12. Commitments and contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

12. Commitments and contingencies

12. Commitments and contingencies

a. Operating leases

The Company had entered into a lease agreement for the rental of premises operated by GreeneStone Clinic Muskoka Inc. which term initially expires on March 31, 2019. The Company has an option to extend the lease for an additional three terms, each term being an additional three years. The Company also has an option to purchase the property for $10,000,000, which option must be exercised in writing, accompanied by a $250,000 deposit and must be closed within 30 days of exercising the option. The Company also has a right of first refusal should the landlord receive an acceptable offer for the premises, the Company would be entitled to acquire the premises on the same terms and conditions of the acceptable offer, provided the Company has met certain covenants. The rental expense for the year ended December 31, 2016 was CDN $485,055.

Subsequent to year end, on February 14, 2017, the Company sold the GreeneStone Muskoka Treatment Center to a third party, simultaneously with the disposal of the Treatment Center, the Company acquired 100% of Cranberry Cove Holdings, LTD, the entity in which the property, subject to the lease mentioned above is registered.

Cranberry Cove Holdings, Ltd, entered into a new lease agreement with the purchasers and the existing lease was terminated.

b. Contingency related to outstanding tax liabilities

The Company was delinquent in paying harmonized sales tax, filing and paying payroll taxes and may also be subject to US taxation and penalties as fully disclosed in note 7 above.

Subsequent to year end, on February 14, 2017, the Company disposed of its GreeneStone Muskoka Treatment Center. A portion of the proceeds realized on the sale of the business was used to settle the outstanding Harmonized Sales Tax and Payroll tax liabilities.

The Company has also provided for US tax liabilities of $250,000 due to non-compliance with the filing of certain required returns. The actual liability may be higher due to interest and penalties assessed by these taxing authorities.

c. Other

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.