRS”) for annual consolidated financial statements. The condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company as at and for the year ended December 31, 2022.

7

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

2.

Basis of preparation (continued):

These condensed interim consolidated financial statements comprise the accounts of Greenbrook TMS Inc., the parent company, and its subsidiaries. The Company accounts for its controlled subsidiaries using the consolidation method of accounting from the date that control commences and is deconsolidated from the date control ceases. All intercompany transactions and balances have been eliminated on consolidation.

These condensed interim consolidated financial statements were approved by the Board of Directors of the Company (the “Board”) and authorized for issue by the Board on August 14, 2023.

(c)

Basis of measurement:

These condensed interim consolidated financial statements have been prepared on a historic cost basis except for financial instruments classified as fair value through profit or loss, which are stated at their fair value. Other measurement bases are described in the applicable notes.

Presentation of the condensed interim consolidated statements of financial position differentiates between current and non-current assets and liabilities. The condensed interim consolidated statements of net loss and comprehensive loss are presented using the function classification of expense.

Regional operating income (loss) presents regional operating income (loss) on an entity-wide basis and is calculated as total service revenue less direct center and patient care costs, other regional and center support costs, and depreciation. These costs encapsulate all costs (other than incentive compensation such as share-based compensation granted to senior regional employees) associated with the center and regional management infrastructure, including the cost of the delivery of TMS treatments to patients and the cost of the Company’s regional patient acquisition strategy.

8

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

3.

Material accounting policies:

These condensed interim consolidated financial statements have been prepared using the material accounting policies consistent with those applied in the Company’s December 31, 2022 audited consolidated financial statements.

4.

Recent accounting pronouncements:

The IASB has issued the following amendment to the existing standard that became effective for periods beginning on or after January 1, 2023:

(i)

IAS 12 – Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction, narrowing the scope for exemption when recognizing deferred taxes. The amendments were adopted on January 1, 2023.

(ii)

IAS 1 – Presentation of Financial Statements: Disclosure of Accounting Policies relates to the requirement for companies to disclose their material accounting policies rather than their significant accounting policies. The amendments were adopted on January 1, 2023.

(iii)

IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates relates to a new definition for accounting estimates, clarifying that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments were adopted on January 1, 2023.

The adoption of the amendments to the existing standards did not have a material impact on our condensed interim consolidated financial statements.

The IASB has issued the following amendment to the existing standard that will become effective for periods beginning on or after January 1, 2024:

(i)

IAS 1 – Presentation of Financial Statements: Non-current Liabilities with Covenants relates to the removal of the requirement for a right to deter settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must exist at the end of the reporting period and have substance. The amendments are effective for annual periods beginning on or after January 1, 2024.

The Company has not early-adopted the above noted standard. The Company is currently assessing the impact of this pronouncement but presently does not expect this amendment to the existing standard to have any material impact on the Company’s condensed interim consolidated financial statements.

9

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

5.

Business acquisitions:

Acquisition of Success TMS:

On July 14, 2022, the Company, through its wholly-owned U.S. subsidiary, TMS NeuroHealth Centers Inc., completed the acquisition of all of the issued and outstanding equity interests in Check Five LLC, a Delaware limited liability company (doing business as “Success TMS”) (“Success TMS”) from its parent company, Success Behavioral Holdings LLC (the “Success TMS Acquisition”) pursuant to a Membership Interest Purchase Agreement dated as of May 15, 2022, by and among the Company, Success TMS and its direct and indirect owners, including Success Behavioral Holdings, LLC, Theragroup LLC, The Bereke Trust U/T/A Dated 2/10/03, Batya Klein and Benjamin Klein (collectively, the “Seller Parties”).

As consideration for the purchase of Success TMS, the Seller Parties received, in the aggregate, 8,725,995 common shares of the Company valued at $11,783,584, and an additional 2,908,665 common shares of the Company, valued at $3,927,861, have been held back and deposited with an escrow agent, to be released to Benjamin Klein or the Company, as applicable, upon satisfaction of customary working capital and certain other adjustments, including to satisfy any indemnity claims against the Seller Parties.

The purchase price consideration was determined based on the pro forma revenue contribution of the two companies and was fixed at an amount equal to approximately 40% of the total issued and outstanding common shares of the Company on a post-acquisition basis and subject to adjustments, as described above.

The Success TMS Acquisition represented the addition of 47 new Treatment Centers (as defined below), with a new presence in additional states, including Illinois, New Jersey, Nevada and Pennsylvania.

10

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

5.

Business acquisitions (continued):

The Success TMS Acquisition was accounted for using the acquisition method of accounting. The allocation of the purchase price consideration for the Success TMS Acquisition is finalized, and is comprised as follows:

Purchase consideration
Share issuance	$	11,783,584
Share issuance, held in escrow		3,927,861
		15,711,445
Net assets acquired
Cash acquired		688,958
Accounts receivable, net		3,728,255
Prepaid expenses and other		804,416
Property, plant and equipment		829,049
Software		363,424
Management services agreements		15,850,000
Right-of-use assets		23,650,865
Accounts payable and accrued liabilities		(4,890,405	)
Deferred grant income		(225,559	)
Loans payable		(14,836,324	)
Shareholder loan		(2,078,979	)
Lease liabilities		(23,500,474	)
		383,226
Goodwill	$	15,328,219

As part of the Success TMS Acquisition, the Company acquired five management services agreements (the “Success TMS MSAs”) between Success TMS and professional entities owned by Success TMS physicians, under which it provides management, administrative, financial and other services in exchange for a fee. The Success TMS MSAs are the key intangible assets identified as part of the Success TMS Acquisition and drives the value of the business. The Success TMS MSAs are valued using the multi-period excess earnings method. The multi-period excess earnings method considers the present value of net cash flows expected to be generated by the Success TMS MSAs by excluding any cash flows related to contributory assets.

Goodwill is primarily attributable to the ability to expand the Company’s national footprint and the synergies expected to result from combining Success TMS’ operations with the Company, and is allocated to the Success TMS cash generating unit. Goodwill is deductible for tax purposes.

11

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

6.

Property, plant and equipment:

	Furniture and  equipment		Leasehold  improvements		TMS devices		Total
Cost

Balance, December 31, 2022	$	115,604	$	344,336	$	4,656,273	$	5,116,213
Additions		–		8,690		630,189		638,879
Balance, June 30, 2023	$	115,604	$	353,026	$	5,286,462	$	5,755,092

Accumulated depreciation

Balance, December 31, 2022	$	103,474	$	95,541	$	1,197,577	$	1,396,592
Depreciation		11,560		30,005		369,820		411,385
Balance, June 30, 2023	$	115,034	$	125,546	$	1,567,397	$	1,807,977

Net book value

Balance, December 31, 2022	$	12,130	$	248,795	$	3,458,696	$	3,719,621
Balance, June 30, 2023		570		227,480		3,719,065		3,947,115

7.

Intangible assets:

	Management  services agreements		Covenants not  to compete		Software		Total
Cost

Balance, December 31, 2022	$	19,888,084	$	398,971	$	363,424	$	20,650,479
Additions		–		–		–		–
Balance, June 30, 2023	$	19,888,084	$	398,971	$	363,424	$	20,650,479

Accumulated amortization

Balance, December 31, 2022	$	2,119,307	$	339,861	$	39,646	$	2,498,814
Amortization		630,623		16,236		39,646		686,505
Balance, June 30, 2023	$	2,749,930	$	356,097	$	79,292	$	3,185,319

Net book value

Balance, December 31, 2022	$	17,768,777	$	59,110	$	323,778	$	18,151,665
Balance, June 30, 2023		17,138,154		42,874		284,132		17,465,160

12

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

8.

Right-of-use assets and lease liabilities:

The Company enters into lease agreements related to TMS devices and mental health treatment centers (“Treatment Centers”). These lease agreements range from one year to seven years in length.

Right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred.

	TMS devices			Treatment  Center  locations			Total
Right-of-use assets, December 31, 2022	$	19,348,091		$	32,489,931		$	51,838,022
Impact of lease additions, disposals and/or modifications		(8,363,112	)		(574,790	)		(8,937,902	)
Exercise of buy-out options into property, plant and equipment		(630,189	)		–			(630,189	)
Depreciation on right-of-use assets		(1,404,865	)		(2,937,794	)		(4,342,659	)
Right-of-use assets, June 30, 2023	$	8,949,925		$	28,977,347		$	37,927,272

During the current period, certain device leases were amended from a fixed fee arrangement to a variable fee arrangement and the Company re-assessed the renewal option relating to certain device leases and concluded that it is not probable that the renewal options under those leases will be exercised, which resulted in a decrease in ROU asset and liability. In addition, certain facility leases were modified or disposed as a result of the Restructuring Plan. See note 10(iv) and note 24(a).

Lease liabilities have been measured by discounting future lease payments using a rate implicit in the lease or the Company’s incremental borrowing rate. The Company’s incremental borrowing rate during the period ended June 30, 2023 is 14.5% (December 31, 2022 – 12%).

	Total
Lease liabilities, December 31, 2022	$	52,925,622
Impact of lease additions, disposals and/or modifications		(9,019,890	)
Interest expense on lease liabilities		2,224,241
Payments of lease liabilities		(7,192,063	)

Lease liabilities, June 30, 2023		38,937,910
Less current portion of lease liabilities		(8,110,502	)

Long term portion of lease liabilities	$	30,827,408

13

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

9.

Accounts payable and accrued liabilities:

The accounts payable and accrued liabilities are as follows:

	June 30,  2023		December 31,  2022
Accounts payable	$	18,560,582	$	16,808,557
Accrued liabilities		3,567,244		3,463,066
Total	$	22,127,826	$	20,271,623

10.

Loans payable:

(a)

Borrowings:

	TMS  Device  Loans (i)		Credit  Facility (ii)		Promissory  notes (iii)		Neuronetics  Note (iv)		Total
Short Term	$	105,066	$	2,585,978	$	30,809	$	1,600,000	$	4,321,853
Long Term		19,041		56,985,665		207,037		4,400,000		61,611,743
Total, June 30, 2023	$	124,107	$	59,571,643	$	237,846	$	6,000,000	$	65,933,596

(i)

TMS Device Loans:

During the year ended December 31, 2022, the Company assumed loans as part of the Success TMS Acquisition from three separate financing companies for the purchase of TMS devices. These TMS device loans bear an average interest rate of 9.3% with average monthly blended interest and capital payments of $1,538 and mature during the years ending December 31, 2023 to December 31, 2025. There are no covenants associated with these loans.

During the six months ended June 30, 2023, the Company repaid TMS device loans totalling $84,665 (June 30, 2022 – $23,771).

14

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

10.

Loans payable (continued):

(ii)

Credit Facility:

On July 14, 2022, the Company entered into the Madryn Credit Agreement in respect of the Madryn Credit Facility. The Madryn Credit Facility provided the Company with a $55,000,000 term loan (the “Existing Loan”) that was funded at closing on July 14, 2022, with an option to draw up to an additional $20,000,000 in a single draw at any time on or prior to December 31, 2024 for the purposes of funding future mergers and acquisition activity. As at December 31, 2022, all amounts borrowed under the Madryn Credit Facility bore interest at a rate equal to the three-month London Interbank Offered Rate (“LIBOR”) plus 9.0%, subject to a minimum three-month LIBOR floor of 1.5%. The Madryn Credit Facility matures over 63 months and provides for four years of interest-only payments. The initial principal balance of $55,000,000 is due in five equal 3 month installments beginning on September 30, 2026. The Company has granted general security over all assets of the Company in connection with the performance and prompt payment of all obligations of the Madryn Credit Facility.

On February 1, February 21, March 20 and March 24, 2023, the Company entered into amendments to the Madryn Credit Facility, whereby Madryn extended four additional tranches of debt financing to the Company in an aggregate principal amount of $6,000,000, each of which were fully funded at closing of the applicable tranche (the “New Loans”). The terms and conditions of the New Loans are consistent with the terms and conditions of the Existing Loan.

In addition, the Madryn Credit Facility was amended on February 21, 2023 to provide that, commencing March 31, 2023, all advances under the Madryn Credit Facility (including the New Loans) will cease to accrue interest using the LIBOR benchmark and instead will accrue interest at a rate equal to 9.0% plus the 3-month Term Secured Overnight Financing Rate (“SOFR”) benchmark (subject to a floor or 1.5%) plus 0.10%.

The carrying amount of the Madryn Credit Facility as at June 30, 2023 is $59,571,643 (December 31, 2022 – $52,036,483). Transaction costs of $3,612,053 were incurred and are deferred over the term of the Madryn Credit Facility, of which $537,594 was incurred during the six month period associated with the various amendments. Amortization of deferred transaction costs for the three and six months ended June 30, 2023 were $230,735 and $446,982, respectively (June 30, 2022 – nil and nil, respectively) and was included in interest expense.

In accordance with the terms of the Madryn Credit Agreement, the Company has issued conversion instruments (each, a “Conversion Instrument”) to Madryn and certain of its affiliated entities that provide the holders thereof with the option to convert up to $5,000,000 of the outstanding principal amount of the Madryn Credit Facility into common shares of the Company at a price per share equal to $1.90, subject to customary anti-dilution adjustments. The New Loans provide the holders with the option to convert up to $546,000 of the outstanding principal amount of the New Loans into common shares of the Company at a price per share equal to $1.90, subject to customary anti-dilution adjustments. See note 12(d).

15

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

10.

Loans payable (continued):

The terms of the Madryn Credit Agreement require the Company to satisfy various affirmative and negative covenants and to meet certain financial tests, including but not limited to, consolidated minimum revenue and minimum liquidity covenants. In addition, the Madryn Credit Agreement contains affirmative and negative covenants that limit, among other things, the Company’s ability to incur additional indebtedness outside of what is permitted under the Madryn Credit Agreement, create certain liens on assets, declare dividends and engage in certain types of transactions. The Madryn Credit Agreement also includes customary events of default, including payment and covenant breaches, bankruptcy events and the occurrence of a change of control. The Madryn Credit Facility also requires the Company to deliver to Madryn annual audited financial statements that do not contain any going concern note, however the Company has obtained waivers from Madryn with respect to such obligation for fiscal 2022.

On June 14, 2023, the Company received a waiver from Madryn under the Madryn Credit Agreement to temporarily reduce the Company's minimum liquidity covenant. As consideration for the waiver, Madryn received an amendment fee in the amount of $1,000,000, which fee was paid-in-kind by adding such this amount to the outstanding principal balance of the loan and was recorded in corporate, general and administrative expenses. As at June 30, 2023, the Company was in compliance with the financial covenants (as amended on June 14, 2023) under the Madryn Credit Agreement.

Pursuant to the Private Placement completed on March 23, 2023, Madryn is now also a shareholder of the Company. See note 14.

(iii)

Promissory notes:

On July 14, 2022, the Company assumed two promissory notes in connection with the Success TMS Acquisition totaling $200,000. The promissory notes bear interest at a rate of 5% per annum and have a maturity date of December 31, 2025. Upon acquisition, the two promissory notes were fair valued using an interest rate of 12%.

On February 3, 2023, the Company issued promissory notes to officers of the Company in an aggregate amount of $60,000. The promissory notes bear interest at a rate consistent with the Madryn Credit Facility and mature on the earlier of September 30, 2027, at the election of the noteholders upon a change of control, upon the occurrence of an event of default and acceleration by the noteholders, or the date on which the loans under the Madryn Credit Facility are repaid.

16

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

10.

Loans payable (continued):

The carrying value of the promissory notes as at June 30, 2023 is $237,846 (December 31, 2022 – $166,325). Interest expense for the three and six months ended June 30, 2023 was $7,373 and $13,753, respectively (three and six months ended June 30, 2022 – nil and nil, respectively). During the three and six months ended June 30, 2023, the Company repaid promissory notes totalling nil and nil, respectively (three and six months ended June 30, 2022 – nil and nil, respectively).

(iv)

Neuronetics Note:

On March 31, 2023, the Company entered into an agreement with Neuronetics, Inc. (“Neuronetics”) to convert the Company’s outstanding account balance payable to Neuronetics of $5,883,644, together with Neuronetics’ out-of-pocket transaction costs, into a $6,000,000 secured promissory note (the “Neuronetics Note”). All amounts borrowed under the Neuronetics Note will bear interest at a rate of SOFR plus 7.65%.

Pursuant to the terms of the Neuronetics Note, in the event of default under the Neuronetics Note, the Company will be required to issue common share purchase warrants (the “Neuronetics Warrants”) to Neuronetics equal to (i) 200% of the unpaid amount of any delinquent amount or payment due and payable under the Neuronetics Note, together with all outstanding and unpaid accrued interest, fees, charges and costs, divided by (ii) the exercise price of the Neuronetics Warrants, which will represent a 20% discount to the 30-day volume-weighted average closing price of the Company’s common shares traded on Nasdaq prior to the date of issuance (subject to any limitations required by Nasdaq). Under the Neuronetics Note, the Company has granted Neuronetics a security interest in all of the Company’s assets.

In connection with the entry into the Neuronetics Note, the Company concurrently entered into an amendment to the Madryn Credit Agreement pursuant to which the Company is permitted to incur the indebtedness under the Neuronetics Note.

The carrying value of the Neuronetics Note as at June 30, 2023 is $6,000,000 (December 31, 2022 – nil). Interest expense for the three and six months ended June 30, 2023 was $190,075 and $190,075, respectively (three and six months ended June 30, 2022 – nil and nil, respectively). During the three and six months ended June 30, 2023, the Company repaid promissory notes totalling nil and nil, respectively (three and six months ended June 30, 2022 – nil and nil, respectively).

17

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

10.

Loans payable (continued):

(b)

Non-controlling interest loans:

	June 30,		December 31,
	2023		2022
Non-controlling interest loans	$	98,943	$	94,136

The non-controlling interest holder partners of the Company, from time to time, provide additional capital contributions in the form of capital loans to the Company’s subsidiaries. These loans bear interest at a rate of 10%, compounded on a monthly basis. The loans are unsecured and are repayable subject to certain liquidity and solvency requirements and are classified as current liabilities.

11.

Shareholder loans:

(a)   2022 Promissory Note:

On July 14, 2022, in connection with the Success TMS Acquisition, the Company assumed the obligation of Success TMS to repay a promissory note (the “2022 Promissory Note”) to Benjamin Klein, who is a significant shareholder of the Company. The 2022 Promissory Note totals $2,090,264 and bears interest at a rate of 10% per annum and matures on May 1, 2024. Upon acquisition, the 2022 Promissory Note was fair valued using an interest rate of 12%. The carrying value of the 2022 Promissory Note at June 30, 2023 is $2,124,584 (December 31, 2022 – $2,112,438).

(b)   2023 Promissory Notes:

On February 3, 2023, the Company issued promissory notes (the “2023 Promissory Notes”) to certain shareholders of the Company in an aggregate amount of $1,690,000. The 2023 Promissory Notes bear interest at a rate consistent with the Madryn Credit Facility and mature on the earlier of September 30, 2027, at the election of the noteholders upon a change of control, upon the occurrence of an event of default and acceleration by the noteholders, or the date on which the loans under the Madryn Credit Facility are repaid.

18

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

11.

Shareholder loans (continued):

Transaction costs of $30,000 were incurred and are deferred over the term of the 2023 Promissory Notes. Amortization of deferred transaction costs for the three and six months ended June 30, 2023 were $1,118 and $1,772, respectively (three and six months ended June 30, 2022 – nil and nil, respectively) and were included in interest expense.

On February 28, 2023, the Company issued a promissory note to Greybrook Health, who is a significant shareholder of the Company. The promissory note totals $1,000,000 and bears interest at a rate consistent with the Madryn Credit Facility and matures on the earlier of September 30, 2027, at the election of the noteholder upon a change of control, upon the occurrence of an event of default and acceleration by the noteholder, or the date on which the loans under the Madryn Credit Facility are repaid. In conjunction with the issuance of the unsecured note to Greybrook Health, the Company granted Greybrook Health an option to convert up to $1,000,000 of the outstanding principal amount of the note held by Greybrook Health into common shares of the Company at a conversion price per share equal to 85.0% of the volume-weighted average trading price of the common shares of the Company on the Nasdaq for the five trading days immediately preceding the date of conversion, subject to customary anti-dilution adjustments and conversion limitations required by Nasdaq. As additional consideration for the Greybrook Health promissory note issued on February 28, 2023, the Company issued 135,870 common share purchase warrants to Greybrook Health, each exercisable for one common share of the Company at an exercise price of $1.84 per common share, subject to customary anti-dilution adjustments, expiring on February 28, 2028. There is a cashless exercise option associated with the warrants, available to Greybrook Health.

