PART I

Item 1. Business.

Company History

GreeneStone HealthcareEthema Health Corporation (the “Company” or “Ethema”), 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 a merger, effective February 1, 1995, between the Company and Nova Natural Resources Corporation, a Delaware corporation (“Nova Delaware”). The merger was effectuated solely for the purpose of changing the Company’s domicile from Delaware to Colorado. At all times prior to 2001, the Company was engaged in the oil and gas exploration business. Nova Delaware was the successor entity to Nova Petroleum Corporation, a Delaware corporation, and Power Resources Corporation, a Delaware corporation, which merged in 1986 (“the 1986 Merger”). Prior to the 1986 Merger, Nova Petroleum Corporation and Power Resources Corporation had operated since 1979 and 1972, respectively. In 2001, the Company entered into the electronics business and this business was active in 2001 and 2002, as part of the Torita Group. After 2002, the Company continued with various stages of development in this business until 2010.

Recent Developments

On December 29, 2015 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 operations from development stage electronics to healthcare services. On March 29, 2010, the Company entered into a one year consulting agreement with GreenestoneGreeneStone 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 the initial startup of private clinics and technical assistance to ensure that the clinics were in compliance with governmental policy and procedure requirements as well as any operational requirements. At the time of entering into this consulting agreement, Greenestone Clinic operated a clinic at the Muskoka property now housing its addiction treatment clinic and provided endoscopy services that the Company had planned to offer in its first Ontario medical clinic.

OnMay15,2010,theCompany secured a subleaseofspace (whichwaspreviouslytheRothbart PainClinic) ofapproximately 8,000 sq. ft. tobeused astheCompany’sexecutiveoffices and to run anendoscopy clinic,whichwas subsequently sold.services. The Company started offering medical services in June2010,offering various medical services,includingendoscopy,cardiologyandexecutivemedicals, which services were subsequently sold as part of 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 todobusinessusingthe“GreeneStone” name. The Company,through itswholly ownedsubsidiary GreeneStoneClinicMuskokaInc. (“GreeneStoneMuskoka”)enteredintoa leasewith the owneroftheMuskokapremisesonApril1, 2011.The Companyoffersonlymentalhealthandaddictiontreatment services atthis location whichoperates as an in-patientaddictiontreatmentcenter.sold.

On December 17, 2014,May 15, 2010, the Company completedsecured a sublease of space (which was previously the saleRothbart Pain Clinic) of all ofapproximately 8,000 sq. ft. to be used as the outstanding shares of its subsidiary, 1816191, for the sum of CAD$1,282,002, comprised of the agreed purchase price of CAD$1,250,000Company’s executive offices and the acquisition of net assets at closing of CAD$32,002.to run an endoscopy clinic. The saleEndoscopy clinic was made pursuant to a Share Purchase Agreement, dated October 6, 2014, by and between the Company and Jaintheelal Parekh Medicine Professional Corporation (“Jaintheelal”).subsequently sold. 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, is intheformofan interest bearingnote withacouponof 5%per annum.

The Company’s principaloperationsarenow theprovisionofaddictiontreatment services.

Corporate Structure

The Company currently has one, its wholly owned operating subsidiary GreeneStone Muskoka.

Clinic Muskoka Inc. (“GreeneStone Muskoka Treatment Center

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”Muskoka”) 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,, also 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 aMuskoka premises on April 1, 2011 and provided mental health and addiction treatment services and operated an in-patient 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”).this location.

During December 2016, the Company obtained a license to operate and provide addiction treatment healthcare services in Florida, USA. The company commenced operations under this license with effect from January 2017.

