UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, ~~2023~~2024

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to _________

Commission file number: 000-15078

Ethema Health Corporation

(Exact name of registrant as specified in its charter)

Colorado 84-1227328

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

950 Evernia Street

West Palm Beach, Florida 33401

(Address of principal executive offices)

(416) 500 0020

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class	Name of each exchange on which registered

None	N/A

Securities registered under Section 12(g) of the Act:

Common Stock, $0.01 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of issuer’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D.1(b). ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non-accelerated file, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The ~~aggregate~~ aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 3028, ~~2023~~2024, based on a closing share price of $0.~~0006~~0007 was approximately $2,~~073~~489,~~714~~683.

As of May 6 21, ~~2024~~2025, the registrant had 37,~~729~~726,~~053~~283,805 shares of its common stock, par value $0.01 per share, outstanding.

ETHEMA HEALTH CORPORATION

YEAR ENDED DECEMBER 31, ~~2023~~2024

TABLE OF CONTENTS

		PAGE
PART I.
Item 1.	Business	1
Item 1A.	Risk Factors	34
Item 1B.	Unresolved Staff Comments	34
Item 2.	Properties	34
Item 3.	Legal Proceedings	34
Item 4.	Mine Safety Disclosures	34
PART II.
Item 5.	Market for Registrant’s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities	45
Item 6.	Reserved	56
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	56
Item 8.	Financial Statements and Supplementary Data	1011
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	1112
Item 9A.	Controls and Procedures	1112
Item 9B.	Other Information	1213
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	1213
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	1314
Item 11.	Executive Compensation	1415
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	1516
Item 13.	Certain Relationships and Related Transactions, and Director Independence	1617
Item 14.	Principal Accountant Fees and Services	1718
Part IV.
Item 15.	Exhibits and Financial Statements Schedules	1819
SIGNATURES		2120

PART I

Special Note Regarding Forward-Looking Statements

Many of the matters discussed within this Annual Report contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on our current expectations and projections about future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. Such risks and uncertainties include the risks noted under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere. We do not undertake any obligation to update any forward looking statements. Unless the context requires otherwise, references to “we,” “us,” “our,” and “Ethema,” refer to Ethema Health Corporation and its subsidiaries.

Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.

Item 1. Business.

Company History

Ethema ~~Health~~ Health Corporation (the “Company” or “Ethema”), a Colorado corporation was incorporated under the laws of the State of Colorado on April 1, 1993, and is the surviving company of a merger, effective February 1, 1995, between the Company and Nova ~~Natural~~ Natural Resources Corporation, a Delaware corporation (“Nova Delaware”). The merger was effectuated solely for the purpose of changing the Company’s domicile from Delaware to Colorado. At all times prior to 2001, the Company was engaged in the oil and gas exploration business. Nova Delaware was the successor entity to Nova Petroleum Corporation, a Delaware corporation, and Power Resources Corporation, a Delaware corporation, which merged in 1986 (“the 1986 Merger”). Prior to the 1986 Merger, Nova Petroleum Corporation ~~and~~ and Power Resources Corporation had operated since 1979 and 1972, respectively. In 2001, the Company entered into the electronics business and this business was active in 2001 and 2002, as part of the Torita Group. After 2002, the Company continued with various stages of ~~development~~ development in this business until 2010.

On ~~April~~ April 1, 2010, the Company changed its principal operations from development stage electronics to healthcare services. On March 29, 2010, ~~the~~ the Company entered into a one year consulting agreement with ~~GreeneStone~~Greenstone Clinic Inc., a Canadian corporation (“Greenestone Clinic”), whereby Greenestone Clinic provided consulting services for the Company’s development and operation of medical clinics in the province of Ontario, Canada. Specifically, Greenestone Clinic provided medical and business expertise in the initial startup of private clinics and technical assistance to ensure that the clinics were in compliance with governmental policy and procedure requirements as well as any operational requirements. At the time of entering into this consulting agreement, Greenestone Clinic operated a clinic at the Muskoka property housing its addiction treatment clinic and provided endoscopy services. The Company started offering medical services in June 2010, offering various medical services, including endoscopy, cardiology and executive medicals, which services were subsequently sold.

During ~~December~~ December 2016, the Company obtained a license to operate and provide addiction treatment healthcare services in Florida, USA. The company ~~commenced~~ commenced operations under this license with effect from January 2017.

On ~~February~~ February 14, 2017, the Company completed a series of transactions (referred to collectively as the “Restructuring Transactions”), ~~including~~ including a Share Purchase Agreement (the “SPA”) whereby the Company ~~acquired~~ acquired 100% of the stock of Cranberry Cove Holdings Ltd. (“CCH”) from Leon Developments Ltd. (“Leon Developments”), a a company wholly owned by Shawn E. Leon, who is the President, CEO, and CFO of the Company, for an assignment to Leon Developments of CDN$659,918 owing to the Company and the issuance of 60,000,000 shares of the Company’s common stock valued at $2,184,000. CCH held the real estate on which the Company’s ~~GreeneStone~~Greenstone Muskoka operated. The Company entered into an Asset Purchase Agreement (the “APA”) whereby the assets of ~~GreeneStone~~Greenstone Muskoka were sold by ~~GreeneStone~~ Greenstone Muskoka, to Canadian Addiction Residential Treatment LP (the “Purchaser” or “CART”), for a total consideration of CDN$10,000,000. The company also entered into a lease agreement whereby the Company leased the real estate to Cart for an initial 5 year period with three 5 year renewal options.

On February 14, 2017, immediately after closing on the sale of the assets of ~~GreeneStone~~Greenstone Muskoka, the Company closed on the acquisition of of the business and real estate assets of Seastone Delray pursuant to certain real estate and asset purchase agreements through its wholly owned subsidiary, Addiction Recovery Institute of America, LLC (“ARIA”). The purchase price for the ARIA assets was US$6,070,000.

On ~~April~~ April 4, 2017 the Company changed its Corporate name from Greenestone Healthcare Corporation to Ethema Health Corporation.

On ~~November~~ November 2, 2017, the Company entered into an Agreement to purchase certain buildings in West Palm Beach, Florida, totaling approximately 80,000 square feet, on which the Company planned to operate a substance abuse treatment center. The purchase price of the Property was $20,530,000. The Company made a series of nonrefundable down payments totaling $2,940,546 in 2017 and 2018. On May 23, 2018, the Company ~~converted~~ converted the agreement to purchase the buildings from the Landlord into a real property lease agreement with a purchase option. The lease was for an initial 10 years and provided for two additional 10 year extensions. In June 2018, the Company moved its ARIA operations ~~into~~ into the West Palm Beach properties and in September 2018 received a license to operate in-patient detoxification and residential treatment services. On December 20, 2019, the Company entered into an agreement with the landlord to terminate the lease agreement on January 31, 2020.

On ~~April~~ April 2, 2019, the Company disposed of the real estate assets in ARIA located at 801 Andrews Avenue, Delray Beach for gross proceeds of $3,500,000, and on October 10, 2019, the Company transferred the remaining real estate asset located at 810 Andrews Avenue, Delray Beach, ~~Florida~~ Florida to Leonite Capital, LLC, for net proceeds of $1,398,510, which proceeds were offset against the convertible loan owing to Leonite.

On June 30, 2020, the Company entered into an agreement (“the Stock Purchase Agreement”), whereby the Company agreed to acquire 51% of American Treatment Holdings, Inc. (“ATHI”) from The Q Global Trust (“Seller”) and Lawrence B Hawkins (“Hawkins”), which owned 100% of Evernia Health Services LLC. (“Evernia”), which operates drug rehabilitation facilities. The consideration for the acquisition was a loan to be provided by the Company to Evernia in the amount of $500,000. The Company has an option to acquire an additional 24% of ATHI for 100,000,000 shares of common stock and $50,000, on the condition that a probationary license was approved by the Florida Department of Family and Child Services, which was received on June 30, 2021, upon which the Company exercised its option to acquire the additional 24% of ATHI, resulting in a 75% ownership of ATHI.

On ~~December~~ ~~30,~~May ~~2022~~15, 2024, the ~~company~~Company entered into ~~two~~a ~~agreements~~Stock Purchase Agreement whereby it ~~sold~~acquired ~~two non-operating subsidiaries, Greenstone Muskoka and ARIA to~~ the ~~Company~~remaining ~~Chairman~~25% ~~and CEO for gross proceeds~~ of ~~$0,~~ATHI ~~after~~representing ~~Greenstone Muskoka forgave its intercompany receivable owing from the Company of $6~~5,~~690~~000,~~381~~000 ~~and~~shares from the ~~Company~~minority ~~forgave~~stockholder ~~its~~for ~~intercompany~~gross ~~balance~~proceeds ~~owing from ARIA~~ of $91,~~605~~100,~~315~~000.

On ~~June~~December 30, ~~2023~~2022, the ~~Company~~company entered into antwo ~~exchange~~agreements ~~agreement with Leonite Capital, LLC,~~ whereby it ~~exchanged~~sold ~~400~~two non-operating subsidiaries,~~000~~ ~~Series~~Greenstone BMuskoka ~~shares~~and ARIA ~~with~~to athe ~~value~~Company ofChairman ~~$400,000~~and ~~plus~~CEO ~~accrued~~for ~~dividends~~gross ~~thereon~~proceeds of $610,~~184~~ ~~for~~after Greenstone Muskoka forgave its ~~entire~~intercompany ~~shareholding~~receivable inowing ~~its~~from ~~property~~the Company ~~owning~~of ~~subsidiary~~$6,690,381 ~~CCH. The~~and ~~Series~~the BCompany ~~shares~~forgave ~~were~~its ~~cancelled~~intercompany ~~upon~~balance ~~consummation~~owing offrom ~~the~~ARIA ~~transaction~~of $9,605,315.

On ~~October~~June 330, ~~2022~~2023, the Company entered into aan ~~purchase~~exchange ~~and sale~~ agreement with ~~Evernia~~Leonite ~~Station~~Capital, ~~Limited Partnership for the purchase of 950 Evernia Street~~LLC, ~~West~~whereby ~~Palm~~it ~~Beach,~~exchanged ~~Florida (“950”)~~400,000 ~~the~~Series ~~property~~B inshares with ~~which~~a itvalue ~~operates~~of ~~its~~$400,000 ~~treatment~~plus ~~center,~~accrued ~~for~~dividends ~~gross~~thereon ~~proceeds~~ of $561,~~500,000.~~184 ~~(“Purchase~~for ~~Agreement”).~~its ~~The~~entire ~~closing~~shareholding ~~was~~in ~~originally~~its ~~scheduled~~property ~~for~~owning ~~February 1~~subsidiary, ~~2023, however through a series~~CCH. ofThe 6Series ~~addendums~~B toshares ~~the~~were ~~Purchase~~cancelled ~~Agreement~~upon ~~requiring~~consummation ~~the payment~~ of ~~a total $180,000 in extension fees,~~ the ~~Closing was extended to August 3, 2023~~transaction.

~~Simultaneously~~On ~~with~~October ~~the closing of the purchase and sale agreements~~3, on2022 ~~August 4, 2023,~~ the Company entered into a ~~long~~purchase ~~term~~and ~~lease~~sale ~~for~~agreement ~~950~~ with anEvernia ~~initial term~~Station ofLimited ~~twenty~~Partnership ~~years,~~for ~~and~~the ~~two~~purchase ~~ten~~of ~~year~~950 Evernia ~~extension~~Street, ~~options.~~West ~~The lessor is Pontus EHC~~ Palm Beach, ~~LLC~~Florida (“950”), athe ~~Delaware~~property ~~limited~~in ~~liability~~which ~~company and~~it aoperates ~~portfolio~~its ~~company~~treatment ofcenter, ~~Pontus~~for ~~Net~~gross ~~Lease~~proceeds of ~~Advisors~~$5,500,000 ~~LLC~~(“Purchase Agreement”). The ~~lease~~closing iswas ~~absolutely~~originally ~~net~~scheduled ~~and~~for ~~the~~February ~~lease~~1, ~~cost~~2023, ~~for~~however ~~the~~through ~~initial~~a ~~year~~series of is6 ~~$748,000 paid~~addendums ~~monthly.~~to ~~The~~the ~~lease~~Purchase ~~increases~~Agreement atrequiring athe ~~rate~~payment of ~~2.75% per year for~~ a total ~~term~~$180,000 ~~lease~~in ~~obligation~~extension ~~of $19~~fees,~~595,653~~ ~~over~~ the ~~initial~~Closing ~~twenty-year~~was extended to August ~~term.~~3, 2023.

~~Corporate~~Simultaneously ~~Structure~~with the closing of the purchase and sale agreements, on August 4, 2023, the Company entered into a long term lease for 950 with an initial term of twenty years, and two ten year extension options. The lessor is Pontus EHC Palm Beach, LLC , a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term.

On March 22, 2024, the Company executed a LOI to acquire certain assets, including furniture, equipment, inventory and supplies of Boca Cove Detox, LLC, along with the assignment of lease and sub-lease for premises located at 899 Meadow Avenue, Boca Raton, Florida. On May 1, 2024 the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company assumed the lease for suites 100,101, 201, 202 and 203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024 and the Company ~~consists~~entered into a Bill of Sale to give effect to the ~~following~~Definitive ~~entities:~~Agreement. The purchase price was $240,000 which was settled by a deposit of $20,000 and a cash payment of $220,000 and the payment to the Seller of $83,393 for the assumption of the security deposit held by the landlord of the Leased Premises located at 899 Meadows Road.

~~Ethema Health Corporation (Parent company);~~2

~~Ethema~~Corporate ~~is the publicly traded investment holding company, registered in Colorado, U.S.~~Structure

~~American~~The ~~Treatment~~Company consists ~~Holdings,~~of ~~Inc,~~the afollowing ~~US registered company (75% owned);~~entities:

~~ATHI owns~~Ethema ~~100%~~Health ofCorporation ~~the~~(Parent ~~members interest of Evernia.~~company);

~~Evernia~~Ethema is ~~Health~~the ~~Center,~~publicly atraded USinvestment ~~registered~~holding company;, registered in Colorado, U.S. and owns the following entities:

~~Evernia operates~~American aTreatment ~~treatment~~Holdings, ~~center~~Inc, ~~in West Palm Beach Florida and is~~ a ~~wholly~~US ~~owned~~registered ~~subsidiary~~company of(100% ~~ATHI which was acquired by Ethema effective July 1, 2021. The Company has been actively involved in the operation of this treatment center since June 30, 2020.~~owned);

~~Delray~~ATHI owns ~~Andrews~~100% ~~RE,~~of ~~LLC~~the ~~(“DARE”),~~members’ ainterest USof ~~registered~~Evernia ~~company~~Health ~~(wholly~~Center ~~owned~~LLC. ~~and dormant);~~

~~DARE has~~Evernia ~~remained~~Health ~~dormant~~Center ~~since~~LLC, ~~inception.~~a US registered company;

~~Employees~~Evernia operates a treatment center in West Palm Beach Florida and is a wholly owned subsidiary of ATHI which was acquired by Ethema effective July 1, 2021. The Company has been actively involved in the operation of this treatment center since June 30, 2020.

~~As of~~Delray ~~December~~Andrews 31RE, ~~2023~~LLC (“DARE”), ~~Ethema~~a ~~had 65 employees.~~US registered company (100% owned and dormant);

2DARE has remained dormant since inception.

~~Marketing~~PB Billing LLC (“PB Bill”), a US registered company (100% owned);

~~The~~PB ~~addiction~~Billing ~~treatment~~performs ~~business in~~ the ~~USA~~function ~~operates as an insured healthcare service. Our marketing efforts are long-term processes~~ of ~~establishing relationships~~billing ~~with relevant professionals~~ and ~~our~~collection ~~treatment~~for ~~staff~~Evernia. ~~We use industry specific conferences and functions to network with these professionals.~~

~~Through Evernia,~~ARIA ~~the~~Kentucky ~~Company~~LLC ~~has~~(“Aria anKentucky”), ~~in-network~~a ~~relationship~~US ~~with~~registered ~~several~~company ~~health~~(100% ~~care providers and the majority of the Company’s clients are sourced from these health care providers.~~ owned);

~~Competition~~Aria Kentucky was established during the current year as the acquisition subsidiary for the business of Edgewater Recovery, which was closed on January 9, 2025, see subsequent events.

~~There are a significant amount of treatment facilities in the United States, we compete with these clinics for patients who are typically covered by insured healthcare services.~~3

~~Environmental Regulations~~Employees

~~The~~As ~~Company~~of isDecember ~~not~~31, ~~currently~~2024, ~~subject~~Ethema tohad 70 employees ~~any pending administrative or judicial enforcement proceedings arising under environmental laws or regulations. Environmental laws~~ and ~~regulations~~14 ~~may~~part-time ~~be adopted in the future which may have an impact upon the Company’s operations~~contractors.

~~Item 1A. Risk Factors.~~Marketing

~~Not~~The addiction treatment business ~~applicable~~in ~~because~~the weUSA operates as an insured healthcare service. Our marketing efforts are along-term ~~smaller~~processes ~~reporting~~of ~~company~~establishing relationships with relevant professionals and our treatment staff. We use industry specific conferences and functions to network with these professionals.

~~Item~~Through Evernia, ~~1B.~~the ~~Unresolved~~Company ~~Staff~~has ~~Comments~~an in-network relationship with several health care providers and the majority of the Company’s clients are sourced from these health care providers.

~~None.~~ Competition

~~Item~~There 2.are ~~Properties~~a significant amount of treatment facilities in the United States, we compete with these clinics for patients who are typically covered by insured healthcare services.

~~Ethema~~Environmental ~~Executive Offices~~Regulations

The Company’s is ~~executive~~not ~~offices~~currently ~~are~~subject ~~located~~to atany ~~950~~pending ~~Evernia~~administrative ~~Street,~~or ~~West~~judicial ~~Palm~~enforcement ~~Beach,~~proceedings ~~Florida,~~arising ~~33406~~under environmental laws or regulations. Environmental laws and regulations may be adopted in the future which may have an impact upon the Company’s operations.

~~West Palm~~Item ~~Beach~~1A. ~~Treatment~~Risk ~~Operations~~Factors.

~~The~~Not ~~Company,~~applicable ~~through~~because ~~its~~we ~~acquisition~~are ofa ~~ATHI,~~smaller ~~effectively~~reporting ~~acquired 75% of the Evernia treatment facility located at 950 Evernia Street, West Palm Beach Florida~~company. ~~The Company has been actively involved in the operation of the Evernia treatment facility since June 2020.~~

Item 31B. ~~Legal Proceedings.~~Unresolved Staff Comments

~~We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations~~None. ~~There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending~~ or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 4 2. ~~Mine Safety Disclosures~~Properties.

~~None.~~Ethema Executive Offices

3The Company’s executive offices are located at 950 Evernia Street, West Palm Beach, Florida, 33406.

~~PART~~West IIPalm Beach Treatment Operations

~~Item~~The Company, 5.through ~~Market~~its ~~for~~acquisition ~~Registrant’s~~of ~~Common~~ATHI, ~~Equity~~effectively acquired an initial 75% of the Evernia treatment facility located at 950 Evernia Street, West ~~Related~~Palm ~~Stockholder~~Beach ~~Matters~~Florida. ~~and~~On ~~Issuer~~May ~~Purchases~~15, 2024, the Company acquired the remaining 25% of ~~Equity~~ATHI. ~~Securities~~ The Company has been actively involved in the operation of the Evernia treatment facility since June 2020.

~~The~~On March ~~Company’s~~22, ~~common~~2024, ~~stock~~the isCompany ~~quoted~~through onits ~~the~~subsidiary ~~Over-the-counter~~Evernia ~~Market~~Health ~~(the~~Center ~~“OTC~~LLC, ~~PINK”)~~entered ~~under~~into ~~the~~a ~~symbol~~Definitive ~~“GRST”. The~~Agreement ~~Company~~whereby ~~was~~the ~~sponsored~~Company by assumed the ~~market~~lease ~~maker~~for ~~Wilson~~suites ~~Davis~~100, &101, ~~Co.~~201, ~~from~~202 ~~Salt~~and ~~Lake City~~203, ~~Utah, which~~ ~~filed~~located aat ~~Form~~899 ~~15c2-11~~Meadows ~~application~~Road, ~~with~~Boca ~~the~~Raton, ~~Financial~~Florida ~~Industry Regulatory Authority~~ (~~“FINRA”) for~~ the ~~Company~~“Boca inLeased ~~2011~~Premises”). ~~This~~The ~~application~~company ~~was~~began ~~approved~~operating bya ~~FINRA~~treatment infacility ~~February~~at ~~2012,~~the ~~and~~Boca ~~Wilson~~Lease ~~Davis~~Premises &during ~~Co.~~January ~~first quoted the stock in March 2012~~2025.

~~From March~~Item ~~2012~~3. toLegal ~~January 2020, our common stock had been traded on the OTCQB markets under the symbol “GRST”, in January 2020, the stock was downgraded to the OTC Pink Sheets market~~Proceedings.

~~The~~We ~~last~~are ~~reported~~currently not ~~sale~~involved ~~price of~~in ~~our~~any ~~common~~litigation ~~stock~~that onwe ~~the~~believe ~~OTC~~could ~~Pink~~have a material adverse effect on ~~May~~our 6,financial ~~2024~~condition ~~was~~or ~~$0.0003~~results ~~per~~of ~~share~~operations. There Asis ofno ~~May~~action, 6suit, ~~2024~~proceeding, ~~there~~inquiry ~~were~~or ~~approximately~~investigation ~~157~~before ~~holders~~or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of ~~record~~the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

~~Dividend Policy~~Item 4. Mine Safety Disclosures.

~~We have not paid any cash dividends on our common stock to date, and we have no intention of paying cash dividends in the foreseeable future~~None. Whether we declare and pay dividends is determined by our Board of Directors at their discretion, subject to certain limitations imposed under Colorado corporate law. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.

~~Equity Compensation Plan Information~~4

~~See Item 11~~PART ~~- Executive Compensation for equity compensation plan information.~~II

~~Other~~The Company’s ~~than~~common asstock ~~set~~is ~~forth~~quoted ~~below~~on orthe asOver-the-counter ~~previously~~Market ~~disclosed~~(the in“OTC ~~our~~PINK”) ~~filings~~under ~~with~~ the ~~Securities~~symbol ~~and~~“GRST”. ~~Exchange~~The ~~Commission,~~Company wewas sponsored ~~did~~by ~~not~~the ~~sell~~market ~~any~~maker ~~equity securities~~Wilson ~~during~~Davis ~~the~~& ~~year~~Co. ~~ended~~from ~~December~~Salt Lake 31City, ~~2023~~Utah, which filed a Form 15c2-11 application with the Financial Industry Regulatory Authority (“FINRA”) for the Company in ~~transactions~~2011. This ~~that~~application ~~were~~was ~~none~~approved ~~registered~~by ~~under~~FINRA in February 2012, and Wilson Davis & Co. first quoted the ~~Securities~~stock ~~Act~~in March 2012.

From March On2012 ~~June 28, 2023 the Company entered into a Warrant Exchange Agreement with a previous lender that exchanged a Warrant outstanding~~ to ~~the~~ ~~previous~~January ~~lender originally issued on June 12,~~ 2020 ~~for a new Warrant dated June 30~~, ~~2023.~~our The substantial changes to the warrant affect the number of shares in the warrant, the exercise price and the term. The original warrant provided for the previous lender to have a continuing right to purchase a 20% share of the outstanding common ~~shares~~stock ~~until~~had itbeen ~~expired~~traded on ~~June 12, 2025 which was originally set at 326,286,847 shares. The new warrant is exercisable for 745,810,761 shares, 20% of~~ the ~~number~~OTCQB ofmarkets ~~common~~under ~~shares outstanding on June 28, 2023, with no allowance for adjustment, except normal adjustments due to splits or consolidations, until~~ the ~~new~~symbol ~~expiry date of June 30, 2027~~“GRST”. ~~The~~In ~~exercise~~January ~~price in the original warrant was $0.10~~2020, ~~with allowance for adjustments, which when applied resulted in an exercise~~ ~~price of $0.0004 per share. The exercise price on~~ the ~~new~~stock ~~warrant~~was isdowngraded ~~$0.001 and is only adjustable if the Company issues any shares at a price less than the exercise price during the warrant period except for any issuance of shares~~ to the ~~Company’s~~OTC ~~president~~Pink ~~or related~~Sheets ~~parties on any debt outstanding to those parties as of June 30, 2023, and limited to a conversion price of $0~~market.~~0005 per share.~~

~~Penny~~The last ~~Stock~~reported sale price of our common stock on the OTC Pink on May 21, 2025 was $0.0004 per share. As of May 21, 2025, there were approximately 152 holders of record of our common stock.

~~The~~Dividend U.S. Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws. (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.Policy

~~The broker~~We ~~dealer~~have ~~also~~not paid ~~must~~any ~~provide,~~cash ~~prior~~dividends toon ~~effecting~~our ~~any~~common ~~transaction~~stock into ~~a penny stock~~date, ~~the~~and ~~customer~~we ~~with~~have ~~(a)~~no ~~bid~~intention ~~and~~of ~~offer~~paying ~~quotations for~~cash ~~the~~dividends ~~penny~~in ~~stock; (b)~~ the ~~compensation~~foreseeable offuture. ~~the~~Whether we ~~broker~~declare ~~dealer~~ and ~~its~~pay ~~salesperson~~dividends inis ~~the~~determined ~~transaction;~~by ~~(c)~~our ~~the~~Board ~~number~~ of ~~shares to~~Directors ~~which~~at ~~such~~their ~~bid~~discretion, ~~and~~subject ~~ask~~to ~~prices~~certain ~~apply,~~limitations orimposed ~~other~~under Colorado ~~comparable~~corporate ~~information~~law. ~~relating~~The totiming, ~~the~~amount ~~depth~~ and ~~liquidity~~form of ~~the~~dividends, ~~market~~if ~~for~~any, ~~such~~will ~~stock; and~~depend ~~(d)~~on, aamong ~~monthly~~other ~~account~~things, ~~statement~~our ~~showing~~results ~~the~~of ~~market~~operations, financial ~~value~~condition, ofcash ~~each~~requirements ~~penny~~and ~~stock~~other ~~held~~factors indeemed ~~the~~relevant ~~customer’s~~by ~~account~~our Board of Directors.

4Equity Compensation Plan Information

~~In addition,~~See ~~the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker~~Item 11 ~~dealer~~- ~~must~~Executive ~~make~~Compensation ~~a special written determination that the penny stock is a suitable investment~~ for ~~the~~equity ~~purchaser~~compensation ~~and~~plan receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statementinformation.

