Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-54748

ETHEMA HEALTH CORPORATION.

(Exact Name of Registrant as Specified in its Charter)

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

950 Evernia Street West Palm Beach, Florida		33401
Address of Principal Executive Offices		Zip Code

(416) 500-0020

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

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 past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

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 Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)		Name of each exchange on which registered
Common shares	GRST	OTC Pink

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Number of shares of common stock outstanding as of May 29, 2024 was 3,729,053,805.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In particular, statements contained in this Quarterly Report on Form 10-Q, including but not limited to, statements regarding the sufficiency of our cash, our ability to finance our operations and business initiatives and obtain funding for such activities; our future results of operations and financial position, business strategy and plan prospects, or costs and objectives of management for future acquisitions, are forward looking statements. These forward-looking statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “seeks,” “goals,” “estimates,” “predicts,” “potential” and “continue” or similar words. Readers are cautioned that these forward-looking statements are based on our current beliefs, expectations and assumptions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed, projected or implied in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form 10-Q, “Ethema,” the “Company,” “we,” “us” and “our” refer to Ethema Health Corporation.

FORM 10-Q

ETHEMA HEALTH CORPORATION

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item l.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
SIGNATURES		30

ETHEMA HEALTH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2024			December 31, 2023
ASSETS		(Unaudited)

Current assets
Cash	$	137,497		$	68,573
Accounts receivable, net		356,929			313,338
Prepaid expenses		12,249			18,159
Other current assets		3,158			3,030
Total current assets		509,833			403,100
Non-current assets
Property and equipment		519,152			508,401
Intangible assets, net		805,457			894,952
Right of use assets		9,316,039			9,323,723
Deposits paid		409,000			389,000
Total non-current assets		11,049,648			11,116,076
Total assets	$	11,559,481		$	11,519,176

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	336,401		$	352,101
Convertible notes, net of discounts		4,471,232			4,419,927
Short-term notes		1,037,617			680,672
Receivables funding		101,848			211,961
Government assistance loans		14,999			14,962
Operating lease liability		44,485			38,563
Finance lease liability		8,570			8,426
Related party payables		2,660,190			2,572,292
Total current liabilities		8,675,342			8,298,904
Non-current liabilities
Government assistance loans		16,732			20,520
Operating lease liability		9,427,628			9,383,557
Finance lease liability		14,262			16,475
Total non-current liabilities		9,458,622			9,420,552
Total liabilities		18,133,964			17,719,456

Preferred stock - Series B; $1.00 par value 10,000,000 authorized, 0 and 400,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023.		—			—

Stockholders’ deficit
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,000,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023		40,000			40,000
Common stock - $0.01 par value, 10,000,000,000 shares authorized; 3,729,053,805 and 3,729,053,805 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		37,290,539			37,290,539
Additional paid-in capital		26,187,925			26,187,925
Discount for shares issued below par value		(27,363,367	)		(27,363,367	)
Accumulated deficit		(42,729,580	)		(42,355,377	)
Total stockholders’ deficit		(6,574,483	)		(6,200,280	)
Total liabilities and stockholders’ deficit	$	11,559,481		$	11,519,176

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

ETHEMA HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

	Three months ended March 31, 2024			Three months ended March 31, 2023

Revenues	$	1,300,100		$	1,300,046

Operating expenses
General and administrative		274,546			241,237
Rent expense		265,132			114,564
Management fees		—			27,500
Professional fees		150,550			111,204
Salaries and wages		727,741			592,036
Depreciation and amortization expense		111,206			138,479
Total operating expenses		1,529,175			1,225,020

Operating loss (income)		(229,075	)		75,026

Other (expense) income
Interest income		575			—
Interest expense		(93,186	)		(157,096	)
Amortization of debt discount		(63,162	)		(76,921	)
Foreign exchange movements		10,645			(2,955	)
Loss before taxation		(374,203	)		(161,946	)
Taxation		—			(13,771	)
Net loss		374,203	)		(175,717	)
Net income attributable to non-controlling interest		—			(2,968	)
Net loss attributable to Ethema Health Corporation Stockholders’		(374,203	)		(178,685	)
Preferred stock dividend		—			(23,419	)
Net loss available to common shareholders of Ethema Health Corporation		(374,203	)		(202,104	)
Accumulated other comprehensive (loss) income
Foreign currency translation adjustment		—			(1,504	)

Total comprehensive loss	$	(374,203	)	$	(203,608	)

Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)
Weighted average common shares outstanding – Basic and diluted		3,729,053,805			3,729,053,805

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

ETHEMA HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT


	Series A Preferred				Common				Additional paid-in		Discount to			Accumulated other Comprehensive		Accumulated			Non-controlling shareholders
	Shares		Amount		Shares		Amount		Capital		par value			Income		Deficit			interest		Total
Balance as of December 31, 2023		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	26,187,925	$	(27,363,367	)		—		(42,355,377	)		—		(6,200,280	)
Net loss		—		—		—		—		—		—			—		(374,203	)				(374,203	)
Balance as of March 31, 2024		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	26,187,925	$	(27,363,367	)	$	—	$	(42,729,580	)	$	—	$	(6,574,483	)


	Series A Preferred				Common				Additional paid-in		Discount to			Accumulated other Comprehensive			Accumulated			Non-controlling shareholders
	Shares		Amount		Shares		Amount		Capital		par value			Income			Deficit			interest		Total
Balance as of December 31, 2022		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	23,419,917	$	(27,363,367	)	$	(5,065	)	$	(43,484,751	)	$	870,184	$	(9,232,543	)
Foreign currency translation		—		—		—		—		—		—			(1,504	)		—			—		(1,504	)
Net loss		—		—		—		—		—					—			(178,685	)		2,968		(175,717	)
Dividends accrued		—		—		—		—		—		—			—			(23,419	)		—		(23,419	)
Balance as of March 31, 2023		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	23,419,917	$	(27,363,367	)	$	(6,569	)	$	(43,686,855	)	$	873,152	$	(9,433,183	)

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

ETHEMA HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Three months ended March 31, 2024			Three months ended March 31, 2023
Operating activities
Net loss	$	(374,203	)	$	(175,717	)
Adjustment to reconcile consolidated net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense		111,206			138,479
Amortization of debt discount		63,162			76,921
Amortization of right of use asset		7,684			70,219
Deferred taxation movement		—			(15,532	)
Changes in operating assets and liabilities
Accounts receivable		87,048			(151,744	)
Prepaid expenses		5,910			10,576
Other current assets		(127	)		(64,476	)
Accounts payable and accrued liabilities		(56,642	)		251,384
Operating lease liabilities		49,993			(68,413	)
Taxes payable		—			34,177
Net cash (used in) provided by operating activities		(105,969	)		105,874

Investing activities
Deposits paid		(20,000	)		(50,000	)
Purchase of property and equipment		(32,462	)		(52,418	)
Net cash used in investing activities		(52,462	)		(102,418	)

Financing activities
Repayment of mortgage		—			(29,300	)
Proceeds from receivables funding		—			190,000
Repayment of receivables funding		(146,067	)		(204,133	)
Repayment of convertible notes		—			(10,000	)
Proceeds from promissory notes		302,000			—
Repayment of government assistance loans		(3,748	)		(3,449	)
Repayment of finance leases		(2,069	)		(1,944	)
Proceeds from related party notes		87,898			—
Repayment of related party notes		—			(58,917	)
Net cash provided by (used in) financing activities		238,014			(117,743	)

Effect of exchange rate on cash		(10,659	)		1,110

Net change in cash		68,924			(113,177	)
Beginning cash balance		68,573			140,757
Ending cash balance	$	137,497		$	27,580

Supplemental cash flow information
Cash paid for interest	$	3,488		$	53,310
Cash paid for income taxes	$	—		$	—

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

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of business

Since 2010, the Company has operated addiction treatment centers. Initially the Company operated an addiction treatment center in Ontario Canada under its Greenestone Muskoka clinic, which was sold on February 14, 2017. Simultaneously with this sale the Company purchased buildings and operated an addiction treatment center in Delray Beach Florida under its Addiction recovery Institute of America subsidiary with a license obtained in December 2016, initially though owned properties in Delray Beach and subsequently though leased properties in West Palm Beach, Florida. Since June 30, 2020, the Company has been actively involved in the management of a treatment center operated by Evernia in West Palm Beach Florida. On July 1, 2021, the Company closed on the acquisition of 75% of ATHI, which owns 100% of Evernia, once the probationary approval of a license was obtained from the Department of Children and Family Services of Florida. Evernia is currently the only active treatment center operated by the Company.

The Company sold its real estate on which its Greenstone Muskoka clinic operated during the prior year.

Non-binding Letter of Intent (”LOI”) to acquire assets and assignment of lease and sub lease for Boca cove Detox Center

On March 22, 2024, the Company executed a LOI to acquire certain assets, including furniture, equipment inventory and supplies of Boca Cove Detox, LLC, along with the assignment of lease and sub-lease for premises located at 899 Meadow Avenue, Boca Raton, Florida.

The purchase price is $240,000 with monthly repayment of $20,000 per month beginning on the Effective Date, defined below, of the agreement for a period of 12 months. The Company paid a non-refundable Exclusivity Deposit (“Exclusivity Deposit”) to the Seller, which deposit will be applied to the purchase price. In addition, upon the execution of the transaction documents, the Company will pay to the seller a Security Deposit (“Security Deposit”) of $83,393 which will be applied to the purchase price if the assignment of the lease is completed within 12 months of the effective date, if not completed within 11 months of the effective date, than $20,000 will be applied to the 12 installment of the purchase price, with the remaining balance of $63,393 remaining as the Security Deposit and applied to the last month of the sub-lease agreement.

The Effective Date is the earlier of the Company obtaining a license for the premises or 30 days from the signing of the LOI and the payment of the Exclusivity Deposit.

2. Summary of significant accounting policies

Financial Reporting

The (a) unaudited condensed consolidated balance sheets as of March 31, 2024, and as of December 31, 2023, which has been derived from audited consolidated financial statements, and (b) the unaudited condensed consolidated statements of operations, stockholders’ deficit and cash flows of the Company, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of results that may be expected for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on May 7, 2024.

All amounts referred to in the notes to the unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.

a) Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

b) Principles of consolidation and foreign translation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.

In the prior year, certain of the Company’s subsidiaries functional currency was the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, “Foreign Currency Translation” as follows:

●

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

●

Certain non-monetary assets and liabilities and equity at historical rates.

●

Revenue and expense items and cash flows at the average rate of exchange prevailing during the year.

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

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

On June 30, 2023, the Company disposed on Cranberry Cove Holdings whose functional currency was Canadian Dollars, all remaining subsidiaries have the U.S. dollar as a functional currency.

The relevant translation rates for the prior year were as follows: For the three months ended March 31, 2023, a closing rate of CDN$1 equals US$0.7389 and an average exchange rate of CDN$1 equals US$0.7394.

c) Cash and cash equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with several financial institutions in the USA and Canada. There were no cash equivalents at March 31, 2024 and December 31, 2023.

The Company primarily places cash balances in the USA with high-credit quality financial institutions located in the United States which are insured by the Federal Deposit Insurance Corporation up to a limit of $250,000 per institution, in Canada which are insured by the Canadian Deposit Insurance Corporation up to a limit of CDN$100,000 per institution.

d) Accounts receivable

Accounts receivable primarily consists of amounts due from third-party payors (non-governmental) and private pay patients and is recorded net of allowances for doubtful accounts and contractual discounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s unaudited condensed consolidated financial statements is recorded at the net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimating net revenues at the time of billing that may result in the Company receiving less than the recorded receivable, (ii) the risk of non-payment as a result of commercial insurance companies denying claims, (iii) the risk that patients will fail to remit insurance payments to the Company when the commercial insurance company pays out-of-network claims directly to the patient, (iv) resource and capacity constraints that may prevent the Company from handling the volume of billing and collection issues in a timely manner, (v) the risk that patients do not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

e) Allowance for credit losses, Contractual and Other Discounts

The Company recognizes revenue based on historical collections received from healthcare providers, recognizing only a percentage of revenues actually billed. Effectively recognizing revenue net of any expected billing differentials. Based on the Company’s collection experience, the percentage of revenue recognized is adjusted on a periodic basis, thereby taking into account expected credit losses in the revenue recognition process. The revenue we recognize is already net of expected credit losses.

We constantly evaluate our collections experience and consider the market conditions and current economic developments facing the Company’s operations . We have not experienced significantly different collections to revenues we have recognized and we have not seen any deterioration in the payment patterns from the healthcare providers that the Company works with, we cannot predict with any certainty that the payment patterns the Company experiences may change and we may be required to adjust the percentage of revenue recognized.

f) Leases

The Company accounts for leases in terms of ASC 842. In terms of ASC 842, the Company assesses whether any asset based leases entered into for periods longer than twelve months meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to retain ownership of the asset at the end of the lease term.

Leases which imply that the Company will retain ownership at the end of the lease term are classified as financial leases, are included in property and equipment with a corresponding financial liability raised at the date of lease inception. Interest incurred on financial leases are expensed using the effective interest rate method.

