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 September 30, 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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

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 Exchange Act). Yes ☐ 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 November 14, 2024 was 7,729,053,805.

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 September 30, 2024 (Unaudited) and December 31, 2023	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months and nine months ended September 30, 2024 and 2023	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 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	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

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

ETHEMA HEALTH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2024			December 31, 2023
ASSETS		(Unaudited)

Current assets
Cash	$	60,862		$	68,573
Accounts receivable, net		381,307			313,338
Prepaid expenses		28,777			18,159
Other current assets		1,478			3,030
Total current assets		472,424			403,100
Non-current assets
Property and equipment, net		756,395			508,401
Intangible assets, net		626,467			894,952
Right of use assets		9,988,784			9,323,723
Deposits paid		472,393			389,000
Total non-current assets		11,844,039			11,116,076
Total assets	$	12,316,463		$	11,519,176

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	566,984		$	352,101
Convertible notes, net of discounts		2,188,631			4,419,927
Short-term notes		2,466,018			680,672
Promissory note		267,500			—
Receivables funding, net		480,573			211,961
Related party advance, net		253,596			—
Government assistance loans		15,078			14,962
Operating lease liability		287,128			38,563
Finance lease liability		8,861			8,426
Related party payables		1,006,929			2,572,292
Total current liabilities		7,541,298			8,298,904
Non-current liabilities
Convertible notes, net of discounts		1,749,300			—
Promissory note		167,500			—
Government assistance loans		8,874			20,520
Operating lease liability		9,974,227			9,383,557
Finance lease liability		9,736			16,475
Total non-current liabilities		11,909,637			9,420,552
Total liabilities		19,450,935			17,719,456

Preferred stock - Series B; $1.00 par value 400,000 authorized, 0 issued and outstanding as of September 30, 2024 and December 31, 2023.		—			—

Stockholders’ deficit
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,600,000 and 4,000,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023		46,000			40,000
Common stock - $0.01 par value, 10,000,000,000 shares authorized; 7,729,053,805 and 3,729,053,805 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		77,290,539			37,290,539
Additional paid-in capital		24,986,083			26,187,925
Discount for shares issued below par value		(65,363,367	)		(27,363,367	)
Accumulated deficit		(44,093,727	)		(42,355,377	)
Total stockholders’ deficit		(7,134,472	)		(6,200,280	)
Total liabilities and stockholders’ deficit	$	12,316,463		$	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 September 30, 2024			Three months ended September 30, 2023			Nine months ended September 30, 2024			Nine months ended September 30, 2023

Revenues	$	1,760,000		$	1,353,899		$	4,550,200		$	4,219,904

Operating expenses
General and administrative		417,888			249,283			1,055,663			755,685
Rent expense		392,772			107,707			932,035			328,204
Management fees		480,000			30,000			480,000			273,003
Professional fees		231,312			171,659			686,994			460,773
Salaries and wages		839,015			651,537			2,279,788			1,873,280
Depreciation and amortization		122,721			110,185			346,013			388,259
Total operating expenses		2,483,708			1,320,371			5,780,493			4,079,204

Operating (loss) income		(723,708	)		33,528			(1,230,293	)		140,700

Other Income (expense)
Other income		40,000			110			40,000			449
Other expense		(971	)		—			(971	)		—
Penalty on convertible debt		—			—			—			(34,688	)
Extension fee – property purchase		—			—			—			(130,000	)
Gain on disposal of property		—			2,484,172			—			2,484,172
Loss on debt extinguishment		—			(277,175	)		—			(277,175	)
Interest income		766			—			1,864			—
Interest expense		(167,575	)		(81,371	)		(367,675	)		(382,448	)
Amortization of debt discount		(141,205	)		(73,857	)		(279,607	)		(238,304	)
Foreign exchange movements		(8,021	)		6,598			(3,510	)		(84,148	)
Net (loss) income before income taxes		(1,000,714	)		2,092,005			(1,840,192	)		1,478,558
Income taxes		—			15,532			—			221,107
Net (loss) income		(1,000,714	)		2,107,537			(1,840,192	)		1,699,665
Net loss (income) attributable to non-controlling interest		—			(31,058	)		101,842			(127,906	)
Net (loss) income allocable to Ethema Health Corporation Stockholders		(1,000,714	)		2,076,479			(1,738,350	)		1,571,759
Preferred stock dividend		—			—			—			(47,225	)
Net (loss) income available to common shareholders of Ethema Health Corporation		(1,000,714	)		2,076,479			(1,738,350	)		1,524,534
Accumulated other comprehensive income
Foreign currency translation adjustment		—			—			—			5,065

Total comprehensive (loss) income	$	(1,000,714	)	$	2,076,479		$	(1,738,350	)	$	1,529,599
(Loss) income per share
Basic	$	(0.00	)	$	0.00		$	(0.00	)	$	0.00
Diluted		(0.00	)		0.00			(0.00	)		0.00
(Loss) income per share	$	(0.00	)	$	0.00		$	(0.00	)	$	0.00
Weighted average common shares outstanding
Basic		7,207,314,674			3,729,053,805			4,896,937,017			3,729,053,805
Diluted		7,207,314,674			3,931,379,775			4,896,937,017			3,931,379,775

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	)
Acquisition of minority shareholders interest		—		—		—		—		(1,201,842	)		—			—		—			101,842			(1,100,000	)
Net loss		—		—		—		—		—			—			—		(363,433	)		(101,842	)		(465,275	)
Balance as of June 30, 2024		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	24,986,083		$	(27,363,367	)	$	—		(43,093,013	)		—			(8,139,758	)
Conversion of related party payables to equity		600,000		6,000		4,000,000,000		40,000,000		—			(38,000,000	)		—		—			—			2,006,000
Net loss		—		—		—		—		—			—			—		(1,000,714	)		—			(1,000,714	)
Balance as of September 30, 2024		4,600,000		46,000		7,729,053,805		77,290,539		24,986,083			(65,363,367	)		—		(44,093,727	)		—			(7,134,472	)

	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	)
Disposal of subsidiary to related party		—		—		—		—		2,034,885		—			—			—			(700,000	)		1,334,885
Deemed extinguishment of debt by related party		—		—		—		—		461,184		—			—			—			—			461,184
Foreign currency translation		—		—		—		—		—		—			6,569			—			—			6,569
Net loss		—		—		—		—		—		—			—			(326,035	)		93,880			232,155
Dividends accrued		—		—		—		—		—		—			—			(23,806	)		—			(23,806	)
Balance as of June 30, 2023		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	25,915,986	$	(27,363,367	)	$	—		$	(44,036,696	)	$	267,032		$	(7,886,506	)
Fair value of warrants issued for debt extinguishment		—		—		—		—		271,939		—			—			—			—			271,939
Net loss		—		—		—		—		—		—			—			2,076,479			31,058			2,107,537
Balance as of September 30, 2023		4,000,000	$	40,000		3,729,053,805	$	37,290,539		26,187,925		(27,363,367	)	$	—			(41,960,217	)		298,090			(5,507,030	)

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

ETHEMA HEALTH CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


	Nine months ended September 30, 2024			Nine months ended September 30, 2023
Operating activities
Net (loss) income	$	(1,840,192	)	$	1,699,665
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		346,013			388,259
Amortization of debt discount		279,607			238,304
Non-cash management fee		480,000			—
Amortization of right of use asset		79,196			169,682
Gain on disposal of property		—			(2,484,172	)
Loss on debt extinguishment		—			277,175
Penalty on convertible promissory notes		—			34,688
Deferred tax movement		—			(46,597	)
Changes in operating assets and liabilities
Accounts receivable		62,671			(289,697	)
Prepaid expenses and other current assets		(9,066	)		(48,457	)
Accounts payable and accrued liabilities		128,838			(110,110	)
Operating lease liabilities		94,979			(167,319	)
Taxes payable		—			(237,211	)
Net cash used in operating activities		(377,954	)		(575,790	)
Investing activities
Purchase of property and equipment		(85,522	)		(5,244,011	)
Proceeds on disposal of property		—			8,093,448
Acquisition of business		(240,000	)		—
Acquisition of minority shareholders interest		(625,000	)		—
Deposits paid		(83,393	)		(374,000	)
Net cash used in (provided by) investing activities		(1,033,915	)		2,475,437
Financing activities
Repayment of mortgage loans		—			(58,320	)
Proceeds from convertible notes		—			150,000
Repayment of convertible notes		—			(1,124,442	)
Proceeds from short-term notes		1,912,000			223,500
Repayment of short-term notes		(801,323	)		(568,325	)
Repayment of promissory note		(40,000	)		—
Repayment of government assistance loans		(11,519	)		(10,855	)
Repayment of third-party loans		—			(361,260	)
Repayment of finance leases		(6,304	)		(5,907	)
Proceeds from receivables funding		542,000			580,646
Repayment of receivables funding		(378,688	)		(848,417	)
Proceeds from related party advance		250,000			—
Repayment of related party advance		(11,538	)		—
Repayment of related party notes		(39,363	)		(76,296	)
Net cash provided by (used in) financing activities		1,415,265			(2,099,676	)
Effect of exchange rate changes on cash		(11,107	)		71,000
Net change in cash		(7,711	)		(129,029	)
Beginning cash balance		68,573			140,757
Ending cash balance	$	60,862		$	11,728
Supplemental cash flow information
Cash paid for interest	$	248,079		$	334,735
Cash paid for income taxes	$	—		$	—
Non-cash investing and financing activities
Promissory note issue on acquisition of minority shareholders interest	$	475,000		$	—
Conversion of related party payable to common stock	$	2,000,000		$	—
Conversion of related party payable to Series A preferred stock	$	6,000		$	—
Disposal of subsidiary to related party	$	—		$	1,334,885
Deemed extinguishment of debt by related party	$	—		$	461,184

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 through owned properties in Delray Beach and subsequently through 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. The Company’s operations are currently conducted through its Evernia West Palm Beach facility and operations are expected to commence in its Boca Raton facility as soon as the facility is approved for patient intake by insurers, which approval is expected in the fourth quarter of 2024.

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

Acquisition of minority shareholders interest in ATHI

On May 15, 2024, the Company entered into a Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority shareholder for gross proceeds of $1,100,000. The Company paid an initial deposit of $25,000 and on closing an additional $600,000. The Company issued a non-interest-bearing promissory note for the remaining balance of $475,000, which promissory note is repayable in installments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight installments) and months ten through seventeen (eight installments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

Acquisition of 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. On May 1, 2024 the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease for suites 100,101, 201, 202 and 203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024 and the Company entered into a Bill of Sale to give effect to the Definitive Agreement.

The purchase price was $240,000 which was settled by a deposit of $20,000 and a cash payment of $220,000 and the payment to the Seller of $83,393 for the assumption of the security deposit held by the landlord of the Leased Premises located at 899 Meadows Road.

2. Summary of significant accounting policies

Financial Reporting

The (a) unaudited condensed consolidated balance sheets as of September 30, 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 and nine months ended September 30, 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 six months ended June 30, 2023, a closing rate of CDN$1 equals US$0.7553 and an average exchange rate of CDN$1 equals US$0.7420.

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 September 30, 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 considering expected credit losses in the revenue recognition process. The revenue the Company recognizes is already net of expected credit losses.

The Company constantly evaluates its collections experience and consider the market conditions and current economic developments facing the Company’s operations.

