14. Subsequent events

12 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

14. Subsequent events

14. Subsequent events

Subsequent to December 31, 2016, during January 2017, the Company raised an additional $71,000 in convertible short-term notes with a maturity in July 2017. These notes bear interest at 0% and are convertible into shares of common stock at $0.03 per share. The Company also issued three-year warrants exercisable for 2,366,667 shares of common stock, at an exercise price of $0.03 per share to these noteholders.

On February 2, 2017, The Company entered into a Securities Purchase Agreement with LABRYS FUND LP, in terms of the agreement the Company borrowed $100,000 in terms of an unsecured convertible promissory note with a maturity date of August 2, 2017. The principal amount due under the promissory note is $110,000, inclusive of an Original Issue discount of $10,000. The note bears interest at a rate of 8% per annum. The note is only convertible upon a repayment default, at the lower of 60% of the lowest traded price over the preceding 30 day trading period prior to the issuance of this note or 60% of the lowest traded price 30 days prior to the conversion date. The Company issued 1,200,000 common shares to the note holder as a commitment fee which returnable shares will be returned to the company is fully repaid prior to August 2, 2017.

On February 14, 2017, GreeneStone completed a series of transactions (referred to collectively as the “Restructuring Transactions”), including a share purchase agreement (the “SPA”) whereby GreeneStone acquired the stock of the company holding the Muskoka Healthcare Clinic real estate, an asset purchase agreement (the “APA”) and lease (the “Lease”) whereby the Company sold all of the Muskoka clinic business assets and leased the clinic building to the buyer, and a real estate purchase agreement and asset purchase agreement whereby the Company purchased the real estate and business assets of Seastone Delray (the “Florida Purchase”).

The Stock Purchase Agreement

Under the SPA, the Company acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd. (“Leon Developments”), a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of GreeneStone (“Mr. Leon”). CCH owns the real estate on which the Company’s rehabilitation clinic (“the Canadian Rehab Clinic”) in Muskoka, Ontario is located. The total consideration paid by GreeneStone was CDN$3,300,000 (an appraised value of CDN$10,000,000 less the outstanding mortgage loan), which was funded by the assignment to Leon Developments of certain indebtedness owing to GreeneStone in the amount of CDN$659,918, and the issuance of 60,000,000 shares of the Company’s common stock to Leon Developments, valued at approximately US$0.033 per share (the “Shares”).

The Asset Purchase Agreement and Lease

Under the APA, the assets of the Canadian Rehab Clinic were sold by GreeneStone, through its subsidiary, GreeneStone Clinic Muskoka Inc. (the “Rehab Clinic Subsidiary”), to Canadian Addiction Residential Treatment LP (the “Purchaser”), for a total consideration of CDN$10,000,000, plus an additional performance payment of up to CDN$3,000,000 performance payment to be received in 2019 if certain clinic performance metrics are met. The Purchaser completed the sale with cash proceeds to the Company of CDN$10,000,000, of which CDN$1,500,000.00 will remain in escrow for up to two years to cover indemnities given by the Company. Aside from using the proceeds of the Muskoka clinic asset sale to pay down significant tax debts and operational costs of the Company, the Company also used the proceeds to fund the Florida Purchase.

Through the APA, substantially all of the assets of the Rehab Clinic Subsidiary were sold, leaving GreeneStone with only the underlying clinic real estate, which GreeneStone through its newly acquired subsidiary CCH concurrently leased to the Purchaser. The Lease is a triple net lease and provides for a five (5) year primary term with three (3) five-year renewal options, annual base rent for the first year at CDN$420,000 with annual increases, an option to tenant to purchase the leased premises and certain first refusal rights, all as set forth in the Lease filed herewith as Exhibit 10.3.

The Florida Purchase

Immediately after closing on the sale of its Muskoka clinic business, GreeneStone closed on the acquisition of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements This business will be operated through its wholly owned subsidiary Seastone. The purchase price for the Seastone assets was US$6,150,000 financed with a purchase money mortgage of US$3,000,000, and US$3,150,000 in cash.

During January 2017, the Company raised a further $71,000 in convertible notes, each note convertible into shares of common stock at a conversion price of $0.03 per share. In connection with the notes issued, warrants to purchase 2,366,667 shares of common stock were issued to the note holders.

During February 2017, the Company raised a further loan of $110,000 from LABRYS FUND LP for net proceeds of $100,000, including an Original issue Discount of 10%. The loan bears interest at 8% per annum and matures on August 2, 2017. Subject to an Event of Defualt, this loan is convertible into common stock at a 40% discount to market price as determined by a pre-determined formula. The Company issued 1,200,000 shares of Common stock to the note holder as a commitment fee, which is returnable if the note is repaid in full before maturity date.

Other than disclosed above, the Company has evaluated subsequent events through the date of the consolidated financial statements were available to be issued and has concluded that no such events or transactions took place that would require disclosure herein.