~~These~~Recent ~~disclosure~~Sales ~~requirements may have the effect~~ of ~~reducing~~Unregistered ~~the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.~~Securities

~~Issuer~~Other than ~~Purchases~~as ofset ~~Equity~~forth below or as previously disclosed in our filings with the Securities and Exchange Commission, we did not sell any equity securities during the year ended December 31, 2024 in transactions that were not registered under the Securities Act.

~~There~~ ~~were~~On noJuly ~~issuer~~12, ~~purchases~~2024, the Company issued a total of ~~equity~~3,000,000,000 ~~securities~~shares ~~during~~of common stock to Mr. Shawn Leon, the ~~fiscal~~company ~~year~~CEO ~~ended~~for ~~December 31~~the conversion of $1, ~~2023~~500,000 of related party payables and a further 1,000,000,000 shares to his spouse, Ms. Eileen Greene, for the conversion of $500,000 of related parties payables.

~~Item~~On September 27, 2024, we issued 600,000 shares of Series 6A Preferred stock to Mr. ~~Reserved~~Shawn Leon for the conversion of $6,000 of related party payables.

~~Item~~On November 7.17, ~~Management’s Discussion~~2024, ~~and~~165,000 ~~Analysis~~shares of ~~Financial~~Series ~~Condition~~A ~~and~~Preferred ~~Results~~stock was sold to a relative of ~~Operations~~Mr. Leon for gross proceeds of $1,650.

~~The~~Penny following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our audited annual financial statements and the related notes thereto, each of which appear elsewhere in this Annual Report. This discussion contains certain forward-looking statements that involve risks and uncertainties in this Annual Report. Actual results could differ materially from those projected in the forward-looking statements. The Management Discussion and Analysis of Financial Condition and Results of Operations below is based upon only the financial performance of Ethema Health Corporation.Stock

~~Our~~The U.S. ~~consolidated~~Securities ~~financial~~and ~~statements~~Exchange ~~are~~Commission ~~prepared~~(the in“SEC”) ~~accordance~~has ~~with~~adopted ~~accounting~~rules ~~principles~~that ~~generally~~regulate ~~accepted~~broker indealer ~~the~~practices ~~United~~in ~~States~~connection ~~(“GAAP”).~~with ~~These~~transactions ~~accounting~~in ~~principles~~penny ~~require~~stocks. usPenny tostocks ~~make~~are ~~certain~~generally ~~estimates,~~equity ~~judgments,~~securities ~~and~~with ~~assumptions.~~a Wemarket ~~believe~~price ~~that~~of ~~the~~less ~~estimates~~than $5.00, ~~judgments~~other than securities ~~and~~registered ~~assumptions~~on ~~upon~~certain ~~which~~national wesecurities ~~rely~~exchanges ~~are~~or ~~reasonable~~quoted ~~based~~on ~~upon~~the NASDAQ system, provided that current price and volume information with ~~available~~respect to ustransactions atin such securities is provided by the ~~time~~exchange ~~that~~or ~~these~~system. ~~estimates,~~The ~~judgments~~penny stock rules require a broker dealer, ~~and~~prior ~~assumptions~~to ~~are~~a ~~made.~~transaction ~~These~~in ~~estimates~~a penny stock, ~~judgments~~to deliver a standardized risk disclosure document prepared by the SEC, ~~and~~that: ~~assumptions~~(a) ~~can~~contains ~~affect~~a description of the ~~reported~~nature ~~amounts~~and level of ~~assets~~risk in the market for penny stocks in both public offerings and ~~liabilities~~secondary astrading; of(b) contains ~~the~~a ~~date~~description of the ~~consolidated~~broker’s ~~financial~~or ~~statements~~dealer’s asduties ~~well~~to as the ~~reported~~customer ~~amounts~~and of ~~revenues~~the rights and ~~expenses~~remedies ~~during~~available to the ~~periods~~customer with ~~presented~~respect to a violation of such duties or other requirements of the securities laws. (c) contains a brief, clear, narrative description ~~Our~~of ~~consolidated~~a ~~financial~~dealer ~~statements~~market, ~~would~~including bebid ~~affected~~and toask ~~the~~prices ~~extent~~for ~~there~~penny ~~are~~stocks ~~material~~and ~~differences~~the significance of the spread between ~~these~~the ~~estimates.~~bid ~~This~~and ~~discussion~~ask price; ~~and~~(d) ~~analysis~~contains ~~should~~a betoll-free ~~read~~telephone number for inquiries on disciplinary actions; (e) defines significant terms in ~~conjunction~~the ~~with~~disclosure document or in the ~~company’s~~conduct ~~consolidated~~of ~~financial~~trading ~~statements~~in penny stocks; and ~~accompanying~~(f) ~~notes~~contains tosuch ~~the~~other ~~consolidated~~information and is in such form, including language, ~~financial~~type ~~statements~~size ~~for~~and format, as the ~~year~~SEC ~~ended~~shall ~~December~~require ~~31,~~by ~~2023~~rule or regulation.

~~Results~~The broker ofdealer ~~operations~~also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny ~~year~~stock; ~~ended~~(b) ~~December~~the ~~31,~~compensation ~~2023~~of the broker dealer and its salesperson in the ~~year~~transaction; ~~ended~~(c) ~~December~~the 31number of shares to which such bid and ask prices apply, ~~2022~~or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

~~Revenue~~5

~~Revenue was~~In $5addition,~~344,976~~ the ~~and~~penny $4stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules,~~820,747~~ ~~for~~the broker dealer must make a special written determination that the ~~years~~penny ~~ended~~stock ~~December~~is ~~31,~~a ~~2023~~suitable investment for the purchaser and ~~2022~~receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, ~~respectively~~a written agreement as to transactions involving penny stocks, anand a ~~increase~~signed and dated copy of ~~$524,229~~a orwritten 10suitability statement.~~9%.~~

~~Revenue~~These disclosure ~~from~~requirements ~~patient~~may ~~treatment~~have ~~was $5,159,680 and 4,411,546 for~~ the ~~years~~effect ~~ended December 31, 2023 and 2022, respectively, an increase~~ of ~~$748,134 or~~reducing ~~17.0%. The increase is due to~~ the ~~increase~~trading inactivity ~~the~~for ~~number~~our ofcommon ~~in-network~~stock. ~~patients~~Therefore, atstockholders ~~the~~may ~~facility~~have ~~due~~difficulty ~~to the approval of the facility~~selling byour ~~a number of health care plans over the current year~~securities.

~~Revenue~~Issuer ~~from~~Purchases ~~rental income was $185,296 and $377,351 for the years ended December 31, 2023 and 2022, respectively, a decrease~~ of ~~$192,055~~Equity or 50.4%. The Company disposed of its real property owning subsidiary, Cranberry Cove Holdings, to a related party , Leonite Capital, LLC on June 30, 2023, revenue was only recognized for the first half of the current fiscal year.Securities

~~Operating~~There were ~~Expenses~~no issuer purchases of equity securities during the fiscal year ended December 31, 2024.

~~Operating~~Item ~~expenses was $5,886,896 and $4,331,630 for the years ended December 31, 2023 and 2022, respectively, an increase of $1,555,266 or 35~~6.~~9%.~~ ~~The increase in operating expenses is attributable to:~~Reserved

·Item ~~General~~7. ~~and~~Management’s ~~administrative~~Discussion ~~expenses was $1,041,501~~ and ~~$805,372~~Analysis ~~for the years ended December 31, 2023 and 2022, respectively, an increase~~ of ~~$236,129~~Financial orCondition 29.3%. The increase is primarily attributable to due to an increase in insurance costs of $85,701, due to the general hardening of the insurance market in South Florida, an increase in capital raising costs of $40,470 for funds spent on exploring capital raising opportunities, and ~~the~~Results ~~balance~~ of ~~$117,959 consisting of increase in numerous individually insignificant costs, related to the increase in the number of patients passing through the facility during the current period~~Operations.

·The ~~Rent~~following discussion ~~expense was $614,793~~ and ~~$427,482~~analysis ~~for~~should ~~the~~be ~~years~~read ~~ended~~in ~~December~~conjunction 31with, ~~2023~~ and ~~2022 an increase of $187,311 or 43.8%. The increase~~ is ~~primarily~~qualified ~~due to an increase~~ in ~~rental~~its ~~which~~entirety ~~arose~~by, onour ~~the~~audited ~~acquisition~~annual offinancial ~~the building from our landlord~~ statements and the ~~immediate~~related ~~disposal~~notes ofthereto, ~~the~~each ~~building~~of towhich aappear ~~third~~elsewhere ~~party~~in onthis ~~August~~Annual 4,Report. ~~2023,~~This ~~resulting~~discussion incontains ~~the~~certain ~~cancellation~~forward-looking statements ofthat ~~the~~involve ~~old~~risks ~~lease~~and ~~which~~uncertainties ~~expired~~ in ~~January~~this ~~2027~~Annual ~~and~~Report. ~~entering~~Actual ~~into~~results acould ~~new~~differ 20materially ~~year~~from ~~lease~~those ~~expiring~~projected in the ~~August~~forward-looking ~~2043,~~statements. atThe anManagement ~~increased~~Discussion ~~current~~and ~~rental~~Analysis of ~~$33,161~~Financial ~~per~~Condition ~~month~~and asResults ~~adjusted for rental smoothing over the term~~ of ~~the~~Operations ~~lease~~below onis ~~both~~based upon ~~the~~only ~~cancelled old lease and~~ the ~~new~~financial 20performance ~~year lease, see gain on disposal~~ of ~~property~~Ethema ~~below~~Health Corporation.

5Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our consolidated financial statements would be affected to the extent there are material differences between these estimates. This discussion and analysis should be read in conjunction with the company’s consolidated financial statements and accompanying notes to the consolidated financial statements for the year ended December 31, 2024.

~~· Management fees were $368,003 and $132,500 for the years ended December 31, 2023 and 2022, respectively, an increase~~ Results of ~~$235,503~~operations or 177.7%. Management fees included a once off charge of $185,503 related to a fee charged by Leon Developments to Cranberry Cove prior to its disposal to a related party Leonite Capital on June 30, 2023. In addition, the Company paid management fees of $182,500 to the minority shareholder of ATHI during the year. · Professional fees were $707,413 and $463,678 for the years ended December 31, 2023 and 2022, respectively, an increase of $243,735 or 52.6%. The increase is primarily due to the increase in professional fees related to the acquisition and immediate disposal of the real property in which the treatment facility operates on August 4, 2023, see gain on disposal of property, below, and an increase in contractor fees related to the increase in the number of patients treated at the facility during the current year, ~~which resulted in increased revenues. · Salaries and wages was $2,656,267 and $1,962,479 for the years~~ ended December 31, ~~2023~~2024 and ~~2022, respectively, an increase of $693,788 or 35.4%. The increase is due to~~ the ~~increase in headcount to service the increase in the number of patients treated at the facility during the current~~ year. ~~· Depreciation expense was $498,919 and $540,119 for the years~~ ended December 31, 2023 ~~and 2022, respectively, a decrease of $41,200 or 7~~.6%. The decrease is primarily due to the disposal of Cranberry Cove Holdings to Leonite Capital, a related party, on June 30, 2023. Cranberry Cove assets included buildings and leasehold improvements which were being depreciated prior to disposal.

~~Operating (loss) profit~~Revenue

~~The~~Revenue ~~operating (loss) profit~~ was $~~(541~~6,~~920)~~017,204 and $~~489~~5,~~117~~344,976 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, an increase ~~in loss~~ of $1672,~~031,037~~228 or ~~210~~12.86%. The increase in loss is due to the increase in operating expenses of $1,555,266, discussed in detail above, including once off management fees of $245,503, increased professional fees and capital raising fees which are not expected to incur in future periods, offset by the increase in revenue of $524,229, discussed in detail above.

~~Other~~Revenue ~~income~~from patient treatment was $6,017,204 and $5,164,454 for the years ended December 31, 2024 and 2023, respectively, an increase of $852,750 or 16.5%. The increase is due to organic growth in the number of in-network patients at the facility and an increase in advertising spend to attract patients to the facility.

~~Other~~Revenue from rental income was $0 and $15180,~~760~~522 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively., Ina ~~2022~~decrease ~~other~~of ~~income~~$180,522 or ~~consisted~~100.0%. The Company disposed of aits ~~financial inducement~~real ~~granted~~property owning subsidiary, Cranberry Cove Holdings, to ~~the~~a ~~Company~~related byparty, ~~the~~Leonite ~~previous~~Capital, LLC ~~landlord~~on June 30, 2023.

~~Forgiveness~~Operating ~~of government relief loan~~Expenses

~~Forgiveness~~Operating ofexpenses ~~government relief loan~~ was $07,350,333 and $~~104~~5,~~368~~886,896 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, aan ~~decrease~~increase of $~~104~~1,~~368~~463,437 or ~~100~~ 24.09%. The ~~Company~~increase ~~received~~in ~~partial~~operating ~~forgiveness~~expenses ofis ~~the~~attributable ~~Government assistance loan in the prior year.~~to:

Gain on disposal of property

·	General and administrative expenses was $1,550,799 and $1,041,501 for the years ended December 31, 2024 and 2023, respectively, an increase of $509,298 or 48.9%. The increase is primarily attributable to due to an increase in advertising and marketing costs of $228,767, we spent more funds on advertising to attract new patients to our West Palm Beach facility during the current year, and increases in general operating expenses resulting from the increased patient count, including an increase in food costs of $47,739, an increase in small equipment purchases of $37,596, an increase in client supplies of $20,248, an increase in utilities of $35,450 and an increase in travel costs of $34,160, in addition, property taxes increased by $73,082 due to the increased property value in West Palm Beach and, the balance of $38,256 consisting of increase in numerous individually insignificant costs, related to the increase in the number of patients passing through the facility during the current period.

·	Rent expense was $1,304,127 and $614,793 for the years ended December 31, 2024 and 2023 an increase of $689,334 or 112.1%. The increase is primarily due to an increase in rental which arose on the acquisition of the west Palm Beach building in August 2023 from our landlord and the immediate disposal of the building to a third party, resulting in the cancellation of the old lease which expired in January 2027 and entering into a new 20 year lease expiring in August 2043, at an increased rental expense of $410,204 over the prior year, including a significant rent smoothing adjustment of $223,851 during the current year, in addition, we acquired the business of Boca Cove Detox during the current year and incurred a rental expense of $221,275 for the use of this facility. We only began generating revenue from this facility in January 2025, after obtaining the necessary licensing and approval from the health care insurance providers.

Gain on disposal of property was $2,484,172 and $0 for the year ended December 31, 2023 and 2022, respectively, an increase of $2,484,172 or 100.0%. The Company exercised its option to acquire the property located at 950 Evernia Street, West Palm Beach, Florida, in which its treatment center operations, and subsequently disposed of the property to a third party, realizing a profit on disposal of $2,484,172, after transaction costs.6

~~Loss~~ · Management fees were $0 and $368,003 for the years ended December 31, 2024 and 2023, respectively, a decrease of $368,003 or 100.0%. In the prior year management fees included a once off charge of $185,503 related to a fee charged by Leon Developments to Cranberry Cove prior to its disposal to a related party, Leonite Capital on ~~debt~~June ~~extinguishment~~30, 2023. In addition, the Company paid management fees of $182,500 to the minority stockholder of ATHI during the prior year. · Professional fees were $955,801 and $707,413 for the years ended December 31, 2024 and 2023, respectively, an increase of $248,388 or 35.1%. The increase is primarily due to an increase in contractor fees incurred by our in-house billing company of $182,434 during the current year as we bolster this department to improve our collections from insurance providers. In addition we incurred professional fees related to corporate activity on closing the acquisition of Boca Cove Detox and the acquisition of the business of Edgewater Recovery in Kentucky which closed on January 7, 2025. · Salaries and wages were $3,072,654 and $2,656,267 for the years ended December 31, 2024 and 2023, respectively, an increase of $416,387 or 15.7%. The increase is due to acquisition of Boca Cove Detox which was fully staffed in anticipation of receiving our licenses and approvals from healthcare providers in the third quarter of 2024, this was only obtained in January 2025. In addition we increased our headcount due to the increased patient count during the current year. · Depreciation and amortization expense was $466,952 and $498,919 for the years ended December 31, 2024 and 2023, respectively, a decrease of $31,967 or 6.4%. The decrease is primarily due to the disposal of Cranberry Cove Holdings to Leonite Capital, a related party, on June 30, 2023. Cranberry Cove assets included buildings and leasehold improvements which were being depreciated prior to disposal.

~~Loss~~Operating ~~on debt extinguishment was $277,175 and $0 for the years ended December 31, 2023 and 2022, respectively, an increase of $277,175 or 100.0%. The~~ loss ~~on debt extinguishment is related primarily to replacement warrants issued to Leonite Capital as part of the debt settlement reached with Leonite.~~

~~Extension~~The operating ~~fee~~loss onwas ~~property~~$1,333,129 ~~purchase~~and $541,920 for the years ended December 31, 2024 and 2023, respectively, an increase in loss of $791,209 or 146.0%. The increase in loss is due to the increase in operating expenses of $1,463,437, discussed in detail above, offset by the increase in revenue of $672,228, discussed in detail above.

~~The~~Other extension fee on the property purchase was $140,000 and $0 for the years ended December 31, 2023 and 2022, respectively, an increase of $140,000 or 100%. The extension fee was levied by the landlord of our West Palm Beach facility to afford us additional time to structure the acquisition of the facility, which we in turn disposed of to a third party lender.income

~~Penalty~~Other income onwas ~~convertible~~$110,000 ~~debt~~and $0 for the years ended December 31, 2024 and 2023, respectively. Other income consisted of management fees provided to Edgewater Recovery, prior to acquisition by the Company.

~~The penalty on convertible~~Other notes was $34,688 and $60,075 for the years ended December 31, 2023 and 2022, respectively, an increase of $25,387 or 42.3%. The penalty on convertible note was agreed upon with one of our lenders whose note was in default and was subsequently settled after June 30, 2023. expense

~~Interest~~Other expense ~~income~~ was $1,160 and $0 for the years ended December 31, 2024 and 2023, respectively, an increase of $1,160 or 100.0%.

~~Interest income~~Gain ~~was~~on ~~$676~~disposal ~~and~~of ~~$78 for the years ended December 31, 2023 and 2022 respectively. Interest income is immaterial.~~property

6Gain on disposal of property was $0 and $2,484,172 for the years ended December 31, 2024 and 2023, respectively, a decrease of $2,484,172 or 100.0%. In the prior year, the Company exercised its option to acquire the property located at 950 Evernia Street, West Palm Beach, Florida, in which its treatment center operations are located, and subsequently disposed of the property to a third party, realizing a profit on disposal of $2,484,172, after transaction costs.

~~Interest~~Loss on ~~expense~~debt extinguishment

~~Interest~~Loss ~~expense~~on debt extinguishment was $~~500,226~~ 0 and $~~588~~277,~~477~~175 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $88277,~~251~~175 or 15100.0%,. ~~primarily due to~~ In the ~~decrease in~~prior ~~mortgage~~year, ~~interest due to~~ the ~~disposal~~loss ofon ~~CCH,~~debt ~~our~~extinguishment ~~property~~was ~~owning~~related ~~subsidiary~~primarily onto ~~June~~replacement ~~30,~~warrants ~~2023,~~issued ~~and~~to aLeonite ~~decrease~~Capital inas ~~interest~~part ~~expense~~of onthe ~~convertible~~debt ~~notes~~settlement ~~and~~agreement ~~promissory~~reached ~~notes~~with ~~settled during the current period~~Leonite.

~~Debt~~Extension ~~discount~~fee on property purchase

~~Debt~~The ~~discount~~extension fee on the property purchase was $~~281,354~~ 0 and $~~624~~140,~~683~~000 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, a decrease of $~~343~~140,~~329~~ 000 or ~~54.6~~100%. ~~The decrease~~In isthe ~~primarily~~prior ~~due~~year, to the ~~full~~extension ~~amortization~~fee ofwas ~~debt~~levied ~~discount~~by onthe ~~convertible~~landlord ~~notes~~of inour ~~the~~West ~~prior~~Palm ~~year.~~Beach ~~The~~facility ~~current~~to ~~year~~afford ~~amortization~~us additional time ~~consists~~to structure the acquisition of the ~~amortization~~facility, which we in turn disposed of ~~discount~~to ona ~~receivables~~third ~~funding~~party lender.

~~Foreign~~Penalty ~~exchange~~on ~~movements~~convertible notes

~~Foreign~~The ~~exchange movements~~penalty ~~were~~on convertible notes was $~~(95,032)~~0 and $134,~~071,320~~688 for the years ended December 31, ~~2023~~2024 and ~~2022~~2023, respectively, ~~Foreign~~a ~~exchange~~decrease ~~movements~~of ~~represents~~$34,688 ~~the~~or realized exchange gains and (losses) on monetary assets and liabilities settled during the current year as well as mark to market unrealized gains and losses on monetary assets and liabilities reflected on the balance sheet and denominated in Canadian Dollars100.0%. In the prior year, ~~the~~ ~~foreign exchange movements included~~ the ~~realization~~penalty ~~of significant translation differences~~ on ~~foreign~~convertible ~~subsidiaries~~note ~~sold~~was ~~and~~agreed inupon ~~the current~~with ~~year~~one ~~we disposed~~ of ~~Cranberry Cove Holdings,~~ our ~~last~~lenders ~~foreign~~whose ~~subsidiary~~notes ~~denominated~~were in ~~Canadian~~default ~~Dollars,~~and towas subsequently asettled ~~related~~after ~~party~~June 30, 2023.

~~Net~~ Interest income ~~before taxation~~

~~Net~~ Interest income ~~before taxation~~ was $~~614~~2,~~453~~292 and $~~407,408~~676 for the years ended December 31, ~~2023~~2024 and ~~2022,~~2023 respectively~~, an increase of $207,045 or 50~~.~~8%.~~ ~~The increase~~Interest isincome ~~primarily~~represent ~~due to the gain on sale of property, and the decrease in debt discount and~~ interest ~~expense, offset by the increase~~earned ~~in the operating loss, the loss~~ on ~~debt~~positive ~~extinguishment,~~bank ~~the extension fee paid on the property purchase and the foreign exchange movements, all discussed in detail above~~balances.

~~Taxation~~7

~~Taxation was $391,962 and~~Interest $(112,220) for the years ended December 31, 2023 and 2022, respectively an increase of $504,182 or 449.3%. The increase is due to the completion of tax returns for our operating subsidiaries during the current year, which resulted in the reversal of previously provided for income taxes, primarily related to accelerated depreciation allowances on property and equipment and the reversal of the deferred tax liability related to intangible assets. The 2022 charge relates to the profitable Evernia operations, which has been subsequently reversed in the 2023 year.expense

~~Net~~Interest expense ~~income~~was $565,343 and $500,226 for the years ended December 31, 2024 and 2023, respectively, an increase of $65,117 or 13.0%, primarily due to the increase in short term note funding of $1,912,000 less repayments of $752,680, the additional funds were raised to fund the acquisition of Boca Cove Detox and for general working capital purposes.

~~Net income was $1,006,415~~Debt and $295,188 for the years ended December 31, 2023 and 2022, respectively, an increase of $711,227 or 240.9%. The increase is due to the increase in income before taxation and the reversal of prior period taxation charges and deferred tax balances, discussed above.discount

~~Liquidity~~Debt discount was $416,120 and ~~Capital~~$281,354 ~~Resources~~for the years ended December 31, 2024 and 2023, respectively, an increase of $134,766 or 47.9%. The increase is primarily due to the increase in short term note funding issued at a discount and the increased utilization of receivables funding during the current year resulting in increased amortization of debt discount associated with this funding.

~~Cash~~Foreign ~~used~~exchange in operating activities was $(0.5) million and cash generated by operating activities was $1.6 million for the years ended December 31, 2023 and 2022, respectively a decrease of $2.1 million or 129.6%. The decrease is primarily due to the following: movements

·Foreign ~~The~~exchange movements ~~increase~~were ~~in net income of~~ $~~0.7 million~~37,523 asand ~~discussed above; · The decrease in non-cash movements of~~ $(~~2.7~~95,032) ~~million,~~for ~~primarily due to~~ the ~~gain~~years onended ~~disposal~~December of31, ~~property~~2024 ofand ~~$(2.5) million~~2023, asrespectively. ~~discussed~~Foreign ~~above;~~exchange ·movements ~~The~~represents the ~~increase~~realized inexchange ~~working~~gains ~~capital~~and ~~of $~~(~~0.1~~losses) ~~million,~~on ~~primarily~~monetary ~~due~~assets toand anliabilities ~~increase~~settled induring the ~~movement~~current ofyear ~~accounts~~as ~~receivable~~well ofas ~~$0.3~~mark ~~million,~~to amarket unrealized ~~decrease~~gains inand ~~the~~losses ~~movement~~on inmonetary ~~accounts~~assets ~~payable~~ and ~~accrued~~ liabilities ofreflected ~~$(0.1)~~on ~~million, and a decrease in~~ the ~~movement~~balance ofsheet ~~taxes~~and ~~payable~~denominated ofin ~~$0.4~~Canadian ~~million due to the reversal of prior year tax provisions~~Dollars.

~~Cash~~Net ~~provided~~(loss) byincome ~~investing~~before ~~activities~~income was $2.5 million and cash used in investing activities was $0.7 million for the years ended December 31, 2023 and 2022, respectively. The Company exercised its option to acquire 950 Evernia Street, where it conducts its treatment facility for net proceeds of $5.2 million, net of $0.4 million of deposits previously paid. Upon acquisition, we immediately sold the property for net proceeds of $8.1 million, after fees and expenses related to the disposal. During the current year, we paid a lease deposit of $374,000 for the real property lease entered into immediately upon disposal of the real property. In the prior year we invested $0.4 million in deposits for the purchase of the Evernia Street property and a further $0.3 million in property and equipment for the treatment center.taxes

7Net (loss) income before income taxes was $(2,165,937) and $614,453 for the years ended December 31, 2024 and 2023, respectively, an increase of $2,780,390 or 452.5%. The increase is primarily due to the increase in operating loss as discussed above, the increase in interest expense and debt discount, the prior period gain on sale of property, offset by the other income earned for managing the Edgewater facility, a decrease in the prior year loss on debt extinguishment and the prior year extension fee on the property purchase, all discussed in detail above.

