Securities registered under Section 12(b) of the Exchange Act:

Securities registered under Section 12(g) of the Act:

Common Stock, $0.01 par value per share

(Title of class)

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

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 preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ][X]

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

(Do not check if a smaller reporting company) Emerging growth company[X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.[ ]

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

The aggregate market value of thevotingandnonvotingcommon equity held by non-affiliatesnonaffiliates of the registrant on June 30, 2015, 2016,based on a closing price of $0.03$0.04 was approximately $1,226,511. $1,506,000.As of April 10, 2015,2017, the registrant had 47,738,855109,938,855 shares of its common stock, par value $0.01 per share, outstanding.

YEAR ENDED DECEMBER 31, 2015

TABLE OF CONTENTS

PART I

Item 1.  Business.

Company History

GreeneStoneEthema Health Corporation(formerlyknownas Greenestone Healthcare Corporation,Corporation) (the “Company” or “Ethema” or “GreeneStone”), a Colorado corporation was incorporated under the laws of the State of Colorado on April 1,1993 (“(“Greenestone” or the “Company”), and is the surviving company of amerger,effective February 1,1995,between the Company andNovaNatural Resources Corporation, a Delaware corporation (“Nova Delaware”). Themergerwas effectuated solely for the purpose of changing the Company’s domicilefromDelaware to Colorado.Atall times prior to2001,the Company was engaged in the oil and gas exploration business.NovaDelaware was the successor entity toNovaPetroleum Corporation, a Delaware corporation, and Power Resources Corporation, a Delaware corporation,whichmergedin1986 (“(“the1986Merger”).Prior to the1986Merger,NovaPetroleum Corporation and Power Resources Corporation had operated since1979and1972,respectively.In2001,the Company enteredintothe electronics business andthisbusiness was active in2001and2002,as part of theToritaGroup. After2002,the Company continuedwithvarious stages of development inthisbusinessuntil2010.

Recent Developments

On December 29, 2015 April 1,2010,the Company entered into a nonbinding Letter of Intent (the “LOI”) with Aurora Recovery Centre LP (“ALP” for the purchase of certain assets of ALP. This LOI has expired and the proposed transaction will not proceed.

In February 2015, the Company finalized the terms for the acquisition of the property currently leased by the Company. The property, which is the location of GreeneStone's Muskoka addiction treatment center, encompasses approximately 48,000 square feet of buildings on 43 acres and is adjacent to Lake Muskoka in Ontario. The property has11separate buildings, including five detox suites, 29 residential suites, staff cottages with 13 individual bedrooms, a self-contained fitness center, kitchen and dining facilities, and several meeting and therapy rooms. Additional facilities include an indoor and outdoor pool, a tennis court, a volleyball court, a running track and nature trails. As of the date of this annual report, the Company is addressing certain due diligence items which are being resolved and once the requisite funds have been raised the transaction will be consummated.

The purchase price for the property consists of the following; i) CAD$5,500,000 which will be funded by a mortgage bond over the property; and ii) the issue of 50,000,000 common shares in the Company, at the market price of the shares on the date of closing.

Change in Operations

On April 1, 2010, the Company, pursuant to Board of Directors resolution, changed its principal operationsfromdevelopment stage electronics to healthcare services.On March 29,2010, the Company enteredinto a one year consulting agreementwith Greenestone Clinic Inc., a Canadian corporation (“Greenestone Clinic”), whereby Greenestone Clinic provided consulting services for the Company’s development and operation of medical clinics in the province of Ontario, Canada. Specifically, Greenestone Clinic provided medical and business expertise in theinitialstartup of private clinics and technical assistance to ensure that the clinics were in compliancewithgovernmental policy and procedure requirements as well as any operational requirements.Atthe time of enteringinto thisconsulting agreement, Greenestone Clinic operated a clinic at the Muskoka property now housing its addiction treatment clinic and provided endoscopy services. The Company started offering medical services thatin June 2010, offering various medical services, including endoscopy, cardiology and executive medicals, which services were subsequently sold.

On May 15,2010, the Company had plannedsecured a sublease of space (which was previously the Rothbart Pain Clinic) of approximately 8,000 sq. ft. to offerbe used as the Company’s executive offices and to run an endoscopy clinic. The Company, through its wholly owned subsidiary GreeneStone Clinic Muskoka Inc. (“GreeneStone Muskoka”),alsoentered into a lease with the owner of the Muskoka premises on April 1, 2011 and provided mental health and addiction treatment services and operated an in- patient addiction treatment center at this location.

Recent Developments

On February 14, 2017, GreeneStone completed a series of transactions (referred to collectively as the “Restructuring Transactions”), including a share purchase agreement (the “SPA”) whereby GreeneStone acquired the stock of the company holding the Muskoka Healthcare Clinic real estate, an asset purchase agreement (the “APA”) and lease (the “Lease”) whereby the Company sold all of the Muskoka clinic business assets and leased the clinic building to the buyer, and a real estate purchase agreement and asset purchase agreement whereby GreeneStone purchased the real estate and business assets of Seastone Delray (the “Florida Purchase”).

The Stock Purchase Agreement

Under the SPA, the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of GreeneStone (“Mr. Leon”). CCH owns the real estate on which the Company’s rehabilitation clinic (“the Canadian Rehab Clinic”) in its firstMuskoka, Ontario medical clinic.is located. The total consideration paid by GreeneStone was CDN$3,300,000 (an appraised value of CDN$10,000,000 less the outstanding mortgage loan), which was funded by the assignment to Leon Developments of certain indebtedness owing to GreeneStone in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments, valued at approximately US$0.033 per share (the “Shares”).

The Asset Purchase Agreement and Lease

OnUnderMaythe15,APA,the assets of the Canadian Rehab Clinic were sold by GreeneStone, through its subsidiary, GreeneStone Clinic Muskoka Inc. (the “Rehab Clinic Subsidiary”), to Canadian2010,AddictionResidential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000,plus anadditionalperformance payment of up to CDN$3,000,000 performance payment to be received in2019if certain clinic performance metricsaremet. The Purchaser completed the salewithcash proceeds to the Company secured a subleaseofspace (whichwaspreviouslytheRothbart PainClinic) CDN$10,000,000, ofapproximately 8,000 sq. ft. tobeused astheCompany’sexecutiveoffices and to run anendoscopy clinic,whichCDN$1,500,000was subsequently sold.willremain in escrow for up totwoyears to cover indemnities given by the Company. Asidefromusing the proceeds of the Muskoka clinic asset sale to paydownsignificant tax debts and operational costs of the Company, the Company also used the proceeds to fund the Florida Purchase.

