10-Q 1 grst10q051515.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to____________

Commission File Number: 000-15078

GREENESTONE HEALTHCARE CORPORATION

(Exact name of registrant as specified in its charter)

Colorado	84-1227328
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5734 Yonge Street, Suite 300

North York, Ontario, Canada M2M 4E7

(Address of principal executive offices and zip code)

(416) 222-5501

(Registrant’s telephone number, including area code)

Prepared by:

Sunny J. Barkats, Esq.

18 East 41 ^st Street, 14^thFloor

New York, NY 10017

Tel (646) 502-7001

Fax (646) 607-5544

www.JSBarkats.com

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[ ]	Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of May 18, 2015, there were 47,741,878 shares outstanding of the registrant’s common stock.

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	PART I – FINANCIAL INFORMATION



Item 1.	Financial Statements.	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	31

Item 4.	Controls and Procedures.	31

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	32

Item 1A.	Risk Factors.	32

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds.	32

Item 3	Defaults Upon Senior Securities.	32

Item 4.	Mine Safety Disclosures.	32

Item 5.	Other Information.	32

Item 6.	Exhibits.	33

Signatures		34

PART I – FINANCIAL INFORMATION

Explanatory Note

Overview of Restatement

In this Quarterly Report on Form 10-Q, GreeneStone Healthcare Corporation (together with its subsidiaries, the “Company” or “Greenestone”):

(a) restates its unaudited Consolidated Statement of Operations and Consolidated Statements of Cash Flows for the three months ended March 31, 2014

(b) amends its Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) as it relates to the three months ended March 31, 2014;

Background on the Restatement

As previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on March 27, 2015 the board of directors of the Company, in performance of its function as the audit committee, and in consultation with management, concluded that, because of errors identified in the Company’s previously issued financial statements for the three months ended March 31, 2014, the Company would restate its previously issued financial statements.

These errors were discovered by management during the Company’s normal closing process, in the course of the Company’s regularly scheduled audit by its newly appointed Independent Public Accountants, and during the course of an internal investigation initiated by the board of directors of the Company (in performance of its function as the audit committee). The Company’s board of directors has completed its investigation. The restatements reflect adjustments to correct errors in the Company’s accounting for certain convertible debt and options and shares issued for services. The effect of the restatements on the Company’s Balance Sheets is not material and the restatements have no effect on reported cash flow from operations.

In addition, the Company has restated its consolidated financial statements, to retroactively reflect the Company’s Board of Directors decision to dispose of its Endoscopy Division, as of and for the three months ended March 31, 2014. The restated financial statements correct the following errors:

Beneficial Conversion Feature

During the fourth quarter of fiscal 2014, the Company identified an error as a result of not recognizing the beneficial conversion feature inherent in seventy five (75) mandatorily convertible notes issued between 2010 and 2012 to accredited investors; the beneficial conversion feature inherent in two (2) convertible notes issued to Asher Enterprises, Inc. during the second and third quarter of 2013; and the beneficial conversion feature inherent in five (5) convertible notes issued to JMJ Financial Group during the five quarters beginning with the period ended June 30, 2013 and ending in the period ended September 30, 2014.

Employee Option Incentive Grants

During the fourth quarter of fiscal 2014, the Company identified an error as a result of not recognizing the costs of employee option incentive granted during the second quarter of 2012 and which terminated during the second quarter of 2014. The cumulative effect of the errors over the restated periods resulted in an increase to pre-tax and after tax expense of approximately $2,810,683 of which none was attributable to discontinued operations.

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The adjustments made as a result of the restatement are more fully discussed in Note 1, Restatement of Previously Issued Financial Statements, of the Notes to Consolidated Financial Statements included in this Annual Report. To further review the effects of the accounting errors identified and the restatement adjustments, see Part II—Item 7— Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report. For a description of the control deficiencies identified by management as a result of the investigation and our internal reviews, and management’s plan to remediate those deficiencies, see Part II—Item 9A— Controls and Procedures.

Previously filed Annual Reports on Form 10-K and quarterly reports on Form 10-Q for the periods affected by the restatement have not been amended. Accordingly, investors should no longer rely upon the Company’s previously released financial statements for these periods and any earnings releases or other communications relating to these periods. Quarterly reports for fiscal 2015 will include restated results for the corresponding interim periods of fiscal 2014. All amounts in this Quarterly Report on Form10-Q affected by the restatement adjustments reflect such amounts as restated.

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Item 1. Financial Statements.

GREENESTONE HEALTHCARE CORPORATION

FOR THE THREE MONTHS ENDED MARCH 31, 2015

(Stated in U.S. $ unless stated otherwise)

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		Page

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014		4
Unaudited Consolidated Statement of Operations for the three months ended March 31, 2015 and 2014 (restated)		5
Unaudited Consolidated Statement of Changes in Stockholders’ Deficit from January 1, 2014 (as restated) to March 31, 2015		6
Unaudited Consolidated Statement of Cash Flows for the three months ended March 31, 2015 and 2014 (restated)		7
Notes to the Unaudited Consolidated Interim Financial Statements		24

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GREENESTONE HEALTHCARE CORPORATION
Consolidated Balance Sheets

ASSETS	March 31, 2015 (unaudited)			December 31, 2014

Current assets
Cash	$	5,513		$	88,152
Accounts receivable, net		185,478			164,832
Prepaid expenses		31,634			46,267
Due from sale of Subsidiary		488,683			493,806
Total current assets		711,308			793,057
Cash - Restricted		78,850			86,200
Fixed assets, net		235,776			256,543

Total assets	$	1,025,934		$	1,135,800

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank overdraft	$	9,758		$	—
Accounts payable and accrued liabilities		699,454			808,971
Taxes payable		2,733,612			2,806,297
Deferred revenue		178,035			143,839
Convertible notes payable		—			—
Current portion of loan payable		7,054			7,625
Short Term convertible loan		12,565			29,758
Related party payables		76,734			51,336
Total current liabilities		3,717,211			3,847,826
Loan payable		15,093			18,460
Total liabilities		3,732,304			3,866,286
Stockholders' deficit
Preferred Stock - Series B; $0.01 par value, 10,000,000 shares authorized; 106,000 and nil outstanding at March 31 2015 and December 31, 2014 respectively		1,060			—
Common stock; $0.01 par value, 500,000,000 shares authorized; 46,678,855 and 46,131,764 shares issued and outstanding at March 31, 2015 and December 31, 2014 respectively		466,789			461,318
Additional paid-in capital		16,187,074			16,129,038
Accumulated other comprehensive loss		560,365			245,187
Accumulated deficit		(19,921,658	)		(19,566,029	)
Total stockholders' deficit		(2,706,370	)		(2,730,486	)