On February 28, 2023, the fair value of the promissory note was $1,176,471 and the value of the lender warrants at grant date was $63,587, for a total fair value of $1,240,058. The promissory note face value is $1,000,000, resulting in a loss on inception of $240,058, allocated to both the promissory note and the lender warrants, on a pro-rated basis. The loss on inception will be deferred over the term of the promissory note. The fair value of the warrants on the date of inception has been deducted from the carrying value of the Greybrook Health promissory note as a transaction cost. See note 12(a) for lender warrants.

Transaction costs of $70,562 were incurred and are deferred over the term of the promissory note. Amortization of deferred transaction costs and deferred loss for the three and six months ended June 30, 2023 were $2,761 and $3,674, respectively (three and six months ended June 30, 2022 – nil and nil, respectively) and were included in interest expense. The carrying value of the 2023 Promissory Notes at June 30, 2023 is $1,683,723 (December 31, 2022 – $2,112,438).

19

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

11.

Shareholder loans (continued):

Interest expense for the three and six months ended June 30, 2023 were $112,576 and $216,148, respectively (three and six months ended June 30, 2022 – nil and nil, respectively). During the three and six months ended June 30, 2023, the Company repaid $52,256 and $104,513 of the shareholder loans, respectively (three and six months ended June 30, 2022 – nil and nil, respectively).

12.

Other payables:

(a)

Lender warrants:

	June 30,		December 31,
	2023		2022
Lender warrants	$	35,597	$	6,567

(i)

Oxford lender warrants

As consideration for providing the Oxford Credit Facility, the Company issued 51,307 common share purchase warrants to Oxford, each exercisable for one common share of the Company at an exercise price of C$11.20 per common share, expiring on December 31, 2025.

As the exercise price is denoted in a different currency than the Company’s functional currency, the Oxford lender warrants are recorded as a financial liability on the condensed interim consolidated statements of financial position. As at June 30, 2023, the value of the Oxford lender warrants was nil (December 31, 2022 – $6,567).

The change in fair value of the Oxford lender warrants during the three and six months ended June 30, 2023 was a decrease of nil and $6,567, respectively (three and six months ended June 30, 2022 – decrease of $33,554 and $43,098, respectively) and was recorded in corporate, general and administrative expenses.

20

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

12.

Other payables (continued):

(ii)

Greybrook Health lender warrants

As consideration for the purchase of the Greybrook Health promissory note issued on February 28, 2023, the Company issued 135,870 common share purchase warrants to Greybrook Health. Each Greybrook lender warrant will be exercisable for one common share at an exercise price of $1.84, subject to customary anti-dilution adjustments. The Greybrook lender warrants will expire five years from the date of issuance. See note 11(b).

As there is a cashless exercise option for the Greybrook Health lender warrants, they are recorded as a financial liability on the condensed interim consolidated statements of financial position. As at June 30, 2023, the value of the Greybrook lender warrants was $35,597 (December 31, 2022 – nil). The change in fair value of the lender warrants during the three and six months ended June 30, 2023 was a decrease of nil and $27,990, respectively (three and six months ended June 30, 2022 - nil and nil, respectively) and was recorded in corporate, general and administrative expenses.

(b)

Deferred share units:

	June 30,		December 31,
	2023		2022
Deferred share units	$	455,207	$	578,061

On May 6, 2021, the Company adopted a deferred share unit plan (the “DSU Plan”) for non-employee directors (each, a “Non-Employee Director”). Each Non-Employee Director is required to take at least 50% of their annual retainer (other than annual committee Chair retainers) in deferred share units (“DSUs”) and may elect to take additional amounts in the form of DSUs. Discretionary DSUs may also be granted to Non-Employee Directors under the DSU Plan. The DSUs granted vest immediately.

Following a Non-Employee Director ceasing to hold all positions with the Company, the Non-Employee Director will receive a payment in cash at the fair market value of the common shares represented by the Non-Employee Director’s DSUs generally within ten days of the Non-Employee Director’s elected redemption date.

As the DSUs are cash-settled, the DSUs are recorded as cash-settled share-based payments and a financial liability has been recognized on the condensed interim consolidated statements of financial position. During the three and six months ended June 30, 2023, 405,217 and 405,217 DSUs were granted, respectively (three and six months ended June 30, 2022 – 129,173 and 129,173, respectively). As at June 30, 2023, the value of the financial liability attributable to the DSUs was $455,207 (December 31, 2022 – $578,061). For the three and six months ended June 30, 2023, the Company recognized an expense of $176,337 and a recovery of $122,854, respectively (three and six months ended June 30, 2022 – expense of $49,905 and $27,544, respectively) in corporate, general and administrative expenses related to the DSUs.

21

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

12.

Other payables (continued):

(c)

Performance share units:

	June 30,		December 31,
	2023		2022
Performance share units	$	2,512	$	44,753

On May 6, 2021, the Company’s Equity Incentive Plan was amended and restated to permit the Company to grant performance share units (“PSUs”) and restricted share units (“RSUs”), in addition to stock options. Under the Equity Incentive Plan, the Company pays equity instruments of the Company, or a cash payment equal to the fair market value thereof, as consideration in exchange for employee and similar services provided to the Company. The Equity Incentive Plan is open to employees, directors, officers and consultants of the Company and its affiliates; however, Non-Employee Directors are not entitled to receive grants of PSUs.

On August 5, 2021, 38,647 PSUs were granted under the Equity Incentive Plan. The performance period in respect of this award is August 5, 2021 to December 31, 2023. The PSUs will vest on December 31, 2023 (the “Vesting Date”) subject to the attainment of certain performance vesting conditions. Subject to all terms and conditions of the Equity Incentive Plan and the terms of the grant agreement, any vested and outstanding PSUs will be settled following the Vesting Date and, in any event, no later than March 15, 2024. Pursuant to the grant agreement, upon satisfaction of the performance vesting conditions, the PSUs will be settled in cash.

Based on future projections with respect to the performance vesting conditions of the PSUs, the Company estimates that 3,865 PSUs will vest on the Vesting Date (December 31, 2022 – 23,188).

22

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

12.

Other payables (continued):

As at June 30, 2023, the value of the financial liability attributable to the PSUs is $2,512 (December 31, 2022 – $44,753).

As at June 30, 2023, the Company has not issued any RSUs under the Equity Incentive Plan (December 31, 2022 – nil).

(d)

Conversion Instruments:

	June 30,		December 31,
	2023		2022
Conversion Instruments	$	229,503	$	1,605,429

On July 14, 2022, in connection with the Madryn Credit Facility, the Company issued the Conversion Instruments to Madryn and certain of its affiliated entities. The Conversion Instruments provide the holders thereof with the option to convert up to an aggregate of $5,000,000 of the outstanding principal amount of the Existing Loan into common shares of the Company at a price per share equal to $1.90, subject to customary anti-dilution adjustments. The New Loans provide the holders with the option to convert up to $546,000 of the outstanding principal amount of the New Loans into common shares of the Company at a price per share equal to $1.90, subject to customary anti-dilution adjustments. See note 10(a)(ii) and note 25.

The embedded derivative in relation to the Conversion Instruments were fair valued using the finite difference valuation method and are recorded as a financial liability in other payables on the consolidated statements of financial position. On inception, the aggregate value of the Conversion Instruments were $1,033,811. As at June 30, 2023, the aggregate value of the Conversion Instruments was $229,503 (December 31, 2022 – $1,605,429).

The change in fair value of the Conversion Instruments during the three and six months ended June 30, 2023 was a decrease of $356,855 and $1,375,926, respectively (three and six months ended June 30, 2022 – nil and nil, respectively) and was recorded in corporate, general and administrative expenses.

23

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

13.

Deferred and contingent consideration:

	June 30,		December 31,
	2023		2022
Deferred and contingent consideration	$	1,000,000	$	1,000,000

The deferred and contingent consideration payable balance related to the acquisition of Achieve TMS East, LLC and Achieve TMS Central, LLC (the “Achieve TMS East/Central Acquisition”) as at December 31, 2021 was $1,250,000, made up of an estimated nil earn-out payable and $1,250,000 in restricted cash that was held in an escrow account, subject to finalization of the escrow conditions. During the year ended December 31, 2022, $250,000 of the restricted cash held in escrow was released to the vendors in accordance with the terms of the agreement.

As at June 30, 2023, the deferred and contingent consideration in relation to the of Achieve TMS East/Central Acquisition was $1,000,000 (December 31, 2022 – $1,000,000).

14.

Common shares:

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares, issuable in series. As at June 30, 2023 and December 31, 2022, there were nil preferred shares issued and outstanding.

			Total
	Number		amount
December 31, 2022		29,436,545	$	114,120,362
Issuance of common shares – Private Placement		11,363,635		6,139,262
June 30, 2023		40,800,180	$	120,259,624

On March 23, 2023, the Company completed the Private Placement. Pursuant to the Private Placement, an aggregate of 11,363,635 common shares were issued at a price of $0.55 per common share, for aggregate gross proceeds to the Company of $6,250,000. The Company incurred transaction costs of $110,738 which were recorded as a reduction in equity. The Private Placement included investments by Madryn, together with certain of the Company’s other major shareholders, including Greybrook Health and affiliates of MSS. In connection with the Private Placement, Greybrook Health, Madryn and MSS each received customary resale, demand and “piggy-back” registration rights pursuant to a registration rights agreement entered into among the parties on closing of the Private Placement. See also note 25.

24

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

15.

Contributed surplus:

Contributed surplus is comprised of share-based compensation.

Stock options granted under the Equity Incentive Plan are equity-settled. The fair value of the grant of the options is recognized as an expense in the condensed interim consolidated statements of net loss and comprehensive loss. The total amount to be expensed is determined by the fair value of the options granted. The total expense is recognized over the vesting period which is the period over which all of the service vesting conditions are satisfied. The vesting period is determined at the discretion of the Board and has ranged from immediate vesting to over three years.

The maximum number of common shares reserved for issuance, in the aggregate, under the Equity Incentive Plan is 10% of the aggregate number of common shares outstanding, provided that the maximum number of RSUs and PSUs shall not exceed 5% of the aggregate number of common shares outstanding. As at June 30, 2023, this represented 4,080,018 common shares (December 31, 2022 – 2,943,655).

As at June 30, 2023, 1,702,500 stock options are outstanding (December 31, 2022 – 764,667). The stock options have an expiry date of ten years from the applicable date of issue. The Company has not issued any RSUs or equity-settled PSUs under the Equity Incentive Plan.

	June 30, 2023						December 31, 2022
				Weighted						Weighted
	Number			average			Number			average
	of stock			exercise			of stock			exercise
	options			price			options			price
Outstanding, beginning of period		764,667		$	8.15			897,500		$	8.66
Granted		980,000			0.75			–			–
Forfeited		(42,167	)		(8.57	)		(132,833	)		(11.59	)
Outstanding, end of period		1,702,500		$	3.88			764,667		$	8.15

The weighted average contractual life of the outstanding options as at June 30, 2023 was 7.7 years (December 31, 2022 – 4.8 years).

25

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

15.

Contributed surplus (continued):

The total number of stock options exercisable as at June 30, 2023 was 1,174,167 (December 31, 2022 – 642,466).

During the three and six months ended June 30, 2023, the Company recorded a total share-based options compensation expense of $513,782 and $576,730, respectively (three and six months ended June 30, 2022 – $63,882 and $313,204, respectively).

The following stock options were granted during the six months ended June 30, 2023:

(i)

On May 15, 2023, 980,000 stock options were granted at an estimated fair value of $0.66 per option using the Black-Scholes option pricing model based on the following assumptions: volatility of 93.09%; remaining life of ten years; expected dividend yield of 0%; forfeiture rate of 6.89% and an annual risk-free interest rate of 3.47%.

As at June 30, 2023, the total compensation cost not yet recognized related to options granted is approximately $333,856 (December 31, 2022 – $190,536) and will be recognized over the remaining average vesting period of 1.27 years (December 31, 2022 – 0.69 years).

16.

Contingencies:

The Company may be involved in certain legal matters arising from time to time in the normal course of business. The Company records provisions that reflect management’s best estimate of any potential liability relating to these matters. The resolution of these matters is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

17.

Pensions:

The Company has adopted a defined contribution pension plan for its employees whereby the Company matches contributions made by participating employees up to a maximum of 3.5% of such employees’ annual salaries. During the three and six months ended June 30, 2023, contributions, which were recorded as expenses within direct center and patient care costs, other regional and center support costs and corporate, general and administrative expenses, amounted to $180,145 and $375,909 (three and six months ended June 30, 2022 – $137,010 and $255,427, respectively).

26

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

18.

Income taxes:

During the six months ended June 30, 2023, there were no significant changes to the Company’s tax position.

19.

Risk management arising from financial instruments:

In the normal course of business, the Company is exposed to risks related to financial instruments that can affect its operating performance. These risks, and the actions taken to manage them, are as follows:

(a)

Fair value:

The Company has Level 1 financial instruments which consists of cash, restricted cash, accounts receivable and accounts payable and accrued liabilities which approximate their fair value given their short-term nature. The Company also has lender warrants, DSUs and PSUs that are considered Level 2 financial instruments (see note 12). The Company has deferred and contingent consideration (note 13) and Conversion Instruments (note 12) that are considered Level 3 financial instruments.

The carrying value of the loans payable, shareholder loans and finance lease obligations approximates their fair value given the difference between the discount rates used to recognize the liabilities in the condensed interim consolidated statements of financial position and the market rates of interest is insignificant.

Financial instruments are classified into one of the following categories: financial assets or financial liabilities.

(b)

Credit risk:

Credit risk arises from the potential that a counterparty will fail to perform its obligations. The Company is exposed to credit risk from patients and third-party payors including federal and state agencies (under the Medicare programs), managed care health plans and commercial insurance companies. The Company’s exposure to credit risk is mitigated in large part due to the majority of the accounts receivable balance being receivable from large, creditworthy medical insurance companies and government-backed health plans.

27

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

19.

Risk management arising from financial instruments (continued):

The Company’s aging schedule in respect of its accounts receivable balance as at June 30, 2023 and December 31, 2022 is provided below:

	June 30,		December 31,
Days since service delivered	2023		2022
0 – 90	$	5,639,815	$	7,341,725
91 – 180		2,912,775		2,666,631
181 – 270		2,854,471		2,024,644
270+		2,785,290		1,865,305
Total accounts receivable	$	14,192,351	$	13,898,305

Based on the Company’s industry, none of the accounts receivable in the table above are considered “past due”. Furthermore, the payors have the ability and intent to pay, but price lists for the Company’s services are subject to the discretion of payors. As such, the timing of collections is not linked to increased credit risk. The Company continues to collect on services rendered in excess of 24 months from the date such services were rendered.

(c)

Liquidity risk:

Liquidity risk is the risk that the Company may encounter difficulty in raising funds to meet its financial commitments or can only do so at excessive cost. The Company ensures there is sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and its ability to raise capital from existing or new investors and/or lenders (see note 2(a)).

(d)

Currency risk:

Currency risk is the risk to the Company’s earnings that arises from fluctuations in foreign exchange rates and the degree of volatility of those rates. The Company has minimal exposure to currency risk as substantially all of the Company’s revenue, expenses, assets and liabilities are denominated in U.S. dollars. The Company pays certain vendors and payroll costs in Canadian dollars from time to time, but due to the limited size and nature of these payments it does not give rise to significant currency risk.

28

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

19.

Risk management arising from financial instruments (continued):

(e)

Interest rate risk:

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to changes in interest rates on its cash and long-term debt. Certain loans payable and shareholder loans (see note 10 and note 11) bear interest at a rate equal to the 3-month Term Secured Overnight Financing Rate plus 9.1% or at a rate equal to the 3-month Term Secured Overnight Financing Rate plus 7.65%. A 1% increase in interest rates would result in a $2,778,392 increase to interest expense on the condensed interim consolidated statements of net loss and comprehensive loss over the term of the loans payable and shareholder loans.

20.

Capital management:

The Company’s objective is to maintain a capital structure that supports its long-term growth strategy, maintains creditor and customer confidence, and maximizes shareholder value.

The capital structure of the Company consists of its shareholders’ equity, including contributed surplus and deficit, as well as loans payable.

The Company’s primary uses of capital are to finance operations, finance new center start-up costs, increase non-cash working capital, capital expenditures and finance service debt obligations. The Company’s objectives when managing capital are to ensure the Company will continue to have enough liquidity so it can provide its services to its customers and returns to its shareholders. The Company, as part of its annual budgeting process and on an ongoing basis, periodically evaluates its estimated cash requirements to fund working capital requirements of existing operations. Based on this and taking into account its anticipated cash flows from operations and its holdings of cash, the Company validates whether it has the sufficient capital or needs to obtain additional capital.

21.

Related party transactions:

(a)

Transactions with significant shareholder – Greybrook Health

As at June 30, 2023, $1,897 is included in accounts payable and accrued liabilities for amounts payable for management services rendered and other overhead costs incurred by Greybrook Health in the ordinary course of business (December 31, 2022 – nil). These amounts were recorded at their exchange amount, being the amount agreed to by the parties.

29

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

21.

Related party transactions (continued):

During the three and six months ended June 30, 2023, the Company recognized $1,667 and $3,223 in corporate, general and administrative expenses (three and six months ended June 30, 2022 – $6 and $328, respectively) related to transactions with Greybrook Health.

(b)

Loan from shareholder – Greybrook Health

On February 3, 2023 and February 28, 2023, the Company received loans from and issued promissory notes to Greybrook Health, who is a significant shareholder of the Company. The promissory notes for the loans total $1,437,604 and bear interest at a rate consistent with the Madryn Credit Facility and mature on the earlier of September 30, 2027, at the election of Greybrook Health upon a change of control, upon the occurrence of an event of default and acceleration by Greybrook Health, or the date on which the loans under the Madryn Credit Facility are repaid. In conjunction with the issuance of the unsecured notes to Greybrook Health, the Company granted Greybrook Health an option to convert up to $1,000,000 of the outstanding principal amount of the Greybrook Health promissory notes held by Greybrook Health into common shares of the Company at a conversion price per share equal to 85.0% of the volume-weighted average trading price of the common shares of the Company on the Nasdaq for the five trading days immediately preceding the date of conversion, subject to customary anti-dilution adjustments and conversion limitations required by Nasdaq. As additional consideration for the Greybrook Health promissory note issued on February 28, 2023, the Company issued 135,870 common share purchase warrants to Greybrook Health, each exercisable for one common share of the Company at an exercise price of $1.84 per common share, subject to customary anti-dilution adjustments, expiring on February 28, 2028. See note 11(b) and note 12(a).

During the three and six months ended June 30, 2023, the Company recognized $51,889 and $74,029 in interest expense (three and six months ended June 30, 2022 – nil and nil, respectively) related to the Greybrook Health promissory notes.

(c)

Transactions with the significant shareholder – Benjamin Klein

During the three and six months ended June 30, 2023, the Company recognized $58,042 and $152,257 in corporate, general and administrative expenses (three and six months ended June 30, 2022 – nil and nil, respectively) for amounts payable for employment services rendered and other related costs incurred by Benjamin Klein in the ordinary course of business.

30

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

21.

Related party transactions (continued):

As at June 30, 2023 nil is included in accounts payable and accrued liabilities for amounts payable for travel expenses and other related costs incurred by Benjamin Klein in the ordinary course of business.

(d)

Loan from significant shareholder – Benjamin Klein

On July 14, 2022, in connection with the Success TMS Acquisition, the Company assumed the obligation to repay a promissory note to Benjamin Klein, who is a significant shareholder and director of the Company. The promissory note totals $2,090,264 and bears interest at a rate of 10% per annum and matures on May 1, 2024. The carrying amount of the promissory note to Benjamin Klein as at June 30, 2023 is $2,124,584 (December 31, 2022 – 2,112,438). See note 11(a).

During the three and six months ended June 30, 2023, the Company recognized $64,425 and $127,310 in interest expense (three and six months ended June 30, 2022 – nil and nil, respectively) related to this promissory note.