Leases which imply that the Company will not acquire the asset at the end of the lease term are classified as operating leases, the Company’s right to use the asset is reflected as a non-current right of use asset with a corresponding operational lease liability raised at the date of lease inception. The right of use asset and the operational lease liability are amortized over the right of use period using the effective interest rate implied in the operating lease agreement.

Property and equipment

Property and equipment is recorded at cost. Depreciation is calculated on the straight-line basis over the estimated life of the asset.

h) Long Lived Assets

The Company evaluates the carrying value of its long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

i) Intangible assets

Intangible assets are stated at acquisition cost less accumulated amortization, if applicable, less any adjustments for impairment losses.

Amortization is charged on a straight-line basis over the estimated remaining useful lives of the individual intangibles. Where intangibles are deemed to be impaired the Company recognizes an impairment loss measured as the difference between the estimated fair value of the intangible and its book value.

Licenses to provide substance abuse rehabilitation services are amortized over the expected life of the contract, including any anticipated renewals. The Company expects its licenses to remain in operation for a period of five years.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

j) 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 previously used a Black Scholes 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 were included in the statements of operations. Inputs into the Black Scholes Option Pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk free interest rate and the estimated life of the financial instruments being fair valued.

k) Financial instruments

The Company initially measures its financial assets and liabilities at fair value. 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, loans payable and related party notes.

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

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

Level 1. Observable inputs such as quoted prices in active markets;


	·	Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and


	·	Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

The Company measures its convertible debt and derivative liabilities associated therewith at fair value. These liabilities are revalued periodically and the resultant gain or loss is realized through the consolidated Statement of Operations and Comprehensive Loss

l) Related parties

Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

m) Revenue recognition

ASC 606 requires companies to exercise more judgment and recognize revenue using a five-step process.

The Company’s provision for doubtful accounts are recorded as a direct reduction to revenue instead of being presented as a separate line item on the consolidated statements of operations and comprehensive loss.

As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize the revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to remain admitted in our facilities.

The Company receives payments from the following sources for services rendered in our U.S. Facility: (i) commercial insurers; and (ii) individual patients and clients. As the period between the time of service and time of payment is typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and does not adjust for the effects of a significant financing component.

The Company derives a significant portion of its revenue from other payors that receive discounts from established billing rates. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management.

Settlements with third-party payors are estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are determined. In the opinion of management, adequate provision has been made for any adjustments and final settlements. However, there can be no assurance that any such adjustments and final settlements will not have a material effect on the Company’s financial condition or results of operations. The Company’s receivables were $356,929 and $313,338 at March 31, 2024 and December 31, 2023, respectively. Management believes that these receivables are properly stated and are not likely to be settled for a significantly different amount.

The Company’s revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its revenue transactions:

identify the contract with a customer;

ii.

identify the performance obligations in the contract;

iii.

determine the transaction price;

iv.

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

n) 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 consolidated 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-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal 2019, through 2023 are subject to audit or review by the US tax authorities.

o) Net income per Share

Basic net income per share is computed on the basis of the weighted average number of common stock outstanding during the year.

Diluted net income per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net income per share are excluded from the calculation.

Dilution is computed by applying the treasury stock method for options and warrants. Under this method, “in-the money” options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Dilution is computed by applying the if-converted method for convertible preferred stocks. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to common stock. The shares issuable upon conversion will be added to weighted average number of common stock outstanding. Conversion will be assumed only if it reduces earnings per share (or increases loss per share).

p) Stock-based compensation

Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense over the employee’s requisite service period or vesting period on a straight-line basis. Stock-based compensation expense recognized in the unaudited condensed consolidated statements of operations is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. This estimate will be revised in subsequent periods if actual forfeitures differ from those estimates. We have no awards with performance conditions and no awards dependent on market conditions.

There were no stock-based compensation awards that vested during the three months ended March 31, 2024 and 2023 and there was no stock-based compensation recorded in the unaudited condensed consolidated financial statements.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

q) Financial instruments risks

The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet dates, March 31, 2024 and December 31, 2023.

Credit risk

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

Credit risk associated with accounts receivable is mitigated as only a percentage of the revenue billed to health insurance companies is recognized as income until such time as the actual funds are collected. The revenue is concentrated amongst several health insurance companies located in the US.

In the opinion of management, credit risk with respect to accounts receivable is assessed as low.

ii.

Liquidity risk

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. The Company is exposed to liquidity risk through its working capital deficiency of approximately $8.2 million, and an accumulated deficit of approximately $42.7 million. The Company is dependent upon the raising of additional capital to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from the prior year.

iii.

Market risk

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

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its convertible debt, short term loans, third party loans and government assistance loans as of March 31, 2024. In the opinion of management, interest rate risk is assessed as moderate.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has minimal disclosure to certain foreign currency payables and loans.

Other price risk

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

r) Recent accounting pronouncements

The Financial Accounting Standards Board (“FASB”) issued additional updates during the three months ended March 31, 2024. None of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the Company’s consolidated financial statements upon adoption.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Going concern

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the normal course of business. At March 31, 2024 the Company has a working capital deficiency of $8.2 million, and total liabilities in excess of assets in the amount of $6.6 million. Management believes that current available resources will not be sufficient to fund the Company’s planned expenditures over the next 12 months. These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about the Company's ability to continue as a going concern for one year from the date of issuance of these condensed interim consolidated financial statements.

The Company will be dependent upon the raising of additional capital through placement of common shares, and/or debt financing in order to implement its business plan and generating sufficient revenue in excess of costs. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These unaudited condensed consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

4. Disposal of subsidiary

On June 30, 2023, the Company entered into an exchange agreement with Leonite Capital, LLC, whereby it exchanged the 400,000 Series B shares with a value of $400,000 plus accrued dividends thereon of $61,184 for its entire shareholding in its property-owning subsidiary, Cranberry Cove Holdings. The Series B shares were cancelled upon consummation of the transaction.

Immediately prior to the disposal of Cranberry Cove Holdings, the Company assumed the loan owed to a third party of $779,005 and the loan owing to Leon Developments of $1,973,837, Leon developments, a related party, owned by the Company’s CEO, Shawn Leon. In addition, the Company forgave the intercompany debt owing by Cranberry Cove Holdings of $4,566,848.

The assets and liabilities disposed of were as follows:

	Net book value
Assets
Other receivables	$	12,015
Property and equipment		2,420,499
		2,432,514
Liabilities
Accounts payable and accrued liabilities		(196,859	)
Government assistance loans		(45,317	)
Mortgage loan		(3,525,223	)
		(3,767,399	)

Disposal of subsidiary to related party – recorded as additional paid in capital	$	(1,334,885	)

The minority shareholders interest related to the Series A preferred stock in Cranberry Cove Holdings was recorded as a deemed contribution to the Company and credited to additional paid in capital, resulting in a total credit to additional paid in capital of $2,034,885.

The cancellation of the Series B shares, were owned by Leonite Capital, a related party, was deemed to be an extinguishment of debt by a related party and recorded as a credit to additional paid in capital of $461,184.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Property and equipment

Acquisition and simultaneous disposition of property

On October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida (“950”), the property in which it operates its treatment center, for gross proceeds of $5,500,000. (“Purchase Agreement”). The closing was originally scheduled for February 1, 2023, however through a series of 6 addendums to the Purchase Agreement requiring the payment of a total $180,000 in extension fees, the Closing was extended to August 3, 2023.

On February 27, 2023 the Company signed a listing agreement with Stream Capital Partners listing 950 for sale at a price of $9,568,000 with the intention of identifying a buyer that would purchase and then potentially enter into a lease agreement with the Company.

On May 4, 2023 the Company signed a Letter of Intent with Pontus Net Lease Advisers, LLC to sell 950 for $8,500,000 and lease the property to the Company for a term of twenty years with two ten-year extensions. On May 19, 2023, the Company signed a purchase and sale agreement with Pontus Net Lease Advisors to sell 950 for $8,500,000. On August 4, 2023, the Company completed both the purchase of 950 from Evernia Station Limited Partnership and the subsequent sale of 950 to Pontus Net Lease Advisors, LLC.

Simultaneously with the closing of the purchase and sale agreements, on August 4, 2023, the Company entered into a long-term lease for 950 with an initial term of twenty years, and two ten-year extension options. The lessor is Pontus EHC Palm Beach, LLC , a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met.

The Company paid gross proceeds of $1,449,000 to Leonite Capital and Leonite Fund I, LP in settlement of all amounts outstanding to both entities, disclosed in notes 8 and 9 above. In addition, $65,450 was paid to Ed Blasiak to settle the convertible promissory note disclosed in note 8 above, $179,474 was paid to Joshua Bauman to settle the convertible promissory note disclosed in note 8 above, and $260,548 was paid to Mirage Realty, LLC to settle the senior secured promissory note, disclosed in note 9 above.

The details of the property purchase and subsequent sale are as follows:

	Amount
Purchase of 950 Evernia Street property
Purchase price	$	5,500,000
Fees and expenses related to property purchase		109,276
Total acquisition cost		5,609,276

Proceeds on sale		8,500,000
Fees and expenses related to disposal of the property		(406,552	)
Net proceeds on disposal of property		8,093,448

Gain on sale of property	$	2,484,172

Property and equipment consists of the following:

		March 31, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease		490,501		(100,054	)		390,447		371,308
Furniture and fittings	6 years		152,235		(53,864	)		98,371		104,715
Vehicles	5 years		55,949		(31,858	)		24,091		26,889
Computer equipment	3 years		8,925		(2,682	)		6,243		5,489
		$	707,610	$	(188,458	)	$	519,152	$	508,401

Depreciation expense for the three months ended March 31, 2024 and 2023 was $21,711 and $48,494, respectively.

On June 30, 2023, the Company sold its interest in Cranberry Cove Holdings to Leonite Capital, which includes the land and property. Refer Note 4 above.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Intangibles

Intangible assets consist of the following:

	Useful lives	March 31, 2024							December 31, 2023
		Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 years	$	1,789,903	$	(984,446	)	$	805,457	$	894,952

The Company evaluates intangible assets for impairment on an annual basis during the last month of each year and at an interim date if indications of impairment exist. Intangible asset impairment is determined by comparing the fair value of the asset to its carrying amount with an impairment being recognized only when the fair value is less than carrying value and the impairment is deemed to be permanent in nature.

The Company recorded $89,495 in amortization expense for finite-lived assets for each of the three months ended March 31, 2024 and 2023.

7. Leases

The Company acquired ATHI on July 1, 2021, ATHI’s wholly owned subsidiary had entered into an operating lease agreement for certain real property located at 950 Evernia Street, West Palm Beach, Florida, with effect from February 1, 2019 for a period of three years, expiring on 1 February 2022. Under the terms of the lease agreement, the lease was extended during October 2021 for a further 5-year period until 1 February 2027.

As described in note 4 above, on October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida, the property in which it operates its treatment center, for gross proceeds of $5,500,000. On August 3, 2023, after 6 addendums to the agreement, the Company closed on the acquisition of the property. This resulted in the termination of the lease with Evernia station, resulting in the reversal of the remaining right-of-use asset of $1,226,080 and the associated operating lease liability of $1,328,803, which liability included $102,723 of accrued rental, which was offset against the rental expense.

On August 4, 2023, the Company entered into a long-term lease for 950 Evernia Street, West Palm Beach, Florida with an initial term of twenty years, and two ten-year extension options. The lessor is Pontus EHC Palm Beach, LLC , a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met. Due to the initial lease term of twenty years, the Company is not certain that the extension periods will be exercised at this point in time and accordingly, these have been excluded from the present value of the minimum future lease payments.

To determine the present value of minimum future lease payments for operating leases at August 4, 2023, the Company was required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment (the "incremental borrowing rate" or "IBR").

The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the Fannie Mae, in excess of $3,000,000 rate based on an 80% value to loan ratio, averaging the 15- and 30-year indicative rates, resulting in a rate of 7.70%. The Company determined that 7.70% per annum was an appropriate incremental borrowing rate to apply to its real-estate operating lease.

The present value of the future minimum lease payments was valued at $9,333,953 on August 4, 2023.