Through the APA, substantially all of the assets of the Rehab Clinic Subsidiary were sold, leaving GreeneStone with only the underlying clinic real estate, which GreeneStone through its newly acquired subsidiary CCH concurrently leased to the Purchaser. The Lease is a triple net lease and provides for a five (5) year primary term with three (3) five year renewal options, annual base rent for the first year at CDN$420,000 with annual increases, an option to tenant to purchase the leased premises and certain first refusal rights.

The Florida Purchase

On May 17, 2016 Greenstone, through its wholly owned subsidiaries; Seastone Delray Healthcare, LLC (“Seastone”) and Delray Andrews RE, LLC (“Andrews”), both Florida limited liability companies, together with GreeneStone, entered into an Asset Purchase Agreement (“Seastone APA”), and a Management Services Agreement (“Management Agreement”), with Seastone of Delray, LLC, a Florida limited liability company (“Seastone Delray”) in order to operate and ultimately acquire Seastone Delray’s business of providing addiction treatment health care services (the “Seastone Business”). Also on May 17, 2016, the Company started offering medicalentered into a commercial real estate contract (the “RE Contract”) with Seastone Condominiums of Delray, LLC and 810 Andrews, LLC, both Florida limited liability companies (“the RE Sellers”) to acquire certain real property used to operate the Seastone Business.

Pursuant to the terms of the Management Agreement, the Company operated Seastone Delray’s addiction treatment health care services in Junebusiness (the “Seastone Business”) until it purchased the Business.2010,offering various medical services,includingendoscopy,cardiologyandexecutivemedicals, which services were subsequently sold as part ofImmediately after closing on the sale of our subsidiary, 1816191 Ontario (“1816191”) duringDecember2014.

InMarch2011,GreenestoneClinic,aformerCompanyconsultant, gave upthepremises in Bala,Ontario,previously leasedbyGreenestoneClinicand operated as a private medicalresortand alsoallowed theCompany todoits Muskoka clinic business,usingthe“GreeneStone” name. The Company,through itswholly ownedsubsidiary GreeneStoneClinicMuskokaInc. (“GreeneStoneMuskoka”)enteredintoa leasewith the owneroftheMuskokapremisesonApril1, 2011.The Companyoffersonlymentalhealthandaddictiontreatment services atthis location whichoperates as an in-patientaddictiontreatmentcenter.

On December 17, 2014, the Company completed the sale of all of the outstanding shares of its subsidiary, 1816191, for the sum of CAD$1,282,002, comprised of the agreed purchase price of CAD$1,250,000 andFebruary 14, 2017, GreeneStone closed on the acquisition of net assetsthe Seastone Business and real estate assets. The purchase price for the Florida transaction was $6,150,000, which is being funded by a purchase money first mortgage in the amount of $3,000,000 at closing5% per annum payable at $15,000 per month for three years; and $3,150,000 in cash. The Seastone Business is now the primary business of CAD$32,002. The sale was made pursuant to a Share Purchase Agreement, dated October 6, 2014, byGreeneStone and between the Company and Jaintheelal Parekh Medicine Professional Corporation (“Jaintheelal”). The Company and Jaintheelal entered into a revised Share Purchase Agreement on December 16, 2014.

JaintheelalisownedbyDr.Jay Parekh,theCompany’sformerMedical director in chargeofEndoscopy. The sale priceof CAD$1,282,002included theassumptionby Jaintheelal of debtinthesame amount asthesale price,whichdebt wasowedby1816191totheCompany intheamountof CAD$895,496and toJaintheelal ofCAD$386,542. Atclosing, Jaintheelaloffsettheassumeddebttotheregistrantof CAD$895,496 by US$277,500 throughthecancellation of2,408,268 sharesoftheCompany’s commonstock,for a net amountduetotheCompanyof US$493,807.The remainderoftheassumeddebtowedby1816191totheCompanywas originallyduetotheCompanyonJune30,2015,which duedate was extendedto December31,2015,thisloanhasnotbeenextendedbeyond thisdateasofthedatehereof,it is intheformofan interest bearingnote withacouponof 5%per annum.

The Company’s principaloperationsarenow theprovisionofaddictiontreatment services.being operated through its wholly owned subsidiary Seastone Delray Healthcare, LLC.

Corporate Structure

TheAt the beginning of the 2016 fiscal year, the Company currently hashad one, wholly owned, operating subsidiary, GreeneStone Muskoka. During the year, and in connection with the restructuring transactions discussed above, the Company formed two new subsidiaries, Seastone Delray Healthcare, LLC (“Seastone Delray”) and Delray Andrews RE, LLC (“Delray Andrews”), both Florida limited liability companies

GreeneStone Muskoka Treatment CenterSubsequent to year end, the Company’s Restructuring Transactions had the following effect:

On February 1, 2011,Dr.Paul Garfunkel was retained on a six-month consulting contract to advise the Company on its plan to go into the addiction treatment business.Dr.Garfunkel formed a Clinical Advisory Group (“CAG”) including himself,Dr.Clive Chamberlain,Dr.Greg Donahue and Janice Harris R.N. The CAG created the mission and protocols for the addiction treatment business and was tasked to hire a leader for the addiction treatmentbusiness.

On April 1, 2011, the Company through GreeneStone Muskoka, entered into a lease (the “Bala Lease”) with Cranberry Cove Holdings Ltd. (“Cranberry”), the owner of the Bala, Ontario property (the “Bala Property”) in order to operate a mental health and addiction treatment center at the property. On April 1, 2011 (the “Purchase Date”), GreeneStone Muskoka purchased all of the assets of Greenestone Clinic that were previously used for the operation of the executive medical center located at the Bala Property. This gave GreeneStone Muskoka a turnkey opportunity to start up its addiction treatment business (the “GreeneStone Muskoka TreatmentCenter”).

On April 1, 2011,Dr.Susan K. Blank was hired under a one-year contract to run the GreeneStone Muskoka Treatment Center.Dr.Blank worked with the CAG to refine the mission and protocols for the GreeneStone Muskoka Treatment Center and worked on the policies and procedures for the operation of the treatmentcenter. 

In August 2011, the GreeneStone Muskoka Treatment Center began providing addiction treatment services and took its first paying clients. The GreeneStone Muskoka Treatment Center offers clients a 45day program that costs between CAD$27,000 and CAD$37,000 per treatment period. Treatment is individualized, providing the first two weeks of treatment, with an assessment thereafter and often, a recommendation to extend treatment. The treatment offered is concurrent, with addiction and co-occurring mental health disorders treated at the same time. The center has a 36 bed capacity and can easily be expanded beyond that capacity. Treatment consists of group and individual therapy, as well as recreation therapy. Clients are taught about nutrition and are provided with nutritious food while intreatment.