On April 1, 2011,Dr.Susan K. Blank was hired underFebruary 14, 2017, the Company completed a one-year contractseries of transactions (referred to runcollectively as the “Restructuring Transactions”), including a Share Purchase Agreement (the “SPA”) whereby the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”), which held the real estate on which the Company’s GreeneStone Muskoka operated, an asset purchase agreement (the “APA”) and lease (the “Lease”) whereby the Company sold certain of the GreeneStone Muskoka Treatment Center.Dr.Blank worked withbusiness assets and leased the CAGreal estate to refine the missionbuyer, and protocols fora 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 Share Purchase Agreement

Under the SPA, the Company acquired 100% of the stock of CCH from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of the Company (“Mr. Leon”). CCH owns the real estate on which GreeneStone Muskoka Treatment Centeris located. The total consideration paid by the Company was CDN$3,517,062, including the assumption of certain liabilities of CCH, which was funded by the assignment to Leon Developments of certain indebtedness owing to the Company in the amount of CDN$659,918, and worked on the policies and procedures for the operationissuance of 60,000,000 shares of the treatmentcenter.Company’s common stock to Leon Developments, valued at US$0.0364 per share.

The Asset Purchase Agreement and Lease

In August 2011,Under the APA, the assets of GreeneStone Muskoka were sold by the Company, through its subsidiary, GreeneStone Muskoka, to Canadian Addiction Residential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000. The proceeds of the GreeneStone Muskoka Treatment Center began providing addiction treatment servicesasset sale were used to pay down certain tax debts and took its first paying clients. Theoperational costs of the Company and to fund the Florida Purchase, mentioned below.

Through the APA, substantially all of the assets of GreeneStone Muskoka Treatment Center offers clientswere sold, leaving Ethema with only the underlying clinic real estate, which the Company, through its newly acquired subsidiary, CCH concurrently leased to the Purchaser. The Lease is a 45day program that costs between CAD$27,000triple net lease and CAD$37,000 per treatment period. Treatment is individualized, providingprovides 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 Purchases and Business

Immediately after closing on the sale of the assets of the Canadian Rehab Clinic, the Company closed on the acquisition of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements. This business is operated through its wholly owned subsidiary, Addiction Recovery Institute of America, LLC (“ARIA”) (formerly Seastone Delray Healthcare, LLC). The purchase price for the ARIA assets was US$6,070,000 financed with a purchase money mortgage of US$3,000,000, and US$3,070,000 in cash.

On April 4, 2017 the Company changed its Corporate name from Greenestone Healthcare Corporation to Ethema Health Corporation.

On November 2, 2017, the Company entered into an Agreement to purchase from AREP 5400 East Avenue LLC certain buildings in West Palm Beach, Florida, totaling approximately 80,000 square feet, on which the Company planned to operate a substance abuse treatment center. The purchase price of the Property was $20,530,000. The Company made a series of nonrefundable down payments totaling $2,940,546 in 2017 and 2018. The Company could not get the necessary financing to close on the deal.

On May 23, 2018, the Company converted the agreement to purchase AREP 5400 East Avenue LLC. (“the landlord”) into a lease agreement with a purchase option of $17,250,000, increasing August 31, 2018 by $750,000 per month until the purchase option is exercised. The premises is located at 5400, 5402 and 5410 East Avenue, West Palm Beach, Florida (the “Property”). The lease was for an initial 10 years and provided for two weeks ofadditional 10 year extensions.

The Company was previously under agreement to purchase the property from the landlord. The property is presently used as a rehabilitation treatment with an assessment thereaftercenter. The current tenant at the property, Alternatives in Treatment, LLC, a Florida limited liability company, consented to the Lease 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 hasexecution of the Lease entered into 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 providedSublease Agreement with nutritious food while intreatment.the Company.

In NovemberJune 2018, the Company moved its operations out of 2011, the CAG was disbanded after achieving its goals. In March 2012, Dr. BlankDelray Beach properties and two contract therapists, all of whom were frominto the United States, were replaced by a more permanent team of Canadian doctors and therapists.leased property at 5400 East Avenue in West Palm Beach.

On August 3, 2018, the Company changed the name of its subsidiary Seastone Delray Healthcare, LLC to Addiction Recovery Institute of America, LLC (“ARIA”).

The Company received a license to operate in-patient detoxification and residential treatment services in September 2018.

In June of 2019, the Company and the landlord wished to proceed with marketing the property for sale and agreed to convert the long term lease into a month to month lease for a reduced amount of space on the property and Alternatives in Treatment became a direct tenant of the Landlord in the remainder of the space.