Right of use assets are included in the consolidated balance sheet are as follows:

	March 31, 2024		December 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	24,091	$	26,889
Right-of-use assets - operating leases, net of amortization	$	9,316,039	$	9,323,723

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Leases (continued)

Lease costs consists of the following:


	Three months ended March 31,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	2,797	$	2,797
Interest expense on finance lease liabilities		401		526
		3,198		3,323

Operating lease cost	$	244,677	$	86,127
Lease cost	$	247,875	$	89,450

Other lease information:


	Three months ended March 31,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(401	)	$	(526	)
Operating cash flows from operating leases		(199,000	)		(86,127	)
Financing cash flows from finance leases		(2,057	)		(1,944	)
Cash paid for amounts included in the measurement of lease liabilities	$	(201,458	)	$	(88,597	)

Weighted average lease term – finance leases		2 years and 7 months			3 years and 7 months
Weighted average remaining lease term – operating leases		19 years and 5 months			3 years and 10 months

Discount rate – finance leases		6.59	%		6.60	%
Discount rate – operating leases		7.70	%		4.64	%

Maturity of Leases

Finance lease liability

The amount of future minimum lease payments under finance leases at March 31, 2024 is as follows:

	Amount
Remainder of 2024	$	7,372
2025		9,829
2026		6,195
2027		1,707
		25,103
Imputed interest		(2,271	)
Total finance lease liability	$	22,832
Disclosed as:
Current portion	$	8,570
Non-Current portion		14,262
Lease liability	$	22,832

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Leases (continued)

Operating lease liability

The amount of future minimum lease payments under operating leases are as follows:

	Amount

Remainder of 2024	$	567,856
2025		775,615
2026		796,945
2027		818,861
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,159,319
Imputed interest		(9,687,206	)
Total operating lease liability	$	9,472,113

Disclosed as:
Current portion	$	44,485
Non-Current portion		9,427,628
Lease liability	$	9,472,113

8. Short-term Convertible Notes

The short-term convertible notes consist of the following:

	Interest rate			Maturity Date	Principal		Interest		March 31, 2024		December 31, 2023
Auctus Fund, LLC		0.0	%	On Demand		70,000		—		70,000		70,000

Joshua Bauman		10.0	%	August 9, 2024		120,776		3,993		124,769		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		3,229,000		1,047,463		4,276,463		4,228,161

					$	3,419,776	$	1,051,456	$	4,471,232	$	4,419,927

Auctus Fund, LLC

On August 7, 2019, the Company, entered into a Securities Purchase Agreement with Auctus Fund, LLC, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $225,000. The Note had a maturity date of May 7, 2020 and bore interest at the rate of ten percent per annum from the date on which the Note was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company had the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note is convertible at any time and from time to time at the election of Auctus Fund, LLC during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock for the thirty trading days prior to conversion.

On June 15, 2020, The Company entered into an amended agreement with Auctus whereby the Company agreed to discharge the principal amount of the note by nine equal monthly installments of $25,000 commencing in October 2020. During the year ended December 31, 2021, the Company repaid Auctus the principal sum of $50,000.

During March 2022, the Company paid $20,000 of principal on the convertible note, thereby reducing the principal outstanding to $80,000. The note matured May 7, 2020, Auctus Fund LLC has not declared a default and we are in discussion with the lender on settling the note.

During February 2023, the Company paid $10,000 of principal on the convertible note, thereby reducing the principal outstanding to $70,000. The note matured May 7, 2020, Auctus Fund LLC has not declared a default and we are in constant in constant discussion with the lender on settling the note.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Short-term Convertible Notes (continued)

Joshua Bauman

On August 9, 2023, the Company issued a convertible promissory note to Bauman, in the aggregate principal amount of $150,000. The note bears interest at 10.0% per annum and matures on August 9, 2024. The note is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for anti-dilution provisions. The note is convertible into common stock at the option of the holder after the expiration of six months from the issuance date, in addition, should the note reach its maturity date, August 9, 2024, the note will automatically convert into shares of common stock at the conversion price, subject to anti-dilution provisions.

Series N convertible notes

Between January 28, 2019 and June 11, 2020, the Company closed several tranches of Series N Convertible notes in which it raised $3,229,000 in principal from accredited investors through the issuance to the investors of the Company’s Series N convertible notes, in the total original principal amount of $3,229,000, which Notes are convertible into the Company’s common stock at a conversion price of $0.08 per share together with three year warrants to purchase up to a total of 52,237,500 shares of the Company’s common stock at an exercise price of $0.12 per share. Both the conversion price under the Notes and the exercise price under the warrants are subject to standard adjustment mechanisms. The notes matured one year from the date of issuance.

The maturity dates of the Series N convertible notes were extended to December 31, 2024, with the exception of 5 series N convertible notes issued to one investor with an aggregate principal outstanding of $1,273,000, which was extended to December 31, 2025. No consideration was provided to the investors for the maturity date extensions.

9. Short-term Notes

The short-term notes consist of the following:

Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			March 31, 2024 Amount		December 31, 2023 Amount
LXT Biotech		6.0	%	On Demand	$	98,251	$	29,314	$	—		$	127,565	$	129,184

Mirage Realty		10.0	%	June 15, 2024		250,000		9,514		—			259,514		236,421

Third Party		12.0	%	On demand		293,725		22,597		—			316,322		315,067

Revolving line of credit		60.0	%	May 1,2024		171,000		13,805		(3,872	)		180,933		—
		60.0	%	May 14, 2024		78,000		5,917		(2,993	)		80,924		—
		60.0	%	May 12, 2024		71,000		2,061		(702	)		72,359		—

Total convertible notes payable					$	961,976	$	83,208	$	(7,567	)	$	1,037,617	$	680,672

LXR Biotech

On April 12, 2019, the Company, entered into a secured promissory note in the aggregate principal amount of CDN$133,130. The Note had a maturity date of April 11, 2020 and bears interest at the rate of six percent per annum from the date on which the Note was issued.

This note has not been repaid, is in default and remains outstanding.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Short-term Notes (continued)

Mirage Realty, LLC

On November 15, 2023, the Company, entered into a senior secured promissory note in the aggregate principal amount of $250,000 for net proceeds of $223,500 after an original issue discount and fees of $26,500. The note earns interest at 10% per annum and originally matured on March 15, 2024. The maturity date was extended to April 15, 2024, with no change to the terms of the note or any additional consideration paid to the noteholder.

Third party note

On April 12, 2019, Eileen Greene, a related party, assigned CDN$1,000,000 of the amount owed by the Company to her, to a third party. The loan bears interest at 12% per annum which the Company agreed to pay. This loan was assumed by the Company on the disposal of CCH to Leonite Capital as disclosed in note 4 above.

During April and May 2023, the Company made interest repayments of CDN$35,000 (approximately $25,970) on the third party loan. Between August 9 and August 10, 2023, the Company made principal repayments of CDN$345,890 ($257,775) and interest repayments of CDN$104,110 (approximately $77,515).

Revolving line of credit

On February 1, 2024 Ethema Health Corporation, American Treatment Holdings Inc, and Evernia Health Center LLC entered into a secured revolving line of credit agreement (“ Agreement”) with Testing 123, LLC. The draw under the is limited to a maximum of 80% of the Receivables balance as provided to the Lender, subject to the maximum borrowing under the Term Loan Agreement of $1,000,000. The interest on the term loan is 5% per month. The revolving credit line is valid for a period of two years and each draw will have a maturity date that is two years from the draw date, with an origination fee of $1,000 per draw. Each loan may be prepaid at any time without penalty. The Company will pay a commitment fee of $40,000 to the borrower in common shares on the completion of a public offering, unless no such offering takes place within a year, whereby the outstanding principal will be increased by $40,000. The revolving credit line is secured by all assets, tangible and intangible of the Company and its direct and indirect subsidiaries, American Treatment Holdings, Inc. and Evernia Health Center, LLC.

10. Government assistance loans

On May 3, 2021, ARIA was granted a government assistance loan in the aggregate principal amount of $157,367. The loan is forgivable if the Company demonstrates that the proceeds were used for expenses such as employee costs during the pandemic. Should the loan not be forgiven, interest is payable on the loan at the rate of 1% per annum and the principal is repayable and interest is payable over an 18-month period.

On September 21, 2022, ARIA received partial forgiveness of the government assistance loan of $104,368, the balance of the loan plus accrued interest is due and payable. On December 30, 2022, the Company sold ARIA to its Chairman and CEO and agreed to assume the repayment of the government assistance loan. As of March 31, 2024, the balance outstanding, including interest thereon was $31,731.

11. Receivables funding

June 2, 2023 Funding

On June 2, 2023, the Company received funding from an agreement entered into through its 75% held subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Bizfund.com (“Bizfund)”), whereby $198,000 of the Receivables of Evernia were sold to Bizfund, for gross proceeds of $150,000, made up of a cash payment to the Company of $75,750 and the transfer of $74,250 of the January 19, 2023, outstanding principal to the June 2, 2023 funding agreement.. The Company is obliged to pay 15.0% of the receivables until the amount of $198,000 is paid in full, with periodic repayments of $4,950 per week. The guarantor of the funding is a minority shareholder in ATHI.

The Company made weekly cash payments of $4,950 totaling $198,000 by March 12, 2024, thereby extinguishing the debt.

September 15, 2023 Funding

On September 15, 2023, the Company, through its 75% held subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $320,000 of the Receivables of Evernia were sold to Itria, for gross proceeds of $250,000. The Company also incurred fees of $3,000, resulting in net proceeds of $247,500. The Company is obliged to pay $6,666.67 per week until the amount of $320,000 is paid in full. The guarantor of the funding is a minority shareholder in ATHI.

The Company made weekly cash payments of $6,667 totaling $186,667 by March 29, 2024. The balance outstanding at March 31, 2024 was $133,333, less unamortized discount of $31,485.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. Related party payables

Schedule of Related party payable

	March 31,		December 31,
	2024		2023
Due to related parties
Shawn E. Leon	$	33,407	$	61,267
Leon Developments Ltd.		1,092,701		1,092,701
Eileen Greene		1,534,082		1,418,324
Total related party payables	$	2,660,190	$	2,572,292

Shawn E. Leon

As of March 31, 2024 and December 31, 2023, the Company had a payable to Shawn Leon of $33,407 and $461,267, respectively. Mr. Leon is a director and CEO of the Company. The balances payable are non-interest bearing and have no fixed repayment terms.

Due to the current financial position of the Group, Mr. Leon forfeited the management fees due to him for the three months ended March 31, 2024 and the year ended December 31, 2023.

Leon Developments, Ltd.

Leon Developments is owned by Shawn Leon, the Company’s CEO and director. As of March 31, 2024 and December 31, 2023, the Company owed Leon Developments, Ltd., $1,092,701.

Eileen Greene

As of March 31, 2024 and December 31, 2023, the Company owed Eileen Greene, the spouse of our CEO, Shawn Leon, $1,534,082 and $1,418,324, respectively. The amount owed to Ms. Greene is non-interest bearing and has no fixed repayment terms.

Leonite Capital, LLC and Leonite Fund I, LLP

Leonite Capital is considered a related party due to its Series A Preferred stock interest in CCH, which was previously a wholly owned subsidiary of the Company, of $700,000, and its Series B Preferred stock interest in the Company of $400,000, as of December 31, 2022.

The Series A Preferred stock interest in CCH of $700,000 was recorded as a minority shareholder interest as of December 31, 2022.

Accrued dividends on the CCH Series A Preferred shares of $145,547 and accrued dividends on the Series B Preferred shares of $49,282 was owed to Leonite Capital as of December 31, 2022. Prior to the disposal of CCH to Leonite Capital on June 30, 2023, and the simultaneous cancellation of the Series B Preferred stock as discussed below, the accrued dividends on the CCH Series A Preferred shares was $184,545 and the accrued dividends on the Series B Preferred shares was $61,184.

On June 30, 2023, the Company entered into an exchange agreement with Leonite Capital whereby it exchanged the 400,000 Series B shares with a value of $400,000 plus accrued dividends thereon of $61,184 for its entire shareholding in its property-owning subsidiary, Cranberry Cove Holdings. The Series B shares and the accrued dividends thereon were extinguished and cancelled upon consummation of the transaction.

Due to the related party nature of the transaction, the net result of the disposal of $1,334,885 and the $700,000 of the CCH Series A Preferred shares, totaling $2,034,885, was recorded as a credit to additional paid-in-capital.

In addition, due to the related party nature of the transaction, the cancellation of the Series B Preferred stock, of $400,000 and the dividends thereon of $61,184, totaling $461,184, was recorded as an extinguishment of debt reflected in additional paid-in-capital.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. Related party payables (continued)

Leonite Capital, LLC and Leonite Fund I, LLP (continued)

On August 4, 2023, the company repaid Leonite Capital $1,449,000 consisting of repayments of short-term convertible notes of $995,257, promissory notes of $420,069, additional penalty on settlement of $5,236 and a personal loan by Leonite to Shawn Leon of $28,438, which repayment reduced the related party payable to Shawn Leon, as disclosed above.

All related party transactions occur in the normal course of operations and in terms of agreements entered into between the parties.

13. Stockholder’s deficit

Common shares

Authorized and outstanding

The Company has authorized 10,000,000,000 shares with a par value of $0.01 per share. The company has issued 3,729,053,805 shares of common stock at March 31, 2024 and December 31, 2023.

Series A Preferred shares

Authorized, issued and outstanding

The Company has authorized 10,000,000 Series A preferred shares with a par value of $0.01 per share. The Company has issued and outstanding 4,000,000 Series A Preferred shares at March 31, 2024 and December 31, 2023.

Series B preferred shares

Authorized and outstanding

The Company has authorized 400,000 Series B preferred shares with a par value of $1.00 per share. The company has no issued and outstanding Series B Preferred shares at March 31, 2024 and December 31, 2023.

Stock options

Our board of directors adopted the Greenstone Healthcare Corporation 2013 Stock Option Plan (the “Plan”) to promote our long-term growth and profitability by (i) providing our key directors, officers and employees with incentives to improve stockholder value and contribute to our growth and financial success and (ii) enable us to attract, retain and reward the best available persons for positions of substantial responsibility. A total of 10,000,000 shares of our common stock have been reserved for issuance upon exercise of options granted pursuant to the Plan. The Plan allows us to grant options to our employees, officers and directors and those of our subsidiaries, provided that only our employees and those of our subsidiaries may receive incentive stock options under the Plan. We have no issued options at March 31, 2024 under the Plan.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13. Stockholder’s deficit (continued)

Warrants

All of the warrants have cashless exercise terms whereby in-the-money warrants may be exercised by reducing the number of shares issued in terms of the warrant exercise to offset the proceeds due on the exercise.