In November of 2011, the CAG was disbanded after achieving its goals. In March 2012, Dr. Blank and two contract therapists, all of whom were from the United States, were replaced by a more permanent team of Canadian doctors and therapists.

Employees

As of December 31, 2015, GreeneStone Healthcare2016, Ethema Health Corporation had no employees and its subsidiary GreeneStone Clinic Muskoka had approximately 32 employees. Following the restructuring Transactions as of April 12, 2017, the Company had 14 employees.

Marketing

The addiction treatment business operates as a private pay service. The customers get no government or OHIP subsidy to attend our treatment facility. The decision to attend the treatment center is made by eachindividual,making it important to market our services to theindividual.Thereare a large number of mental health professionals thatrefer to the treatment center andwe ensure thatwe maintain contactwith and market to these professionals.Ourmarketingefforts arelongterm processes of establishing relationshipswithrelevant professionals and our treatmentstaff.We use industry specific conferences and functions to networkwith these professionals.

Approximately 70% of our clients are sourced via the Internet. This is the single biggest focus for our marketing team, Search Engine Optimization (SEO) is very important and the Company aggressively seeks the maximum cost/benefit relationships with specialist firms in this field. We believe our marketing efforts are successful and effective.

Competition

The private pay addiction treatment business is not well established in Canada and there are only a few competitors that provide these services. Two of the biggest providers are also government hospital licensed facilities, that do both OHIP insured services and privately paid services. Most hospitals have a mental health unit that can handle detoxification, but do not provide addiction treatment programs. There is only one large competitor with a similar offering to GreeneStone Muskoka, located on the west coast of Canada. There are hundreds of private paid facilities in the United States and they collectively, represent a major competitor for those with the ability to pay for addiction services. Addiction service facilities in the United States that offer the same level of treatment offered by our Company are generally 50% to 100% more expensive than we are. We believe that travel to the United States by potential customers with potential travel restrictions as well as the higher cost eliminates many U.S. facilities as competition.

Environmental Regulations

The Company is not currently subject to any pending administrative or judicial enforcement proceedings arising under environmental laws or regulations. Environmental laws and regulations may be adopted in the future which may have an impact upon the Company’s operations.

Item 1A. Risk Factors.

Not applicable because we are a smaller reporting company.

Item1B. UnresolvedStaffComments

none.

Item 2. Properties.

GreenestoneEthema Executive Offices and Endoscopy Unit

The Company’s executive officesare located at5734 Yonge Street, Suite300, Toronto, Ontario, Canada M2M 4E7, consisting of approximately 8,000 sq. ft. and takes up the entire third floor of thebuilding (the “Yonge Street Facility”). This facility was leased by1816191 and the primary activity atthisfacility was endoscopy procedures. The Company enteredintoa sublease for office space at these premisesfrom1816191on a month to month basis.

Lease of Greenestone Muskoka Treatment Facility

The BalaGreenestone Muskoka Treatment Facility is located in Bala, Ontario at3571 Highway 169.The property is 43 acres in size and contains approximately 48,000 square feet ofbuildings.The property is leased fromThe property isownedbyEthema’swholly owned Canadian subsidiary Cranberry Cove and has been leasedtothenew owner ofthe Muskoka Clinic for a term of five years,which commencedends on April 1, 2014 and hasFebruary 28,2022.The Lease givesthetenant anoptionto extend forthreeadditional five (5) year terms, an additional three years. Further, the Company has an optionto purchase the property at any time duringfor apurchaseprice of $7,000,000 in the first (36) months of the term and thereafter at a purchase price increased by $1,500,000 for each successive year up to a maximum of the lease for $10.0 million dollars$10,000,000, and a right of first refusal in the event of a sale to a third party.

Delray Beach Real Estate

The real estate acquired in Delray Beach, Florida consist of two parcels of land. The first parcel is located at 810 Andrews Avenue, Delray Beach, Florida, is 0.34 acres in size and has a two-story, 2,839 square foot CBS office building constructed in 1963. It is in good condition, and is currently used as an office for addiction treatment services. The second parcel, is located at 801 Andrews Avenue, Delray Beach, Florida, is 0.34 acres in size and has a two-story, residential condominium building containing 10 units totaling 8,844 square feet. The improvements were constructed in 1971 with the latest renovation occurring in 2014. The property was being used as a sober home.

Item 3. Legal Proceedings.

We

A former employee has filed suit against the Company asserting wrongful dismissal, claiming damages between CDN$43,500 and CDN$50,000 this matter is under discussion with the plaintiff, we feel that the damages claimed are remote.

Other than disclosed above, wearecurrently notinvolvedin anylitigationthatwebelieve could have a material adverseeffecton our financialconditionor results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court,publicboard, government agency, self-regulatoryselfregulatory organization orbody pendingor,to theknowledgeof the executiveofficersof 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’officersor directors in their capacities as such, inwhichan adverse decision could have a material adverse effect.

Item 4. Mine Safety Disclosures.Disclosures.

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)Market Information

The Company’s common stock is quoted on the Over-the-counter Bulletin Board (the “OTCBB”) under the symbol “GRST”. The Company was sponsored by the market maker Wilson Davis & Co. from Salt Lake City, Utah, which filed a Form 15c2-11 application with the Financial Industry Regulatory Authority (“FINRA”) for the Company in 2011. This application was approved by FINRA in February 2012, and Wilson Davis & Co. first quoted the stock in March 2012.

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Quotations on the OTCBB reflect bid and ask quotations, may reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.

(b)Holders

The number of record holders of the Company’s common stock as of April 10, 2015, was approximately 149.11, 2017 is 151.

(c)Dividends

We have never paid any cash dividends on our common shares, and we do not anticipate that we will pay any dividends with respect to those securities in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion development of our business.

(d)Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2015,2016, there were 10,000,000 common securities authorized for issuance under the Company’s 2013 Stock Option Plan (which was previously approved by securityholders). security holders) of which there were 480,000 options outstanding as of December 31, 2016.

Recent Sales of Unregistered Securities

In the securities transactions described below, shares were issued pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended, afforded the Company under Section 4(a)(2) promulgated thereunder due to the fact that the issuance did not involve a public offering because of the insubstantial number of persons involved in each offering, the size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(a) (2) of the Securities Act for these transactions.

