1. Restatement of Previously Issued Financial Statements

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

1. Restatement of Previously Issued Financial Statements

1. Restatement of Previously Issued Financial Statements

The Company has restated its consolidated financial statements for the six months ended June 30, 2014.

The restatements reflect adjustments to correct errors identified by management during the Company’s normal closing process, in the course of the Company’s regularly scheduled audit by its newly appointed Independent Accounting Firm, and during the course of an internal investigation initiated by the board of directors of the Company (in performance of its function as the audit committee). The Company’s board of directors has completed its investigation. The effect of the restatements on the Company’s Balance Sheets is not material and the restatements have no effect on reported cash flow from operations.

In addition, the Company has restated its consolidated financial statements, to retroactively reflect the Company’s Board of Directors decision to dispose of its Endoscopy Division, as of and for the six months ended June 30, 2014.

Beneficial Conversion Feature

During the fourth quarter of fiscal 2014, the Company identified an error as a result of not recognizing the beneficial conversion feature inherent in seventy five (75) mandatorily convertible notes issued between 2010 and 2012 to accredited investors; the beneficial conversion feature inherent in two (2) convertible notes issued to Asher Enterprises, Inc. during the second and third quarter of 2013; and the beneficial conversion feature inherent in five (5) convertible notes issued to JMJ Financial Group during the five quarters beginning with the period ended June 30, 2013 and ending in the period ended September 30, 2014.

Employee Option Incentive Grants

During the fourth quarter of fiscal 2014, the Company identified an error as a result of not recognizing the costs of employee option incentive granted during the second quarter of 2012 and which terminated during the second quarter of 2014.

The restated Consolidated Balance Sheet as of June 30, 2014 and the restated Consolidated Statements of Operations and Cash Flows for the three and six months ended June 30, 2014 are presented below:

GREENESTONE HEALTHCARE CORP

CONSOLIDATED BALANCE SHEET

June 30, 2014

	As Previously
	Reported on Form 10-Q			Opening Deficit			BCF			Compensation			As Restated			Reclassify Discontinued Operations			As Restated and Reclassified
ASSETS
CURRENT ASSETS
Cash	$	27,562											$	27,562		$	—		$	27,562
Accounts receivable		396,337												396,337			(281,425	)		114,912
Prepaid expenses		103,762												103,762			(26,545	)		77,217
Inventory		31,897												31,897			(31,897	)		—
Current assets - held for sale		—												—			339,867			339,867
Total current assets		559,558			—			—			—			559,558			—			559,558
NON CURRENT ASSETS:
Cash - Restricted		93,480			—			—			—			93,480			—			93,480
Fixed assets		524,886												524,886			(232,135	)		292,751
Long term assets - held for resale																	232,135			232,135
Total assets	$	1,177,924		$	—		$	—		$	—		$	1,177,924		$	—		$	1,177,924
LIABILITIES AND
STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities		595,275												595,275			(221,214	)		374,061
Taxes payable		2,633,188			—			—			—			2,633,188			(19,387	)		2,613,801
Deferred revenue		110,126												110,126						110,126
Current portion of loan payable		8,086			—			—			—			8,086			—			8,086
Short term loan		93,689			(34,357	)		8,785						68,117						68,117
Related party payables		597,412			—			—			—			597,412			(324,216	)		273,196
Current liabilities - held for resale		—			—			—			—			—			564,817			564,817
Total current liabilities		4,037,776			(34,357	)		8,785			—			4,012,204			—			4,012,204
NON CURRENT LIABILITIES:
Loan payable		24,200												24,200			—			24,200
Total Liabilities		4,061,976			(34,357	)		8,785			—			4,036,404			—			4,036,404
STOCKHOLDERS' DEFICIT
Common stock		473,431			—			—			—			473,431			—			473,431
Additional paid-in capital		8,738,070			4,150,113			34,286			624,596			13,547,065			—			13,547,065
Accumulated other comprehensive loss		271,509			—			—			—			271,509			—			271,509
Accumulated deficit		(12,367,062	)		(4,115,756	)		(43,071	)		(624,596	)		(17,150,485	)		—			(17,150,485	)
Total Stockholders' Deficit		(2,884,052	)		34,357			(8,785	)		—			(2,858,480	)		—			(2,858,480	)
Total Liabilities and Stockholders' Deficit	$	1,177,924		$	—		$	—		$	—		$	1,177,924		$	—		$	1,177,924