The Company once again had an opportunity to purchase the property in October of 2019 but could not arrange for sufficient financing to complete the purchase and the Landlord subsequently entered into a conditional agreement with another purchaser.

On December 20, 2019, the Company entered into an agreement with the landlord to terminate the lease agreement on January 31, 2020.

The Company has signed a Letter of intent to acquire a new facility at another location nearby which has been delayed by the Corona Virus pandemic and a delay in obtaining the licensing for this facility. The Company has been actively involved in the operation of the treatment center operated by Evernia Health Center LLC (“Evernia”) at 950 Evernia Street, West Palm Beach Florida. The Company is under contract to purchase a majority interest in this company and has been financing the start up operations of this facility. This operation will be the Company’s only treatment center operating and expects the purchase of the majority interest to close in the second quarter of 2021.

Corporate Structure

The Company consists of the following entities:

Employees

As of December 31, 2015, GreeneStone Healthcare2020, Ethema Health Corporation had no employees and its subsidiary GreeneStone Clinic Muskoka had approximately 322 employees.

Marketing

The addiction treatment business in the USA operates as a private payan insured healthcare service. The customers get no government or OHIP subsidy to attend our treatment facility. The decision to attend the treatment center is made by each individual, making it important to market our services to the individual. There are a large number of mental health professionals that refer to the treatment center and we ensure that we maintain contact with and market to these professionals. Our marketing efforts are long term processes of establishing relationships with relevant professionals and our treatment staff. We use industry specific conferences and functions to network with 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 hundredsa significant amount of private paidtreatment facilities in the United States, and they collectively, represent a major competitorwe compete with these clinics for those with the ability to pay for addictionpatients who are typically covered by insured healthcare 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.

Item 1B. Unresolved Staff Comments

none.None. 

Item 2. Properties.

GreenestoneEthema Executive Offices and Endoscopy Unit

The Company’s executive offices are located at 5734 Yonge Street, Suite 300, Toronto, Ontario, Canada M2M 4E7, consisting of approximately 8,000 sq. ft. and takes up the entire third floor of the building (the “Yonge Street Facility”). 1590 S. Congress Avenue, West Palm Beach, Florida, 33406..

West Palm Beach Treatment Operations

The Company treatment operations were based in our leased premises at 5400 East Avenue, West Palm Beach, Florida, USA.

This facility was leased by 1816191 and the primary activityoperated until January 30, 2020, we have subsequently ceased operations at this facility was endoscopy procedures. The Company entered into a sublease for office space at these premises from 1816191 on a month to month basis.and are currently exploring new treatment facility options.

The Company has been actively involved in the operation of the treatment center operated by Evernia Health Center LLC (“Evernia”) at 950 Evernia Street, West Palm Beach Florida. The Company is under contract to purchase a majority interest in this company and has been financing the start up operations of this facility. This operation will be the Company’s only treatment center operating and expects the purchase of the majority interest to close in the second quarter of 2021. The Company is accounting for the funds advanced to Evernia as other investments, until such time as the contract to purchase Evernia is closed.

Greenestone Muskoka Treatment Facility

The BalaGreenestone Muskoka Treatment Facility is located in Bala, Ontario at 3571 Highway 169. The property is 43 acres in size and contains approximately 48,000 square feet of buildings. The property is owned by Ethema’s wholly owned Canadian subsidiary CCH and has been leased from Cranberry Coveto the new owner of the Muskoka Clinic for a term of five years, which commencedends on April 1, 2014 and hasFebruary 28, 2022. The Lease gives the tenant an option to extend for anthree additional three years. Further, the Company hasfive (5) year terms, an option to purchase the property at any time duringfor a purchase price of $7,000,000 in the first thirty six (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.

Item 3. Legal Proceedings.

WeA suit, claiming past due rent was filed against the Company in March 2020 for rent of a storage warehouse, the warehouse was abandoned during March 2020. The rental expense was accrued in our records as of December 31, 2019.

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

Item 4. Mine Safety Disclosures.Disclosures.

None.

PART II

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 BoardMarket (the “OTCBB”“OTC PINK”) 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.

From March 2012 to January 2020, our common stock has been traded on the OTCQB markets under the symbol “GRST”, in January 2020, the stock was downgraded to the OTC Pink Sheets market.