The following is a summary of the securities transactions during the year ended December 31, 2015:2016:

On January 15, 2015 the Company issued 300,000 shares of the Company’s common stock to JMJ pursuant to the conversion of a convertible note totaling US$8,117 at a conversion price of US$0.027 per share.

On March 31, 2015, the Company cancelled 2,909 shares of the Company’s common stock pursuant to a convertible note conversion to recognize the effect of the currency exchange difference in the note conversion.

On March 31, 2015, the Company issued 250,000 shares of the Company’s common stock and 106,000 of the Company’s Series B Preferred stock to Castelli as compensation for services rendered totaling$56,096.

On April 30, 2015, the Company issued 1,060,000 shares of the Company’ common stock to Castelli upon conversion of the 106,000 Series B Preferred stock, mentioned above, at a conversion ratio of10:1.

Penny Stock

The U.S. Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Item 6. Selected Financial Data.

Not applicable as we are a smaller reporting company.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This annual report on Form 10-K 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-lookingforward- 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 year ended December 31, 2015.2016.

Plan of Operation

During

Subsequent to year end, the next twelve months, theCompany sold its addiction treatment center located in Ontario Canada, and acquired an addiction treatment center located in Delray Beach Florida, as described below. The Company plans to continue and expand its operations in the USA as a provider of addiction and after-careaftercare treatment services. The Company plans to focus on the growth of its addiction and aftercare treatment units while simultaneously reducing costs in current operations.

The Company finalized theOnMay 17,2016Greenstone, through itswholly ownedsubsidiaries; Seastone Delray Healthcare, LLC (“Seastone”) and Delray Andrews RE, LLC (“Andrews”),bothFlorida limitedliabilitycompanies, togetherwithGreeneStone, enteredintoan Asset Purchase Agreement (“SeastoneAPA”), a Commercial Real estate contract (“RE Contract”), and a Management Services Agreement (“Management Agreement”),with Seastone of Delray, LLC, a Florida limitedliability company (“Seastone Delray”).

On February 14, 2017, and in terms for the acquisition of the property currently leased byagreements entered into on May 19, 2016, GreeneStone completed a series of transactions (referred to collectively as the Company. The property, which is“Restructuring Transactions”), including a share purchase agreement (the “SPA”) whereby GreeneStone acquired the location of GreeneStone's Muskoka addiction treatment center, encompasses approximately 48,000 square feet of buildings on 43 acres and is adjacent to Lake Muskoka in Ontario. The Company expects this deal to close by the second quarterstock of the 2016 financial year, oncecompany holding the appropriate funding has been raised.

The Company plans to expand its addiction treatment business with acquisitions. In 2014,Muskoka Healthcare Clinic real estate, an asset purchase agreement (the “APA”) and lease (the “Lease”) whereby the Company entered intosold all of the Muskoka clinic business assets and leased the clinic building to the buyer, and a non-binding letterreal estate purchase agreement and asset purchase agreement whereby GreeneStone purchased the real estate and business assets of intent with Venture Academy to acquire teen addition treatment centers in Ontario and British Columbia. The Company will need to raise additional capital for this acquisition, which would require the sale of its equity and/or debt securities and securing bank financing.

Results of OperationsSeastone Delray (the “Florida Purchase”)

For the Fiscal Year Ended December 31, 2015, Compared to the Fiscal Year Ended December 31, 2014The Stock Purchase Agreement

Under the SPA, the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of GreeneStone (“Mr. Leon”). CCH owns the real estate on which the Company’s rehabilitation clinic (“the Canadian Rehab Clinic”) in Muskoka, Ontario is located. The total consideration paid by GreeneStone was CDN$3,300,000 (an appraised value of CDN$10,000,000 less the outstanding mortgage loan), which was funded by the assignment to Leon Developments of certain indebtedness owing to GreeneStone in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments, valued at approximately US$0.033 per share (the “Shares”).

The Asset Purchase Agreement and Lease

UndertheAPA,the assets of the Canadian Rehab Clinic were sold by GreeneStone, through its subsidiary, GreeneStone Clinic Muskoka Inc. (the “Rehab Clinic Subsidiary”), to CanadianAddictionResidential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000,plus anadditionalperformance payment of up to CDN$3,000,000 performance payment to be received in2019if certain clinic performance metricsaremet. The Purchaser completed the salewithcash proceeds to the Company of CDN$10,000,000, ofwhichCDN$1,500,000willremain in escrow for up totwoyears to cover indemnities given by the Company. Asidefromusing the proceeds of the Muskoka clinic asset sale to paydownsignificant tax debts and operational costs of the Company, the Company also used the proceeds to fund the Florida Purchase.

Through the APA, substantially all of the assets of the Rehab Clinic Subsidiary were sold, leaving GreeneStone with only the underlying clinic real estate, which GreeneStone through its newly acquired subsidiary CCH concurrently leased to the Purchaser. The Lease is a triple net lease and provides for a five (5) year primary term with three (3) five year renewal options, annual base rent for the first year at CDN$420,000 with annual increases, an option to tenant to purchase the leased premises and certain first refusal rights.

The Florida Purchase

Immediately after closing on the sale of its Muskoka clinic business, GreeneStone closed on the acquisition of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements This businesswillbe operated through itswholly ownedsubsidiary Seastone. The purchase price for the Seastone assets was US$6,150,000 financedwith a purchase money mortgage of US$3,000,000, and US$3,150,000 in cash.

Results of operations for the year ended December 31, 2016 and the year ended December 31, 2015.

The company sold its Greenestone Muskoka Treatment Center effective February 17,2017,simultaneouslywiththe purchase of the assets and real estate of an addiction treatment center in Delray Beach, Florida. The disposal of the Greenestone Muskoka Treatment Center has been reflected as a discontinued operation in the financial statements as of December 31,2016and2015and the results of operations and cash flows for theyearsended December 31,2016 and2015.

Revenue

Wehad no revenues totaling $3,138,878 and $3,416,342 for the years ended December 31,2016and2015, and 2014, respectively, a decrease of $277,464 or 8.1%. We operate in Canada and our functional currency isdue the Canadian Dollar. Our revenue, in Canadian Dollars increased from CAD$3,963,274 to CAD$4,003,090 for the years ended December 31, 2014 and 2015, respectively, an increase of $39,816 or 1.0%. The decrease in revenue in US$ terms is attributable to the relative strengthdisposal of the US$ againstGreenestone Muskoka Treatment Center, effective February 17,2017. The revenue of the CAD$ during the current year, the average exchange rate between the CAD$ and the US$Greenestone Muskoka Treatment Center has weekend from $0.9051been reflected as a discontinued operation in the prior year to $0.7833 in the current year, a decrease in the average exchange rate of 15.5%. The Company believes that revenue will grow over the next year.these financial statements.