(e)

Loans from shareholders and officers

On February 3, 2023, the Company received loans from and issued promissory notes to shareholders and officers of the Company. The promissory notes for the loans total $312,396 and bear interest at a rate consistent with the Madryn Credit Facility and mature on the earlier of September 30, 2027, at the election of the noteholders upon a change of control, upon the occurrence of an event of default and acceleration by the noteholders, or the date on which the loans under the Madryn Credit Facility are repaid. The carrying amount of the promissory notes issued to shareholders and officers as at June 30, 2023 is $302,499 (December 31, 2022 – nil). See note 10(a) and note 11(b).

During the three and six months ended June 30, 2023, the Company recognized $11,354 and $18,331 in interest expense (three and six months ended June 30, 2022 – nil and nil, respectively) related to these promissory notes.

(f)

Loan from significant shareholder – Madryn

On July 14, 2022, the Company entered into a credit agreement in respect of the Madryn Credit Facility, which was subsequently amended during the six months ended June 30, 2023, for a total principal balance of $62,000,000. Pursuant to the Private Placement completed on March 23, 2023, Madryn is now a significant shareholder of the Company. See note 10(a), note 14 and note 25.

31

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

21.

Related party transactions (continued):

During the three and six months ended June 30, 2023, the Company recognized $2,444,388 and $4,755,469 in interest expense, respectively (three and six months ended June 30, 2022 – nil and nil, respectively) related to the Madryn Credit Facility.

22.

Basic and diluted loss per share:

	Three months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Net loss attributable to the shareholders of Greenbrook TMS	$	(12,259,994	)	$	(7,347,849	)	$	(21,491,876	)	$	(15,185,832	)
Weighted average common shares outstanding:
Basic and diluted		40,800,180			17,801,885			35,594,492			17,801,885
Loss per share:
Basic and diluted	$	(0.30	)	$	(0.41	)	$	(0.60	)	$	(0.85	)

For the three and six months ended June 30, 2023, the effect of 1,702,500 options (June 30, 2022 – 876,833) and 187,177 lender warrants (June 30, 2022 – 51,307) have been excluded from the diluted loss per share calculation because this effect would be anti-dilutive.

23.

Non-controlling interest:

As a result of operating agreements with non-wholly owned entities, the Company has control over these entities under IFRS, as the Company has power over all significant decisions made by these entities and thus 100% of the financial results of these subsidiaries are included in the Company’s condensed interim consolidated financial results.

32

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

23.

Non-controlling interest (continued):

On February 27, 2023, the Company acquired a portion of the non-controlling ownership interest in Greenbrook TMS Connecticut LLC for the release of liabilities and losses. As at June 30, 2023, the Company has an ownership interest of 100% of Greenbrook TMS Connecticut LLC.

The following table summarizes the aggregate financial information for the Company’s non-wholly owned entities as at June 30, 2023 and December 31, 2022:

	June 30,			December 31,
	2023			2022
Cash	$	406,389		$	580,056
Accounts receivable, net		5,131,305			4,389,076
Prepaid expenses and other		622,250			483,082
Property, plant and equipment		872,565			1,085,006
Right-of-use assets		7,460,740			9,124,023
Accounts payable and accrued liabilities		2,223,473			1,666,756
Lease liabilities		8,485,300			10,008,346
Loans payable		15,253,140			15,262,520
Shareholder’s deficit attributable to the shareholders of Greenbrook TMS		(9,220,334	)		(9,023,100	)
Shareholder’s deficit attributable to non-controlling interest		(3,688,774	)		(1,240,632	)
Distributions paid to non-controlling interest		–			(1,838,380	)
Partnership buyout		118,052			(496,659	)
Historical subsidiary investment by non-controlling interest		1,322,392			1,322,392

The following table summarizes the aggregate financial information for the Company’s non-wholly owned entities for the three and six months ended June 30, 2023 and June 30, 2022:

	Three months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Revenue	$	6,789,835		$	6,547,733		$	13,326,047		$	12,327,502
Net loss attributable to the shareholders of Greenbrook TMS		(302,443	)		(918,939	)		(800,377	)		(2,084,441	)
Net loss attributable to non-controlling interest		(60,422	)		(4,679	)		(113,103	)		(171,655	)

33

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

24.

Expenses by nature:

The components of the Company’s other regional and center support costs include the following:

	Three months ended				Six months ended
	June 30,		June 30,		June 30,		June 30,
	2023		2022		2023		2022
Salaries and bonuses	$	4,107,321	$	3,361,426	$	8,772,966	$	6,836,977
Marketing expenses		403,548		1,687,736		816,601		3,404,900
Total	$	4,510,869	$	5,049,162	$	9,589,567	$	10,241,877

The components of the Company’s corporate, general and administrative expenses include the following:

	Three months ended					Six months ended
	June 30,			June 30,		June 30,			June 30,
	2023			2022		2023			2022
Salaries and bonuses	$	4,109,639		$	3,437,683	$	8,250,728		$	7,055,544
Professional and legal fees		1,577,808			1,131,377		2,627,313			1,784,738
Computer supplies and software		656,060			502,050		1,432,020			871,383
Marketing expenses		25,945			89,617		31,267			224,570
Convertible debt (note 12(d))		(356,855	)		–		(1,516,787	)		–
Restructuring expense		162,029			–		463,868			–
Insurance		149,325			249,107		362,778			428,819
Credit facility amendment fee (note 10(a))		1,000,000			–		1,000,000			–
Other		459,684			202,783		988,004			371,181
Total	$	7,783,635		$	5,612,617	$	13,639,191		$	10,736,235

On March 6, 2023, the Company announced that it is embarking on a comprehensive restructuring plan (the “Restructuring Plan”) that aims to strengthen the Company by leveraging its scale to further reduce complexity, streamlining its operating model and driving operational efficiencies to achieve profitability.

As part of this Restructuring Plan, the Company is decreasing its operating footprint. The remaining Treatment Centers will continue clinical TMS offerings and a select and growing number of Treatment Centers will continue offering Spravato® (esketamine nasal spray) therapy.

34

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

24.

Expenses by nature (continued):

During the three and six months ended June 30, 2023, the Company recognized restructuring expenses of $162,029 and $463,868, respectively, in corporate, general and administrative expenses related to the Restructuring Plan (three and six months ended June 30, 2022 – nil and nil, respectively).

25.

Subsequent events:

(a)

Alumni Purchase Agreement

On July 13, 2023, the Company entered into the Alumni Purchase Agreement with Alumni, pursuant to which Alumni has agreed to provide equity line financing for sales from time to time of up to $4,458,156 of common shares (the “Maximum Commitment Amount”). The common shares will be issued from time to time (the “Purchase Shares”) in connection with the delivery of purchase notices delivered by the Company to Alumni, at variable prices set forth therein, in accordance with the terms of the Alumni Purchase Agreement. Each individual sale of Purchase Shares will be limited to no more than the number of common shares that would result in the direct or indirect beneficial ownership by Alumni of more than 9.99% of the then-outstanding common shares.

In exchange for Alumni entering into the Alumni Purchase Agreement, the Company issued 212,293 common shares to Alumni (the “Commitment Shares” and together with the Purchase Shares, the “Offered Shares”). The Alumni Purchase Agreement expires upon the earlier of the aggregate offering amount of Offered Shares meeting the Maximum Commitment Amount or December 31, 2023. Subsequent to June 30, 2023, the Company has issued to date an aggregate of 1,461,538 Purchase Shares for aggregate gross proceeds to the Company of $403,024.

(b)

Madryn Debt Financing

On August 1, 2023, the Company entered into an amendment to the Madryn Credit Facility, whereby certain affiliates of Madryn have extended an additional tranche of debt financing in an aggregate principal amount of $2,000,000. The terms and conditions of the loan are consistent with the Madryn Credit Facility in all material respects. The additional tranche provides Madryn with the option to convert up to an additional $182,000 of the outstanding principal amount into common shares of the Company at a price per share equal to $1.90, subject to customary anti-dilution adjustments. This conversion feature corresponds to the conversion provisions for its Existing Loan, which provide Madryn with the option to convert a portion of the outstanding principal amount of the Existing Loan into common shares at a price per share equal to $1.90.

The amendment to the Madryn Credit Facility also provides that the entire amount of the interest payment due on June 30, 2023, which was previously deferred under prior amendments to the Madryn Credit Facility, will be paid in-kind and be added to the outstanding principal amount of the Existing Loan. The amendment also extends the period during which the Company's minimum liquidity covenant is reduced from $3,000,000 to $300,000 to August 15, 2023.

35

Greenbrook TMS Inc.

Notes to Condensed Interim Consolidated Financial Statements (continued)

(Expressed in U.S. dollars, unless otherwise stated)

Three and six months ended June 30, 2023 and 2022

(Unaudited)

25.

Subsequent events (continued):

(c)

Greybrook Health Debt Financing

On August 1, 2023, the Company entered into a note purchase agreement with Greybrook Health, whereby the Company has issued and sold $1,000,000 aggregate principal amount of an unsecured note to Greybrook Health, which bears interest consistent with the Madryn Credit Facility, matures on September 30, 2027 and is subordinated to the Madryn Credit Facility.

As additional consideration for entering into the note purchase agreement, the Company issued 250,000 common share purchase warrants to Greybrook Health. Each warrant will be exercisable for one common share of the Company at an exercise price equal to (a) if the common shares are listed on the Nasdaq or any other trading market at the time of exercise, 85.0% of the volume-weighted average trading price of the common shares on the Nasdaq (or, if not listed on Nasdaq, then such other trading market on which the common shares are principally traded, based upon daily share volume) for the five trading days immediately preceding the exercise date, or (b) if the common shares are not listed on any trading market at the time of exercise, a per share price based on fair market value, as determined by the Board, in each case subject to customary anti-dilution adjustments. The warrants will expire five years from the date of issuance.

36

Exhibit 99.3

Greenbrook TMS Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the three- and six-month periods ended June 30, 2023 and 2022

August 14, 2023

TABLE OF CONTENTS

BASIS OF PRESENTATION	3
CAUTIONARY NOTE REGARDING NON-IFRS MEASURES AND INDUSTRY METRICS	3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION	4
OVERVIEW	5
KEY HIGHLIGHTS AND RECENT DEVELOPMENTS	6
FACTORS AFFECTING OUR PERFORMANCE	10
COMPONENTS OF OUR RESULTS OF OPERATIONS	11
FACTORS AFFECTING THE COMPARABILITY OF OUR RESULTS	13
RESULTS OF OPERATIONS	15
Analysis of Results for Q2 2023 and YTD 2023	16
EBITDA AND ADJUSTED EBITDA	19
RECONCILIATION OF NON-IFRS MEASURES	20
RECONCILIATION OF ACCOUNTS RECEIVABLE	21
QUARTERLY FINANCIAL INFORMATION	22
LIQUIDITY AND CAPITAL RESOURCES	23
INDEBTEDNESS	25
Off-Balance Sheet Arrangements	31
Related Party Transactions	31
Risks and Uncertainties	32
DISCLOSURE CONTROLS & PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING	38
Share Information	39
Critical Accounting Estimates	40
Changes in Significant Accounting Policies	40
ADDITIONAL INFORMATION	40

2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (“MD&A”) provides information concerning the financial condition and results of operations of Greenbrook TMS Inc. (the “Company”, “Greenbrook”, “us” or “we”). This MD&A should be read in conjunction with our unaudited condensed interim consolidated financial statements for the three- and six-month periods ended June 30, 2023 and 2022, including the related notes thereto, and our audited consolidated financial statements, including the related notes thereto, for the fiscal years ended December 31, 2022, 2021 and 2020, and the related MD&A. The financial information contained in this MD&A is derived from the financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

BASIS OF PRESENTATION

Our unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting, as issued by the IASB. Our fiscal year is the 12-month period ending December 31. The next fiscal year will occur in the 12-month period ending December 31, 2023.

All references in this MD&A to “Q2 2023” are to our fiscal quarter for the three-month period ended June 30, 2023, all references to “Q2 2022” are to our fiscal quarter for the three-month period ended June 30, 2022, all references to “Q1 2023” are to our fiscal quarter for the three-month period ended March 31, 2023, all references to “Q3 2022” are to our fiscal quarter for the three-month period ended September 30, 2022, and all references to “Q4 2022” are to our fiscal quarter for the three-month period ended December 31, 2022. All references in this MD&A to “YTD 2023” or “year-to-date 2023” are to the six-month period ended June 30, 2023 and all references to “YTD 2022” or “year-to-date 2022” are to the six-month period ended June 30, 2022. All references in this MD&A to “Fiscal 2022” are to our fiscal year ended December 31, 2022 and all references in this MD&A to “Fiscal 2023” are to our fiscal year ending December 31, 2023.

Amounts stated in this MD&A are in United States dollars, unless otherwise indicated.

CAUTIONARY NOTE REGARDING NON-IFRS MEASURES

This MD&A makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures are not intended to represent, and should not be considered as alternatives to, loss attributable to the common shareholders of Greenbrook or other performance measures derived in accordance with IFRS as measures of operating performance or operating cash flows or as a measure of liquidity. In addition to our results determined in accordance with IFRS, we use non-IFRS measures including, “EBITDA” and “Adjusted EBITDA” (each as defined below). These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. However, we caution you that “Adjusted EBITDA” may be defined by us differently than by other companies. Our management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

3

We define such non-IFRS measures as follows:

“Adjusted EBITDA” is a non-IFRS measure that is defined as net income (loss) before amortization, depreciation, interest expenses, interest income and income taxes, adjusted for share-based compensation expenses (comprising share-based compensation and the re-valuation of equity-based conversion instruments) and one-time expenses. We believe our Adjusted EBITDA metric is a meaningful financial metric as it measures the ability of our current mental health service centers (“Treatment Centers”) that specialize in TMS (as defined below) and Spravato® (esketamine nasal spray) treatments (“Treatment”) operations to generate earnings while eliminating the impact of one-time expenses and share-based compensation expenses, which do not have an impact on the operating performance of our existing Treatment Center network. The IFRS measurement most directly comparable to Adjusted EBITDA is loss attributable to common shareholders of Greenbrook.

“EBITDA” is a non-IFRS measure that is defined as net income (loss) before amortization, depreciation, interest expenses, interest income and income taxes. The IFRS measurement most directly comparable to EBITDA is loss attributable to common shareholders of Greenbrook.

See “Reconciliation of Non-IFRS Measures” below for a quantitative reconciliation of the foregoing non-IFRS measures to their most directly comparable measures calculated in accordance with IFRS.

As a result of the execution of the Restructuring Plan (as defined below), management has shifted from measuring performance on a region-by-region basis through Same-Region Sales Growth to Adjusted EBITDA as the Company’s primary non-IFRS measure.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Some of the information contained in this MD&A, including the Company’s expectations regarding the continued roll-out of Spravato® Program and Medication Management (each as defined below) at additional Treatment Centers and our potential to enhance profit margins and diversify total revenue, the impact of the Success TMS Acquisition (as defined below), the impact of the Madryn Credit Facility (as defined below) and the Restructuring Plan on our business, our expansion opportunities, our expectations regarding our liquidity and available financing, and our expectations of future results, performance, achievements, prospects or opportunities, constitutes “forward-looking information” within the meaning of applicable securities laws in Canada and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and is current as of the date of this MD&A. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information contained in this MD&A as a result of various factors.

Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “should”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances.

4

Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: macroeconomic factors such as inflation and recessionary conditions, substantial doubt regarding the Company’s ability to continue as a going concern due to recurring losses from operations; inability to increase cash flow and/or raise sufficient capital to support the Company’s operating activities and fund its cash obligations, repay indebtedness and satisfy the Company’s working capital needs and debt obligations; prolonged decline in the price of the Common Shares reducing the Company’s ability to raise capital; inability to satisfy debt covenants under the Madryn Credit Facility and the potential acceleration of indebtedness; including as a result of an unfavorable decision in respect of the Klein Note Action (as defined below); risks related to our ability to continue to negotiate amendments to the Madryn Credit Facility to prevent a default; risks relating to our ability to deliver and execute on our Restructuring Plan and the possible failure to complete the Restructuring Plan on terms acceptable to the Company or its suppliers (including Neuronetics (as defined below)), or at all; risks relating to maintaining an active, liquid and orderly trading market for Common Shares as a result of our potential inability to regain compliance with the Nasdaq Stock Market’s (“Nasdaq”) listing rules; risks relating to the Company’s ability to realize expected cost-savings and other anticipated benefits from the Restructuring Plan; risks related to the Company’s negative cash flows, liquidity and its ability to secure additional financing; increases in indebtedness levels causing a reduction in financial flexibility; inability to achieve or sustain profitability in the future; inability to secure additional financing to fund losses from operations and satisfy our debt obligations; risks relating to strategic alternatives, including restructuring or refinancing of our debt, seeking additional debt or equity capital, reducing or delaying our business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining bankruptcy protection, and the terms, value and timing of any transaction resulting from that process; claims made by or against the Company, including the Klein Matters (as defined below), which may be resolved unfavorably to us; risks relating to the Company’s dependence on Neuronetics as its exclusive supplier of TMS Devices (as defined below); as well as the factors discussed in the “Risks and Uncertainties” section of this MD&A. Additional risks and uncertainties are discussed in the Company’s materials filed with the Canadian securities regulatory authorities and the United States Securities and Exchange Commission (the “SEC”) from time to time, including the Company’s Annual Report on Form 20-F dated April 17, 2023 in respect of the fiscal year ended December 31, 2022 (the “Annual Report”). These factors are not intended to represent a complete list of the factors that could affect us or our ability to achieve the anticipated benefits from the Success TMS Acquisition, the Madryn Credit Facility and the Restructuring Plan; however, these factors should be considered carefully.

The purpose of the forward-looking information is to provide the reader with a description of management’s current expectations regarding the Company’s financial performance and may not be appropriate for other purposes; readers should not place undue reliance on forward-looking information contained herein. To the extent any forward-looking information in this MD&A constitutes future-oriented financial information or financial outlook, within the meaning of applicable securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlook, as with forward-looking information generally, are based on current assumptions and are subject to risks, uncertainties and other factors. Furthermore, unless otherwise stated, the forward-looking statements contained in this MD&A are made as of the date of this MD&A and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

OVERVIEW

We are a leading provider of TMS therapy and Spravato® (esketamine nasal spray) therapy in the United States for the treatment of Major Depressive Disorder (“MDD”) and other mental health disorders. Our predecessor, TMS NeuroHealth Centers Inc. (“TMS US”), was established in 2011 to take advantage of the opportunity created through the paradigm-shifting technology of Transcranial Magnetic Stimulation (“TMS”), an FDA-cleared, non-invasive therapy for the treatment of MDD. In 2018, our Treatment Centers began offering treatment for obsessive compulsive disorder. Our business model takes advantage of the opportunity for a new, differentiated service channel for the delivery of Treatments – a patient-focused, centers-based service model to make treatment easily accessible to all patients while maintaining a high standard of care.

5

In early 2021, we commenced offering Spravato® (esketamine nasal spray) therapy at select Treatment Centers to treat adults with treatment-resistant depression and depressive symptoms in adults with MDD with suicidal thoughts or actions (the “Spravato® Program”). We have since grown to offer Spravato® at 50 Treatment Centers within our operating network as of the date of this MD&A. See “Key Highlights and Recent Developments—Spravato® Program” below.

After opening our first Treatment Center in 2011 in Tysons Corner in Northern Virginia, we have grown to control and operate a network of outpatient mental health service centers that specialize in Treatment across the United States. We offer Treatment Centers in convenient locations to provide easy access to patients and clinicians. As at June 30, 2023, the Company owned and operated 133 Treatment Centers in the Commonwealths of Massachusetts, Virginia and Pennsylvania and the States of Maryland, North Carolina, Missouri, Illinois, Ohio, Texas, Connecticut, Florida, South Carolina, Michigan, Alaska, Oregon, California, New Jersey, and Nevada. In connection with the Restructuring Plan, the Company decreased its operating footprint by closing a total of 50 Treatment Centers, bringing the total number of Treatment Center locations to 133 (from 183), spanning 17 management regions. In addition to increased cost efficiencies, the Company believes that a more condensed operating footprint is optimal in light of the Company’s shift towards a more comprehensive mental health care model, including an increased focus on Spravato® therapy. See “Key Highlights and Recent Developments—Restructuring Plan” and “Key Highlights and Recent Developments—Spravato® Program” below.

Our regional model seeks to develop leading positions in key regional markets, leveraging operational efficiencies by combining smaller local Treatment Centers that are strategically located within a single region for convenient patient and clinician access, with regional management infrastructure in place to support center operations. Management regions typically cover a specific metropolitan area that meets a requisite base population threshold. The management region is typically defined by a manageable geographic area in terms of size, which facilitates the use of regional staff working across the various Treatment Center locations within the management region, and which resides within a marketing capture area that allows for efficiencies in advertising cost. Management regions often have similar economic characteristics and are not necessarily defined by state lines, other geographic borders, or differentiating methods of services delivery, but rather are defined by a functional management area.

