1. Restatement of Previously Issued Financial Statements

9 Months Ended

Sep. 30, 2015

Accounting Changes and Error Corrections [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 nine months ended September 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.

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 September 30, 2014 and the restated Consolidated Statements of Operations and Cash Flows for the three and nine months ended September 30, 2014 are presented below:

Unaudited Restated Consolidated Balance Sheet as at September 30, 2014

GREENESTONE HEALTHCARE CORPORATION
RESTATEMENT OF BALANCE SHEET AT SEPTEMBER 30, 2014
	As previously reported on Form 10-Q			Opening Deficit			Beneficial Conversion feature			Compensation			As Restated
ASSETS
CURRENT ASSETS
Cash	$	—		$	—		$	—		$	—		$	—
Accounts receivable, net		200,103			—			—			—			200,103
Prepaid expenses		95,810			—			—			—			95,810
Current assets held for resale		354,986			—			—			—			354,986
Total current assets		650,899			—			—			—			650,899
NON-CURRENT ASSETS
Cash - Restricted		89,290			—			—			—			89,290
Fixed assets, net		286,096			—			—			—			286,096
Long term assets held for resale		220,574			—			—			—			220,574
Total assets	$	1,246,859		$	—		$	—		$	—		$	1,246,859
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank overdraft	$	21,335		$	—		$	—		$	—		$	21,335
Accounts payable and accrued liabilities		423,242			—			—			—			423,242
Taxes payable		2,539,518			—			—			—			2,539,518
Deferred revenue		88,546			—			—			—			88,546
Short Term loan		82,962			(34,357	)		10,530			—			59,135
Current portion of loan payable		7,811			—			—			—			7,811
Related party notes		394,998			—			—			—			394,998
Current liabilities held for resale		297,286			—			—			—			297,286
Total current liabilities		3,855,698			(34,357	)		10,530			—			3,831,871
NON-CURRENT LIABILITIES
Loan payable		21,130			—			—			—			21,130
Total liabilities		3,876,828			(34,357	)		10,530			—			3,853,001
STOCKHOLDERS' DEFICIT
Common stock; $0.01 par value, 100,000,000 shares authorized; 47,693,055 and 41,065,564 shares issued and outstanding as of September 30, 2014 and December 31, 2013 respectively		476,930			—			—			—			476,930
Additional paid-in capital		8,756,610			4,150,113			45,000			624,596			13,576,319
Accumulated other comprehensive loss		395,640			—			—			—			395,640
Accumulated deficit		(12,259,149	)		(4,115,756	)		(55,530	)		(624,596	)		(17,055,031	)
Total stockholders' deficit		(2,629,969	)		34,357			(10,530	)		—			(2,606,142	)
Total liabilities and stockholders' deficit	$	1,246,859		$	—		$	—		$	—		$	1,246,859

Unaudited Restated Consolidated Income Statement for the Three Months Ended September 30, 2014

GREENESTONE HEALTHCARE CORPORATION

RESTATEMENT OF INCOME STATEMENT

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014

	As previously reported on Form 10-Q			Beneficial Conversion feature			Compensation		As Restated
Revenue	$	1,197,121		$	—		$	—	$	1,197,121
Cost of Services Provided		—			—			—		—
Gross margin		1,197,121			—			—		1,197,121
Operating expenses
Depreciation		20,718			—			—		20,718
General and administrative		193,813			—			—		193,813
Management fees		55			—			—		55
Professional fees		115,565			—			—		115,565
Rent		82,839			—			—		82,839
Salaries and wages		576,618			—			—		576,618
Total operating expenses		989,608			—			—		989,608
Net operating loss		207,513			—			—		207,513
Interest expense		2,640			(12,459	)		—		(9,819	)
Net loss from continuing operations		210,152			(12,459	)		—		197,693
Net operating loss from discontinued operations		(102,241	)		—			—		(102,241	)
Net loss applicable to common stockholders'		107,911			(12,459	)		—		95,452
Foreign currency translation adjustment		124,131			—			—		124,131
Total comprehensive income/(loss)	$	232,042		$	(12,459	)	$	—	$	219,583