The Company has not experienced significantly different collections to revenues it has recognized and it has not seen any deterioration in the payment patterns from the healthcare providers that the Company works with, the Company cannot predict with any certainty that the payment patterns the Company experiences may change and the Company 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.

g) 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. If applicable, the Company uses a Black Scholes Option Pricing model to estimate the fair value of derivatives such as variable debt conversion features, at the end of each applicable reporting period. Changes in the fair value of derivatives are included in the statements of operations, for each reporting period. 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 the Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) 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 the Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. The Company recognizes its transaction costs in the Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) 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 Unaudited Condensed 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 unaudited condensed consolidated statements of operations and comprehensive loss.

As the Company’s 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 its patients typically are under no obligation to remain admitted in its facilities.

The Company receives payments from the following sources for services rendered in its 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 in-patient 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 $381,307 and $313,338 at September 30, 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. The Company has no awards with performance conditions and no awards dependent on market conditions

There were no stock-based compensation awards that vested during the three and nine months ended September 30, 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, September 30, 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 $7.1 million, and an accumulated deficit of approximately $44.1 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 September 30, 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 exposure 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 nine months ended September 30, 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 unaudited condensed 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 September 30, 2024 the Company has a working capital deficiency of $7.1 million, and total liabilities in excess of assets in the amount of $7.1 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. Acquisition of minority shareholders interest in ATHI

On May 15, 2024, the Company entered into a Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority shareholder for gross proceeds of $1,100,000. The Company paid an initial deposit of $25,000 and on closing an additional $600,000. The Company issued a non-interest-bearing promissory note for the remaining balance of $475,000, which promissory note is repayable in installments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight installments) and months ten through seventeen (eight instalments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

The acquisition of the minority shareholders interest was accounted for in terms of ASC 810, Consolidation.

Schedule of acquisition of the minority shareholders interest
	Amount
Purchase price
Cash	$	625,000
Promissory note		475,000
Total		1,100,000
Allocation of purchase price
Minority shareholders interest		101,842
Additional paid in capital		(1,201,842	)
Total	$	(1,100,000	)

5. Acquisition of Boca Cove Detox

Schedule of acquisition of boca cove detox
	Amount
Purchase price
Cash	$	323,393
Total		323,393
Allocation of purchase price
Property and equipment		240,000
Deposit assumed on leased premises		83,393
Total	$	323,393

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Property and equipment

Acquisition of Boca Cove Detox

On May 1, 2024 the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease for suites 100,101, 201, 202 and 203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024 and the Company entered into a Bill of Sale to give effect to the Definitive Agreement. The purchase price of the assets was $240,000.

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

Schedule of property purchase and subsequent sale
	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

Acquisition of Boca Cove Detox

Property and equipment consists of the following:

Schedule of property and equipment
		September 30, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease		539,890		(125,871	)		414,019		371,308
Furniture and fittings	6 years		395,459		(76,775	)		318,684		104,715
Vehicles	5 years		55,949		(37,453	)		18,496		26,889
Computer equipment	3 years		9,372		(4,176	)		5,196		5,489
		$	1,000,670	$	(244,275	)	$	756,395	$	508,401

Depreciation expense for the three months ended September 30, 2024 and 2023 was $33,226 and $20,690, respectively, and for the nine months ended September 30, 2024 and 2023 was $77,528 and $119,774, respectively.

Intangibles

Intangible assets consist of the following:

Schedule of intangible assets
	Useful lives	September 30, 2024							December 31, 2023
		Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 years	$	1,789,903	$	(1,163,436	)	$	626,467	$	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 September 30, 2024 and 2023 and $268,485 for each of the nine months ended September 30, 2024 and 2023.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 February 1, 2027.

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 it 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.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Leases (continued)

The assigned lease has a remaining term of 3 years, expiring on June 30, 2027, with an initial monthly lease cost of $21,843 from July 1, 2024 to December 31, 2024, escalating by 2.9% per annum, each annual period being a calendar year.

To determine the present value of minimum future lease payments for operating leases at June 10, 2024, the Company was required to estimate a rate of interest that it 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 Bank rate 3/1 adjustable-rate mortgage which represents the average rate for several mortgage lenders in the market of 6.36%. The Company determined that 6.36% 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 $744,256 on June 10, 2024.

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

Schedule of right of use assets are included in the consolidated balance
	September 30, 2024		December 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	18,496	$	26,889
Right-of-use assets - operating leases, net of amortization	$	9,988,784	$	9,323,723

Lease costs consists of the following:

Schedule of lease costs
	Nine months ended September 30,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	8,392	$	8,392
Interest expense on finance lease liabilities		1,106		1,504
Total finance lease cost		9,498		9,896

Operating lease cost		910,076		446,189
Lease cost	$	919,574	$	456,085

Other lease information:

Schedule of other lease
	Nine months ended September 30,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(1,106	)	$	(1,504	)
Operating cash flows from operating leases		(738,760	)		(446,189	)
Financing cash flows from finance leases		(6,266	)		(5,868	)
Cash paid for amounts included in the measurement of lease liabilities	$	(746,132	)	$	(453,561	)

Weighted average lease term – finance leases		2 years and 2 months			3 years and 2 months
Weighted average remaining lease term – operating leases		17 years and ten months			19 years and 11 months

Discount rate – finance leases		6.58	%		6.60	%
Discount rate – operating leases		7.60	%		7.70	%

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Leases (continued)

Maturity of Leases

Finance lease liability

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

Schedule of future minimum lease payments under finance leases
	Amount
Remainder of 2024	$	2,457
2025		9,829
2026		6,195
2027		1,707
Total finance lease		20,188
Imputed interest		(1,591	)
Total finance lease liability	$	18,597
Disclosed as:
Current portion	$	8,861
Non-Current portion		9,736
Lease liability	$	18,597

Operating lease liability

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

Schedule of future minimum lease payments under operating leases
	Amount

Remainder of 2024	$	257,672
2025		1,045,192
2026		1,074,288
2027		961,526
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,538,720
Imputed interest		(9,277,365	)
Total operating lease liability	$	10,261,355

Disclosed as:
Current portion	$	287,128
Non-Current portion		9,974,227
Lease liability	$	10,261,355

9. Short-term Convertible Notes

The short-term convertible notes consist of the following:

Schedule of short-term convertible notes
	Interest rate			Maturity Date	Principal		Interest		September 30, 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		10,031		130,807		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		2,779,000		958,124		3,737,124		4,228,161

					$	2,969,776	$	968,155	$	3,937,931	$	4,419,927
Disclosed as follows:
Short-term									$	2,188,631	$	4,419,927
Long-term										1,749,300		—
									$	3,937,931	$	4,419,927

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. 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. The note has not been converted into common shares and remains outstanding without a default notification.

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.

Between April 30, 2024 and May 10, 2024, three series N convertible note holders, converted principal of $450,000 into Series R promissory notes after the repayment of $151,475 of accrued interest.

During the current year, the Company repaid $24,000 of accrued interest to certain Series N convertible note holders.

10. Short-term Notes

The short-term notes consist of the following:

Schedule of short-term notes
Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			September 30, 2024 Amount		December 31, 2023 Amount
LXT Biotech		6.0	%	On Demand	$	98,499	$	32,351	$	—		$	130,850	$	129,184

Mirage Realty		10.0	%	June 15, 2024		—		—		—					236,421
		6 to 18	%	November 15, 2024		600,000		19,500		—			619,500		—

Third Party		12.0	%	On demand		254,944		5,515		—			260,459		315,067

Revolving line of credit		60.0	%	August 13,2024		111,100		17,406		—			128,506		—
		60	%	September 30, 2024		181,000		17,798		—			198,798

Series R Promissory notes		7.5	%	March 31, 2025		1,155,000		31,508		(58,603	)		1,127,905		—

Total convertible notes payable					$	2,400,543	$	124,078	$	(58,603	)	$	2,466,018	$	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

10. 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 earned 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.

On May 13, 2024, the Company repaid principal of $250,000 and accrued interest thereon of $15,000, thereby extinguishing the debt.

On May 15, 2024, the Company, entered into a senior secured promissory note in the aggregate principal amount of $600,000. The note earns interest at 6% per annum for the first two months and 9% per annum for the following two months and 18% for the next two months. The note matures on November 15, 2024. The proceeds of the note were used to acquire the minority shareholder interest in ATHI, refer note 4 above.

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.

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). On August 1, 2024, the Company repaid CDN$100,000 ($72,223) of which CDN$53,418 ($38,580) was allocated to principal and CDN$46,582 ($33,643) was allocated to interest repayment.

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 months 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.

Series R senior secured promissory notes

Between April 15, 2024 and May 10, 2024, the Company entered into securities purchase agreements with accredited investors whereby the Company issued 6 senior secured promissory notes with an aggregate issue price of $660,000 for gross proceeds of $600,000. The promissory notes bear interest at 7.5% per annum, interest is payable quarterly at an increasing rate of 3%, 6%, 9% and 12% of the principal outstanding. The notes mature on March 31,2025.

Between May 2, 2024 and May 10, 2024, the company entered into exchange agreements with three investors, whereby the investors exchanged three series N notes with a principal amount outstanding of $450,000 for senior secured Series R promissory notes with an aggregate issue price of $495,000. The promissory notes bear interest at 7.5% per annum, interest is payable quarterly at an increasing rate of 3%, 6%, 9% and 12% of the principal outstanding. The notes mature on March 31, 2025.

11. Promissory Note

On May 15, 2024, the Company entered into a Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority shareholder for gross proceeds of $1,100,000. The Company paid an initial deposit of $25,000 and on closing an additional $600,000. The Company issued a non-interest bearing promissory note for the remaining balance of $475,000, which promissory note is repayable in instalments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight instalments) and months ten through seventeen (eight instalments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

Schedule of promissory note
	September 30, 2024			December 31, 2023

Promissory note issued	$	475,000		$	—
Repayments		(40,000	)		—
	$	435,000		$	—
Disclosed as:
Current portion	$	267,500		$	—
Long-term portion		167,500			—
	$	435,000		$	—

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. Receivables funding

June 2, 2023 Funding

On June 2, 2023, the Company through its 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 was the previous 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 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 was obliged to pay $6,667 per week until the amount of $320,000 was paid in full. The guarantor of the funding was the previous minority shareholder in ATHI.

The Company made weekly cash payments of $6,667 totaling $320,000 by August 10, 2024, thereby extinguishing the debt.

May 30, 2024 Funding

On May 30, 2024, the Company, through its subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Fortunate Sons (“Fortunate”), whereby $375,000 of the Receivables of Evernia were sold to Fortunate for gross proceeds of $300,000. The Company also incurred fees of $5,000, resulting in net proceeds of $295,000. The Company is obliged to pay $10,750 per week commencing 4 weeks after the agreement was entered into until the amount of $375,000 is paid in full.

The proceeds of the receivables funding was used to acquire the assets of Boca Cove Detox.

The Company has repaid $75,250 and the balance outstanding as of September 30, 2024 was $245,821, net of unamortized debt discount of $53,929.

August 30, 2024 Funding

On August 30, 2024, the Company, through its subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $312,500 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 $247,000. The Company is obliged to pay $8,013 per week until the amount of $312,500 is paid in full.

The Company made weekly cash payments of $8,013 totaling $24,039 and the balance outstanding as of September 30, 2024 was $234,752, net of unamortized debt discount of $53,709.

13. 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 September 30, 2024, the balance outstanding, including interest thereon was $23,952.