KEY HIGHLIGHTS AND RECENT DEVELOPMENTS

During Q2 2023, we continued to focus on the execution of our Restructuring Plan and we are very pleased with our progress to date. The Company has now effectively stabilized its cost structure with a headcount reduction of 145 employees amounting to approximately $11 million in annualized savings. Furthermore, the rationalization of marketing spend, extinguishment of lease liabilities and a reduction of other recurring corporate, general and administrative expenses has effectively removed $10 million in annualized costs as compared to Q4 2022.

Revenue in Q2 2023 increased by 29% to $18.3 million, as compared to Q2 2022 (Q2 2022: $14.2 million), predominantly due to the Success TMS Acquisition that was completed in July 2022. Furthermore, Q2 2023 revenue proved resilient at approximately 87% of the total quarterly revenue achieved in Q4 2022, despite the closure of 50 Treatment Centers in connection with the Restructuring Plan and a significantly reduced marketing spend (marketing spend in Q2 2023 represented less than 10% of marketing spend in Q4 2022). Quarterly revenue in Q2 2023 was impacted by liquidity constraints prohibiting any meaningful investment in marketing to effectively generate an adequate patient pipeline. We are, however, encouraged by our current base level of post-Restructuring Plan quarterly revenue, which we intend to build on through marketing investment and acceleration of the Spravato® Program as we believe liquidity constraints may start to dissipate in future quarters. We also continued to generate positive regional operating income in Q2 2023 primarily as a result of the significant cost reductions implemented in connection with the Restructuring Plan.

6

Although the cost reductions associated with the Restructuring Plan have been substantially executed, we expect our new operating structure will continue to allow us to rationalize costs, while further reducing business complexity, streamline our operating model and drive operational efficiencies. We believe that these structural changes, paired with an improved balance sheet through recent cash injections, continued insider support and the Alumni Purchase Agreement (as defined herein), will improve our near-term cash flows and ultimately lead to profitability in the future.

Treatment volumes in Q2 2023 were 81,855, a 32% increase compared to Q2 2022 (Q2 2022: 62,038), and new patient starts increased in Q2 2023 by 46% to 2,647, as compared to Q2 2022 (Q2 2022: 1,809), predominantly due to the Success TMS Acquisition and the reversion to pre-pandemic operating conditions in our mature regions.

We believe that mental health remains a key focus in the United States, and the unmet demand for Treatment remains at an all-time high, with our network of Treatment Centers well-positioned to serve this unmet demand. We believe our business fundamentals are stronger than ever with the growth of the Spravato® Program, the opportunity to increase marketing investment in our streamlined business, the introduction of medication management (see “- Medication Management” below) and potential future treatment opportunities.

Restructuring Plan

On March 6, 2023, the Company announced that it is embarking on a comprehensive restructuring plan (the “Restructuring Plan”). As part of this Restructuring Plan, the Company has decreased its operating footprint by closing 50 Treatment Centers, allowing management to focus on the remaining 133 Treatment Centers, which have generated approximately 90% of the Company’s total revenue in Q4 2022. The remaining Treatment Centers continue to provide clinical TMS offerings and a select and growing number of Treatment Centers will continue offering Spravato® therapy. These changes also include a workforce reduction that is expected to impact approximately 20-25% of the Company’s staff.

The Restructuring Plan is intended to establish a path forward for the Company to achieve sustainable profitability and long-term growth. We are encouraged by the progress that we have made to date in respect of the Restructuring Plan. As of the date of this MD&A, we have realized approximately $21 million in annualized recurring cost reductions through a significant reduction in headcount, optimizing marketing spend through key learnings from our Q4 2022 marketing efforts as well as reduction in recurring corporate, general and administrative expenses. While our Q2 2023 results already demonstrate tangible progress to date, these savings are not expected to be fully reflected until late in Fiscal 2023 as the costs associated with executing these savings begins to dissipate. We believe that we are on track to realizing our goal of $22 to $25 million in cost reductions on an annualized run rate once the Restructuring Plan has been fully implemented. Restructuring and related charges associated with these actions are estimated to be in the range of $1 million to $2 million and are expected to be substantially incurred by the end of Fiscal 2023. See “Cautionary Note Regarding Forward-Looking Information”.

Spravato® Program

The roll-out of our Spravato® Program at select Treatment Centers continued throughout Q2 2023, building on our long-term business plan of utilizing our Treatment Centers as platforms for the delivery of innovative treatments to patients suffering from MDD and other mental health disorders. As at the date of this MD&A, we had a total 50 Treatment Centers offering Spravato®. We are now in a position to start accelerating this roll-out as some of the key elements of the Restructuring Plan have been executed. We expect to have between 70-80 Treatment Centers offering Spravato® by the end of Fiscal 2023.

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Medication Management Program

As at the date of this MD&A, the Company has begun a pilot to roll-out our facilitation of medication management (“Medication Management”) to select Treatment Centers across our footprint, building on our long-term business plan of utilizing our Treatment Centers as platforms for the delivery of innovative treatments to patients suffering from MDD and other mental health disorders. Although Medication Management is a lower margin business, we believe this program will allow us to reach patients earlier in their treatment journey, develop an internal patient pipeline for TMS and Spravato®, while also further optimizing marketing costs. We also believe that moving to a more comprehensive mental health care provider will allow us to provide greater access to those suffering from MDD and other mental health disorders.

Alumni Purchase Agreement

On July 13, 2023, the Company entered into a purchase agreement (the “Alumni Purchase Agreement”) with Alumni Capital LP (“Alumni”). The Alumni Purchase Agreement provides equity line financing for sales from time to time of up to $4,458,156 (the “Maximum Commitment Amount”) of common shares in the capital of the Company (“Common Shares”). The Common Shares will be issued from time to time (the “Purchase Shares”) in connection with the delivery of purchase notices delivered by the Company to Alumni, at variable prices set forth therein, in accordance with the terms of the Alumni Purchase Agreement and pursuant to the prospectus supplement, dated as of July 13, 2023, under the Company’s shelf registration statement on Form F-3 (the “Shelf Registration Statement”). Each individual sale of Purchase Shares will be limited to no more than the number of Common Shares that would result in the direct or indirect beneficial ownership by Alumni of more than 9.99% of the then-outstanding Common Shares. As at the date of this MD&A, we have issued an aggregate of 1,461,538 Purchase Shares for aggregate proceeds to the Company of $403,024.

In exchange for Alumni entering into the Alumni Purchase Agreement, the Company issued 212,293 Common Shares to Alumni (the “Commitment Shares” and together with the Purchase Shares, the “Offered Shares”). The Alumni Purchase Agreement expires upon the earlier of (1) the aggregate offering amount of Offered Shares meeting the Maximum Commitment Amount; (2) the date on which the Common Shares cease trading on Nasdaq; or (3) December 31, 2023. In addition, the ability of the Company to sell additional Purchase Shares under the Alumni Purchase Agreement in the future is contingent on the Company’s continued eligibility to use the Shelf Registration Statement. The Company has and intends to continue to use the proceeds from the issuance of the Purchase Shares for general corporate and working capital purposes.

The Alumni Purchase Agreement contains customary representations, warranties and covenants by each of the Company and Alumni. Greenbrook controls the timing and amount of any future sales of its Common Shares, subject to the terms of the Alumni Purchase Agreement. Alumni has no right to require any sales of Purchase Shares by the Company, but is obligated to make purchases of Purchase Shares from the Company from time to time, pursuant to directions from the Company, in accordance with the Alumni Purchase Agreement and the applicable purchase notices.

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Debt Financings

On August 1, 2023, the Company entered into an amendment to the Madryn Credit Facility, whereby certain affiliates of Maryn Asset Management LP (“Madryn”) have extended an additional tranche of debt financing in an aggregate principal amount of $2,000,000. Concurrent with the amendment, the Company entered into a note purchase agreement with Greybrook Health Inc. (“Greybrook Health”), whereby the Company has issued and sold $1,000,000 aggregate principal amount of an unsecured note to Greybrook Health. See “Indebtedness and Capital Raising” below.

2023 Annual General Meeting of Shareholders

On June 20, 2023, at the Company’s annual general meeting of shareholders (the “Meeting”), each of Brian P. Burke, Colleen Campbell, Sasha Cucuz, Adrienne Graves, Ph.D., Bill Leonard, Frank Tworecke and Elias Vamvakas were elected as directors of the Company by shareholders, to hold office until the next annual meeting of shareholders or until their successors are elected or appointed. Benjamin Klein also ran for election to the board of directors of the Company (the “Board”) but received more “withheld” votes than votes “for”, and in accordance with the Company’s majority voting policy, Mr. Klein was required to tender his resignation as a director to the Board. On June 23, 2023, the Board announced that Mr. Klein had tendered his resignation and that his resignation had been accepted by the Board, relieving Mr. Klein of his responsibilities as a director of the Company. In addition to Mr. Klein’s departure, Ms. Adele C. Oliva and Mr. Robert Higgins, previous members of the Board, did not stand for re-election at the Meeting.

Nasdaq Listing Deficiencies

On May 15, 2023, the Company received notification from Nasdaq that the Company is not in compliance with the minimum bid price requirement for continued listing on Nasdaq as the bid price of the Common Shares on Nasdaq closed below $1.00 (the “Minimum Bid Requirement”) for 30 consecutive trading days from March 31 to May 12, 2023.

Additionally, on May 16, 2023, the Company received a separate notification (together with the Minimum Bid Requirement notification, the “Notifications”) from Nasdaq that it was not in compliance with the minimum market value of listed securities requirement as the market value of the Common Shares was below $35 million (the “MVLS Requirement” and together with the Minimum Bid Requirement, the “Nasdaq Requirements”) for 30 consecutive trading days from April 3 to May 15, 2023.

The Notifications have no immediate effect on the listing of the Common Shares on Nasdaq and do not affect the Company’s business operations. As set forth in the Notifications, the Company has until November 13, 2023 (the “Compliance Period”) to regain compliance with the Nasdaq Requirements. During the Compliance Period, the Common Shares will continue to trade on Nasdaq, subject to continued compliance with Nasdaq’s other continued listing standards. If at any time before November 13, 2023, the bid price of the Common Shares closes at or above $1.00 per share and/or the Company achieves a market value of its Common Shares of $35 million, for a minimum of 10 consecutive trading days, it is expected that Nasdaq would notify the Company that it has regained compliance with the Minimum Bid Requirement and/or the MVLS Requirement, as applicable.

The Company is considering all available options to regain compliance with the Nasdaq Requirements; however, the Company can provide no assurance that it will regain compliance during the Compliance Period or at all, and accordingly, the Common Shares may be delisted from Nasdaq, following which there would be no active liquid trading market for the Common Shares.

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FACTORS AFFECTING OUR PERFORMANCE

We believe that our performance and future success depend on a number of factors that present significant opportunities for us. These factors are also subject to a number of inherent risks and challenges, some of which are discussed below. See also the “Risks and Uncertainties” section of this MD&A.

Number of Treatment Centers

Following the completion of the Restructuring Plan, we believe we will continue to have a meaningful opportunity to selectively increase the number of our Treatment Centers and the number of treatment centers offering Spravato® and Medication Management. The opening and success of new Treatment Centers or offering ancillary products in those Treatment Centers is subject to numerous factors, including our ability to locate the appropriate space, finance the operations, build relationships with clinicians, negotiate suitable lease terms and local payor arrangements, and other factors, some of which are beyond our control. At the same time, we have selectively closed certain Treatment Centers to maximize our profitability, which may temporarily reduce our number of active Treatment Centers from quarter to quarter as we continue to aim for overall expansion of the business.

Competition

The market for Treatment is becoming increasingly competitive. We compete principally on the basis of our reputation and brand, the location of our Treatment Centers, the quality of our Treatment services and the reputation of our partner clinicians. In the markets in which we are operating, or anticipate operating in the future, competition predominantly consists of individual clinicians that have a TMS device, an FDA-regulated medical device specifically manufactured to transmit the magnetic pulses required to stimulate the cortical areas in the brain to effectively treat MDD and other mental health disorders (each, a “TMS Device”), in their office and who can offer TMS therapy directly to their patients. We also face competition from a limited number of multi-location psychiatric practices or behavioral health groups that offer TMS therapy as part of their overall practice, as well as a few other specialist TMS providers. As we expand our mental health products and services to include Spravato®, we also face competition from mental health practitioners that provide similar offerings. We also face indirect competition from pharmaceutical and other companies that develop competitive products, such as anti-depressant medications, with certain competitive advantages such as widespread market acceptance, ease of patient use and well-established reimbursement. Our commercial opportunity could be reduced or eliminated if these competitors develop and commercialize anti-depressant medications or other treatments that are safer or more effective than TMS or Spravato®. At any time, these and other potential market entrants may develop treatment alternatives that may render our products uncompetitive or less competitive.

We are also subject to competition from providers of invasive neuromodulation therapies such as electroconvulsive therapy and vagus nerve stimulation.

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Capital Management

Our objective is to maintain a capital structure that supports our long-term business strategy, maintain creditor and customer confidence, and maximize shareholder value. Our primary uses of capital are to finance operations, finance new center start-up costs, increase non-cash working capital and capital expenditures, as well as to service debt obligations. See “Key Highlights and Recent Developments” above. We have experienced losses since inception and, although we secured $55 million pursuant to the Existing Loan (as defined below), $10.75 million pursuant to the Debt Financings (as defined below), $6.25 million pursuant to the 2023 Private Placement (as defined below), and we may be able to sell up to $4.45 million pursuant to the Alumni Purchase Agreement, we expect that we will require additional financing to fund our operating activities and such additional financing is required in order for us to repay our debt obligations and satisfy our cash requirements. We have historically been able to obtain financing from supportive shareholders and other sources when required, however there can be no assurance that we will continue to receive financing support from our existing shareholders in the future. See “Liquidity and Capital Resources” and “Risks and Uncertainties” below. In addition, we may be constrained in our ability to raise capital if our Common Shares are delisted by Nasdaq. See “Key Highlights and Recent Developments—Nasdaq Listing Deficiencies” above.

Industry and Reimbursement Trends

Our revenue is impacted by changes to United States healthcare laws, our clinical partners’ and contractors’ healthcare costs, the ability to secure favorable pricing structures with device manufacturers and payors’ reimbursement criteria and associated rates. In addition, the geographic distribution of our Treatment Centers can impact our revenues per Treatment because reimbursement rates vary from state to state.

Technology

Our revenues are affected by the availability of, and reimbursement for, new TMS indications, new technology or other novel treatment modalities (including Spravato®) and our ability to incorporate the new technology into our Treatment Centers.

Segments

We evaluate our business and report our results based on organizational units used by management to monitor performance and make operating decisions on the basis of one operating and reportable segment: Outpatient Mental Health Service Centers. We currently measure this reportable operating segment’s performance based on total revenues and entity-wide regional operating income.

COMPONENTS OF OUR RESULTS OF OPERATIONS

In assessing our results of operations, we consider a variety of financial and operating measures that affect our operating results.

Total Revenue

Total revenue consists of service revenue attributable to the performance of treatments. In circumstances where the net patient fees have not yet been received, the amount of revenue recognized is estimated based on an expected value approach. Due to the nature of the industry and complexity of our revenue arrangements, where price lists are subject to the discretion of payors, variable consideration exists that may result in price concessions and constraints to the transaction price for the services rendered.

In estimating this variable consideration, we consider various factors including, but not limited to, the following:

·

commercial payors and the administrators of federally-funded healthcare programs exercise discretion over pricing and may establish a base fee schedule for TMS (which is subject to change prior to final settlement) or negotiate a specific reimbursement rate with an individual TMS provider;

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·

average of previous net service fees received by the applicable payor and fees received by other patients for similar services;

·

management’s best estimate, leveraging industry knowledge and expectations of third-party payors’ fee schedules;

·

factors that would influence the contractual rate and the related benefit coverage, such as obtaining pre-authorization of services and determining whether the procedure is medically necessary;

·

probability of failure in obtaining timely proper provider credentialing (including re-credentialling) and documentation, in order to bill various payors which may result in enhanced price concessions; and

·

variation in coverage for similar services among various payors and various payor benefit plans.

We update the estimated transaction price (including updating our assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period in which such variances become known.

Third-party payors include federal and state agencies (under the Medicare programs), managed care health plans and commercial insurance companies. Variable consideration also exists in the form of settlements with these third-party payors as a result of retroactive adjustments due to audits and reviews. We apply constraint to the transaction price, such that net revenues are recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future.

Entity-Wide Regional Operating Income (Loss) and Direct Center and Regional Costs

Regional operating income presents regional operating income on an entity-wide basis and is calculated as total revenue less direct center and regional costs. Direct center and regional costs consist of direct center and patient care costs, regional employee compensation, regional marketing expenses, and depreciation. These costs encapsulate all costs (other than incentive compensation such as share-based compensation granted to senior regional employees) associated with the center and regional management infrastructure, including the cost of the delivery of treatments to patients and the cost of our regional patient acquisition strategy.

Center Development Costs

Center development costs represent direct expenses associated with developing new Treatment Centers, including small furnishings and fittings, wiring and electrical and, in some cases, the cost of minor space alterations.

Corporate Employee Compensation

Corporate employee compensation represents compensation incurred to manage the centralized business infrastructure of the Company, including annual base salary, annual cash bonuses and other non-equity incentives.

Corporate Marketing Expenses

Corporate marketing expenses represent costs incurred that impact the Company on an overall basis including investments in website functionality and brand management activities.

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Other Corporate, General and Administrative Expenses

Other corporate, general and administrative expenses represent expenses related to the corporate infrastructure required to support our ongoing business including insurance costs, professional and legal costs and costs incurred related to our corporate offices. Costs related to the Restructuring Plan, the re-valuation of conversion instruments and the Credit Amendment Fee (as defined below) are also included within other corporate, general and administrative expenses.

Share-Based Compensation

Share-based compensation represents stock options, restricted share units and performance share units granted as consideration in exchange for employee and similar services to align personnel performance with the Company’s long-term goals.

Amortization

Amortization relates to the reduction in useful life of the Company’s intangible assets.

Interest

Interest expense relates to interest incurred on loans and lease liabilities. Interest income relates to income realized as a result of investing excess funds into investment accounts.

Adjusted EBITDA

Adjusted EBITDA is a non-IFRS measure that deducts from EBITDA share-based compensation expenses and expenses that represent one-time costs incurred for purposes of enhancing the performance of the business and to achieve our Treatment Center growth. See “Cautionary Note Regarding Non-IFRS Measures” above.

FACTORS AFFECTING THE COMPARABILITY OF OUR RESULTS

Acquisition of Success TMS

On July 14, 2022, we, through our wholly-owned U.S. subsidiary, TMS US, completed the acquisition of all of the issued and outstanding equity interests in Check Five LLC, a Delaware limited liability company (doing business as “Success TMS”) (“Success TMS”) from its parent company, Success Behavioral Holdings LLC (the “Success TMS Acquisition”) pursuant to a Membership Interest Purchase Agreement dated as of May 15, 2022 (the “Purchase Agreement”) by and among the Company, Success TMS and its direct and indirect owners, including Success Behavioral Holdings LLC, Theragroup LLC, The Bereke Trust U/T/A Dated 2/10/03, Batya Klein and Benjamin Klein (collectively, the “Seller Parties”).

As consideration for the purchase of Success TMS, the Seller Parties received, in the aggregate, 8,725,995 Common Shares, and an additional 2,908,665 Common Shares have been held back and deposited with an escrow agent, to be released to Benjamin Klein or the Company, as applicable, upon satisfaction of customary working capital and certain other adjustments, including to satisfy any indemnity claims against the Seller Parties (such Common Shares issued as consideration to the Seller Parties, including the Common Shares deposited in escrow, collectively, the “Consideration Shares”). The purchase price consideration was determined based on the pro forma revenue contribution of the two companies and was fixed at an amount equal to approximately 40% of the total issued and outstanding Common Shares on a post-acquisition basis and subject to adjustments, as described above.