~~Cash~~Income used in financing activities was $(2.1) million and cash provided by investing activities was $0.3 million for the years ended December 31, 2023 and 2022, respectively. In the current year, the Company used a portion of the proceeds from investing activities for the net repayment of convertible notes of $(1.0) million, the net repayment of promissory notes of $(0.1) million and the payment of third party loans of $0.3 million.. The Company also repaid net receivables funding of $0.4 million, mortgage loans of $0.1 million and related party loans of $0.2 million during the current year. In the prior year, we repaid net promissory notes of $0.1 million, mortgage loans of $0.1 million, and third party loans of $0.1 million, funded by net receivables funding of $$.4 million and related party loans of $0.3 million.taxes

~~Over~~Income ~~the~~taxes ~~next~~were ~~twelve~~$0 ~~months~~and we$391,962 ~~estimate~~for ~~that~~ the ~~company~~years ~~will~~ended ~~require~~December ~~approximately~~31, ~~$4.8~~2024 ~~million~~and in2023, ~~funding~~respectively toa ~~repay~~decrease ~~its~~of ~~obligations~~$391,962 ifor ~~these~~100.0%. Losses ~~obligations~~were ~~are~~made ~~not~~in ~~converted~~the tocurrent ~~equity.~~year, Weresulting ~~will~~in ~~need~~an ~~funding~~increase ~~for~~in ~~working~~the ~~capital~~NOL asvaluation weallowance. ~~continue~~In tothe ~~seek~~prior ~~opportunities~~year, ~~for~~we ~~addiction~~completed ~~treatment~~tax inreturns ~~the~~for USour ~~markets.~~operating ~~There~~subsidiaries, iswhich noresulted ~~assurance~~in ~~that~~ the ~~Company~~reversal ~~will~~of bepreviously ~~successful~~provided ~~with~~for ~~future~~income ~~financing ventures~~taxes, ~~and~~primarily ~~the~~related ~~inability~~ to ~~secure~~ ~~such~~accelerated ~~financing~~depreciation ~~may~~allowances ~~have a material adverse effect~~ on ~~the~~property ~~Company’s~~and ~~financial~~equipment ~~condition.~~and In the ~~opinion~~reversal of ~~management,~~ the ~~Company’s liquidity~~deferred ~~risk~~tax isliability ~~assessed~~related asto ~~high~~intangible assets.

~~Going~~Net (loss) ~~Concern~~income

~~Our~~Net (loss) ~~consolidated~~income ~~financial~~was ~~statements have been prepared in accordance with US GAAP applicable to a going concern~~$(2,165,937) ~~which assumes that we will be able to meet our obligations~~ and ~~continue~~$1,006,415 ~~our~~for ~~operations in~~ the ~~normal~~years ~~course~~ended ~~of business. At~~ December 31, 2024 and 2023, werespectively, ~~had~~an aincrease ~~working capital deficiency~~ of $~~7.9 million~~3,172,352 ~~and~~or ~~total liabilities in excess of assets in the amount of $6~~315.2 ~~million~~%. ~~We believe that current~~ ~~available~~The ~~resources~~increase ~~will~~is ~~not~~due ~~be sufficient~~ to ~~fund our planned expenditures over~~ the ~~next~~increase ~~12 months. Accordingly, we will be dependent upon the raising of additional capital through placement of common shares, and/or debt financing~~ in ~~order~~loss tobefore ~~implement~~income ~~our~~taxes ~~business plan~~ and ~~generate~~the ~~sufficient~~prior ~~revenue~~period inreversal ~~excess~~ of ~~costs.~~income Iftax wecharges ~~raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution,~~ and ~~such securities may have rights, preferences or privileges senior~~ todeferred ~~those~~tax ~~of the holders of common stock or convertible senior notes. If we raise additional funds by issuing debt~~balances, wediscussed ~~may be subject to limitations on its operations, through debt covenants or other restrictions~~above. If we obtain additional funds through arrangements with collaborators or strategic partners, we may be required to relinquish our rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our financial condition. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.

~~Critical~~Liquidity and ~~accounting~~Capital ~~policies~~Resources

~~Revenue~~Cash ~~recognition~~used in operating activities was $0.46 million and $0.53 million for the years ended December 31, 2024 and 2023, respectively a decrease of $0.07 million or 13.2%. The decrease is primarily due to the following:

We recognize revenue in terms of ASC 606 which requires us to exercise more judgment and recognize revenue using a five-step process as described under our accounting policies in note 2 to the consolidated financial statements.

	The increase in net loss of $(3.2) million, as discussed above;

·	The decrease in non-cash movements of $2.5 million, primarily due to the prior year gain on disposal of property of $2.5 million, as discussed above;

·	The decrease in working capital movements of $0.8 million, primarily due to an increase in the movement of accounts receivable of $0.1 million, increase in the movement of accounts payable and accrued liabilities of $0.2 million, the increase in movement of operating lease liabilities of $0.3 million, and the increase in the movement of taxes payable of $0.2 million due to the reversal of tax provisions in the prior year.

WeCash ~~derive~~used ~~substantially~~in ~~all~~investing ofactivities ~~our~~was ~~revenue~~$1.0 ~~from~~million ~~payors~~and ~~that~~cash ~~receive~~provided ~~discounts~~by ~~from~~investing ~~established~~activities ~~billing~~was ~~rates~~$2.5 ~~The~~million ~~various~~for ~~managed~~the ~~care~~years ~~contracts~~ended December ~~under~~31, ~~which~~2024 ~~these~~and ~~discounts~~2023, ~~must~~respectively. beIn ~~calculated~~the ~~are~~current ~~complex~~year, ~~subject~~the toCompany ~~interpretation~~acquired the business of the Boca Cove detox facility for $0.2 million and ~~adjustment~~the payment of property deposits related to this facility of $0.1 million, ~~and~~we ~~may~~also ~~include~~acquired ~~multiple~~the ~~reimbursement~~minority stockholders interest ~~mechanisms~~in ATHI for ~~different~~a ~~types~~cash payment of ~~services~~$0.6 ~~provided~~million inand ~~the~~purchased ~~Company’s~~additional ~~inpatient~~property ~~facilities~~ and ~~cost~~equipment ~~settlement~~of ~~provisions~~$0.1 ~~Management~~million at our west Palm Beach facility. ~~estimates~~In the ~~transaction~~prior ~~price~~year, onthe aCompany ~~payor-specific~~exercised ~~basis~~its ~~given~~option ~~its~~to ~~interpretation~~acquire of950 ~~the~~Evernia ~~applicable~~Street, ~~regulations~~where orit ~~contract~~conducts ~~terms.~~its ~~The services~~treatment ~~authorized~~facility ~~and~~for ~~provided~~net ~~and~~proceeds of ~~related~~$5.2 ~~reimbursement~~million, ~~are~~net ~~often~~of ~~subject~~$0.4 tomillion ~~interpretation~~of ~~that~~deposits ~~could~~previously ~~result~~paid. inUpon ~~payments~~acquisition, ~~that~~we ~~differ from~~immediately sold the ~~Company’s~~property ~~estimates~~for net proceeds of $8.1 ~~Additionally~~million, ~~updated~~after ~~regulations~~fees and ~~contract~~expenses ~~renegotiations~~related ~~occur~~to ~~frequently~~the disposal, ~~necessitating~~and ~~regular review~~paid ~~and~~a ~~assessment~~rental deposit of $0.4 million related to the ~~estimation~~lease ~~process~~entered into byon ~~management~~the property disposed of.

Settlements with third-party payors are estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are determined. In the opinion of management, adequate provision has been made for any adjustments and final settlements. 8

~~Allowance~~Cash provided by financing activities was $1.7 million and cash used in financing activities was $(2.1) million and for ~~Doubtful~~the ~~Accounts~~years ended December 31, ~~Contractual~~2024 and ~~Other~~2023, ~~Discounts~~respectively. In the current year, we raised $1.9 million in short term notes, and repaid $0.8 million, realizing a net $1.1 million, We repaid $0.1 million on the promissory note due on the acquisition of ATHI, we received subscription receipts of $0.2 million, we also raised a total of $0.7 million and repaid $0.6 million in receivables funding, we received a net advance from related parties of $0.2 million, these proceeds were used to acquire Boca Cove Detox and the minority stockholders interest and for general working capital purposes. In the prior year, the net proceeds realized on the acquisition and immediate sale of the property, discussed under investing activities was used to repay convertible notes of $(1.0) million, the net repayment of promissory notes of $(0.1) million and the payment of third party loans of $(0.3) million. The Company also repaid net receivables funding of $(0.4) million, mortgage loans of $(0.1) million and related party loans of $(0.2) million during the prior year.

~~In conjunction~~Over ~~with~~the ~~Revenue~~next ~~recognition,~~twelve months we ~~recognize~~estimate ~~revenue~~that ~~based~~the oncompany ~~historical~~will ~~collections~~require ~~received~~approximately ~~from~~$3.8 ~~healthcare~~million ~~providers,~~in ~~recognizing~~funding ~~only~~to ~~a percentage~~repay ofits ~~revenues~~obligations ~~actually~~other than ~~billed~~convertible notes. ~~Effectively~~We ~~recognizing~~will ~~revenue~~need ~~net~~funding offor ~~any~~working ~~expected~~capital ~~billing~~as ~~differentials.~~we ~~Based~~continue onto ~~our~~seek ~~collection~~additional opportunities for addiction treatment ~~experience,~~in the ~~percentage~~US ofmarkets. ~~revenue~~There ~~recognized~~ is ~~adjusted~~no onassurance athat ~~periodic~~the ~~basis,~~Company ~~thereby~~will ~~taking~~be ~~into~~successful ~~account~~with ~~expected~~future ~~credit~~financing ~~losses~~ventures, inand the inability to secure such financing may have a material adverse effect on the ~~revenue~~Company’s ~~recognition~~financial ~~process~~condition. ~~The~~In ~~revenue~~the weopinion ~~recognize~~of ismanagement, ~~already~~the ~~net~~Company’s liquidity ofrisk ~~expected~~is ~~credit~~assessed ~~losses~~as high.

8Going Concern

~~Leases~~The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. For the year ended December 31, 2024, we incurred operating losses of $1.3 million and had a negative cash flow from operating activities of 0.5 million. As of December 31, 2024, we had an accumulated deficit of $44.4 million, working capital deficiency of $9.1 million and total liabilities in excess of total assets of $7.5 million. These matters raise substantial doubt about our ability to continue as a going concern.

WeManagement believes ~~account~~that ~~for~~current ~~leases~~available inresources ~~terms~~will ofnot ~~ASC~~be ~~842.~~sufficient Into ~~terms~~fund our planned expenditures over the next 12 months. Accordingly, we will be dependent upon the raising of ~~ASC~~additional ~~842~~capital through placement of common shares, ~~the~~and/or ~~Company~~debt ~~assesses~~financing ~~whether~~in ~~any~~order ~~asset~~to ~~based~~implement our ~~leases~~business ~~entered~~plan ~~into~~and ~~for~~generating ~~periods~~sufficient ~~longer~~revenue ~~than~~in ~~twelve~~excess ~~months~~of ~~meet~~costs. If we raise additional capital through the ~~definition~~ issuance of ~~financial~~equity securities ~~leases~~ or ~~operation~~securities ~~leases~~convertible into equity, bystockholders ~~evaluating~~will ~~the~~experience ~~terms~~dilution, ofand ~~the~~such ~~lease~~securities may have rights, ~~including~~preferences or ~~the~~privileges ~~following;~~senior ~~the~~to ~~duration~~those of the ~~lease;~~holders ~~the~~of common stock or convertible senior notes. If we raise additional funds by issuing debt, ~~implied~~we ~~interest~~may ~~rate~~be insubject ~~the~~to ~~lease;~~limitations ~~the~~on ~~cash~~our ~~flows~~operations, ofthrough ~~the~~debt ~~lease;~~covenants ~~and~~or ~~whether~~other ~~the~~restrictions. ~~Company~~If ~~intends~~we obtain additional funds through arrangements with collaborators or strategic partners, we may be required to ~~retain~~relinquish ~~ownership~~its ofrights ~~the~~to ~~asset~~certain atgeographical ~~the~~areas, or ~~end~~techniques ofthat it might otherwise seek to retain. There is no assurance that we will be successful with future financing ventures, and the ~~lease~~inability ~~term~~to secure such financing may have a material adverse effect on our financial condition.

~~Leases~~Based on ~~which~~the ~~imply~~uncertainties ~~that~~described above, we ~~will~~believe ~~not~~our ~~acquire~~business ~~the~~plan ~~asset at~~does ~~the~~not ~~end~~alleviate of the ~~lease~~existence ~~term~~of ~~are~~substantial ~~classified~~doubt asabout ~~operating leases,~~ our ~~right~~ ability to ~~use~~continue ~~the asset is reflected~~ as a ~~non-current~~going ~~right~~concern ofwithin ~~use asset~~one ~~with~~year afrom ~~corresponding~~the ~~operational~~date ~~lease~~of ~~liability raised at~~ the ~~date~~issuance of ~~lease~~these ~~inception~~consolidated financial statements. The ~~right~~accompanying consolidated offinancial ~~use~~statements ~~asset~~do ~~and~~not ~~the~~include ~~operational lease~~any ~~liability~~adjustments ~~are~~to ~~amortized~~the ~~over~~amounts ~~the~~and ~~right~~classifications of ~~use~~assets ~~period~~and ~~using~~liabilities ~~the~~that ~~effective~~might be ~~interest~~necessary ~~rate~~should ~~implied~~we inbe ~~the~~unable ~~operating~~to ~~lease~~continue ~~agreement~~as a going concern.

~~Long~~Critical accounting ~~Lived Assets~~policies

~~The Company evaluates the carrying value of its long-lived~~Revenue assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.recognition

~~Fair~~We recognize ~~value~~revenue isin ~~based~~terms ~~upon~~of ~~discounted~~ASC ~~cash~~606 ~~flows~~which ~~of the~~requires ~~assets~~us atto aexercise ~~rate~~more ~~deemed~~judgment ~~reasonable~~and ~~for~~recognize ~~the~~revenue ~~type~~using ofa ~~asset~~five-step ~~and~~process ~~prevailing~~as ~~market~~described under ~~conditions,~~our ~~appraisals,~~accounting ~~and,~~policies ifin ~~appropriate,~~note ~~current estimated~~2 ~~net~~to ~~sales~~the ~~proceeds~~consolidated ~~from~~financial ~~pending offers~~statements.

~~Critical~~We derive ~~Accounting~~substantially ~~Estimates~~all of our revenue from payors that receive discounts from established billing rates. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management.

~~Preparation of our consolidated financial statements~~Settlements ~~in accordance~~ with ~~U.S.~~third-party ~~generally~~payors ~~accepted~~are ~~accounting~~estimated ~~principles (“GAAP”) requires us to make estimates~~ and ~~assumptions~~recorded ~~that affect~~in the ~~reported~~period ~~amounts~~in ofwhich ~~certain~~the ~~assets, liabilities, revenues and expenses, as well as~~ related ~~disclosure~~services ~~of contingent assets and liabilities. Our estimates~~ are ~~based~~rendered ~~on our historical experience, information received from third parties~~ and ~~on various other factors that we believe~~ are ~~reasonable~~adjusted ~~under~~in ~~the circumstances, that results of which form the basis for making judgments about the carrying value~~future ofperiods ~~assets~~as ~~and~~final ~~liabilities~~settlements ~~that~~ are ~~not readily apparent from other sources~~determined. ~~Actual~~In ~~results may differ from these estimated under different assumption or conditions. Significant accounting policies are fundamental to understanding our financial condition and results as they require~~ the ~~use~~opinion of ~~estimates~~management, ~~and~~adequate ~~assumptions~~provision ~~which~~has ~~affect~~been ~~the~~made ~~financial~~for ~~statements~~any adjustments and ~~accompanying notes. See Note 2 - Summary of Significant~~final ~~Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further information~~settlements.

~~The Critical accounting policies that involved significant~~Allowance ~~estimation~~for ~~include~~credit ~~the following:~~losses

In conjunction with Revenue recognition, we recognize revenue based on historical collections received from healthcare providers, recognizing only a percentage of revenues actually billed. Effectively recognizing revenue net of any expected billing differentials. Based on our collection experience, the percentage of revenue recognized is adjusted on a periodic basis, thereby taking into account expected credit losses in the revenue recognition process. The revenue we recognize is already net of expected credit losses.

Management constantly monitors the level of billings and collections on those billings and makes an estimation of the percentage of billings that will ultimately be recorded as revenue. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates.9

~~Since we already make adjustments for expected collections we are constantly taking into account any expected credit losses.~~Leases

~~Leases~~We account for leases in terms of ASC 842. In terms of ASC 842, the Company assesses whether any asset based leases entered into for periods longer than twelve months meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to retain ownership of the asset at the end of the lease term.

OnLeases ~~August~~which imply 4,that ~~2023~~we will not acquire the asset at the end of the lease term are classified as operating leases, weour ~~entered~~right ~~into~~to use the asset is anreflected ~~acquisition~~as ~~and~~a ~~immediate~~non-current ~~disposal~~right ~~transaction~~of use asset with ~~two~~a ~~unrelated~~corresponding ~~third~~operational ~~parties~~lease ~~for~~liability raised at the ~~building~~date ~~which~~of welease ~~currently~~inception. The ~~operate~~right ~~our~~of ~~West Palm~~use ~~Beach~~asset ~~treatment~~and ~~facility,~~the ~~see~~operational ~~note~~lease 5liability toare amortized over the ~~consolidated~~right ~~financial~~of ~~statements.~~use period using the effective interest rate implied in the operating lease agreement.

~~Simultaneously~~Long ~~with~~Lived the acquisition and disposal, on August 4, 2023, we entered into a long term lease for 950 Evernia Street, West Palm Beach, Florida with an initial term of twenty years, and two ten year extension options. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. Due to the initial lease term of twenty years, we are not certain that the extension periods will be exercised at this point in time and accordingly, these have been excluded from the present value of the minimum future lease payments.Assets

ToThe ~~determine~~Company evaluates the ~~present~~ carrying value of ~~minimum~~its ~~future~~long-lived ~~lease~~assets ~~payments~~ for ~~operating~~impairment ~~leases~~by atcomparing ~~August~~the 4,expected ~~2023,~~undiscounted wefuture ~~were~~cash ~~required~~flows ~~to estimate a rate~~ of ~~interest~~the ~~that we~~assets ~~would have~~ to ~~pay~~the tonet ~~borrow~~book onvalue aof ~~collateralized basis over a similar term in a similar economic environment (~~the ~~"incremental~~assets ~~borrowing rate"~~when events or ~~"IBR").~~circumstances ~~Wey~~indicate ~~determined~~that the ~~appropriate~~carrying ~~IBR~~amount byof ~~identifying~~ a ~~reference~~long-lived ~~rate~~asset ~~and~~may ~~making~~not ~~adjustments~~be ~~that~~recoverable. If ~~take~~the ~~into consideration~~expected ~~financing~~undiscounted ~~options~~future ~~and~~cash ~~certain~~flows ~~lease-specific~~are ~~circumstances.~~less ~~For~~than the ~~reference~~net ~~rate,~~book ~~the~~value ~~Company~~of ~~used~~ the ~~Fannie Mae~~assets, in the excess of ~~$3,000,000~~the ~~rate~~net ~~based~~book ~~on an 80%~~ value toover ~~loan ratio, averaging~~ the ~~15 and 30 year indicative rates, resulting in a rate of 7.70%.~~ Weestimated ~~determined~~fair ~~that 7.70%~~value ~~per~~will ~~annum~~be ~~was~~charged ~~an appropriate incremental borrowing rate~~ to ~~apply to its real-estate operating lease~~earnings.

~~The~~Fair ~~present~~ value is based upon discounted cash flows of the ~~future~~ ~~minimum~~assets ~~lease~~at ~~payments~~a ~~was~~rate ~~valued~~deemed atreasonable $9for the type of asset and prevailing market conditions,~~333~~ appraisals,~~953 on~~ ~~August~~and, 4if appropriate, ~~2023~~current estimated net sales proceeds from pending offers.

~~Long-lived~~Critical Accounting ~~assets~~Estimates

WePreparation of ~~have~~our ~~significant~~consolidated ~~long-lived~~financial ~~assets,~~statements ~~including~~in ~~property~~accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and ~~equipment,~~assumptions ~~intangible~~that affect the reported amounts of certain assets, ~~right-~~liabilities, revenues and expenses, as well as related disclosure of~~-use~~ contingent assets and ~~deposits~~liabilities. ~~The~~Our ~~Company~~estimates ~~evaluates~~are ~~the~~based ~~carrying~~on ~~value~~our ofhistorical ~~its~~experience, ~~long-lived~~information ~~assets~~received ~~for~~from ~~impairment~~third byparties ~~comparing~~and ~~managements~~on ~~estimates~~various ofother ~~undiscounted~~factors ~~future~~that ~~cash~~we ~~flows~~believe ofare ~~the~~reasonable ~~assets~~under to the ~~net~~circumstances, ~~book~~the ~~value~~results of ~~the~~which ~~assets~~form ~~when~~the ~~events~~basis orfor ~~circumstances~~making ~~indicate~~judgments ~~that~~about the carrying ~~amount~~value of aassets ~~long-lived~~and ~~asset~~liabilities ~~may~~that are not bereadily ~~recoverable.~~apparent ~~This~~from ~~requires~~other ~~significant~~sources. Actual ~~estimation~~results ofmay ~~future~~differ ~~revenue~~from ~~streams,~~these ~~based~~estimated onunder ~~management’s~~different ~~understanding~~assumption ofor ~~the~~conditions. ~~business~~Significant ~~which~~accounting ~~may~~policies ~~not~~are befundamental ~~accurate~~to understanding our financial condition and ~~may~~results as they require ~~re-estimation~~ atthe ause ~~future~~of ~~date.~~estimates Ifand assumptions which affect the ~~expected~~financial ~~undiscounted~~statements and ~~future~~accompanying ~~cash~~notes. ~~flows~~See ~~are~~Note ~~less~~2 ~~than~~- ~~the~~Summary ~~net~~of ~~book~~Significant ~~value~~Accounting Policies of the ~~assets,~~Notes to the ~~excess of~~Consolidated ~~the~~Financial ~~net~~Statements included ~~book~~in ~~value~~Part ~~over~~II, ~~the~~Item ~~estimated~~8 ~~fair~~of ~~value~~this ~~will~~Annual beReport ~~charged~~for tofurther ~~earnings~~information.

~~Fair~~The ~~value is based upon discounted cash flows of~~Critical ~~the~~accounting ~~assets~~policies atthat ainvolved ~~rate~~significant ~~deemed~~estimation byinclude ~~management to be reasonable for~~ the ~~type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.~~following:

9Revenue recognition

~~Item~~Management 8constantly monitors the level of billings and collections on those billings and makes an estimation of the percentage of billings that will ultimately be recorded as revenue. The ~~Financial~~various ~~Statements~~managed care contracts under which these discounts must be calculated are complex, subject to interpretation and ~~Supplementary~~adjustment, ~~Data~~and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates.

~~ETHEMA~~Since we ~~HEALTH~~already ~~CORPORATION~~make adjustments for expected collections we are constantly taking into account any expected credit losses.

~~INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS~~ Leases

~~(Expressed~~On inAugust ~~US$~~4, ~~unless~~2023, ~~otherwise~~we ~~indicated)~~entered into an acquisition and immediate disposal transaction with two unrelated third parties for the building which we currently operate our West Palm Beach treatment facility, see note 5 to the consolidated financial statements.

	PAGE
Report of Independent Registered Public Accounting Firm (PCAOB ID 229)	F-1
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-3
Consolidated Statements of Operations and Comprehensive (Loss) income for the years ended December 31, 2023 and 2022	F-4
Consolidated Statements of Changes in Stockholders Deficit for the years ended December 31, 2023 and 2022	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022	F-6
Notes to the Consolidated Financial Statements	F-7

Simultaneously with the acquisition and disposal, on August 4, 2023, we entered into a long term lease for 950 Evernia Street, West Palm Beach, Florida with an initial term of twenty years, and two ten year extension options. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,655,717 over the initial twenty-year term. Due to the initial lease term of twenty years, we are not certain that the extension periods will be exercised at this point in time and accordingly, these have been excluded from the present value of the minimum future lease payments.

~~REPORT~~To determine OFthe ~~INDEPENDENT~~present ~~REGISTERED~~value ~~PUBLIC~~of ~~ACCOUNTING~~minimum ~~FIRM~~future lease payments for operating leases at August 4, 2023, we were required to estimate a rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment (the "incremental borrowing rate" or "IBR"). Wey determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the Fannie Mae, in excess of $3,000,000 rate based on an 80% value to loan ratio, averaging the 15 and 30 year indicative rates, resulting in a rate of 7.70%. We determined that 7.70% per annum was an appropriate incremental borrowing rate to apply to its real estate operating lease.

ToThe present value of the ~~Board~~future ofminimum ~~Directors~~lease ~~and~~payments ~~Stockholders~~was ofvalued at $9,333,953 on August 4, 2023.

~~Ethema~~On May 1, 2024 the Company, through its subsidiary Evernia Health ~~Corporation~~Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease for suites 100,101, 201, 202 and ~~Subsidiaries~~203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024.

~~West~~The assigned ~~Palm~~lease ~~Beach~~has a remaining term of 3 years, FLexpiring ~~33401~~on June 30, 2027, with an initial monthly lease cost of $21,843 from July 1, 2024 to December 31, 2024, escalating by 2.9% per annum, each annual period being a calendar year.

~~Opinion~~To determine the present value of minimum future lease payments for operating leases at June 10, 2024, the Company was required to estimate a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment (the ~~Financial~~"incremental borrowing ~~Statements~~rate" or "IBR").

~~We have~~The ~~audited the accompanying consolidated balance sheet of Ethema Health Corporation and Subsidiaries (collectively, the “~~Company”) asdetermined ~~of December 31, 2023,~~ the ~~related~~appropriate ~~consolidated~~IBR ~~statement~~by ofidentifying ~~operations,~~a ~~stockholders’~~reference ~~deficit~~rate and ~~cash~~making ~~flows~~adjustments ~~for~~that ~~each~~take ofinto ~~the year~~consideration ~~ended~~financing ~~December~~options ~~31, 2023,~~ and certain ~~the~~lease-specific ~~related notes and schedules (collectively referred to as the “financial statements”)~~circumstances. In ~~our~~For ~~opinion,~~ the ~~financial~~reference ~~statements present fairly~~rate, ~~in all material respects,~~ the ~~financial~~Company ~~position~~used of the ~~Company~~Bank asrate of3/1 ~~December 31,~~adjustable-rate ~~2023,~~mortgage ~~and~~which represents the ~~results~~average ofrate ~~its~~for ~~operations~~several ~~and~~mortgage ~~its~~lenders ~~cash~~in ~~flows~~the ~~for~~market ~~each~~ of ~~the~~6.36%. ~~year~~The ~~ended~~Company ~~December~~determined ~~31,~~that 6.36% ~~2023~~per inannum ~~conformity~~was ~~with~~an ~~accounting~~appropriate ~~principles~~incremental ~~generally~~borrowing ~~accepted~~rate into ~~the~~apply ~~United~~to ~~States~~its ofreal ~~America~~estate operating lease.