14. Related parties

Schedule of related party payable
	September 30,			December 31,
	2024			2023
Related party payables
Shawn E. Leon	$	34,261		$	61,267
Leon Developments Ltd.		—			1,092,701
Eileen Greene		972,668			1,418,324
Total related party payables	$	1,006,929		$	2,572,292

Related party advance
Eileen Greene
Principal outstanding	$	285,000		$	—
Repayments		(11,539	)		—
		273,461			—

Debt discount at inception		(35,000	)		—
Amortization of debt discount		15,135			—
		(19,865	)		—

Total Related party advances	$	253,596		$	—

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14. Related parties (continued)

Shawn E. Leon

At September 30, 2024 and December 31, 2023, the Company had a payable to Shawn Leon of $34,261 and $61,267, respectively. Mr. Leon is a director and CEO of the Company. The balances receivable and payable are non-interest bearing and have no fixed repayment terms.

During the nine months ended September 30, 2024, Mr. Leon was credited with a management fee of $480,000. Mr. Leon forfeited management fees due to him for the year ended December 31, 2023.

During July 2024, the related party payable of $1,092,701 owing to Leon Developments was assigned by Leon Developments to Mr. Leon.

On July 12, 2024, Mr. Leon converted $1,500,000 of the related party payable into 3,000,000,000 shares of common stock at a conversion price of $0.0005 per share.

Leon Developments, Ltd.

Leon Developments is owned by Shawn Leon, the Company’s CEO and director. As of September 30, 2024 and December 31, 2023, the Company owed Leon Developments, Ltd., $0 and $1,092,701, respectively.

During July 2024, the related party payable of $1,092,701 owing to Leon Developments was assigned by Leon Developments to Mr. Leon.

Eileen Greene

As of September 30, 2024 and December 31, 2023, the Company owed Eileen Greene, the spouse of its CEO, Shawn Leon, $972,668 and $1,418,324, respectively. The amount owed to Ms. Greene is non-interest bearing and has no fixed repayment terms.

On July 12, 2024, Ms. Greene converted $500,000 of the related party payable into 1,000,000,000 shares of common stock at a conversion price of $0.0005 per share.

On July 4, 2024, Ms. Greene advanced the Company $250,000 with an original issue discount of $35,000, totaling $285,000. The amount is being repaid in instalments of $5,769 as and when the Company has the cash flow to make the payments, the loan is expected to be fully repaid in June 2025 or earlier depending on cash flow.

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

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. 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 7,729,053,805 and 3,729,053,805 shares of common stock at September 30, 2024 and December 31, 2023, respectively.

On July 12, 2024, the Company issued 4,000,000,000 shares of common stock to Mr. Shawn Leon, the company CEO and his spouse, Ms. Eileen Greene, both related parties, for the conversion of $2,000,000 of related party payables, see note 14 above.

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 4,600,000 and 4,000,000 Series A Preferred shares at September 30, 2024 and December 31, 2023, respectively.

On September 27, 2024, the Company issued 600,000 shares of Series A Preferred stock to Mr. Shawn Leon for the conversion of $6,000 of related party payables, see note 14 above.

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 September 30, 2024 and December 31, 2023.

Stock options

The Company’s board of directors adopted the Greenstone Healthcare Corporation 2013 Stock Option Plan (the “Plan”) to promote its long-term growth and profitability by (i) providing its key directors, officers and employees with incentives to improve stockholder value and contribute to its growth and financial success and (ii) enable it to attract, retain and reward the best available persons for positions of substantial responsibility. A total of 10,000,000 shares of the Company’s common stock have been reserved for issuance upon exercise of options granted pursuant to the Plan. The Plan allows the Company to grant options to its employees, officers and directors and those of its subsidiaries, provided that only the Company’s employees and those of its subsidiaries may receive incentive stock options under the Plan. The Company has no issued options at September 30, 2024 under the Plan.

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.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. Stockholder’s deficit (continued)

Warrants (continued)

A summary of the Company’s warrant activity during the period from January 1, 2023 to September 30, 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 September 30, 2024

1,022,376,420

$0.001 to $0.00205

0.0012840

The following table summarizes information about warrants outstanding at September 30, 2024:

Schedule of warrants outstanding	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		2.75				745,810,761
$0.002050		276,565,659		1.26				276,565,659
		1,022,376,420		2.35	$	0.001284		1,022,376,420	$	0.001284

All of the warrants outstanding at September 30, 2024 are vested. The warrants outstanding at September 30, 2024 have an intrinsic value of $0.

16. 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 its Evernia, Addiction Recovery Institute of America facility.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. Net loss per common share

For the three and nine months ended September 30, 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.

Schedule of diluted net loss per share
	Three and nine months ended September 30, 2024

Shares issuable upon exercise of warrants		1,022,376,420
Shares issuable on conversion of convertible notes		177,521,610
		1,199,898,030

For the three months ended September 30, 2023, the computation of basic and diluted earnings per share is calculated as follows:


			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	2,076,479		3,729,053,805	$	0.00

Effect of dilutive securities
Convertible debt		50,964		202,325,970

Diluted earnings per share
Net income per share available for common stockholders	$	2,127,443		3,931,379,775	$	0.00

For the nine months ended September 30, 2023, the computation of basic and diluted earnings per share is calculated as follows:

			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	1,524,534		3,729,053,805	$	0.00

Effect of dilutive securities
Convertible debt		146,395		202,325,970

Diluted earnings per share
Net income per share available for common stockholders	$	1,670,929		3,931,379,775	$	0.00

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

18. 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.

b. Other

The Company has principal and interest payment commitments under the Convertible notes disclosed under Note 9 above. Conversion of these notes are at the option of the investor, if not converted these notes may need to be repaid.

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.

ETHEMA HEALTH CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

19.

Subsequent events

Edgewater Recovery Centers, LLC

On July 8, 2024 the Company finalized the execution of a letter of intent and on July 10, 2024 entered into a Management Agreement with respect to the assets and operations of Edgewater Recovery Center LLC of Morehead Kentucky (“ETC”).

The initial proposal was for the Company to acquire the business and assets of ETC and the real property in which ETC operates included in three separate entities, ERC Investments, LLC (“ERC”), JDE Properties, LLC (“JDE”), and New Journey LLC (“NJ”). Due to the requirement for credit and personal guarantees, the Company is unable to acquire the real property as part of this transaction. The three real property entities., ERC, JDE and NJ entities will now be acquired by BH Properties Fund LLC (“BH Prop”), a fund under control of Shawn Leon, the Company’s CEO and director pursuant to an Equity Purchase Agreement (“EPA”).

On October 22, 2024, ARIA Kentucky, LLC (“ARIA Kentucky”), a wholly owned subsidiary of the Company entered into a binding Asset Purchase Agreement whereby ARIA Kentucky will acquire the business of ETC, including; all the assignable assets, including current assets existing at the time of closing, all cash balances and rights to receive cash, all equipment, all warranties related to the business and acquired assets, all intangible assets including intellectual property, all equipment, all business inventories, all property leases associated with the business, all assumed contracts, all governmental authorizations; and all information and records, including patient records, as defined in the APA.

THE APA also contains certain Seller and Purchaser representations, warranties, covenants and obligations, which are defined in the APA and are customary in agreements of this nature.

The APA may be terminated by either party if not closed within 120 days, or by mutual consent of the parties, or by either the purchaser or seller upon breach of any of the representations, warranties, covenants or obligations by the other party, or by either party if any law or regulation prevents the conclusion of the APA.

Upon the closing of the Agreement, which will occur upon the settlement or waiver of all condition’s precedent, ARIA Kentucky will pay a purchase consideration of $250,000 and assume certain liabilities related to the acquired assets, including trade payables from July 15, 2024, the Transfer Date, until the closing date. All liabilities under assumed contracts and certain specifically identified liabilities, including a settlement agreement with the United States and Kentucky government and certain obligations as a borrower or guarantor related to banking obligations will also be assumed by ARIA Kentucky. The closing is also conditional upon the simultaneous closing of the EPA with BH Prop.

ETC has been managed by the Company since July 15, 2024 and will continue to be managed until such time as the newly created, wholly owned subsidiary of the Company, ARIA Kentucky is fully licensed, accredited and contracted with the managed care organizations, whereupon the operations of ETC will cease. ETC will continue to generate revenues from servicing clients during the transition period. The existing interim management of ETC will be continued by ARIA Kentucky and all operations will be conducted under the Addiction Recovery Institute of America ("ARIA") Brand.

Other than disclosed above, the Company has evaluated subsequent events through the date of the condensed consolidated financial statements were issued, it 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, we plan to continue to grow the Evernia business organically or through acquisitions, should any opportunities present themselves.

Edgewater Recovery Centers, LLC

As mentioned in Note 19 to the unaudited condensed consolidated financial statements, we finalized the execution of a letter of intent and a management agreement with respect to the assets and operations of Edgewater Recovery Center LLC of Morehead Kentucky, and on October 22, we signed a binding Asset Purchase Agreement ("APA") to purchase the business operations and operational assets, excluding any real property of Edgewater Recovery Center, LLC ("ETC") headquartered in Morehead Kentucky. ETC operates primarily in the urban areas of Morehead in eastern Kentucky and Paducah in western Kentucky.

ETC has been managed by us since July 15, 2024 and will continue to be managed until such time as our newly created, wholly owned subsidiary, ARIA Kentucky, LLC ("ARIA Kentucky") is fully licensed, accredited and contracted with the managed care organizations, whereupon the operations of ETC will cease. ETC will continue to generate revenues from servicing clients during the transition period. The existing interim management of ETC will be continued by ARIA Kentucky and all operations will be conducted under the Addiction Recovery Institute of America ("ARIA") Brand.

The current ETC patient census in Kentucky is approximately 195 patients which we believe, that with the conclusion of the binding APA, will increase dramatically in the near term. The Ethema management team has stabilized the ETC operations over the last three months and is cash flow positive. we intend to add another 16 beds in October at the Paducah location, which has been operating at full capacity, increasing revenue in this underserved market.

ETC and after the closing of the transaction, ARIA Kentucky, primarily provides care to Medicaid insured clients. There is currently on-going investigations into other Medicaid providers in Kentucky, which, we believe, will reduce the number of patients served by these providers, presenting ARIA Kentucky with an opportunity to further expand its footprint and revenue potential in Kentucky.

Results of operations for the three months ended September 30, 2024 and 2023.

Revenues

Revenues were $1,760,000 and $1,353,899 for the three months ended September 30, 2024 and 2023, respectively, an increase of $406,101 or 30.0%. All of the revenue is related to in-patient services. The increase is attributable to the increase in the number of patients at the West Palm Beach facility due to a concerted marketing effort during the current quarter.

Operating Expenses

Operating expenses were $2,483,708 and $1,320,371 for the three months ended September 30, 2024 and 2023, respectively, an increase of $1,163,337 or 88.1%. The increase is primarily due to the following:

●

General and administrative expenses was $417,888 and $249,283 for the three months ended September 30, 2024 and 2023, respectively, an increase of $168,605. The increase includes an increase in advertising and marketing costs of $93,066 and an increase in customer related food costs of $32,830 related to the increase in patient numbers. The balance of the increase consists of numerous individually insignificant expense items.

●

Rent expense was $392,772 and $107,707 for the three months ended September 30, 2024 and 2023, respectively, an increase of $285,065 or 264.7%. The increase is due to the acquisition of the Evernia property and the subsequent sale of the property at an increased value with the simultaneous entry into a new 20-year lease agreement. The rental expense includes a rental smoothing adjustment of $55,363 in terms of US GAAP over the life of the lease, the rental expense incurred on the Boca Cove Detox Center of $114,077 and the increase in rental expense associated with the increased value on the Evernia property which was acquired and resold to a third party at an increased market related value.