Operating Expenses

Operating expenses totaled $3,409,450$790,880 and $4,757,851$450,221 for the years ended December 31, 2016 and 2015, and 2014, respectively, a decreasean increase of $1,348,401$340,659 or 28.3%75.7%. The decreaseincrease in operating expenses in US$ terms is attributable to the relative strength of the US$ against the CAD$ during the current year, the average exchange rate between the CAD$ and the US$ has weekend from $0.9051 in the prior year to $0.7833 in the current year, a decrease in the average exchange rate of 15.5%. The decline in the currency exchange rate accounts for approximately $530,156 of the differential. The non-currency decrease is primarily attributed to a reduction in labor of $903,217 due to a reduction in labor overhead costs and the cessation of aftercare services and a non-currency decrease in rental expense ofapproximately $91,765 due to a re-negotiation of our rental arrangement at our executive offices.to:

Operating loss

The operating loss totaled $270,572$790,880 and $1,341,509$450,221 for the years ended December 31, 2016 and 2015, and 2014, respectively, a decreasean increase of $1,070,937, primarily due$340,659 or 75.7%. The increase is attributable to the declinemovement in operating expenses explainedabove.discussed above.

Other income

Other income of $72,508 and $0 for the years ended December 31, 2016 and 2015, respectively, represents the proceeds related to the sale of certain oil rights which belonged to the Company prior to changing its operations to that of drug rehabilitation and treatment centers.

Other expense

Other expense of $457,913$156,387 and $427,298 for the years ended December 31, 2016 and 2015, respectively consists primarily of expenses incurred in operating the Seastone of Delray Clinic, in terms of a management agreement, prior to its acquisition on February 14, 2017 and in the prior year we recognized a provision of $446,476 raised against thefor a receivable on the sale of the Endoscopy clinic. This receivable was fully provided forendoscopy clinic as there were no payments received in accordance with the agreement or any payments received as of the date hereof.

Interest expense

Interest expense totaled $192,104of $29,504 and $310,583$19,580 for the years endedDecember31, 20152016 and 2014, 2015,respectively, a decrease of $118,479 or 38.1%. The decline consists of an approximate decline of $29,871 due to the deterioration in the exchange rate and a reduction in the interest bearing convertible notes which were carried in the prior year, offset by an increase in interest expense attributable of $9,924 or 50.7% wasprimarilydueto interestthe shortterm convertiblenoteadvanced tothe Company during the currentyearandrepaidbeforeyearend.

Debt discount

A Debt discount of $93,244 was recognized on payroll and Harmonized SalesTax(“HST”), and accruals for income taxpenalties.a convertible loan agreement entered into during the current year.

Foreign exchange movements

Foreign exchange movements of $184,586, represent$811 and $(97,858) for the years ended December 31,2016 and2015, represents the realized exchange lossgains and (losses) on monetary assets andliabilitiessettled during the current year as well asmarkto market adjustments on monetary assets andliabilitiesreflected on the balance sheet and denominated in Canadian Dollars. The movement is a function of the exchange rate for theyear,during the prior year the exchange rate wasmorevolatileand experienced a general deterioration against the Dollar, the exchange rate has beenmorestable during the currentyear.

TaxationNet income (loss) from discontinued operations

The net income (loss) from discontinued operations of $735,987 and $(160,219) for the years ended December 31, 2016 and 2015, respectively, an increase of $896,206 or 559.4% was primarily due an increase in the number of patients treated at the facility, predominantly from various Canadian Government departments. The Greenestone Muskoka Treatment facility located in Ontario was disposed of on February 14, 2017 and had therefore been treated as a discontinued operation in these financial statements.

A taxation expenseNet loss

Net loss of $50,000 was provided$260,709 and $1,155,176 for the years ended December 31, 2016 and 2015, respectively, a decrease of $894,467 or 77.4%, primarily due to the increase in operating expenses, offset by the improvement in the currentresults of the discontinued operations prior to its disposal and the prior year as an estimateloss on write down of potential US taxes to be paid for failure to file required US tax returns in time.loans advanced by the Company on the sale of its Endoscopy clinic.

Net loss from discontinued operations

During the prior year, the Company disposed of its Endoscopy Clinic to a related party. The net loss from discontinued operations amounted to $248,181.

Net Loss

Net loss totaled $1,155,176 and $1,900,273 for the years ended December 31, 2015 and 2014, respectively, a decrease of $745,097, primarily due to the decrease in operating expenses, the sale of the Endoscopy unit in the prior year and the decline in interest expense, discussed above.

Contingency related to outstanding payroll tax liabilities:

The Company wasdelinquentin filing previous payroll tax returns resulting in taxes, interest and penalties payable at December 31, 2015 2016and 2014. 2015.As of December 31,2016and2015 and 2014 as part ofTaxes Payable, the Company has payroll taxliabilities and GSTliabilitiesof approximately $2,429,032$2,548,824 and $2,065,000,$2,290,506, respectively, due to various taxing authorities on the consolidated balance sheets. IfThese Tax liabilities were settled upon the Company does not satisfy these liabilities,disposal of the taxing authorities may place liens on its bank accounts which would have a negative impact on its abilityGreenestone Treatment Center. The remaining liability of approximately $250,000 relates to operate. Further, the actual liability may be highernonfiling of certain foreign assets forms due to interest or penalties assessed by the taxing authorities.US Federal Government. This issue is currently being addressed.

Liquidity and Capital Resources

The following table summarizes working capital at December 31, 2015,2016, compared to December 31, 2014.2015.

Subsequent to year end, on February 17, 2017, the Company sold its Greenestone Muskoka Treatment Center for gross proceeds of CDN$10,000,000 of which CDN$1,500,000 remains in escrow should it be required to satisfy certain warranties provided in the sale agreements relating to the facility. The proceeds were used to settle the outstanding tax liabilities of the Company and to acquire a treatment facility in Delray Beach, Florida.

Over the nexttwelvemonthsweestimate that the companywillrequire $3.5million to cover the$1.0 million in working capital deficit and properly market and promote the company.as it develops its Seastone of Delray business. The company willmay have to raise equity or secure debt. There is no assurance that the Companywill be successfulwith future financing ventures, and theinabilityto secure such financing may have a material adverseeffecton the Company’s financialcondition.Intheopinionof management, the Company’sliquidity risk is assessed as high and remains unchanged medium, a changefrom the prior year.years,high risk assessment, due to the settlement of the outstanding tax liabilities mentioned above.