GREENESTONE HEALTHCARE CORPORATION

RESTATED AND RECLASSIFIED UNAUDITED INCOME STATEMENT

For the three months ended June 30, 2014

	As Previously Reported on Form 10-Q			BCF			Compensation			As Restated			Reclassify Discontinued Operations			As Restated and Reclassified
Revenues	$	1,641,094		$	—		$	—		$	1,614,094		$	(635,484	)	$	1,005,610
Cost of services provided		358,420			—			—			358,420			(358,420	)		—
Gross margin		1,282,674			—			—			1,282,674			(277,064	)		1,005,610
Operating expenses
Depreciation		35,040			—						35,040			(14,353	)		20,687
General and administrative		246,502			—						246,502			(82,419	)		164,083
Management fees		22,933			—						22,933			(68	)		22,865
Professional fees		20,844			—						20,844			(16,059	)		4,785
Rent		161,804			—						161,804			(89,309	)		72,495
Salaries and wages		684,743			—			312,295			997,041			(129,809	)		867,232
Total operating expenses		1,171,866			—			312,298			1,481,164			(332,317	)		1,152,147
Net Operating income (loss)	$	110,808		$	—		$	(312,298	)	$	(201,490	)	$	54,953		$	(146,537	)
Interest expense		(8,347	)		(10,521	)		—			(18,868	)		6,620			(12,248	)
Foreign exchange movement		—			—			—			—			—			—
Income (loss) from continuing operations	$	102,461		$	(10,521	)	$	(312,298	)	$	(220,358	)	$	61,573		$	(158,785	)
Loss from discontinued operations, net of tax		—			—			—			—			(61,573	)		(61,573	)
Net loss applicable to common shareholders	$	102,461		$	(10,521	)	$	(312,298	)	$	(220,358	)	$	—		$	(220,385	)
Accumulated other comprehensive loss
Foreign currency translation adjustment		(98,303	)		—			—			(98,303	)		—			(98,303	)
Total comprehensive income (loss)	$	4,158		$	(10,521	)	$	(312,298	)	$	(318,661	)	$	—		$	(318,661	)

GREENESTONE HEALTHCARE CORPORATION

Restated and reclassified Unaudited Income Statement

For the six months ended June 30, 2014

	As Previously Reported 10-Q			BCF			Compensation			As Restated			Reclassify Discontinued Operations			As Restated And Reclassified
Revenue	$	2,779,072		$	—		$	—		$	2,779,072		$	(1,163,25	)	$	1,615,819
Cost of services provided		646,893			—			—			646,893			(646,893	)		—
Gross margin		2,132,179			—			—			2,132,179			(516,360	)		1,615,819
Operating Expenses
Depreciation		69,637			—						69,637			(28,494	)		41,143
General and administrative		397,301			—						397,301			(143,432	)		253,869
Management fees		77,223			—						77,223			(9,115	)		68,108
Professional fees		83,374			—						83,374			(18,321	)		65,053
Rent		421,699			—						421,699			(170,899	)		250,800
Salaries and wages		1,393,975			—			624,596			2,018,571			(246,399	)		1,772,172
Total operating expenses		2,443,209			—			624,596			3,067,805			(616,660	)		2,451,145
Net operating income (loss)		(311,030	)		—			(624,596	)		(935,626	)		100,300			(835,326	)
Interest expense		(28,248	)		(43,071	)		—			(71,319	)		6,620			(64,699	)
Foreign exchange movement		(92,825	)		—			—			(92,825	)		—			(92,825	)
Income (loss) from continuing operations		(432,103	)		(43,071	)		(624,596	)		(1,099,770	)		106,920			(992,850	)
Loss from discontinued operations, net of tax		—			—			—			—			(106,920	)		(106,920	)
Net loss applicable to common stockholders		(432,103	)		(43,071	)		(624,596	)		(1,099,770	)		—			(1,099,770	)
Accumulated other comprehensive loss
Foreign currency translation adjustment		7,374			—			—			7,374			—			7,374
Total Comprehensive income (loss)	$	(424,729	)	$	(43,071	)	$	(624,596	)	$	(1,092,396	)	$	—		$	(1,092,396	)