Total liabilities and stockholders' deficit	$	1,025,934		$	1,135,800
The accompanying notes are an integral part of the unaudited consolidated financial statements

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GREENESTONE HEALTHCARE CORPORATION
Consolidated Interim Statements of Operations
(Unaudited)
	For the three months period ended
	March 31,
	2015			2014
				(As Restated)
Revenues	$	680,712		$	612,018
Operating expenses
Depreciation		20,994			21,308
General and administrative		298,201			263,482
Management fees		48,368			45,320
Professional fees		84,011			60,101
Rent		88,755			177,381
Salaries and wages		444,471			903,943
Total operating expenses		984,800			1,471,535

Operating loss		(304,088	)		(859,517	)

Other expense
Interest expense		(51,541	)		(63,935	)
Net loss from continuing operations		(355,629	)		(923,452	)
Loss from discontinued operations, net of tax		—			(45,347	)
Net loss applicable to common shareholders		(355,629	)		(968,799	)
Accumulated other comprehensive loss
Foreign currency translation adjustment		315,178			194,174

Total comprehensive loss	$	(40,450	)	$	(774,625	)

Basic and diluted loss per common share- continuing operations	$	(0.01	)	$	(0.02	)

Basic and diluted loss per common share- discontinued operations		—		$	(0.00	)

Basic and diluted loss per common share	$	(0.01	)	$	(0.02	)

Weighted average outstanding		46,388,120			45,939,346

The accompanying notes are an integral part of the unaudited consolidated financial statements

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GREENESTONE HEALTHCARE CORPORATION Consolidated Statement of Changes in Stockholders' Deficit

	Preferred Series "B"				Common						Additional Paid			Comprehensive (Loss)			Accumulated
	Shares		Amount		Shares			Amount			in Capital			Income			Deficit			Total
Balance, December 31, 2013		—		—		41,065,582			410,656			13,920,629			264,135			(17,665,756	)		(3,070,336	)

Surrender of shares as part of sale of subsidiary		—		—		(2,408,268	)		(24,083	)		(253,417	)		—			—			(277,500	)
Disposition of subsidiary		—		—		—			—			1,104,407			(90,304	)		—			1,014,103
Common stock issued for convertible notes		—		—		728,459			7,285			190,445			—			—			197,730
Common stock issued for short term note		—		—		2,245,991			22,460			104,616			—			—			127,076
Shares issued for cash		—		—		4,500,000			45,000			337,500			—			—			382,500
Stock option compensation		—		—		—			—			679,858			—			—			679,858
Beneficial conversion feature of debt issuances		—		—		—			—			45,000			—			—			45,000
Foreign currency translation		—		—		—			—			—			71,356			—			71,356
Net loss, year ended December 31, 2014		—		—		—			—			—			—			(1,900,273	)		(1,900,273	)
Balance, December 31, 2014		—		—		46,131,764			461,318			16,129,038			245,187			(19,566,029	)		(2,730,486	)

Shares issued for debt conversion		—				300,000			3,000			5,117			—			—			8,117
Shares issued for services		106,000		1,060		250,000			2,500			53,346			—			—			56,906
Adjustments to previously issued shares for debt conversion, due to exchange adjustments		—		—		(2,909	)		(29	)		(427	)		—			—			(456	)
Foreign currency translation		—		—		—			—			—			315,178			—			315,178
Net loss, period ended March 31, 2015		—		—		—			—			—			—			(355,629	)		(355,629	)
Balance, March 31, 2015		106,000		1,060		46,678,855			466,789			16,187,074			560,365			(19,921,658	)		(2,706,370	)

The accompanying notes are an integral part of the unaudited consolidated financial statements

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GREENESTONE HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	March 31, 2015			March 31, 2014
Cash flows from operating activities:					(Restated)
Net loss	$	(355,629	)	$	(923,452	)
Net loss from discontinued operations, net of tax		—			(45,347	)
Net loss from continuing operations		(355,629	)		(968,799	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		20,994			35,446
Provision for bad debts		10,442			—
Stock compensation		—			312,298
Stock issued for services		56,906			—
Amortization of beneficial conversion feature		9,609			32,550
Changes in operating assets and liabilities
Accounts receivable		(31,088	)		130,567
Prepaid expenses		14,633			(35,132	)
Inventory		—			611
Accounts payable and accrued liabilities		(109,310	)		(52,905	)
Taxes payable		(72,685	)		103,923
Deferred revenue		34,196			(52,445	)
Net cash used in operating activities- continuing operations		(422,139	)		(493,886	)
Net cash provided by operating activities- discontinued operations		—			63,119
Net cash provided used in operating activities		(422,139	)		(430,767	)

Cash flows from investing activities:
Cash paid for purchase of fixed assets		(9,613	)		(53,233	)
Net cash used in investing activities- discontinued operations		—			3,161
Net cash used by investing activities		(9,613	)		(50,072	)

Cash flows from financing activities:
Repayment of auto loan payable		(3,938	)		(3,643	)
Changes in restricted cash		7,350			3,550
Proceeds from bank overdraft		9,758			(80,048	)
Proceeds from issuance of short term notes, net		—			(11,000	)
Repayment of short term notes		(18,685)			(148,281	)
Proceeds from issuance of related party notes		25,398			(192,103	)
Repayment of related party notes		—			103,817
Proceeds from issuance of common stock		—			440,548
Net cash provided by financing activities- continuing operations		19,883			112,840
Net cash provided by financing activities- discontinued operations		—			173,825
Net cash provided by financing activities		19,883			286,665
Effect of exchange rate on cash		329,230			194,174

Net decrease in cash		(82,639	)		—
Cash, beginning of period		88,152			—
Cash, end of period	$	5,513		$	—

Supplemental cash flow information:
Cash paid for interest	$	38,190		$	145,523

Cash paid for income taxes	$	—		$	—
Noncash Transaction:
Common stock issued as a result of conversion of convertible notes payable	$	8,117		$	397,298

The accompanying notes are an integral part of the unaudited consolidated financial statements

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GREENESTONE HEALTHCARE CORPORATION

Notes to Consolidated Interim Financial Statements

1. Restatement of Previously Issued Financial Statements

The Company has restated its consolidated financial statements as of and for the three months ended March 31, 2014

The restatements reflect adjustments to correct errors identified by management during the Company’s normal closing process, in the course of the Company’s regularly scheduled audit by its newly appointed Independent Accounting Firm, and during the course of an internal investigation initiated by the board of directors of the Company (in performance of its function as the audit committee). The Company’s board of directors has completed its investigation. The effect of the restatements on the Company’s Balance Sheets is not material and the restatements have no effect on reported cash flow from operations.