The present ~~Company's~~value ~~Ability~~of tothe ~~Continue~~future asminimum alease ~~Going~~payments ~~Concern~~was valued at $744,256 on June 10, 2024.

~~The~~Long-lived accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has an accumulated deficit and has stated that substantial doubt exists about Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans in regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.assets

~~Basis~~We have significant long-lived assets, including property and equipment, intangible assets, right-of-use assets and deposits. The Company evaluates the carrying value of its long-lived assets for ~~Opinion~~impairment by comparing managements estimates of undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. This requires significant estimation of future revenue streams, based on management’s understanding of the business which may not be accurate and may require re-estimation at a future date. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

~~These financial~~Fair ~~statements are the responsibility of the Company’s management. Our responsibility~~ value is ~~to express an opinion on the Company’s financial statements~~ based onupon ~~our~~discounted ~~audits.~~cash Weflows ~~are~~of ~~a public accounting firm registered with~~ the ~~Public~~assets ~~Company~~at ~~Accounting~~a ~~Oversight~~rate ~~Board (United~~deemed ~~States)~~by ~~(“PCAOB”)~~management ~~and are required~~ to be ~~independent~~reasonable ~~with~~for ~~respect to~~ the ~~Company~~type inof ~~accordance~~asset ~~with~~and ~~the U.S. federal~~prevailing ~~securities~~market ~~laws~~conditions, ~~and~~appraisals, ~~the applicable rules~~ and, ~~regulations~~if ofappropriate, ~~the~~current ~~Securities~~estimated ~~and~~net ~~Exchange~~sales ~~Commission~~proceeds ~~and~~from ~~the~~pending ~~PCAOB~~offers.

WeItem ~~conducted our audits in accordance with the standards of the PCAOB~~8. ~~Those~~Financial ~~standards~~Statements ~~require that we plan~~ and ~~perform~~Supplementary ~~the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud~~Data. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Our~~ETHEMA ~~audits~~HEALTH included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.CORPORATION

~~Critical~~INDEX ~~Audit~~TO ~~Matters~~THE CONSOLIDATED FINANCIAL STATEMENTS

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (~~1) relate to accounts or disclosures that are material to the financial~~Expressed ~~statements~~in ~~and~~US$ ~~(2)~~unless ~~involved~~otherwise ~~our especially challenging, subjective or complex judgments.~~indicated)

We determined that there are no critical audit matters.

	PAGE
Report of Independent Registered Public Accounting Firm (PCAOB ID 587)	F-1
Consolidated Balance Sheets as of December 31, 2024 and 2023	F-3
Consolidated Statements of Operations for the years ended December 31, 2024 and 2023	F-4
Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2024 and 2023	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023	F-6
Notes to the Consolidated Financial Statements	F-7

~~/s/ RBSM LLP~~11

~~587~~New York Office: 805 Third Avenue New York, NY 10022 212.838-5100

WeREPORT ~~have~~OF ~~served~~INDEPENDENT asREGISTERED ~~the~~PUBLIC ~~Company’s~~ACCOUNTING ~~auditor since 2023.~~FIRM

~~New York,~~To NYthe Board of Directors and Stockholders of

~~May 7,~~Ethema ~~2024~~Health Corporation and subsidiaries

~~New York,~~West NYPalm ~~Washington DC Mumbai & Pune~~Beach, ~~India Boca Raton,~~ FL 33401

~~San~~Opinion ~~Francisco,~~on CAthe ~~Las~~Consolidated ~~Vegas,~~Financial ~~NV Beijing, China Athens, Greece~~Statements

~~Member:~~We have ~~ANTEA~~audited ~~International~~the accompanying consolidated balance sheets of Ethema Health Corporation and subsidiaries (collectively, the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with ~~affiliated~~accounting ~~offices~~principles ~~worldwide~~generally accepted in the United States of America.

~~F-1~~The Company's Ability to Continue as a Going Concern

~~REPORT~~The OFaccompanying ~~INDEPENDENT~~consolidated ~~REGISTERED~~financial ~~PUBLIC~~statements ~~ACCOUNTING~~have ~~FIRM~~been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has working capital deficiency and accumulated deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans in regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

~~To the~~Basis ~~Board~~for ~~of Directors and Stockholders of Ethema Health Corporation~~Opinion

~~West~~These consolidated financial statements are the responsibility ~~Palm~~of ~~Beach,~~the ~~Florida~~Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~Opinion~~We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the ~~Consolidated~~effectiveness ~~Financial~~of ~~Statements~~the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~We have~~Our ~~audited~~audits ~~the~~included ~~accompanying~~performing ~~consolidated~~procedures ~~balance~~to ~~sheets of Ethema Health Corporation (~~assess the ~~Company)~~risks atof ~~December~~material ~~31,~~misstatement ~~2022,~~of ~~and~~ the ~~related~~ consolidated financial statements, ofwhether ~~operations~~due ~~and~~to ~~comprehensive~~error ~~income~~or ~~(loss)~~fraud, ~~changes in stockholders’ deficit,~~ and ~~cash~~performing ~~flows~~procedures that ~~for~~respond ~~each of~~to ~~the~~those ~~year~~risks. ~~ended~~Such ~~December~~procedures ~~31,~~included ~~2022~~examining, ~~and~~on ~~the~~a ~~related~~test ~~notes~~basis, ~~(collectively~~evidence ~~referred~~regarding ~~to as~~ the ~~consolidated~~amounts ~~financial~~and ~~statements).~~disclosures Inin ~~our opinion,~~ the consolidated financial statements. ~~present~~Our ~~fairly,~~audits inalso ~~all~~included ~~material~~evaluating ~~respects,~~ the ~~financial~~accounting ~~position~~principles ofused ~~the~~and ~~Company~~significant atestimates ~~December~~made by 31management, ~~2022,~~as ~~and~~well ~~the~~as ~~results~~evaluating ofthe ~~its~~overall ~~operations~~presentation ~~and~~of ~~its cash flows for~~ the ~~year~~consolidated ~~ended~~financial ~~December~~statements. ~~31,~~We ~~2022,~~believe inthat ~~conformity~~our ~~with~~audits ~~accounting principles~~provide ~~generally~~a ~~accepted~~reasonable inbasis ~~the~~for ~~United~~our ~~States of America~~opinion.

~~Basis for~~Critical ~~Opinion~~Audit Matters

~~The accompanying~~Critical ~~consolidated~~audit ~~financial~~matters ~~statements~~ are ~~the~~matters ~~responsibility~~arising offrom the ~~Company’s management. Our responsibility is to express~~ ancurrent ~~opinion~~period onaudit of the ~~Company’s~~ consolidated financial statements ~~based~~that onwere ~~our~~communicated ~~audits.~~or We are arequired ~~public~~to ~~accounting~~be ~~firm~~communicated ~~registered~~to ~~with~~ the ~~Public~~audit ~~Company~~committee and ~~Accounting~~that ~~Oversight Board~~ (~~United States~~i) ~~(PCAOB)~~relate ~~and~~to ~~are~~accounts ~~required~~or todisclosures bethat ~~independent~~are ~~with~~material ~~respect~~ to the ~~Company in~~consolidated ~~accordance~~financial ~~with~~statements ~~the U.S. federal securities laws~~ and ~~the~~(ii) ~~applicable~~involved ~~rules~~our ~~and~~especially challenging, ~~regulations~~subjective, ofor ~~the~~complex ~~Securities and Exchange Commission and the PCAOB~~judgments.

We ~~conducted~~ ~~our audits in accordance with the standards of the PCAOB. Those standards require~~ determined that wethere ~~plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements~~ are ~~free~~no ofcritical ~~material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an~~ audit ~~of its internal control over financial reporting~~matters. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Our~~/s/ RBSM audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.LLP

~~Going~~We have served as the Company’s ~~Concern~~auditor since 2023.

~~The accompanying consolidated~~New ~~financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the consolidated financial statements~~York, the Company has accumulated deficit of approximately $43.5 million and negative working capital of approximately $12.7 million at December 31, 2022, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.NY

~~Critical~~May ~~Audit~~23, ~~Matters~~2025

~~The~~PCAOP ~~critical~~ID ~~audit~~Number matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.587

~~Accounting~~New ~~for~~York, ~~Embedded~~NY ~~Conversion Features~~Washington onDC ~~Convertible~~Mumbai ~~Notes~~& –Pune, ~~Refer~~India Boca toRaton, ~~Notes 9 and 14 to the Financial Statements~~FL

~~The~~Houston, ~~principal~~TX ~~considerations for~~San ~~our~~Francisco, ~~determination~~CA ~~that~~Las ~~performing~~Vegas, ~~procedures~~NV ~~relating to the valuation of derivatives is a critical audit matter are the significant~~Beijing, ~~judgment~~China ~~by management when developing the fair value of the derivative liabilities. This in turn led to a high degree of auditor judgment~~Athens, ~~subjectivity,~~ ~~and effort in performing procedures and evaluating management’s significant assumptions related to the valuation models used and related variable inputs used within those models.~~Greece

~~Addressing the~~Member: ~~matter~~ANTEA ~~involved~~International ~~performing procedures and evaluating audit evidence in connection~~ with ~~forming~~affiliated ~~our overall opinion on the consolidated~~offices financial statements. These procedures included testing management’s process for developing the fair value estimate; evaluating the appropriateness of the valuation techniques; testing the completeness and accuracy of underlying data used in the model; and evaluating the significant assumptions used by management, including the values of expected volatility and discount rate. Evaluating management’s assumptions related to the volatility amounts and discount rates involved evaluating whether the assumptions used by management were reasonable considering the current and historical performance, the consistency with external market and industry data, and whether these assumptions were consistent with evidence obtained in other areas of the audit.worldwide

~~/s/ Daszkal Bolton LLP Boca Raton, Florida March 31, 2023 We served as the Company’s auditor from 2018 to March 2023.~~F-1

~~F-2~~ETHEMA HEALTH CORPORATION

~~ETHEMA~~CONSOLIDATED ~~HEALTH~~BALANCE ~~CORPORATION~~SHEETS

CONSOLIDATED BALANCE SHEETS


	December 31, 2024			December 31, 2023
ASSETS

Current assets
Cash	$	244,771		$	68,573
Accounts receivable, net		260,841			313,338
Prepaid expenses		23,146			18,159
Other current assets		—			3,030
Total current assets		528,758			403,100
Non-current assets
Property and equipment, net		699,688			508,401
Intangible assets, net		536,971			894,952
Right of use assets		9,920,592			9,323,723
Deposits paid		472,393			389,000
Total non-current assets		11,629,644			11,116,076
Total assets	$	12,158,402		$	11,519,176

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Accounts payable and accrued liabilities	$	764,255		$	352,101
Convertible notes, net of discounts		3,973,245			4,419,927
Short-term notes, net		2,575,123			680,672
Promissory note		405,000			—
Receivables funding, net		516,247			211,961
Related party advance, net		264,966			—
Government assistance loans		15,088			14,962
Operating lease liability		299,102			38,563
Finance lease liability		9,829			8,426
Related party payables		633,318			2,572,292
Stock subscription liability		198,600			—
Total current liabilities		9,654,773			8,298,904
Non-current liabilities
Government assistance loans		6,149			20,520
Operating lease liability		9,949,454			9,383,557
Finance lease liability		6,593			16,475
Total non-current liabilities		9,962,196			9,420,552
Total liabilities		19,616,969			17,719,456

Stockholders’ deficit
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,765,000 and 4,000,000 shares issued and outstanding as of December 31, 2024 and 2023, respectively.		47,650			40,000
Common stock - $0.01 par value, 10,000,000,000 shares authorized; 7,729,053,805 and 3,729,053,805 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively.		77,290,539			37,290,539
Additional paid-in capital		24,986,083			26,187,925
Discount for shares issued below par value		(65,363,367	)		(27,363,367	)
Accumulated deficit		(44,419,472	)		(42,355,377	)
Total stockholders’ deficit		(7,458,567	)		(6,200,280	)
Total liabilities and stockholders’ deficit	$	12,158,402		$	11,519,176

	December 31, 2023			December 31, 2022
ASSETS
Current assets
Cash	$	68,573		$	140,757
Accounts receivable, net		313,338			337,074
Prepaid expenses		18,159			44,718
Other current assets		3,030			20,347
Total current assets		403,100			542,896
Non-current assets
Property and equipment		508,401			2,974,395
Intangible assets, net		894,952			1,252,932
Right of use assets		9,323,723			1,393,071
Deposits paid		389,000			400,000
Total non-current assets		11,116,076			6,020,398
Total assets	$	11,519,176		$	6,563,294
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	352,101		$	170,934
Taxes payable		—			248,644
Convertible notes, net of discounts		4,419,927			5,269,250
Short-term notes		680,672			460,534
Mortgage loans		—			3,504,605
Receivables funding		211,961			416,731
Government assistance loans		14,962			14,818
Operating lease liability		38,563			287,017
Finance lease liability		8,426			7,891
Accrued dividends		—			194,829
Related party payables		2,572,292			2,713,878
Total current liabilities		8,298,904			13,289,131
Non-current liabilities
Government assistance loans		20,520			79,555
Deferred taxation		—			217,451
Third party loans		—			578,335
Operating lease liability		9,383,557			1,206,413
Finance lease liability		16,475			24,952
Total non-current liabilities		9,420,552			2,106,706
Total liabilities		17,719,456			15,395,837
Preferred stock - Series B; $1.00 par value 10,000,000 authorized, 0 and 400,000 shares issued and outstanding as of December 31, 2023 and 2022, respectively.		—			400,000
Stockholders’ deficit
Preferred stock - Series A; $0.01 par value, 10,000,000 authorized, 4,000,000 shares issued and outstanding as of December 31, 2023 and 2022.		40,000			40,000
Common stock - $0.01 par value, 10,000,000,000 shares authorized; 3,729,053,805 shares issued and outstanding as of December 31, 2023 and December 31, 2022.		37,290,539			37,290,539
Additional paid-in capital		26,187,925			23,419,917
Discount for shares issued below par value		(27,363,367	)		(27,363,367	)
Accumulated other comprehensive loss		—			(5,065	)
Accumulated deficit		(42,355,377	)		(43,484,751	)
Stockholders’ deficit attributable to Ethema Health Corporation stockholders’		(6,200,280	)		(10,102,727	)
Non-controlling interest		—			870,184
Total stockholders’ deficit		(6,200,280	)		(9,232,543	)
Total liabilities and stockholders’ deficit	$	11,519,176		$	6,563,294

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

~~The accompanying notes are an integral part of the consolidated financial statements~~F-2

~~F-3~~ETHEMA HEALTH CORPORATION

~~ETHEMA~~CONSOLIDATED ~~HEALTH~~STATEMENTS ~~CORPORATION~~OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year ended December 31, 2024			Year ended December 31, 2023

Revenues	$	6,017,204		$	5,344,976

Operating expenses
General and administrative		1,550,799			1,041,501
Rent expense		1,304,127			614,793
Management fees		—			368,003
Professional fees		955,801			707,413
Salaries and wages		3,072,654			2,656,267
Depreciation and amortization		466,952			498,919
Total operating expenses		7,350,333			5,886,896

Operating loss		(1,333,129	)		(541,920	)

Other (expense) income
Other income		110,000			—
Other expense		(1,160	)		—
Gain on sale of property		—			2,484,172
Loss on debt extinguishment		—			(277,175	)
Extension fee on property purchase		—			(140,000	)
Penalty on notes and convertible notes		—			(34,688	)
Interest income		2,292			676
Interest expense		(565,343	)		(500,226	)
Debt discount		(416,120	)		(281,354	)
Foreign exchange movements		37,523			(95,032	)
Net (loss) income before income taxes		(2,165,937	)		614,453
Income taxes		—			391,962
Net (loss) income		(2,165,937	)		1,006,415
Net loss attributable to non-controlling stockholders interest		101,842			170,184
Net (loss) income attributable to Ethema Health Corporation Stockholders’		(2,064,095	)		1,176,599
Preferred stock dividend		—			(47,225	)
Net (loss) income available to common stockholders of Ethema Health Corporation		(2,064,095	)		1,129,374

Basic (loss) income per common share	$	(0.00	)	$	0.00
Diluted (loss) income per common share	$	(0.00	)	$	0.00
Weighted average common shares outstanding – Basic		5,608,835,226			3,729,053,805
Weighted average common shares outstanding – Diluted		5,608,835,226			3,903,671,684

~~AND~~The ~~COMPREHENSIVE~~accompanying ~~(LOSS)~~notes ~~INCOME~~are an integral part of the consolidated financial statements

	Year ended December 31, 2023			Year ended December 31, 2022
Revenues	$	5,344,976		$	4,820,747
Operating expenses
General and administrative		1,041,501			805,372
Rent expense		614,793			427,482
Management fees		368,003			132,500
Professional fees		707,413			463,678
Salaries and wages		2,656,267			1,962,479
Depreciation expense		498,919			540,119
Total operating expenses		5,886,896			4,331,630
Operating (loss) profit		(541,920	)		489,117
Other (expense) income
Other income		—			15,760
Forgiveness of government relief loan		—			104,368
Gain on sale of property		2,484,172			—
Loss on debt extinguishment		(277,175	)		—
Extension fee on property purchase		(140,000	)		—
Penalty on notes and convertible notes		(34,688	)		(60,075	)
Interest income		676			78
Interest expense		(500,226	)		(588,477	)
Debt discount		(281,354	)		(624,683	)
Foreign exchange movements		(95,032	)		1,071,320
Net income before taxation		614,453			407,408
Taxation		391,962			(112,220	)
Net income		1,006,415			295,188
Net loss (income) attributable to non-controlling interest		170,184			(47,308	)
Net income attributable to Ethema Health Corporation Stockholders’		1,176,599			247,880
Preferred stock dividend		(47,225	)		(97,782	)
Net income available to common shareholders of Ethema Health Corporation		1,129,374			150,098
Accumulated other comprehensive loss
Foreign currency translation adjustment		—			(821,597	)
Total comprehensive income (loss)	$	1,129,374		$	(671,499	)
Basic income per common share	$	0.00		$	0.00
Diluted income per common share	$	0.00		$	0.00
Weighted average common shares outstanding – Basic		3,729,053,805			3,704,807,230
Weighted average common shares outstanding – Diluted		3,903,671,684			4,276,363,181

F-3

~~The~~ETHEMA ~~accompanying~~HEALTH ~~notes are an integral part of the consolidated financial statements~~CORPORATION

~~F-4~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

ETHEMA HEALTH CORPORATION


	Series A Preferred				Common				Additional Paid			Discount			Comprehensive			Accumulated			Non- controlling stockholders
	Shares		Amount		Shares		Amount		in Capital			to par value			Income			Deficit			Interest			Total
Balance as of December 31, 2022		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	23,419,917		$	(27,363,367	)	$	(5,065	)	$	(43,484,751	)	$	870,184		$	(9,232,543	)
Disposal of subsidiary to related party		—		—		—		—		2,034,885			—			—			—			(700,000	)		1,334,885
Deemed extinguishment of debt by related party		—		—		—		—		461,184			—			—			—			—			461,184
Fair value of warrants issued on debt extinguishment		—		—		—		—		271,939			—			—			—			—			271,939
Foreign currency translation		—		—		—		—		—			—			5,065			—			—			5,065
Net income		—		—		—		—		—			—			—			1,176,599			(170,184	)		1,006,415
Dividends accrued		—		—		—		—		—			—			—			(47,225	)		—			(47,225	)
Balance as of December 31, 2023		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	26,187,925		$	(27,363,367	)	$	—		$	(42,355,377	)	$	—		$	(6,200,280	)
Acquisition of minority stockholders interest		—		—		—		—		(1,201,842	)		—			—			—			101,842			(1,100,000	)
Conversion of related party payable to Series A preferred shares		600,000		6,000		—		—		—			—			—			—			—			6,000
Subscription for Series A preferred A shares		165,000		1,650		—		—		—			—			—			—			—			1,650
Conversion of related party payables to common shares		—		—		4,000,000,000		40,000,000		—			(38,000,000	)		—			—			—			2,000,000
Net loss		—		—		—		—		—			—			—			(2,064,095	)		(101,842	)		(2,165,937	)
Balance as of December 31, 2024		4,765,000	$	47,650		7,729,053,805	$	77,290,539	$	24,986,083		$	(65,363,367	)	$	—		$	(44,419,472	)	$	—		$	(7,458,567	)

~~CONSOLIDATED~~ The ~~STATEMENTS~~accompanying OFnotes ~~STOCKHOLDERS’~~are ~~DEFICIT~~an integral part of the consolidated financial statement

	Series A Preferred				Common				Additional Paid		Discount			Comprehensive			Accumulated			Non- controlling shareholders
	Shares		Amount		Shares		Amount		in Capital		to par value			Income			Deficit			Interest			Total
Balance as of December 31, 2021		4,000,000		40,000		3,579,053,805		35,790,539		22,791,350		(26,013,367	)		816,532			(44,103,311	)		822,876			(9,855,381	)
Adjustments to prior period on adoption of ASU 2020-06		—		—		—		—		—		—			—			468,462			—			468,462
Conversion of convertible notes		—		—		150,000,000		1,500,000		—		(1,350,000	)		—			—			—			150,000
Transactions with related parties		—		—		—		—		628,567		—			—			—			—			628,567
Foreign currency translation		—		—		—		—		—		—			(821,597	)		—			—			(821,597	)
Net income		—		—		—		—		—					—			247,880			47,308			295,188
Dividends accrued		—		—		—		—		—		—			—			(97,782	)		—			(97,782	)
Balance as of December 31, 2022		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	23,419,917	$	(27,363,367	)	$	(5,065	)	$	(43,484,751	)	$	870,184		$	(9,232,543	)
Disposal of subsidiary to related party		—		—		—		—		2,034,885		—			—			—			(700,000	)		1,334,885
Deemed extinguishment of debt by related party		—		—		—		—		461,184		—			—			—			—			461,184
Fair value of warrants issued on debt extinguishment		—		—		—		—		271,939		—			—			—			—			271,939
Foreign currency translation		—		—		—		—		—		—			5,065			—			—			5,065
Net income		—		—		—		—		—		—			—			1,176,599			(170,184	)		1,006,415
Dividends accrued		—		—		—		—		—		—			—			(47,225	)		—			(47,225	)
Balance as of December 31, 2023		4,000,000	$	40,000		3,729,053,805	$	37,290,539	$	26,187,925	$	(27,363,367	)		—			(42,355,377	)		—			(6,200,280	)

F-4

~~The~~ETHEMA ~~accompanying~~HEALTH ~~notes are an integral part of the consolidated financial statement~~CORPORATION

~~F-5~~CONSOLIDATED STATEMENTS OF CASH FLOWS

ETHEMA HEALTH CORPORATION


	Year ended December 31, 2024			Year ended December 31, 2023
Operating activities
Net (loss) income	$	(2,165,937	)	$	1,006,415
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		466,952			498,919
Amortization of debt discount		416,120			281,354
Gain on disposal of property		—			(2,484,172	)
Loss on debt extinguishment		—			277,175
Penalty on notes and convertible notes		—			34,688
Amortization of right of use asset		147,387			177,220
Deferred taxation movement		—			(217,451	)
Changes in operating assets and liabilities
Accounts receivable		183,137			78,037
Prepaid expenses		(4,987	)		26,562
Other current assets		3,030			5,513
Accounts payable and accrued liabilities		416,414			201,978
Operating lease liabilities		82,180			(179,184	)
Taxes payable		—			(237,211	)
Net cash used in operating activities		(455,704	)		(530,157	)

Investing activities
Acquisition of real property, net of $400,000 deposit paid		—			(5,209,276	)
Proceeds on disposal of real property		—			8,093,448
Purchase of property and equipment		(60,259	)		(40,602	)
Acquisition of property		(240,000	)		—
Acquisition of minority stockholders interest		(625,000	)		—
Investment in deposits		(83,393	)		(389,000	)
Net cash (used in) provided by investing activities		(1,008,652	)		2,454,570

Financing activities
Repayment of mortgage		—			(58,320	)
Proceeds from convertible notes		—			150,000
Repayment of convertible notes		—			(1,153,666	)
Proceeds from short term notes		1,912,000			447,000
Repayment of short term notes		(752,680	)		(568,325	)
Repayment of promissory notes		(70,000	)		—
Proceeds from receivables funding		690,000			580,646
Repayment of receivables funding		(586,752	)		(994,483	)
Proceeds from advances – related party		250,000			—
Repayment of advances – related party		(11,538	)		—
Repayment of government assistance loans		(14,250	)		(14,579	)
Proceeds from (repayment of) third party loans		—			(283,746	)
Repayment of finance leases		(8,478	)		(7,943	)
Proceeds from stock subscription liability		198,600			—
Proceeds from Series A preferred subscriptions		1,650			—
(Repayment) proceeds of related party notes		67,026			(174,012	)
Net cash provided by (used in ) financing activities		1,675,578			(2,077,428	)

Effect of exchange rate on cash		(35,024	)		80,831

Net change in cash		176,198			(72,184	)
Beginning cash balance		68,573			140,757
Ending cash balance	$	244,771		$	68,573

Supplemental cash flow information
Cash paid for interest	$	355,443		$	425,117
Cash paid for income taxes	$	—		$	—

Non-cash investing and financing activities
Fair value of warrant issued on debt extinguishment	$	—		$	271,939
Disposal of subsidiary to related party	$	—		$	1,334,885
Deemed extinguishment of debt by related party	$	—		$	461,184
Promissory note issued to acquire minority stockholders interest	$	475,000		$	—
Exchange of Series N convertible notes for Series R promissory notes	$	450,000		$	—
Conversion of related party payables to common shares	$	2,000,000		$	—
Conversion of related party payable to Series A preferred stock	$	6,000		$	—
Present value of operating lease liability and operating lease right-of-use asset recognized in connection with lease commencement	$	744,256		$	—

~~CONSOLIDATED~~The ~~STATEMENTS~~accompanying OFnotes ~~CASH~~are ~~FLOWS~~ an integral part of the consolidated financial statements

	Year ended December 31, 2023			Year ended December 31, 2022
Operating activities
Net income	$	1,006,415		$	295,188
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization expense		498,919			540,119
Amortization of debt discount		281,354			624,683
Gain on disposal of property		(2,484,172	)		—
Loss on debt extinguishment		277,175			—
Forgiveness of federal relief loan		—			(104,368	)
Penalty on promissory notes		34,688			60,075
Amortization of right of use asset		177,220			260,745
Deferred taxation movement		(217,451	)		(55,606	)
Changes in operating assets and liabilities
Accounts receivable		78,037			(215,364	)
Prepaid expenses		26,562			(14,996	)
Other current assets		5,513			(3,113	)
Accounts payable and accrued liabilities		201,978			305,785
Operating lease liabilities		(179,184	)		(241,083	)
Taxes payable		(237,211	)		125,014
Net cash (used in) provided by operating activities		(530,157	)		1,577,079
Investing activities
Acquisition of real property, net of $400,000 deposit paid		(5,209,276	)		—
Proceeds on disposal of real property		8,093,448			—
Purchase of property and equipment		(40,602	)		(315,822	)
Proceeds on sale of subsidiary, net of cash of $1,421		—			(1,421	)
Proceeds from deposits		—			4,984
Investment in deposits		(389,000	)		(400,000	)
Net cash provided by (used in) investing activities		2,454,570			(712,259	)
Financing activities
Repayment of mortgage		(58,320	)		(117,073	)
Proceeds from convertible notes		150,000			—
Repayment of convertible notes		(1,153,666	)		—
Proceeds from promissory notes		447,000			160,000
Repayment of promissory notes		(568,325	)		(289,044	)
Proceeds from receivables funding		580,646			682,500
Repayment of receivables funding		(994,483	)		(330,312	)
Repayment of government assistance loans		(14,579	)		(2,970	)
Repayment of third party loans		(283,746	)		(76,856	)
Repayment of finance leases		(7,943	)		(7,437	)
(Repayment) proceeds of related party notes		(174,012	)		284,906
Net cash (used in ) provided by financing activities		(2,077,428	)		303,714
Effect of exchange rate on cash		80,831			(1,076,599	)
Net change in cash		(72,184	)		91,935
Beginning cash balance		140,757			48,822
Ending cash balance	$	68,573		$	140,757
Supplemental cash flow information
Cash paid for interest	$	425,117		$	234,240
Cash paid for income taxes	$	—		$	—
Non-cash investing and financing activities
Fair value of warrant issued on debt extinguishment	$	271,939		$	—
Disposal of subsidiary to related party	$	1,334,885		$	—
Deemed extinguishment of debt by related party	$	461,184		$	—
Conversion of convertible notes	$	—		$	150,000

F-5

~~The~~ETHEMA ~~accompanying~~HEALTH ~~notes are an integral part of the consolidated financial statements~~CORPORATION

~~F-6~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~ETHEMA HEALTH~~1. ~~CORPORATION~~Nature of business

~~NOTES~~Since TO2010, ~~THE~~the ~~CONSOLIDATED~~Company ~~FINANCIAL~~has ~~STATEMENTS~~operated addiction treatment centers. Initially the Company operated an addiction treatment center in Ontario Canada under its Greenestone Muskoka clinic, which was sold on February 14, 2017. Simultaneously with this sale the Company purchased buildings and operated an addiction treatment center in Delray Beach Florida under its Addiction recovery Institute of America subsidiary with a license obtained in December 2016, initially though owned properties in Delray Beach and subsequently though leased properties in West Palm Beach, Florida. Since June 30, 2020, the Company has been actively involved in the management of a treatment center operated by Evernia in West Palm Beach Florida. On July 1, 2021, the Company closed on the acquisition of 75% of ATHI, which owns 100% of Evernia, once the probationary approval of a license was obtained from the Department of Children and Family Services of Florida.