●

Management fees were $480,000 and $30,000 for the three months ended September 30, 2024 and 2023, respectively, an increase of $450,000 or 1,500.0%. A management fee was accrued for Shawn Leon during the current quarter after several years of no management fees due to the previous financial performance of the group.

●

Professional fees were $231,312 and $171,659 for the three months ended September 30, 2024 and 2023, respectively, an increase of $59,653 or 34.8%. The increase is primarily due to the level of corporate activity as we are concentrating on closing certain acquisitions and pursuing further acquisition opportunities.

●

Salaries and wages were $839,015 and $651,537 for the three months ended September 30, 2024 and 2023, respectively, an increase of $187,478 or 28.8%. the increase is primarily due to the increase in employee headcount to; (i) staff the Boca Detox Center, which was acquired in the prior quarter, no revenues have been generated from this facility, which is waiting for its operational license, which was granted in October 2024, and (ii) to service the increase in our patient headcount at our Evernia facility which is directly correlated to the increase in revenue.

●

Depreciation and amortization was $122,721 and $110,185 for the three months ended September 30, 2024 and 2023, respectively, an increase of $12,536 or 11.4%. The increase is primarily due to the acquisition of the Boca Cove Detox Center during the prior quarter.

Operating (loss) income

Operating loss was $723,708 and operating income was $33,528 for the three months ended September 30, 2024 and 2023, respectively, an increase of $757,236 or 2,258.5%. The increase is due to the increase in operational expenses of $1,163,337, offset by the increase in revenue of $406,101 as discussed in detail above.

Other income

Other income was $40,000 and $110 for the three months ended September 30, 2024 and 2023, respectively., an increase of $39,890. Other income during the current period is a temporary management fee earned on operating the Edgewater Recovery operation until such time as the acquisition is closed.

Other expense

Other expense was $971 and $0 for the three months ended September 30, 2024 and 2023, respectively. The amounts are immaterial.

Gain on disposal of property

Gain on disposal of property was $0 and $2,484,172 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $2,484,172 or 100.0%. In the prior year, we exercised our option to acquire the property located at 950 Evernia Street, West Palm Beach, Florida, in which its treatment center operates, and subsequently disposed of the property to a third party, realizing a profit of $2,484,172, after transaction costs.

Loss on debt extinguishment

Loss on debt extinguishment was $0 and $277,175 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $277,175 or 100.0%. The loss on debt extinguishment in the prior year is related primarily to replacement warrants issued to Leonite Capital as part of the settlement reached with Leonite, whereby all indebtedness to Leonite was extinguished.

Interest income

Interest income was $766 and $0 for the three months ended September 30, 2024 and 2023, respectively. The amounts are immaterial.

Interest expense

Interest expense was $167,575 and $81,371 for the three months ended September 30, 2024 and 2023, respectively, an increase of $86,204 or 105.9%. The increase is primarily due to the additional debt advanced to us to close the acquisition of the minority shareholders interest in ATHI and the Boca Cove Detox facility.

Amortization of debt discount

Amortization of debt discount was $141,205 and $73,857 for the three months ended September 30, 2024 and 2023, respectively, an increase of $67,348 or 91.2%. The increase is primarily due the increase in debt to close the acquisition of the minority shareholders interest in ATHI and the acquisition of the Boca Cove detox facility during the prior quarter.

Foreign exchange movements

Foreign exchange movements were $(8,021) and $6,598 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $14,619 or 221.6%. The foreign exchange movement consists of 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) income before income taxes

Net loss before income taxes was $(1,000,714) and net income before income taxes $2,092,005 for the three months ended September 30, 2024 and 2023, respectively, an increase of $3,092,719 or 147.8%. The increase is primarily due to the prior year gain on disposal of property, the increase in operating expenses over the prior year, offset by an increase in revenues.

Income Taxes

Income taxes was $0 and $15,532 for the three months ended September 30, 2024 and 2023, a decrease of $15,532 or 100.0%. We have sufficient net operating losses to offset any taxable income during the current period, the prior year income tax credit related to a deferred tax credit on intangible assets.

Net (loss) income

Net loss was $(1,000,714) and net income was $2,107,537 for the three months ended September 30, 2024 and 2023, respectively, an increase of $3,108,251 or 147.5%, primarily due to the increase in net loss before taxation and the movement in income taxes, discussed above.

For the nine months ended September 30, 2024 and September 30, 2023.

Revenues

Revenues were $4,550,200 and $4,219,904 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $330,296 or 7.8%. The revenue from in-patient services related to Evernia was S4,550,200 and $4,034,607 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $515,593 or 12.8%. The increase is attributable to the increase in the number of beds available at the facility and increasing our in-network provider status to include several insurance providers.

The revenue from rental properties was $0 and $185,296 for the nine months ended September 30, 2024 and 2023, a decrease of $185,296 or 100.0%. We sold CCH, our rental owning subsidiary on June 30, 2023.

Operating Expenses

Operating expenses were $5,780,493 and $4,079,204 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $1,701,289 or 41.74%. The increase is primarily due to the following:

●

General and administrative expenses was $1,055,663 and $755,685 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $299,978. The increase includes an increase in advertising and marketing costs of $148,708, to attract more clients to the facility, and an increase in property taxes of $62,434, in line with the increase in rental expenses and customer related food costs of $33,884 related to the increase in patient numbers. The balance of the increase consists of numerous individually insignificant expense items.

●

Rent expense was $932,035 and $328,204 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $603,831 or 184.0%. The increase is due to the acquisition of the Evernia property and the subsequent sale of property at an increased value with the simultaneous entry into a new 20-year lease agreement. The rental expense includes a rental smoothing adjustment of $171,317 in terms of US GAAP over the life of the lease, the rental expense incurred on the newly acquired Boca Cove Detox Center of $114,077 and the increase in rental expense associated with the increased value on the Evernia property which was acquired and resold to a third party at an increased market related value.

●

Management fees was $480,000 and $273,003 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $206,997 or 75.8%. A management fee was accrued for Shawn Leon during the current quarter after several years of no management fees due to the previous financial performance of the group and in the prior year, management fees included a fee paid to Leon developments from CCH prior to the disposal of CCH to a third party on September 30, 2023.

●

Professional fees were $686,994 and $460,773 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $226,221 or 49.1%. The increase is primarily due to the level of corporate activity as we are concentrating on closing certain acquisitions and pursuing further acquisition opportunities.

●

Salaries and wages were $2,279,788 and $1,873,280 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $406,508 or 21.7%. the increase is primarily due to the increase in patients and the growth of the facility over the prior year and is directly correlated to the increase in revenue.

●

Depreciation and amortization was $346,013 and $388,259 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $42,246 or 10.9%. The decrease is primarily due to the disposal, in the prior year of CCH, which included several depreciable assets.

Operating (loss) income

The operating loss was $1,230,293 and operating income was $140,700 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $1,370,993 or 974.4%. The increase is due to the increase in operating expenses of $1,701,289, offset by the increase in revenue of $330,296, as discussed in detail above.

Other income

Other income was $40,000 and $449 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $39,551. Other income during the current period is a temporary management fee earned on operating the Edgewater Recovery operation until such time as the acquisition is closed.

Other expense

Other expense was $971 and $0 for the nine months ended September 30, 2024 and 2023, respectively. The amounts are immaterial

Penalty on convertible debt

The penalty on convertible notes was $0 and $34,688 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $34,688 or 100%. The penalty on convertible note in the prior year was agreed upon with one of our lenders whose note was in default and was subsequently settled after June 30, 2023.

Extension fee on property purchase

The extension fee on the property purchase was $0 and $130,000 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $130,000 or 100%. The extension fee was levied in the prior year by the landlord of our West Palm Beach facility to afford us additional time to structure the acquisition of the facility, which we disposed of to a third party after the acquisition.

Gain on disposal of property

Gain on disposal of property was $0 and $2,484,172 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $2,484,172 or 100.0%. In the prior year, we exercised our option to acquire the property located at 950 Evernia Street, West Palm Beach, Florida, in which our treatment center operates, and subsequently disposed of the property to a third party, realizing a profit of $2,484,172, after transaction costs.

Loss on debt extinguishment

Loss on debt extinguishment was $0 and $277,175 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $277,175 or 100.0%. The loss on debt extinguishment in the prior year is related primarily to replacement warrants issued to Leonite Capital as part of the settlement reached with Leonite, whereby all indebtedness to Leonite was extinguished.

Interest income

Interest income was $1,864 and $0 for the nine months ended September 30, 2024 and 2023, respectively. The amounts are immaterial.

Interest expense

Interest expense was $367,675 and $382,448 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $14,773 or 3.9%. The decrease is primarily due to monitoring fees incurred in the prior year on two short term notes which were in default and additional default interest incurred on those borrowings.

Amortization of debt discount

Amortization of debt discount was $279,607 and $238,304 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $41,303 or 17.3%. The increase is primarily due the increase in debt to close the acquisition of the minority shareholders interest in ATHI and the acquisition of the Boca Cove detox facility during the prior quarter.

Foreign exchange movements

Foreign exchange movements were $(3,510) and $(84,148) for the nine months ended September 30, 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.

Net (loss) income before income taxes

Net loss before income taxes was $(1,840,192) and net income before income taxes was $1,478,558 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $3,318,750 or 224.5%. The increase is primarily due to the increase in the operating loss, the prior year gain on sale of property, offset by the prior year loss on debt extinguishment, and the prior year extension fee paid on the property purchase, all discussed in detail above.

Income taxes

Income taxes was $0 and a Tax credit was $(221,107) for the nine months ended September 30, 2024 and 2023, a decrease of $221,107 or 100.0%. We have sufficient net operating losses to offset any taxable income during the current period, the prior year income tax credit related to a deferred tax credit on intangible assets and the reversal of prior year tax provisions upon filing prior period tax returns.

Net (loss) income

Net (loss) income was $(1,840,192) and $1,699,665 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $3,539,857 or 208.3%. The increase is primarily due to the increase in net loss before taxes offset by the taxation credit, as discussed above.

Commitments and contingencies

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

	Amount
Remainder of 2024	$	2,457
2025		9,829
2026		6,195
2027		1,707
		20,188

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

	Amount

Remainder of 2024	$	257,672
2025		1,045,192
2026		1,074,288
2027		961,526
2028		841,379
2029 and thereafter		15,358,663
		19,538,720

We also have commitments under convertible notes, short-term notes, promissory note and receivables funding. If the convertible loans, as disclosed in note 9, above are not converted they will need to be repaid.

Liquidity and Capital Resources

We have prepared our unaudited condensed consolidated financial statements 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 September 30, 2024 we had a working capital deficiency of $7.1 million, and total liabilities in excess of assets in the amount of $7.1 million. We believe that current available resources will not be sufficient to fund our planned expenditures over the next 12 months. These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about our ability to continue as a going concern for one year from the date of issuance of these interim condensed consolidated financial statements.

We are dependent on the raising additional capital through placement of common shares, and/or debt financing in order to implement our business plan and generating 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 our 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 we 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 unaudited condensed 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.

Cash used in operating activities was $377,954 and $575,790 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $197,836. The decrease is primarily due to the following:

●

An increase in net loss of $3,539,857, discussed under operations above.

●

An increase in the movement of non-cash items of $2,607,477 primarily due to the movement in the gain on disposal of property of $2,484,172, and the movement in on-cash management fees accrued of $480,000, offset by the movement in loss on debt extinguishment of $277,175.

●

The movement in working capital increased by $1,130,216, primarily due to the increase in the movements in accounts receivable of $352,368 accounts payable of $238,948, operating lease liabilities of $262,298 and taxes payable of $237,211.