GREENESTONE HEALTHCARE CORP

RESTATED AND RECLASSIFIED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period Ended June 30, 2014

	As Previously Reported 10-Q			BCF			Compensation			As Restated			Reclassify Discontinued Operations			As Restated And Reclassified
Operating Activities
Net loss – continuing operations	$	(432,103	)	$	(43,071	)	$	(624,596	)	$	(1,099,770	)	$	106,920		$	(992,850	)
Net loss – discontinued operations		—			—			—			—			(106,920	)		(106,920	)
		(432,103	)		(43,071	)		(624,596	)		(1,099,770	)		—			(1,099,770	)
Adjustments to reconcile net loss to net cash utilized by operating activities
Depreciation		69,637			—			—			69,637			(28,494	)		41,143
Stock issued for services		—			—			624,596			624,596			—			624,596
Amortization of beneficial conversion feature		—			43,071			—			43,071			—			43,071
Change in operating assets and liabilities
Decrease in accounts receivable		44,580			—			—			44,580			35,010			79,590
Increase in inventory		(19,349	)		—			—			(19,349	)		19,349			—
Decrease in prepaid expenses		6,091			—			—			6,091			1,215			7,306
Decrease in accounts payable and accrued liabilities		(108,643	)		—			—			(108,643	)		42,097			(66,546	)
Increase in accrued interest		13,689			—			—			13,689			—			13,689
Increase in taxes payable		242,413			—			—			242,413			(531	)		241,882
Increase in deferred revenue		2,651			—			—			2,651			—			2,651
Net cash used in operating activities – continuing operations		(181,034	)		—			—			(181,034	)		68,646			(112,388	)
Net cash used in operating activities – discontinued operations		—			—			—			—			(68,646	)		(68,646	)
Net cash used in operating activities		(181,034	)		—			—			(181,034	)		—			(181,034	)
Investing activities
Acquisition of fixed assets		(58,399	)		—			—			(58,399	)		7,751			(50,648	)
Net cash used in investing activities – continuing operations		(58,399	)		—			—			(58,399	)		7,751			(50,648	)
Net cash used in investing activities – discontinued operations		—			—			—			—			(7,751	)		(7,751	)
Net cash used in investing activities		(58,399	)		—			—			(58,399	)		—			(58,399	)
Financing activities
Change in restricted cash		540			—			—			540			—			540
Repayment of loans		(4,120	)		—			—			(4,120	)		—			(4,120	)
Proceeds from convertible notes payable		80,000			—			—			80,000			—			80,000
Proceeds from the sale of common stock		382,502			—			—			382,502			—			382,502
Proceeds from related party notes		(73,228	)		—			—			(73,228	)		140,429			67,201
Net cash generated by financing activities – continuing operations		385,694			—			—			385,694			140,429			526,123
Net cash used in financing activities – discontinued operations		—			—			—			—			(140,429	)		(140,429	)
Net cash used in financing activities		385,694			—			—			385,694			—			385,694
Effect of exchange rate on cash		7,374			—			—			7,374			—			7,374
Net change in cash		153,635			—			—			153,635			—			153,635
Beginning cash balance (overdraft)		(126,073	)		—			—			(126,073	)		—			(126,073	)
Ending cash balance (excluding restricted cash)		27,562			—			—			27,562			—			27,562

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