The following table sets forth the rangelast reported sale price 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.OTC Pink on April 12, 2021, was $0.0056 per share. As of April 12, 2021, there were approximately 154 holders of record of our common stock. 

(b)Holders

The number of record holders of the Company’s common stock as of April 10, 2015, was approximately 149.Dividend Policy

(c)Dividends

We have nevernot paid any cash dividends on our common shares,stock to date, and we do not anticipate that we will pay anyhave no intention of paying cash dividends with respect to those securities in the foreseeable future. Our current business planWhether we declare and pay dividends is determined by our Board of Directors at their discretion, subject to retaincertain limitations imposed under Nevada corporate law. The timing, amount and form of dividends, if any, future earnings to finance the expansion developmentwill depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our business.Board of Directors.

(d)Securities Authorized for Issuance Under Equity Compensation PlansPlan Information

As of December 31, 2015, there were 10,000,000 common securities authorizedSee Item 11 - Executive Compensation for issuance under the Company’s 2013 Stock Option Plan (which was previously approved by securityholders). 

equity compensation plan information.

Recent Sales of Unregistered Securities

In the securities transactions describedOther than as set forth below shares were issued pursuant to the exemptions from the registration requirements ofor as previously disclosed in our filings with the Securities Act of 1933, as amended, afforded the Company under Section 4(a)(2) promulgated thereunder due to the fact that the issuanceand Exchange Commission, we 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 thesell any equity securities transactions during the year ended December 31, 2015:2020 in transactions that were not registered under the Securities Act.

Between January 6, 2020 and December 28, 2020 in terms of conversion notices received from several convertible note holders the Company issued 1,586,659,618 shares of common stock at a par value of $0.01 per share to settle $551,908 of convertible debt and accrued interest thereon.

Between January 6, 2020 and May 2, 2020, in terms of warrant exercise notices received the Company issued 184,000,000 shares of common stock at par value of $0.01 each, These warrants were exercised on a cashless basis.

On January 15, 2015June 1, 2020, the Company issued 300,000100,000,000 shares to Ethan Leon, the son of the Company’s common stock to JMJ pursuantour CEO in settlement of $25,000 of advances made to the conversion of a convertible note totaling US$8,117 at a conversion price of US$0.027 per share.Company by Eileen Greene and assigned to Ethan Leon,

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,June 12, 2020, the Company issued 250,000 shares of the Company’s common stock and 106,000 of the Company’s400,000 Series B Preferred stockshares to Castelli as compensation for services rendered totaling$56,096.an investor at par value of $1.00 per share in partial settlement of convertible debt amounting to $400,000.

On April 30, 2015,During December 2020, the Company issued 1,060,0004,000,000 Series A Preferred shares at par value of $0.01 per share to Eileen Greene, the Company’ common stockspouse of our CEO, in settlement of $40,000 of advances made to Castelli upon conversion of the 106,000 Series B Preferred stock, mentioned above, at a conversion ratio of10:1.Company.

Penny

 Penny Stock

The U.S. Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker-dealerbroker 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,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;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;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;price; (d) contains a toll-free telephone number for inquiries on disciplinary actions;actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks;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-dealerbroker 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;stock; (b) the compensation of the broker-dealerbroker dealer and its salesperson in the transaction;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;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-dealerbroker 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.

Special Note Regarding Forward-Looking Statements

Many of the matters discussed within this Annual Report contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on our current expectations and projections about future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. Such risks and uncertainties include the risks noted under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere. We do not undertake any obligation to update any forward looking statements. Unless the context requires otherwise, references to “we,” “us,” “our,” and “Ethema,” refer to Ethema Health Corporation and its subsidiaries.

Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.

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-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 consolidated 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 consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our consolidated 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 consolidated financial statements and accompanying notes to the consolidated financial statements for the year ended December 31, 2015.2020.

PlanResults of Operationoperations for the year ended December 31, 2020 and the year ended December 31, 2019.