All of the warrants have price protection features whereby any securities issued subsequent to the date of the warrant issuance date, were issued at a lower price, or have conversion features that are lower than the current exercise price, or were converted at a lower price, or are exercisable at a lower price, to the current warrant exercise price, will result in the exercise price of the warrant being set to the lower issue, conversion or exercise price.

Warrant exchange agreement

On June 28, 2023 the Company entered into a Warrant Exchange Agreement with Leonite that exchanged a Warrant outstanding to Leonite originally issued on June 12, 2020 for a new Warrant dated June 30, 2023. The substantial changes to the warrant affect the number of shares in the warrant, the exercise price and the term. The original warrant provided for Leonite to have a continuing right to purchase a 20% share of the outstanding common shares until it expired on June 12, 2025 which was originally set at 326,286,847 shares. The new warrant is exercisable for 745,810,761 shares, 20% of the current number of common shares outstanding, with no allowance for adjustment, except normal adjustments due to splits or consolidations, until the new expiry date of June 30, 2027. The exercise price in the original warrant was $0.10, with allowance for adjustments, which when applied resulted in an exercise price of $0.0004 per share. The exercise price on the new warrant is $0.001 and is only adjustable if the Company issues any shares at a price less than the exercise price during the warrant period except for any issuance of shares to the Company’s president or related parties on any debt outstanding to those parties as of June 30, 2023, and limited to a conversion price of $0.0005 per share.

The replacement warrants were valued effective June 30, 2023, the effective date of issuance of the warrants, as the difference between the fair value of the original warrant exercisable for 326,286,847 shares of common stock and the fair value of the replacement four-year warrant exercisable for 745,810,861 shares of common stock at an exercise price of $0.001 per share.

A summary of the Company’s warrant activity during the period from January 1, 2023 to March 31, 2024 is as follows:

	No. of shares			Exercise price per share		Weighted average exercise price

Outstanding as of January 1, 2023		602,852,506			$0.000675 to $0.00205	$	0.001306
Granted		745,810,761			$0.001		0.001
Forfeited/cancelled		(326,286,847	)		$0.000675		0.000675
Exercised		—			—		—
Outstanding as of December 31, 2023		1,022,376,420			$0.001 to $0.00205	$	0.0012840
Granted		—			—		—
Forfeited/cancelled		—			—		—
Exercised		—			—		—
Outstanding as of March 31, 2024		1,022,376,420			$0.001 to $0.00205	$	0.0012840

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13. Stockholder’s deficit (continued)

The following table summarizes information about warrants outstanding at March 31, 2024:

	Warrants outstanding						Warrants exercisable
Exercise price	No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price

$0.001		745,810,761		3.25				745,810,761
$0.002050		276,565,659		1.77				276,565,659
		1,022,376,420		2.85	$	0.001284		1,022,376,420	$	0.001284

All of the warrants outstanding at March 31, 2024 are vested. The warrants outstanding at March 31, 2024 have an intrinsic value of $0.

14. Segment information

The Company had two reportable operating segments, until the disposal of CCH on June 30, 2023, prior to that date the Company derived rental income from the property owned by its CCH subsidiary, subsequent to June 30, 2023, the Company only provides rehabilitation services to customers, these services are provided to customers at our Evernia, Addiction Recovery Institute of America.

The segment operating results of the reportable segments for the prior three months ended March 31, 2023 is disclosed as follows:


	Three months ended March 31, 2023
	Rental Operations			In-Patient services			Total

Revenue	$	89,419		$	1,210,627		$	1,300,046
Operating expenses		30,120			1,194,900			1,225,020

Operating income		59,299			15,727			75,026

Other (expense) income
Interest expense		(47,733	)		(109,363	)		(157,096	)
Amortization of debt discount		—			(76,921	)		(76,921	)
Foreign exchange movements		(1,035	)		(1,920	)		(2,955	)
Net income (loss) before taxes		10,531			(172,477	)		(161,946	)
Taxes		—			(13,771	)		(13,771	)
Net income (loss)	$	10,531		$	(186,248	)	$	(175,717	)

The operating assets and liabilities of the reportable segments as of March 31, 2023 is as follows:


	March 31, 2023
	Rental Operations			In-Patient services			Total

Purchase of fixed assets	$	—		$	52,418		$	52,418
Assets
Current assets		233			689,431			689,664
Non-current assets		2,441,143			3,474,998			5,916,141
Liabilities
Current liabilities		(4,985,120	)		(9,083,220	)		(14,068,340	)
Non-current liabilities		(619,856	)		(1,350,792	)		(1,970,648	)
Intercompany balances		(1,299,110	)		1,299,110			—
Net liability position	$	(4,462,710	)	$	(4,970,473	)	$	(9,433,183	)

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. Net loss per common share

For the three months ended March 31, 2024 and 2023, the following warrants exercisable for shares and convertible securities convertible into a number of shares were excluded from the computation of diluted net loss per share as the results would have been anti-dilutive.

	Three months ended March 31, 2024		Three months ended March 31, 2023

Shares issuable upon exercise of warrants		1,022,376,420		602,852,506
Shares issuable on conversion of convertible notes		178,224,555		582,290,570
		1,200,600,975		1,185,143,076

16. Commitments and contingencies

a. Options granted to purchase shares in ATHI

On July 12, 2020, the Company entered into a five-year option agreement with Leonite Capital LLC (“Leonite”) and other investors (collectively the “Transferees”). The Company agreed to sell to Leonite a portion of the total outstanding shares of ATHI from the shares of ATHI held by the company. The Company provided Leonite an option to purchase 4,000,000 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $400), based on the advances that Leonite made to the Company totaling $396,000. Leonite shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Leonite to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

On September 14, 2020, the Company entered into a five-year option agreement with Ed Blasiak (“Blasiak”) whereby the Company agreed to sell to Blasiak a portion of the total outstanding shares of ATHI. The Company provided Blasiak an option to purchase 571,428 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $57), based on the advances that Blasiak made to the Company totaling $50,000. Blasiak shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Blasiak to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

On October 29, 2020, the Company entered into a five-year option agreement with First Fire whereby the Company agreed to sell to First Fire a portion of the total outstanding shares of ATHI. The Company provided First Fire an option to purchase 1,428,571 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $143), based on the advances that First Fire made to the Company totaling $120,000. First Fire shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by First Fire to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

On October 29, 2020, the Company entered into a five-year option agreement entered into with Bauman, so that the Company agreed to sell to Bauman a portion of the total outstanding shares of ATHI. The Company provided Bauman an option to purchase 1,428,571 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $143), based on the advances that Bauman made to the Company totaling $120,000. Bauman shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Bauman to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

From time to time, the Company and its subsidiaries enter into legal disputes in the ordinary course of business. The Company believes there are no material legal or administrative matters pending that are likely to have, individually or in the aggregate, a material adverse effect on its business or results of operations.

b. Other

The Company has principal and interest payment commitments under the Convertible notes disclosed under Note 8 above. Conversion of these notes are at the option of the investor, if not converted these notes may need to be repaid.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. Subsequent events

Series R Senior secured promissory notes

The company entered into the Series R senior secured promissory notes (“Series R Notes”), as detailed below, each note with a 10% original issue discount, bearing interest at 7.5% per annum, based on a 360 day year, which interest will be paid as follows: 90 days from inception - 3% per annum, 180 days - 6% per annum, 270 days – 9% per annum, and on maturity - 12% per annum or the balance of the interest outstanding. The note also provides for default interest of 24% per annum on all amounts outstanding after maturity. The notes may be prepaid upon 30 days’ notice to the lender. The notes are senior to all other indebtedness except for existing advances under receivables funding, outstanding line-of-credit advances and a certain $600,000 advance.

On April 8, April 14, and April 17, 2024, the Company issued three Series R Notes to investors, each note for $55,000 for gross proceeds of $50,000 for each note, including an original issue discount of $5,000.

On April 30, 2024, a Series N note holder entered into a swap agreement with an Investor (“Investor 4”) whereby his $250,000 Series N convertible note was assigned and transferred to Investor 4. The interest outstanding on the Series N note of $78,123 was repaid out of the proceeds of the Series R Note issued to Investor 4 on May 2, 2024. Subsequent to the repayment of the outstanding interest, on May 2, 2024, the Company exchanged the $250,000 Series N note for a $275,000 Series R Note, including an original issue discount of $25,000.

On May 2, 2024, the Company issued a $275,000 Series R Note to Investor 4, including an original issue discount of $25,000 for gross proceeds of $250,000. A portion of the proceeds was used to repay the interest on the Series N note, discussed above.

On May 10, 2024, the Company issued two Series R Notes to two investors (“Investor 5 and 6”), each note for $110,000 for gross proceeds of $100,000 for each Series R Note, each Series R Note including an original issue discount of $10,000. On May 10, 2024, a portion of the proceeds received from Investor 5 and 6 was used to repay outstanding interest of $32,926 on each of Investor 5 and 6, $100,000 Series N note. Subsequent to the payment of the outstanding interest the Company exchanged each $100,000 Series N note for two $110,000 Series R Notes, each Series R Note including an original issue discount of $10,000.

Revolving line of credit

Between April 8, 2024 and May 2, 2024, the Company repaid $186,120 of principal and interest on the initial revolving line of credit advance on February 1, 2024.

On May 15, 2024, the Company drew down a further $130,000 on the revolving line of credit, of which $85,800 was used to repay the second line of credit advance on February 15, 2024, the balance of $44,200 was used for working capital purposes.

Senior secured promissory note

On May 15, 2024, the Company, together with its subsidiaries, Evernia Health Center, LLC, American Treatment Holdings Inc, and Shawn Leon, entered into a Senior Secured Promissory Note (“Senior Note”)with an accredited investor for gross proceeds of $600,000, maturing on November 15, 2024 and bearing interest at 6% per annum for the first two months, 9% per annum for the following two months and 18% per annum for the last two months. The note also provides for default interest at a maximum of 24% per month, subject to the Usury Act. The Senior Note is senior to all other indebtedness including the promissory note issued to Q Global Trust, LLC (“Q Global”), except for allowed payments in terms of the Q Global agreement, as described below. The Senior Note, upon an event of default, may be converted into shares of ATHI at the rate of 1% of ATHI for each $24,000 of indebtedness, capped at $633,000. The proceeds from this note were used as the down payment for the acquisition of the remaining 25% of ATHI held by the minority shareholder.

Purchase of minority shareholder interest in ATHI

On May 15, 2024, the Company, Q Global Trust, LLC (the “Seller”), Lawrence B Hawkins and ATHI entered into an agreement for the purchase of the 25% minority shareholders interest in the share capital of ATHI for gross proceeds of $1,100,000. The Company paid proceeds of $625,000 on closing, and issued the Seller a promissory note for $475,000, subordinated to the Senior Note above. The Company will make 8 monthly installments of $10,000 each and on the ninth month a payment of $157,500, for the next eight months the Company will make payments of $10,000 each and on the eighteenth month a final payment of $157,500, totaling $475,000. The note does not bear interest and is guaranteed by Shawn Leon, Evernia Health Center, LLC and ATHI.

Share subscription

On April 6, 2024, the Company entered into a share subscription agreement in terms of a Regulation A filing, resulting in the issuance of 2,083,300 shares of common stock for gross proceeds of $2,500 at $0.0012 per share

Other than disclosed above, the Company has evaluated subsequent events through the date of the condensed consolidated financial statements were issued, we did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

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

The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our condensed consolidated financial statements and the notes presented herein and the consolidated financial statements and the other information set forth in our Annual Report on Form 10- K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on May 7, 2024. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the Securities and Exchange Commission.

Plan of Operation

During the next twelve months, the Company plans to continue to grow the Evernia business organically or through acquisitions, should any opportunities present themselves.

On March 22, 2024, we executed a LOI to acquire certain assets, including furniture, equipment inventory and supplies of Boca Cove Detox, LLC, along with the assignment of lease and sub-lease for premises located at 899 Meadow Avenue, Boca Raton, Florida.

The purchase price is $240,000 with monthly repayment of $20,000 per month beginning on the Effective Date, defined below, of the agreement for a period of 12 months. We paid a non-refundable Exclusivity Deposit (“Exclusivity Deposit”) to the Seller, which deposit will be applied to the purchase price. In addition, upon the execution of the transaction documents, we will pay to the seller a Security Deposit (“Security Deposit”) of $83,393 which will be applied to the purchase price if the assignment of the lease is completed within 12 months of the effective date, if not completed within 11 months of the effective date, than $20,000 will be applied to the 12 installment of the purchase price, with the remaining balance of $63,393 remaining as the Security Deposit and applied to the last month of the sub-lease agreement.

The Effective Date is the earlier of us obtaining a license for the premises or 30 days from the signing of the LOI and the payment of the Exclusivity Deposit.

The Exclusivity period is to last as long as the parties are negotiating the terms of the transaction documents or 30 days from the date of execution of the LOI, which was executed on March 25, 2024, whichever date is later. The contractual terms are still being negotiated, pending the seller obtaining certain building certifications.