Beneficial Conversion Feature

Employee Option Incentive Grants

The restated unaudited Consolidated Balance Sheet as of March 31, 2014 and the restated unaudited Consolidated Statements of Operations and Cash Flows for the three months ended March 31, 2014 are presented below:

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GREENESTONE HEALTHCARE CORP

Consolidated Balance Sheet

March 31, 2014

(Unaudited)

	As Previously Reported on Form 10-Q		Opening Deficit			BCF		Compensation		As Restated		Reclassify Discontinued Operations			As Restated and Reclassified
ASSETS
CURRENT ASSETS
Cash	$	—		—			—		—	$	—	$	—		$	—
Accounts receivable		279,711		—			—		—		279,711		(210,635	)		69,076
Prepaid expenses		97,352		—			—		—		97,352		(17,812	)		79,540
Inventory		34,920		—			—		—		34,920		(34,920	)		—
Current assets - held for sale		—		—			—		—		—		263,367			263,367
Total current assets		411,983		—			—		—		411,983		—			411,983

NON CURRENT ASSETS:
Fixed assets		551,637		—			—		—		551,637		(238,801	)		312,836
Cash - Restricted		90,470		—			—		—		90,470		—			90,470
Long term assets - held for resale				—			—		—				238,801			238,801
Total assets	$	1,054,090	$	—		$	—	$	—	$	1,054,090	$	—		$	1,054,090

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank overdraft	$	46,025		—			—		—	$	46,025	$	—		$	46,025
Accounts payable and accrued liabilities		657,262		—			—		—		657,262		(190,124	)		467,138
Harmonized sales tax payable		608,497		—			—		—		608,497					608,497
Withholding taxes payable		1,887,780		—			—		—		1,887,780		(19,013	)		1,868,767
Deferred revenue		55,032		—			—		—		55,032					55,032
Convertible notes payable		139,000		(34,357	)		11,121		—		115,764		(2,210	)		113,554
Short term loan		53,541		—			—		—		53,541		—			53,541
Current portion of loan payable		7,652		—			—		—		7,652		—			7,652
Related party notes		559,614		—			—		—		559,614		(262,177	)		297,437
Current liabilities - held for resale		—		—			—		—		—		473,524			473,524
Total current liabilities		4,014,403		(34,357	)		11,121		—		3,991,167		—			3,991,167

NON CURRENT LIABILITIES:
Loan payable (note 9)		25,110		—			—		—		25,110		—			25,110
Total Liabilities		4,039,513		(34,357	)		11,121		—		4,016,277		—			4,016,277

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	As Previously Reported on Form 10-Q			Opening Deficit			BCF			Compensation			As Restated			Reclassify Discontinued Operations		As Restated and Reclassified

STOCKHOLDERS' DEFICIT
Preferred Stock - Series A; $0.01 par value, 3,000,000 shares authorized; -0- issued and outstanding		—			—			—			—			—			—		—
Preferred Stock - Series B; $0.01 par value, 10,000,000 shares authorized; -0- issued and outstanding		—			—			—			—			—			—		—
Common stock; $0.01 par value, 500,000,000 shares authorized; 47,088,864 shares issued and- outstanding		470,889			—			—			—			470,889			—		470,889
Additional paid-in capital		8,643,401			4,150,113			333,727			312,298			13,439,539			—		13,439,539
Accumulated other comprehensive loss		458,309												458,309			—		458,309
Accumulated deficit		(12,558,022	)		(4,115,756	)		(344,848	)		(312,298	)		(17,330,924	)		—		(17,330,924	)
Total Stockholders' Deficit		(2,985,423	)		34,357			(11,121	)		—			(2,962,187	)		—		(2,962,187	)
Total Liabilities and Stockholders' Deficit	$	1,054,090		$	—		$	—		$	—		$	1,054,090		$	—	$	1,054,090

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GREENESTONE HEALTHCARE CORP
INCOME STATEMENT
For the Three months Ended March 31, 2014
(Unaudited)

	As Previously Reported on Form 10-Q			BCF			Compensation			As Restated			Reclassify Discontinued Operations			As Restated and Reclassified
Revenues	$	1,139,787		$	—		$	—		$	1,139,787		$	(527,769	)	$	612,018
Cost of services provided		288,573			—			—			288,573			(288,573	)		—
Gross margin		851,214			—			—			851,214			(239,196	)		612,018
Operating expenses
Depreciation		35,449			—			—			35,449			(14,141	)		21,308
General and administrative		242,713			—			—			242,713			(26,364	)		216,349
Management fees		54,367			—			—			54,367			(9,047	)		45,320
Meals and entertainment		36			—			—			36			(36	)		0
Professional fees		62,363			—			—			62,363			(2,262	)		60,101
Rent		258,971			—			—			258,971			(81,590	)		177,381
Salaries and wages		708,235			—			312,298			1,020,533			(116,590	)		903,943
Supplies		77,269			—			—			77,269			(34,513	)		42,756
Travel		4,377			—			—			4,377			—			4,377
Total operating expenses		1,443,780			—			312,298			1,756,078			(284,543	)		1,471,535
Operating loss	$	(592,566	)	$	—		$	(312,298	)	$	(904,864	)	$	45,347		$	(859,517	)
Other income (loss)					—			—			—			—			—
Interest expense		(31,385	)		(32,550	)					(63,935	)					(63,935	)
Net loss from continuing operations	$	(623,951	)	$	(32,550	)	$	(312,298	)	$	(968,799	)	$	45,347		$	(923,452	)
Profit (Loss) from discontinued operations, net of tax		—			—			—			—			(45,347	)		(45,347	)
Net loss applicable to common shareholders	$	(623,951	)	$	(32,550	)	$	(312,298	)	$	(968,799	)	$	—		$	(968,799	)
Accumulated other comprehensive loss		—			—			—			—			—			—
Foreign currency translation adjustment		194,174									194,174						194,174
Total comprehensive loss	$	(429,777	)	$	(32,550	)	$	(312,298	)	$	(774,625	)	$	—		$	(774,625	)

Basic and diluted income (loss) per common share- continuing operations	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.02	)	$	0.00		$	(0.02	)