Cash provided by (used in) financing activities was $1,415,265 and $(2,099,676) for the nine months ended September 30, 2024 and 2023, respectively. In the current period we received $1,912,000 and repaid $(801,323) of short-term notes and received $542,000 and repaid $378,688 from receivables funding, in addition we received a term advance of $250,000 from a related party of which $11,538 was repaid. We also repaid $40,000 of the $475,000 promissory note issued on the acquisition of the minority interest in ATHI. In the prior period we repaid convertible notes of $1,124,442, repaid promissory notes of $568,325, third party loans of $361,260 and net repayment of receivables funding of $267,771, primarily out of the net proceeds of the property disposal, offset by proceeds received on convertible notes of $150,000 and proceeds from promissory notes of $223,500.

Over the next twelve months we estimate that we will require approximately $3.5 million for working capital and to repay existing short-term notes as the business continues to develop its rehab business in the US market. We have convertible notes, short term loans and promissory notes which will mature or have already matured during the current year and may have to raise equity or secure debt. 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. In the opinion of management, our liquidity risk is assessed as high due to this uncertainty.

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 September 30, 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 September 30, 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

On September 27, 2024, we issued 600,000 shares of Series A Preferred stock to Mr. Shawn Leon for the conversion of $6,000 of related party payables.

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

10.1	Letter of Intent, dated July 8, 2024, by Ethema Health Corporation and Edgewater Health Centers, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 12, 2024)

10.2	Securities Purchase Agreement, dated July 12, 2024, by Ethema Health Corporation and Shawn Leon (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 12, 2024)

10.3	Asset Purchase Agreement, dated July 12, 2024, by ARIA Kentucky, LLC, Edgewater Health Centers, LLC and John David Elam (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 29, 2024)

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
104	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: November 14, 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)

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:

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

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;

4.	I am 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.	I have disclosed, based on my 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: November 14, 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 September 30, 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)

November 14, 2024

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Nov. 14, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
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
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		7,729,053,805

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash	$ 60,862	$ 68,573
Accounts receivable, net	381,307	313,338
Prepaid expenses	28,777	18,159
Other current assets	1,478	3,030
Total current assets	472,424	403,100
Non-current assets
Property and equipment, net	756,395	508,401
Intangible assets, net	626,467	894,952
Right of use assets	9,988,784	9,323,723
Deposits paid	472,393	389,000
Total non-current assets	11,844,039	11,116,076
Total assets	12,316,463	11,519,176
Current liabilities
Accounts payable and accrued liabilities	566,984	352,101
Convertible notes, net of discounts	2,188,631	4,419,927
Short-term notes	2,466,018	680,672
Promissory note	267,500
Receivables funding, net	480,573	211,961
Related party advance, net	253,596
Government assistance loans	15,078	14,962
Operating lease liability	287,128	38,563
Finance lease liability	8,861	8,426
Related party payables	1,006,929	2,572,292
Total current liabilities	7,541,298	8,298,904
Non-current liabilities
Convertible notes, net of discounts	1,749,300
Promissory note	167,500
Government assistance loans	8,874	20,520
Operating lease liability	9,974,227	9,383,557
Finance lease liability	9,736	16,475
Total non-current liabilities	11,909,637	9,420,552
Total liabilities	19,450,935	17,719,456
Preferred stock - Series B; $1.00 par value 400,000 authorized, 0 issued and outstanding as of September 30, 2024 and December 31, 2023.
Stockholders’ deficit
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,600,000 and 4,000,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023	46,000	40,000
Common stock - $0.01 par value, 10,000,000,000 shares authorized; 7,729,053,805 and 3,729,053,805 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	77,290,539	37,290,539
Additional paid-in capital	24,986,083	26,187,925
Discount for shares issued below par value	(65,363,367)	(27,363,367)
Accumulated deficit	(44,093,727)	(42,355,377)
Total stockholders’ deficit	(7,134,472)	(6,200,280)
Total liabilities and stockholders’ deficit	$ 12,316,463	$ 11,519,176

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	4,600,000	4,000,000
Preferred stock, shares outstanding	4,600,000	4,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	10,000,000,000	10,000,000,000
Common stock, shares issued	7,729,053,805	3,729,053,805
Common stock, shares outstanding	7,729,053,805	3,729,053,805
Series B Preferred Stock [Member]
Temporary equity, par value	$ 1.00	$ 1.00
Temporary equity, shares authorized	400,000	400,000
Temporary equity, shares issued	0	0
Temporary equity, shares outstanding	0	0

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenues	$ 1,760,000	$ 1,353,899	$ 4,550,200	$ 4,219,904
Operating expenses
General and administrative	417,888	249,283	1,055,663	755,685
Rent expense	392,772	107,707	932,035	328,204
Management fees	480,000	30,000	480,000	273,003
Professional fees	231,312	171,659	686,994	460,773
Salaries and wages	839,015	651,537	2,279,788	1,873,280
Depreciation and amortization	122,721	110,185	346,013	388,259
Total operating expenses	2,483,708	1,320,371	5,780,493	4,079,204
Operating (loss) income	(723,708)	33,528	(1,230,293)	140,700
Other Income (expense)
Other income	40,000	110	40,000	449
Other expense	(971)		(971)
Penalty on convertible debt				(34,688)
Extension fee – property purchase				(130,000)
Gain on disposal of property		2,484,172		2,484,172
Loss on debt extinguishment		(277,175)		(277,175)
Interest income	766		1,864
Interest expense	(167,575)	(81,371)	(367,675)	(382,448)
Amortization of debt discount	(141,205)	(73,857)	(279,607)	(238,304)
Foreign exchange movements	(8,021)	6,598	(3,510)	(84,148)
Net (loss) income before income taxes	(1,000,714)	2,092,005	(1,840,192)	1,478,558
Income taxes		15,532		221,107
Net (loss) income	(1,000,714)	2,107,537	(1,840,192)	1,699,665
Net loss (income) attributable to non-controlling interest		(31,058)	101,842	(127,906)
Net (loss) income allocable to Ethema Health Corporation Stockholders	(1,000,714)	2,076,479	(1,738,350)	1,571,759
Preferred stock dividend				(47,225)
Net (loss) income available to common shareholders of Ethema Health Corporation	(1,000,714)	2,076,479	(1,738,350)	1,524,534
Accumulated other comprehensive income
Foreign currency translation adjustment				5,065
Total comprehensive (loss) income	$ (1,000,714)	$ 2,076,479	$ (1,738,350)	$ 1,529,599
(Loss) income per share
Basic	$ (0.00)	$ 0.00	$ (0.00)	$ 0.00
Diluted	(0.00)	0.00	(0.00)	0.00
(Loss) income per share	$ (0.00)	$ 0.00	$ (0.00)	$ 0.00
Weighted average common shares outstanding
Basic	7,207,314,674	3,729,053,805	4,896,937,017	3,729,053,805
Diluted	7,207,314,674	3,931,379,775	4,896,937,017	3,931,379,775

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($)	Series A Preferred [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Discount To Par Value [Member]	Comprehensive Income [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 40,000	$ 37,290,539	$ 23,419,917	$ (27,363,367)	$ (5,065)	$ (43,484,751)	$ 870,184	$ (9,232,543)
Beginning balance, shares at Dec. 31, 2022	4,000,000	3,729,053,805
Foreign currency translation					(1,504)			(1,504)
Net loss						(178,685)	2,968	(175,717)
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)	873,152	(9,433,183)
Ending balance, shares at Mar. 31, 2023	4,000,000	3,729,053,805
Disposal of subsidiary to related party			2,034,885				(700,000)	1,334,885
Deemed extinguishment of debt by related party			461,184					461,184
Foreign currency translation					6,569			6,569
Net loss						(326,035)	93,880	232,155
Dividends accrued						(23,806)		(23,806)
Ending balance, value at Jun. 30, 2023	$ 40,000	$ 37,290,539	25,915,986	(27,363,367)		(44,036,696)	267,032	(7,886,506)
Ending balance, shares at Jun. 30, 2023	4,000,000	3,729,053,805
Fair value of warrants issued for debt extinguishment			271,939					271,939
Net loss						2,076,479	31,058	2,107,537
Ending balance, value at Sep. 30, 2023	$ 40,000	$ 37,290,539	26,187,925	(27,363,367)		(41,960,217)	298,090	(5,507,030)
Ending balance, shares at Sep. 30, 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)
Beginning balance, shares 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)
Ending balance, shares at Mar. 31, 2024	4,000,000	3,729,053,805
Acquisition of minority shareholders interest			(1,201,842)				101,842	(1,100,000)
Net loss						(363,433)	(101,842)	(465,275)
Ending balance, value at Jun. 30, 2024	$ 40,000	$ 37,290,539	24,986,083	(27,363,367)		(43,093,013)		(8,139,758)
Ending balance, shares at Jun. 30, 2024	4,000,000	3,729,053,805
Conversion of related party payables to equity	$ 6,000	$ 40,000,000		(38,000,000)				2,006,000
Conversion of related party payables to equity, shares	600,000	4,000,000,000
Net loss						(1,000,714)		(1,000,714)
Ending balance, value at Sep. 30, 2024	$ 46,000	$ 77,290,539	$ 24,986,083	$ (65,363,367)		$ (44,093,727)		$ (7,134,472)
Ending balance, shares at Sep. 30, 2024	4,600,000	7,729,053,805

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Operating activities
Net (loss) income	$ (1,840,192)	$ 1,699,665
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	346,013	388,259
Amortization of debt discount	279,607	238,304
Non-cash management fee	480,000
Amortization of right of use asset	79,196	169,682
Gain on disposal of property		(2,484,172)
Loss on debt extinguishment		277,175
Penalty on convertible promissory notes		34,688
Deferred tax movement		(46,597)
Changes in operating assets and liabilities
Accounts receivable	62,671	(289,697)
Prepaid expenses and other current assets	(9,066)	(48,457)
Accounts payable and accrued liabilities	128,838	(110,110)
Operating lease liabilities	94,979	(167,319)
Taxes payable		(237,211)
Net cash used in operating activities	(377,954)	(575,790)
Investing activities
Purchase of property and equipment	(85,522)	(5,244,011)
Proceeds on disposal of property		8,093,448
Acquisition of business	(240,000)
Acquisition of minority shareholders interest	(625,000)
Deposits paid	(83,393)	(374,000)
Net cash used in (provided by) investing activities	(1,033,915)	2,475,437
Financing activities
Repayment of mortgage loans		(58,320)
Proceeds from convertible notes		150,000
Repayment of convertible notes		(1,124,442)
Proceeds from short-term notes	1,912,000	223,500
Repayment of short-term notes	(801,323)	(568,325)
Repayment of promissory note	(40,000)
Repayment of government assistance loans	(11,519)	(10,855)
Repayment of third-party loans		(361,260)
Repayment of finance leases	(6,304)	(5,907)
Proceeds from receivables funding	542,000	580,646
Repayment of receivables funding	(378,688)	(848,417)
Proceeds from related party advance	250,000
Repayment of related party advance	(11,538)
Repayment of related party notes	(39,363)	(76,296)
Net cash provided by (used in) financing activities	1,415,265	(2,099,676)
Effect of exchange rate changes on cash	(11,107)	71,000
Net change in cash	(7,711)	(129,029)
Beginning cash balance	68,573	140,757
Ending cash balance	60,862	11,728
Supplemental cash flow information
Cash paid for interest	248,079	334,735
Cash paid for income taxes
Non-cash investing and financing activities
Promissory note issue on acquisition of minority shareholders interest	475,000
Conversion of related party payable to common stock	2,000,000
Conversion of related party payable to Series A preferred stock	6,000
Disposal of subsidiary to related party		1,334,885
Deemed extinguishment of debt by related party		$ 461,184

Nature of business

9 Months Ended

Sep. 30, 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.