Results of operations for the three months ended March 31, 2024 and 2023.

Revenues

Revenues were $1,300,100 and $1,300,046 for the three months ended March 31, 2024 and 2023, respectively, an increase of $54 or 0%. The revenue from in-patient services was $1,300,100 and $1,210,627 for the three months ended March 31, 2024 and 2023, respectively, an increase of $89,838 or 7.4%. The increase is in line with expectations, with a slight impact of current market conditions being felt by the business. The revenue from rental properties was $0 and $89,419 for the three months ended March 31, 2024 and 2023, respectively, The Company sold its property-owning subsidiary, CCH on June 30, 2023.

Operating Expenses

Operating expenses were $1,529,175 and $1,225,020 for the three months ended March 31, 2024 and 2023, respectively, an increase of $304,155 or 24.2%. The increase is primarily due to the following:

●	General and administrative expenses was $274,545 and $241,237 for the three months ended March 31, 2024 and 2023, respectively, an increase of $33,308 or 13.8%. The increase is primarily due to general inflationary increases of several individually insignificant expense line items

●

Rent expense was $265,132 and $114,564 for the three months ended March 31, 2024 and 2023, respectively, an increase of $150,568 or 131.4%. The increase is primarily due to an increase in rental which arose on the acquisition of the building from our landlord and the immediate disposal of the building to a third party on August 4, 2023, resulting in the cancellation of the old lease which expired in January 2027 and entering into a new 20 year lease expiring in August 2043, at an increase in monthly rental cost of approximately $33,000 per month and a rental smoothing adjustment over the 20 year lease of approximately $19,000 per month.

●	Management fees were $0 and $27,500 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $27,500 or 100.0%. In the prior period management fees were paid to the minority shareholder in Evernia, these fees were for a limited time and are no longer payable.

●	Professional fees were $150,550 and $111,204 for the three months ended March 31, 2024 and 2023, respectively, an increase of $39,346 or 35.4%. The increase is due to additional fees incurred on regulation A fund raising during the current period.

●	Salaries and wages were $727,741 and $592,036 for the three months ended March 31, 2024 and 2023, respectively, an increase of $135,678 or 22.9%. The increase is due the increase in staff headcount during the current year.

●	Depreciation expense was $111,206 and $138,479 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $27,273 or 19.7%, primarily due to the disposal of CCH and its related plant and equipment in June 2023.

Operating loss (income)

The operating loss was $(229,074) and operating income was $75,026 for the three months ended March 31, 2024 and 2023, respectively, an increase in loss of $304,100 or 405.3%. The slight increase in patient revenues and the disposal of our CCH subsidiary in June 2023, resulted in minimal overall revenue growth, which was offset by the $319,155 increase in operating expenses, as discussed under revenue and operating expenses above.

Interest income

Interest income was $575 and $0 for the three months ended March 31, 2024 and 2023, an increase of $575 or 100%, interest income is immaterial.

Interest expense

Interest expense was $93,186 and $157,096 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $63,910 or 40.7%, primarily due to the repayment of convertible debt incurring penalty interest rates in the prior year.

Amortization of debt discount

Amortization of debt discount was $63,162 and $76,921 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $13,759 or 17.94%. The amortization of debt discount related primarily due to short-term receivables funding, in the prior year receivables funding balances were significantly higher than in the current period.

Foreign exchange movements

Foreign exchange income was $10,645 and foreign exchange loss was $(2,955) or the three months ended March 31, 2024 and 2023, respectively, representing the realized exchange gains 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. The Dollar strengthened against the Canadian Dollar during the current period, resulting in an unrealized loss on Canadian denominated assets.

Taxation

Taxation was $0 and $13,771 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $13,771 or 100.0%, primarily due to increased operating expenses in the Evernia operation, resulting in a loss for the quarter, and therefore no taxation provision.

Net loss

Net loss was $374,203 and $175,717 for the three months ended March 31, 2024 and 2023, respectively, an increase of $198,486 or 113.0%. The increase was primarily due to the increase in operating expenses offset by the reduction in interest expense and amortization of debt discount, which is fully discussed above.

Commitments and contingencies

The company has commitments under operating and finance leases as follows:

The amount of future minimum lease payments under finance leases as of March 31, 2024 is as follows:

	Amount
Remainder of 2024	$	7,372
2025		9,829
2026		6,195
2027		1,707
	$	25,103

The amount of future minimum lease payments under operating leases as of March 31, 2024, is as follows:

	Amount

Remainder of 2024	$	567,856
2025		775,615
2026		796,945
2027		818,861
2028		841,379
2029 and thereafter		15,358,663
	$	19,159,319

The company also has commitments under convertible loans and short-term loans. If the convertible loans, as disclosed in note 8, above are not converted they will need to be repaid.

Liquidity and Capital Resources

Cash used in operating was $106,569 and cash generated by operating activities was $(105,874) for the three months ended March 31, 2024 and 2023, respectively, an increase of $212,443. The increase is primarily due to the following:

●	An increase in net loss of $198,486, as discussed under results of operations above.

●	Offset by a decrease in the movement of non-cash items of $88,0358, primarily due to the movement in the right of use asset of $62,535 and the movement in depreciation expense of $27,273.

●

Working capital movements increased by $74,078, primarily due to an increase in the movement of accounts receivable balance of $238,792, an increase in the movement in operating lease liabilities of $118,406, and an increase in the movement of other current assets of $64,349, offset by the movement in payable and accrued liabilities of $(308,626).

Cash used in investing activities was $52,462 and $102,418 for the three months ended March 31, 2024 and 2023, respectively. In the current period we invested in leasehold improvements and furniture and fittings to increase capacity at our Evernia facility and paid an additional deposit of $20,000 for the acquisition of a treatment facility.

Cash provided by financing activities was $238,615 and cash used in financing activities was $117,743 for the three months ended March 31, 2024 and 2023, during the current period we raised funding from promissory notes of $302,000 and $87,898 from related parties, offset by the repayment of receivables funding of $146,067.

In the prior year the Company received receivables funding of $190,000, and repaid $204,133, in addition mortgage repayments of $29,300 were made and repayments to related parties of $58,917 were made.

Over the next twelve months we estimate that the company will require approximately $0.5 million in working capital as it continues to develop the Evernia facility and it is also exploring several other treatment center options and sources of patients throughout the country. The company may have to raise equity or secure debt. 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 medium.

Going Concern

Our unaudited condensed consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that we will be able to meet our obligations and continue our operations in the normal course of business. At March 31, 2024, we had a working capital deficiency of $7.9 million, and total liabilities in excess of assets in the amount of $6.6 million. We believe that current available resources will not be sufficient to fund our planned expenditures over the next 12 months. Accordingly, we will be dependent upon the raising of additional capital through placement of common shares, and/or debt financing in order to implement our business plan and generate sufficient revenue in excess of costs. If we raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If we raise additional funds by issuing debt, we may be subject to limitations on its operations, through debt covenants or other restrictions. If we obtain additional funds through arrangements with collaborators or strategic partners, we may be required to relinquish our rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our financial condition. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.

Recently Issued Accounting Pronouncements

The recent Accounting Pronouncements are fully disclosed in note 2 to our unaudited condensed consolidated financial statements.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying unaudited condensed consolidated financial statements.

Off balance sheet arrangements

We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.

Inflation

The effect of inflation on our revenue and operating results was not significant.

Climate Change

We believe that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures as of March 31, 2024 are not effective due to a lack of written policies and procedures to address all material transactions and

developments impacting our financial statements.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended March 31, 2024. Our management is committed to improving our controls and procedures by, among other matters, continuing to consider and adopt appropriate policies and procedures to address all material transactions and developments impacting our financial statements. However, our management does not expect that our disclosure controls and procedures and our internal control processes, even if improved, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that the breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PART II

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

Item 2. Unregistered sales of equity securities and use of proceeds

Unregistered sales of equity securities

None.

Use of proceeds from public offerings of common stock

None.

Item 3. Defaults upon senior securities

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits

Exhibit No.	Description

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

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

101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline Taxonomy Extension CAL XBRL Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101	Cover Page Interactive Data File (embedded within the Inline XBRL Document)

* filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ETHEMA HEALTH CORPORATION

Date: May 31, 2024

By:/s/ Shawn E. Leon

Name: Shawn E. Leon

Title: Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Position	Date

/s/Shawn E. Leon	Chief Executive Officer (Principal Executive Officer),	May 31, 2024
Shawn Leon	Chief Financial Officer (Principal Financial Officer), President and Director

/s/ Gerald T. Miller	Director	May 31, 2024
Gerald Miller

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14 OR RULE

15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shawn E. Leon, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Ethema Health Corporation;

1.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 31, 2024

/s/ Shawn E. Leon

Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ethema Health Corporation, a Colorado corporation (the “Company”), on Form 10-Q for the quarterly period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shawn E. Leon, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Shawn E. Leon

Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

May 31, 2024

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 29, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-54748
Entity Registrant Name	ETHEMA HEALTH CORPORATION.
Entity Central Index Key	0000792935
Entity Tax Identification Number	84-1227328
Entity Incorporation, State or Country Code	CO
Entity Address, Address Line One	950 Evernia Street
Entity Address, City or Town	West Palm Beach
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33401
City Area Code	(416)
Local Phone Number	500-0020
Title of 12(b) Security	Common shares
Trading Symbol	GRST
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		3,729,053,805

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Current assets
Cash	$ 137,497	$ 68,573
Accounts receivable, net	356,929	313,338
Prepaid expenses	12,249	18,159
Other current assets	3,158	3,030
Total current assets	509,833	403,100
Non-current assets
Property and equipment	519,152	508,401
Intangible assets, net	805,457	894,952
Right of use assets	9,316,039	9,323,723
Deposits paid	409,000	389,000
Total non-current assets	11,049,648	11,116,076
Total assets	11,559,481	11,519,176
Current liabilities
Accounts payable and accrued liabilities	336,401	352,101
Convertible notes, net of discounts	4,471,232	4,419,927
Short-term notes	1,037,617	680,672
Receivables funding	101,848	211,961
Government assistance loans	14,999	14,962
Operating lease liability	44,485	38,563
Finance lease liability	8,570	8,426
Related party payables	2,660,190	2,572,292
Total current liabilities	8,675,342	8,298,904
Non-current liabilities
Government assistance loans	16,732	20,520
Operating lease liability	9,427,628	9,383,557
Finance lease liability	14,262	16,475
Total non-current liabilities	9,458,622	9,420,552
Total liabilities	18,133,964	17,719,456
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,000,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023	40,000	40,000
Common stock - $0.01 par value, 10,000,000,000 shares authorized; 3,729,053,805 and 3,729,053,805 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	37,290,539	37,290,539
Additional paid-in capital	26,187,925	26,187,925
Discount for shares issued below par value	(27,363,367)	(27,363,367)
Accumulated deficit	(42,729,580)	(42,355,377)
Total stockholders’ deficit	(6,574,483)	(6,200,280)
Total liabilities and stockholders’ deficit	11,559,481	11,519,176
Series B Preferred Stock [Member]
Non-current liabilities
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,000,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	4,000,000	4,000,000
Preferred Stock, Shares Outstanding	4,000,000	4,000,000
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	10,000,000,000	10,000,000,000
Common Stock, Shares, Issued	3,729,053,805	3,729,053,805
Common Stock, Shares, Outstanding	3,729,053,805	3,729,053,805
Series B Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	400,000	400,000
Preferred Stock, Shares Outstanding	400,000	400,000

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Revenues	$ 1,300,100	$ 1,300,046
Operating expenses
General and administrative	274,546	241,237
Rent expense	265,132	114,564
Management fees		27,500
Professional fees	150,550	111,204
Salaries and wages	727,741	592,036
Depreciation and amortization expense	111,206	138,479
Total operating expenses	1,529,175	1,225,020
Operating loss (income)	(229,075)	75,026
Other (expense) income
Interest income	575
Interest expense	(93,186)	(157,096)
Amortization of debt discount	(63,162)	(76,921)
Foreign exchange movements	10,645	(2,955)
Loss before taxation	(374,203)	(161,946)
Taxation		(13,771)
Net loss	374,203	(175,717)
Net income attributable to non-controlling interest		(2,968)
Net loss attributable to Ethema Health Corporation Stockholders’	(374,203)	(178,685)
Preferred stock dividend		(23,419)
Net loss available to common shareholders of Ethema Health Corporation	(374,203)	(202,104)
Accumulated other comprehensive (loss) income
Foreign currency translation adjustment		(1,504)
Total comprehensive loss	$ (374,203)	$ (203,608)
Basic and diluted loss per common share	$ (0.00)	$ (0.00)
Weighted average common shares outstanding – Basic and diluted	3,729,053,805	3,729,053,805