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As contemplated by the Purchase Agreement, the Company also entered into an investor rights agreement with Benjamin Klein, dated as of July 14, 2022 (the “Klein Investor Rights Agreement”), which provides Benjamin Klein with a right to nominate a single representative to the Board for so long as the Seller Parties own at least 5% of the issued and outstanding Common Shares, subject to certain conditions, including applicable securities laws and stock exchange requirements. In accordance with the terms of the Klein Investor Rights Agreement, Mr. Klein was appointed to the Board as the board nominee, effective on July 14, 2022, immediately following completion of the Success TMS Acquisition. In connection with the Success TMS Acquisition, Mr. Klein was also appointed the Chief Operating Officer of the Company, whereby Mr. Klein served in that role from July 14, 2022 until his departure on May 4, 2023. Mr. Klein also resigned from the Board effective June 23, 2023 in accordance with Greenbrook’s Majority Voting Policy. See “Key Highlights and Recent Developments – 2023 Annual General Meeting of Shareholders” above.

On May 24, 2023, the Seller Parties filed a complaint in the Superior Court of the State of Delaware against the Company, TMS US and certain executive officers of the Company (the “Delaware Complaint”), concerning alleged disputes arising out of the Success TMS Acquisition (the “Purchase Agreement Claims”). The Purchase Agreement Claims allege contractual fraud, indemnification for breach of certain representations and warranties of the Company contained in the Purchase Agreement, and breach of the implied covenant of good faith and fair dealing. The Delaware Complaint seeks damages in an amount to be determined at trial, which are alleged to exceed $1 million. On July 27, 2023, the Company and the other defendants moved to dismiss the Purchase Agreement Claims. The Seller Parties subsequently stated their intention to file and serve amended claims on or before August 31, 2023.

Regional Development Activity

Our regional model seeks to develop leading positions in key markets, and to leverage operational efficiencies by combining smaller local Treatment Centers within a region under a single shared regional management infrastructure. Part of our core strategy is to continue to develop new Treatment Centers within our existing regions as well as in new management regions, in each case, organically or through acquisitions of existing centers or businesses, which may affect comparability of results. Although we are currently focusing on a more condensed footprint due to the execution of our Restructuring Plan, our long-term growth strategy remains.

Seasonality

Typically, we experience seasonal factors in the first quarter of each fiscal year that result in reduced revenues in those quarters as compared to the other three quarters of the year. These seasonal factors include cold weather and the reset of deductibles during the first part of the year. We also typically experience a slowdown in new patient starts during the third quarter of each fiscal year as a result of summer holidays.

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RESULTS OF OPERATIONS

Summary Financial Information

The following table summarizes our results of operations for the periods indicated. The selected consolidated financial information set out below has been derived from our unaudited condensed interim consolidated financial statements, and should be read in conjunction with those financial statements and the related notes thereto. In addition, we note that the results presented below may not be indicative of our results in future periods as a result of the Restructuring Plan (as described above).

(US$) (unaudited)	Q2 2023			Q2 2022			YTD 2023			YTD 2022
Total revenue		18,346,799			14,210,309			38,254,850			27,275,455
Direct center and patient care costs		11,281,818			7,645,662			22,945,186			14,986,158
Regional employee compensation		4,107,321			3,361,426			8,772,966			6,836,977
Regional marketing expenses		403,548			1,687,736			816,601			3,404,900
Depreciation		2,317,109			1,586,560			4,754,044			3,156,544
Total direct center and regional costs		18,109,796			14,281,384			37,288,797			28,384,579
Regional operating income (loss)		237,003			(71,075	)		966,053			(1,109,124	)
Center development costs		105,871			186,708			218,062			346,154
Corporate employee compensation		4,109,639			3,437,683			8,250,728			7,055,544
Corporate marketing expenses		25,945			89,617			31,267			224,570
Other corporate, general and administrative expenses		3,648,051			2,085,317			5,357,196			3,456,121
Share-based compensation		513,782			63,882			576,730			313,204
Amortization		343,252			207,500			686,505			415,000
Interest expense		3,810,935			1,220,689			7,450,645			2,450,000
Interest income		(56	)		(9,943	)		(101	)		(12,230	)
Loss before income taxes		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)
Income tax expense		–			–			–			–
Loss for the period and comprehensive loss		(12,320,416	)		(7,352,528	)		(21,604,979	)		(15,357,487	)
Loss attributable to non-controlling interest		(60,422	)		(4,679	)		(113,103	)		(171,655	)
Loss attributable to the common shareholders of Greenbrook		(12,259,994	)		(7,347,849	)		(21,491,876	)		(15,185,832	)
Net loss per share (basic and diluted)		(0.30	)		(0.41	)		(0.60	)		(0.85	)

Selected Financial Position Data

The following table provides selected financial position data as at the dates indicated:

(US$)	As at June 30,						As at December 31,
	2023 (unaudited)			2022 (unaudited)			2022
Cash and restricted cash		2,078,347			2,061,395			2,623,957
Current assets (excluding cash)		18,031,984			12,552,196			16,418,981
Total assets		87,143,989			62,341,799			100,446,357
Current liabilities		38,797,736			36,206,977			37,147,290
Non-current liabilities		93,831,665			24,886,023			93,895,492
Total liabilities		132,629,401			61,093,000			131,042,782
Non-controlling interests		(2,248,330	)		(1,206,010	)		(2,253,279	)
Shareholders’ equity (deficit)		(45,485,412	)		1,248,799			(30,596,425	)

For further information regarding our liquidity and financial position, see “Liquidity and Capital Resources” below. See also “Risks and Uncertainties” below.

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Selected Operating Data

The following table provides selected operating data as at the dates indicated. As described above, as of the date of this MD&A, the Company has reduced its operating footprint to 133 Treatment Centers in connection with the Restructuring Plan. See “Cautionary Note Regarding Forward-Looking Information”.

	As at June 30,				As at December 31,
(unaudited)	2023		2022		2022
Number of active Treatment Centers⁽¹⁾		133		144		183
Number of Treatment Centers-in-development⁽²⁾		–		–		–
Total Treatment Centers		133		144		183
Number of management regions		17		13		18
Number of TMS Devices installed		341		234		345
Number of regional personnel		400		328		495
Number of shared-services / corporate personnel⁽³⁾		84		66		134
Number of providers⁽⁴⁾		202		164		225
Number of consultations performed⁽⁵⁾		17,899		7,818		27,831
Number of patient starts⁽⁵⁾		5,501		3,626		9,253
Number of Treatments performed⁽⁵⁾		174,388		121,105		312,940
Average revenue per Treatment⁽⁵⁾	$	219	$	225	$	221

Notes:

	(1)	Active Treatment Centers represent Treatment Centers that have performed billable Treatment services during the applicable period.
	(2)	Treatment Centers-in-development represents Treatment Centers that have committed to a space lease agreement and the development process is substantially complete.
	(3)	Shared-services / corporate personnel is disclosed on a full-time equivalent basis. The Company utilizes part-time staff and consultants as a means of managing costs.
	(4)	Number of providers represents clinician partners that are involved in the provision of Treatment services from our Treatment Centers.
	(5)	Figure calculated for the applicable year or period ended.

Analysis of Results for Q2 2023 and YTD 2023

The following section provides an overview of our financial performance during Q2 2023 compared to Q2 2022 and during YTD 2023 compared to YTD 2022.

Total Revenue

Despite very limited marketing spend and a reduction in our operating footprint, consolidated revenue increased to $18.3 million in Q2 2023, a 29% increase compared to Q2 2022 (Q2 2022: $14.2 million) and $38.3 million in YTD 2023, a 40% increase compared to YTD 2022 (YTD 2022: $27.3 million). This was predominately due to the Success TMS Acquisition which was completed during Q3 2022 and the reversion to pre-pandemic operating conditions in our mature regions.

New patient starts increased to 2,647 in Q2 2023, a 46% increase compared to Q2 2022 (Q2 2022: 1,809) and increased to 5,501 in YTD 2023, a 52% increase compared to YTD 2022 (YTD 2022: 3,626). Treatment volumes in Q2 2023 were 81,855, a 32% increase compared to Q2 2022 (Q2 2022: 62,038), and were 174,388 in YTD 2023, a 44% increase compared to YTD 2022 (YTD 2022: 121,105). Consultations performed were 9,924 in Q2 2023, a 130% increase compared to Q2 2022 (Q2 2022: 4,318), and were 17,899 in YTD 2023, a 129% increase compared to YTD 2022 (YTD 2022: 7,818). The increases in new patient starts, treatment volumes and consultations performed were predominantly due to the increase in active Treatment Centers during Q2 2023 as compared to Q2 2022 (primarily as a result of the Success TMS Acquisition which was completed during Q3 2022) and the reversion to pre-pandemic operating conditions in our mature regions.

Average revenue per Treatment decreased by 2% to $224 in Q2 2023 as compared to Q2 2022 (Q2 2022: $229) and decreased by 3% to $219 in YTD 2023 as compared to YTD 2022 (YTD 2022: $225). This decrease was primarily attributable to a change in payor mix and the geographical distribution of revenue (including as a result of the Success TMS Acquisition).

Accounts Receivable

Accounts receivable increased by $0.3 million to $14.2 million as at the end of Q2 2023 as compared to $13.9 million as at the end of Q4 2022. The increase in Q2 2023 as compared to Q4 2022 is primarily due to the timing of cash collection activity from payors. We also continue to collect on services rendered in excess of 24 months from the date such services were rendered.

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Entity-Wide Regional Operating Income (Loss) and Direct Center and Regional Costs

Direct center and regional costs increased by 27% to $18.1 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $14.3 million) and by 31% to $37.3 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $28.4 million). This increase is predominately due to the increase in active Treatment Centers quarter-over-quarter (primarily resulting from the Success TMS Acquisition in Q3 2022), partially offset by cost savings in relation to the execution of the Restructuring Plan.

Entity-wide regional operating income was $0.2 million during Q2 2023 as compared to an entity-wide regional operating loss of $0.1 million in Q2 2022. Entity-wide regional operating income was $1.0 million during YTD 2023 as compared to an entity-wide regional operating loss of $1.1 million in YTD 2022. The increase in entity-wide regional operating income was primarily due the reduction in head count, rationalization of marketing spend and a reduction in other direct center and regional costs resulting from the execution of the Restructuring Plan.

Direct center and regional costs decreased by 15% to $18.1 million during Q2 2023 as compared to Q4 2022 (Q4 2022: $21.2 million) due to the reduction in head count, rationalization of marketing spend and a reduction in other direct center expenses resulting from the execution of the Restructuring Plan. Given the ongoing nature of the Restructuring Plan execution, the reduction in associated costs were only partially reflected in Q2 2023 but are expected to be fully realized by the end of Fiscal 2023.

We believe we will be able to continue to achieve near-term operational synergies through our Restructuring Plan, resulting in a significant reduction in direct center and regional costs (see “Cautionary Note Regarding Forward-Looking Information” and “Key Highlights and Recent Developments—Restructuring Plan”).

Center Development Costs

Center development costs decreased by 43% to $0.1 million during Q2 2023 (Q2 2022: $0.2 million) and decreased by 37% to $0.2 million during YTD 2023 (YTD 2022: $0.3 million). The decrease is predominantly due to a reduction in the number of Treatment Centers developed during Q2 2023 as compared to Q2 2022, partially offset by the minimal incremental costs associated with establishing the Spravato® Program at additional Treatment Centers during YTD 2023.

Corporate Employee Compensation

Corporate employee compensation incurred to manage the centralized business infrastructure of the Company increased by 20% to $4.1 million during Q2 2023 (Q2 2022: $3.4 million) and increased by 17% to $8.3 million during YTD 2023 (YTD 2022: $7.1 million). This increase is predominately due to the Success TMS Acquisition which was completed during Q3 2022, partially offset by the execution of the Restructuring Plan.

We believe we will be able to continue to achieve near-term operational synergies through our Restructuring Plan, resulting in a significant reduction in corporate employee compensation (see “Cautionary Note Regarding Forward-Looking Information” and “Key Highlights and Recent Developments—Restructuring Plan”).

Corporate Marketing Expenses

Corporate marketing expenses decreased by 71% to $0.03 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $0.09 million) and by 86% to $0.03 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $0.22 million). The decrease was primarily a result of managing spend as a result of the execution of the Restructuring Plan in addition to actively limiting expenditures due to liquidity constraints which we are actively seeking to resolve (see “Key Highlights and Recent Developments”).

17

We believe we will be able to continue to manage corporate marketing expenses well-below historical levels through the execution of Restructuring Plan (see “Cautionary Note Regarding Forward-Looking Information” and “Key Highlights and Recent Developments—Restructuring Plan”).

Other Corporate, General and Administrative Expenses

Other corporate, general and administrative expenses increased by 75% to $3.6 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $2.1 million) and increased by 55% to $5.4 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $3.5 million). The increase in Q2 2023 was predominantly due to one-time expenses incurred related to the execution of the Restructuring Plan, the Credit Facility Amendment Fee, financing initiatives-related expenses, professional and legal fees related to the Klein Matters (as defined below) and the Neuronetics Note (as defined below), partially offset by the re-valuation of conversion instruments. In addition to the above, the YTD 2023 increase includes Success TMS related integration and expenses. See “Key Highlights and Recent Developments—Restructuring Plan” and “Adjusted EBITDA and One-time Expenses” below.

Recurring corporate, general and administrative expenses (the aggregate of corporate employee compensation, corporate marketing expenses and other corporate, general and administrative expenses, but excluding one-time expenses and the re-valuation of conversion instruments) decreased by 14% to $6.1 million during Q2 2023 as compared to Q4 2022 (Q4 2022: $7.1 million), primarily due to the reduction in head count, rationalization of marketing spend and a reduction in other recurring corporate, general and administrative expenses. Given the ongoing nature of the Restructuring Plan execution, the reduction in associated costs were only partially reflected in Q2 2023 but are expected to be fully realized by the end of Fiscal 2023.

We believe we will be able to continue to achieve near-term operational synergies through our Restructuring Plan, resulting in a significant reduction in corporate, general and administrative expenses (see “Cautionary Note Regarding Forward-Looking Information” and “Key Highlights and Recent Developments—Restructuring Plan”).

Share-Based Compensation

Share-based compensation increased by 704% to $0.5 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $0.1 million) and increased by 84% to $0.6 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $0.3 million). The increase was predominantly due to the timing and fair value of stock options granted to key personnel to ensure retention and long-term alignment with the goals of the Company.

Amortization

Amortization increased by 65% to $0.3 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $0.2 million) and increased by 65% to $0.7 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $0.4 million). The increase was primarily a result of the intangible assets acquired by the Company in connection with the Success TMS Acquisition.

Interest

Interest expense increased by 212% to $3.8 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $1.2 million) and increased by 204% to $7.5 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $2.5 million). The increase in interest expense is primarily due to the debt financings completed during Q1 2023. See “Indebtedness and Capital Raising” below.

Interest income was $56 during Q2 2023 (Q2 2022: $9,943) and $101 during YTD 2023 (YTD 2022: $12,230). The decreases were due to a decrease in the amount of excess funds invested.

18

Loss for the Period and Comprehensive Loss and Loss for the Period Attributable to the Common Shareholders of Greenbrook

The loss for the period and comprehensive loss increased by 68% to $12.3 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $7.4 million), and increased by 41% to $21.6 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $15.4 million). The increase in Q2 2023 is predominately due to the increase in interest expenses arising from the additional debt financings completed in Q1 2023, the increase in share-based compensation expense, the increase in costs and depreciation as a result of the completion of the Success TMS Acquisition in Q3 2022 and one-time costs associated with the execution of the Restructuring Plan, the Credit Facility Amendment Fee, financing initiatives-related expenses, professional and legal fees related to the Klein Matters and the Neuronetics Note, partially offset by the re-valuation of conversion instruments. In addition to the above, the increase in YTD 2023 includes Success TMS related integration and expenses. See “Interest Expense, Entity-Wide Regional Operating Income (Loss) and Direct Center and Regional Costs” above, “Adjusted EBITDA and One-time Expenses” below and “Key Highlights and Recent Developments—Restructuring Plan” above.

The loss attributable to the common shareholders of Greenbrook increased by 67% to $12.3 million during Q2 2023 as compared to Q2 2022 (Q2 2022: $7.3 million) and 42% to $21.5 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $15.2 million). This was predominantly due to the factors described above impacting net losses.

Adjusted EBITDA and One-Time Expenses

The Adjusted EBITDA loss position remained relatively consistent at $3.6 million in Q2 2023 as compared to Q2 2022 (Q2 2022: $3.5 million) and improved by 19% to $6.5 million during YTD 2023 as compared to YTD 2022 (YTD 2022: $8.0 million). The decrease in the Adjusted EBITDA loss position in YTD 2023 as compared to YTD 2022 is primarily attributable to a reduction in the EBITDA loss position as well as an increase in one-time costs. One-time costs that occurred in YTD 2023 related to restructuring costs incurred as we executed on our Restructuring Plan (see “Key Highlights and Recent Developments—Restructuring Plan”), the Credit Facility Amendment Fee, financing initiatives-related expenses, Success TMS related integration and expenses, professional and legal fees related to the Klein Matters and the Neuronetics Note, while one-time costs that occurred in YTD 2022 included professional and legal fees related to the Success TMS Acquisition and the Madryn Credit Facility. See “Cautionary Note Regarding Non-IFRS Measures” above.

EBITDA AND ADJUSTED EBITDA

The table below illustrates our EBITDA and Adjusted EBITDA for the periods presented:

(US$) (unaudited)	Q2 2023			Q2 2022			YTD 2023			YTD 2022
EBITDA		(5,788,754	)		(4,343,043	)		(8,600,783	)		(9,176,518	)
Adjusted EBITDA		(3,585,532	)		(3,533,650	)		(6,524,226	)		(8,025,955	)

For a definition of EBITDA and Adjusted EBITDA, see “Cautionary Note Regarding Non-IFRS Measures” above. For quantitative reconciliations of EBITDA and Adjusted EBITDA to loss attributable to the common shareholders of Greenbrook, see “Reconciliation of Non-IFRS Measures” immediately below.