Item 8. Financial Statements and Supplementary Data.

GREENESTONE HEALTHCARE

ETHEMA HEALTH CORPORATION

(formerly known as Greenestone Healthcare Corporation)

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US$ unless otherwise indicated)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and StockholdersofGreeneStone HealthcareCorporation Ethema Health Corporation

(formerly known as Greenestone Healthcare Corporation)

Wehave auditedtheaccompanying consolidated balancesheetsofGreeneStone Healthcare Ethema Health Corporation (“the Company”) as ofDecemberof December 31, 2016 and 2015and2014andtherelatedconsolidatedstatementsof operationsandothercomprehensive loss, stockholders’ deficit and cash flows forthe two years in the period endedDecember31, 20152016 and2014. 2015. These consolidated financial statementsaretheresponsibilityoftheCompany’s management.Ourresponsibility is to express anopinionontheseconsolidatedfinancial statements basedonouraudit. audit.

Weconducted our auditin accordancewiththestandardsofthePublic CompanyAccountingOversight Board (United States). Those standards requirethatweplan andplanperformand performthe audittoobtain reasonable assurance about whether thefinancial statementsarefreeofmaterial misstatement. The Company isnotrequired tohave,norwereweengagedtoperform, anauditof itsinternal controloverfinancial reporting.Ouraudit includedconsiderationofinternal controloverfinancial reporting as a basis fordesigningauditproceduresthatareappropriate inthecircumstances,but notforthepurposeofexpressing anopinionontheeffectivenessoftheCompany’s internal control over financial reporting. Accordingly, weexpresswe express nosuchopinion. AnAn auditalsoincludesexamining, ona test basis,evidence supportingtheamounts and disclosures inthefinancial statements, assessingthe accountingprinciplesused and significant estimates madebymanagement, aswellasevaluating theoverall financial statement presentation.Webelieve thatour auditprovidesa reasonable basis forouropinion.

Inouropinion,the consolidated financial statementsreferredto above presentfairly,in all material respects, the consolidated financial position of GreeneStone HealthcareEthema Health Corporation as of December 31,2016 and2015 and 2014 and the results of its operations and its cash flows for the two years in the period ended December 31,2016 and2015 and 2014 in conformitywith accounting principles generally accepted in theUnited States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has sustained net losses and has a working capital and stockholder’s deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/RBSM LLP

New York, NY 10022

April 14, 201617, 2017

ETHEMA HEALTH CORPORATION

The accompanying notes are an integral part of the consolidated financial statements(formerly known as Greenestone Healthcare Corporation)

CONSOLDATED BALANCE SHEETS

GREENESTONE HEALTHCARE

ETHEMA HEALTH CORPORATION

(formerly known as Greenestone Healthcare Corporation)

CONSOLIDATED STATEMENTS OF OPERATIONS

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

CONSOLIDATED STATEMENT OF CASH FLOWS 

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

F-5

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

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

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

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.Nature of Business

GreeneStone Healthcare

Ethema Health Corporation (the “Company”) was incorporated under the laws of the state of Colorado, USA, on April 1,1993.Effective May 2012,April 4, 2017, the Company changed its corporate name to GreeneStoneEthema Health Corporation and prior to that, on May2012,the Company had changed its name to Greenestone Healthcare CorporationfromNovaNatural Resources Corporation.Asat December 31,2016and2015, and 2014, the Companyowns 100%of the outstanding shares of Greenestone Clinic Muskoka Inc.,which was incorporated in2010 under the laws of the Province of Ontario, Canada. Greenestone Clinic Muskoka Inc. provides medical services to various patients in a clinic located in the regional municipality of Muskoka.

On May 17, 2016 Greenstone, through its newly formed, wholly owned subsidiaries; Seastone Delray Healthcare, LLC (“Seastone”) and Delray Andrews RE, LLC (“Andrews”), both Florida limited liability companies, entered into an Asset Purchase Agreement (“Seastone APA”), a Commercial Real estate contract (“RE Contract”), and a Management Services Agreement (“Management Agreement”), with Seastone of Delray, LLC, a Florida limited liability company (“Seastone Delray”).

Pursuant to the terms of the Seastone APA, the Company would purchase Seastone Delray’s business, which is primarily the practice of providing addiction treatment health care services (the “Business”), and substantially all the assets used in connection with the Business and other assets in which Seastone Delray has any right, title or interest, except those certain assets specifically excluded in the Seastone APA.

Pursuant to the terms of the Management Agreement, the Company would have the right to operate Seastone Delray’s Business for 90 days commencing on June 15, 2016 or earlier if the Company waives the Due Diligence Period (the “Management Period”). During the Management Period, the Company is entitled to the revenues from the Business and will pay Seastone Delray $20,000 per month to cover certain costs related to the Business, which shall increase to $28,000 per month if the Management Agreement is extended beyond 90 days. The Management Agreement may be terminated by either party if the Purchase Agreement did not close by September 15, 2016.

Also on May 17, 2016, the Company entered into a commercial real estate contract (the “RE Contract”) with Seastone Condominiums of Delray, LLC and 810 Andrews, LLC, both Florida limited liability companies (“the RE Sellers”). Pursuant to the RE Contract, the Company would acquire certain real property, and, prior to the closing, intends to assign the RE Contract to Andrews.

The purchase price for the Transaction was $6,150,000, which was being funded by a purchase money first mortgage in the amount of $3,000,000 at 5% per annum payable at $15,000 per month for three years; and $3,150,000 in cash.

On February 14, 2017, GreeneStone completed a series of transactions (referred to collectively as the “Restructuring Transactions”), including a share purchase agreement (the “SPA”) whereby GreeneStone acquired the stock of the company holding the Muskoka Healthcare Clinic real estate, an asset purchase agreement (the “APA”) and lease (the “Lease”) whereby the Company sold all of the Muskoka clinic business assets and leased the clinic building to the buyer, and a real estate purchase agreement and asset purchase agreement whereby the Company purchased the real estate and business assets of Seastone Delray (the “Florida Purchase”).

The Stock Purchase Agreement

Under the SPA, the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of GreeneStone (“Mr. Leon”). CCH owns the real estate on which the Company’s rehabilitation clinic (“the Canadian Rehab Clinic”) in Muskoka, Ontario is located. The total consideration paid by GreeneStone was CDN$3,300,000 (an appraised value of CDN$10,000,000 less the outstanding mortgage loan), which was funded by the assignment to Leon Developments of certain indebtedness owing to GreeneStone in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments, valued at approximately US$0.033 per share (the “Shares”).