During the next twelve months, the Company plans to continue and expand its operations as a provider of addiction and after-care treatment services. The Company plans to focus on the growth of its addiction and aftercare treatment units while simultaneously reducing costs in current operations.Revenue

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 acresRevenue was $338,996 and is adjacent to Lake Muskoka in Ontario. The Company expects this deal to close by the second quarter of the 2016 financial year, once the appropriate funding has been raised.

The Company plans to expand its addiction treatment business with acquisitions. In 2014, the Company entered into a non-binding letter 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 Operations

For the Fiscal Year Ended December 31, 2015, Compared to the Fiscal Year Ended December 31, 2014

Revenue

We had revenues totaling $3,138,878 and $3,416,342$359,947 for the years ended December 31, 20152020 and 2014,2019, respectively, a decrease of $277,464$20,951 or 8.1%5.8%. We operate in Canada

Revenue from patient treatment was $0 and our functional currency is the Canadian Dollar. Our revenue, in Canadian Dollars increased from CAD$3,963,274 to CAD$4,003,090$28,363 for the years ended December 31, 20142020 and 2015,2019, respectively, an increasea decrease of $39,816$28,363 or 1.0%100.0%. The decrease in revenue in US$ terms is attributabledue to the relative strengthcessation of operations at our West Palm Beach facility in December 2019. We have entered into an LOI to acquire another facility, however the US$ against the CAD$ during the current year, the average exchange rate between the CAD$ and the US$transaction has weekend from $0.9051 in the prior year to $0.7833 in the current year, a decrease in the average exchange ratenot closed as of 15.5%. The Company believes that revenue will grow over the next year.December 31, 2020.

Operating Expenses

Operating expenses totaled $3,409,450Revenue from rental income was $338,996 and $4,757,851$331,584 for the years ended December 31, 20152020 and 2014,2019, respectively, an increase of $7,412 or 2.2%.

Operating Expenses

Operating expenses was $502,340 and $4,559,682 for the years ended December 31, 2020 and 2019, respectively, a decrease of $1,348,401$4,057,342 or 28.3%89.0%. The decrease in operating expenses in US$ 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 $270,572was $163,344 and $1,341,509$4,199,735 for the years ended December 31, 20152020 and 2014,2019, respectively, a decrease of $1,070,937, primarily due$4,036,391 or 96.1%. The decrease is attributable to the declinedecrease in operating expenses explainedabove.discussed above.

Other expenseincome

Other expense of $457,913 consists primarily of the provision of $446,476 raised against the receivable on the sale of the Endoscopy clinic. This receivableincome was fully provided for 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 $192,104$1,183 and $310,583$6,600 for the years ended December 31, 20152020 and 2014,2019, respectively, a decrease of $118,479$5,417 or 38.1%82.1%. This amount is immaterial.

Gain on debt extinguishment

Gain on debt extinguishment was $12,683,678 and $0 for the year ended December 31, 2020 and 2019, respectively. The decline consistscompany entered into several debt extinguishment agreements with convertible debt holders whereby the amounts payable and the payment terms under these convertible notes were renegotiated, this also resulted in the extinguishment of derivative liabilities related to these convertible notes.

Gain (loss) on sale of assets

The Gain on sale of assets was $36,470 and the loss on sale of assets was $1,019,812 for the years ended December 31, 2020 and 2019, respectively. The gain in the current year represents an approximate decline of $29,871 dueover-accrual for expenses relating to the deterioration indisposal of the exchange rateDelray Beach properties and a reduction in the interest bearing convertible notes which were carriedloss in the prior year offset byrepresents the loss on the disposal of the Delray Beach properties during 2019.

Warrant exercise

Warrant exercise was $95,868 and $0 for the years ended December 31, 2020 and 2019, respectively, an increase of $95,868 or 100%. During the current period a warrant holder exercised warrants for a total of 224,388,247 shares of common stock resulting in interestthe expense attributable to interest on payroll and Harmonized SalesTax(“HST”), and accrualsof $95,868 for income taxpenalties.the issue of 184,000,000 shares.

Penalty on convertible notes

The penalty on convertible notes was $0 and $569,628 for the years ended December 31, 2020 and 2019, respectively. The penalty arose on notes which were in default in 2019, penalties were either levied or provided for in terms of the agreements entered into with the lenders.

