Restatement of prior period results

6 Months Ended

Jun. 30, 2018

Restatement of Prior Year Income [Abstract]

Restatement of prior period results

3. Restatement of prior period results

The Company finalized the Purchase Price allocation for the acquisition of the assets of Seastone and CCH during December 2017. This resulted in the retroactive restatement of the statement of the unaudited condensed consolidated statement of operations and the unaudited condensed consolidated statement of cash flows for the three and six months ended June 30, 2017.

The value of the assets acquired were adjusted in line with valuations received and the corresponding depreciation charge was adjusted accordingly.

This resulted in an increase in other expense of $1,146,600 and $4,701,415 for the three months and six months ended June 30, 2017, respectively, on the transfer of assets between parties under common control and a net reduction in the associated depreciation charge of $51,442 and $74,912 for the three months and six months ended June 30, 2017, respectively.

A further adjustment was made to other income, which was reduced by $62,960 and $94,940, for the three months and six months ended June 30, 2017, respectively, to modify the Company’s estimate of deferred purchase price consideration due on the disposal of Muskoka. 

The reconciliation of the unaudited condensed consolidated statement of operations for the three months ended June 30, 2017 is as follows:

ETHEMA HEALTH CORPORATION

(Formerly known as Greenestone Healthcare Corporation)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended June 20, 2017 As  previously reported			Adjustments			Three months ended June 30, 2017 As Restated
Revenues	$	402,220					$	402,220
Operating expenses
General and administrative		57,905						57,905
Professional fees		66,403						66,403
Salaries and wages		173,451						173,451
Depreciation and amortization		125,340			(51,442	)		73,898
Total operating expenses		423,099			(51,442	)		371,657
Operating (loss) gain		(20,879	)		51,442			30,563
Other Income (expense)
Other income		63,960			(62,960	)		1,000
Other expense		1,127,335			(1,146,600	)		(19,265	)
Interest expense		(93,603	)					(93,603	)
Debt discount		(241,666	)					(241,666	)
Derivative liability movement		167,580						167,580
Foreign exchange movements		(6,438	)					(6,438	)
Net loss before taxation from continuing operations		996,289			(1,158,118	)		(161,829	)
Taxation		—			—			—
Net loss from continuing operations		996,289			(1,158,118	)		(161,829	)
Net loss from discontinued operations, net of tax		(141,177	)					(141,177	)
Net income (loss)		855,112			(1,158,118	)		(303,006	)
Accumulated other comprehensive gain
Foreign currency translation adjustment		154,255						154,255
Total comprehensive income (loss)	$	1,009,367		$	(1,158,117	)	$	(148,751	)
Basic income (loss) per common share from continuing operations	$	0.01		$	(0.01	)	$	(0.00	)
Basic loss per share from discontinued operations	$	(0.00	)	$	—		$	(0.00	)
Basic income per common share	$	0.01		$	0.01		$	0.00
Diluted income per share from discontinued operations	$	(0.00	)	$	—		$	(0.00	)
Diluted income (loss) per common share	$	0.01		$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding - Basic		108,772,921			108,772,921			108,772,921

The reconciliation of the unaudited condensed consolidated statement of operations for the six months ended June 30, 2017 is as follows:

ETHEMA HEALTH CORPORATION

(Formerly known as Greenestone Healthcare Corporation)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Six months ended June 20, 2017 As  previously reported			Adjustments			Six months ended June 30, 2017 As Restated
Revenues	$	724,730					$	724,730
Operating expenses
General and administrative		408,442						408,442
Professional fees		399,204						399,204
Salaries and wages		382,695						382,695
Depreciation and amortization		182,406			(74,912	)		107,494
Total operating expenses		1,372,747			(74,912	)		1,297,835
Operating loss		(648,017	)		74,912			(573,105	)
Other Income (expense)
Other income		568,309			(94,940	)		473,369
Other expense		(392,539	)		(4,701,415	)		(5,093,954	)
Interest income		32,074						32,074
Interest expense		(156,620	)					(156,620	)
Debt discount		(429,325	)					(429,325	)
Derivative liability movement		94,532						94,532
Foreign exchange movements		(164,347	)					(164,347	)
Net loss before taxation from continuing operations		(1,095,933	)		(4,721,443	)		(5,817,376	)
Taxation		—			—			—
Net loss from continuing operations		(1,095,933	)		(4,721,443	)		(5,817,376	)
Net income from discontinued operations, net of tax		7,412,643						7,412,643
Net income		6,316,710			(4,721,443	)		1,595,267
Accumulated other comprehensive gain
Foreign currency translation adjustment		(36,692	)					(36,692	)
Total comprehensive income	$	6,280,018		$	(4,721,443	)	$	1,558,575
Basic loss per common share from continuing operations	$	(0.01	)	$	(0.05	)	$	(0.06	)
Basic income per share from discontinued operations	$	0.08		$	—		$	0.08
Basic income per common share	$	0.07		$	(0.05	)	$	0.02
Diluted loss per common share from continuing operations	$	(0.01	)	$	(0.04	)	$	(0.06	)
Diluted income per share from discontinued operations	$	0.07		$	—		$	0.07
Diluted income per common share	$	0.06		$	(0.04	)	$	0.01
Weighted average common shares outstanding - Basic		93,838,855			93,838,855			93,838,855
Weighted average common shares outstanding - Diluted		104,974,243			104,974,243			104,974,243

The reconciliation of the unadjusted condensed consolidated statement of cash flows for the six months ended June 30, 2017 is as follows:

ETHEMA HEALTH CORPORATION

(Formerly known as Greenestone Healthcare Corporation)

	June 20, 2017 As previously reported			Adjustments			June 30, 2017  Adjusted Total
Operating activities
Net income	$	6,316,710		$	(4,721,443	)	$	1,595,267
Net income from discontinued operations		(7,412,643	)					(7,412,643	)
Net loss from continuing operations		(1,095,933	)		(4,721,443	)		(5,817,376	)
Adjustment to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		182,406			(74,912	)		107,494
Non cash compensation expense on acquisition of subsidiary		373,274			4,701,415			5,074,689
Loss on mortgage sold		19,265						19,265
Non cash compensation for services		4,000						4,000
Other foreign exchange movements		(27,476	)					(27,476	)
Amortization of debt discount		429,325						429,325
Derivative liability movements		(94,532	)					(94,532	)
Provision against receivable on sale of subsidiary		(446,476	)					(446,476	)
Changes in operating assets and liabilities
Accounts receivable		(327,351	)					(327,351	)
Prepaid expenses		(6,776	)					(6,776	)
Accounts payable and accrued liabilities		(150,095	)		94,940			(55,155	)
Taxes payable		(2,401,665	)					(2,401,665	)
Net cash used in operating activities - continuing operations		(3,542,034	)		—			(3,542,034	)
Net cash provided by operating activities - discontinued operations		101,033						101,033
		(3,441,001	)		—			(3,441,001	)
Investing activities
Investments in Seastone		(2,960,000	)					(2,960,000	)
Proceeds from restricted cash		51,362						51,362
Purchase of fixed assets		(8,878	)					(8,878	)
Net cash used in investing activities - continuing operations		(2,917,516	)		—			(2,917,516	)
Net cash provided by investing activities - discontinued operations		6,241,082						6,241,082
		3,323,566			—			3,323,566
Financing activities
(Decrease) Increase in bank overdraft		(36,605	)					(36,605	)
Proceeds from mortgage sold		111,554						111,554
Repayment of mortgage		(85,613	)					(85,613	)
Proceeds from convertible notes		294,500						294,500
Repayment of convertible notes		(130,000	)					(130,000	)
(Repayment of) proceeds from related party notes		26,195						26,195
Net cash provided by financing activities		180,031			—			180,031
Effect of exchange rate on cash		(36,692	)					(36,692	)
Net change in cash		25,904						25,904
Beginning cash balance		4,779						4,779
Ending cash balance	$	30,683		$	—		$	30,683