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

2.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SummaryThe Asset Purchase Agreement and Lease

Under the APA, the assets of Significant Accounting Policiesthe Canadian Rehab Clinic were sold by GreeneStone, through its subsidiary, GreeneStone Clinic Muskoka Inc. (“Muskoka”), to Canadian Addiction Residential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000, plus an additional performance payment of up to CDN$3,000,000 as a performance payment to be received in 2019 if certain clinic performance metrics are met. The Purchaser completed the sale with cash proceeds to the Company of CDN$10,000,000, of which CDN$1,500,000 will remain in escrow for up to two years to cover indemnities given by the Company. The proceeds of the Muskoka clinic asset sale were used to pay down certain tax debts and operational costs of the Company and to fund the Florida Purchase, mentioned below.

Through theAPA,substantially all of the assets of the Rehab Clinic Subsidiary were sold, leaving GreeneStonewith onlythe underlying clinic real estate,whichGreeneStone through itsnewlyacquired subsidiary CCH concurrently leased to thePurchaser.The Lease is a triple net lease and provides for a five (5) year primary termwiththree (3) five year renewal options, annual base rent for thefirstyear atCDN$420,000 withannual increases, anoptionto tenant to purchase the leased premises and certainfirstrefusal rights,.

a)Financial ReportingThe Florida Purchase

Immediately after closing on the sale of its Muskoka clinic business, GreeneStone closed on the acquisition of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements This businesswillbe operated through itswholly ownedsubsidiary Seastone. The purchase price for the Seastone assets was US$6,150,000 financedwith a purchase money mortgage of US$3,000,000, and US$3,150,000 in cash.

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Revenues and expenses are reported on the accrual basis, which means that income is recognized as it is earned and expenses are recognized as they are incurred.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that i) recorded transactions are valid; ii) valid transactions are recorded; and iii) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

b)Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

c)Principals

2. Summary of consolidation and foreign currency translationSignificant Accounting Policies (continued)

The accompanying consolidated financial statements include the accounts of the Company, its subsidiary. All inter-companyintercompany transactions and balances have been eliminated on consolidation.consolidation

The Company’s subsidiary’s functional currency iswas 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"Translation” as follows:

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

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

c)Principals of consolidation and foreign currency translation (continued)

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 year ended December 31, 20152016 a closing rate of CAD$1.0000 equals US$0.722500.7448 and an average exchange rate of CAD$1.0000 equals US$0.7833 for the year ended December 31, 2015.0.7555.

d)Revenue Recognition

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

In particular, the Company recognizes:

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.

e)Non-monetary transactions

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued)

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:

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

f)Cash and cash equivalents

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

The Company has $72,250$74,480 (CAD$100,000) in restricted cash held by their bank to cover against the possibility of credit card charge backs, for services not performed.

g)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 December 31, 20152016 and December 31, 2014,2015, the Company has a $0 and $27,294$0 allowance for doubtful accounts, respectively.

h)Financial instruments

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

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

Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, harmonized sales tax payable, withholding taxes payable, convertible notes payable, loanloans 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:

The Company does not have assets or liabilities measured at fair value on a recurring basis at December 31, 20152016 and 2014.2015. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis during the year ended December 31, 20152016 and 2014.2015.

GREENESTONE HEALTHCARE

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.Summary of Significant Accounting Policies(continued)

i)Plant and equipment

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

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.

j)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.

k)Income taxes

The Company accounts for income taxes under the provisions of ASC Topic 740,“Income Taxes”. Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income taxes are provided using the liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax basis of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in income in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax assets will not be realized.

ASC Topic 740 contains a two-steptwostep approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. Thefirststep is to determine if theweightof available evidence indicates that it ismorelikely than not that the tax positionwillbe sustained in an audit,includingresolution of any related appeals orlitigationprocesses. The second step is to measure the tax benefit as the largest amount that ismorethan 50% likely to be realizeduponultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefitswithingeneral and administrative expense.Tothe extent that accrued interest and penalties do not ultimately become payable, amounts accruedwillbe reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal2001, through 2013 2016are subject to audit or review by theUS tax authority,authorities, whereas fiscal2010 through 2013 2016aresubject to audit or review by the Canadian tax authority.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

l)Loss 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 years ended December 31, 20152016 and 2014.2015.

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

m)Stock based compensation

2. Summary of Significant Accounting Policies (continued)

ASC 718-10 "Compensation - Stock Compensation" prescribes accounting and reporting standards for all stock-basedstockbased payments awarded to employees,includingemployee 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 presentobligationto settle the share-basedsharebased payment transaction in cash or other assets exists. A presentobligationto settle in cash or other assets exists if:(a)theoptionto settle by issuing equity instruments lacks commercial substance or (b) the presentobligation is implied because of an entity's past practices or stated policies.If a presentobligationexists, the transaction should be recognized as a liability;liability; otherwise, the transaction should be recognized as equity.

The Company accounts for stock-basedstockbased compensation issued to non-employeesnonemployees and consultants in accordancewiththe provisions of ASC 505-50505-50 "Equity - Based Payments to Non-Employees"NonEmployees". Measurement of share-basedsharebased payment transactionswith non-employeesnonemployees shall be based on the fair value of whichever ismore reliably measurable:(a) thegoods or services received;received; or (b) the equity instruments issued. The fair value of the share-basedsharebased payment transaction should be determined at the earlier of performance commitment date or performance completion date.

n)Legal proceedings

The costs of prosecuting and defending legal actions are expensed as incurred.

o)Accounting for uncertainty in income taxes

The Financial Accounting Standards Board has issued guidance on Accounting for Uncertainty in Income Taxes, FASB ASC 740, Income Taxes which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Management has concluded that the Company has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. When applicable, the Company will include interest and penalties related to uncertain tax positions in income tax expense.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

p)Derivatives

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company uses a Black-ScholesBlackScholes Option Pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the statements of operations. Inputs into the Black-ScholesBlackScholes Option Pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk-freeriskfree interest rate and the estimated life of the financial instruments being fair valued.

If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.

q)Recent accounting pronouncements

In January 2015,2016, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01 to have a material effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB FinancialAccounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

In April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, is to simplify presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU does not affect the recognition and measurement guidance for debt issuance costs. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early application is permitted. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

q)Recent accounting pronouncements (continued)

In April 2015, FASB issued Accounting Standards Update No. 2015-05,Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees paid in a Cloud Computing Arrangement, provides guidance to customers about whether a cloud computing arrangement includes a software license. If such an arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account for it as a service contract. For public business entities, the ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early application is permitted. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

In April 2015, FASB issued Accounting Standards Update No. 2015-06,Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions, specifies that, for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a drop down transaction should be allocated entirely to the general partner. In that circumstance, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition.

