SEC Info - Ethema Health Corp. - ‘10-Q’ for 6/30/22

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

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

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. i 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). i 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.

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 ☐ i No ☒

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 August 12, 2022 was i 3,729,053,805.

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, including those identified below, under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and those identified under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 14, 2022. 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.

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

The accompanying notes are an integral part of the unaudited condensed consolidated 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 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, 2021 filed with the Securities and Exchange Commission on April 14, 2022. 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.

During the next twelve months, the Company plans to continue to grow the Evernia business.

With effect from July 1, 2021, the operations of ATHI, which include Evernia are included in the results of operations.

Revenues were $1,138,032 and $96,158 for the three months ended June 30, 2022 and 2021, respectively, an increase of $1,041,874 or 1,083.5%. The revenue from in-patient services related to Evernia was $1,043,861 and $0 for the three months ended June 30, 2022 and 2021, respectively. Evernia was acquired on July 1, 2021. The revenue from rental properties was $94,171 and $96,l58 and included the rental escalation as per the agreement and an improvement in the currency exchange rate against the Canadian Dollar over the prior period.

Operating expenses were $1,086,270 and $30,614 for the three months ended June 30, 2022 and 2021, respectively, an increase of $1,055,656 or 3,448.3%. The increase is primarily due to the following:

The operating income was $51,762 and $65,544 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $13,782 or 21.0%. In the prior period, management fees of $52,744 were reversed, after eliminating the reversal operating income increased by $38,962, primarily due to the operating income of $84,625, generated by Evernia offset by an increase in operating expenses for the legacy business related to an increase in professional fees as discussed above.

Loss on advance was $0 and $120,000 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $120,000 or 100.0%. In the prior year, the company provided against funds that were advanced to Local link wellness, which management determined to be uncollectible.

Interest expense was $122,848 and $474,008 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $351,160 or 74.1%, primarily due to a reduction in overall debt due to conversion of convertible notes over the prior 12 months and the repayment of convertible notes during the current period.

Amortization of debt discount was $211,202 and $847,865 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $636,663 or 75.1%. The decrease is primarily due to the conversion of convertible debt over the past twelve months and the repayment of debt during the prior period, resulting in acceleration of amortization expense in periods prior to the current period.

The derivative liability movement was $67,039 and $1,146,864 for the three months ended June 30, 2022 and 2021, respectively. The derivative liability movement represents the mark to market movements of variably priced convertible notes and warrants issued during the current and prior comparative period. The decrease in the mark to market movement of $1,079,825 was primarily due to the conversion of several convertible notes during the prior period.

Foreign exchange movements was $193,368 and $(101,247) for the three months ended June 30, 2022 and 2021, 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,

Net loss before taxation was $154,914 and $2,626,438 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $2,471,524 or 94.1%, is primarily due to the loss on advance in the prior year, the decrease in interest expense, the decrease in amortization of debt discount and the decrease in derivative liability movement, as discussed above.

Taxation was $24,700 and $0 for the three months ended June 30, 2022 and 2021, an increase of $24,700 or 100.0%. The increase is due to the profit generated by Evernia, which was acquired on July 1, 2021.

Net loss was $179,614 and $2,626,438 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $2,446,824 or 93.2%, is primarily due to the decrease in net loss before taxation and the increase in the taxation charge, as discussed above.

Revenues were $2,161,347 and $186,951 for the six months ended June 30, 2022 and 2021, respectively, an increase of $1,947,396 or 1056.1%. The revenue from in-patient services related to Evernia was $1,973,302 and $0 for the six months ended June 30, 2022 and 2021, respectively. Evernia was acquired on July 1, 2021. The revenue from rental properties was $188,045 and $186,951 for the six months ended June 30, 2022 and 2021, respectively and included the rental escalation as per the agreement.

Operating expenses were $2,034,645 and $82,630 for the six months ended June 30, 2022 and 2021, respectively, an increase of $1,952,015 or 2,362,.4%. The increase is primarily due to the following:

The operating income was $126,702 and $104,321 for the six months ended June 30, 2022 and 2021, respectively, an increase of $22,381 or 21.4%. In the prior period, management fees of $52,708 were reversed, after eliminating the reversal of management fees, operating income increased by $73,994, primarily due to the operating income of $131,359, generated by Evernia offset by an increase in operating expenses for the legacy business related to an increase in professional fees as discussed above.