~~1. Nature~~The ofCompany ~~business~~sold its real estate on which its Greenstone Muskoka clinic operated during the prior year.

~~Since~~Acquisition 2010, the Company has operated addiction treatment centers. Initially the Company operated an addiction treatment center in Ontario Canada under its Greenestone Muskoka clinic, which was sold on February 14, 2017. Simultaneously with this sale the Company purchased buildings and operated an addiction treatment center in Delray Beach Florida under its Addiction recovery Institute of ~~America~~minority ~~subsidiary~~stockholders ~~with a~~interest ~~license obtained~~ in December 2016, initially though owned properties in Delray Beach and subsequently though leased properties in West Palm Beach, Florida. Since June 30, 2020, the Company has been actively involved in the management of a treatment center operated by Evernia in West Palm Beach Florida. On July 1, 2021, the Company closed on the acquisition of 75% of ATHI, which owns 100% of Evernia, once the probationary approval of a license was obtained from the Department of Children and Family Services of Florida. Evernia is currently the only active treatment center operated by the Company.

~~The~~On May 15, 2024, the Company ~~sold~~entered ~~its~~into ~~real~~a ~~estate~~Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority stockholder for gross proceeds of $1,100,000. The Company paid an initial deposit of $25,000 and on ~~which~~closing an ~~its~~additional ~~Greenstone~~$600,000. ~~Muskoka~~The ~~clinic~~Company ~~operated~~issued ~~during~~a non-interest-bearing promissory note for the ~~current~~remaining ~~year~~balance of $475,000, ~~see~~which promissory note 4is ~~below~~repayable in installments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight installments) and months ten through seventeen (eight installments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

~~2. Summary~~Acquisition of ~~significant~~assets ~~accounting~~and ~~policies~~assignment of lease and sub-lease for Boca cove Detox Center

~~Financial~~On ~~Reporting~~March 22, 2024, the Company executed a LOI to acquire certain assets, including furniture, equipment inventory and supplies of Boca Cove Detox, LLC, along with the assignment of lease and sub-lease for premises located at 899 Meadow Avenue, Boca Raton, Florida. On May 1, 2024 the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease for suites 100, 101, 201, 202 and 203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024 and the Company entered into a Bill of Sale to give effect to the Definitive Agreement.

The ~~Company~~purchase ~~prepares~~price ~~its~~was ~~consolidated~~$240,000 ~~financial~~which ~~statements~~was insettled ~~conformity~~by ~~with~~a ~~accounting~~deposit ~~principles~~of ~~generally~~$20,000 ~~accepted~~and ina cash payment of $220,000 and the ~~United~~payment ~~States~~to the Seller of $83,393 for the assumption of ~~America~~the ~~(“US~~security ~~GAAP”)~~deposit held by the landlord of the Leased Premises located at 899 Meadows Road.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud2. ~~The~~Summary ~~Company’s system~~ of ~~internal~~significant accounting control is designed to assure, among other items, that i) recorded transactions are valid; ii) valid transactions are recorded; and iii) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.policies

a)Financial ~~Use of Estimates~~Reporting

The ~~preparation~~Company ofprepares its consolidated financial statements in conformity with USaccounting ~~GAAP~~principles ~~requires~~generally ~~management~~accepted toin ~~make estimates and assumptions that affect~~ the ~~reported~~United ~~amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated~~States ~~financial statements and the reported amounts~~ of ~~revenues~~America ~~and~~(“US ~~expenses during the reporting periods~~GAAP”). ~~Actual results could differ from those estimates.~~

~~b) Principals~~Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of ~~consolidation~~internal accounting control and ~~foreign~~preventing ~~currency~~and ~~translation~~detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that i) recorded transactions are valid; ii) valid transactions are recorded; and iii) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

~~The~~a) ~~accompanying~~Use ~~consolidated financial statements include the accounts~~ of ~~the Company and all of its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.~~Estimates

~~Certain~~The preparation of ~~the~~consolidated ~~Company’s~~financial ~~previous~~statements ~~subsidiaries~~in ~~functional~~conformity ~~currency~~with ~~was~~U.S. ~~the~~GAAP ~~Canadian~~requires ~~dollar~~management to make estimates and assumptions, which ~~while~~are evaluated on an ongoing basis, that affect the ~~Company’s~~amounts ~~reporting~~reported ~~currency~~in the consolidated financial statements and accompanying notes. isManagement bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the Ucircumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources.S. ~~dollar~~Actual results could differ from those estimates and judgments. ~~All~~In ~~transactions~~particular, significant ~~initiated~~estimates and judgments include those related to, the estimated useful lives of long lived assets, the fair value of long-lived assets including impairment analysis, estimates in ~~Canadian~~revenue ~~dollars~~recognition, ~~are~~allowance ~~translated~~for ~~into~~credit USlosses, ~~dollars~~estimates in ~~accordance~~the ~~with~~fair ~~ASC~~value ~~830~~of warrants and stock options granted for services or compensation, ~~“Foreign~~estimates in convertible debt, borrowing rate consideration for right-of-use ~~Currency~~(ROU) ~~Translation”~~lease asassets ~~follows:~~including related lease liability, and the valuation allowance for deferred tax assets due to continuing operating losses.

●Making estimates ~~Monetary~~requires ~~assets~~management ~~and~~to ~~liabilities~~exercise significant judgment. It is at least reasonably possible that the ~~rate~~estimate of ~~exchange~~the in effect of a condition, situation or set of circumstances that existed at the ~~balance~~date ~~sheet~~of ~~date~~the consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.

~~● Certain non~~F-~~monetary assets and liabilities and equity at historical rates.~~6

●ETHEMA HEALTH ~~Revenue and expense items and cash flows at the average rate of exchange prevailing during the year.~~CORPORATION

~~Adjustments~~NOTES ~~arising~~TO ~~from~~THE ~~such~~CONSOLIDATED ~~translations~~FINANCIAL were deferred until realization and were included as a separate component of stockholders’ deficit as a component of accumulated other comprehensive income or loss. Therefore, translation adjustments were not included in determining net income (loss) but reported as other comprehensive income (loss).STATEMENTS

~~For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date~~2. IfSummary ~~the exchange rate changes between the time~~ of ~~purchase~~significant ~~and~~accounting ~~the~~policies ~~time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the year.~~(continued)

~~The relevant~~b) ~~translation~~Principals ~~rates are as follows: For the year ended December 31, 2023, a closing rate~~ of ~~CDN$1~~consolidation ~~equals US$0.7561~~ and anforeign ~~average exchange~~currency ~~rate of CDN$1 equals US$0.7409, for the year ended December 31, 2022, a closing rate of CDN$1.0000 equals US$0.7383 and an average exchange rate of CDN$1.0000 equals US$0.7686.~~translation

~~F-7~~The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.

~~ETHEMA~~Certain ~~HEALTH~~of ~~CORPORATION~~the Company’s previous subsidiaries functional currency was the Canadian dollar, while the Company’s reporting currency is the U.S. dollar. All transactions initiated in Canadian dollars are translated into US dollars in accordance with ASC 830, “Foreign Currency Translation” as follows:

~~NOTES TO~~● ~~THE~~Monetary ~~CONSOLIDATED~~assets ~~FINANCIAL~~and ~~STATEMENTS~~liabilities at the rate of exchange in effect at the balance sheet date. ● Certain non-monetary assets and liabilities and equity at historical rates. ● Revenue and expense items and cash flows at the average rate of exchange prevailing during the year.

~~2. Summary~~Adjustments arising from such translations were deferred until realization and were included as a separate component of ~~significant~~stockholders’ ~~accounting~~deficit as ~~policies~~a component of accumulated other comprehensive income or loss. Therefore, translation adjustments were not included in determining net income (~~continued~~loss) but reported as other comprehensive income (loss).

c)For ~~Business~~foreign ~~Combinations~~currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the year.

~~The~~On ~~Company~~June ~~allocates~~30, ~~the~~2023, ~~fair value of purchase consideration to~~ the ~~tangible~~Company ~~and~~disposed ~~intangible assets acquired and liabilities assumed for business combinations with third parties based~~ on ~~their~~Cranberry ~~estimated~~Cove ~~fair~~Holdings ~~values.~~whose ~~The~~functional ~~excess~~currency ofwas ~~the~~Canadian ~~fair~~Dollars, ~~value~~all ofremaining ~~purchase consideration~~subsidiaries ~~over~~have the ~~fair~~U.S. ~~values~~dollar ofas ~~these~~a ~~identifiable~~functional ~~assets and liabilities is recorded as goodwill~~currency.

~~Such~~The ~~valuations~~relevant ~~require~~translation ~~management~~rates ~~to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but~~ are ~~not~~as ~~limited~~follows: ~~to,~~For ~~future~~the ~~expected~~year ~~cash~~ended ~~flows~~December ~~from acquired users~~31, ~~acquired technology~~2023, ~~and trade names from~~ a ~~market~~closing ~~participant~~rate ~~perspective,~~of ~~useful~~CDN$1 ~~lives~~equals ~~and discount rates~~US$0.7561 ~~Management's~~and ~~estimates~~an ~~of fair value~~average ~~are~~exchange ~~based~~rate ~~upon~~of ~~assumptions~~CDN$1 ~~believed~~equals ~~to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates~~US$0.7409.

dc) ~~Cash~~ ~~and~~Business ~~cash equivalents~~Combinations

~~For~~The ~~purposes~~Company ofallocates the ~~statements~~fair value of ~~cash~~purchase ~~flows,~~consideration to the ~~Company~~tangible ~~considers~~and ~~all~~intangible ~~highly~~assets ~~liquid~~acquired ~~instruments~~and ~~purchased~~liabilities ~~with~~assumed ~~a maturity of three months~~for orbusiness ~~less~~combinations ~~and~~with ~~money~~third ~~market~~parties ~~accounts~~based toon betheir ~~cash~~estimated ~~equivalents~~fair values. The ~~Company~~excess ~~maintains~~of ~~cash~~the ~~and~~fair ~~cash~~value ~~equivalents~~of ~~with~~purchase ~~several financial institution~~consideration inover the ~~USA~~fair ~~and~~values ~~Canada.~~of ~~There~~these ~~were no cash~~identifiable ~~equivalents~~assets atand ~~December~~liabilities ~~31,~~is ~~2023~~recorded ~~and~~as ~~2022~~goodwill.

~~The~~Such ~~Company~~valuations ~~primarily~~require ~~places~~management ~~cash~~to ~~balances~~make insignificant ~~the~~estimates ~~USA~~and assumptions, especially with ~~high-credit~~respect ~~quality~~to ~~financial~~intangible ~~institutions~~assets. ~~located~~Significant estimates in ~~the~~valuing ~~United~~certain ~~States~~intangible ~~which~~ assets include, but are ~~insured~~not bylimited ~~the~~to, ~~Federal~~future ~~Deposit~~expected ~~Insurance~~cash ~~Corporation~~flows upfrom toacquired users, acquired technology, and trade names from a ~~limit~~market participant perspective, useful lives and discount rates. Management's estimates of ~~$250~~fair value are based upon assumptions believed to be reasonable,~~000~~ but which are inherently uncertain and unpredictable and, as a result, actual results ~~per~~may ~~institution.~~differ from estimates.

ed) ~~Accounts~~ ~~receivable~~Cash and cash equivalents

~~Accounts~~For ~~receivable~~purposes ~~primarily consists~~ of ~~amounts~~the ~~due~~statements ~~from third-party payors (non-governmental) and private pay patients and is recorded net~~ of ~~allowances for doubtful accounts and contractual discounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and~~ cash flows~~. Accordingly~~, ~~accounts receivable reported in~~ the Company’s ~~consolidated~~considers ~~financial statements~~all ishighly ~~recorded~~liquid atinstruments ~~the~~purchased ~~net~~with ~~amount~~a ~~expected~~maturity toof bethree ~~received. The Company’s primary collection risks are (i) the risk~~months ofor ~~overestimating net revenues at the time of billing that may result in the Company receiving~~ less ~~than~~and ~~the~~money ~~recorded~~market ~~receivable,~~accounts ~~(ii) the risk of non-payment as a result of commercial insurance companies denying claims, (iii) the risk that patients will fail~~ to ~~remit insurance~~be ~~payments~~cash toequivalents. ~~the~~The Company ~~when~~maintains ~~the~~cash ~~commercial~~and ~~insurance~~cash ~~company~~equivalents ~~pays~~with ~~out-of-network~~several ~~claims~~financial ~~directly to the patient, (iv) resource~~institution ~~and~~in ~~capacity constraints that may prevent~~ the ~~Company~~USA ~~from handling the volume of billing~~ and ~~collection~~Canada. ~~issues~~There ~~in a timely manner, (v)~~were ~~the risk~~no cash ~~that~~equivalents ~~patients~~at doDecember ~~not pay the Company for their self-pay balances (including co-pays~~31, ~~deductibles~~2024 and ~~any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients~~2023.

f)The ~~Allowance~~Company ~~for~~primarily ~~Doubtful~~places ~~Accounts,~~cash ~~Contractual~~balances ~~and~~in ~~Other~~the ~~Discounts~~USA with high-credit quality financial institutions located in the United States which are insured by the Federal Deposit Insurance Corporation up to a limit of $250,000 per institution.

~~The Company derives the majority of its revenues from commercial payors at in~~F-network rates. The Company recognizes revenue based on historical collections received from healthcare providers, recognizing only a percentage of revenues actually billed. Effectively recognizing revenue net of any expected billing differentials. Based on the Company’s collection experience, the percentage of revenue recognized is adjusted on a periodic basis, thereby taking into account expected credit losses in the revenue recognition process. The revenue we recognize is already net of expected credit losses, therefore management does not maintain a separate allowance for doubtful accounts, contractual and other discounts.7

~~Management~~ETHEMA ~~also~~HEALTH ~~takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the percentage of revenue to be recognized.~~CORPORATION

NOTES TO g)THE ~~Leases~~CONSOLIDATED FINANCIAL STATEMENTS

~~The Company accounts for leases in terms of ASC 842~~2. InSummary ~~terms~~ of ~~ASC~~significant ~~842,~~accounting ~~the~~policies Company assesses whether any asset based leases entered into for periods longer than twelve months meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to retain ownership of the asset at the end of the lease term.(continued)

~~Leases which imply that the Company will~~e) ~~retain~~Accounts ownership at the end of the lease term are classified as financial leases, are included in property and equipment with a corresponding financial liability raised at the date of lease inception. Interest incurred on financial leases are expensed using the effective interest rate method.receivable

~~Leases~~Accounts receivable ~~which~~primarily ~~imply~~consists ~~that~~of ~~the~~amounts due from third-party payors (non-governmental) and private pay patients and is recorded net of allowances for doubtful accounts and contractual discounts. The Company’s ~~will~~ability to collect outstanding receivables is critical ~~not~~to ~~acquire~~its results of operations and cash flows. Accordingly, accounts receivable reported in the ~~asset~~Company’s consolidated financial statements is recorded at the ~~end~~net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimating net revenues at the ~~lease~~time ~~term~~of ~~are~~billing ~~classified~~that asmay ~~operating~~result ~~leases,~~in the Company’s ~~right~~receiving toless ~~use~~than the ~~asset~~recorded isreceivable, ~~reflected as~~(ii) the arisk of non-~~current~~payment ~~right~~as a result of ~~use~~commercial ~~asset~~insurance ~~with~~companies adenying ~~corresponding~~claims, ~~operational~~(iii) the ~~lease~~risk ~~liability~~that ~~raised~~patients atwill fail to remit insurance payments to the ~~date~~Company ofwhen ~~lease~~the ~~inception.~~commercial ~~The~~insurance ~~right~~ company pays out-of-network ~~use~~claims ~~asset~~directly ~~and~~to the ~~operational~~patient, ~~lease~~(iv) resource ~~liability~~and capacity ~~are~~constraints ~~amortized~~that ~~over~~may prevent the ~~right~~Company from handling the volume of ~~use~~billing ~~period~~and ~~using~~collection issues in a timely manner, (v) the risk ~~effective~~that ~~interest~~patients ~~rate~~do ~~implied~~not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not incovered by insurance) and (vi) the ~~operating~~risk ~~lease~~of ~~agreement~~non-payment from uninsured patients.

hf) ~~Property~~Allowance ~~and~~for ~~equipment~~Doubtful Accounts

~~Property~~The ~~and~~Company ~~equipment~~derives isthe ~~recorded~~majority of its revenues from commercial payors at ~~cost~~in-network rates. ~~Depreciation~~The isCompany ~~calculated~~recognizes revenue based on historical collections received from healthcare providers, recognizing only a percentage of revenues actually billed. Effectively recognizing revenue net of any expected billing differentials. Based on the ~~straight~~Company’s ~~line~~collection experience, the percentage of revenue recognized is adjusted on a periodic basis, ~~over~~thereby taking into account expected credit losses in the ~~estimated~~revenue ~~life~~recognition process. The revenue we recognize is already net of ~~the~~expected ~~asset~~credit losses, therefore management does not maintain a separate allowance for doubtful accounts, contractual and other discounts.

~~F-8~~Management also takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the percentage of revenue to be recognized.

~~ETHEMA~~g) ~~HEALTH CORPORATION~~Leases

~~NOTES~~The TOCompany ~~THE~~accounts ~~CONSOLIDATED~~for ~~FINANCIAL~~leases ~~STATEMENTS~~in terms of ASC 842. In terms of ASC 842, the Company assesses whether any asset based leases entered into for periods longer than twelve months meet the definition of financial leases or operation leases, by evaluating the terms of the lease, including the following; the duration of the lease; the implied interest rate in the lease; the cash flows of the lease; and whether the Company intends to retain ownership of the asset at the end of the lease term.

~~2. Summary~~Leases which imply that the Company will retain ownership at the end of ~~significant~~the ~~accounting~~lease ~~policies~~term ~~(continued)~~are classified as financial leases, are included in property and equipment with a corresponding financial liability raised at the date of lease inception. Interest incurred on financial leases are expensed using the effective interest rate method.

Leases which i)imply ~~Long~~that ~~Lived~~the ~~Assets~~Company will not acquire the asset at the end of the lease term are classified as operating leases, the Company’s right to use the asset is reflected as a non-current right of use asset with a corresponding operational lease liability raised at the date of lease inception. The right of use asset and the operational lease liability are amortized over the right of use period using the effective interest rate implied in the operating lease agreement.

~~The Company evaluates the carrying value~~h) ofProperty ~~its~~and long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.equipment

~~Fair~~Property and ~~value~~equipment is ~~based~~recorded ~~upon discounted cash flows of the assets~~ at acost. ~~rate~~Depreciation ~~deemed~~is ~~reasonable~~calculated ~~for~~on the ~~type~~straight ofline ~~asset~~basis ~~and~~over ~~prevailing~~the ~~market conditions, appraisals, and, if appropriate, current~~ estimated ~~net~~life ~~sales~~of ~~proceeds~~the ~~from pending offers~~asset.

ji) ~~Intangible~~Long ~~assets~~Lived Assets

~~Intangible~~The Company evaluates the carrying value of its long-lived assets ~~are~~for ~~stated~~impairment atby ~~acquisition~~comparing ~~cost~~the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less ~~accumulated~~than ~~amortization,~~the ifnet ~~applicable~~book value of the assets, ~~less~~the ~~any~~excess of ~~adjustments~~the ~~for~~net ~~impairment~~book ~~losses~~value over the estimated fair value will be charged to earnings.

~~Amortization~~Fair value is ~~charged~~based onupon adiscounted ~~straight-line~~cash ~~basis~~flows ~~over the estimated remaining useful lives~~ of the ~~individual~~assets ~~intangibles.~~at ~~Where~~a ~~intangibles~~rate ~~are~~ deemed to bereasonable ~~impaired~~for the ~~Company~~type ~~recognizes~~of anasset ~~impairment~~and ~~loss~~prevailing ~~measured~~market asconditions, appraisals, ~~the~~and, ~~difference~~if ~~between~~appropriate, ~~the~~current estimated ~~fair~~net ~~value~~sales ofproceeds ~~the~~from ~~intangible and~~pending ~~its book value~~offers.

Licenses to provide substance abuse rehabilitation services are amortized over the expected life of the contract, including any anticipated renewals. The Company expects its licenses to remain in operation for a period of five years.F-8

~~k) Leases~~ETHEMA HEALTH CORPORATION

~~The~~NOTES ~~Company~~TO ~~accounts~~THE ~~for~~CONSOLIDATED ~~leases~~FINANCIAL in terms of AC 842 whereby leases are classified as either finance or operating leases. Leases that transfer substantially all of the benefits and inherent risks of ownership of property to the Company are accounted for as finance leases. At the time a finance lease is entered into, an asset is recorded together with its related long-term obligation to reflect the acquisition and financing. Property and equipment recorded under finance leases is amortized on the same basis as described above. Operating leases are recognized on the balance sheet as a lease liability with a corresponding right of use asset for all leases with a term that is more than twelve months. Payments under operating leases are expensed as incurred.STATEMENTS

l2. Summary of significant accounting policies (continued) ~~Derivatives~~

~~The Company~~j) ~~evaluates~~Intangible embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company previously used a Black Scholes Option Pricing model to estimate the fair value of convertible debt conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period were included in the statements of operations. Inputs into the Black Scholes Option Pricing model require estimates, including such items as estimated volatility of the Company’s stock, risk free interest rate and the estimated life of the financial instruments being fair valued.assets

IfIntangible ~~the~~assets ~~conversion~~are ~~feature~~stated ~~does~~at ~~not~~acquisition ~~require~~cost ~~derivative~~less ~~treatment~~accumulated ~~under~~amortization, ~~ASC~~if ~~815~~applicable, ~~the~~less ~~instrument~~any isadjustments ~~evaluated under ASC 470-20 “Debt with Conversion and Other Options”~~ for ~~consideration~~impairment ~~of any beneficial conversion feature~~losses.

m)Amortization ~~Financial~~is ~~instruments~~charged on a straight-line basis over the estimated remaining useful lives of the individual intangibles. Where intangibles are deemed to be impaired the Company recognizes an impairment loss measured as the difference between the estimated fair value of the intangible and its book value.

~~The~~Licenses ~~Company~~to ~~initially~~provide ~~measures~~substance ~~its~~abuse ~~financial~~rehabilitation ~~assets~~services ~~and~~are ~~liabilities~~amortized atover ~~fair~~the ~~value,~~expected ~~except~~life ~~for~~of ~~certain~~the ~~non-arm’s~~contract, ~~length~~including ~~transactions~~any anticipated renewals. The Company ~~subsequently~~expects ~~measures~~its ~~all~~licenses ~~its~~to ~~financial~~remain ~~assets~~in ~~and~~operation ~~financial~~for ~~liabilities~~a atperiod ~~amortized~~of ~~cost~~five years.

~~Financial assets~~k) ~~measured at amortized cost include cash and accounts receivable.~~Derivatives

~~Financial~~The ~~liabilities~~Company ~~measured~~evaluates atembedded ~~amortized~~conversion ~~cost~~features ~~include~~within ~~bank~~convertible ~~indebtedness,~~debt ~~accounts~~under ~~payable~~ASC 815 “Derivatives and ~~accrued~~Hedging” ~~liabilities,~~to ~~withholding~~determine whether ~~taxes~~the ~~payable,~~embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Company previously used a Black Scholes Option Pricing model to estimate the fair value of convertible ~~notes~~debt ~~payable~~conversion features at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period were included in the statements of operations. Inputs into the Black Scholes Option Pricing model require estimates, ~~loans~~including ~~payable~~such items as estimated volatility of the Company’s stock, risk free interest rate and ~~related~~the ~~party~~estimated ~~notes~~life of the financial instruments being fair valued.