Loss on conversion of convertible debentures

Loss on conversion of convertible debentures was $585,351 and $203,981 for the years ended December 31, 2020 and 2019, an increase of 381,370 or 187.0%. The loss on conversion of convertible debentures was due to the conversion of debentures at a discount to market price by several convertible note holders during the current and prior year.

Deposit forfeited

On December 20, 2019, the Company entered into an agreement to terminate the lease agreement on January 30, 2020. The deposit forfeited was $1,665,078 for the year ended December 31, 2019. The deposit forfeited represents deposits initially paid for the acquisition of the West Palm Beach treatment facility located at 5400, 5402 and 5410 East Avenue West Palm Beach. We were unable to consummate the purchase transaction and entered into a lease agreement with the landlord, the deposit initially paid was offset against outstanding rental. The excess was recorded as a forfeiture.

Interest income

Interest income was $629 and $17,226 for the years ended December 31, 2020 and 2019, respectively, a decrease of 16,597 or 96.3%. The interest income in the prior year was earned on the escrow balance due from the sale of Greenstone Muskoka in 2017.

Interest expense

Interest expense was $631,425 and $1,079,038 for the years ended December 31, 2020 and 2019, respectively, a decrease of $447,613 or 41.5%, primarily due to the decrease in mortgage liabilities on the disposal of the Delray Beach properties in the prior year and the conversion of convertible debt to equity during the current year.

Debt discount

Debt discount was $861,657 and $3,338,760 for the years ended December 31, 2020 and 2019, respectively, a decrease of $2,477,103 or 74.2%. The decrease is primarily due to the maturity date of several convertible notes prior to the current year, with the resultant full amortization of debt discount related to those convertible notes.

Derivative liability movement

The derivative liability movement during the current year represents the mark to market movements of variably priced convertible notes and warrants issued during the current and prior years. These securities are marked to market on a quarterly basis and the resultant gain or loss is recorded as a derivative liability movement in the consolidated statements of operations and comprehensive loss.

Foreign exchange movements

Foreign exchange movements of $184,586, representwas $(175,500) and $(311,606) for the years ended December 31, 2020 and 2019, respectively and represents the realized exchange lossgains and (losses) on monetary assets and liabilities settled during the current year as well as mark to market adjustments on monetary assets and liabilities reflected on the balance sheet and denominated in Canadian Dollars.

Taxation

A taxation expense of $50,000 was provided for in the current year as an estimate of potential US taxes to be paid for failure to file required US tax returns in time.

Net loss from discontinued operationsincome (loss)

During the prior year, the Company disposed of its Endoscopy Clinic to a related party. TheNet income was $3,084,992 and net loss from discontinued operations amounted to $248,181.

Net Loss

Net loss totaled $1,155,176 and $1,900,273was $(14,962,841) for the years ended December 31, 20152020 and 2014,2019, respectively, a decreasean increase of $745,097,$18,047,833 or 120.6%. The increase is primarily due to the decreasereduction in operating expenses the sale of the Endoscopy unit in the prior year and the declinegain realized on debt extinguishments, offset by the increase in interest expense,derivative liability movements, as discussed above.

Contingency related to outstanding payroll tax liabilities:liabilities

The Company was delinquent in filing previous payroll tax returns resulting in taxes, interest and penalties payable at December 31, 2015 and 2014. As of December 31, 2015 and 2014 as part of Taxes Payable, the Company has payroll tax liabilities of approximately $2,429,032 and $2,065,000, respectivelyalso not filed certain foreign assets forms due to various taxing authorities on the consolidated balance sheets. If the Company does not satisfy these liabilities, the taxing authorities may place liens on its bank accounts which would have a negative impact on its ability to operate. Further, the actual liability may be higher due to interest orUS Federal Government. A provision of $250,000 was made for any potential penalties assesseddue. This issue is being addressed by the taxing authorities.our tax advisors.