Acquisition of minority shareholders interest in ATHI

Acquisition of assets and assignment of lease and sub-lease for Boca cove Detox Center

Summary of significant accounting policies

9 Months Ended

Sep. 30, 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

The Company constantly evaluates its collections experience and consider the market conditions and current economic developments facing the Company’s operations.

f) Leases

g) 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.

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

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

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going concern

3. Going concern

Acquisition of minority shareholders interest in ATHI

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisition of minority shareholders interest in ATHI

4. Acquisition of minority shareholders interest in ATHI

On May 15, 2024, the Company entered into a Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority shareholder for gross proceeds of $1,100,000. The Company paid an initial deposit of $25,000 and on closing an additional $600,000. The Company issued a non-interest-bearing promissory note for the remaining balance of $475,000, which promissory note is repayable in installments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight installments) and months ten through seventeen (eight instalments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

The acquisition of the minority shareholders interest was accounted for in terms of ASC 810, Consolidation.

Schedule of acquisition of the minority shareholders interest
	Amount
Purchase price
Cash	$	625,000
Promissory note		475,000
Total		1,100,000
Allocation of purchase price
Minority shareholders interest		101,842
Additional paid in capital		(1,201,842	)
Total	$	(1,100,000	)

Acquisition of Boca Cove Detox

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisition of Boca Cove Detox

5. Acquisition of Boca Cove Detox

Schedule of acquisition of boca cove detox
	Amount
Purchase price
Cash	$	323,393
Total		323,393
Allocation of purchase price
Property and equipment		240,000
Deposit assumed on leased premises		83,393
Total	$	323,393

Property and equipment

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Property and equipment

6. Property and equipment

Acquisition of Boca Cove Detox

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

Schedule of property purchase and subsequent sale
	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

Acquisition of Boca Cove Detox

Property and equipment consists of the following:

Schedule of property and equipment
		September 30, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease		539,890		(125,871	)		414,019		371,308
Furniture and fittings	6 years		395,459		(76,775	)		318,684		104,715
Vehicles	5 years		55,949		(37,453	)		18,496		26,889
Computer equipment	3 years		9,372		(4,176	)		5,196		5,489
		$	1,000,670	$	(244,275	)	$	756,395	$	508,401

Intangibles

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangibles

Intangibles

Intangible assets consist of the following:

Schedule of intangible assets
	Useful lives	September 30, 2024							December 31, 2023
		Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 years	$	1,789,903	$	(1,163,436	)	$	626,467	$	894,952

Leases

9 Months Ended

Sep. 30, 2024

Leases

Leases

Leases

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

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 Bank rate 3/1 adjustable-rate mortgage which represents the average rate for several mortgage lenders in the market of 6.36%. The Company determined that 6.36% 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 $744,256 on June 10, 2024.

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

Schedule of right of use assets are included in the consolidated balance
	September 30, 2024		December 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	18,496	$	26,889
Right-of-use assets - operating leases, net of amortization	$	9,988,784	$	9,323,723

Lease costs consists of the following:

Schedule of lease costs
	Nine months ended September 30,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	8,392	$	8,392
Interest expense on finance lease liabilities		1,106		1,504
Total finance lease cost		9,498		9,896

Operating lease cost		910,076		446,189
Lease cost	$	919,574	$	456,085

Other lease information:

Schedule of other lease
	Nine months ended September 30,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(1,106	)	$	(1,504	)
Operating cash flows from operating leases		(738,760	)		(446,189	)
Financing cash flows from finance leases		(6,266	)		(5,868	)
Cash paid for amounts included in the measurement of lease liabilities	$	(746,132	)	$	(453,561	)

Weighted average lease term – finance leases		2 years and 2 months			3 years and 2 months
Weighted average remaining lease term – operating leases		17 years and ten months			19 years and 11 months

Discount rate – finance leases		6.58	%		6.60	%
Discount rate – operating leases		7.60	%		7.70	%

Maturity of Leases

Finance lease liability

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

Schedule of future minimum lease payments under finance leases
	Amount
Remainder of 2024	$	2,457
2025		9,829
2026		6,195
2027		1,707
Total finance lease		20,188
Imputed interest		(1,591	)
Total finance lease liability	$	18,597
Disclosed as:
Current portion	$	8,861
Non-Current portion		9,736
Lease liability	$	18,597

Operating lease liability

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

Schedule of future minimum lease payments under operating leases
	Amount

Remainder of 2024	$	257,672
2025		1,045,192
2026		1,074,288
2027		961,526
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,538,720
Imputed interest		(9,277,365	)
Total operating lease liability	$	10,261,355

Disclosed as:
Current portion	$	287,128
Non-Current portion		9,974,227
Lease liability	$	10,261,355

Short-term Convertible Notes

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Short-term Convertible Notes

9. Short-term Convertible Notes

The short-term convertible notes consist of the following:

Schedule of short-term convertible notes
	Interest rate			Maturity Date	Principal		Interest		September 30, 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		10,031		130,807		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		2,779,000		958,124		3,737,124		4,228,161

					$	2,969,776	$	968,155	$	3,937,931	$	4,419,927
Disclosed as follows:
Short-term									$	2,188,631	$	4,419,927
Long-term										1,749,300		—
									$	3,937,931	$	4,419,927

Joshua Bauman

Series N convertible notes

Between April 30, 2024 and May 10, 2024, three series N convertible note holders, converted principal of $450,000 into Series R promissory notes after the repayment of $151,475 of accrued interest.

During the current year, the Company repaid $24,000 of accrued interest to certain Series N convertible note holders.

Short-term Notes

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Short-term Notes

10. Short-term Notes

The short-term notes consist of the following:

Schedule of short-term notes
Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			September 30, 2024 Amount		December 31, 2023 Amount
LXT Biotech		6.0	%	On Demand	$	98,499	$	32,351	$	—		$	130,850	$	129,184

Mirage Realty		10.0	%	June 15, 2024		—		—		—					236,421
		6 to 18	%	November 15, 2024		600,000		19,500		—			619,500		—

Third Party		12.0	%	On demand		254,944		5,515		—			260,459		315,067

Revolving line of credit		60.0	%	August 13,2024		111,100		17,406		—			128,506		—
		60	%	September 30, 2024		181,000		17,798		—			198,798

Series R Promissory notes		7.5	%	March 31, 2025		1,155,000		31,508		(58,603	)		1,127,905		—

Total convertible notes payable					$	2,400,543	$	124,078	$	(58,603	)	$	2,466,018	$	680,672

LXR Biotech

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

Mirage Realty, LLC

On May 13, 2024, the Company repaid principal of $250,000 and accrued interest thereon of $15,000, thereby extinguishing the debt.

Third party note

Revolving line of credit

Series R senior secured promissory notes

Promissory Note

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Promissory Note

11. Promissory Note

On May 15, 2024, the Company entered into a Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority shareholder for gross proceeds of $1,100,000. The Company paid an initial deposit of $25,000 and on closing an additional $600,000. The Company issued a non-interest bearing promissory note for the remaining balance of $475,000, which promissory note is repayable in instalments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight instalments) and months ten through seventeen (eight instalments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

Schedule of promissory note
	September 30, 2024			December 31, 2023

Promissory note issued	$	475,000		$	—
Repayments		(40,000	)		—
	$	435,000		$	—
Disclosed as:
Current portion	$	267,500		$	—
Long-term portion		167,500			—
	$	435,000		$	—

Receivables funding

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

Receivables funding

12. 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 $320,000 by August 10, 2024, thereby extinguishing the debt.

May 30, 2024 Funding

The proceeds of the receivables funding was used to acquire the assets of Boca Cove Detox.

The Company has repaid $75,250 and the balance outstanding as of September 30, 2024 was $245,821, net of unamortized debt discount of $53,929.

August 30, 2024 Funding

The Company made weekly cash payments of $8,013 totaling $24,039 and the balance outstanding as of September 30, 2024 was $234,752, net of unamortized debt discount of $53,709.

Government assistance loans

9 Months Ended

Sep. 30, 2024

Government Assistance [Abstract]

Government assistance loans

13. Government assistance loans

Related parties

9 Months Ended

Sep. 30, 2024

Related parties

14. Related parties

Schedule of related party payable
	September 30,			December 31,
	2024			2023
Related party payables
Shawn E. Leon	$	34,261		$	61,267
Leon Developments Ltd.		—			1,092,701
Eileen Greene		972,668			1,418,324
Total related party payables	$	1,006,929		$	2,572,292

Related party advance
Eileen Greene
Principal outstanding	$	285,000		$	—
Repayments		(11,539	)		—
		273,461			—

Debt discount at inception		(35,000	)		—
Amortization of debt discount		15,135			—
		(19,865	)		—

Total Related party advances	$	253,596		$	—

Shawn E. Leon

During the nine months ended September 30, 2024, Mr. Leon was credited with a management fee of $480,000. Mr. Leon forfeited management fees due to him for the year ended December 31, 2023.

During July 2024, the related party payable of $1,092,701 owing to Leon Developments was assigned by Leon Developments to Mr. Leon.

On July 12, 2024, Mr. Leon converted $1,500,000 of the related party payable into 3,000,000,000 shares of common stock at a conversion price of $0.0005 per share.

Leon Developments, Ltd.

Leon Developments is owned by Shawn Leon, the Company’s CEO and director. As of September 30, 2024 and December 31, 2023, the Company owed Leon Developments, Ltd., $0 and $1,092,701, respectively.

During July 2024, the related party payable of $1,092,701 owing to Leon Developments was assigned by Leon Developments to Mr. Leon.

Eileen Greene

On July 12, 2024, Ms. Greene converted $500,000 of the related party payable into 1,000,000,000 shares of common stock at a conversion price of $0.0005 per share.

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

Stockholder’s deficit

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Stockholder’s deficit

15. Stockholder’s deficit

Common shares

Authorized and outstanding

Series A Preferred shares

Authorized, issued and outstanding

On September 27, 2024, the Company issued 600,000 shares of Series A Preferred stock to Mr. Shawn Leon for the conversion of $6,000 of related party payables, see note 14 above.

Series B preferred shares

Authorized and outstanding

Stock options

Warrants

Warrants (continued)

A summary of the Company’s warrant activity during the period from January 1, 2023 to September 30, 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 September 30, 2024

1,022,376,420

$0.001 to $0.00205

0.0012840

The following table summarizes information about warrants outstanding at September 30, 2024:

Schedule of warrants outstanding	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		2.75				745,810,761
$0.002050		276,565,659		1.26				276,565,659
		1,022,376,420		2.35	$	0.001284		1,022,376,420	$	0.001284

All of the warrants outstanding at September 30, 2024 are vested. The warrants outstanding at September 30, 2024 have an intrinsic value of $0.