Penalty on convertible notes was $0 and $9,240 for the six months ended June 30, 2022 and 2021, a decrease of $9,240. The penalty on convertible notes relates to a fee paid in the previous year for the extension of repayment dates on the Labrys note.

Loss on advance was $0 and $120,000 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $120,000 or 100.0%. The company provided against funds that were advanced to Local link wellness in the prior year, which management determined to be uncollectible.

Fair value of warrants granted to convertible debt holders was $0 and $976,788 for the six months ended June 30, 2022 and 2021, an increase of $976,788 or 100%. The Company granted warrants to certain convertible debt holders in terms of agreements entered into with them, whereby any debt issued subsequent to their debt on more favorable terms would result in the debt holders being entitled to the same terms as issued to the subsequent debt holders. The company issued warrants for a total of 246,464,649 shares of common stock valued using a Black Scholes valuation model.

Interest expense was $203,616 and $737,988 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $403,013 or 54.6%, primarily due to a reduction in overall debt due to conversion of convertible notes over the prior 12 months and the repayment of convertible notes during the current period.

Amortization of debt discount was $464,034 and $1,350,542 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $886,508 or 65.60%. The decrease is primarily due to the conversion of convertible debt over the past twelve months and the repayment of debt during the prior period, resulting in acceleration of amortization expense in periods prior to the current period.

The derivative liability movement was $130,437 and $(1,723,619) for the six months ended June 30, 2022and 2021, respectively. The derivative liability movement represents the mark to market movements of variably priced convertible notes and warrants issued during the current and prior comparative period.

Foreign exchange movements was $97,812 and $(180,738) for the six months ended June 30, 2022 and 2021, 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.

Net loss before taxation was $301,636 and $4,994,594 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $4,692,958 or 94.0%, is primarily due to the loss on advance in the prior year, the fair value of the warrants granted to convertible debt holders, the decrease in interest expense, the decrease in amortization of debt discount and the decrease in derivative liability movements, as discussed above.

Taxation was $42,963 and $0 for the six months ended June 30, 2022 and 2021, an increase of $42,963 or 100.0%. The increase is due to the profit generated by Evernia, which was acquired on July 1, 2021.

Net loss was $344,599 and $4,994,594 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $4,649,995 or 93.1%, is primarily due to the decrease in net loss before taxation, offset by the increase in taxation, as discussed above.

The amount of future minimum lease payments under finance leases as of June 30, 2022 is as follows:

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

The company also has commitments under convertible loans, short term loans, mortgage loans. If the convertible loans, as disclosed in note 10, above are not converted will need to be repaid, the short term loans disclosed in note 11 are repayable on demand and the mortgage loans, disclosed on note 12 above, matured during July 2022, this loan is currently being renegotiated with the lenders..

If government assistance loans, are not forgiven, the Company will need to repay the balance outstanding, including interest thereon.

Cash generated from operating activities was $246,940 and cash used in operating activities was $(383,358) for the six months ended June 30, 2022 and 2021, respectively, an increase of $630,298. The increase is primarily due to the following:

Cash used in investing activities was $213,726 and $498,020 for the six months ended June 30, 2022 and 2021, respectively In the current period the Company invested in expanding the Evernia facility, the prior year investment was attributable to the advances made to Evernia, which acquisition closed on July 1, 2021.

Cash provided by financing was $127,261 and $691,302 for the six months ended June 30, 2022 and 2021, respectively. In the current period the Company made a net repayment to convertible promissory note holders of $118,467 and received receivables funding of $195,500 of which $15,000 was repaid during the current period and proceeds from related parties of $207,294.

Over the next twelve months we estimate that the company will require approximately $1.5 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 also has convertible notes, short term loans and secured promissory notes which have matured and are in default and 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 high due to this uncertainty.

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.

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

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

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.

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Principal Executive Officer and the Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that due to a lack of segregation of duties the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Subject to receipt of additional financing or revenue generated from operations, the Company intends to retain additional individuals to remedy the ineffective controls.

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 June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

A suit, claiming past due rent was filed against the Company in March 2020 for rent of a storage warehouse, the warehouse was abandoned during March 2020. The rental expense was accrued in our records for $12,293 as of December 31, 2021.

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

On March 1, 2022, the Company, entered into a secured Promissory Note in the aggregate principal amount of $124,000 for net proceeds of $100,000 after an original issue discount of $24,000. The Note had a maturity date of April 1, 2022 and bears interest at the rate of zero percent per annum from the date on which the Note was issued until the same became due and payable.