~~Financial~~If ~~assets measured at cost are tested for impairment when there are indicators of impairment. The amount of~~ the ~~write-down~~conversion isfeature ~~recognized in~~does ~~net~~not ~~income.~~require ~~The~~derivative ~~previously~~treatment ~~recognized~~under ~~impairment~~ASC ~~loss may be reversed to the extent of the improvement~~815, ~~directly or by adjusting~~ the ~~allowance~~ ~~account,~~instrument ~~provided it~~ is noevaluated ~~greater~~under ~~than~~ASC ~~the~~470-20 ~~amount~~“Debt ~~that would have been reported at the date of the reversal had the impairment~~with ~~not~~Conversion ~~been~~and ~~recognized~~Other ~~previously.~~Options” ~~The~~for ~~amount~~consideration of ~~the~~any ~~reversal~~beneficial isconversion ~~recognized in net income~~feature. The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

~~FASB ASC~~l) ~~820~~Financial defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:instruments

●The Company ~~Level~~initially 1.measures ~~Observable~~its ~~inputs~~financial ~~such~~assets asand ~~quoted~~liabilities ~~prices~~at infair ~~active markets; ● Level 2. Inputs~~value, ~~other~~except ~~than~~for ~~the~~certain ~~quoted~~non-arm’s ~~prices~~length intransactions. The ~~active~~Company ~~markets,~~subsequently ~~that~~measures ~~are~~all ~~observable~~its ~~either~~financial ~~directly~~assets ~~or indirectly;~~ and ●financial ~~Level~~liabilities 3.at ~~Unobservable~~amortized ~~inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions~~cost.

~~The~~Financial ~~Company~~assets ~~measures~~measured ~~its convertible debt and any derivative liabilities associated therewith~~ at ~~fair~~amortized ~~value.~~cost ~~These~~include ~~liabilities~~cash ~~are revalued periodically~~ and ~~the~~accounts ~~resultant gain or loss is realized through the consolidated Statement of Operations and Comprehensive Loss~~receivable.

~~F-9~~Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, taxes payable, convertible notes payable, promissory notes, receivables funding, loans payable and related party notes.

~~ETHEMA~~Financial ~~HEALTH~~assets ~~CORPORATION~~measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income. The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

~~NOTES~~FASB TOASC ~~THE~~820 ~~CONSOLIDATED~~defines ~~FINANCIAL~~fair ~~STATEMENTS~~value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

● Level 1. Observable inputs such as quoted prices in active markets; ● Level 2. ~~Summary of~~ ~~significant~~Inputs, ~~accounting~~other ~~policies~~than ~~(continued)~~the quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

~~n) Related~~The ~~parties~~Company measures its convertible debt and any derivative liabilities associated therewith at fair value. These liabilities are revalued periodically and the resultant gain or loss is realized through the consolidated Statement of Operations and Comprehensive Loss.

Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged.F-9

~~o) Revenue~~ETHEMA ~~recognition~~HEALTH CORPORATION

~~ASC~~NOTES ~~606~~TO ~~requires~~THE ~~companies~~CONSOLIDATED toFINANCIAL ~~exercise more judgment and recognize revenue using a five-step process.~~STATEMENTS

~~The Company’s~~2. ~~provision~~Summary ~~for doubtful accounts are recorded as a direct reduction to revenue instead~~ of ~~being~~significant ~~presented~~accounting aspolicies ~~a separate line item on the consolidated statements of operations and comprehensive loss.~~(continued)

~~As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in ASC 606-10-50-14(a~~m)~~. Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at~~ ~~the~~Related end of the reporting period or when the Company expects to recognize the revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to remain admitted in our facilities.parties

~~The~~Parties ~~Company~~are ~~receives~~considered ~~payments~~to ~~from~~be related to the ~~following~~Company ~~sources~~if ~~for~~the ~~services~~parties ~~rendered~~directly inor ~~our~~indirectly, ~~U.S.~~through ~~Facility:~~one ~~(i) commercial~~or ~~insurers;~~more ~~and~~intermediaries, ~~(ii) individual~~control, are controlled ~~patients~~by, ~~and~~or ~~clients.~~are Asunder common control with the ~~period~~Company. ~~between~~Related parties also include principal owners of the ~~time~~Company, its management, members of ~~service~~the ~~and~~immediate ~~time~~families of ~~payment~~principal isowners ~~typically~~of ~~one~~the ~~year~~Company orand ~~less,~~its management and other parties with which the Company ~~elected~~may deal if one party controls or can significantly influence the ~~practical~~management ~~expedient~~or ~~under~~operating ~~ASC~~policies ~~606-10-32-18~~of ~~and~~the ~~does~~other ~~not~~to ~~adjust~~an ~~for~~extent that one of the ~~effects~~transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of athe ~~significant~~goods ~~financing~~or ~~component~~services exchanged.

~~The~~n) ~~Company~~Revenue derives a significant portion of its revenue from payors that receive discounts from established billing rates. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management.recognition

~~Settlements~~ASC ~~with~~606 ~~third-party~~requires ~~payors~~companies ~~are~~to ~~estimated~~exercise ~~and~~more ~~recorded~~judgment ~~in the period in which the related services are rendered~~ and ~~are~~recognize ~~adjusted~~revenue inusing future periods as final settlements are determined. In the opinion of management, adequate provision has been made for any adjustments and final settlements. However, there can be no assurance that any such adjustments and final settlements will not have a ~~material~~five-step ~~effect on the Company’s financial condition or results of operations~~process. The Company’s receivables were $313,338 and $337,074 at December 31, 2023 and December 31, 2022, respectively. Management believes that these receivables are properly stated and are not likely to be settled for a significantly different amount.

The Company’s ~~revenues~~provision ~~are~~for ~~recognized~~doubtful ~~when~~accounts ~~control of the promised goods or services~~ are ~~transferred~~recorded toas a ~~customer,~~direct inreduction ~~an amount that reflects the consideration that the Company expects~~ to ~~receive~~revenue ininstead ~~exchange~~of ~~for~~being ~~those~~presented ~~services.~~as ~~The~~a ~~Company derives its revenues from~~separate ~~the~~line ~~sale~~item ofon ~~its services. The Company applies~~ the ~~following~~consolidated ~~five~~statements ~~steps in order to determine the appropriate amount~~ of ~~revenue~~operations ~~to be~~and ~~recognized~~comprehensive ~~as it fulfills its obligations under each of its revenue transactions:~~ loss.

i.As our ~~identify~~performance ~~the~~obligations ~~contract~~relate to contracts with a ~~customer;~~duration ~~ii.~~of ~~identify~~one year or less, the ~~performance~~Company ~~obligations~~elected the optional exemption in ASC 606-10-50-14(a). Therefore, the ~~contract;~~Company ~~iii.~~is ~~determine~~not required to disclose the transaction price; ~~iv.~~for ~~allocate~~the remaining performance obligations at the ~~transaction~~end ~~price~~of the reporting period or when the Company expects to ~~performance~~recognize the revenue. The Company has minimal unsatisfied performance obligations inat the ~~contract;~~end ~~and~~of the reporting period as our patients typically are under no obligation to remain admitted in our facilities.

vThe Company receives payments from the following sources for services rendered in our U.S. ~~recognize~~Facility: ~~revenue~~(i) commercial asinsurers; and (ii) individual patients and clients. As the ~~performance~~period ~~obligation~~between the time of service and time of payment is ~~satisfied~~typically one year or less, the Company elected the practical expedient under ASC 606-10-32-18 and does not adjust for the effects of a significant financing component.

FThe Company derives a significant portion of its revenue from payors that receive discounts from established billing rates. The various managed care contracts under which these discounts must be calculated are complex, subject to interpretation and adjustment, and may include multiple reimbursement mechanisms for different types of services provided in the Company’s inpatient facilities and cost settlement provisions. Management estimates the transaction price on a payor-10specific basis given its interpretation of the applicable regulations or contract terms. The services authorized and provided and related reimbursement are often subject to interpretation that could result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management.

~~ETHEMA~~Settlements ~~HEALTH~~with ~~CORPORATION~~third-party payors are estimated and recorded in the period in which the related services are rendered and are adjusted in future periods as final settlements are determined. In the opinion of management, adequate provision has been made for any adjustments and final settlements. However, there can be no assurance that any such adjustments and final settlements will not have a material effect on the Company’s financial condition or results of operations. The Company’s receivables were $260,841 and $313,338 at December 31, 2024 and December 31, 2023, respectively. Management believes that these receivables are properly stated and are not likely to be settled for a significantly different amount.

~~NOTES~~The TOCompany’s ~~THE~~revenues ~~CONSOLIDATED~~are ~~FINANCIAL~~recognized ~~STATEMENTS~~when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company derives its revenues from the sale of its services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its revenue transactions:

2i. ~~Summary of~~ ~~significant~~identify ~~accounting~~the ~~policies~~contract ~~(continued)~~with a customer; ii. identify the performance obligations in the contract;

~~p) Income~~iii. ~~taxes~~determine the transaction price; iv. allocate the transaction price to performance obligations in the contract; and v. recognize revenue as the performance obligation is satisfied.

The Company accounts for income taxes under the provisions of ASC Topic 740, “Income Taxes”. Under ASC Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income taxes are provided using the liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax basis of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in income in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax assets will not be realized.F-10

~~ASC Topic~~ETHEMA ~~740~~HEALTH contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal 2019, through 2021 are subject to audit or review by the US tax authorities, whereas fiscal 2011 through 2021 are subject to audit or review by the Canadian tax authority.CORPORATION

q)NOTES ~~Net~~TO ~~income~~THE ~~per~~CONSOLIDATED ~~Share~~FINANCIAL STATEMENTS

~~Basic net~~2. ~~income~~Summary ~~per share is computed on the basis~~ of ~~the~~significant ~~weighted~~accounting ~~average~~policies ~~number of common stock outstanding during the year.~~(continued)

~~Diluted~~o) ~~net~~Income income per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net income per share are excluded from the calculation.taxes

~~Dilution~~The isCompany ~~computed~~accounts byfor ~~applying~~income ~~the~~taxes ~~treasury~~under ~~stock~~the ~~method~~provisions ~~for~~of ~~options~~ASC ~~and~~Topic ~~warrants.~~740, “Income Taxes”. Under ~~this~~ASC ~~method~~Topic 740, ~~“in-the~~deferred ~~money”~~tax ~~options~~assets and ~~warrants~~ liabilities are ~~assumed~~recognized tofor bethe ~~exercised~~future attax ~~the~~consequences ~~beginning~~attributable ofto ~~the~~differences ~~period~~between ~~(or~~the atconsolidated financial ~~the~~statement ~~time~~carrying amounts of ~~issuance,~~existing ifassets ~~later),~~ and asliabilities ifand ~~funds~~their ~~obtained thereby~~respective ~~were~~tax ~~used~~bases. toDeferred ~~purchase~~income ~~common~~taxes ~~stock~~are atprovided using the ~~average~~liability ~~market~~method. ~~price~~Under ~~during~~this ~~the~~method, ~~period.~~deferred ~~Dilution~~income istaxes ~~computed~~are byrecognized ~~applying~~for the ~~if-converted method~~tax ~~for~~consequences ~~convertible~~of ~~preferred~~temporary ~~stocks.~~differences by ~~Under~~applying ~~this~~enacted ~~method,~~statutory ~~convertible~~rates ~~preferred~~applicable ~~stock~~to isfuture ~~assumed~~years to bedifferences ~~converted~~between at the ~~beginning~~financial ~~of the~~statement ~~period~~carrying ~~(or~~amounts atand the tax ~~time~~bases of ~~issuance,~~existing ifassets ~~later),~~ and ~~preferred~~liabilities. ~~dividends~~The ~~(if~~tax ~~any)~~basis ~~will~~of bean ~~added~~asset ~~back~~or liability is the amount attributed to ~~determine~~that ~~income~~asset ~~applicable~~or liability tofor ~~common~~tax ~~stock~~purposes. The ~~shares~~effect ~~issuable~~on ~~upon~~deferred ~~conversion~~taxes ~~will~~of bea ~~added~~change toin ~~weighted~~tax ~~average~~rates ~~number~~is ofrecognized ~~common~~in ~~stock~~income ~~outstanding~~in the period of change. ~~Conversion~~A valuation allowance ~~will~~is beprovided ~~assumed~~to ~~only~~reduce the amount of deferred tax assets if it ~~reduces~~is ~~earnings~~considered ~~per~~more ~~share~~likely (than not that some portion of, or ~~increases~~all ~~loss~~of, ~~per~~the deferred ~~share)~~tax assets will not be realized.

r)ASC Topic ~~Stock~~740 ~~based~~contains ~~compensation~~a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. The tax returns for fiscal 2020, through 2023 are subject to audit or review by the US tax authorities, whereas fiscal 2011 through 2023 are subject to audit or review by the Canadian tax authority.

~~Stock~~p) ~~based~~Net ~~compensation~~(loss) ~~cost~~income isper ~~measured at the grant date, based on the estimated fair value of the award and is recognized as expense over the employee’s requisite service period or vesting period on a straight-line basis.~~ Share-based compensation expense recognized in the consolidated statements of operations for the year ended December 31, 2023 and 2022 is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. This estimate will be revised in subsequent periods if actual forfeitures differ from those estimates. We have no awards with performance conditions and no awards dependent on market conditions.

~~F-11~~Basic net (loss) income per share is computed on the basis of the weighted average number of common stock outstanding during the year.

~~ETHEMA~~Diluted ~~HEALTH~~net ~~CORPORATION~~(loss) income per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net (loss) income per share are excluded from the calculation.

~~NOTES~~Dilution TOis ~~THE~~computed ~~CONSOLIDATED~~by ~~FINANCIAL~~applying ~~STATEMENTS~~the treasury stock method for options and warrants. Under this method, “in-the money” options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Dilution is computed by applying the if-converted method for convertible preferred stocks. Under this method, convertible preferred stock is assumed to be converted at the beginning of the period (or at the time of issuance, if later), and preferred dividends (if any) will be added back to determine income applicable to common stock. The shares issuable upon conversion will be added to weighted average number of common stock outstanding. Conversion will be assumed only if it reduces earnings per share (or increases loss per share).

~~2. Summary~~q) ofStock ~~significant~~based ~~accounting policies (continued)~~compensation

Stock based compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense over the employee’s) requisite service period or vesting period on a straight-line basis. Share-based compensation expense recognized ~~Financial~~in ~~instruments~~the ~~Risks~~consolidated statements of operations for the year ended December 31, 2024 and 2023 is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. This estimate will be revised in subsequent periods if actual forfeitures differ from those estimates. We have no awards with performance conditions and no awards dependent on market conditions.

The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet date, December 31, 2023 and 2022.F-11

i.ETHEMA HEALTH ~~Credit risk~~CORPORATION

~~Credit~~NOTES ~~risk~~TO isTHE ~~the~~CONSOLIDATED ~~risk~~FINANCIAL that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that subject the Company to credit risk consist primarily of accounts receivable.STATEMENTS

~~Credit risk~~2. ~~associated~~Summary ~~with accounts receivable is mitigated as only a percentage~~ of ~~the~~significant ~~revenue~~accounting ~~billed~~policies ~~to health insurance companies is recognized as income until such time as the actual funds are collected. The revenue is concentrated amongst several health insurance companies located in the US.~~(continued)

Inr) ~~the~~Financial ~~opinion~~instruments ~~of management, credit risk with respect to accounts receivable is assessed as low.~~Risks

iiThe Company is exposed to various risks through its financial instruments. ~~Liquidity~~The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet date, December 31, 2024 and 2023.

~~Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due~~i. ~~The~~Credit ~~Company is exposed to liquidity~~ risk through its working capital deficiency of approximately $7.9 million, and an accumulated deficit of approximately $42.4 million. The Company is dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from that of the prior year.

~~iii~~Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial ~~Market~~instruments that subject the Company to credit risk consist primarily of accounts receivable.

~~Market~~Credit risk isassociated ~~the~~with ~~risk~~accounts ~~that~~receivable ~~the~~is ~~fair~~mitigated ~~value~~as oronly ~~future~~a ~~cash~~percentage ~~flows~~ of athe ~~financial~~revenue ~~instrument~~billed ~~will~~to ~~fluctuate~~health ~~because~~insurance ofcompanies ~~changes~~is ~~in market prices.~~recognized ~~Market~~as ~~risk~~income ~~comprises~~until ofsuch ~~three~~time ~~types~~as ofthe ~~risk:~~actual ~~interest~~funds ~~rate~~are ~~risk, currency risk, and other price risk~~collected. The ~~Company~~revenue is ~~exposed~~concentrated toamongst ~~interest rate~~several ~~risk~~health ~~and~~insurance ~~currency~~companies ~~risk~~located in the US.

a.In the ~~Interest~~opinion ~~rate~~of management, credit risk with respect to accounts receivable is assessed as low.

~~Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates~~ii. ~~The~~Liquidity ~~Company is exposed to interest rate~~ risk ~~on its convertible debt, short term loans, third party loans and government assistance loans as of December 31, 2023. In the opinion of management, interest rate risk is assessed as moderate.~~

bLiquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. ~~Currency~~The Company is exposed to liquidity risk through its working capital deficiency of approximately $9.1 million, and an accumulated deficit of approximately $44.4 million. The Company is dependent upon the raising of additional capital in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. In the opinion of management, liquidity risk is assessed as high, material and remains unchanged from that of the prior year.

~~Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates~~iii. ~~The~~Market ~~Company has limited exposure to assets and liabilities denominated in foreign currencies. The Company has not entered into any hedging agreements to mitigate this~~ risk~~. In the opinion of management, currency risk is assessed as low, material and remains unchanged from that of the prior year.~~

cMarket risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market ~~Other~~risk comprises of three types of risk: interest rate risk, currency risk, and other price risk. The Company is exposed to interest rate risk and currency risk.

~~Other price risk is the risk that the fair value or future cash flows of~~ a. ~~financial~~Interest ~~instrument will fluctuate because of changes in market prices (other than those arising from interest~~ rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. In the opinion of management, the Company is not exposed to this risk and remains unchanged from the prior year.

~~t) Recent~~Interest ~~accounting~~rate ~~pronouncements~~risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its convertible debt, promissory notes, short term loans, receivables funding third party loans and government assistance loans as of December 31, 2024. In the opinion of management, interest rate risk is assessed as moderate.

~~The Financial Accounting Standards Board (“FASB”) issued additional updates during the year ended December 31, 2023~~b. ~~None~~Currency of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the Company’s consolidated financial statements upon adoption.risk

~~F-12~~Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has limited exposure to assets and liabilities denominated in foreign currencies. The Company has not entered into any hedging agreements to mitigate this risk. In the opinion of management, currency risk is assessed as low, immaterial and remains unchanged from that of the prior year.

~~ETHEMA HEALTH~~c. ~~CORPORATION~~Other price risk

~~NOTES~~Other TOprice ~~THE~~risk ~~CONSOLIDATED~~is ~~FINANCIAL~~the ~~STATEMENTS~~risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. In the opinion of management, the Company is not exposed to this risk and remains unchanged from the prior year.

3d. ~~Going~~ ~~concern~~Concentration of customers

~~The Company’s~~During ~~consolidated~~the ~~financial~~years ended ~~statements~~December ~~have been prepared in accordance with US GAAP applicable to a going concern~~31, ~~which assumes~~2024 ~~that the Company will be able to meet its obligations~~ and ~~continue its operations in the normal course of business. At December 31,~~ 2023, the Company ~~has~~derived aapproximately ~~working~~100% ~~capital deficiency~~ of ~~$7.4 million,~~its ~~and total liabilities~~ in-patient ~~excess~~revenues offrom ~~assets~~a ingroup ~~the amount~~ of ~~$6.2 million . Management believes that current available resources will not be sufficient to fund the Company’s planned~~commercial ~~expenditures~~healthcare ~~over the next 12 months~~insurers. ~~Accordingly,~~Any ~~the~~adverse ~~Company~~change ~~will~~in bepolicy ~~dependent~~towards ~~upon~~ the ~~raising~~treatment of ~~additional~~substance ~~capital~~abuse ~~through~~patients ~~placement of~~adopted ~~common~~by ~~shares,~~a ~~and/or~~majority ~~debt financing in order to implement its business plan and generating sufficient revenue in excess~~ of ~~costs. If~~ the ~~Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders~~ ~~will~~group ~~experience dilution, and such securities may have rights, preferences or privileges senior to those~~ of ~~the~~commercial ~~holders~~healthcare ofinsurers common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that the Company will ~~be successful with future financing ventures, and the inability to secure such financing may~~ have a ~~material~~significant ~~adverse~~impact ~~effect~~ on the Company~~’s financial condition~~. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

4.s) ~~Disposal~~Recent ofaccounting ~~subsidiaries~~pronouncements

~~On June~~The ~~30,~~Financial ~~2023,~~Accounting Standards ~~the~~Board ~~Company~~(“FASB”) ~~entered~~issued ~~into~~additional anupdates ~~exchange~~during ~~agreement~~the ~~with~~year ~~Leonite~~ended ~~Capital,~~December ~~LLC~~31, ~~whereby~~2024. itNone ~~exchanged~~of ~~the~~these ~~400,000~~standards are ~~Series~~either Bapplicable ~~shares with~~to athe ~~value~~Company ofor ~~$400,000~~require ~~plus~~adoption ~~accrued~~at ~~dividends~~a ~~thereon~~future ofdate ~~$61,184~~and ~~for~~none ~~its~~are ~~entire~~expected ~~shareholding~~to inhave ~~its~~a ~~property~~material ~~owning~~impact ~~subsidiary,~~on ~~Cranberry~~the ~~Cove~~Company’s ~~Holdings.~~consolidated ~~The~~financial ~~Series~~statements ~~B shares were cancelled~~ upon ~~consummation of the transaction~~adoption.

~~Immediately prior~~t) Comprehensive toincome ~~the disposal of Cranberry Cove Holdings, the Company assumed the loan owed to a third party of $779,005 and the loan owing to~~(loss) Leon Developments of $1,973,837, Leon developments, a related party, owned by the Company’s CEO, Shawn Leon. In addition, the Company forgave the intercompany debt owing by Cranberry Cove Holdings of $4,566,848.

~~The~~Comprehensive ~~assets~~income ~~and~~is ~~liabilities~~defined ~~disposed~~as the change in equity of ~~were~~a ascompany ~~follows:~~during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. The Company does not have any comprehensive income (loss) for the periods presented.

~~Schedule~~u) Segment ofinformation ~~assets and liabilities Disposal~~

	Net book value
Assets
Other receivable	$	12,015
Property and equipment		2,420,499
		2,432,514
Liabilities
Accounts payable and accrued liabilities		(196,859	)
Government assistance loans		(45,317	)
Mortgage loan		(3,525,223	)
		(3,767,399	)
Disposal of subsidiary to related party – recorded as additional paid in capital	$	(1,334,885	)

The Company’s Chief Executive Officer and President (“CEO”) is our chief operating decision maker (“CODM”) and evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis. Because our CODM evaluates financial performance on a consolidated basis, the Company has determined that it operates as a single reportable segment composed of the financial results of Ethema Health Corporation.

The minority shareholders interest related to the Series A preferred stock in Cranberry Cove Holdings was recorded as a deemed contribution to the Company and credited to additional paid in capital, resulting in a total credit to additional paid in capital of $2,034,885.F-12

~~The~~ETHEMA ~~cancellation~~HEALTH of the Series B shares, which were owned by Leonite Capital, a related party, was deemed to be an extinguishment of debt by a related party and recorded as a credit to additional paid in capital of $461,184.CORPORATION

~~F-13~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~ETHEMA HEALTH~~3. ~~CORPORATION~~Going concern

~~NOTES~~The TOaccompanying ~~THE~~consolidated ~~CONSOLIDATED~~financial ~~FINANCIAL~~statements ~~STATEMENTS~~have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. For the year ended December 31, 2024, the Company incurred operating losses of $1.3 million and had a negative cash flow from operating activities of 0.5 million. As of December 31, 2024, the Company had an accumulated deficit of $44.4 million, working capital deficiency of $9.1 million and total liabilities in excess of total assets of $7.5 million. These matters raise substantial doubt about Company’s ability to continue as a going concern.

4Management believes that current available resources will not be sufficient to fund the Company’s planned expenditures over the next 12 months. Accordingly, ~~Disposal~~the Company will be dependent upon the raising of ~~subsidiaries~~additional ~~(continued)~~capital through placement of common shares, and/or debt financing in order to implement its business plan and generating sufficient revenue in excess of costs. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain geographical areas, or techniques that it might otherwise seek to retain. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition.

OnBased ~~December~~on ~~30,~~the ~~2022~~uncertainties described above, the Company ~~entered~~believes ~~into~~its ~~two~~business ~~agreements~~plan ~~whereby~~does itnot ~~sold~~alleviate ~~Greenstone~~the ~~Muskoka~~existence ~~and~~of ~~ARIA~~substantial doubt about its ability to continue as a going concern within one year from the ~~Company~~date ~~Chairman~~of ~~and~~the ~~CEO~~issuance of these consolidated financial statements. ~~for~~The ~~gross~~accompanying ~~proceeds~~consolidated financial statements do not include any adjustments to the amounts and classifications of $0assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

~~Immediately prior~~4. toDisposal ~~the disposal~~ of ~~these subsidiaries, Greenstone Muskoka forgave its intercompany receivable owing from the Company of $6,690,381 and the Company forgave its intercompany balance owing from ARIA of $9,605,315.~~subsidiary

~~The~~On ~~Company~~June ~~also~~30, ~~assumed~~2023, the ~~liability~~Company toentered ~~pay~~into ~~for~~an exchange agreement with Leonite Capital, LLC, whereby it exchanged the ~~Government~~400,000 ~~assistance~~Series ~~loan~~B shares with a value of $50400,~~073~~000 plus accrued dividends thereon of $61,184 for its entire shareholding in its property owning subsidiary, Cranberry Cove Holdings. The Series B shares were cancelled upon consummation of the transaction.

~~Disposal~~Immediately ~~Groups~~prior ~~including~~to ~~discontinued~~the ~~operations~~disposal of Cranberry Cove Holdings, the Company assumed the loan owed to a third party of $779,005 and the loan owing to Leon Developments of $1,973,837, Leon developments, a related party, owned by the Company’s CEO, Shawn Leon. In addition, the Company forgave the intercompany debt owing by Cranberry Cove Holdings of $4,566,848.