Basic and diluted loss per common share- discontinued operations		$ ( -)			$ ( -)			$ ( -)			$ ( -)		$	(0.00	)	$	(0.00	)

Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.02	)		$ ( -)		$	(0.02	)
Weighted average outstanding		45,938,346			45,938,346			45,938,346			45,938,346			45,938,346			45,938,346

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GREENESTONE HEALTHCARE CORP

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period Ended March 31, 2014

(Unaudited)

	As Previously Reported on Form 10-Q			BCF			Compensation			As Restated			Reclassify Discontinued Operations			Conform to 2015 Presentation			As Restated and Reclassified
Cash flows from operating activities:
Net loss	$	(623,064	)	$	(32,550	)	$	(312,298	)	$	(967,912	)		$ 45,347			(887	)	$	(923,452	)
Net loss from discontinued operations, net of tax		—			—			—			—			(45,347	)		—			(45,347	)
Net loss from continuing operations		(623,064	)		(32,550	)		(312,298	)		(967,912	)		—			—			(968,799	)
Adjustments to reconcile net loss to net cash provided by operating activities:		—			—			—			—			—			—			—
Depreciation		34,559						—			34,559			—			887			35,446
Provision for bad debts		—			—			—			—			—			—			—
Stock compensation		—			—			312,298			312,298			—			—			312,298
Stock issued for services		—			—			—			—			—			—			—
Amortization of beneficial conversion feature		—			32,550			—			32,550			—			—			32,550
Changes in operating assets and liabilities
Inc/dec in accounts receivable		161,207			—			—			161,207			(30,640	)		—			130,567
Inc/dec in inventory		(22,372	)		—			—			(22,372	)		22,983			—			611
Inc/dec in prepaids		12,502			—			—			12,502			(47,634	)		—			(35,132	)
Inc/dec in due to related parties		—			—			—			—			—			—			—
Inc/dec in accounts payable and accrued liabilities		(46,656	)		—			—			(46,656	)		(6,249	)		—			(52,905	)
Inc/dec in taxes payable		105,502			—			—			105,502			(1,579	)		—			103,923
Inc/dec in deferred revenue		(52,445	)		—			—			(52,445	)		—			—			(52,445	)
Net cash provided by (used in) operating activities- continuing operations		(430,767	)		—			—			(430,767	)		(63,119	)		—			(493,886	)
Net cash provided by (used in) operating activities- discontinued operations		—			—			—			63,119			—			63,119			—
Net cash provided (used in) operating activities		(430,767	)		—			—			(430,767	)		—			—			(430,767	)

Cash flows from investing activities:		—			—			—			—			—			—			—
Cash paid for purchase of fixed assets		(50,072	)		—			—			(50,072	)		(3,161	)		—			(53,233	)
Net cash provided by (used in) investing activities- discontinued operations		—			—			—			—			3,161			—			3,161
Net cash used by investing activities		(50,072	)		—			—			(50,072	)		—			—			(50,072	)

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GREENESTONE HEALTHCARE CORP
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period Ended March 31, 2014
(Uaudited)

	As Previously Reported on Form 10-Q			BCF		Compensation		As Restated			Reclassify Discontinued Operations			Conform to 2015 Presentation		As Restated and Reclassified

Cash flows from financing activities:		—			—		—		—			—			—		—
Repayment of notes payable		(3,643	)		—		—		(3,643	)		—			—		(3,643	)
Changes in restricted cash		3,550			—		—		3,550			—			—		3,550
Proceeds from issuance of short term notes		—			—		—		—			(148,281	)		—		(148,281	)
Proceeds from bank indebtedness		(80,048	)		—		—		(80,048	)		—			—		(80,048	)
Repayment of short term notes		(11,000	)		—		—		(11,000	)		—			—		(11,000	)
Proceeds from issuance of- related party notes		103,817			—		—		103,817			—			—		103,817
Repayment of related party notes		(166,559	)		—		—		(166,559	)		(25,544	)		—		(192,103	)
Net proceeds from additional paid in capital		385,548			—		—		385,548			—					(385,548	)
Proceeds from issuance of common stock		55,000			—		—		55,000			—			385,548		440,548
Net cash provided by (Used in) financing activities- continuing operations		286,665			—		—		286,665			(173,825	)		—		112,840
Net cash provided by (Used in) financing activities- discontinued operations		—			—		—		—			173,825			—		173,825
Net cash provided by financing activities		286,665			—		—		286,665			—			—		286,665
Effect of exchange rate on cash		194,174			—		—		194,174			—			—		194,174

Net increase in cash	$	—		$	—	$	—	$	—		$	—		$	—	$	—

Supplemental cash flow information
Cash paid for interest	$	145,523			—		—		—			—			—	$	154,523
Cash paid for income taxes		—			—		—		—			—			—		—

Supplemental schedules of noncash investing and financing activities
Common stock issued as a result of conversion of convertible notes payable	$	397,298			—		—		—			—			—	$	397,298
Common stock issued as a result of conversion of short term notes payable		—			—		—		—			—			—		—

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2. Nature of business

GreeneStone Healthcare Corporation (the “Company”) was incorporated under the laws of the state of Colorado, USA, on April 1, 1993. Effective May 2012, the Company changed its corporate name to GreeneStone Healthcare Corporation from Nova Natural Resources Corporation. As at March 31, 2015, the Company owns 100% of the outstanding shares of Greenestone Clinic Muskoka Inc., which was incorporated in 2010 under the laws of the Province of Ontario, Canada. Greenestone Clinic Muskoka Inc. provide medical services to various patients in clinics located in t the regional municipality of Muskoka, Ontario, Canada.

The accompanying unaudited Consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim consolidated financial information and Rule 8-03 of Regulation S-X. Accordingly, these consolidated interim financial statements do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.

All adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included in these unaudited consolidated interim financial statements. Operating results for the three month period presented are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2014 has been derived from audited financial statements. The unaudited consolidated interim financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto for the year ended December 31, 2014.

3. Going concern

The Company’s consolidated interim financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the normal course of business. As at March 31, 2015 the Company has a working capital deficiency of $3,005,903 and accumulated deficit of $19,921,658. Management believes that current available resources will not be sufficient to fund the Company’s planned expenditures, including past due payroll and sales tax payments, as well as estimated penalties and interest, over the next 12 months. Accordingly, the Company will be dependent upon the raising of additional capital through placement of common shares, and, or debt financing in order to implement its business plan. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain geographical areas or techniques that it might otherwise seek to retain. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These consolidated interim financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

4. Significant accounting policies

The accounting policies of the Company are in accordance with US GAAP applied on a basis consistent with that of the preceding year. Outlined below are those policies considered particularly significant.

a) Principals of consolidation and foreign currency translation

The accompanying consolidated interim financial statements include the accounts of the Company, its two subsidiaries, as noted in note 1. All inter-company transactions and balances have been eliminated on consolidation.