On February 28, 2022, the Company issued 150,000,000 shares of common stock to Leonite in connection with a conversion notice received, converting principal of $149,250.

On May 3, 2022, the Company, entered into a secured Promissory Note in the aggregate principal amount of $76,250 for net proceeds of $61,000 after an original issue discount of $15,250. The Note had a maturity date of June 17, 2022 and bears interest at the rate of zero percent per annum from the date on which the Note was issued until the same became due and payable.

On June 1, 2022, The company entered into a Note Exchange Agreement whereby the convertible promissory notes entered into with Labrys Fund LP on May 7, 2021, with. A principal outstanding of $341,000, and on June 2, 2021 with a principal outstanding of $230,000 and accrued interest thereon of $25,300, were exchanged for a new Senior Secured Convertible Promissory note in the principal amount of $745,375. The Note matures on March 1, 2023, and bears interest at the minimum of 10% per annum or the Wall Street Journal quoted prime rate plus 5.75%.

No shares were issued pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended, afforded the Company under Section 4(a)(2) promulgated thereunder due to the fact that the issuance did not involve a public offering because of the insubstantial number of persons involved in each offering, the size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(a) (2) of the Securities Act for these transactions.

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.

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.

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

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

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

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

		Page
	PART I - FINANCIAL INFORMATION
Item l.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive (loss) Income for the three and six months ended June 30, 2022 and 2021	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
SIGNATURES		34


	June 30, 2022			December 31, 2021
		(Unaudited)
ASSETS

Current assets
Cash	$	i 69,145		$	i 48,822
Accounts receivable, net		i 337,665			i 176,011
Prepaid expenses		i 49,326			i 29,731
Other current assets		i 18,819			i 17,235
Total current assets		i 474,955			i 271,799
Non-current assets
Due on sale of subsidiary		i 5,033			i 5,115
Property and equipment, net		i 3,095,334			i 3,012,663
Intangible assets, net		i 1,431,923			i 1,610,913
Right of use assets, net		i 1,525,620			i 1,653,816
Total non-current assets		i 6,057,910			i 6,282,507
Total assets	$	i 6,532,865		$	i 6,554,306

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	i 380,885		$	i 438,482
Taxes payable		i 752,892			i 658,836
Convertible loans, net of discounts		i 5,012,407			i 4,891,938
Short term loans		i 323,519			i 122,167
Mortgage loans		i 3,742,455			i 3,864,312
Government assistance loans		i 157,367			i 157,367
Operating lease liability, current portion		i 263,814			i 241,083
Finance lease liability, current portion		i 7,634			i 7,386
Receivables funding		i 184,135			—
Derivative liability		i 345,738			i 515,901
Accrued dividends on preferred stock		i 152,607			i 105,049
Related party payables		i 2,700,039			i 2,514,281
Total current liabilities		i 14,023,492			i 13,516,802
Non-current liabilities
Government assistance loans		i 46,562			i 47,326
Deferred taxes		i 235,469			i 273,057
Third party loans		i 583,032			i 646,176
Operating lease liability, net of current portion		i 1352,997			i 1,493,431
Finance lease liability, net of current portion		i 28,986			i 32,895
Total non-current liabilities		i 2,247,046			i 2,492,885
Total liabilities		i 16,270,538			i 16,009,687

Preferred stock - Series B; $ i i 1.00 / par value, i i 10,000,000 / authorized, i i 400,000 / shares outstanding at June 30, 2022 and December 31, 2021.		i 400,000			i 400,000

Stockholders’ deficit
Preferred stock - Series A; $ i i 0.01 / par value, i i 10,000,000 / authorized, i i 4,000,000 / shares outstanding at June 30, 2022 and December 31, 2021.		i 40,000			i 40,000
Common stock - $ i i 0.01 / par value, i i 10,000,000,000 / shares authorized; i i 3,729,053,805 / and i i 3,579,053,805 / shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.		i 37,290,539			i 35,790,539
Additional paid-in capital		i 22,791,350			i 22,791,350
Discount for shares issued below par value		( i 27,363,367	)		( i 26,013,367	)
Accumulated other comprehensive income		i 778,180			i 816,532
Accumulated deficit		( i 44,520,889	)		( i 44,103,311	)
Stockholders’ deficit attributable to Ethema Health Corporation stockholders		( i 10,984,187	)		( i 10,678,257	)
Non-controlling interest		i 846,514			i 822,876
Total stockholders’ deficit		( i 10,137,673	)		( i 9,855,381	)
Total liabilities and stockholders’ deficit	$	i 6,532,865		$	i 6,554,306