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RECONCILIATION OF NON-IFRS MEASURES

The table below illustrates a reconciliation of loss attributable to the common shareholders of Greenbrook to EBITDA and Adjusted EBITDA for the periods presented:

(US$) (unaudited)	Q2 2023			Q2 2022			YTD 2023			YTD 2022
Loss attributable to the common shareholders of Greenbrook		(12,259,994	)		(7,347,849	)		(21,491,876	)		(15,185,832	)
Add the impact of:
Interest expense		3,810,935			1,220,689			7,450,645			2,450,000
Amortization		343,252			207,500			686,505			415,000
Depreciation		2,317,109			1,586,560			4,754,044			3,156,544
Less the impact of:
Interest income		(56	)		(9,943	)		(101	)		(12,230	)
EBITDA		(5,788,754	)		(4,343,043	)		(8,600,783	)		(9,176,518	)
Add the impact of:
Share-based compensation		156,927			63,882			(940,057	)		313,204
Add the impact of:
Restructuring and related costs		162,029			–			463,868			–
Klein Matters related professional and legal fees		190,533			–			190,533			–
Neuronetics Note legal fees		458,257			–			458,257			–
Credit Facility Amendment Fee		1,000,000			–			1,000,000			–
Financing initiatives related expenses		235,476			–			753,956			–
Success TMS Acquisition related professional and legal fees		–			643,247			150,000			735,095
Madryn Credit Facility related professional and legal fees		–			102,264			–			102,264
Adjusted EBITDA		(3,585,532	)		(3,533,650	)		(6,524,226	)		(8,025,955	)

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Quarterly Adjusted EBITDA Reconciliation of Non-IFRS Measures

The table below illustrates a reconciliation of loss attributable to the common shareholders of Greenbrook to EBITDA and Adjusted EBITDA for the eight most recently completed fiscal quarters:

(unaudited) (US$)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
Loss attributable to the common shareholders of Greenbrook		(12,259,994	)		(9,231,882	)		(30,179,216	)		(16,361,426	)		(7,347,849	)		(7,837,983	)		(6,831,859	)		(3,517,250	)
Add the impact of:
Interest Expense		3,810,935			3,639,710			3,091,247			3,183,165			1,220,689			1,229,311			1,254,007			1,145,337
Amortization		343,252			343,253			372,565			570,648			207,500			207,500			207,500			115,834
Depreciation		2,317,109			2,436,935			1,865,483			3,136,369			1,586,560			1,569,984			1,529,892			1,373,149
Less the impact of:
Interest income		(56	)		(45	)		(20	)		–			(9,943	)		(2,287	)		(9,429	)		(3,067	)
EBITDA		(5,788,754	)		(2,812,029	)		(24,849,941	)		(9,471,244	)		(4,343,043	)		(4,833,475	)		(3,849,889	)		(885,997	)
Add the impact of:
Share-based compensation		156,927			(1,096,984	)		(1,186,218	)		1,933,280			63,882			249,322			248,428			221,679
Add the impact of:
Equity Financing related professional and legal fees		–			–			–			–			–			–			273,561			–
Forgiveness of loans payable		–			–			–			–			–			–			–			(3,128,596	)
Loss on extinguishment of loan⁽¹⁾		–			–			–			2,331,917			–			–			–			–
Withdrawn Public Offering related professional and legal fees⁽²⁾		–			–			–			–			–			–			(273,561	)		273,561
Internal controls assessment professional and legal fees		–			–			–			–			–			–			31,840			–
Achieve TMS East/Central Acquisition related professional and legal fees⁽³⁾		–			–			–			–			–			–			3,864			422,142
Success TMS Acquisition related professional and legal fees		–			–			–			530,130			643,247			91,848			–			–
Madryn Credit Facility related professional and legal fees		–			–			–			(102,264	)		102,264			–			–			–
Success TMS related integration and expenses		–			150,000			–			945,430			–			–			–			–
Impairment loss⁽⁴⁾		–			–			20,677,160			–			–			–			–			–
Klein Matters related professional and legal fees		190,533			–			–			–			–			–			–			–
Neuronetics Note legal fees		458,257			–			–			–			–			–			–			–
Credit Facility Amendment Fee		1,000,000			–			–			–			–			–			–			–
Restructuring and related costs		162,029			301,839			–			–			–			–			–			–
Financing initiatives related expenses		235,476			518,480			–			–			–			–			–			–
Adjusted EBITDA		(3,585,532	)		(2,938,694	)		(5,358,999	)		(3,832,751	)		(3,533,650	)		(4,492,305	)		(3,565,757	)		(3,097,211	)

Notes:

	(1)	Loss on extinguishment of loan relates to the extinguishment of the Oxford Credit Facility (as defined below), as well as the extinguishment of a loan previously held by Success TMS. Due to their nature, these are considered one-time costs and, accordingly, have been excluded from Adjusted EBITDA.
	(2)	On June 25, 2021, the Company elected to withdraw its previously announced public offering of Common Shares in light of market conditions. Due to their nature, professional and legal fees associated with the Withdrawn Public Offering are also considered one-time costs and, accordingly, have been excluded from Adjusted EBITDA.
	(3)	On October 1, 2021, the Company completed the acquisition of all the issued and outstanding equity interests in Achieve TMS East, LLC and Achieve TMS Central, LLC (the “Achieve TMS East/Central Acquisition”). Due to their nature, the related professional and legal fees associated with the Achieve TMS East/Central Acquisition are considered one-time costs and, accordingly, have been excluded from Adjusted EBITDA.
	(4)	Impairment loss represents the impairment of assets in Fiscal 2022, including goodwill and intangible assets. Due to their nature, impairment losses are considered one-time costs and, accordingly, have been excluded from Adjusted EBITDA.

RECONCILIATION OF ACCOUNTS RECEIVABLE

A quantitative reconciliation of accounts receivable in respect of the three- and six-month periods ended June 30, 2023 and 2022, and the year ended December 31, 2022, which includes a quantification of the adjustment to variable consideration estimate resulting from the additional price concessions which were deemed necessary:

(US$) (unaudited)	Q2 2023			Q2 2022			YTD 2023			YTD 2022			Fiscal 2022
Opening accounts receivable balance as at the period opening date		14,768,205			10,667,222			13,898,305			10,997,389			10,997,389
Accounts receivable acquired as part of the Success TMS Acquisition		–			–			–			–			3,728,255
Revenue recognized based on expected value		19,269,728			15,283,824			40,007,480			29,647,756			73,631,665
Adjustment to variable consideration estimate		(922,929	)		(1,073,515	)		(1,752,630	)		(2,372,301	)		(4,527,219	)
Payments received		(18,922,653	)		(15,072,436	)		(37,960,804	)		(28,467,749	)		(69,931,785	)
Ending accounts receivable balance at the period end date	$	14,192,351		$	9,805,095		$	14,192,351		$	9,805,095		$	13,898,305

21

QUARTERLY FINANCIAL INFORMATION

Selected Quarterly Financial Information

The following table summarizes the results of our operations for the eight most recently completed fiscal quarters:

(unaudited) (US$)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
Revenue		18,346,799			19,908,051			21,076,886			20,752,105			14,210,309			13,065,146			14,047,452			13,130,245
Regional operating income (loss)		237,003			729,050			(141,846	)		(849,472	)		(71,075	)		(1,038,049	)		43,741			249,057
Net loss attributable to common shareholders of Greenbrook		(12,259,994	)		(9,231,882	)		(30,179,216	)		(16,361,426	)		(7,347,849	)		(7,837,983	)		(6,831,859	)		(3,517,250	)
Adjusted EBITDA		(3,585,532	)		(2,938,694	)		(5,358,999	)		(3,832,751	)		(3,533,650	)		(4,492,305	)		(3,565,757	)		(3,097,211	)
Net loss per share – Basic		(0.30	)		(0.30	)		(1.22	)		(0.59	)		(0.41	)		(0.44	)		(0.34	)		(0.22	)
Net loss per share – Diluted		(0.30	)		(0.30	)		(1.22	)		(0.59	)		(0.41	)		(0.44	)		(0.34	)		(0.22	)

Analysis of Results

We achieved quarterly consolidated revenue of $18.3 million in Q2 2023, representing an 8% quarter-over-quarter decrease compared to Q1 2023 (Q1 2023: $19.9 million) predominantly due to the reduction in our operating footprint as a result of the execution of the Restructuring Plan and continued limited marketing spend due to liquidity constraints. Average revenue per Treatment was $224 in Q2 2023, representing a 4% quarter-over-quarter increase compared to Q1 2023 (Q1 2023: $215).

New patient starts in Q2 2023 were 2,647, representing a 7% quarter-over-quarter decrease compared to Q1 2023 (Q1 2023: 2,854). Treatment volumes were 81,855 in Q2 2023, representing a 12% quarter-over-quarter decrease compared to Q1 2023 (Q1 2023: 92,533). Consultations were 9,924 in Q2 2023, representing a 24% quarter-over-quarter increase compared to Q1 2023 (Q1 2023: 7,975). The decline in new patient starts and treatment volumes was driven by the execution of the Restructuring Plan where we experienced a planned reduction in our Treatment Center footprint and continued limited marketing spend (See “Key Highlights—Restructuring Plan” above). The increase in consultations performed was primarily due to the general seasonality of the business during the first quarter of each year (see “Factors Affecting the Compatibility of Our Results—Seasonality” above). We believe that by focusing operations to the Company’s most profitable Treatment Centers through the Restructuring Plan together with the normalization of our marketing spend to expected post-Restructuring Plan levels, we will be able to achieve sustainable profitability and long-term growth (see “Cautionary Note Regarding Forward-Looking Information” and “Key Highlights and Recent Developments—Restructuring Plan”).

We experienced a decrease in entity-wide regional operating income of 67% to $0.2 million in Q2 2023 as compared to Q1 2023 (Q1 2023: $0.7 million), primarily due to the reduction in revenue as described above offset by a reduction in costs due to the execution of the Restructuring Plan. We believe we will be able to continue to execute on further near-term operational synergies to accelerate the Company’s timeline to profitability as part of the comprehensive Restructuring Plan (see “Cautionary Note Regarding Forward-Looking Information” and “Key Highlights and Recent Developments—Restructuring Plan”).

22

The loss attributable to the common shareholders of Greenbrook increased 33% in Q2 2023 to $12.3 million compared to Q1 2023 (Q1 2023: $9.2 million). The increase is primarily due to share-based compensation expense, decrease in revenue, re-valuation of conversion instruments, the Credit Facility Amendment Fee, and the one-time costs incurred for Neuronetics Note legal fees and Klein Matters related professional and legal fees. This is offset by decreases in direct center and patient care costs, other regional and center support costs, and depreciation, due to the Restructuring Plan, as well as decreases in restructuring expenses and other financing and related one-time costs in Q2 2023 as compared to Q1 2023. See “Adjusted EBITDA and One-time Expenses” and “Key Highlights and Recent Developments—Restructuring Plan” above.

Selected Quarterly Operating Data

The following table provides selected operating data for the periods indicated:

(unaudited)	Q2 2023		Q1 2023		Q4 2022		Q3 2022		Q2 2022		Q1 2022		Q4 2021		Q3 2021
Number of active Treatment Centers⁽¹⁾		133		162		183		183		144		146		147		127
Number of Treatment Centers-in-development⁽²⁾		–		–		–		1		–		2		2		4
Total Treatment Centers		133		162		183		184		144		148		149		131
Number of management regions		17		18		18		18		15		15		15		13
Number of TMS Devices installed		341		341		345		338		234		234		234		214
Number of regional personnel		400		406		495		501		328		340		386		350
Number of shared-services / corporate personnel⁽³⁾		84		124		134		143		66		68		44		58
Number of providers⁽⁴⁾		202		222		225		208		164		161		135		126
Number of consultations performed⁽⁵⁾		9,924		7,975		11,215		8,797		4,318		3,501		3,547		3,437
Number of patient starts⁽⁵⁾		2,647		2,854		2,779		2,848		1,809		1,817		1,667		1,520
Number of Treatments performed⁽⁵⁾		81,855		92,533		96,789		95,046		62,038		59,067		61,416		54,525
Average revenue per Treatment⁽⁵⁾	$	224	$	215	$	218	$	218	$	229	$	221	$	229	$	241

Notes:

	(1)	Active Treatment Centers represent Treatment Centers that have performed billable Treatment services during the applicable period.
	(2)	Treatment Centers-in-development represents Treatment Centers that have committed to a space lease agreement and the development process is substantially complete.
	(3)	Shared-services / corporate personnel is disclosed on a full-time equivalent basis. The Company utilizes part-time staff and consultants as a means of managing costs.
	(4)	Number of providers represents clinician partners that are involved in the provision of Treatment services from our Treatment Centers.
	(5)	Figures calculated for the applicable period ended.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Since inception, we have financed our operations primarily from equity offerings, debt financings and revenue generated from our Treatment Centers. Our primary uses of capital are to finance operations, finance new Treatment Center development costs, increase non-cash working capital and fund investments in our centralized business infrastructure. Our objectives when managing capital are to ensure that we will continue to have enough liquidity to provide services to our customers and provide returns to our shareholders. We have also used capital to finance acquisitions and may continue to do so in the future. Cash is held primarily in U.S. dollars.

23

As part of our annual budgeting process and on an ongoing basis, we evaluate our estimated annual cash requirements to fund planned expansion activities and working capital requirements of existing operations. Based on this, in addition to historical cash flow, anticipated proceeds from the Alumni Purchase Agreement, the 2023 Private Placement and Debt Financing, and considering our anticipated cash flows from regional operations and our holdings of cash, as of the date of this MD&A, we believe that we have sufficient capital to meet our future operating expenses, capital expenditures and debt service requirements for approximately the next three months and, consequently, we will need to raise additional funding in the near-to-medium term. However, our ability to fund operating expenses, capital expenditures and future debt service requirements will depend on, among other things, our ability to source external funding, our future operating performance, which will be affected by our ability to execute on our Restructuring Plan, our ability to meet our debt obligations and remain in compliance with debt covenants, our ability to remain listed on Nasdaq, and general economic, financial and other factors, including factors beyond our control such as inflation and recessionary conditions. See “Cautionary Note Regarding Forward-Looking Information”, “Risks and Uncertainties”, “Factors Affecting our Performance” and “Key Highlights and Recent Developments—Restructuring Plan and —Nasdaq Listing Deficiencies”, as well as further details on our indebtedness and capital raising below under “Indebtedness and Capital Raising”.

Analysis of Cash Flows for YTD 2023

The following table presents our cash flows for each of the periods presented:

(US$)	YTD 2023			YTD 2022
Net cash used in operating activities		(4,312,415	)		(3,600,760	)
Net cash generated from (used in) financing activities		3,775,394			(6,049,754	)
Net cash generated from (used in) investing activities		(8,589	)		12,230
Increase (decrease) in cash		(545,610	)		(9,638,284	)

Cash Flows used in Operating Activities

For YTD 2023, cash flows used in operating activities (which includes the full cost of developing new Treatment Centers) totaled $4.3 million, as compared to $3.6 million in YTD 2022. The increase is due to the change in non-cash working capital, offset by better regional performance and cost reductions related to the implementation of our Restructuring Plan. See “Key Highlights and Recent Developments—Restructuring Plan”.

24

Cash Flows generated from (used in) Financing Activities

For YTD 2023, cash flows generated from financing activities amounted to $3.8 million generated as compared to $6.0 million used in YTD 2022. This is primarily driven by the net proceeds from the 2023 Private Placement and the Debt Financing received in YTD 2023.

Cash Flows generated from (used in) Investing Activities

For YTD 2023, cash flows used in investing activities totaled $0.01 million as compared to cash flows generated from investing activities of $0.01 million in YTD 2022, due to the purchase of property, plant and equipment.

INDEBTEDNESS and Capital RAising

Madryn Credit Facility

On July 14, 2022, the Company entered into a credit agreement (as amended, the “Madryn Credit Agreement”) for a $75 million secured credit facility with Madryn Asset Management, LP (“Madryn”) and its affiliated entities (the “Madryn Credit Facility”). The Madryn Credit Facility provides the Company with a $55 million term loan (the “Existing Loan”), which was funded on closing. In addition, the Madryn Credit Facility permits the Company to draw up to an additional $20 million in a single draw at any time on or prior to December 31, 2024 for purposes of funding future mergers and acquisition activity. Prior to March 31, 2023, all amounts borrowed under the Madryn Credit Facility bore interest at a rate equal to the three-month LIBOR rate plus 9.0%, subject to a minimum three-month LIBOR floor of 1.5%. Commencing March 31, 2023, as a result of an amendment to the Madryn Credit Facility entered into between the parties on February 21, 2023, all advances under the Madryn Credit Facility will accrue interest at a rate equal to 9.0% plus the 3-month Term Secured Overnight Financing Rate (“SOFR”) benchmark (subject to a floor of 1.5%) plus 0.10%. The Madryn Credit Facility matures over 63 months and provides for four years of interest-only payments. The Company has granted general security over all assets of the Company in connection with the performance and prompt payment of all obligations of the Madryn Credit Facility.

The terms of the Madryn Credit Agreement require the Company to satisfy various affirmative and negative covenants and to meet certain financial tests, including but not limited to, financial covenants that require the Company to (i) generate consolidated revenues for each 12-month period (on a pro forma basis giving effect to the Success TMS Acquisition), measured quarterly (commencing with the 12 months ending on September 30, 2022), in amounts that (A) for the first, second and third measurement periods, are in line with the historical trailing performance of the Company and Success TMS (taken together as a combined company) but substitute one, two and three quarters, respectively, of historical combined revenues with a portion of the projected combined revenues for those quarters; and (B) for measurement periods thereafter, represent a percentage of the Company’s projected consolidated revenues for such periods, assuming modest growth over time, and is capped at the minimum revenue requirement for the 12 months ending on June 30, 2027, and (ii) maintain minimum liquidity of $3.0 million. In addition, the Madryn Credit Agreement contains affirmative and negative covenants that limit, among other things, the Company’s ability to incur additional indebtedness outside of what is permitted under the Madryn Credit Agreement, create certain liens on assets, declare dividends and engage in certain types of transactions. As at June 30, 2023, the Company was in compliance with the Minimum Liquidity Covenant (as amended). The Madryn Credit Agreement also contains affirmative covenants that require the Company to deliver, on or prior to March 31, 2023, audited financial statements for the fiscal year ended December 31, 2022 (the “Financial Statements”), accompanied by a report and opinion of an independent certified public accountant which is not subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit (together, the “Reporting Requirements”).

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In accordance with the terms of the Madryn Credit Agreement, Greenbrook has issued conversion instruments (each, a “Madryn Conversion Instrument” and together, the “Madryn Conversion Instruments”) to Madryn and certain of its affiliated entities that provide the holders thereof with the option to convert up to $5 million of the outstanding principal amount of the Existing Loan into Common Shares at a price per share equal to $1.90, subject to customary anti-dilution adjustments (the “Madryn Conversion Price”).

On July 14, 2022, the Company used approximately $15.4 million of the proceeds from the Madryn Credit Facility to repay in full the outstanding balance owing under the Oxford Credit Facility (as defined below), as well as prepayment fees and legal fees incurred, and terminated the Oxford Credit Facility. Concurrently, the Company used approximately $15.1 million of the proceeds from the Madryn Credit Facility to repay various loans previously held by Success TMS. The Company subsequently used $2.9 million to normalize vendor payment aging resulting from cash management practices prior to strengthening our balance sheet and made a $2.3 million cash investment due to a lag in working capital from the continued development of Treatment Center locations. After financing fees and closing costs of $3.1 million, the remaining balance of the proceeds in respect of the Madryn Credit Facility totaled $16.2 million.

During YTD 2023, the Company entered into amendments to the Madryn Credit Facility (as described below), whereby Madryn and its affiliated entities extended five additional tranches of debt financing to the Company in an aggregate principal amount of $8.0 million, each of which were fully funded at closing of the applicable tranche (collectively, the “New Loans”). The terms and conditions of the New Loans are consistent with the terms and conditions of the Existing Loan in all material respects. Madryn was also granted the right to appoint one observer to the Board.

The New Loans also provide Madryn with the option to convert up to approximately $728,000 of the outstanding principal amount of the New Loans into Common Shares at the Madryn Conversion Price. The Madryn Conversion Instruments correspond to the conversion provisions for the Existing Loan, which provide Madryn with the option to convert up to $5 million of the outstanding principal amount of the Existing Loan into Common Shares at the Madryn Conversion Price. As a result of the New Loans, Madryn has the option to convert an aggregate of approximately $5,728,000 of the outstanding principal amount of the loans outstanding at the Madryn Conversion Price, resulting in the potential issuance of up to approximately 3.0 million Common Shares, representing approximately 6.6% of the issued and outstanding Common Shares as at the date of this MD&A.

In addition, on February 21, 2023, March 20, 2023, June 14, 2023, July 3, 2023, July 14, 2023, and August 1, 2023, the Company received waivers from Madryn with respect to the Company’s non-compliance with the covenant to maintain a minimum cash balance of $3,000,000, which is tested on a daily basis (the “Minimum Liquidity Covenant”). The most recent waiver executed on August 1, 2023 extended the reduced Minimum Liquidity Covenant of $300,000 until August 15, 2023. We anticipate either coming into compliance with the original $3,000,000 minimum liquidity covenant or obtaining a further extension by August 15. The August 1 amendment also included a conversion of the June 2023 cash interest payment into paid-in-kind interest by adding such interest amount to the outstanding principal balance of the loan as well as an additional tranche of debt financing in an aggregate principal amount of $2,000,000. The terms and conditions of the additional tranche are consistent with the Madryn Credit Facility in all material respects. The amendment entered into by the parties on June 14, 2023 includes an amendment fee payable to Madryn in the amount of $1,000,000 (the “Credit Facility Amendment Fee”), to be paid in kind by adding the Amendment Fee to the outstanding principal balance of the loan. In addition, we entered into the Alumni Purchase Agreement and completed the 2023 Private Placement and the Debt Financings in part to remain in compliance with the Minimum Liquidity Covenant under the Madryn Credit Facility and in order to satisfy our near-term cash requirements necessary to operate our business. In addition, on March 31, 2023, the Company received a waiver from Madryn with respect to the Company’s non-compliance with the Reporting Requirements.

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Neuronetics Note and Warrants

In January 2023, the Company and Neuronetics, Inc. (“Neuronetics”) jointly announced an expanded commercial partnership through year end 2028. Under the amended and restated master sales agreement between the Company and Neuronetics, dated as of January 17, 2023 (as amended by an amending agreement dated March 16, 2023, the “Neuronetics Agreement”), Neuronetics will be the exclusive supplier of TMS Devices to the Company. Over time, Neuronetics’ NeuroStar TMS Devices will replace competitive TMS Devices at the Company’s Treatment Centers. The parties also expect to work jointly to grow, through co-branding and co-marketing programs, enhanced patient and clinician awareness, improved patient access to care, and collaboration on product development and publications. The Neuronetics Agreement also contains minimum purchase commitments, and all treatment session purchases will convert to a “per-click” consumable model.