Liquidity and Capital Resources

The following table summarizes working capital atCash used in operating activities was $101,970 and $2,895,538 for the years ended December 31, 2015, compared2020 and 2019, respectively a decrease of $2,793,568 or 96.5%. The decrease is primarily due to the following:

Cash used in investing activities was $684,454 and cash generated by investing activities was $4,556,698 for the years ended December 31, 2014.2020 and 2019, respectively. We invested $690,449 in a treatment facility based on West Palm Beach which we have committed to acquiring once we have concluded the sale agreement. In the prior year, we realized net proceeds on the disposal of the Delray Beach properties of $4,756,360.

Cash generated by financing activities was $854,019 and cash used by financing activities was $1,951,034 for the years ended December 31, 2020 and 2019, respectively. During the current year we raised $1,129,050 from convertible notes and repaid $210,600 in convertible notes, primarily to fund our new facility in West Palm Beach. In the prior year, we repaid the mortgage outstanding on the Delray properties of $3,067,073 out of the proceeds of the property disposal and repaid $2,504,695 to debt investors during the current year, in the prior year we raised $4,035,000 from debt investors.

Over the next twelve months we estimate that the company will require $3.5millionapproximately $6.5 million in funding to cover therepay its obligations, if these obligations are not converted to equity and for funding working capital deficit and properly market and promoteas we continue to seek opportunities for addiction treatment in the company. The company will have to raise equity or secure debt.US markets. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, the Company’s liquidity risk is assessed as high and remains unchanged from the prior year.high.

Item 8. Financial Statements and Supplementary Data.

GREENESTONE HEALTHCAREETHEMA HEALTH 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

West Palm Beach, Florida

Opinion on the Consolidated Financial Statements

Wehave auditedtheaccompanying balance sheets of Ethema Health Corporation (the “Company”) at December 31, 2020 and 2019, and the related consolidated balancesheetsofGreeneStone Healthcare Corporation (“the Company”) as ofDecember31, 2015and2014andtherelatedconsolidatedstatementsof operationsandothercomprehensive loss,income (loss), changes in stockholders’ deficit, and cash flows for each of theyearsendedDecember31, 20152020 and2014.These consolidated financial statementsare 2019, and theresponsibilityoftheCompany’s management.Ourresponsibility is related notes (collectively referred to express anopinionontheseas the consolidatedfinancial statements basedonouraudit.

Weconducted our auditin accordancewith thestandardsofthePublic Company Accounting Oversight Board (United States)statements). Those standards requirethatweplanand performthe audittoobtain reasonable assurance about whether thefinancial statementsarefreeofmaterial misstatement. The Company isnotrequired tohave,norwereweengagedtoperform, anauditof itsinternal controloverfinancial reporting.Our audit includedconsiderationofinternal controloverfinancial reporting as a basis fordesigningauditproceduresthatareappropriate inthecircumstances,but notforthepurposeofexpressing anopinionontheeffectivenessoftheCompany’s internal control over financial reporting. Accordingly, weexpressnosuchopinion.An 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of GreeneStone Healthcare Corporation as ofthe Company at December 31, 20152020 and 20142019, and the results of its operations and its cash flows for each of the years ended December 31, 20152020 and 20142019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The accompanying consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discusseddescribed in Note 3 to the consolidated financial statements, the Company has sustained net losseshad accumulated deficit of approximately $42.4 million and has anegative working capital and stockholder’s deficit. These conditions raiseof approximately $12.9 million at December 31, 2020, which raises substantial doubt about the Company’sits ability to continue as a going concern. Management’s plans in regardsregard 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 LLPCritical Audit Matter

New York, NY

April 14, 2016

The accompanying notescritical audit matters communicated below are an integral partmatters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Embedded Conversion Features on Convertible Notes – Refer to Notes 12 and 16 to the Financial Statements

The principal considerations for our determination that performing procedures relating to the valuation of derivatives is a critical audit matter are the significant judgment by management when developing the fair value of the derivative liabilities. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the valuation models used and related variable inputs used within those models.

GREENESTONE HEALTHCARE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

ETHEMA HEALTH CORPORATION

CONSOLIDATED BALANCE SHEETS

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

ETHEMA HEALTH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS 

AND COMPREHENSIVE INCOME (LOSS)

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

ETHEMA HEALTH CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

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

ETHEMA HEALTH CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS 

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