The assets and liabilities disposed of were as follows:

	Greenstone Muskoka			ARIA		Net book value
Schedule of assets and liabilities Disposal	Net book value
Assets
Cash	$	382		$	1,038	$	1,420
Other receivable	$	12,015
		382			1,038		1,420
Property and equipment		2,420,499
Liabilities
		2,432,514
Accounts payable and accrued liabilities		—			134,795		134,795
Liabilities
Payroll taxes		134,812			—		134,812
Accounts payable and accrued liabilities		(196,859	)
Income taxes payable		360,380			—		360,380
Government assistance loans		(45,317	)
		495,192			134,795		629,987
Mortgage loan		(3,525,223	)
Net liabilities sold		494,810			133,757		628,567
		(3,767,399	)
Net proceeds realized		—			—		—
Disposal of subsidiary to related party – recorded as additional paid in capital	$	(1,334,885	)
Gain on disposal booked as adjustment to paid in capital	$	494,810		$	133,757	$	628,567

5.The ~~Property~~minority stockholders interest related to the Series A preferred stock in Cranberry Cove Holdings of $700,000 was recorded as a deemed contribution to the Company and ~~equipment~~credited to additional paid in capital, resulting in a total credit to additional paid in capital of $2,034,885.

~~Acquisition~~The cancellation of the Series B shares, which were owned by Leonite Capital, a related party, was deemed to be an extinguishment of debt by a related party and ~~simultaneous~~recorded ~~disposition~~as a credit to additional paid in capital of ~~property~~$461,184.

On October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida (“950”), the property in which it operates its treatment center, for gross proceeds of $5,500,000. (“Purchase Agreement”). The closing was originally scheduled for February 1, 2023, however through a series of 6 addendums to the Purchase Agreement requiring the payment of a total $180,000 in extension fees, the Closing was extended to August 3, 2023.F-13

On ETHEMA ~~February~~HEALTH 27, 2023 the Company signed a listing agreement with Stream Capital Partners listing 950 for sale at a price of $9,568,000 with the intention of identifying a buyer that would purchase and then potentially enter into a lease agreement with the Company.CORPORATION

OnNOTES ~~May~~TO 4,THE ~~2023~~CONSOLIDATED ~~the~~FINANCIAL Company signed a Letter of Intent with Pontus Net Lease Advisers, LLC to sell 950 for $8,500,000 and lease the property to the Company for a term of twenty years with two ten year extensions. On May 19, 2023, the Company signed a purchase and sale agreement with Pontus Net Lease Advisors to sell 950 for $8,500,000. On August 4, 2023, the Company completed both the purchase of 950 from Evernia Station Limited Partnership and the subsequent sale of 950 to Pontus Net Lease Advisors, LLC.STATEMENTS

Simultaneously with the closing of the purchase and sale agreements, on August 4, 2023, the Company entered into a long term lease for 950 with an initial term of twenty years, and two ten year extension options5. ~~The~~Acquisition ~~lessor is Pontus EHC Palm Beach, LLC , a Delaware limited liability company and a portfolio company~~ of ~~Pontus~~minority ~~Net~~stockholders ~~Lease~~interest ~~Advisors,~~in LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met.ATHI

~~The~~On ~~Company~~May ~~paid~~15, ~~gross~~2024, ~~proceeds~~the ofCompany ~~$1,449,000~~entered tointo ~~Leonite~~a ~~Capital~~Stock ~~and~~Purchase ~~Leonite~~Agreement ~~Fund~~whereby I,it LPacquired inthe ~~settlement~~remaining 25% of ~~all~~ATHI ~~amounts~~representing ~~outstanding~~5,000,000 shares tofrom ~~both~~the ~~entities, disclosed~~minority instockholder ~~notes~~for 9gross ~~and~~proceeds 10of ~~below~~$1,100,000. InThe ~~addition,~~Company paid an initial deposit of $6525,~~450~~000 ~~was~~and ~~paid~~on toclosing an Edadditional ~~Blasiak~~$600,000. toThe ~~settle~~Company ~~the~~issued ~~convertible~~a non-interest-bearing promissory note ~~disclosed~~for inthe remaining balance of $475,000, which promissory note 9is ~~below,~~repayable in installments of $~~179~~10,~~474~~000 ~~was~~a ~~paid~~month toon ~~Joshua~~each ~~Bauman~~monthly toanniversary ~~settle~~date of the ~~convertible~~agreement ~~promissory~~for ~~note~~months ~~disclosed~~one into ~~note~~eight 9(eight installments) ~~below,~~ and ~~$260,548~~months ~~was paid~~ten tothrough ~~Mirage~~seventeen ~~Realty~~(eight instalments), ~~LLC~~and topayments ~~settle~~of ~~the~~$157,500 ~~senior~~on ~~secured~~month ~~promissory~~nine ~~note,~~and ~~disclosed~~month ineighteen, ~~note~~for 10a total ~~below~~of $475,000.

~~F-14~~The acquisition of the minority stockholders interest was accounted for in terms of ASC 810, Consolidation.

ETHEMA HEALTH CORPORATION

Schedule of acquisition
	Amount
Purchase price
Cash	$	625,000
Promissory note		475,000
Total		1,100,000
Allocation of purchase price
Minority stockholders interest		101,842
Additional paid in capital		(1,201,842	)
Total	$	(1,100,000	)

~~NOTES TO~~6. ~~THE~~Acquisition ~~CONSOLIDATED~~of ~~FINANCIAL~~Boca ~~STATEMENTS~~Cove Detox

5On March 22, 2024, the Company executed a LOI to acquire certain assets, including furniture, equipment inventory and supplies of Boca Cove Detox, LLC, along with the assignment of lease and sub-lease for premises located at 899 Meadow Avenue, Boca Raton, Florida. ~~Property~~On May 1, 2024 the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease for suites 100,101, 201, 202 and ~~equipment~~203 located at 899 Meadows Road, Boca Raton, Florida (~~continued~~the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024 and the Company entered into a Bill of Sale to give effect to the Definitive Agreement.

~~Acquisition~~The purchase price was $240,000 which was settled by a deposit of $20,000 and ~~simultaneous~~a ~~disposition~~cash payment of ~~property~~$220,000 ~~(Continued)~~and the payment to the Seller of $83,393 for the assumption of the security deposit held by the landlord of the Leased Premises located at 899 Meadows Road.

The details of the property purchase and subsequent sale are as follows:

Schedule of acquisition of boca cove detox
	Amount
Purchase price
Cash	$	323,393
Allocation of purchase price
Property and equipment		240,000
Deposit assumed on leased premises		83,393
Total	$	323,393

7. Property ~~purchase~~ and ~~subsequent sale~~equipment

	Amount
Purchase of 950 Evernia Street property
Purchase price	$	5,500,000
Fees and expenses related to property purchase		109,276
Total acquisition cost		5,609,276
Proceeds on sale		8,500,000
Fees and expenses related to disposal of the property		(406,552	)
Net proceeds on disposal of property		8,093,448
Gain on sale of property	$	2,484,172

Acquisition and simultaneous disposition of property

~~Property~~On October 3, 2022 the Company entered into a purchase and ~~equipment~~sale ~~consists~~agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida (“950”), the ~~following:~~ property in which it operates its treatment center, for gross proceeds of $5,500,000. (“Purchase Agreement”). The closing was originally scheduled for February 1, 2023, however through a series of 6 addendums to the Purchase Agreement requiring the payment of a total $180,000 in extension fees, the Closing was extended to August 3, 2023.

~~Schedule~~On ofFebruary 27, 2023 the Company signed a listing agreement with Stream Capital Partners listing 950 for sale at a price of ~~property~~$9,568,000 with the intention of identifying a buyer that would purchase and then potentially enter into a lease agreement with the Company.

	December 31, 2023							December 31, 2022
	Cost		Accumulated depreciation			Net book value		Net book value
Land	$	—	$	—		$	—	$	158,742
Property		—		—			—		2,310,448
Leasehold improvements		459,439		(88,131	)		371,308		373,320
Furniture and fittings		152,234		(47,519	)		104,715		92,941
Vehicles		55,949		(29,060	)		26,889		38,079
Computer equipment		7,525		(2,036	)		5,489		865
	$	675,147	$	(166,746	)	$	508,401	$	2,974,395

F-14

~~Depreciation~~ETHEMA ~~expense~~HEALTH ~~for the year ended December 31, 2023 and 2022 was $140,939 and $182,139, respectively.~~CORPORATION

~~6. Intangibles~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~Intangible assets consist of the Company’s estimate of the fair value of intangibles acquired with the acquisition of ATHI~~7. ~~The~~Property ~~Company~~and ~~allocated the~~equipment ~~excess over the tangible assets acquired, less the liabilities assumed to the contract provided to the Company by a health care service provider.~~(continued)

~~Intangible~~Acquisition ~~assets~~and ~~consist~~simultaneous disposition of ~~the~~property ~~following:~~ (continued)

~~Schedule~~On May 4, 2023 the Company signed a Letter of ~~Intangible~~Intent ~~assets~~with Pontus Net Lease Advisers, LLC to sell 950 for $8,500,000 and lease the property to the Company for a term of twenty years with two ten year extensions. On May 19, 2023, the Company signed a purchase and sale agreement with Pontus Net Lease Advisors to sell 950 for $8,500,000. On August 4, 2023, the Company completed both the purchase of 950 from Evernia Station Limited Partnership and the subsequent sale of 950 to Pontus Net Lease Advisors, LLC.

	December 31, 2023							December 31, 2022
	Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	$	1,789,903	$	(894,951	)	$	894,952	$	125,293

Simultaneously with the closing of the purchase and sale agreements, on August 4, 2023, the Company entered into a long term lease for 950 with an initial term of twenty years, and two ten year extension options. The lessor is Pontus EHC Palm Beach, LLC, a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met.

The Company ~~evaluates~~paid ~~intangible~~gross ~~assets~~proceeds ~~for~~of ~~impairment~~$1,449,000 onto anLeonite ~~annual~~Capital ~~basis~~and ~~during~~Leonite ~~the~~Fund ~~last~~I, ~~month~~LP ofin ~~each~~settlement ~~year~~of ~~and~~all atamounts anoutstanding ~~interim~~to ~~date~~both ~~if indications~~entities. ofIn ~~impairment~~addition, ~~exist.~~$65,450 ~~Intangible~~was ~~asset~~paid ~~impairment~~to isEd ~~determined~~Blasiak byto ~~comparing~~settle the ~~fair~~convertible ~~value~~promissory ofnote ~~the~~owing ~~asset~~ to ~~its~~him, ~~carrying~~$179,474 ~~amount~~was ~~with~~paid ~~an impairment~~to ~~being~~Joshua ~~recognized~~Bauman to ~~only~~settle ~~when~~a ~~the~~convertible ~~fair~~promissory ~~value~~note isowing ~~less~~to ~~than~~him ~~carrying~~and ~~value~~$260,548 ~~and~~was ~~the~~paid ~~impairment~~to isMirage ~~deemed~~Realty, LLC to besettle ~~permanent~~the insenior ~~nature~~secured promissory note owing to them.

The ~~Company~~details ~~recorded~~of ~~$357,981 in amortization expense for finite-lived assets for~~ the ~~years~~property ~~ended~~purchase ~~December~~and ~~31,~~subsequent ~~2023~~sale ~~and~~are ~~2022.~~as follows:

Estimated future amortization expense is as follows:

Schedule of property purchase and subsequent sale
	Amount
Purchase of 950 Evernia Street property
Purchase price	$	5,500,000
Fees and expenses related to property purchase		109,276
Total acquisition cost		5,609,276

Proceeds on sale		8,500,000
Fees and expenses related to disposal of the property		(406,552	)
Net proceeds on disposal of property		8,093,448

Gain on sale of property	$	2,484,172

~~Estimated~~Acquisition ~~future~~of ~~amortization~~Boca ~~expense~~Cove Detox

		Amount
2024	$	357,981
2025		357,981
2026		178,990
Total estimated amortization expense	$	894,952

On May 1, 2024 the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease for suites 100,101, 201, 202 and 203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of the lease from the property owner. The lease was assigned on June 10, 2024 and the Company entered into a Bill of Sale to give effect to the Definitive Agreement. The purchase price of the assets was $240,000.

~~F-15~~Property and equipment consists of the following:

ETHEMA HEALTH CORPORATION

Schedule of property and equipment
		December 31, 2024							December 31, 2023
	Useful lives	Cost		Accumulated depreciation			Net book value		Net book value
Leasehold improvements	Life of lease	$	513,375	$	(137,330	)	$	376,045	$	371,308
Furniture and fittings	6 years		396,711		(93,282	)		303,429		104,715
Vehicles	5 years		55,949		(40,250	)		15,699		26,889
Computer equipment	3 years		9,372		(4,857	)		4,515		5,489
		$	975,407	$	(275,719	)	$	699,688	$	508,401

~~NOTES~~Depreciation TOexpense ~~THE~~for ~~CONSOLIDATED~~the ~~FINANCIAL~~year ~~STATEMENTS~~ended December 31, 2024 and 2023 was $108,971 and $140,938, respectively.

~~7. Leases~~F-15

~~The~~ETHEMA ~~Company~~HEALTH acquired ATHI on July 1, 2021, ATHI’s wholly owned subsidiary had entered into an operating lease agreement for certain real property located at 950 Evernia Street, West Palm Beach, Florida, with effect from February 1, 2019 for a period of three years, expiring on 1 February 2022. Under the terms of the lease agreement, the lease was extended during October 2021 for a further 5 year period until 1 February 2027.CORPORATION

AsNOTES ~~described~~TO inTHE ~~note~~CONSOLIDATED 5FINANCIAL above, on October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida, the property in which it operates its treatment center, for gross proceeds of $5,500,000. On August 3, 2023, after 6 addendums to the agreement, the Company closed on the acquisition of the property. This resulted in the termination of the lease with Evernia station, resulting in the reversal of the remaining right-of-use asset of $1,226,080 and the associated operating lease liability of $1,328,803, which liability included $102,723 of accrued rental, which was offset against the rental expense.STATEMENTS

~~On August 4, 2023, the Company entered into a long term lease for 950 Evernia Street, West Palm Beach, Florida with an initial term of twenty years, and two ten year extension options~~8. The lessor is Pontus EHC Palm Beach, LLC , a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met. Due to the initial lease term of twenty years, the Company is not certain that the extension periods will be exercised at this point in time and accordingly, these have been excluded from the present value of the minimum future lease payments.Intangibles

ToIntangible ~~determine~~assets consist of the ~~present~~Company’s ~~value~~estimate of ~~minimum~~the ~~future~~fair ~~lease~~value ~~payments~~of ~~for~~intangibles ~~operating~~acquired ~~leases~~with atthe ~~August~~acquisition 4,of ~~2023,~~ATHI. ~~the~~The Company ~~was~~allocated the ~~required~~excess toover ~~estimate a~~the ~~rate~~tangible ofassets ~~interest~~acquired, ~~that~~less wethe ~~would~~liabilities ~~have~~assumed to ~~pay~~the tocontract ~~borrow~~provided onto athe ~~collateralized~~Company ~~basis~~by ~~over~~ a ~~similar~~health ~~term~~care ~~in a similar economic environment~~service ~~(the "incremental borrowing rate" or "IBR")~~provider.

~~The~~Intangible ~~Company~~assets ~~determined~~consist the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the Fannie Mae, in excess of ~~$3,000,000 rate based on an 80% value to loan ratio, averaging~~ the ~~15 and 30 year indicative rates, resulting in a rate of 7.70%. The Company determined that 7.70% per annum was an appropriate incremental borrowing rate to apply to its real-estate operating lease.~~following:

The present value of the future minimum lease payments was valued at $9,333,953 on August 4, 2023.

Schedule of intangible assets
		December 31, 2024							December 31, 2023
	Useful lives	Cost		Accumulated amortization			Net book value		Net book value
Health care Provider license	5 Years	$	1,789,903	$	(1,252,932	)	$	536,971	$	894,952

The ~~Right~~Company ofevaluates ~~use~~intangible assets ~~are~~for ~~included~~impairment inon an annual basis during the ~~consolidated~~last ~~balance~~month ~~sheet~~of ~~are~~each asyear ~~follows:~~and at an interim date if indications of impairment exist. Intangible asset impairment is determined by comparing the fair value of the asset to its carrying amount with an impairment being recognized only when the fair value is less than carrying value and the impairment is deemed to be permanent in nature.

~~Schedule~~The ofCompany ~~Right~~recorded of$357,981 in ~~use~~amortization expense for finite-lived assets for the years ended December 31, 2024 and 2023.

	December 31, 2023		December 31, 2022
Non-current assets
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	24,901	$	38,079
Right-of-use assets - operating leases, net of amortization	$	9,323,723	$	1,393,071

Estimated future amortization expense is as follows:

Lease costs consists of the following:

Schedule of future amortization expense
		Amount
2025	$	357,981
2026		178,990
Total estimated amortization expense	$	536,971

~~Schedule of~~9. ~~lease cost~~ Leases

	Year ended December 31,
	2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	11,190	$	11,190
Interest expense on finance lease liabilities		1,938		2,443
		13,128		13,633
Operating lease cost	$	598,336	$	400,207
Lease cost	$	611,464	$	413,840

The Company acquired ATHI on July 1, 2021, ATHI’s wholly owned subsidiary had entered into an operating lease agreement for certain real property located at 950 Evernia Street, West Palm Beach, Florida, with effect from February 1, 2019 for a period of three years, expiring on 1 February 2022. Under the terms of the lease agreement, the lease was extended during October 2021 for a further 5-year period until February 1, 2027.

~~Other~~On October 3, 2022 the Company entered into a purchase and sale agreement with Evernia Station Limited Partnership for the purchase of 950 Evernia Street, West Palm Beach, Florida, the property in which it operates its treatment center, for gross proceeds of $5,500,000. On August 3, 2023, after 6 addendums to the agreement, the Company closed on the acquisition of the property. This resulted in the termination of the lease ~~information:~~ with Evernia station, resulting in the reversal of the remaining right-of-use asset of $1,226,080 and the associated operating lease liability of $1,328,803, which liability included $102,723 of accrued rental, which was offset against the rental expense.

~~Schedule~~On August 4, 2023, the Company entered into a long-term lease for 950 Evernia Street, West Palm Beach, Florida with an initial term of ~~Other~~twenty years, and two ten-year extension options. The lessor is Pontus EHC Palm Beach, LLC, a Delaware limited liability company and a portfolio company of Pontus Net Lease Advisors, LLC. The lease is absolutely net and the lease cost for the initial year is $748,000 paid monthly. The lease increases at a rate of 2.75% per year for a total term lease obligation of $19,595,653 over the initial twenty-year term. The Lease is personally guaranteed by the Company President and the guarantee may be released after 5 years based on certain financial and performance metrics being met. Due to the initial lease term of twenty years, the Company is not certain that the extension periods will be exercised at this point in time and accordingly, these have been excluded from the present value of the minimum future lease payments.

	Year ended December 31,
	2023			2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(1,938	)	$	(2,443	)
Operating cash flows from operating leases		(600,299	)		(380,545	)
Financing cash flows from finance leases		(7,891	)		(7,437	)
Cash paid for amounts included in the measurement of lease liabilities	$	(610,127	)	$	(390,425	)
Weighted average lease term – finance leases		2 years and ten months			3 years and ten months
Weighted average remaining lease term – operating leases		19 years and 8 months			4 years and 1 months
Discount rate – finance leases		6.60	%		6.60	%
Discount rate – operating leases		7.7	%		4.64	%

To determine the present value of minimum future lease payments for operating leases at August 4, 2023, the Company was required to estimate a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment (the "incremental borrowing rate" or "IBR").

FThe Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-16specific circumstances. For the reference rate, the Company used the Fannie Mae, in excess of $3,000,000 rate based on an 80% value to loan ratio, averaging the 15- and 30-year indicative rates, resulting in a rate of 7.70%. The Company determined that 7.70% per annum was an appropriate incremental borrowing rate to apply to its real estate operating lease.

~~ETHEMA~~The ~~HEALTH~~present ~~CORPORATION~~value of the future minimum lease payments was valued at $9,333,953 on August 4, 2023.

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~F-16

7.ETHEMA HEALTH ~~Leases (continued)~~CORPORATION

~~Maturity~~NOTES ofTO ~~Leases~~THE CONSOLIDATED FINANCIAL STATEMENTS

~~Finance lease~~9. ~~liability~~Leases (continued)

~~The~~On ~~amount~~May of1, ~~future~~2024 ~~minimum~~the Company, through its subsidiary Evernia Health Center LLC, entered into a Definitive Agreement whereby the Company would assume the lease ~~payments~~for ~~under~~suites ~~finance~~100, ~~leases~~101, as201, 202 and 203 located at 899 Meadows Road, Boca Raton, Florida (the “Leased Premises”) and the furniture, fixtures and equipment located therein, upon the assignment of ~~December~~the 31lease from the property owner. The lease was assigned on June 10, ~~2023~~2024 isand asthe ~~follows:~~Company entered into a Bill of Sale to give effect to the Definitive Agreement.

~~Schedule~~The assigned lease has a remaining term of ~~Finance~~3 years, expiring on June 30, 2027, with an initial monthly lease ~~liability~~cost of $21,843 from July 1, 2024 to December 31, 2024, escalating by 2.9% per annum, each annual period being a calendar year.

	Amount
2024	$	9,829
2025		9,829
2026		6,195
2027		1,707
		27,560
Imputed interest		(2,659)
Total finance lease liability	$	24,901
Disclosed as:
Current portion	$	8,426
Non-Current portion		16,475
Lease liability	$	24,901

To determine the present value of minimum future lease payments for operating leases at June 10, 2024, the Company was required to estimate a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment (the "incremental borrowing rate" or "IBR").

~~Operating~~The Company determined the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific ~~liability~~circumstances. For the reference rate, the Company used the Bank rate 3/1 adjustable-rate mortgage which represents the average rate for several mortgage lenders in the market of 6.36%. The Company determined that 6.36% per annum was an appropriate incremental borrowing rate to apply to its real estate operating lease.

The ~~amount~~present value of the future minimum lease payments ~~under~~was ~~operating~~valued ~~leases~~at ~~are~~$744,256 ason ~~follows:~~June 10, 2024.

~~Schedule~~Right of ~~Operating~~use ~~lease~~assets ~~liability~~are included in the consolidated balance sheet are as follows:

	Amount
Schedule of right of use assets are included in the consolidated balance
2023	$	754,857
	December 31, 2024			December 31, 2023
2024		775,615
Non-current assets
2025		796,945
Right-of-use assets – finance leases, net of depreciation, included in Property and equipment	$	15,699		$	26,889
2026		818,861
Right-of-use assets - operating leases, net of amortization	$	9,920,592		$	9,323,723
2027 and thereafter		16,200,042
Total undiscounted minimum future lease payments		19,346,320
Imputed interest		(9,924,200	)
Total operating lease liability	$	9,422,120
Disclosed as:
Current portion	$	38,563
Non-Current portion		9,383,557
Lease liability	$	9,422,120

8.Lease ~~Taxes~~costs ~~Payable~~consists of the following:

Taxes payable consist of:

Schedule of lease costs
	Year ended December 31,
	2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	11,190	$	11,190
Interest expense on finance lease liabilities		1,402		1,938
Total finance lease cost		12,592		13,128

Operating lease cost	$	1,304,127	$	598,336
LeaLease costse cost	$	1,316,719	$	611,464

~~Schedule~~Other oflease ~~taxation payable~~information:

	December 31, 2023			December 31, 2022
Schedule of other lease
HST/GST payable		—			74,134
	Year ended December 31,
Income tax payable		—			174,510
	2024			2023
	$	—		$	248,644
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	(1,402	)	$	(1,938	)
Operating cash flows from operating leases		(999,883	)		(600,299	)
Financing cash flows from finance leases		(8,478	)		(7,943	)
Cash paid for amounts included in the measurement of lease liabilities	$	(1,009,763	)	$	(610,180	)
Weighted average lease term – finance leases		1 years and ten months			2 years and ten months
Weighted average remaining lease term – operating leases		17 years and 8 months			19 years and 8 months
Discount rate – finance leases		6.60	%		6.60	%
Discount rate – operating leases		7.61	%		7.70	%

On June 30, 2023, the Company entered into an exchange agreement with Leonite Capital, LLC, whereby it exchanged the 400,000 Series B shares with a value of $400,000 plus accrued dividends thereon of $61,184 for its entire shareholding in its property owning subsidiary, Cranberry Cove Holdings. The HST/GST payable was settled prior to disposal.F-17

~~The~~ETHEMA ~~income~~HEALTH ~~tax provision raised in previous years was reversed in the current year upon filing the tax returns with no taxation payable.~~CORPORATION

~~F-17~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~ETHEMA HEALTH~~9. ~~CORPORATION~~Leases (continued)

~~NOTES~~Maturity TOof ~~THE CONSOLIDATED FINANCIAL STATEMENTS~~Leases

~~9. Short-term~~Finance ~~Convertible~~lease ~~Notes~~liability

The amount ~~short-term~~of ~~convertible~~future ~~notes~~minimum ~~consist~~lease payments under finance leases as of ~~the~~December ~~following~~31, 2023 is as follows:

Schedule of short-term convertible notes

Schedule of future minimum lease payments under finance leases
	Amount
2025	$	9,829
2026		6,195
2027		1,707
Total finance lease		17,731
Imputed interest		(1,309	)
Total finance lease liability	$	16,422
Disclosed as:
Current portion	$	9,829
Non-Current portion		6,593
Lease liability	$	16,422

	Interest rate			Maturity Date	Principal		Interest		December 31, 2023		December 31, 2022
Leonite Capital, LLC		12.0	%	On Demand	$	—	$	—	$	—	$	184,749
Leonite Fund I, LP		Variable		March 1, 2023		—		—		—		720,830
Auctus Fund, LLC		0.0	%	On Demand		70,000		—		70,000		80,000
Labrys Fund, LP		12.0	%	On Demand		—		—		—		8,826
Ed Blasiak		6.5	%	On Demand		—		—		—		63,322
Joshua Bauman		11.0	%	October 21, 2022		—		—		—		169,710
		10.0	%	August 9, 2024		120,776		990		121,766		—
Series N convertible notes		6.0	%	On Demand		3,229,000		999,161		4,228,161		4,041,813
					$	3,419,776	$	1,000,151	$	4,419,927	$	5,269,250

Operating lease liability

~~Leonite~~The ~~Capital,~~amount ~~LLC~~of future minimum lease payments under operating leases are as follows:

On July 12, 2020, the Company entered into a Senior Secured Convertible Note agreement with Leonite for $440,000 with an original issue discount of $40,000 for gross proceeds of $400,000, the initial tranche advanced will be for cash of $200,000 plus the OID of $20,000, the remaining advances will be at the discretion of the Leonite. The loan bears interest at 6.5% per annum and matures on June 12, 2021. The Company is required to make monthly payments of the accrued interest on the advances made. The note is convertible into common shares at the option of the holder at $0.10 per share, or 80% multiplied by the price per share paid in subsequent financings or after a six month period from the effective date at 60% of the lowest trading price during the preceding 21 consecutive trading days. The note has both conversion price protection and anti-dilution protection provisions.