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($)	Series A Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Discount To Par Value 1 [Member]	Comprehensive Income [Member]	Retained Earnings [Member]	Total	Noncontrolling Interest [Member]
Beginning balance, value at Dec. 31, 2022	$ 40,000	$ 37,290,539	$ 23,419,917	$ (27,363,367)	$ (5,065)	$ (43,484,751)	$ (9,232,543)	$ 870,184
Balance at Dec. 31, 2022	4,000,000	3,729,053,805
Net loss						(178,685)	(175,717)	2,968
Foreign currency translation					(1,504)		(1,504)
Dividends accrued						(23,419)	(23,419)
Ending balance, value at Mar. 31, 2023	$ 40,000	$ 37,290,539	23,419,917	(27,363,367)	(6,569)	(43,686,855)	(9,433,183)	$ 873,152
Balance at Mar. 31, 2023	4,000,000	3,729,053,805
Beginning balance, value at Dec. 31, 2023	$ 40,000	$ 37,290,539	26,187,925	(27,363,367)		(42,355,377)	(6,200,280)
Balance at Dec. 31, 2023	4,000,000	3,729,053,805
Net loss						(374,203)	(374,203)
Ending balance, value at Mar. 31, 2024	$ 40,000	$ 37,290,539	$ 26,187,925	$ (27,363,367)		$ (42,729,580)	$ (6,574,483)
Balance at Mar. 31, 2024	4,000,000	3,729,053,805

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating activities
Net loss	$ (374,203)	$ (175,717)
Adjustment to reconcile consolidated net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense	111,206	138,479
Amortization of debt discount	63,162	76,921
Amortization of right of use asset	7,684	70,219
Deferred taxation movement		(15,532)
Changes in operating assets and liabilities
Accounts receivable	87,048	(151,744)
Prepaid expenses	5,910	10,576
Other current assets	(127)	(64,476)
Accounts payable and accrued liabilities	(56,642)	251,384
Operating lease liabilities	49,993	(68,413)
Taxes payable		34,177
Net cash (used in) provided by operating activities	(105,969)	105,874
Investing activities
Deposits paid	(20,000)	(50,000)
Purchase of property and equipment	(32,462)	(52,418)
Net cash used in investing activities	(52,462)	(102,418)
Financing activities
Repayment of mortgage		(29,300)
Proceeds from receivables funding		190,000
Repayment of receivables funding	(146,067)	(204,133)
Repayment of convertible notes		(10,000)
Proceeds from promissory notes	302,000
Repayment of government assistance loans	(3,748)	(3,449)
Repayment of finance leases	(2,069)	(1,944)
Proceeds from related party notes	87,898
Repayment of related party notes		(58,917)
Net cash provided by (used in) financing activities	238,014	(117,743)
Effect of exchange rate on cash	(10,659)	1,110
Net change in cash	68,924	(113,177)
Beginning cash balance	68,573	140,757
Ending cash balance	137,497	27,580
Supplemental cash flow information
Cash paid for interest	3,488	53,310
Cash paid for income taxes

Nature of business

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of business

1. Nature of business

The Company sold its real estate on which its Greenstone Muskoka clinic operated during the prior year.

Non-binding Letter of Intent (”LOI”) to acquire assets and assignment of lease and sub lease for Boca cove Detox Center

The Effective Date is the earlier of the Company obtaining a license for the premises or 30 days from the signing of the LOI and the payment of the Exclusivity Deposit.

Summary of significant accounting policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of significant accounting policies

2. Summary of significant accounting policies

Financial Reporting

All amounts referred to in the notes to the unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.

a) Use of Estimates

b) Principles of consolidation and foreign translation

●

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

●

Certain non-monetary assets and liabilities and equity at historical rates.

●

Revenue and expense items and cash flows at the average rate of exchange prevailing during the year.

On June 30, 2023, the Company disposed on Cranberry Cove Holdings whose functional currency was Canadian Dollars, all remaining subsidiaries have the U.S. dollar as a functional currency.

c) Cash and cash equivalents

d) Accounts receivable

e) Allowance for credit losses, Contractual and Other Discounts

f) Leases

Property and equipment

Property and equipment is recorded at cost. Depreciation is calculated on the straight-line basis over the estimated life of the asset.

h) Long Lived Assets

i) Intangible assets

Intangible assets are stated at acquisition cost less accumulated amortization, if applicable, less any adjustments for impairment losses.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

j) Derivatives

k) Financial instruments

The Company initially measures its financial assets and liabilities at fair value. 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.

Level 1. Observable inputs such as quoted prices in active markets;


	·	Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and


	·	Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

l) Related parties

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

m) Revenue recognition

ASC 606 requires companies to exercise more judgment and recognize revenue using a five-step process.

identify the contract with a customer;

ii.

identify the performance obligations in the contract;

iii.

determine the transaction price;

iv.

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

n) Income taxes

o) Net income per Share

Basic net income per share is computed on the basis of the weighted average number of common stock outstanding during the year.

p) Stock-based compensation

q) Financial instruments risks

Credit risk

In the opinion of management, credit risk with respect to accounts receivable is assessed as low.

ii.

Liquidity risk

iii.

Market risk

Interest rate risk

Currency risk

Other price risk

r) Recent accounting pronouncements

Going concern

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going concern

3. Going concern

Disposal of subsidiary

3 Months Ended

Mar. 31, 2024

Disposal Of Subsidiary

Disposal of subsidiary

4. Disposal of subsidiary

The assets and liabilities disposed of were as follows:

	Net book value
Assets
Other receivables	$	12,015
Property and equipment		2,420,499
		2,432,514
Liabilities
Accounts payable and accrued liabilities		(196,859	)
Government assistance loans		(45,317	)
Mortgage loan		(3,525,223	)
		(3,767,399	)

Disposal of subsidiary to related party – recorded as additional paid in capital	$	(1,334,885	)

Property and equipment

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Property and equipment

5. Property and equipment

Acquisition and simultaneous disposition of property

The details of the property purchase and subsequent sale are as follows:

	Amount
Purchase of 950 Evernia Street property
Purchase price	$	5,500,000
Fees and expenses related to property purchase		109,276
Total acquisition cost		5,609,276

Proceeds on sale		8,500,000
Fees and expenses related to disposal of the property		(406,552	)
Net proceeds on disposal of property		8,093,448

Gain on sale of property	$	2,484,172

Property and equipment consists of the following:

		March 31, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease		490,501		(100,054	)		390,447		371,308
Furniture and fittings	6 years		152,235		(53,864	)		98,371		104,715
Vehicles	5 years		55,949		(31,858	)		24,091		26,889
Computer equipment	3 years		8,925		(2,682	)		6,243		5,489
		$	707,610	$	(188,458	)	$	519,152	$	508,401

Depreciation expense for the three months ended March 31, 2024 and 2023 was $21,711 and $48,494, respectively.

On June 30, 2023, the Company sold its interest in Cranberry Cove Holdings to Leonite Capital, which includes the land and property. Refer Note 4 above.

Intangibles

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangibles

6. Intangibles

Intangible assets consist of the following:

	Useful lives	March 31, 2024							December 31, 2023
		Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 years	$	1,789,903	$	(984,446	)	$	805,457	$	894,952

The Company recorded $89,495 in amortization expense for finite-lived assets for each of the three months ended March 31, 2024 and 2023.

Leases

3 Months Ended

Mar. 31, 2024

Leases

Leases

7. Leases

The present value of the future minimum lease payments was valued at $9,333,953 on August 4, 2023.

Right of use assets are included in the consolidated balance sheet are as follows:

	March 31, 2024		December 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	24,091	$	26,889
Right-of-use assets - operating leases, net of amortization	$	9,316,039	$	9,323,723

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease costs consists of the following:


	Three months ended March 31,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	2,797	$	2,797
Interest expense on finance lease liabilities		401		526
		3,198		3,323

Operating lease cost	$	244,677	$	86,127
Lease cost	$	247,875	$	89,450

Other lease information:


	Three months ended March 31,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(401	)	$	(526	)
Operating cash flows from operating leases		(199,000	)		(86,127	)
Financing cash flows from finance leases		(2,057	)		(1,944	)
Cash paid for amounts included in the measurement of lease liabilities	$	(201,458	)	$	(88,597	)

Weighted average lease term – finance leases		2 years and 7 months			3 years and 7 months
Weighted average remaining lease term – operating leases		19 years and 5 months			3 years and 10 months

Discount rate – finance leases		6.59	%		6.60	%
Discount rate – operating leases		7.70	%		4.64	%

Maturity of Leases

Finance lease liability

The amount of future minimum lease payments under finance leases at March 31, 2024 is as follows:

	Amount
Remainder of 2024	$	7,372
2025		9,829
2026		6,195
2027		1,707
		25,103
Imputed interest		(2,271	)
Total finance lease liability	$	22,832
Disclosed as:
Current portion	$	8,570
Non-Current portion		14,262
Lease liability	$	22,832

Operating lease liability

The amount of future minimum lease payments under operating leases are as follows:

	Amount

Remainder of 2024	$	567,856
2025		775,615
2026		796,945
2027		818,861
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,159,319
Imputed interest		(9,687,206	)
Total operating lease liability	$	9,472,113

Disclosed as:
Current portion	$	44,485
Non-Current portion		9,427,628
Lease liability	$	9,472,113

Short-term Convertible Notes

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Short-term Convertible Notes

8. Short-term Convertible Notes

The short-term convertible notes consist of the following:

	Interest rate			Maturity Date	Principal		Interest		March 31, 2024		December 31, 2023
Auctus Fund, LLC		0.0	%	On Demand		70,000		—		70,000		70,000

Joshua Bauman		10.0	%	August 9, 2024		120,776		3,993		124,769		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		3,229,000		1,047,463		4,276,463		4,228,161

					$	3,419,776	$	1,051,456	$	4,471,232	$	4,419,927

Auctus Fund, LLC

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Joshua Bauman

Series N convertible notes

Short-term Notes

3 Months Ended

Mar. 31, 2024

Short-term Notes

Short-term Notes

9. Short-term Notes

The short-term notes consist of the following:

Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			March 31, 2024 Amount		December 31, 2023 Amount
LXT Biotech		6.0	%	On Demand	$	98,251	$	29,314	$	—		$	127,565	$	129,184

Mirage Realty		10.0	%	June 15, 2024		250,000		9,514		—			259,514		236,421

Third Party		12.0	%	On demand		293,725		22,597		—			316,322		315,067

Revolving line of credit		60.0	%	May 1,2024		171,000		13,805		(3,872	)		180,933		—
		60.0	%	May 14, 2024		78,000		5,917		(2,993	)		80,924		—
		60.0	%	May 12, 2024		71,000		2,061		(702	)		72,359		—

Total convertible notes payable					$	961,976	$	83,208	$	(7,567	)	$	1,037,617	$	680,672

LXR Biotech

This note has not been repaid, is in default and remains outstanding.

Mirage Realty, LLC

Third party note

Revolving line of credit

Government assistance loans

3 Months Ended

Mar. 31, 2024

Government Assistance [Abstract]

Government assistance loans

10. Government assistance loans

Receivables funding

3 Months Ended

Mar. 31, 2024

Receivables Funding

Receivables funding

11. Receivables funding

June 2, 2023 Funding

The Company made weekly cash payments of $4,950 totaling $198,000 by March 12, 2024, thereby extinguishing the debt.

September 15, 2023 Funding

The Company made weekly cash payments of $6,667 totaling $186,667 by March 29, 2024. The balance outstanding at March 31, 2024 was $133,333, less unamortized discount of $31,485.

Related party payables

3 Months Ended

Mar. 31, 2024

Related party payables

12. Related party payables

Schedule of Related party payable

	March 31,		December 31,
	2024		2023
Due to related parties
Shawn E. Leon	$	33,407	$	61,267
Leon Developments Ltd.		1,092,701		1,092,701
Eileen Greene		1,534,082		1,418,324
Total related party payables	$	2,660,190	$	2,572,292

Shawn E. Leon

Due to the current financial position of the Group, Mr. Leon forfeited the management fees due to him for the three months ended March 31, 2024 and the year ended December 31, 2023.

Leon Developments, Ltd.

Leon Developments is owned by Shawn Leon, the Company’s CEO and director. As of March 31, 2024 and December 31, 2023, the Company owed Leon Developments, Ltd., $1,092,701.

Eileen Greene

Leonite Capital, LLC and Leonite Fund I, LLP

The Series A Preferred stock interest in CCH of $700,000 was recorded as a minority shareholder interest as of December 31, 2022.

Leonite Capital, LLC and Leonite Fund I, LLP (continued)

All related party transactions occur in the normal course of operations and in terms of agreements entered into between the parties.

Stockholder’s deficit

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Stockholder’s deficit

13. Stockholder’s deficit

Common shares

Authorized and outstanding

The Company has authorized 10,000,000,000 shares with a par value of $0.01 per share. The company has issued 3,729,053,805 shares of common stock at March 31, 2024 and December 31, 2023.

Series A Preferred shares

Authorized, issued and outstanding

Series B preferred shares

Authorized and outstanding

Stock options

Warrants

Warrant exchange agreement

A summary of the Company’s warrant activity during the period from January 1, 2023 to March 31, 2024 is as follows:

	No. of shares			Exercise price per share		Weighted average exercise price

Outstanding as of January 1, 2023		602,852,506			$0.000675 to $0.00205	$	0.001306
Granted		745,810,761			$0.001		0.001
Forfeited/cancelled		(326,286,847	)		$0.000675		0.000675
Exercised		—			—		—
Outstanding as of December 31, 2023		1,022,376,420			$0.001 to $0.00205	$	0.0012840
Granted		—			—		—
Forfeited/cancelled		—			—		—
Exercised		—			—		—
Outstanding as of March 31, 2024		1,022,376,420			$0.001 to $0.00205	$	0.0012840

The following table summarizes information about warrants outstanding at March 31, 2024:

	Warrants outstanding						Warrants exercisable
Exercise price	No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price

$0.001		745,810,761		3.25				745,810,761
$0.002050		276,565,659		1.77				276,565,659
		1,022,376,420		2.85	$	0.001284		1,022,376,420	$	0.001284

All of the warrants outstanding at March 31, 2024 are vested. The warrants outstanding at March 31, 2024 have an intrinsic value of $0.