Ethema Health Corp. – ‘10-Q’ for 6/30/22

On: Monday, 8/15/22, at 2:14pm ET · For: 6/30/22 · Accession #: 1903596-22-529 · File #: 0-15078

Previous ‘10-Q’: ‘10-Q’ on 5/16/22 for 3/31/22 · Next: ‘10-Q’ on 11/14/22 for 9/30/22 · Latest: ‘10-Q’ on 11/20/23 for 9/30/23

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference


	Six months ended June 30, 2022			Six months ended June 30, 2021
Operating activities
Net loss	$	( i 344,599	)	$	( i 4,994,594	)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		i 266,243			i 65,233
Non-cash interest converted to equity		—			i 344,701
Fair value of warrants granted		—			i 976,788
Amortization of debt discount		i 464,034			i 1,350,542
Unrealized foreign exchange loss		—			i 39,468
Derivative liability movements		( i 130,437	)		i 1,723,619
Amortization of right of use asset		i 128,195			—
Changes in operating assets and liabilities
Accounts receivable		( i 169,211	)		—
Prepaid expenses and other current assets		( i 21,181	)		i 83,840
Accounts payable and accrued liabilities		i 104,282			i 1,544
Operating lease liabilities		( i 117,703	)		—
Deferred taxation movement		( i 37,588	)		—
Taxes payable		i 104,905			i 25,501
Net cash provided by (used in) operating activities		i 246,940			( i 383,358	)

Investing activities
Purchase of property and equipment		( i 213,726	)		—
Other investments		—			( i 498,020	)
Net cash used in investing activities		( i 213,726	)		( i 498,020	)

Financing activities
Repayment of mortgage loans		( i 59,761	)		( i 58,449	)
Proceeds from convertible notes		—			i 1,262,149
Repayment of convertible notes		( i 278,467	)		( i 709,778	)
Proceeds from promissory notes		i 160,000			—
Proceeds from federal assistance loans		—			i 173,406
Repayment of third party loans		( i 78,646	)		—
Repayment of finance leases		( i 3,661	)		—
Proceeds from receivables funding		i 195,500			—
Repayment of receivables funding		( i 15,000	)		—
Proceeds from related party payables		i 207,294			i 23,974
Net cash provided by financing activities		i 127,259			i 691,302

Effect of exchange rate on cash		( i 140,150	)		i 133,230

Net change in cash		i 20,323			( i 56,846	)
Beginning cash balance		i 48,822			i 90,500
Ending cash balance	$	i 69,145		$	i 33,654

Supplemental cash flow information
Cash paid for interest	$	i 86,733		$	i 303,336
Cash paid for income taxes	$	—		$	—

Non-cash investing and financing activities
Conversion of convertible notes	$	i 150,000		$	—
Fair value of warrants issued	$	—		$	i 908,126

	●	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.

	i.	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
	v.	recognize revenue as the performance obligation is satisfied.

Schedule of assets acquired and liabilities assumed
	Amount
Consideration
Cash	$	i 50,000
100,000,000 shares of common stock at fair market value		i 410,000
Total purchase consideration	$	i 460,000
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash	$	i 60,324
Other Current assets		i 198,133
Property, plant and equipment		i 130,234
Right of use asset		i 1,772,560
Intangibles		i 1,789,903
Total assets		i 3,951,154
Less: liabilities assumed
Current liabilities assumed		( i 50,040	)
Intercompany advance		( i 1,140,985	)
Operating lease liabilities assumed		( i 1,836,151	)
Imputed Deferred taxation on identifiable intangible acquired		( i 310,645	)
Total liabilities		( i 3,337,821	)
Net identifiable assets acquired and liabilities assumed		i 613,333
Fair value of non-controlling interest		( i 153,333	)
Total	$	i 460,000

Schedule of revenue and earnings
	Revenue		Earnings

Actual from January 1, 2022 to June 30, 2022	$	i 1,973,302	$	i 94,553

2021 Supplemental pro forma from January 1, 2021 to June 30, 2021	$	i 1,268,660	$	( i 5,367,301	)

Schedule of Right of use assets
	June 30, 2022		December 31, 2021
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	i 43,673	$	i 49,268
Right-of-use assets - operating leases, net of amortization	$	i 1,525,620	$	i 1,653,816