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The Company’s subsidiaries functional currency is the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, "Foreign Currency Translation" as follows:

Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date.

ii)

Equity at historical rates.

iii)

Revenue and expense items at the average rate of exchange prevailing during the period.

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ deficit as a component of accumulated other comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss).

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.

The relevant translation rates are as follows: For the three month period ended March 31, 2015 closing rate at 0.7885 $US:$CAN, average rate at 0.8061 $US:$CAN and for the three month period ended March 31, 2014 closing rate at 0.9047 $US:$CAN, average rate at 0.9047 $US:$CAN.

b) Revenue recognition

The Company recognizes revenue from the rendering of services when they are earned; specifically when all of the following conditions are met:

•

the significant risks and rewards of ownership are transferred to customers and the Company retains neither continuing involvement nor effective control;

•

there is clear evidence that an arrangement exists;

•

the amount of revenue and related costs can be measured reliably; and

•

it is probable that the economic benefits associated with the transaction will flow to the Company.

In particular, the Company recognizes:

•

Fees for gastrointestinal clinical services, out-patient counseling, coaching, intervention, psychological assessments and other related services when patients receive the service; and

•

Fees for in-patient addiction treatments proportionately over the term of the patient’s treatment.

Deferred revenue represents monies deposited by the patients for future services to be provided by the Company. Such monies will be recognized into revenue as the patient progresses through their treatment term.

c) Use of estimates

The preparation of consolidated interim financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the recognition, measurement and disclosure of amounts reported in the consolidated interim financial statements and accompanying notes. The reported amounts, including depreciation, allowance for doubtful accounts, inventory, accounts payable and accrued liabilities and note disclosures are determined using management's best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results will differ from such estimates.

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d) Non-monetary transactions

The Company’s policy is to measure an asset exchanged or transferred in a non-monetary transaction at the more reliable measurement of the fair value of the asset given up and the fair value of the asset received, unless:

The transaction lacks commercial substance;

ii)

The transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange;

iii)

Neither the fair value of the asset received nor the fair value of the asset given up is reliably measurable; or

iv)

The transaction is a non-monetary, non-reciprocal transfer to owners that represents a spin-off or other form of restructuring or liquidation.

e) Cash

The Company's policy is to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to overdrawn and term deposits with a maturity period of three months or less from the date of acquisition.

The Company has $78,850 in restricted cash held by their bank to cover against the possibility of services not performed.

f) Accounts receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. At March 31, 2015 and December 31, 2014, the Company has $24,448 and $27,294 of allowance for doubtful accounts, respectively.

g) Financial instruments

The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm's length transactions. The Company subsequently measures all its financial assets and financial liabilities at amortized cost.

Financial assets measured at amortized cost include cash and accounts receivable.

Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, harmonized sales tax payable, withholding taxes payable, convertible notes payable, loan payable and related party notes.

Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income. The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1.		Observable inputs such as quoted prices in active markets;
Level 2.		Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3.		Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

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The Company does not have assets or liabilities measured at fair value on a recurring basis at March 31, 2015. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis during the three month period ended March 31, 2015.

h) Fixed assets

Fixed assets are recorded at cost. Depreciation is calculated on the declining balance method at the following annual rates:

Computer Equipment	30	%
Computer Software	100	%
Furniture and Equipment	30	%
Medical Equipment	25	%
Vehicles	30	%

Leasehold improvements are depreciated using the straight-line method over the term of the lease. Half rates are used for all fixed assets in the year of acquisition.

i) Leases

Leases are classified as either capital or operating leases. Leases that transfer substantially all of the benefits and inherent risks of ownership of property to the Company are accounted for as capital leases. At the time a capital lease is entered into, an asset is recorded together with its related long-term obligation to reflect the acquisition and financing. Equipment recorded under capital leases is amortized on the same basis as described above. Payments under operating leases are expensed as incurred.

j) Income taxes

The Company uses the future income tax method to account for income taxes. Under this method, future income tax assets and liabilities are determined based on the difference between the carrying value and the tax basis of the assets and liabilities. Any change in the net amount of future income tax assets and liabilities is included in income. Future income tax assets and liabilities are determined based on enacted or substantively enacted tax rates and laws, which are expected to apply to the Company's taxable income for the periods in which the assets and liabilities will be recovered. Future income tax assets are recognized when it is more likely than not that they will be realized.

k) Earnings per share information

FASB ASC 260-10, “Earnings Per Share” provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) applicable to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. The effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted loss per share is the same for the three months ended March 31, 2015.

Basic and diluted income per share was the same, at three months ended March 31, 2015, as there were no common share equivalents outstanding.

l) Share based expenses

ASC 718-10 "Compensation - Stock Compensation" codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments awarded to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights that may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.

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The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "Equity - Based Payments to Non-Employees" which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.

m) Prior Period Reclassifications

Reclassifications of prior period amounts related to discontinued operations as a result of the expected 1816191 Ontario Limited disposition.

4. Recently adopted accounting pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual and interim periods beginning on or after December 15, 2016, and early adoption is not permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. The Company is currently evaluating the impact of adopting this guidance.

In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2014 and the Company will continue to assess the impact on its consolidated financial statements.

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5. Financial instruments

The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company's risk exposure and concentrations at the balance sheet date, March 31, 2015.

(a)

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that subject the Company to credit risk consist primarily of accounts receivable.

Credit risk associated with accounts receivable of Greenestone Clinic Muskoka Inc. is mitigated due to balances from many customers, as well as through credit checks and frequent reviews of receivables to ensure timely collection. In addition, there is no concentration risk with the Greenestone Clinic Muskoka Inc. accounts receivable balance since balances are due from many customers.

In the opinion of management, credit risk with respect to accounts receivable is assessed as low, not material and remains unchanged from the prior year.

(b)

Liquidity risk

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. The Company is exposed to liquidity risk through its working capital deficiency of $2,991,903and accumulated deficit of $19,907,658. As disclosed in note 3, the Company will be dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition.