Segment information

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Segment information

16. Segment information

Net loss per common share

9 Months Ended

Sep. 30, 2024

(Loss) income per share

Net loss per common share

17. Net loss per common share

Schedule of diluted net loss per share
	Three and nine months ended September 30, 2024

Shares issuable upon exercise of warrants		1,022,376,420
Shares issuable on conversion of convertible notes		177,521,610
		1,199,898,030

For the three months ended September 30, 2023, the computation of basic and diluted earnings per share is calculated as follows:


			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	2,076,479		3,729,053,805	$	0.00

Effect of dilutive securities
Convertible debt		50,964		202,325,970

Diluted earnings per share
Net income per share available for common stockholders	$	2,127,443		3,931,379,775	$	0.00

For the nine months ended September 30, 2023, the computation of basic and diluted earnings per share is calculated as follows:

			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	1,524,534		3,729,053,805	$	0.00

Effect of dilutive securities
Convertible debt		146,395		202,325,970

Diluted earnings per share
Net income per share available for common stockholders	$	1,670,929		3,931,379,775	$	0.00

Commitments and contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

18. Commitments and contingencies

a. Options granted to purchase shares in ATHI

b. Other

Subsequent events

9 Months Ended

Sep. 30, 2024

Subsequent Events [Abstract]

Subsequent events

19.

Subsequent events

Edgewater Recovery Centers, LLC

THE APA also contains certain Seller and Purchaser representations, warranties, covenants and obligations, which are defined in the APA and are customary in agreements of this nature.

Summary of significant accounting policies (Policies)

9 Months Ended

Sep. 30, 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

The Company constantly evaluates its collections experience and consider the market conditions and current economic developments facing the Company’s operations.

Leases

f) Leases

Property and equipment

g) 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

r) Recent accounting pronouncements

r) Recent accounting pronouncements

Acquisition of minority shareholders interest in ATHI (Tables)

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of acquisition of the minority shareholders interest

Schedule of acquisition of the minority shareholders interest
	Amount
Purchase price
Cash	$	625,000
Promissory note		475,000
Total		1,100,000
Allocation of purchase price
Minority shareholders interest		101,842
Additional paid in capital		(1,201,842	)
Total	$	(1,100,000	)

Acquisition of Boca Cove Detox (Tables)

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of acquisition of boca cove detox

Schedule of acquisition of boca cove detox
	Amount
Purchase price
Cash	$	323,393
Total		323,393
Allocation of purchase price
Property and equipment		240,000
Deposit assumed on leased premises		83,393
Total	$	323,393

Property and equipment (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of property purchase and subsequent sale

Schedule of property purchase and subsequent sale
	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

Schedule of property and equipment

Schedule of property and equipment
		September 30, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease		539,890		(125,871	)		414,019		371,308
Furniture and fittings	6 years		395,459		(76,775	)		318,684		104,715
Vehicles	5 years		55,949		(37,453	)		18,496		26,889
Computer equipment	3 years		9,372		(4,176	)		5,196		5,489
		$	1,000,670	$	(244,275	)	$	756,395	$	508,401

Intangibles (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

Schedule of intangible assets
	Useful lives	September 30, 2024							December 31, 2023
		Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 years	$	1,789,903	$	(1,163,436	)	$	626,467	$	894,952

Leases (Tables)

9 Months Ended

Sep. 30, 2024

Leases

Schedule of right of use assets are included in the consolidated balance

Schedule of right of use assets are included in the consolidated balance
	September 30, 2024		December 31, 2023
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	18,496	$	26,889
Right-of-use assets - operating leases, net of amortization	$	9,988,784	$	9,323,723

Schedule of lease costs

Schedule of lease costs
	Nine months ended September 30,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	8,392	$	8,392
Interest expense on finance lease liabilities		1,106		1,504
Total finance lease cost		9,498		9,896

Operating lease cost		910,076		446,189
Lease cost	$	919,574	$	456,085

Schedule of other lease

Schedule of other lease
	Nine months ended September 30,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(1,106	)	$	(1,504	)
Operating cash flows from operating leases		(738,760	)		(446,189	)
Financing cash flows from finance leases		(6,266	)		(5,868	)
Cash paid for amounts included in the measurement of lease liabilities	$	(746,132	)	$	(453,561	)

Weighted average lease term – finance leases		2 years and 2 months			3 years and 2 months
Weighted average remaining lease term – operating leases		17 years and ten months			19 years and 11 months

Discount rate – finance leases		6.58	%		6.60	%
Discount rate – operating leases		7.60	%		7.70	%

Schedule of future minimum lease payments under finance leases

Schedule of future minimum lease payments under finance leases
	Amount
Remainder of 2024	$	2,457
2025		9,829
2026		6,195
2027		1,707
Total finance lease		20,188
Imputed interest		(1,591	)
Total finance lease liability	$	18,597
Disclosed as:
Current portion	$	8,861
Non-Current portion		9,736
Lease liability	$	18,597

Schedule of future minimum lease payments under operating leases

Schedule of future minimum lease payments under operating leases
	Amount

Remainder of 2024	$	257,672
2025		1,045,192
2026		1,074,288
2027		961,526
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,538,720
Imputed interest		(9,277,365	)
Total operating lease liability	$	10,261,355

Disclosed as:
Current portion	$	287,128
Non-Current portion		9,974,227
Lease liability	$	10,261,355

Short-term Convertible Notes (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of short-term convertible notes

Schedule of short-term convertible notes
	Interest rate			Maturity Date	Principal		Interest		September 30, 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		10,031		130,807		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		2,779,000		958,124		3,737,124		4,228,161

					$	2,969,776	$	968,155	$	3,937,931	$	4,419,927
Disclosed as follows:
Short-term									$	2,188,631	$	4,419,927
Long-term										1,749,300		—
									$	3,937,931	$	4,419,927

Short-term Notes (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of short-term notes

Schedule of short-term notes
Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			September 30, 2024 Amount		December 31, 2023 Amount
LXT Biotech		6.0	%	On Demand	$	98,499	$	32,351	$	—		$	130,850	$	129,184

Mirage Realty		10.0	%	June 15, 2024		—		—		—					236,421
		6 to 18	%	November 15, 2024		600,000		19,500		—			619,500		—

Third Party		12.0	%	On demand		254,944		5,515		—			260,459		315,067

Revolving line of credit		60.0	%	August 13,2024		111,100		17,406		—			128,506		—
		60	%	September 30, 2024		181,000		17,798		—			198,798

Series R Promissory notes		7.5	%	March 31, 2025		1,155,000		31,508		(58,603	)		1,127,905		—

Total convertible notes payable					$	2,400,543	$	124,078	$	(58,603	)	$	2,466,018	$	680,672

Promissory Note (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of promissory note

Schedule of promissory note
	September 30, 2024			December 31, 2023

Promissory note issued	$	475,000		$	—
Repayments		(40,000	)		—
	$	435,000		$	—
Disclosed as:
Current portion	$	267,500		$	—
Long-term portion		167,500			—
	$	435,000		$	—

Related parties (Tables)

9 Months Ended

Sep. 30, 2024

Schedule of related party payable

Schedule of related party payable
	September 30,			December 31,
	2024			2023
Related party payables
Shawn E. Leon	$	34,261		$	61,267
Leon Developments Ltd.		—			1,092,701
Eileen Greene		972,668			1,418,324
Total related party payables	$	1,006,929		$	2,572,292

Related party advance
Eileen Greene
Principal outstanding	$	285,000		$	—
Repayments		(11,539	)		—
		273,461			—

Debt discount at inception		(35,000	)		—
Amortization of debt discount		15,135			—
		(19,865	)		—

Total Related party advances	$	253,596		$	—

Stockholder’s deficit (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of warrant activity

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 September 30, 2024

1,022,376,420

$0.001 to $0.00205

0.0012840

Schedule of warrants outstanding

Schedule of warrants outstanding	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		2.75				745,810,761
$0.002050		276,565,659		1.26				276,565,659
		1,022,376,420		2.35	$	0.001284		1,022,376,420	$	0.001284

Net loss per common share (Tables)

9 Months Ended

Sep. 30, 2024

(Loss) income per share

Schedule of diluted net loss per share

Schedule of diluted net loss per share
	Three and nine months ended September 30, 2024

Shares issuable upon exercise of warrants		1,022,376,420
Shares issuable on conversion of convertible notes		177,521,610
		1,199,898,030

Schedule of earnings per share basic and diluted


			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	2,076,479		3,729,053,805	$	0.00

Effect of dilutive securities
Convertible debt		50,964		202,325,970

Diluted earnings per share
Net income per share available for common stockholders	$	2,127,443		3,931,379,775	$	0.00

For the nine months ended September 30, 2023, the computation of basic and diluted earnings per share is calculated as follows:

			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	1,524,534		3,729,053,805	$	0.00

Effect of dilutive securities
Convertible debt		146,395		202,325,970

Diluted earnings per share
Net income per share available for common stockholders	$	1,670,929		3,931,379,775	$	0.00

Summary of significant accounting policies (Details Narrative) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
FDIC Indemnification Asset	$ 250,000
Receivables	381,307	$ 313,338
Working capital	7,100,000
Accumulated deficit	$ 44,100,000

Going concern (Details Narrative) $ in Millions	Sep. 30, 2024 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Working capital	$ 7.1
Total liabilities in excess of assets	$ 7.1

Acquisition of minority shareholders interest in ATHI (Details) - ATHI [Member]	May 15, 2024 USD ($)
Purchase price
Cash	$ 625,000
Promissory note	475,000
Total	1,100,000
Allocation of purchase price
Minority shareholders interest	101,842
Additional paid in capital	(1,201,842)
Total	$ (1,100,000)

Acquisition of Boca Cove Detox (Details) - Leased Premises [Member]	Mar. 22, 2024 USD ($)
Purchase price
Cash	$ 323,393
Total	323,393
Allocation of purchase price
Property and equipment	240,000
Deposit assumed on leased premises	83,393
Total	$ 323,393

Property and equipment (Details)	9 Months Ended
Property and equipment (Details)	Sep. 30, 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 ($)	9 Months Ended
Property and equipment (Details 1) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Cost	$ 1,000,670
Accumulated depreciation	(244,275)
Net book value	$ 756,395	$ 508,401
Useful Life	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives	Life of lease
Cost	$ 539,890
Accumulated depreciation	(125,871)
Net book value	414,019	371,308
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Cost	395,459
Accumulated depreciation	(76,775)
Net book value	$ 318,684	104,715
Useful Life	6 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 55,949
Accumulated depreciation	(37,453)
Net book value	$ 18,496	26,889
Useful Life	5 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 9,372
Accumulated depreciation	(4,176)
Net book value	$ 5,196	$ 5,489
Useful Life	3 years

Property and equipment (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
Property and equipment (Details Narrative) - USD ($)	Mar. 22, 2024	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Restructuring Cost and Reserve [Line Items]
Depreciation expense		$ 33,226	$ 20,690	$ 77,528	$ 119,774
Leased Premises [Member]
Restructuring Cost and Reserve [Line Items]
Purchase price	$ 240,000

Intangibles (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Useful lives	5 years
Cost	$ 1,789,903
Accumulated amortization	(1,163,436)
Net book value	$ 626,467	$ 894,952

Intangibles (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
Intangibles (Details Narrative) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense for finite-lived assets	$ 89,495	$ 89,495	$ 268,485	$ 268,485

Leases (Details) - USD ($)	9 Months Ended	12 Months Ended
Leases (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Leases
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$ 18,496	$ 26,889
Right-of-use assets - operating leases, net of amortization	$ 9,988,784	$ 9,323,723

Leases (Details 1) - USD ($)	9 Months Ended
Leases (Details 1) - USD ($)	Sep. 30, 2024	Sep. 30, 2023
Leases
Amortization of right-of-use assets	$ 8,392	$ 8,392
Interest expense on finance lease liabilities	1,106	1,504
Total finance lease cost	9,498	9,896
Operating lease cost	910,076	446,189
Lease cost	$ 919,574	$ 456,085