In May 2015, the Financial Accounting Standards Board(“FASB”) issuedAccounting StandardsUpdate (“ASU”) No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU 2015-07”). This guidance eliminates the requirement to categorize investments within the fair value hierarchy if their fair value is measured using the net asset value (“NAV”) per share practical expedient in the FASB’s fair value measurement guidance. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015 The Company does not expect the adoption of ASU 2015-07 to have a material effect on its consolidated financial statements.

In July 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost.An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

q)Recent accounting pronouncements (continued)

In August 2015,FASB issued Accounting Standards Update (“ASU”) No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-15, “Interest - Imputation of Interest (Subtopic 835-30).” ASU 2015-15 provides guidance as to the presentation and subsequent measurement of debt issuance costs associated with line of credit arrangements. We do not expect the adoption of ASU 2015-15 to have a material effect on our financial position, results of operations or cash flows.

In September 2015,FASB issued Accounting Standards Update (“ASU”) No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments”requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not been issued. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not yet been made available for issuance. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In November 2015, the FASB issued (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes. Currently deferred taxes for each tax jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability on the balance sheet. To simplify the presentation, the new guidance requires that deferred tax liabilities and assets for all jurisdictions along with any related valuation allowances be classified as noncurrent in a classified statement of financial position. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. The Company has adopted this guidance in the fourth quarter of the year ended December 31, 2015 on a retrospective basis. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows, and did not have any effect on prior periods due to the full valuation allowance against the Company’s net deferred tax assets.

GREENESTONE HEALTHCARE CORPORATION 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

2.Summary of Significant Accounting Policies(continued)

q)Recent accounting pronouncements (continued)

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01,which amends the guidance in U.S.GAAPon the classification and measurement of financial instruments. Changes to the current guidance primarilyaffectthe accounting for equity investments, financialliabilities under the fair valueoption, and the presentation and disclosure requirements for financial instruments.Inaddition, the ASU clarifies guidance related to the valuation allowance assessment when recognizingdeferred tax assets resultingfromunrealized losses on available-for-saleavailableforsale debt securities. The new standard is effective for fiscal years and interim periodsbeginningafter December 15,2017, andupon adoption, an entity should apply the amendments by means of a cumulativeeffect adjustment to the balance sheet at thebeginning of thefirst reporting period inwhich the guidance is effective. Earlyadoption is not permitted except for the provision to record fair value changes for financialliabilitiesunder the fair valueoptionresultingfrominstrumentspecific credit risk in other comprehensive income. The Company is currently evaluating the impact ofadopting this guidance.

In February2016, theFASBissuedAccounting StandardsUpdate (ASU) 2016-02,which amends the guidance in U.S.GAAP on accounting for operating leases, a lesseewillbe required to recognize assets andliabilitiesfor operating leaseswithlease terms ofmorethan 12 months on the balance sheet. The new standard is effective for fiscal years and interim periodsbeginning after December 15,2018, andupon adoption, an entity should apply the amendments by means of a cumulativeeffect adjustment to the balance sheet at thebeginningof thefirstreporting period inwhich the guidance is effective. Earlyadoption is not permitted. The Company is currently evaluating the impact ofadopting this guidance.

ETHEMA HEALTH CORPORATION

(formerly known as Greenstone Healthcare Corporation)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (continued)

In March 2016, the FASB issued an Accounting Standards Update (ASU) “ASU 2016 – 09 Improvements to Employee Share-Based Payment Accounting” which is intended to improve the accounting for employee share-based payments. The ASU simplifies several aspects of the accounting for share-based payment award transactions, including; the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017,2016, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income.permitted. The Company is currently evaluating the impact of adopting this guidance.

In April 2016, the FASB issued an Accounting Standards Update (ASU) “ASU 2016 – 10 Revenue from Contract with Customers: identifying Performance Obligations and Licensing”. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree of judgement necessary to comply with Topic 606. This guidance has no effective date as yet. The Company is currently evaluating the impact of adopting this guidance.

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." ASU 2016-13 will replace the current incurred loss approach with an expected loss model for instruments measured at amortized cost and require entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount under the current other-than-temporary impairment model. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. The Company is currently evaluating the impact of adopting this guidance.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance.

In October2016, theFASB issuedAccounting StandardsUpdate No. (“ASU”) 2016-16, "IntraEntityTransfers of AssetsOther Than Inventory." ASU 2016-16 requires immediate recognition of income tax consequences of intercompany assettransfers,other than inventorytransfers.ExistingGAAP prohibits recognition of income tax consequences of intercompany asset transfers whereby the seller defers any net taxeffect and the buyer is prohibitedfromrecognizing adeferredtax asset on the difference between thenewlycreated tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the consolidated financial statements. ASU 2016-16 specifically excludesfromits scope intercompany inventory transfers whereby the recognition of tax consequenceswilltake place when the inventory is sold to third parties. ASU 2016-16 is effective for fiscal yearsbeginningafter December 15,2017,and interim periodswithinthose fiscal years. Earlyadoption is permitted as of thebeginning of an annual reporting period forwhich financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact ofadopting this guidance.

InOctober2016,theFASBissuedAccountingStandardsUpdate No.(“ASU”) 2016-17, Consolidation(Topic810): Amendments to the Consolidation Analysis.Uponthe effective date ofUpdate2015-02, a single decision maker of a variable interest entity(VIE)is required to consider indirect economic interests in the entity held through related parties on a proportionate basis when determining whether it is the primary beneficiary of that VIE unless the single decision maker and its related partiesare under common control.If a single decision maker and its related partiesareunder common control, the single decision maker is required to consider indirect interests in the entity held through those related parties to be the equivalent of direct interests in their entirety. The Board is issuingthis Updateto amend the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties thatareunder common controlwith the reporting entity when determining whether it is the primary beneficiary of that VIE. The primary beneficiary of a VIE is the reporting entity that has a controlling financial interest in a VIE and, therefore, consolidates the VIE. A reporting entity has an indirect interest in a VIE if it has a direct interest in a related party that, in turn, has a direct interest in the VIE.As part of a separateinitiative, the Boardwillconsider whether other changes to the consolidation guidance for common control arrangementsarenecessary. The amendments inthis Updateareeffective for fiscal yearsbeginningafter December 15,2016, includinginterim periodswithinthose fiscal years. Earlyadoptionis permitted. The Company does not expectthis guidance to have a material impact on its financial statements.