In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from the prior year. In the opinion of management, liquidity risk associated with bank overdraft of $9,758 (December 31, 2014: $Nil) is assessed as low. The Company ensures that financial liabilities are placed with a financial institution with a high credit rating in order to mitigate the risk. There is a concentration risk associated with the bank indebtedness since the Company uses one financial institution.

(c)

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risk: interest rate risk, currency risk, and other price risk. The Company is exposed to interest rate risk and currency risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has a low exposure to interest rate risk on its bank indebtedness as there is a balance of less than $10,000 at March 31, 2015. This liability is based on floating rates of interest that have been stable during the current reporting period. In the opinion of management, interest rate risk is assessed as low, not material and remains unchanged from the prior year.

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ii.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is subject to currency risk as its subsidiaries operate in Canada and are subject to fluctuations in the Canadian dollar. Most of the Company’s financial assets and liabilities are denominated in Canadian dollars. Based on the net exposures at March 31, 2015, a 5% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in an approximate $17,000 increase or decrease in the Company’s after-tax net loss from continuing operation. The Company has not entered into any hedging agreements to mediate this risk. In the opinion of management, currency risk is assessed as low, material and remains unchanged from the prior year.

iii.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. In the opinion of management, the Company is not exposed to this risk and remains unchanged from the prior year.

6. Accounts Receivable: and other receivable

The consolidated accounts receivable balance consists primarily of amounts due from the following parties:

	March 31, 2015			December 31, 2014

Treatment program	$	209,926			175,585
Outpatient Services		—			16,541
Allowance for doubtful accounts		(24,448	)		(27,294	)
	$	185,448			164,832

Due from the sale of Subsidiary:

On December 17, 2014, the Company completed the sale of all the outstanding shares of the Endoscopy clinic, for the sum of C$1,282,001.87, comprised of the agreed purchase price of C$1,250,000 and the acquisition of net assets at closing of C$32,001.87 The sale price of C$1,282,001.87 included the assumption by the buyer of debt in the same amount as the sale price, which debt is owed by the Endoscopy clinic to the Company in the amount of C$895,495.60 and to the buyer of C$386,542.27. At closing, the buyer offset the assumed debt to the registrants of C$895,495.60 by US $277,500.000 through the cancellation of 2408,268 shares of the Company’s common stock, for a net amount due to the Company of US$488,683 and $493,807 as of March 31, 2015 and December 31, 2014, respectively. The remainder of the assumed debt owed by the buyer to the Company is due June 30, 2015 and is the form of an interest bearing note. Management has evaluated this receivable and believes that this receivable is collectible and no reserve is deemed necessary.

7. Fixed assets

	Cost		Accumulated Amortization		March 31, 2015		December 31, 2014
Computer equipment	$	21,277	$	13,608	$	7,669	$	7,352
Computer software		8,706		1,228		7,478		—
Furniture and equipment		335,684		229,946		105,738		114,306
Medical equipment		4,490		3,189		1,302		1,391
Vehicles		64,175		37,186		26,989		40,023
Leasehold improvements		142,793		56,193		86,600		93,471
	$	577,126	$	341,350	$	235,776	$	256,543

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8. Auto Loan payable/ Short term convertible loan

Auto loan:

The Company has an automobile loan payable bearing interest at 4.49% with blended monthly payments of $Can835 that matures March 2018. The loan is secured by the vehicle with a net book value as at March 31, 2015 of $26,989.

Short term convertible loan:

In May 2013 the company entered into a promissory note of up to $500,000 where the maturity date is one year after the lender provides the borrower with funds. A one time interest rate of 12% is applied in case of non payment within the initial 90 days.

The note is convertible at the lessor of $0.30 or 70% of the lowest trading price in the 25 trading days prior to conversion. In 2014 the Company received $105,000 in proceeds and converted $127,076 into 2,245,991 shares of common stock. As of December 31, 2014 the net balance of this loan amounted to $29,758 comprised of a principal balance of $42,466 and a net debt discount of $12,208. During the three months ended March 31, 2015 the Company made cash payments amounting to $18,686 and converted $8,117 through the issuance of 1,488,781 shares of common stock. In addition the Company recorded amortization expense of $9,609 related to the debt discount recognized in previous years. As of March 31, 2015 the net balance of this loan amounted to $12,565 comprised of a principal balance of $15,665 and an net debt discount of $3,100.

Estimated principal re-payments are as follows:

2015	$	5,537
2016		7,382
2017		7,382
Thereafter		1,846
	$	22,146

9. Taxes payable

The Company has taxes, interest and penalties payable at March 31, 2015 and December 31, 2014 as follows:

	March 31, 2015		December 31, 2014
Harmonized sales tax	$	548,093	$	590,920
Payroll taxes		2,035,519		2,065,377
US tax penalties		150,000		150,000

	$	2,733,612	$	2,806,297

10. Related party transactions

A portion of related party notes at March 31, 2015 is due to Greenestone Clinic Inc. in the amount of $47,265 (December 31, 2014: $84,736). The Company is related to Greenestone Clinic Inc. as it is controlled by one of the Company’s directors. The balance owing is non-interest bearing, not secured and has no specified terms of repayment.

The Company had management fees totaling $48,368 during the three-month period ended March 31, 2015 (March 31, 2014: $45,320) to the director (Greenestone Clinic Inc.) for services, which are included in management fees.

In addition, the Company’s CEO has paid various reimbursable business expense on behalf of the Company. As of march 31, 2015 this amounts to approximately $80,000 and is recorded in accounts payable in the accompanying Balance Sheet.

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The Company entered into an agreement to lease premises from Cranberry Cove Holdings Ltd. at market terms. During the three month period ended March 31, 2015, the Company had rent expense of $88,755 (March 31, 2014: $177,381) to Cranberry Cove Holdings Ltd. Cranberry Cove Holdings Ltd. is related to the Company by virtue of its shareholder being a director of the Company.

All related party transactions occur in the normal course of operations and are measured at the exchange amount, as agreed upon by the related parties.

11. Stockholders’ deficit

Authorized common shares

On June 30, 2012, the Company filed a Certificate of Amendment with the Colorado Secretary of State to increase the aggregate number of shares, which the Company has authority to issue to one hundred million (100,000,000) common shares, issued at $0.01 par value per share from 50,000,000 common shares with par value at $0.01. The amendment was approved by the Colorado Secretary of State in May 2012.