Unaudited Restated Consolidated Income Statement for the Nine Months Ended September 30, 2014

GREENESTONE HEALTHCARE CORPORATION

RESTATEMENT OF INCOME STATEMENT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

	As previously reported on Form 10-Q			Beneficial Conversion feature			Compensation			As Restated
Revenue	$	2,812,940		$	—		$	—		$	2,812,940
Cost of Services Provided		—			—			—			—
Gross margin		2,812,940			—			—			2,812,940
Operating expenses
Depreciation		61,861			—			—			61,861
General and administrative		540,508			—			—			540,508
Management fees		68,163			—			—			68,163
Professional fees		180,618			—			—			180,618
Rent		333,639			—			—			333,639
Salaries and wages		1,724,194			—			624,596			2,348,790
Total operating expenses		2,908,983			—			624,596			3,533,579
Net operating loss		(96,043	)		—			(624,596	)		(720,639	)
Interest expense		(18,988	)		(55,530	)		—			(74,518	)
Net loss from continuing operations		(115,031	)		(55,530	)		(624,596	)		(795,157	)
Net operating loss from discontinued operations		(209,161	)		—			—			(209,161	)
Net loss applicable to common stockholders'		(324,192	)		(55,530	)		(624,596	)		(1,004,318	)
Foreign currency translation adjustment		131,505			—			—			131,505
Total comprehensive income/(loss)	$	(192,687	)	$	(55,530	)	$	(624,596	)	$	(872,813	)

Unaudited Restated Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2014

GREENESTONE HEALTHCARE CORPORATION

RESTATEMENT OF INCOME STATEMENT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

	As previously reported on Form 10-Q			Beneficial Conversion feature			Compensation			As Restated
Operating activities
Net loss applicable to common stockholders'	$	(324,192	)	$	(55,530	)	$	(624,596	)	$	(1,004,318	)
Net loss from discontinued operations		209,161			—			—			209,161
Net income (loss) - continuing operations		(115,031	)		(55,530	)		(624,596	)		(795,157	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation		61,861			—			—			61,861
Movement in bad debts provision		(12,078	)		—			—			(12,078	)
Stock issued for services		—			—			624,596			624,596
Amortization of beneficial conversion feature		—			55,530			—			55,530
Changes in operating assets and liabilities
Accounts receivable		6,479			—			—			6,479
Prepaid expenses		(11,286	)		—			—			(11,286	)
Accounts payable and accrued liabilities		(17,365	)		—			—			(17,365	)
Taxes payable		167,599			—			—			167,599
Deferred revenue		(18,929	)		—			—			(18,929	)
Net cash used in operating activities - continuing operations		61,250			—			—			61,250
Net cash used in operating activities - discontinued operations		(247,549	)		—			—			(247,549	)
Net cash used in operating activities		(186,299	)		—			—			(186,299	)
Investing activities
Purchase of fixed assets		(64,711	)		—			—			(64,711	)
Net cash used in investing activities - continuing operations		(64,711	)		—			—			(64,711	)
Net cash used in investing activities - discontinued operations		—			—			—			—
Net cash used in investing activities		(64,711	)		—			—			(64,711	)
Financing activities
Change in restricted cash		(5,632	)		—			—			(5,632	)
Repayment of loan payable		4,730			—			—			4,730
Proceeds from convertible notes payable		105,000			—			—			105,000
Proceeds from issuance of common stock		382,503			—			—			382,503
Proceeds from related party notes		250,652			—			—			250,652
Repayment of related party notes		(111,766	)		—			—			(111,766	)
Net cash used in financing activities - continuing operations		625,487			—			—			625,487
Net cash used in financing activities - discontinued operations		(401,244	)		—			—			(401,244	)
Net cash used in financing activities		224,243			—			—			224,243
Effect of exchange rate on cash		131,505			—			—			131,505
Net change in cash		104,738			—			—			104,738
Beginning cash balance (deficiency)		(126,073	)		—			—			(126,073	)
Ending cash balance ( excluding restricted )	$	(21,335	)	$	—		$	—		$	(21,335	)