Segment information

3 Months Ended

Mar. 31, 2024

Segment Information

Segment information

14. Segment information

The segment operating results of the reportable segments for the prior three months ended March 31, 2023 is disclosed as follows:


	Three months ended March 31, 2023
	Rental Operations			In-Patient services			Total

Revenue	$	89,419		$	1,210,627		$	1,300,046
Operating expenses		30,120			1,194,900			1,225,020

Operating income		59,299			15,727			75,026

Other (expense) income
Interest expense		(47,733	)		(109,363	)		(157,096	)
Amortization of debt discount		—			(76,921	)		(76,921	)
Foreign exchange movements		(1,035	)		(1,920	)		(2,955	)
Net income (loss) before taxes		10,531			(172,477	)		(161,946	)
Taxes		—			(13,771	)		(13,771	)
Net income (loss)	$	10,531		$	(186,248	)	$	(175,717	)

The operating assets and liabilities of the reportable segments as of March 31, 2023 is as follows:


	March 31, 2023
	Rental Operations			In-Patient services			Total

Purchase of fixed assets	$	—		$	52,418		$	52,418
Assets
Current assets		233			689,431			689,664
Non-current assets		2,441,143			3,474,998			5,916,141
Liabilities
Current liabilities		(4,985,120	)		(9,083,220	)		(14,068,340	)
Non-current liabilities		(619,856	)		(1,350,792	)		(1,970,648	)
Intercompany balances		(1,299,110	)		1,299,110			—
Net liability position	$	(4,462,710	)	$	(4,970,473	)	$	(9,433,183	)

Net loss per common share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Net loss per common share

15. Net loss per common share

	Three months ended March 31, 2024		Three months ended March 31, 2023

Shares issuable upon exercise of warrants		1,022,376,420		602,852,506
Shares issuable on conversion of convertible notes		178,224,555		582,290,570
		1,200,600,975		1,185,143,076

Commitments and contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

16. Commitments and contingencies

a. Options granted to purchase shares in ATHI

b. Other

Subsequent events

3 Months Ended

Mar. 31, 2024

Subsequent Events [Abstract]

Subsequent events

17. Subsequent events

Series R Senior secured promissory notes

Revolving line of credit

Between April 8, 2024 and May 2, 2024, the Company repaid $186,120 of principal and interest on the initial revolving line of credit advance on February 1, 2024.

Senior secured promissory note

Purchase of minority shareholder interest in ATHI

Share subscription

Summary of significant accounting policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Use of Estimates

a) Use of Estimates

Principles of consolidation and foreign translation

b) Principles of consolidation and foreign translation

●

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

●

Certain non-monetary assets and liabilities and equity at historical rates.

●

Revenue and expense items and cash flows at the average rate of exchange prevailing during the year.

On June 30, 2023, the Company disposed on Cranberry Cove Holdings whose functional currency was Canadian Dollars, all remaining subsidiaries have the U.S. dollar as a functional currency.

Cash and cash equivalents

c) Cash and cash equivalents

Accounts receivable

d) Accounts receivable

Allowance for credit losses, Contractual and Other Discounts

e) Allowance for credit losses, Contractual and Other Discounts

Leases

f) Leases

Property and equipment

Property and equipment

Property and equipment is recorded at cost. Depreciation is calculated on the straight-line basis over the estimated life of the asset.

Long Lived Assets

h) Long Lived Assets

Intangible assets

i) Intangible assets

Intangible assets are stated at acquisition cost less accumulated amortization, if applicable, less any adjustments for impairment losses.

Derivatives

j) Derivatives

Financial instruments

k) Financial instruments

The Company initially measures its financial assets and liabilities at fair value. 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.

Level 1. Observable inputs such as quoted prices in active markets;


	·	Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and


	·	Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

Related parties

l) Related parties

Revenue recognition

m) Revenue recognition

ASC 606 requires companies to exercise more judgment and recognize revenue using a five-step process.

identify the contract with a customer;

ii.

identify the performance obligations in the contract;

iii.

determine the transaction price;

iv.

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

Income taxes

n) Income taxes

Net income per Share

o) Net income per Share

Basic net income per share is computed on the basis of the weighted average number of common stock outstanding during the year.

Stock-based compensation

p) Stock-based compensation

Financial instruments risks

q) Financial instruments risks

Credit risk

In the opinion of management, credit risk with respect to accounts receivable is assessed as low.

ii.

Liquidity risk

iii.

Market risk

Interest rate risk

Currency risk

Other price risk

Recent accounting pronouncements

r) Recent accounting pronouncements

Disposal of subsidiary (Tables)

3 Months Ended

Mar. 31, 2024

Disposal Of Subsidiary

The assets and liabilities disposed of were as follows:

	Net book value
Assets
Other receivables	$	12,015
Property and equipment		2,420,499
		2,432,514
Liabilities
Accounts payable and accrued liabilities		(196,859	)
Government assistance loans		(45,317	)
Mortgage loan		(3,525,223	)
		(3,767,399	)

Disposal of subsidiary to related party – recorded as additional paid in capital	$	(1,334,885	)

Property and equipment (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

The details of the property purchase and subsequent sale are as follows:

	Amount
Purchase of 950 Evernia Street property
Purchase price	$	5,500,000
Fees and expenses related to property purchase		109,276
Total acquisition cost		5,609,276

Proceeds on sale		8,500,000
Fees and expenses related to disposal of the property		(406,552	)
Net proceeds on disposal of property		8,093,448

Gain on sale of property	$	2,484,172

Property and equipment consists of the following:

		March 31, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease		490,501		(100,054	)		390,447		371,308
Furniture and fittings	6 years		152,235		(53,864	)		98,371		104,715
Vehicles	5 years		55,949		(31,858	)		24,091		26,889
Computer equipment	3 years		8,925		(2,682	)		6,243		5,489
		$	707,610	$	(188,458	)	$	519,152	$	508,401

Intangibles (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets consist of the following:

	Useful lives	March 31, 2024							December 31, 2023
		Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 years	$	1,789,903	$	(984,446	)	$	805,457	$	894,952

Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases

Right of use assets are included in the consolidated balance sheet are as follows:

	March 31, 2024		December 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	24,091	$	26,889
Right-of-use assets - operating leases, net of amortization	$	9,316,039	$	9,323,723

Lease costs consists of the following:


	Three months ended March 31,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	2,797	$	2,797
Interest expense on finance lease liabilities		401		526
		3,198		3,323

Operating lease cost	$	244,677	$	86,127
Lease cost	$	247,875	$	89,450

Other lease information:


	Three months ended March 31,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(401	)	$	(526	)
Operating cash flows from operating leases		(199,000	)		(86,127	)
Financing cash flows from finance leases		(2,057	)		(1,944	)
Cash paid for amounts included in the measurement of lease liabilities	$	(201,458	)	$	(88,597	)

Weighted average lease term – finance leases		2 years and 7 months			3 years and 7 months
Weighted average remaining lease term – operating leases		19 years and 5 months			3 years and 10 months

Discount rate – finance leases		6.59	%		6.60	%
Discount rate – operating leases		7.70	%		4.64	%

The amount of future minimum lease payments under finance leases at March 31, 2024 is as follows:

	Amount
Remainder of 2024	$	7,372
2025		9,829
2026		6,195
2027		1,707
		25,103
Imputed interest		(2,271	)
Total finance lease liability	$	22,832
Disclosed as:
Current portion	$	8,570
Non-Current portion		14,262
Lease liability	$	22,832

The amount of future minimum lease payments under operating leases are as follows:

	Amount

Remainder of 2024	$	567,856
2025		775,615
2026		796,945
2027		818,861
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,159,319
Imputed interest		(9,687,206	)
Total operating lease liability	$	9,472,113

Disclosed as:
Current portion	$	44,485
Non-Current portion		9,427,628
Lease liability	$	9,472,113

Short-term Convertible Notes (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

The short-term convertible notes consist of the following:

	Interest rate			Maturity Date	Principal		Interest		March 31, 2024		December 31, 2023
Auctus Fund, LLC		0.0	%	On Demand		70,000		—		70,000		70,000

Joshua Bauman		10.0	%	August 9, 2024		120,776		3,993		124,769		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		3,229,000		1,047,463		4,276,463		4,228,161

					$	3,419,776	$	1,051,456	$	4,471,232	$	4,419,927

Short-term Notes (Tables)

3 Months Ended

Mar. 31, 2024

Short-term Notes

The short-term notes consist of the following:

Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			March 31, 2024 Amount		December 31, 2023 Amount
LXT Biotech		6.0	%	On Demand	$	98,251	$	29,314	$	—		$	127,565	$	129,184

Mirage Realty		10.0	%	June 15, 2024		250,000		9,514		—			259,514		236,421

Third Party		12.0	%	On demand		293,725		22,597		—			316,322		315,067

Revolving line of credit		60.0	%	May 1,2024		171,000		13,805		(3,872	)		180,933		—
		60.0	%	May 14, 2024		78,000		5,917		(2,993	)		80,924		—
		60.0	%	May 12, 2024		71,000		2,061		(702	)		72,359		—

Total convertible notes payable					$	961,976	$	83,208	$	(7,567	)	$	1,037,617	$	680,672

LXR Biotech

Related party payables (Tables)

3 Months Ended

Mar. 31, 2024

Schedule of Related party payable

	March 31,		December 31,
	2024		2023
Due to related parties
Shawn E. Leon	$	33,407	$	61,267
Leon Developments Ltd.		1,092,701		1,092,701
Eileen Greene		1,534,082		1,418,324
Total related party payables	$	2,660,190	$	2,572,292

Stockholder’s deficit (Tables)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

A summary of the Company’s warrant activity during the period from January 1, 2023 to March 31, 2024 is as follows:

	No. of shares			Exercise price per share		Weighted average exercise price

Outstanding as of January 1, 2023		602,852,506			$0.000675 to $0.00205	$	0.001306
Granted		745,810,761			$0.001		0.001
Forfeited/cancelled		(326,286,847	)		$0.000675		0.000675
Exercised		—			—		—
Outstanding as of December 31, 2023		1,022,376,420			$0.001 to $0.00205	$	0.0012840
Granted		—			—		—
Forfeited/cancelled		—			—		—
Exercised		—			—		—
Outstanding as of March 31, 2024		1,022,376,420			$0.001 to $0.00205	$	0.0012840

The following table summarizes information about warrants outstanding at March 31, 2024:

	Warrants outstanding						Warrants exercisable
Exercise price	No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price

$0.001		745,810,761		3.25				745,810,761
$0.002050		276,565,659		1.77				276,565,659
		1,022,376,420		2.85	$	0.001284		1,022,376,420	$	0.001284

Segment information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Information

The segment operating results of the reportable segments for the prior three months ended March 31, 2023 is disclosed as follows:


	Three months ended March 31, 2023
	Rental Operations			In-Patient services			Total

Revenue	$	89,419		$	1,210,627		$	1,300,046
Operating expenses		30,120			1,194,900			1,225,020

Operating income		59,299			15,727			75,026

Other (expense) income
Interest expense		(47,733	)		(109,363	)		(157,096	)
Amortization of debt discount		—			(76,921	)		(76,921	)
Foreign exchange movements		(1,035	)		(1,920	)		(2,955	)
Net income (loss) before taxes		10,531			(172,477	)		(161,946	)
Taxes		—			(13,771	)		(13,771	)
Net income (loss)	$	10,531		$	(186,248	)	$	(175,717	)

The operating assets and liabilities of the reportable segments as of March 31, 2023 is as follows:


	March 31, 2023
	Rental Operations			In-Patient services			Total

Purchase of fixed assets	$	—		$	52,418		$	52,418
Assets
Current assets		233			689,431			689,664
Non-current assets		2,441,143			3,474,998			5,916,141
Liabilities
Current liabilities		(4,985,120	)		(9,083,220	)		(14,068,340	)
Non-current liabilities		(619,856	)		(1,350,792	)		(1,970,648	)
Intercompany balances		(1,299,110	)		1,299,110			—
Net liability position	$	(4,462,710	)	$	(4,970,473	)	$	(9,433,183	)

Net loss per common share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

the following warrants exercisable for shares and convertible securities convertible into a number of shares were excluded from the computation of diluted net loss per share as the results would have been anti-dilutive.