On March 31, 2023, the Company and Neuronetics agreed to convert the Company’s outstanding account balance payable to Neuronetics in the amount of approximately $5.9 million, together with Neuronetics’ out-of-pocket transaction costs, into a $6.0 million secured promissory note issued to Neuronetics (the “Neuronetics Note”). All amounts borrowed under the Neuronetics Note will bear interest at a rate equal to the sum of (a) the floating interest rate of daily secured overnight financing rate as administered by the Federal Reserve Bank of New York on its website, plus (b) 7.65%. The Neuronetics Note matures on March 31, 2027. Pursuant to the terms of the Neuronetics Note, in the event of an event of default under the Neuronetics Note, Greenbrook will be required to issue the Neuronetics Warrants (defined below). Under the Neuronetics Agreement and the Neuronetics Note, the Company has granted Neuronetics a security interest in all of the Company’s assets. Additionally, under the Neuronetics Agreement, the Company is required to pay all costs to relocate the TMS Devices supplied by Neuronetics from the Treatment Centers that are closed in connection with the Restructuring Plan and install such TMS Devices in the Company’s Treatment Centers that remain open. In connection with the entry into the Neuronetics Note, the Company concurrently entered into an amendment to the Madryn Credit Agreement pursuant to which the Company is permitted to incur the indebtedness under the Neuronetics Note.

Pursuant to the terms of the Neuronetics Note, in the event of an event of default under the Neuronetics Note, the Company will be required to issue common share purchase warrants (the “Neuronetics Warrants”) to Neuronetics equal to (i) 200% of the unpaid amount of any delinquent amount or payment due and payable under the Neuronetics Note, together with all outstanding and unpaid accrued interest, fees, charges and costs, divided by (ii) the exercise price of the Neuronetics Warrants, which will represent a 20% discount to the 30-day volume-weighted average closing price of the Common Shares traded on Nasdaq prior to the date of issuance (subject to any limitations required by Nasdaq).

Under the Neuronetics Agreement and the Neuronetics Note, the Company has granted Neuronetics a security interest in all of the Company’s assets.

On May 25, 2023, the Neuronetics Agreement was amended to include additional out-of-pocket expenses, totaling $0.25 million, incurred by Neuronetics in connection with the negotiation, preparation, and delivery of the Neuronetics Note. In addition, Neuronetics has agreed to waive the fee for TMS Device relocations.

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Additional Financing from Significant Shareholders and Management

Alongside the New Loans from Madryn, the Company also entered into a note purchase agreement with certain significant shareholders (including Greybrook Health) and management of the Company (the “Noteholders”) whereby the Company issued $1.75 million aggregate principal amount of unsecured notes dated February 3, 2023 to the Noteholders (the “February 2023 Notes”). The Company also issued an aggregate principal $1.0 million dollar of unsecured notes on August 1, 2023 to Greybrook Health on August 1 (the “August 2023 Notes” and collectively with the February 2023 Notes, the “Insider Notes”).

The gross proceeds to the Company of the New Loans and the Insider Notes (collectively the “Debt Financings”) equaled $10.75 million. The Insider Notes bear interest at a rate consistent with the Madryn Credit Facility and mature on the earlier of September 30, 2027, at the election of the Noteholders upon a change of control, upon the occurrence of an event of default and acceleration by the Noteholders, or the date on which the loans under the Madryn Credit Facility are repaid.

In conjunction with the issuance of the February 2023 Notes to Greybrook Health, the Company granted Greybrook Health a conversion instrument dated February 28, 2023 (the “Greybrook Conversion Instrument”). The Greybrook Conversion Instrument provides Greybrook Health with an option to convert up to $1.0 million of the outstanding principal amount of the Insider Notes held by Greybrook Health into Common Shares at a conversion price per share equal to the offering price of any public offering of Common Shares (if converted in connection with such offering) or otherwise 85.0% of the volume-weighted average trading price of the Common Shares on Nasdaq for the five trading days immediately preceding the date of conversion (the “Greybrook Conversion Price”), subject to customary anti-dilution adjustments and conversion limitations required by Nasdaq.

As additional consideration for the purchase of the Insider Notes by Greybrook Health, the Company issued a combined total of 385,870 common share purchase warrants to Greybrook Health (the “Greybrook Warrants”). 135,870 of the Greybrook Warrants were issued alongside the February 2023 Notes and are exercisable for one Common Share at an exercise price of $1.84, subject to customary anti-dilution adjustments. 250,000 of the Greybrook Warrants were issued alongside the August 2023 Notes and are exercisable for one Common Share at an exercise price equal to (a) if the Common Shares are listed on Nasdaq or any other trading market at the time of exercise, 85.0% of the volume-weighted average trading price of the Common Shares on Nasdaq (or, if not listed on Nasdaq, then such other trading market on which the Common Shares are principally traded, based upon daily share volume) for the five trading days immediately preceding the exercise date, or (b) if the Common Shares are not listed on any trading market at the time of exercise, a per share price based on fair market value, as determined by the Board, in each case subject to customary anti-dilution adjustments. The Greybrook Warrants will expire five years from the applicable date of issuance.

On August 1, 2023, as part of the New Loans, the Company entered into an amendment to the Madryn Credit Facility, whereby certain affiliates of Madryn have extended an additional tranche of debt financing in an aggregate principal amount of $2,000,000. The terms and conditions of the loan are consistent with the Madryn Credit Facility in all material respects. The additional tranche provides Madryn with the option to convert up to an additional $182,000 of the outstanding principal amount into Common Shares at a price per share equal to $1.90, subject to customary anti-dilution adjustments. This conversion feature corresponds to the conversion provisions for its Existing Loan, which provide Madryn with the option to convert a portion of the outstanding principal amount of the Existing Loan into Common Shares at a price per share equal to $1.90.

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2023 Private Placement

On March 23, 2023, the Company completed a non-brokered private placement of Common Shares (the “2023 Private Placement”) pursuant to private placement exemptions and/or Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). Pursuant to the 2023 Private Placement, an aggregate of 11,363,635 Common Shares were issued at a price of $0.55 per Common Share, for aggregate gross proceeds to the Company of approximately $6.25 million. The 2023 Private Placement included investments by Madryn (as defined below), together with certain of the Company’s other major shareholders, including Greybrook Health and affiliates of Masters Special Situations LLC (“MSS”). The Company is using the net proceeds from the 2023 Private Placement to fund the Restructuring Plan and for working capital and general corporate purposes, which may include the repayment of indebtedness.

In connection with the 2023 Private Placement, Greybrook Health, Madryn and MSS each received customary resale, demand and “piggy-back” registration rights pursuant to a registration rights agreement entered into among the parties on closing of the 2023 Private Placement (the “2023 Registration Rights Agreement”).

Alumni Capital Equity Line

On July 13, 2023, the Company entered into the Alumni Purchase Agreement with Alumni. The Alumni Purchase Agreement provides equity line financing for sales from time to time of up to the Maximum Commitment Amount of Common Shares. The Purchase Shares will be issued from time to time in connection with the delivery of purchase notices delivered by the Company to Alumni, at variable prices set forth therein, in accordance with the terms of the Alumni Purchase Agreement and pursuant to the Shelf Registration Statement. Each individual sale of Purchase Shares will be limited to no more than the number of Common Shares that would result in the direct or indirect beneficial ownership by Alumni of more than 9.99% of the then-outstanding Common Shares. As at the date of this MD&A, we have issued an aggregate of 1,461,538 Purchase Shares for aggregate proceeds to the Company of $403,024.

In exchange for Alumni entering into the Alumni Purchase Agreement, the Company issued Alumni 212,293 Commitment Shares. The Alumni Purchase Agreement expires upon the earlier of (1) the aggregate offering amount of Offered Shares meeting the Maximum Commitment Amount; (2) the date on which the Common Shares cease trading on Nasdaq; or (3) December 31, 2023. In addition, the ability of the Company to sell additional Purchase Shares under the Alumni Purchase Agreement in the future is contingent on the Company’s continued eligibility to use the Shelf Registration Statement. The Company has and intends to continue to use the proceeds from the issuance of the Purchase Shares for general corporate and working capital purposes.

Oxford Credit Facility; Oxford Warrants

On December 31, 2020, the Company entered into a credit and security agreement (the “Oxford Credit Agreement”) in respect of a $30 million credit facility (“Oxford Credit Facility”) with Oxford Finance LLC (“Oxford”).

As consideration for providing the Oxford Credit Facility, we issued 51,307 common share purchase warrants (the “Oxford Warrants”), each exercisable for one Common Share at an exercise price of C$11.20 per Common Share, to Oxford. To date, none of the Oxford Warrants have been exercised. The Oxford Warrants will expire on December 31, 2025.

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In connection with entering into the Madryn Credit Facility on July 14, 2022, the Company repaid in full the outstanding balance owing under the Oxford Credit Facility and terminated the Oxford Credit Agreement.

Other Indebtedness

During the period ended September 30, 2022, the Company assumed loans as part of the Success TMS Acquisition from three separate financing companies for the purchase of TMS Devices. These TMS Device loans bear an average interest rate of 9.3% with average monthly blended interest and capital payments of $1,538 and mature during the years ending December 31, 2023 to December 31, 2025. There are no covenants associated with these loans.

During YTD 2023, the Company repaid TMS Device loans totalling $0.08 million (YTD 2022: $0.02 million).

During Fiscal 2022, the Company assumed two promissory notes totaling $0.2 million, bearing interest of 5% per annum with a maturity date of December 31, 2025. In addition, on July 14, 2022, in connection with the Success TMS Acquisition, the Company assumed the obligation of Success TMS to repay a promissory note to Benjamin Klein, who is a significant shareholder and former director of the Company (the “Klein Note”). The Klein Note totals $2.1 million, bears interest at a rate of 10% per annum and matures on May 1, 2024.

During YTD 2023, the Company paid $0.1 million towards these three promissory notes (collectively, including the Klein Note, the “Success TMS Notes”) (YTD 2022: nil).

On April 25, 2023, Batya Klein, as trustee of the Marital Trust created by Kenneth S. Klein Revocable Trust U/A/D 10/20/80 filed a complaint against Success TMS in the Superior Court of New Jersey, Law Division (Bergen County) alleging a single claim for breach of contract of the Klein Note in the principal amount of $2,090,264 (the “Klein Note Action” and, together with the Delaware Complaint, the “Klein Matters”). Specifically, the complaint alleged that there was an event of default under the Klein Note and demanded acceleration of the indebtedness due thereunder. However, the Company believes there was no event of default under the Klein Note so the demand for acceleration was defective. The Company also believes the New Jersey court lacks jurisdiction to hear the matter. Accordingly, the Company moved to dismiss the Klein Note Action, which motion is currently scheduled to be heard on August 18, 2023.

Tabular Disclosure of Contractual Obligations

The following table summarizes our significant contractual obligations as of June 30, 2023:

(US$) (unaudited)	Total		Less than 1 year		1 – 3 years		3 - 5 years		More than 5 years
Loans Payable⁽¹⁾		110,140,508		11,788,559		17,174,919		81,177,030		–
Rental Leases⁽²⁾		46,078,893		3,811,109		13,733,732		12,112,465		16,421,587
Device Leases⁽³⁾		6,303,860		2,159,342		4,144,518		–		–
Total		162,523,261		17,759,010		35,053,169		93,289,495		16,421,587

Notes:

	(1)	Loans payable relate to undiscounted cash flows for loans, including the Madryn Credit Facility, the Neuronetics Note, TMS Device loans, the Insider Notes and the Success TMS Notes as at June 30, 2023, inclusive of principal and interest.
	(2)	Rental leases relate to the undiscounted cash flows of all future payments for all rental agreements. We expect to satisfy these obligations with cash from operations.
	(3)	Device leases relate to the undiscounted cash flows of all future payments for all device agreements. We expect to satisfy these obligations with cash from operations.

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Off-Balance Sheet Arrangements

The Company has not engaged in any off-balance sheet financing transactions.

Related Party Transactions

Greybrook Health

During Q2 2023 and YTD 2023, the Company recognized $0.002 million and $0.003 million, respectively, in other corporate, general and administrative expenses (Q2 2022 and YTD 2022: nil) related to transactions with Greybrook Health. As at June 30, 2023, $0.002 million was included in accounts payable and accrued liabilities related to payables for Greybrook Capital Inc. (the parent company of Greybrook Health).

In connection with the Debt Financing, the Company issued Insider Notes to Greybrook Health and certain other significant shareholders and management of the Company. In conjunction with the issuance of the February 2023 Notes to Greybrook Health, the Company granted Greybrook Health the Greybrook Conversion Instrument. As additional consideration for the purchase of the August 2023 Notes by Greybrook Health, the Company issued the Greybrook Warrants to Greybrook Health. Greybrook Health also participated in the 2023 Private Placement, purchasing 2,272,727 Common Shares at an aggregate subscription price of approximately $1.25 million. See “Indebtedness and Capital Raising – Additional Financing from Significant Shareholders and Management” and “Indebtedness and Capital Raising – 2023 Private Placement” above.

Madryn

On July 14, 2022, the Company entered into the Madryn Credit Facility with Madryn. In connection with the Debt Financings, the Company entered into amendments to the Madryn Credit Facility, whereby Madryn and its affiliated entities extended the New Loans to the Company (see “Indebtedness” above). During Q2 2023 and YTD 2023, the Company recognized $2.4 million and $4.8 million in interest expense, respectively, related to the Madryn Credit Facility (Q2 2022 and YTD 2022: nil).

Madryn also participated in the 2023 Private Placement, purchasing 6,363,636 Common Shares at an aggregate subscription price of approximately $3.5 million. See “Indebtedness and Capital Raising – 2023 Private Placement” above.

On August 1, 2023, the Company entered into an amendment to the Madryn Credit Facility, whereby certain affiliates of Madryn have extended an additional tranche of debt financing in an aggregate principal amount of $2,000,000. The terms and conditions of the loan are consistent with the Madryn Credit Facility in all material respects. The additional tranche provides Madryn with the option to convert up to an additional $182,000 of the outstanding principal amount into common shares of the Company at a price per share equal to $1.90, subject to customary anti-dilution adjustments.

Benjamin Klein

During Q2 2023 and YTD 2023, the Company recognized $0.1 million and $0.2 million, respectively, in other corporate, general and administrative expenses (Q2 2022 and YTD 2022: nil) related to amounts payable for employment services rendered and other related costs incurred by Benjamin Klein in the ordinary course of business. As at June 30, 2023, nil was included in accounts payable and accrued liabilities related to payables for Benjamin Klein and entities he owns.

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On July 14, 2022, in connection with the Success TMS Acquisition, the Company assumed the obligation of Success TMS to repay the Klein Note. The Klein Note totals $2.1 million, bears interest at a rate of 10% per annum and matures on May 1, 2024. The carrying value of the Klein Note as at June 30, 2023 was $2.1 million (June 30, 2022 – nil). During Q2 2023 and YTD 2023, the Company recognized $0.06 million and $0.1 million, respectively, in interest expense related to the Klein Note (Q2 2022 and YTD 2022: nil). See “Indebtedness and Capital Raising – Other Indebtedness” above.

Loans from other shareholders and officers

In connection with the Debt Financing, the Company received loans from and issued Insider Notes to certain shareholders and officers of the Company, including, 1315 Capital II, L.P., Bill Leonard, Erns Loubser and Geoffrey Grammer. The Insider Notes for the loans total $0.3 million, bear interest at a rate consistent with the Madryn Credit Facility and mature on the earlier of September 30, 2027, at the election of the Noteholders upon a change of control, upon the occurrence of an event of default and acceleration by the Noteholders, or the date on which the loans under the Madryn Credit Facility are repaid. During Q2 2023 and YTD 2023, the Company recognized $0.01 million and $0.02 million, respectively, in interest expense (Q2 2022 and YTD 2022 – nil) related to these Notes.

Other Agreements with Related Parties

We have also entered into certain customary investor rights and registration rights agreements with certain of our shareholders who either have a nominee appointed to our Board or the unexercised right to appoint a nominee to our Board. For additional information on these related party agreements, please refer to the Annual Report, which is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. See also “Factors Affecting the Comparability of our Results—Acquisition of Success TMS” and “Indebtedness and Capital Resources—2023 Private Placement” above.

Risks and Uncertainties

We are exposed to a variety of financial risks in the normal course of our business, including currency, interest rate, credit, and liquidity risks. Our overall risk management program and business practices seek to minimize any potential adverse effects on our consolidated financial performance. Risk management is carried out under practices approved by the Board. This includes identifying, evaluating and hedging financial risks based on requirements of our organization. Our Board provides guidance for overall risk management, covering many areas of risk including interest rate risk, credit risk, liquidity risk and currency risk.

For a detailed description of risk factors associated with the Company, refer to the “Risk Factors” section of the Annual Report, which is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov, as well as the risk factors described below.

Risks Related to the Company’s Business and Liquidity

There is substantial doubt about the Company’s ability to continue as a going concern due to recurring losses from operations, accumulated deficit, and insufficient cash resources to meet the Company’s business objectives.

Based on recurring losses from operations and negative cash flows from operations for the six months ended June 30, 2023 as well as current cash and liquidity projections, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern. Furthermore, as discussed in Note 2(a) to the Company’s financial statements for the three months ended March 31, 2023, included in the Q1 Interim Report, we have generated operating losses since inception, and we had negative cash flow from operating activities for the three months ended March 31, 2023, which together raises substantial doubt about the Company’s ability to continue as a going concern. In addition, during YTD 2023, we have received multiple waivers from our lender under the Madryn Credit Facility to ensure continued compliance with the Minimum Liquidity Covenant, including most recently on August 1, 2023, which extended our ability to rely on a reduced Minimum Liquidity Covenant of $300,000 (vs $3,000,000 in the Madryn Credit Facility) until August 15, 2023. We anticipate either coming into compliance with the original $3,000,000 Minimum Liquidity Covenant or obtaining a further extension by August 15; however, we can provide no assurance that we will be able to do so.

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To the extent that we continue to have negative cash flow in future periods, we will need to allocate a portion of the net proceeds received from additional financings to fund such negative cash flow and to ensure that we remain in the Minimum Liquidity Covenant. There can be no assurance that additional capital or other types of financing will be available when needed or that these financings will be on terms at least as favorable to the Company as previous offerings, or available to the Company at all. In addition, we can provide no assurances that we will be able to satisfy payment obligations on the Company’s outstanding indebtedness (including, without limitation, the Madryn Credit Facility, our TMS Device loans, the Neuronetics Note, the Insider Notes and the Success TMS Notes). See “Indebtedness and Capital Raising—Tabular Disclosure of Contractual Obligations.”

We may not realize expected returns on the Restructuring Plan.

Corporate restructurings such as the Restructuring Plan involve risks that could materially and adversely affect the Company’s business plan, including the failure of the Company to realize the anticipated benefits and cost savings. There can be no assurance that the Company will be able to fully realize some or all of the expected benefits of the Restructuring Plan. The ability to realize these anticipated benefits will depend in part on successfully consolidating functions and integrating operations, procedures, and personnel in a timely and efficient manner. There is a risk that some or all of the expected benefits will fail to materialize or may not occur within the time periods anticipated by management. The realization of some or all of such benefits may be affected by a number of factors, many of which are beyond the control of the Company.

An unfavorable outcome of the Klein Matters could result in a material adverse effect to the Company’s financial position, which may include an acceleration of the Company’s indebtedness under the Klein Note.

On April 25, 2023, the Klein Note Action was filed against the Company’s wholly owned subsidiary, Success TMS, in the Superior Court of New Jersey, Law Division (Bergen County), in regard to the claim of breach of contract of a promissory note in the principal amount of $2,090,263.58. On May 24, 2023, the Delaware Complaint concerning the Purchase Agreement Claims was filed against the Company and additional defendants in the Superior Court of the State of Delaware.

The Company believes there was no event of default under the Klein Note and so the demand for acceleration was defective. The Company also believes the New Jersey court lacks jurisdiction to hear the matter. Accordingly, the Company moved to dismiss the Klein Note Action, which motion is currently scheduled to be heard on August 18, 2023. With respect to the Purchase Agreement claims, on July 27, 2023, the Company and the other defendants moved to dismiss the Purchase Agreement Claims. The Seller Parties subsequently stated their intention to file and serve amended claims on or before August 31, 2023. We can provide no assurance that the court will agree with the Company’s positions regarding either of the Klein Matters.