Schedule of Lease costs
	Six months ended June 30,
	2022		2021
Finance lease cost:
Amortization of right-of-use assets	$	i 5,595	$	—
Interest expense on finance lease liabilities		i 1,279		—
Finance lease cost		i 6,874		—

Operating lease cost		i 199,539		—
Lease cost	$	i 206,413	$	—

Schedule of Other lease
	Six months ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	( i 3,661	)	$	—
Operating cash flows from operating leases		( i 199,539	)		—
	$	( i 203,200	)	$	—

Weighted average remaining lease term – finance leases		i 4 years and three months			—
Weighted average remaining lease term – operating leases		i 4 years and 7 months			—

Discount rate – finance leases		i 6.61	%		—
Discount rate – operating leases		i 4.64	%		—

Schedule of Finance lease liability
	Amount
Remainder of 2022	$	i 4,915
2023		i 9,829
2024		i 9,829
2025		i 9,829
2026		i 7,902
Total undiscounted minimum future lease payments		i 42,304
Imputed interest		( i 5,684	)
Total finance lease liability	$	i 36,620
Disclosed as:
Current portion	$	i 7,634
Non-Current portion		i 28,986
Lease liability	$	i 36,620

Schedule of Operating lease liability
	Amount
Remainder of 2022	$	i 166,698
2023		i 348,677
2024		i 366,110
2025		i 384,416
2026		i 437,407
Total undiscounted minimum future lease payments		i 1,703,308
Imputed interest		( i 86,497	)
Total operating lease liability	$	i 1,616,811

Disclosed as:
Current portion	$	i 263,814
Non-Current portion		i 1,352,997
Lease liability	$	i 1,616,811

	●	A payroll tax liability of $141,696 (CDN$182,589) in Greenstone Muskoka which has not been settled as yet.
	●	A GST/HST tax payable of $145,178 (CDN$187,077).

Schedule of taxation payable
	June 30, 2022		December 31, 2021

Payroll taxes	$	i 141,696	$	i 144,020
HST/GST payable		i 145,178		i 123,134
Income tax payable		i 466,018		i 391,682
Taxes Payable	$	i 752,892	$	i 658,836

	·	The Maturity date of the note was extended to June 30, 2022.
	·	The triggering of the dilutive event on October 25, 2021 which reduced the conversion price of the convertible note to $0.001 per share, will not be utilized as long as any events of default under the note are not triggered.
	·	The Company agreed to make two equal payments of $127,650 on the note on May 31, and June 30, 2022.

Schedule of assumption used in Black Scholes	Six months ended June 30 2022

Calculated stock price		$ i 0.0006 to $ i 0.0010
Risk free interest rate		i 0.06% to i 2.99	%
Expected life of convertible notes and warrants		i 3 to i 36 months
expected volatility of underlying stock		i 167.1% to i 245.9	%
Expected dividend rate		i 0	%

Schedule of derivative liability	June 30, 2022			December 31, 2021

Opening balance	$	i 515,901		$	i 4,765,387
Derivative liability extinguished on convertible notes converted to equity		( i 39,726	)			( i 2,914,119	)
Derivative liability on issued convertible notes		—			i 190,824
Fair value adjustments to derivative liability		( i 130,437	)		( i 1,526,191		)

Closing balance	$	i 345,738		$	i 515,901

Schedule of Antidilutive Securities
	Three and six months ended June 30, 2022		Three and six months ended June 30, 2021

Warrants to purchase shares of common stock		i 605,727,506		i 932,034,450
Convertible notes (in shares)		i 324,016,605		i 1,131,642,844
		i 929,744,111		i 2,063,677,294

	Amount
Remainder of 2022	$	4,915
2023		9,829
2024		9,829
2025		9,829
2026		7,902
Total undiscounted minimum future lease payments		42,304

	Amount
Remainder of 2022	$	166,698
2023		348,677
2024		366,110
2025		384,416
2026		437,407
Total undiscounted minimum future lease payments		1,703,308

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*

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Name	Position	Date

/s/*Shawn E. Leon*	Chief Executive Officer (Principal Executive Officer),	August 15, 2022
Shawn Leon	Chief Financial Officer (Principal Financial Officer), President and Director

/s/ *John O’Bireck*	Director	August 15, 2022
John O’Bireck

/s/ *Gerald T. Miller*	Director	August 15, 2022