On March 25, 2013 the Company filed a certificate of Amendment with the Colorado Secretary of State to increase the aggregate number of shares which the Company has the authority to issue to five hundred million (500,000,000) common shares, issued at $0.01 par value per share from 100,000,000 common shares with par value at $0.01, to authorize three million (3,000,000) series A convertible preferred shares, par value of $0.01 per share, and to the authorize ten million (10,000,000) series B convertible preferred shares, par value $0.01 per share. Each series B convertible preferred shares is convertible into 10 Common shares. The amendment was approved by the Colorado Secretary of State on March 26, 2013.

Issued common shares

The Company has a total of 46,678,855 issued and outstanding common shares as at March 31, 2015. At December 31, 2014 to the Company had 46,131,765 issued and outstanding common shares.

The Company issued 300,000 shares of its common stock to satisfy its obligations under an aggregate principal of $8,117 of convertible promissory notes for the three month period ended March 31, 2015.

The Company adjusted previously issued 2,909 common shares pursuant to convertible note conversions to reflect currency exchange differences.

The Company issued 250,000 shares of its common stock as compensation for $25,000 of services for the three-month period ended March 31, 2015.

Issued preferred series “B” shares

The Company has a total of 106,000 issued and outstanding series “B” preferred shares as at March 31, 2015. At December 31, 2014 to the Company had nil issued and outstanding series “B” preferred shares.

The Company issued 106,000 shares of its series “B” preferred shares as compensation for $31,906 of services for the three-month period ended March 31, 2015.

Options

On April 1, 2012, the Company granted 3,600,000 options to the Director of Aftercare at an exercise price of $0.20. The intrinsic value of these options was recorded as an expense, at the rate of $312,248 per quarter over the life of the options, as they vested. The 3,600,000 options were terminated on May 5, 2014 upon the sale of Aftercare.

On August 15, 2014, the Company granted 300,000 options to the President of its Investor Relations firm at an exercise price of $0.00333. The $34,418 intrinsic value of these options was recorded as an expense on that date.

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On November 1, 2014, the Company granted 480,000 options to its Chief Financial Officer. at an exercise price of $0.12. The $20,844 intrinsic value of these options was recorded as an expense on that date.

	Number of Options and Warrants			Weighted Average Exercise Price Per Share

Outstanding at December 31, 2013		5,100,000		$	0.185

Granted		5,280,000			0.139
Cancelled/forfeited		—			—
Expired		(3,600,000	)		(0.20	)
Exercised		—			—
Outstanding at December 31, 2014 and March 31, 2015		6,780,000		$	0.139

12. Income taxes

Current or future U.S. federal income tax provision or benefits have not been provided for any of the periods presented because the Company has experienced operating losses since inception. Under ASC 740 “Income Taxes,” when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. The Company has provided a full valuation allowance on the net future tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that they will not earn income sufficient to realize the future tax assets during the carry forward period.

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the three month period ended March 31, 2015, applicable under ASC 740. As a result of the adoption of ASC 740, the Company did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet.

The components of the Company’s future tax asset as at March 31, 2015 and December 31, 2015 are as follows:

	March 31, 2015			December 31, 2014

Net operating loss carry forward	$	12,259,149		$	11,934,958
Valuation allowance		(12,259,149	)		(11,934,958	)
Net future tax asset	$	—		$	—

A reconciliation of income taxes computed at the 35% statutory rate to the income tax recorded is as follows:

	March 31, 2015			December 31, 2014

Tax at statutory rate	$	113,467		$	570,870
Valuation allowance		(113,467	)		(570,870	)
Net future tax asset	$	—		$	—

The Company did not pay any income taxes during the three month period ended March 31, 2015 and the year ended December 31, 2014.

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The net federal operating loss carry forwards will expire in 2024 through 2034. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.

13. Subsequent events

On April 30, 2015 the holders of 106,000 series “B” preferred shares converted their shares into 1,060,000 common shares of the Company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This quarterly report on Form 10-Q and other reports filed by GreeneStone Healthcare Corp. (“we,” “us,” “our,” or the “Company”) from time to time with the SEC contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates. This discussion and analysis should be read in conjunction with the Company’s financial statements and accompanying notes to the financial statements for the quarter ended March 31, 2015.

Plan of Operation

During the next twelve months, the Company plans to continue its operations as a provider of addiction treatment services, and to expand by way of acquisition of new facilities.

The Company believes that it will need a minimum of $3,000,000 to cover its planned operations over the next 12 months. This estimate includes (i) $250,000 for marketing and (ii) 2,750,000 for tax obligations.

Results of Operations

For the Three Months Ended March 31, 2015, Compared to the Three Months Ended March 31, 2014

Revenue

During the three months ended March 31, 2015, revenues increased to $680,712, from $612,018 during the three months ended March 31, 2014, an increase of $68,694. This increase is mainly attributable to an increase in occupancy at the Company’s treatment facility. The Company believes that revenue will continue to grow steadily, especially in the mental health division, and the Company will become more profitable as most of its costs, such as rent and salaries and wages are relatively fixed, and therefore will reduce as a percentage as business volume grows.

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Operating Expenses

Operating expenses for the three months ended March 31, 2015, were $ 984,800, compared to $ 1,471,535 for the three months ended March 31, 2014, a decrease of $ 486,735. The 2014 expenses included $312,298 compensation expense for options issued to a former employee. There was no comparable expense during 2015. This decrease in expenses is also due to cost reductions at the Bala property. Operating expenses for the three months ended March 31, 2015, primarily consisted of salaries and wages to medical support staff of $ 444,471; rent payments of $ 88,755 and general and administrative expenses of $ 284,201.

Net Income from Continuing Operations

During the three months ended March 31, 2015, the net loss from continuing operations was $ 304,088, compared to a loss of $ 859,517 during the three months ended March 31, 2014, an decrease of $ 554,429. This decrease is attributable to the steady increase in revenues and business operations with a lower cost base.

Net Loss from Discontinued Operations

During the three months ended March 31, 2015, the net loss from discontinued operations was $ nil, compared to a loss of $ 45,347 during the three months ended March 31, 2014.

Liquidity and Capital Resources

The following table summarizes working capital at March 31, 2015

		March 31, 2015
Current assets	$	711,308
Current liabilities		3,717,211
Working capital deficit	$	(3,005,903	)

Over the next twelve months, we believe that our existing capital combined with our anticipated cash flow from operations will be sufficient to sustain our current operations. It is anticipated that we will need to sell additional equity and/or debt securities in the event we locate potential mergers and/or acquisitions and will be dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, the Company’s liquidity risk is assessed as high and remains unchanged from the prior year.

Critical Accounting Policies

The accounting policies of the Company are in accordance with U.S. GAAP applied on a basis consistent with that of the preceding year. Outlined below are those policies considered particularly significant.