If we are unable to resolve the Klein Matters favorably, it may have a material adverse effect on the Company, including the acceleration of the Klein Note, which could trigger multiple defaults across the Company’s various indebtedness, including the Madryn Credit Facility and the Neuronetics Note. Even if we are successful in resolving this litigation in the Company’s favor, this and any other potential litigation can require a substantial amount of resources as well as redirect management attention, as well as create a negative perception of the Company. Any decision resulting from any such litigation that is unfavorable to the Company, and any additional litigation brought by Ben Klein or anyone else, could have a material adverse effect on the Company’s financial position.

Risks Related to the Common Shares

Additional sales of Purchase Shares to Alumni under the Alumni Purchase Agreement may affect the price of the Common Shares and make it more difficult to raise additional equity capital.

On July 13, 2023, we entered into the Alumni Purchase Agreement with Alumni, pursuant to which Alumni has committed to purchase the Purchase Shares. In connection with the execution of the Alumni Purchase Agreement, we are issuing Alumni the Commitment Shares for no additional consideration as an initial fee for its commitment to purchase the Purchase Shares under the Alumni Purchase Agreement. The purchase price for the Purchase Shares that we may sell to Alumni under the Alumni Purchase Agreement will fluctuate based on the purchase price options described in the Alumni Purchase Agreement.

Sales of the Purchase Shares, if any, to Alumni will depend upon market conditions and other factors to be determined by us. In addition, the ability of the Company to sell additional Purchase Shares under the Alumni Purchase Agreement in the future is contingent on the Company’s continued eligibility to use the Shelf Registration Statement. Therefore, all, some or none of the Purchase Shares may be sold to Alumni pursuant to the Alumni Purchase Agreement and, after it has acquired the Purchase Shares, Alumni may sell all, some or none of those Purchase Shares or Commitment Shares. Sales of the Purchase Shares to Alumni by us could result in substantial dilution to the interests of other holders of the Common Shares. Additionally, the sale of a substantial number of Purchase Shares to Alumni, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales, which could have a materially adverse effect on the Company’s business and operations.

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We are currently in violation of multiple Nasdaq rules for continued listing on Nasdaq. Our ability to sell equity securities and the liquidity of the Common Shares publicly or privately will be adversely affected if we are delisted from Nasdaq or if we are unable to transfer the Company’s listing to another stock exchange.

We have received two separate Nasdaq deficiency notifications regarding the Company’s ongoing violations of Nasdaq listing rules. If the Company fails to remedy these deficiencies during the Compliance Period, Nasdaq may provide notice that the Common Shares are subject to delisting.

Any potential delisting of the Common Shares from Nasdaq would likely result in decreased liquidity and increased volatility for the Common Shares and would adversely affect the Company’s ability to raise additional capital or to enter into strategic transactions. Any potential delisting of the Common Shares from Nasdaq would also make it more difficult for the Company’s shareholders to sell the Common Shares in the public market. A delisting of our Common Shares from Nasdaq would also negatively affect our ability to raise equity financing as there would be no liquid trading market available for our Common Shares. Additionally, there can be no assurance that we will continue to maintain compliance with the other Nasdaq requirements for listing the Common Shares on Nasdaq.

Trading in the Company’s securities is highly speculative, and we may be required to file for bankruptcy protection in the future.

Trading in the Common Shares is highly speculative and poses substantial risks to investors. There is no guarantee that an investment in the Common Shares will earn any positive return in the short or long term, and we have encountered substantial cash shortages that have required restructuring of the Company’s outstanding balance pursuant to the Neuronetics Agreement, amendments and waivers under the Madryn Credit Facility, as well as the extension of additional loans from Madryn and additional financing from significant shareholders (including Greybrook Health) and management, and led to us adopting the Restructuring Plan. A purchase of Common Shares involves a high degree of risk and should be undertaken only by investors whose financial resources are sufficient to enable them to assume such risks, who have no need for immediate liquidity in their investment and who have the financial capacity to absorb a loss of some or all of their investment. Trading prices for the Common Shares may bear little or no relationship to the actual recovery, if any, by holders of the Company’s securities in any bankruptcy proceeding and the Company’s shareholders will likely not receive any recovery at all in a bankruptcy scenario. Our operations and ability to develop and execute the Company’s business plan, the Company’s financial condition, the Company’s liquidity and the Company’s continuation as a going concern, are subject to risks and uncertainties. These risks include, but are not limited to, the following:

·

the Company’s ability to achieve the anticipated cost-savings from the Restructuring Plan;

·

the Company’s ability to meet the Company’s cash requirements for ongoing operations and to satisfy the Company’s outstanding debt obligations (including under the Madryn Credit Facility, the Neuronetics Note, the Insider Notes, TMS Device loans and the Success TMS Notes);

·

the Company’s ability to achieve a favorable outcome in the Klein Matters;

·

the Company’s ability to maintain the Company’s current relationships with or attract new clinicians, patients, employees, and other third parties;

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·

the Company’s ability to maintain contracts that are critical to the Company’s operations, including the Neuronetics Agreement, and maintain the Company’s relationship with Neuronetics;

·

the Company’s ability to attract, motivate and retain key employees; and

·

the actions and decisions of the Company’s creditors (including Madryn, Neuronetics, and Benjamin Klein) and other third parties including, but not limited to, the Company’s landlords and vendors who have interests that may be inconsistent with the Company’s plans.

For additional risks, please see “Risk Factors” in the Company’s Annual Report. These risks and uncertainties could affect the Company’s business and operations in various ways. If some of these risks materialize, we may not be able to have sufficient resources to continue to operate the Company’s business and we may be required to file for bankruptcy protection. Our shareholders may not receive any recovery at all in a bankruptcy scenario.

There are unexercised options, warrants and conversion instruments outstanding and which may be issued from time to time. If these are exercised or converted, an investor’s interest in Common Shares will be diluted.

If all of the Company’s options that were issued and outstanding as of August 11, 2023, including options that are not yet exercisable, were to be exercised, the Company would be required to issue up to an additional 1,702,500 Common Shares, or approximately 3.9% of the issued and outstanding Common Shares on a non-diluted basis. In addition, there are also 437,177 warrants of the Company issued and outstanding that are exercisable into Common Shares on a one-for-one basis. If all of these warrants were to be exercised, the Company would be required to issue up to an additional 437,177 Common Shares, or approximately 1.0% of the issued and outstanding Common Shares on a non-diluted basis. In addition, the Company has outstanding Madryn Conversion Instruments that are convertible at Madryn’s option into up to 5,727,272 Common Shares at the Madryn Conversion Price, and the Greybrook Conversion Instrument that is convertible into $1.0 million of Common Shares at the Greybrook Conversion Price (up to 2,708,162 Common Shares). If the entirety of the Madryn Conversion Instruments were to be exercised, the Company would be required to issue an additional 5,727,272 Common Shares, or approximately 12.0% of the issued and outstanding Common Shares on a non-diluted basis. Finally, if the Company defaults in respect of its obligations under the Neuronetics Note, Greenbrook will be required to issue the Neuronetics Warrants in an amount equal to (i) 200% of the unpaid amount of any delinquent amount or payment due and payable under the Neuronetics Note, together with all outstanding and unpaid accrued interest, fees, charges, and costs, divided by (ii) the exercise price of the Neuronetics Warrants, which will represent a 20% discount to the 30-day volume-weighted average closing price of the Common Shares traded on Nasdaq prior to the date of issuance. Given that the number of Neuronetics Warrants that may become issuable will be based on the outstanding amount of the Company’s debt obligations owing to Neuronetics at the time of a default under the Neuronetics Note, and the Common Shares issuable under such Neuronetics Warrants will be at an exercise price equal to the Company’s 30-day volume-weighted average closing price at the time of issuance of such Neuronetics Warrants, if any, it is not currently possible to determine the precise number of Neuronetics Warrants or Common Shares that may become issuable thereunder upon full exercise of the Neuronetics Warrants, if any, at this time.

These issuances, to the extent they occur, would decrease the proportionate ownership and voting power of all shareholders. This dilution could cause the price of the Common Shares to decline. In addition, the Company’s shareholders could suffer dilution in the net book value per share.

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Future sales of the Company’s securities by existing shareholders or by us could cause the market price for the Common Shares to decline.

Sales of a substantial number of the Common Shares in the public market could occur at any time, including by any of the Company’s major shareholders, directors, officers or Alumni. These sales, or the market perception that the holders of a large number of Common Shares intend to sell their Common Shares, could significantly reduce the market price of the Common Shares. We cannot predict the effect, if any, that future public sales of Common Shares or the availability of these securities for sale under this prospectus supplement will have on the market price of the Common Shares. If the market price of the Common Shares was to drop as a result, this might impede the Company’s ability to raise additional capital and might cause remaining shareholders to lose all or part of their investment.

The Common Shares issuable upon the exercise of outstanding options, warrants and conversion instruments will, to the extent permitted by any applicable vesting requirements, lock-up restrictions, and restrictions under applicable securities laws, also become eligible for sale in the public market. Further, we have previously filed a resale prospectus for resales of up to 2,353,347 Common Shares that were issued to investors in a private placement in June 2021, and on July 13, 2023 we filed a prospectus supplement pursuant to the Alumni Purchase Agreement to provide for sales from time to time of up to $4,458,156 of Common Shares, of which we have sold an aggregate of $536,787 to date and have $3,921,369 of remaining capacity. We are also obligated to register the resale of (1) up to 11,634,660 Common Shares that were issued to the Success TMS sellers (including Mr. Klein) in July 2022, which includes 2,908,665 Common Shares that have been held back and deposited with an escrow agent, to be released to Mr. Klein or the Company, as applicable, upon satisfaction of customary working capital and certain other adjustments, including to satisfy any indemnity claims against the Success TMS sellers; (2) up to 5,727,272 Common Shares issuable upon conversion of the Madryn Conversion Instruments; and (3) up to 11,363,635 Common Shares that were issued in connection with the non-brokered private placement completed in March 2023, in each case, once the conditions for satisfying such registration rights are satisfied. We cannot predict the size of future sales of any such Common Shares or the effect, if any, that future sales of any such Common Shares will have on the market price of the Common Shares.

The forward-looking statements contained in this prospectus supplement may prove to be incorrect.

There can be no assurance that any estimates and assumptions contained in this prospectus supplement will prove to be correct (including, but not limited to, the Company’s expectations regarding the Restructuring Plan, the Company’s ability to retain the Company’s listing on Nasdaq, the Company’s expectations regarding the outcome of the Klein Matters and the Company’s ability to satisfy the Company’s future cash requirements, satisfy debt obligations and continue as a going concern). Our actual results in the future may vary significantly from the historical and estimated results and those variations may be material. There is no representation by us that the actual results achieved by the Company in the future will be the same, in whole or in part, as those included in this prospectus supplement.

Macroeconomic Risk

Macroeconomic conditions may adversely affect our business. Demand for our services may be impacted by weak economic conditions, inflation, stagflation, recession, equity market volatility or other negative economic factors in the United States. Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and shipping, as well as weakening exchange rates and other similar effects. Accordingly, inflation may have a negative impact on our future results of operations, which may be materially adverse. Further, as recessionary conditions develop, our suppliers and other third-party partners may suffer their own financial and economic challenges and as a result they may demand pricing accommodations, delay payment, or become insolvent, which could harm our ability to meet our patients’ demands or collect revenue or otherwise could harm our business. Similarly, disruptions in financial and/or credit markets may impact our ability to manage normal commercial relationships with our patients, suppliers and creditors and might cause us to not be able to continue to access preferred sources of liquidity when we would like, and our borrowing costs could increase. These adverse macroeconomic conditions may also negatively impact patient spending ability, which in turn may negatively impact our revenues. Thus, if general macroeconomic conditions deteriorate, our business and financial results could be materially and adversely affected.

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Credit Risk

Credit risk arises from the potential that a counterparty will fail to perform its obligations. We are exposed to credit risk from patients and third-party payors including federal and state agencies (under the Medicare programs), managed care health plans and commercial insurance companies. Our exposure to credit risk is mitigated in large part by the fact that the majority of our accounts receivable balances are receivable from large, creditworthy medical insurance companies and government-backed health plans.

Based on the Company’s industry, none of the accounts receivable is considered “past due”. Furthermore, the payors have the ability and intent to pay, but price lists for the Company’s services are subject to the discretion of payors. As such, the timing of collections is not linked to increased credit risk. The Company continues to collect on services rendered in excess of 24 months from the date such services were rendered.

Liquidity Risk

Liquidity risk is the risk that we may encounter difficulty in raising funds to meet our financial commitments or can only do so at an excessive cost. We aim to ensure there is sufficient liquidity to meet our short-term business requirements, taking into account our anticipated cash flows from operations, our holdings of cash and our ability to raise capital from existing or new investors and/or lenders. We have historically been able to obtain financing from supportive shareholders and other sources when required; however, we can provide no assurance that such shareholders will continue to provide similar financing in the future.

Currency Risk

Currency risk is the risk to our earnings that arises from fluctuations in foreign exchange rates and the degree of volatility of those rates. We have minimal exposure to currency risk as substantially all of our revenue, expenses, assets and liabilities are denominated in U.S. dollars. We pay certain vendors and payroll costs in Canadian dollars from time to time, but due to the limited size and nature of these payments they do not expose us to significant currency risk.

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to changes in interest rates on its cash and long-term debt. The Madryn Credit Facility bears interest at a rate equal to the 3-month Term Secured Overnight Financing Rate benchmark plus 9.1%. This same interest rate also applies to the Notes. In addition, all amounts borrowed under the Neuronetics Note will bear interest at a rate equal to the sum of (a) the floating interest rate of daily secured overnight financing rate as administered by the Federal Reserve Bank of New York on its website, plus (b) 7.65%.

For additional information, see Note 19 of our unaudited condensed interim consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 for a qualitative and quantitative discussion of our exposure to these market risks.

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DISCLOSURE CONTROLS & PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Disclosure Controls & Procedures

Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide reasonable assurance that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. Management is also responsible for the information relating to be disclosed by the Company is recorded, processed, summarized and reported to senior management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), on a timely basis so that appropriate decisions can be made regarding public disclosure.

Management, under the oversight of the CEO and CFO, has evaluated the design and effectiveness of the Company’s disclosure controls and procedures as of June 30, 2023. Based on this evaluation, the CEO and the CFO concluded that, as of June 30, 2023, the Company’s disclosure controls and procedures (as defined in National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings were ineffective as a result of a material weakness identified in the Company’s internal control over financial reporting, which is further described below.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the CEO and CFO do not expect that the disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

There has been no change in the Company’s disclosure controls and procedures that occurred during the three and six months ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s disclosure controls and procedures.

Internal Controls Over Financial Reporting

Management is also responsible for establishing and maintaining adequate internal controls over financial reporting (“ICFR”) which is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reports for external purposes in accordance with IFRS. In designing such controls, it should be recognized that, due to inherent limitations, any controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect misstatements. Additionally, management is required to use judgment in evaluating controls and procedures.

An evaluation of the design and effectiveness of the Company’s internal controls over financial reporting was carried out by management, under the supervision of the CEO and CFO. In making this evaluation, the CEO and CFO used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control – Integrated Framework (2013).

Based on this evaluation, the CEO and CFO has concluded that, as of June 30, 2023, the Company’s internal controls over financial reporting were ineffective as a result of an identified material weakness.

In connection with the audit of our annual consolidated financial statements for Fiscal 2022 that were prepared in accordance with IFRS, and audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), our management identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Due to the forecasting complexities that arose from an evolving operating environment including the announcement of the Restructuring Plan and significant financing transactions throughout the first quarter of Fiscal 2023 and into April 2023, our management identified a material weakness related to the Company not having effectively designed and maintained controls over the effective preparation, review and approval of its impairment analysis.

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This control deficiency, which was not pervasive in nature and was isolated in impact, resulted in a material misstatement to the Company’s financial statements identified through the audit, which was corrected by management. The identified error resulted in certain adjustments to the amounts or disclosures isolated to goodwill, intangible assets and impairment loss. This error was corrected prior to the release of the annual consolidated financial statements for the fiscal year ended December 31, 2022.

We have implemented a remediation plan that involves retaining an external valuation firm to assess and analyze impairment commencing in Fiscal 2023. We will take all measures necessary to address and cure the underlying causes of the material weakness. Once implemented, our remediation plan may not prove to be successful in remediating the material weakness and we do not guarantee that we will not suffer additional material weaknesses and/or significant deficiencies in the future. Management has and will continue to take actions to implement these remedial measures throughout Fiscal 2023. At this time, management estimates that it will have remediated the material weakness described above by the end of Fiscal 2023.

The CEO and CFO do not expect that internal controls over financial reporting will prevent all misstatements. The design of a system of internal controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that the design will succeed in achieving the stated goals under all potential future conditions. Nevertheless, management has designed and implemented controls to mitigate this risk to the extent practicable.

Notwithstanding the material weakness described above, management has concluded that the Company’s audited consolidated financial statements as at and for the year ended December 31, 2022 and the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2023 present fairly, in all material respects, the Company’s financial position, results of operations, changes in equity and cash flows in accordance with IFRS.

There has been no change in the Company’s ICFR that occurred during the three and six months ended June 30, 2023 that has materially affected, or is reasonable likely to materially affect, the Company’s ICFR.

Share Information

The Company is authorized to issue an unlimited number of Common Shares and an unlimited number of preferred shares, issuable in series. As of the date of this MD&A, there were 42,474,011 Common Shares (which includes 2,908,665 Common Shares held in escrow in connection with the Success TMS Acquisition) and nil preferred shares issued and outstanding. In addition, there were 1,702,500 stock options, 51,307 Oxford Warrants and 385,870 Greybrook Warrants, each representing a right to acquire one Common Share, issued and outstanding; the Madryn Conversion Instruments issued to Madryn and certain of its affiliates permit such holders to exchange such Madryn Conversion Instruments for up to an aggregate of 5,727,272 Common Shares; and the Greybrook Conversion Instrument issued to Greybrook Health which permits such holder to exchange such Greybrook Conversion Instrument for up to an aggregate of 2,708,162 Common Shares. As of the date hereof, assuming exercise and exchange of all outstanding options, Lender Warrants, Oxford Warrants and Madryn Conversion Instruments, there would be 53,049,122 Common Shares issued and outstanding, on a fully-diluted basis.

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In addition, the $1.0 million Greybrook Conversion Instrument may also be converted into Common Shares at the option of Greybrook Health (see “Indebtedness and Capital Raising – Additional Financing from Significant Shareholders and Management” for further details), and if the Neuronetics Note is in default, the Company will be required to issue the Neuronetics Warrants, which would, collectively, have the potential to result in substantial dilution.

Critical Accounting Estimates

There have been no changes to the Company’s critical accounting estimates and judgments since the fiscal year ended December 31, 2022.

Changes in Significant Accounting Policies

Other than as described herein, there are no recent accounting pronouncements that are applicable to the Company or that are expected to have a significant impact on the Company.

ADDITIONAL INFORMATION

Additional information relating to the Company, including the Annual Report, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. The Company’s Common Shares are listed for trading on Nasdaq under the symbol “GBNH”.

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Exhibit 99.4

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, William Leonard, President and Chief Executive Officer of Greenbrook TMS Inc., certify the following:

1.	*Review:* I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Greenbrook TMS Inc. (the “issuer”) for the interim period ended June 30, 2023.

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.	*Design:* Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings:

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the framework established in Internal Control – Integrated Framework (2013 COSO framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2	*ICFR – material weakness relating to design*: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period:

(a)

a description of the material weakness;

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3	*Limitation on scope of design:* N/A

6.	*Reporting changes in ICFR:* The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 14, 2023

(signed) “Bill Leonard”

William Leonard

President and Chief Executive Officer

Exhibit 99.5

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Erns Loubser, Chief Financial Officer of Greenbrook TMS Inc., certify the following:

1.	*Review:* I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Greenbrook TMS Inc. (the “issuer”) for the interim period ended June 30, 2023.

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.	*Design:* Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings:

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the framework established in Internal Control – Integrated Framework (2013 COSO framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2	*ICFR – material weakness relating to design*: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period:

(a)

a description of the material weakness;

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3	*Limitation on scope of design:* N/A

6.	*Reporting changes in ICFR:* The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 14, 2023

(signed) “Erns Loubser”

Erns Loubser

Chief Financial Officer

Greenbrook TMS (NASDAQ:GBNH)
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