	Three months ended March 31, 2024		Three months ended March 31, 2023

Shares issuable upon exercise of warrants		1,022,376,420		602,852,506
Shares issuable on conversion of convertible notes		178,224,555		582,290,570
		1,200,600,975		1,185,143,076

Summary of significant accounting policies (Details Narrative) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
FDIC Indemnification Asset	$ 250,000
Receivables	356,929	$ 313,338
Working capital	$ 8,200,000

Going concern (Details Narrative) $ in Millions	Mar. 31, 2024 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Working captial deficiency	$ 8.2
Total liabilities in excess of assets	$ 6.6

Disposal of subsidiary (Details) - Net Book Value [Member]	Mar. 31, 2024 USD ($)
Other receivables	$ 12,015
Property and equipment	2,420,499
	2,432,514
Accounts payable and accrued liabilities	(196,859)
Government assistance loans	(45,317)
Mortgage loan	(3,525,223)
	(3,767,399)
Disposal of subsidiary to related party – recorded as additional paid in capital	$ (1,334,885)

Disposal of subsidiary (Details Narrative)	Mar. 31, 2024 USD ($)
Disposal Of Subsidiary
Additional Paid in Capital, Common Stock	$ 2,034,885
Additional Paid in Capital	$ 461,184

Property and equipment (Details)	3 Months Ended
Property and equipment (Details)	Mar. 31, 2024 USD ($)
Property, Plant and Equipment [Abstract]
Purchase price	$ 5,500,000
Fees and expenses related to property purchase	109,276
Total acquisition cost	5,609,276
Proceeds on sale	8,500,000
Fees and expenses related to disposal of the property	(406,552)
Net proceeds on disposal of property	8,093,448
Gain on sale of property	$ 2,484,172

Property and equipment (Details 1) - USD ($)	3 Months Ended
Property and equipment (Details 1) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Cost	$ 707,610
Accumulated depreciation	(188,458)
Net book value	$ 519,152	$ 508,401
Useful Life	5 years
[custom:PropertyPlantAndEquipmentNet1-0]		508,401
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives	Life of lease
Cost	$ 490,501
Accumulated depreciation	(100,054)
Net book value	390,447	371,308
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Cost	152,235
Accumulated depreciation	(53,864)
Net book value	$ 98,371	104,715
Useful Life	6 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 55,949
Accumulated depreciation	(31,858)
Net book value	$ 24,091	26,889
Useful Life	5 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 8,925
Accumulated depreciation	(2,682)
Net book value	$ 6,243	$ 5,489
Useful Life	3 years

Property and equipment (Details Narrative) - USD ($)	3 Months Ended
Property and equipment (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Depreciation	$ 21,711	$ 48,494

Intangibles (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Useful Life	5 years
Finite-Lived Intangible Assets, Gross	$ 1,789,903
Finite-Lived Intangible Assets, Accumulated Amortization	(984,446)
Finite-Lived Intangible Assets, Net	$ 805,457	$ 894,952
Finite-Lived Intangible Assets, Net book value		$ 894,952

Intangibles (Details Narrative) - USD ($)	3 Months Ended
Intangibles (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Debt Issuance Costs	$ 89,495	$ 89,495

Leases (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$ 24,091	$ 26,889
Right-of-use assets - operating leases, net of amortization	$ 9,316,039	$ 9,323,723

Leases (Details 1) - USD ($)	3 Months Ended
Leases (Details 1) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Leases
Amortization of right-of-use assets	$ 2,797	$ 2,797
Interest expense on finance lease liabilities	401	526
	3,198	3,323
Operating lease cost	244,677	86,127
Lease cost	$ 247,875	$ 89,450

Leases (Details 2) - USD ($)	3 Months Ended
Leases (Details 2) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Leases
Operating cash flows from finance leases	$ (401)	$ (526)
Operating cash flows from operating leases	(199,000)	(86,127)
Financing cash flows from finance leases	(2,057)	(1,944)
Cash paid for amounts included in the measurement of lease liabilities	$ (201,458)	$ (88,597)
Weighted average lease term - finance leases	2 years and 7 months	3 years and 7 months
Weighted average remaining lease term - operating leases	19 years and 5 months	3 years and 10 months
Discount rate - finance leases	6.59%	6.60%
Discount rate - operating leases	7.70%	4.64%

Leases (Details 3) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Leases
Remainder of 2024	$ 7,372
2025	9,829
2026	6,195
2027	1,707
	25,103
Imputed interest	(2,271)
Lease liability	22,832
Current portion	8,570	$ 8,426
Non-Current portion	$ 14,262	$ 16,475

Leases (Details 4) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Leases
Remainder of 2024	$ 567,856
2025	775,615
2026	796,945
2027	818,861
2028	841,379
2029 and thereafter	15,358,663
Total undiscounted minimum future lease payments	19,159,319
Imputed interest	(9,687,206)
Total operating lease liability	9,472,113
Current portion	44,485	$ 38,563
Non-Current portion	9,427,628	$ 9,383,557
Lease liability	$ 9,472,113

Short-term Convertible Notes (Details) - USD ($)	3 Months Ended		12 Months Ended
Short-term Convertible Notes (Details) - USD ($)	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Short-Term Debt [Line Items]
Principal Amount	$ 3,419,776
Interest Costs Capitalized	1,051,456
Convertible note	$ 4,471,232	$ 4,419,927	$ 680,672
Auctus Fund L L C [Member]
Short-Term Debt [Line Items]
Interest rate	0.00%
Long-Term Debt, Maturities, Repayment Terms	On Demand
Principal Amount	$ 70,000
Interest Costs Capitalized
Convertible note	$ 70,000	70,000
Joshua Bauman [Member]
Short-Term Debt [Line Items]
Interest rate	10.00%
Long-Term Debt, Maturities, Repayment Terms	August 9, 2024
Principal Amount	$ 120,776
Interest Costs Capitalized	3,993
Convertible note	$ 124,769	121,766
Series N Convertible Notes [Member]
Short-Term Debt [Line Items]
Interest rate	6.00%
Principal Amount	$ 3,229,000
Interest Costs Capitalized	1,047,463
Convertible note	$ 4,276,463	$ 4,228,161
Series N Convertible [Member]
Short-Term Debt [Line Items]
Long-Term Debt, Maturities, Repayment Terms	December

Short-term Notes (Details) - USD ($)	3 Months Ended		12 Months Ended
Short-term Notes (Details) - USD ($)	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Short-Term Debt [Line Items]
Principal Amount	$ 961,976
Accrued interest	83,208
Unamortized debt discount	(7,567)
Short-term convertible notes	1,037,617
Short-term convertible notes	4,471,232	$ 4,419,927	$ 680,672
Principal Amount	3,419,776
Accrued interest	$ 1,051,456
L X T Biotech [Member]
Short-Term Debt [Line Items]
Interest rate	6.00%
Long-Term Debt, Maturities, Repayment Terms	On Demand
Principal Amount	$ 98,251
Accrued interest	29,314
Unamortized debt discount
Short-term convertible notes	$ 127,565
Short-term convertible notes			129,184
Mirage Realty [Member]
Short-Term Debt [Line Items]
Interest rate	10.00%
Long-Term Debt, Maturities, Repayment Terms	June 15, 2024
Unamortized debt discount
Short-term convertible notes	259,514		236,421
Principal Amount	250,000
Accrued interest	$ 9,514
Third Party [Member]
Short-Term Debt [Line Items]
Interest rate	12.00%
Long-Term Debt, Maturities, Repayment Terms	On demand
Unamortized debt discount
Short-term convertible notes	316,322		315,067
Principal Amount	293,725
Accrued interest	$ 22,597
Revolving Line Of Credit [Member]
Short-Term Debt [Line Items]
Interest rate	60.00%
Long-Term Debt, Maturities, Repayment Terms	May 1,2024
Unamortized debt discount	$ (3,872)
Short-term convertible notes	180,933
Principal Amount	171,000
Accrued interest	$ 13,805
Short Term Note One [Member]
Short-Term Debt [Line Items]
Interest rate	60.00%
Long-Term Debt, Maturities, Repayment Terms	May 14, 2024
Unamortized debt discount	$ (2,993)
Short-term convertible notes	80,924
Principal Amount	78,000
Accrued interest	$ 5,917
Short Term Note Two [Member]
Short-Term Debt [Line Items]
Interest rate	60.00%
Long-Term Debt, Maturities, Repayment Terms	May 12, 2024
Unamortized debt discount	$ (702)
Short-term convertible notes	72,359
Principal Amount	71,000
Accrued interest	$ 2,061

Related party payables (Details) - USD ($)	3 Months Ended	12 Months Ended
Related party payables (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Related party disclosure	$ 2,660,190	$ 2,572,292
Shawn Eleon [Member]
Related party disclosure	33,407	61,267
Leon Developments [Member]
Related party disclosure	1,092,701	1,092,701
Eileen Greene [Member]
Related party disclosure	$ 1,534,082	$ 1,418,324

Related party payables (Details Narrative) - USD ($)	3 Months Ended	12 Months Ended
Related party payables (Details Narrative) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Shawn Eleon [Member]
Related Party Transaction [Line Items]
Related party payables	$ 33,407	$ 461,267
Leon Developments Ltd [Member]
Related Party Transaction [Line Items]
Related party payables	1,092,701	1,092,701
Eileen Greene [Member]
Related Party Transaction [Line Items]
Related party payables	$ 1,534,082	$ 1,418,324

Stockholders deficit (Details) - $ / shares	3 Months Ended		12 Months Ended
Stockholders deficit (Details) - $ / shares	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number, Beginning Balance	1,022,376,420	602,852,506	602,852,506
Granted		$ 0.001
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0.0012840	$ 0.001306	$ 0.001306
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross		745,810,761
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price		$ 0.001
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period		(326,286,847)
Forfeited/cancelled		$ 0.000675
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price		$ 0.000675
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period
Exercised
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number, Ending Balance	1,022,376,420		1,022,376,420	602,852,506
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance	$ 0.0012840		$ 0.0012840	$ 0.001306
Minimum [Member]
Granted	0.001		0.001	0.000675
Maximum [Member]
Granted	$ 0.00205		$ 0.00205	$ 0.00205

Stockholders deficit (Details 1)	3 Months Ended
Stockholders deficit (Details 1)	Mar. 31, 2024 $ / shares shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of shares warrants outstanding	1,022,376,420
Weighted Average remaining years	3 years 3 months
Numbers of shares	1,022,376,420
Weighted Average remaining years	1 year 9 months 7 days
Weighted Average remaining years	2 years 10 months 6 days
Weighted average exercise price \| $ / shares	$ 0.001284
Weighted average exercise price, warrants exercisable \| $ / shares	$ 0.001284
Excercise 2 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Numbers of shares	276,565,659
Excercise 1 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of shares warrants outstanding	745,810,761
Numbers of shares	745,810,761
Excercise 2 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of shares warrants outstanding	276,565,659

Stockholder’s deficit (Details Narrative)	3 Months Ended
Stockholder’s deficit (Details Narrative)	Mar. 31, 2024 USD ($)
Equity [Abstract]
Intrinsic Value	$ 0

Segment information (Details) - USD ($)	3 Months Ended
Segment information (Details) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Revenue	$ 1,300,100	$ 1,300,046
Operating income	$ (229,075)	75,026
Rental Operations [Member]
Revenue		89,419
Operating expenses		30,120
Operating income		59,299
Interest expense		(47,733)
Amortization of debt discount
Foreign exchange movements		(1,035)
Net income (loss) before taxes		10,531
Taxes
Net income (loss)		10,531
In Patients Services [Member]
Revenue		1,210,627
Operating expenses		1,194,900
Operating income		15,727
Interest expense		(109,363)
Amortization of debt discount		(76,921)
Foreign exchange movements		(1,920)
Net income (loss) before taxes		(172,477)
Taxes		(13,771)
Net income (loss)		(186,248)
Rental In Patient Services [Member]
Revenue		1,300,046
Operating expenses		1,225,020
Operating income		75,026
Interest expense		(157,096)
Amortization of debt discount		(76,921)
Foreign exchange movements		(2,955)
Net income (loss) before taxes		(161,946)
Taxes		(13,771)
Net income (loss)		$ (175,717)

Segment information (Details 1) - USD ($)	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023
Assets	$ 11,559,481	$ 11,519,176
Current assets	$ 509,833	$ 403,100
Rental Operations [Member]
Current assets			$ 233
Non-current assets			2,441,143
Current liabilities			(4,985,120)
Non-current liabilities			(619,856)
Intercompany balances			(1,299,110)
Net liability position			(4,462,710)
In Patient Services [Member]
Current assets			689,431
Non-current assets			3,474,998
Current liabilities			(9,083,220)
Non-current liabilities			(1,350,792)
Intercompany balances			1,299,110
Net liability position			(4,970,473)
Rental In Patient Services [Member]
Current assets			689,664
Non-current assets			5,916,141
Current liabilities			(14,068,340)
Non-current liabilities			(1,970,648)
Intercompany balances
Net liability position			$ (9,433,183)

Net loss per common share (Details) - USD ($)	3 Months Ended
Net loss per common share (Details) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Short-Term Debt [Line Items]
Shares issuable on conversion of convertible notes	$ 1,200,600,975	$ 1,185,143,076
Warrants [Member]
Short-Term Debt [Line Items]
Shares issuable upon exercise of warrants	1,022,376,420	602,852,506
Convertible Notes [Member]
Short-Term Debt [Line Items]
Shares issuable on conversion of convertible notes	$ 178,224,555	$ 582,290,570