Leases (Details 2) - USD ($)	9 Months Ended
Leases (Details 2) - USD ($)	Sep. 30, 2024	Sep. 30, 2023
Leases
Operating cash flows from finance leases	$ (1,106)	$ (1,504)
Operating cash flows from operating leases	(738,760)	(446,189)
Financing cash flows from finance leases	(6,266)	(5,868)
Cash paid for amounts included in the measurement of lease liabilities	$ (746,132)	$ (453,561)
Weighted average lease term - finance leases	2 years and 2 months	3 years and 2 months
Weighted average remaining lease term - operating leases	17 years and ten months	19 years and 11 months
Discount rate - finance leases	6.58%	6.60%
Discount rate - operating leases	7.60%	7.70%

Leases (Details 3) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Leases
Remainder of 2024	$ 2,457
2025	9,829
2026	6,195
2027	1,707
Total finance lease	20,188
Imputed interest	(1,591)
Lease liability	18,597
Current portion	8,861	$ 8,426
Non-Current portion	$ 9,736	$ 16,475

Leases (Details 4) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Leases
Remainder of 2024	$ 257,672
2025	1,045,192
2026	1,074,288
2027	961,526
2028	841,379
2029 and thereafter	15,358,663
Total undiscounted minimum future lease payments	19,538,720
Imputed interest	(9,277,365)
Total operating lease liability	10,261,355
Current portion	287,128
Non-Current portion	9,974,227	$ 9,383,557
Lease liability	$ 10,261,355

Short-term Convertible Notes (Details) - USD ($)	9 Months Ended	12 Months Ended
Short-term Convertible Notes (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Short-Term Debt [Line Items]
Principal amount	$ 2,969,776
Interest Costs Capitalized	968,155
Convertible note	3,937,931	$ 4,419,927
Short-term	2,188,631	4,419,927
Long-term	$ 1,749,300
Auctus Fund L L C [Member]
Short-Term Debt [Line Items]
Interest rate	0.00%
Maturity date	On Demand
Principal amount	$ 70,000
Interest Costs Capitalized
Short-term convertible notes	$ 70,000	70,000
Joshua Bauman [Member]
Short-Term Debt [Line Items]
Interest rate	10.00%
Maturity date	August 9, 2024
Principal amount	$ 120,776
Interest Costs Capitalized	10,031
Short-term convertible notes	$ 130,807	121,766
Series N Convertible Notes [Member]
Short-Term Debt [Line Items]
Interest rate	6.00%
Maturity date	December 31, 2024 to December 31, 2025
Principal amount	$ 2,779,000
Interest Costs Capitalized	958,124
Short-term convertible notes	$ 3,737,124	$ 4,228,161

Short-term Notes (Details) - USD ($)	9 Months Ended	12 Months Ended
Short-term Notes (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Short-Term Debt [Line Items]
Principal Amount	$ 2,400,543
Accrued interest	124,078
Unamortized debt discount	(58,603)
Short-term notes	$ 2,466,018	$ 680,672
L X T Biotech [Member]
Short-Term Debt [Line Items]
Interest rate	6.00%
Maturity date	On Demand
Principal Amount	$ 98,499
Accrued interest	32,351
Unamortized debt discount
Short-term notes	$ 130,850	129,184
Mirage Realty [Member]
Short-Term Debt [Line Items]
Interest rate	10.00%
Maturity date	June 15, 2024
Principal Amount
Accrued interest
Unamortized debt discount
Short-term notes		236,421
Mirage Realty 1 [Member]
Short-Term Debt [Line Items]
Maturity date	November 15, 2024
Principal Amount	$ 600,000
Accrued interest	19,500
Unamortized debt discount
Short-term notes	$ 619,500
Mirage Realty 1 [Member] \| Minimum [Member]
Short-Term Debt [Line Items]
Interest rate	6.00%
Mirage Realty 1 [Member] \| Maximum [Member]
Short-Term Debt [Line Items]
Interest rate	18.00%
Third Party [Member]
Short-Term Debt [Line Items]
Interest rate	12.00%
Maturity date	On demand
Principal Amount	$ 254,944
Accrued interest	5,515
Unamortized debt discount
Short-term notes	$ 260,459	315,067
Revolving Line Of Credit [Member]
Short-Term Debt [Line Items]
Interest rate	60.00%
Maturity date	August 13,2024
Principal Amount	$ 111,100
Accrued interest	17,406
Unamortized debt discount
Short-term notes	$ 128,506
Revolving Line Of Credit 5 [Member]
Short-Term Debt [Line Items]
Interest rate	60.00%
Maturity date	September 30, 2024
Principal Amount	$ 181,000
Accrued interest	17,798
Unamortized debt discount
Short-term notes	$ 198,798
Series R Promissory Notes [Member]
Short-Term Debt [Line Items]
Interest rate	7.50%
Maturity date	March 31, 2025
Principal Amount	$ 1,155,000
Accrued interest	31,508
Unamortized debt discount	(58,603)
Short-term notes	$ 1,127,905

Promissory Note (Details) - Promissory Note [Member] - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Promissory note issued	$ 475,000
Repayments	(40,000)
Promissory note	435,000
Current portion	267,500
Long-term portion	$ 167,500

Promissory Note (Details Narrative) - ATHI [Member] - Stock Purchase Agreement [Member]	May 15, 2024 USD ($) shares
Restructuring Cost and Reserve [Line Items]
Minority shares \| shares	5,000,000
Gross proceeds	$ 1,100,000
Initial deposit	25,000
Additional deposit	600,000
Non-interest bearing promissory note	475,000
Repayable in 1-8 instalments	$ 10,000

Receivables funding (Details Narrative) - USD ($)					9 Months Ended
Receivables funding (Details Narrative) - USD ($)	Aug. 30, 2024	Jun. 02, 2024	May 30, 2024	Sep. 15, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Weekly cash payment						$ 361,260
Receivables					381,307		$ 313,338
Evernia Health Center L L C [Member] \| Bizfund [Member]
Weekly cash payment		$ 4,950
Paid amount		$ 198,000
Evernia Health Center L L C [Member] \| Itria [Member]
Weekly cash payment	$ 8,013			$ 6,667	8,013
Paid amount	312,500			$ 320,000	24,039
Receivables	312,500
Gross proceeds	250,000
Fee amount	3,000
Net proceeds	$ 247,000
Unamortized discount					53,709
Outstanding amount					234,752
Evernia Health Center L L C [Member] \| Fortunate [Member]
Weekly cash payment			$ 10,750
Paid amount			375,000
Receivables			375,000
Gross proceeds			300,000
Fee amount			5,000
Net proceeds			$ 295,000
Repaid amount					75,250
Outstanding balance					245,821
Unamortized discount					$ 53,929

Related parties (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Related Party Transaction [Line Items]
Total related party payables	$ 1,006,929	$ 2,572,292
Total Related party advance	253,596
Debt discount at inception	(35,000)
Amortization of debt discount	15,135
Total debt discount	(19,865)
Shawn E Leon [Member]
Related Party Transaction [Line Items]
Total related party payables	34,261	61,267
Leon Developments Ltd [Member]
Related Party Transaction [Line Items]
Total related party payables		1,092,701
Eileen Greene [Member]
Related Party Transaction [Line Items]
Total related party payables	972,668	1,418,324
Principal outstanding	285,000
Repayments	(11,539)
Total Related party advance	$ 273,461

Related parties (Details Narrative) - USD ($)	9 Months Ended
Related parties (Details Narrative) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Jul. 31, 2024	Dec. 31, 2023
Related Party Transaction [Line Items]
Management fee	$ 480,000
Shawn E Leon [Member]
Related Party Transaction [Line Items]
Total related party payables	34,261			$ 61,267
Mr Leon [Member]
Related Party Transaction [Line Items]
Management fee	480,000
Leon Developments Ltd [Member]
Related Party Transaction [Line Items]
Total related party payables	0		$ 1,092,701	1,092,701
Eileen Greene [Member]
Related Party Transaction [Line Items]
Total related party payables	$ 972,668			$ 1,418,324

Stockholders deficit (Details) - $ / shares	9 Months Ended	12 Months Ended
Stockholders deficit (Details) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Number of share outstanding, Beginning	1,022,376,420	602,852,506
Weighted average exercise price, Beginning	$ 0.0012840	$ 0.001306
Number of share outstanding, Granted		745,810,761
Exercise price per share, Granted		$ 0.001
Weighted average exercise price, Granted		$ 0.001
Number of share outstanding, Forfeited/cancelled		(326,286,847)
Exercise price per share, Forfeited/cancelled		$ 0.000675
Weighted average exercise price, Forfeited/cancelled		$ 0.000675
Number of share outstanding, Exercised
Exercise price per share, Exercised
Weighted average exercise price, Exercised
Number of share outstanding, Ending	1,022,376,420	1,022,376,420
Weighted average exercise price, Ending	$ 0.0012840	$ 0.0012840
Minimum [Member]
Exercise price per share, Beginning	0.001	0.000675
Exercise price per share, Ending	0.001
Maximum [Member]
Exercise price per share, Beginning	0.00205	$ 0.00205
Exercise price per share, Ending	$ 0.00205

Stockholders deficit (Details 1)	9 Months Ended
Stockholders deficit (Details 1)	Sep. 30, 2024 $ / shares shares
Exercise Price 1 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of Warrants	745,810,761
Weighted average remaining years	2 years 9 months
Number of shares, Warrants exercisable	745,810,761
Exercise Price 2 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of Warrants	276,565,659
Weighted average remaining years	1 year 3 months 3 days
Number of shares, Warrants exercisable	276,565,659
Exercise Price [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of Warrants	1,022,376,420
Weighted average remaining years	2 years 4 months 6 days
Number of shares, Warrants exercisable	1,022,376,420
Weighted average exercise price \| $ / shares	$ 0.001284
Weighted average exercise price, Warrants exercisable \| $ / shares	$ 0.001284

Stockholder’s deficit (Details Narrative)	9 Months Ended
Stockholder’s deficit (Details Narrative)	Sep. 30, 2024 USD ($)
Equity [Abstract]
Intrinsic Value	$ 0

Net loss per common share (Details) - shares	3 Months Ended	9 Months Ended
Net loss per common share (Details) - shares	Sep. 30, 2024	Sep. 30, 2024
(Loss) income per share
Shares issuable upon exercise of warrants	1,022,376,420	1,022,376,420
Shares issuable on conversion of convertible notes	177,521,610	177,521,610
Total	1,199,898,030	1,199,898,030

Net loss per common share (Details 1) - USD ($)	3 Months Ended		9 Months Ended
Net loss per common share (Details 1) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
(Loss) income per share
Net income per share available for common stockholders amount	$ (1,000,714)	$ 2,076,479	$ (1,738,350)	$ 1,524,534
Net income per share available for common stockholders shares	7,207,314,674	3,729,053,805	4,896,937,017	3,729,053,805
Net income per share available for common stockholders per share	$ (0.00)	$ 0.00	$ (0.00)	$ 0.00
Convertible debt amount		$ 50,964		$ 146,395
Convertible debt shares		202,325,970		202,325,970
Net income per share available for common stockholders amount		$ 2,127,443		$ 1,670,929
Net income per share available for common stockholders shares	7,207,314,674	3,931,379,775	4,896,937,017	3,931,379,775
Net income per share available for common stockholders per shares	$ (0.00)	$ 0.00	$ (0.00)	$ 0.00

Ethema Health (PK) (USOTC:GRST)
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