Principals of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiary, as described in Note 2. All inter-company transactions and balances have been eliminated on consolidation.

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The Company’s subsidiaries functional currency is the Canadian dollar (CAD), while the Company’s reporting currency is the U.S. dollar (USD). All transactions initiated in Canadian dollars are translated into U.S. dollars in accordance with ASC 830, “Foreign Currency Translation” as follows:

(i)

Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;

(ii)

Equity at historical rates; and

(iii)

Revenue and expense items at the average rate of exchange prevailing during the period.

Revenue Recognition

The Company recognizes revenue for the rendering of services when they are earned; specifically when all the following conditions are met:

•

the significant risks and rewards of ownership are transferred to customers and the Company retains neither continuing involvement nor effective control;

•

there is clear evidence that an arrangement exists;

•

the amount of revenue and related costs can be measured reliably; and

•

it is probable that the economic benefits associated with the transaction will flow to the Company.

In particular, the Company recognizes:

Fees for gastrointestinal clinical services, out-patient counselling, coaching, intervention, psychological assessments and other related services when patients receive the service; and

•

Fees for in-patient addiction treatments proportionately over the term of the patient’s treatment.

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the recognition, measurement and disclosure of amounts reported in the financial statements and accompanying notes. The reported amounts, including depreciation, allowance for doubtful accounts, inventory, accounts payable and accrued liabilities, and note disclosures are determined using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results will differ from such estimates.

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Non-Monetary Transactions

(i)

The transaction lacks commercial substance;

(ii)

(iii)

Neither the fair value of the asset received nor the fair value of the asset given up is reliably measurable; or

(iv)

The transaction is a non-monetary non-reciprocal transfer to owners that represents a spin-off or other form of restructuring or liquidation.

Cash

The Company’s policy is to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to overdrawn and term deposits with a maturity period of three months or less from the date of acquisition.

The Company’s policy is to disclose restricted cash not available for current purposes.

Accounts Receivable

The Company’s policy is to disclose accounts receivable net of a reserve for doubtful accounts.

Financial Instruments

The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions. The Company subsequently measures all its financial assets and financial liabilities at amortized cost.

Financial assets measured at amortized cost include accounts receivable. Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, harmonized sales tax payable, withholding taxes payable, convertible notes payable, loan payable and due to related party.

Level 1		Observable inputs such as quoted prices in active markets;
Level 2		Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3		Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

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The Company does not have assets or liabilities measured at fair value on a recurring basis at March 31, 2015, and March 31, 2014, respectively. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis during the three months period ended March 31, 2015 and March 31, 2014, respectively.

Fixed Assets

Fixed assets are recorded at cost. Depreciation is calculated on the declining balance method at the following annual rates:

Computer equipment	30	%
Computer software	100	%
Furniture and equipment	30	%
Medical equipment	25	%
Vehicles	30	%

Leasehold improvements are depreciated using the straight-line method over the term of the lease. Half rates are used for all fixed assets in the year of acquisition.

Leases

Income Taxes

The Company uses the future income tax method to account for income taxes. Under this method, future income tax assets and liabilities are determined based on the difference between the carrying value and the tax basis of the assets and liabilities. Any change in the net amount of future income tax assets and liabilities is included in income. Future income tax assets and liabilities are determined based on enacted or substantively enacted tax rates and laws which are expected to apply to the Company’s taxable income for the periods in which the assets and liabilities will be recovered. Future income tax assets are recognized when it is more likely than not that they will be realized.

Earnings per Share Information

FASB ASC 260, “Earnings Per Share” provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) applicable to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted loss per share was the same, at the reporting dates, as there were no common share equivalents outstanding.

Share Based Expenses

ASC 718 “Compensation - Stock Compensation” codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments awarded to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights that may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.

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The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 “Equity - Based Payments to Non-Employees” which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 (“EITF 96-18”), “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services”. Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not hold any derivative instruments and do not engage in any hedging activities.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management designed the disclosure controls and procedures to provide reasonable assurance of achieving the desired control objectives.

We carried out an evaluation, under the supervision and with the participation of our management, including our PEO and PFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based upon that evaluation, the PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

Not applicable to a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 31, 2015, we issued an aggregate of 7,850 shares of our common stock to four (4) holders of convertible notes as an adjustment to the number of shares those holders received for a prior conversion of their notes. The number of shares that were issued to the holders was based on a conversion price that was in U.S. dollars and the principal amount of the note being converted was in Canadian Dollars. The adjustment accounted for increase in the principal amount when it was changed into U.S. dollars.

On March 31, 2015, the Company issued 250,000 shares of its common stock to consultant under a consulting agreement. The services were valued at $25,000.

On March 5, 2015, the Company issued an aggregate of 106,000 shares of its Series B Convertible Preferred Stock (“Series B Preferred”) to two principals of its outside legal counsel. The shares of the Series B Preferred are convertible into 1,060,000 shares of Common Stock. The issuance of the Series B Preferred was issued for professional services valued at $31,800.

On January 14, 2015, the Company issued 300,000 shares of its common stock to JMJ Financial for the conversion of $8,117 of principal amount of a convertible note held by JMJ.

The shares of the Company’s common stock issued during the three month period ended March 31, 2015 as described above qualified for an exemption under Section 4(a)(2) of the Securities Act of 1933, because the issuance of shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(a)(2) due to the insubstantial number of persons involved in each of the issuances, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, the Company has met the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act for the above securities transaction.

Item 3. Defaults Upon Senior Securities.

There were no defaults upon senior securities during the three months ended March 31, 2015.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

There is no other information required to be disclosed under this item which was not previously disclosed.

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Item 6. Exhibits.

Exhibit No.		Description

31.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002 *

31.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002 *

32.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

32.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

101.INS		XBRL Instance *

101.SCH		XBRL Taxonomy Extension Schema *

101.CAL		XBRL Taxonomy Extension Calculation *

101.DEF		Taxonomy Extension Definition *

101.LAB		Taxonomy Extension Labels *

101.PRE		Taxonomy Extension Presentation *

* filed herewith

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		GREENESTONE HEALTHCARE CORP.

Date:	May 20, 2015	By:	/s/ Shawn E. Leon
			Name:	Shawn E. Leon
			Title:	Chief Executive Officer
				(Principal Executive Officer)

Date:	May 20, 2015	By:	/s/ William L. Sklar
			Name:	William L. Sklar
			Title:	Chief Financial Officer
				(Principal Financial Officer)
				(Principal Accounting Officer)

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