Schedule of future minimum lease payments under operating leases
	Amount

2025	$	1,045,192
2026		1,074,288
2027		961,526
2028		841,379
2029 and thereafter		15,358,663
Total undiscounted minimum future lease payments		19,281,048
Imputed interest		(9,032,492	)
Total operating lease liability	$	10,248,556

Disclosed as:
Current portion	$	299,102
Non-Current portion		9,949,454
Lease liability	$	10,248,556

~~On February~~10. ~~28,~~Short-term ~~2022,~~Convertible ~~in terms of a conversion notice, Leonite converted the principal sum of $149,250 of the Leonite Note into 150,000,000 shares of common stock at a conversion price of $0.0010 per share.~~Notes

OnThe ~~March~~short-term 1,convertible ~~2023,~~notes ~~the~~consist ~~Company entered into a forbearance agreement with Leonite whereby the parties agreed to extend the maturity date~~ of ~~the~~ ~~note to June 8, 2023,~~ the Company will continue to pay interest on the note, until repaid. On August 4, 2023, the Company settled all outstanding liabilities owing to Leonite Capital and Leonite Fund I, LP, for gross proceeds of $1,449,000.following:

Leonite Fund I, LP

Schedule of short-term convertible notes
	Interest rate			Maturity Date	Principal		Interest		December 31, 2024		December 31, 2023

Auctus Fund, LLC		0.0	%	On Demand	$	70,000	$	—	$	70,000	$	70,000

Joshua Bauman		10.0	%	August 9, 2024		120,776		13,068		133,844		121,766

Series N convertible notes		6.0	%	December 31, 2024 to December 31, 2025		2,779,000		990,401		3,769,401		4,228,161

					$	2,969,776	$	1,003,469	$	3,973,245	$	4,419,927

Effective June 1, 2022, the Company entered into a Note Exchange Agreement whereby the convertible promissory notes entered into with Labrys Fund LP on May 7, 2021, with an outstanding principal balance of $341,000, and on June 2, 2021, with an outstanding principal balance of $230,000 and accrued interest thereon of $25,300, were exchanged for a new Senior Secured Convertible Promissory note in the principal amount of $745,375, including an OID of $149,075. The Note matured on March 1, 2023, and bore interest at the minimum of 10% per annum or the Wall Street Journal quoted prime rate plus 5.75%.F-18

~~Interest~~ETHEMA isHEALTH payable monthly and the note may be prepaid with a prepayment penalty of 10%. The note is convertible into common stock at a fixed conversion price of $0.01 per share, subject to anti-dilution adjustments and a fundamental transaction clause allowing the note holder to receive the same consideration as common stockholders would receive.CORPORATION

~~The~~NOTES ~~convertible~~TO ~~note~~THE isCONSOLIDATED ~~secured~~FINANCIAL ~~by all of the assets of Ethema Health Corporation and Addiction Recovery Institute of America, LLC.~~STATEMENTS

On March 1, 2023, the Company entered into a forbearance agreement with Leonite whereby the parties agreed to extend the maturity date of the note to June 8, 2023, the Company will continue to pay interest on the note, until repaid10. OnShort-term ~~August 4,~~Convertible ~~2023,~~Notes ~~the Company settled all outstanding liabilities owing to Leonite Capital and Leonite fund I, L.P. for gross proceeds of $1,449,000.~~(continued)

~~F-18~~Auctus Fund, LLC

~~ETHEMA~~On ~~HEALTH~~August ~~CORPORATION~~7, 2019, the Company, entered into a Securities Purchase Agreement with Auctus Fund, LLC, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $225,000. The Note had a maturity date of May 7, 2020 and bore interest at the rate of ten percent per annum from the date on which the Note was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company had the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note is convertible at any time and from time to time at the election of Auctus Fund, LLC during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock for the thirty trading days prior to conversion.

~~NOTES~~On TOJune ~~THE~~15, ~~CONSOLIDATED~~2020, ~~FINANCIAL~~The ~~STATEMENTS~~Company entered into an amended agreement with Auctus whereby the Company agreed to discharge the principal amount of the note by nine equal monthly installments of $25,000 commencing in October 2020. During the year ended December 31, 2021, the Company repaid Auctus the principal sum of $50,000.

~~9. Short-term~~During ~~Convertible~~March ~~Notes~~2022, ~~(continued)~~the Company paid $20,000 of principal on the convertible note, thereby reducing the principal outstanding to $80,000.

~~Auctus~~During ~~Fund~~February 2023, the Company paid $10,000 of principal on the convertible note, thereby reducing the principal outstanding to $70,000. The note matured May 7, 2020, Auctus Fund LLC has not declared a default and we are in constant discussion with the lender on settling the note.

OnJoshua August 7, 2019, the Company, entered into a Securities Purchase Agreement with Auctus Fund, LLC, pursuant to which the Company issued a Convertible Promissory Note in the aggregate principal amount of $225,000. The Note had a maturity date of May 7, 2020 and bore interest at the rate of ten percent per annum from the date on which the Note was issued until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company had the right to prepay the Note in terms of agreement. The outstanding principal amount of the Note is convertible at any time and from time to time at the election of Auctus Fund, LLC during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock for the thirty trading days prior to conversion.Bauman

On ~~June~~August 159, ~~2020~~2023, ~~The~~the Company ~~entered~~issued ~~into~~a anconvertible ~~amended~~promissory ~~agreement~~note ~~with~~to ~~Auctus~~Mr. ~~whereby~~Bauman, in the ~~Company~~aggregate ~~agreed~~principal toamount ~~discharge~~of ~~the~~$150,000. The ~~principal~~note ~~amount of~~bears ~~the~~interest at 10.0% per annum and matures on August 9, 2024. The note byis ~~nine~~convertible ~~equal~~into ~~monthly~~shares ~~installments~~of common stock at a conversion price at the option of the holder at $250.001 per share,~~000 commencing~~ inadjusted ~~October~~for ~~2020~~anti-dilution provisions. ~~During~~The note is convertible into common stock at the ~~year~~option ~~ended~~of ~~December~~the 31holder after the expiration of six months from the issuance date, ~~2021~~in addition, should the ~~Company~~note ~~repaid~~reach ~~Auctus~~its maturity date, August 9, 2024, the ~~principal~~note ~~sum~~will automatically convert into shares of ~~$50~~common stock at the conversion price,~~000~~ subject to anti-dilution provisions. The note was not automatically converted into shares of common stock upon maturity and remains outstanding, although the note is in technical default, a default has not been declared and we are negotiating with the note holder on amending the terms or repaying the note.

During ~~March~~November ~~2022,~~2023 ~~the~~and ~~Company~~December ~~paid $20~~2023,~~000~~ ~~of principal on~~ the ~~convertible~~company ~~note,~~repaid ~~thereby reducing the principal outstanding to~~ $8029,~~000.~~224 ~~The note~~and ~~matured May 7~~$4,597 ~~2020,~~in ~~Auctus~~principal ~~Fund LLC has not declared a default~~ and weinterest, ~~are~~respectively. inNo ~~discussion~~repayments were ~~with~~made during the ~~lender~~year onended ~~settling~~December ~~the~~31, ~~note~~2024.

~~During~~Series ~~February~~N ~~2023, the Company paid $10,000 of principal on the~~ convertible note, thereby reducing the principal outstanding to $70,000. The note matured May 7, 2020, Auctus Fund LLC has not declared a default and we are in constant in constant discussion with the lender on settling the note. notes

EdBetween ~~Blasiak~~January 28, 2019 and June 11, 2020, the Company closed several tranches of Series N Convertible notes in which it raised $3,229,000 in principal from accredited investors through the issuance to the investors of the Company’s Series N convertible notes, in the total original principal amount of $3,229,000, which Notes are convertible into the Company’s common stock at a conversion price of $0.08 per share together with three year warrants to purchase up to a total of 52,237,500 shares of the Company’s common stock at an exercise price of $0.12 per share. Both the conversion price under the Notes and the exercise price under the warrants are subject to standard adjustment mechanisms. The notes matured one year from the date of issuance.

On ~~September~~The ~~14,~~maturity ~~2020,~~dates of the ~~Company~~Series ~~entered~~N ~~into~~convertible anotes ~~Securities~~were ~~Purchase~~extended ~~Agreement~~to ~~with~~December Ed31, ~~Blasiak (“Blasiak”)~~2024, ~~pursuant~~with ~~to which~~ the ~~Company~~exception ~~issued~~of a5 ~~senior~~series ~~secured~~N convertible notes ~~promissory~~issued ~~note~~to inone ~~the~~investor with an aggregate principal ~~amount~~outstanding of $551,~~000~~273, ~~including an original issue discount of $5,~~000~~. The note bears interest at 6.5% per annum and matured on September 14~~, ~~2021.~~which ~~The~~was ~~note~~extended ~~is senior~~ to ~~any future~~December ~~borrowings and commencing on October 1~~31, ~~2020 the Company will make monthly payments of the accrued interest under the note~~2025. ~~The~~No consideration ~~note~~was ~~may~~provided beto ~~prepaid at certain prepayment penalties and is convertible into shares of common stock at a conversion price at~~ the ~~option of~~investors ~~the holder at $0.001 per share, adjusted~~ for ~~anti-dilution provisions; or 80% of~~ the ~~price~~maturity ~~per~~date ~~share of subsequent equity financings or; after six months 60% of the lowest trading price during the preceding six month period~~extensions.

~~The~~Between ~~note~~April ~~had~~30, ~~matured~~2024 and ~~was~~May in10, ~~technical~~2024, ~~default~~three ~~which~~series ~~had~~N ~~not~~convertible ~~been~~note ~~formally~~holders, ~~declared~~converted byprincipal Edof ~~Blasiak. On~~$450,000 ~~August~~into 4,Series ~~2023,~~R ~~the~~promissory ~~Company~~notes ~~settled~~after the ~~senior~~repayment ~~secured convertible promissory note owing to Ed Blasiak for proceeds~~ of $65151,~~450~~475 of accrued interest.

~~Joshua~~During ~~Bauman~~the current year, the Company repaid $33,750 of accrued interest to certain Series N convertible note holders.

On October 21, 2021, the Company entered into a Securities Purchase Agreement with Bauman, pursuant to which the Company issued a senior secured convertible promissory note in the aggregate principal amount of $150,000, including an original issue discount of $16,250. The note bears interest at 11.0% per annum, which is guaranteed and earned in full on issue date and matured on October 21, 2022. The note is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for antiF-~~dilution provisions.~~19

~~The~~ETHEMA ~~note~~HEALTH had matured and was in technical default which had not been formally declared by Mr. Bauman. On August 4, 2023, the Company settled the senior secured convertible promissory note owing to Mr. Bauman for proceeds of $179,474.CORPORATION

OnNOTES ~~August~~TO 9,THE ~~2023,~~CONSOLIDATED ~~the~~FINANCIAL ~~Company issued a convertible promissory note to Mr. Bauman, in the aggregate principal amount of $150,000. The note bears interest at~~STATEMENTS 10.0% per annum and matures on August 9, 2024. The note is convertible into shares of common stock at a conversion price at the option of the holder at $0.001 per share, adjusted for anti-dilution provisions. The note is convertible into common stock at the option of the holder after the expiration of six months from the issuance date, in addition, should the note reach its maturity date, August 9, 2024, the note will automatically convert into shares of common stock at the conversion price, subject to anti-dilution provisions.

~~During November~~11. ~~2023~~Short-term ~~and December 2023, the company repaid $29,224 and $4,597 in principal and interest, respectively.~~Notes

~~Series N~~The ~~convertible~~short term notes consist of the following:

Between January 28, 2019 and June 11, 2020, the Company closed several tranches of Series N Convertible notes in which it raised $3,229,000 in principal from accredited investors through the issuance to the investors of the Company’s Series N convertible notes, in the total original principal amount of $3,229,000, which Notes are convertible into the Company’s common stock at a conversion price of $0.08 per share together with three year warrants to purchase up to a total of 52,237,500 shares of the Company’s common stock at an exercise price of $0.12 per share. Both the conversion price under the Notes and the exercise price under the warrants are subject to standard adjustment mechanisms. The notes matured one year from the date of issuance.

Schedule of short-term notes
Description	Interest Rate			Maturity date	Principal		Accrued Interest		Unamortized debt discount			December 31, 2024 Amount		December 31, 2023 Amount
LXR Biotech		6.0	%	On Demand	$	92,522	$	31,787	$	—		$	124,309	$	129,184

Mirage Realty		10.0	%	March 15, 2024		—		—		—			—		236,421
		6.0 to 18.0	%	November 15, 2024		600,000		13,500		—			613,500		—

Third Party		12.0	%	On demand		239,474		12,425		—			251,899		315,067

Revolving line of credit		60.0	%	May 1,2024		—		—		—			—		—
		60.0	%	May 14, 2024		—		—		—			—		—
		60.0	%	May 12, 2024		—		—		—			—		—
		60.0	%	July 14, 2024		—		—		—			—		—
		120.0	%	August 13, 2024		101,000		61,576		—			162,576		—
		120.0	%	September 30, 2024		181,000		77,589		—			258,589		—

Series R Promissory notes		7.5	%	March 31, 2025		1,155,000		38,447		(29,197	)		1,164,250		—

Total convertible notes payable					$	2,368,996	$	235,324	$	(29,197	)	$	2,575,123	$	680,672

~~The series~~LXR ~~N convertible notes matured and are in default. The Company is considering its options to settle these notes.~~Biotech

~~F-19~~On April 12, 2019, the Company, entered into a secured promissory note in the aggregate principal amount of CDN$133,130. The Note had a maturity date of April 11, 2020 and bears interest at the rate of six percent per annum from the date on which the Note was issued.

~~ETHEMA~~This note has not been repaid, is in default ~~HEALTH~~and ~~CORPORATION~~remains outstanding.

~~NOTES TO~~Mirage ~~THE~~Realty, ~~CONSOLIDATED FINANCIAL STATEMENTS~~ LLC

On November 15, 2023, the Company, entered into a senior secured promissory note in the aggregate principal amount of $250,000 for net proceeds of $223,500 after an original issue discount and fees of $26,500. The note earned interest at 10% per annum and originally matured on March 15, 2024. The maturity date ~~Short-term~~was ~~Notes~~extended to April 15, 2024, with no change to the terms of the note or any additional consideration paid to the noteholder.

~~Leonite~~On May 13, 2024, the Company repaid principal ~~Capital~~of $250,000 ~~LLC~~and accrued interest thereon of $15,000, thereby extinguishing the debt.

~~Secured~~On May 15, 2024, the Company, entered ~~Promissory~~into ~~Notes~~ a senior secured promissory note in the aggregate principal amount of $600,000. The note earns interest at 6% per annum for the first two months and 9% per annum for the following two months and 18% for the next two months. The note matured on November 15, 2024. The proceeds of the note were used to acquire the minority stockholder interest in ATHI, refer note 5 above.

On ~~March~~ 1October 29, ~~2022~~2024, the ~~Company~~maturity ~~entered into a secured Promissory Note in the aggregate principal amount of $124,000 for net proceeds~~date of ~~$100,000 after an original issue discount of $24,000. Due to~~ the ~~failure to repay the~~ note ~~by due date, a penalty of $37,200~~ was ~~added~~extended to ~~the~~January ~~principal~~2025 ~~outstanding~~with ~~and~~interest ~~the~~accruing ~~Company~~thereon ~~incurs~~at a18% ~~monthly monitoring fee of $2,000~~ per ~~month~~annum. InOn ~~addition~~February ~~the~~13, ~~note~~2025, ~~earns interest~~we atreceived a ~~default~~further extension ~~rate of 24% per annum~~ on ~~the~~this ~~total~~note ~~balance~~to ~~outstanding~~May 15, ~~including~~2025 ~~the~~with ~~monthly~~interest ~~monitoring~~thereon ~~fee~~remaining ~~and~~at ~~accrued~~18% ~~interest~~per annum.

~~The Note~~Third ~~had~~party ~~a maturity date of April 1, 2022. On August 4, 2023, the Company settled all outstanding liabilities owing to Leonite Capital and Leonite fund I, L.P. for gross proceeds of $1,449,000.~~note

On ~~May~~ 3April 12, ~~2022~~2019, ~~the~~Eileen ~~Company~~Greene, ~~entered into~~ a ~~secured Promissory Note in the aggregate principal amount of $76~~related party,~~250 for~~ ~~net~~assigned ~~proceeds of~~ CDN$611,000,000 ~~after an original issue discount~~ of ~~$15,250. Due to~~ the ~~failure~~amount toowed ~~repay~~by the ~~note~~Company byto ~~due date~~her, ~~a penalty of $22,875 was added~~ to ~~the principal outstanding and the Company incurs~~ a ~~monthly~~third ~~monitoring fee of $2,000 per month~~party. InThe ~~addition~~loan ~~the~~bears ~~note earns~~ interest at ~~a default rate of 24~~12% per annum which on the ~~total~~Company ~~balance~~agreed ~~outstanding,~~to ~~including the monthly monitoring fee and accrued interest~~pay.

~~The Note~~During ~~had~~April aand ~~maturity~~May ~~date~~2023, the Company made interest repayments of ~~June 17~~ CDN$35,000 ~~2022~~(approximately $25,970) on the third-party loan. OnBetween August 49 and August 10, 2023, the Company made ~~settled~~principal ~~all~~repayments ~~outstanding~~of ~~liabilities~~CDN$345,890 ~~owing~~($257,775) ~~to Leonite Capital~~ and ~~Leonite~~interest ~~fund~~repayments Iof CDN$104,110 L(approximately $77,515).P. ~~for~~On ~~gross~~August ~~proceeds~~1, 2024, the Company repaid CDN$100,000 ($72,223) of which CDN$153,~~449~~418 ($38,~~000~~580) was allocated to principal and CDN$46,582 ($33,643) was allocated to interest repayment.

~~Mirage Realty, LLC~~F-20

OnETHEMA ~~March~~HEALTH 15, 2023, the Company, entered into a senior secured Promissory Note in the aggregate principal amount of $250,000 for net proceeds of $223,500 after an original issue discount and fees of $26,500. The note earns interest at 10% per annum and matures on July 15, 2023CORPORATION

OnNOTES ~~August~~TO 4,THE ~~2023,~~CONSOLIDATED ~~the~~FINANCIAL ~~Company settled the senior secured promissory note owing to Mirage Realty for gross proceeds of $260,548.~~STATEMENTS

On November 15, 2023, the Company, entered into a senior secured promissory note in the aggregate principal amount of $250,000 for net proceeds of $223,500 after an original issue discount and fees of $26,50011. ~~The~~Short-term ~~note~~Notes earns interest at 10% per annum and originally matured on March 15, 2024. The maturity date was extended to April 15, 2024, with no change to the terms of the note or any additional consideration paid to the noteholder. (continued)

~~LXR Biotech~~Revolving line of credit

On ~~April~~February 121, ~~2019~~2024 Ethema Health Corporation, ~~the~~American ~~Company~~Treatment Holdings Inc, and Evernia Health Center LLC entered into a secured ~~promissory~~revolving line ~~note~~of incredit agreement (“Agreement”) with Testing 123, LLC. The draw under the ~~aggregate~~is ~~principal~~limited ~~amount~~to a maximum of ~~CDN~~80% of the Receivables balance as provided to the Lender, subject to the maximum borrowing under the Term Loan Agreement of $~~133~~1,~~130~~000,000. The interest ~~Note~~on ~~had~~the term loan is 5% per month and the default interest rate is 10% per month. The revolving credit line is valid for a period of two years and each draw will have a maturity date that is two months from the draw date, with an origination fee of ~~April~~ 11$1,000 ~~2020 and~~per ~~bears~~draw. Each ~~interest~~loan may be prepaid at any time without penalty. The Company will pay a commitment fee of $40,000 to the ~~rate~~borrower in common shares on the completion of ~~six~~a ~~percent~~public ~~per~~offering, ~~annum~~unless ~~from~~no such offering takes place within a year, whereby the ~~date~~outstanding onprincipal ~~which~~will be increased by $40,000. The revolving credit line is secured by all assets, tangible and intangible of the ~~Note~~Company ~~was~~and its direct and indirect ~~issued~~subsidiaries, American Treatment Holdings, Inc. and Evernia Health Center, LLC.

~~This~~Series ~~note~~R ~~has~~senior ~~not~~secured ~~been~~promissory ~~repaid, is in default and remains outstanding. The balance outstanding at December 31, 2023 was $129,184 (CDN$170,859).~~notes

~~Third~~Between ~~Party~~April ~~Note~~15, 2024 and May 10, 2024, the Company entered into securities purchase agreements with accredited investors whereby the Company issued 6 senior secured promissory notes with an aggregate issue price of $660,000 for gross proceeds of $600,000. The promissory notes bear interest at 7.5% per annum, interest is payable quarterly at an increasing rate of 3%, 6%, 9% and 12% of the principal outstanding. The notes mature on March 31, 2025.

OnBetween ~~April~~May 122, ~~2019~~2024 and May 10, ~~Eileen~~2024, ~~Greene~~the company entered into exchange agreements with three investors, whereby the investors exchanged three series N notes with a ~~related~~principal ~~party,~~amount ~~assigned~~outstanding ~~CDN~~of $1450,000~~,000 of~~ ~~the~~for ~~amount~~senior ~~owed~~secured bySeries ~~the~~R ~~Company~~promissory tonotes ~~her,~~with toan aaggregate ~~third~~issue price ~~party~~of $495,000. The ~~loan~~promissory ~~bears~~notes bear interest at 127.5% per annum, ~~which~~interest ~~the~~is ~~Company~~payable ~~agreed~~quarterly toat ~~pay.~~an ~~This~~increasing ~~loan~~rate ~~was~~of ~~assumed~~3%, by6%, 9% ~~the~~and ~~Company~~12% onof the ~~disposal~~principal ofoutstanding. ~~CCH to~~The ~~Leonite~~notes ~~Capital~~mature ason ~~disclosed~~March in31, ~~note 4 above~~2025.

~~During April and May 2023, the Company made interest repayments of CDN$35,000 (approximately $25,970) on the third party loan~~12. ~~Between~~Promissory August 9 and August 10, 2023, the Company made principal repayments of CDN$345,890 ($257,775) and interest repayments of CDN$104,110 (approximately $77,515). As of December 31, 2023 the balance of principal and interest outstanding on third party loans was CDN$416,709 (approximately $315,068). Note

11On May 15, 2024, the Company entered into a Stock Purchase Agreement whereby it acquired the remaining 25% of ATHI representing 5,000,000 shares from the minority stockholder for gross proceeds of $1,100,000. ~~Mortgage~~ ~~loans~~The Company paid an initial deposit of $25,000 and on closing an additional $600,000. The Company issued a non-interest bearing promissory note for the remaining balance of $475,000, which promissory note is repayable in instalments of $10,000 a month on each monthly anniversary date of the agreement for months one to eight (eight instalments) and months ten through seventeen (eight instalments), and payments of $157,500 on month nine and month eighteen, for a total of $475,000.

Mortgage loans is disclosed as follows:

Schedule of promissory note
	December 31, 2024			December 31, 2023

Promissory note issued	$	475,000		$	—
Repayments		(70,000	)		—
	$	405,000		$	—
Disclosed as:
Current portion	$	405,000		$	—

~~Schedule of~~13. ~~mortgage~~Receivables ~~loans~~funding

	Interest rate		Maturity date		Principal Outstanding		Accrued interest		December 31, 2023		December 31, 2022
Cranberry Cove Holdings, Ltd.
Pace Mortgage	4.2	%	July 19, 2022	$	—	$	—	$	—	$	3,504,605
Disclosed as follows:
Short-term portion								$	—	$	3,504,605

June 2, 2023 Funding

~~Cranberry~~On June 2, 2023, the Company through its ~~Cove~~subsidiary, ~~Holdings~~Evernia Health Center, ~~Ltd~~LLC entered into a Receivables Sale Agreement with Bizfund.com (“~~CCH~~Bizfund”), whereby $198,000 of the Receivables of Evernia were sold to Bizfund, for gross proceeds of $150,000, made up of a cash payment to the Company of $75,750 and the transfer of $74,250 of the January 19, 2023, outstanding principal to the June 2, 2023 funding agreement. The Company is obliged to pay 15.0% of the receivables until the amount of $198,000 is paid in full, with periodic repayments of $4,950 per week. The guarantor of the funding was the previous minority stockholder in ATHI.

OnThe ~~July~~Company ~~19,~~made ~~2017,~~weekly ~~CCH,~~cash apayments ~~wholly owned subsidiary, closed on a loan agreement in the principal amount~~ of ~~CDN~~$54,~~500~~950 totaling $198,000~~. The loan is secured~~ by aMarch ~~first~~12, ~~mortgage~~2024, onthereby extinguishing the ~~premises owned by CCH located at 3571 Muskoka Road 169, Bala, Ontario~~debt.

~~The loan bears interest at the fixed rate of 4.2% with a 5~~F-year primary term and a 25-year amortization. The Company has guaranteed the loan and the Company’s chief executive officer and controlling shareholder also has personally guaranteed the Loan. CCH and the Company have granted the Lender a general security interest in its assets to secure repayment of the Loan. The loan is amortized with monthly installments of CDN $29,531.21

OnETHEMA ~~June~~HEALTH ~~30, 2023, the Company sold its interest in CCH to Leonite Capital, which includes the real property as disclosed in Note 5 and the associated mortgage loan. Refer to Note 4 above.~~CORPORATION

~~F-20~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~ETHEMA HEALTH~~13. ~~CORPORATION~~Receivables funding (continued)

~~NOTES TO~~September ~~THE~~15, ~~CONSOLIDATED~~2023 ~~FINANCIAL STATEMENTS~~Funding

12On September 15, 2023, the Company, through its subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $320,000 of the Receivables of Evernia were sold to Itria, for gross proceeds of $250,000. The Company also incurred fees of $3,000, ~~Government~~resulting ~~assistance~~in ~~loans~~net proceeds of $247,500. The Company was obliged to pay $6,667 per week until the amount of $320,000 was paid in full. The guarantor of the funding was the previous minority stockholder in ATHI.

~~On December~~The 1,Company ~~2020,~~made ~~CCH~~weekly ~~was~~cash ~~granted~~payments ~~a Covid-19 related government assistance loan in the aggregate principal amount~~ of ~~CDN~~$ 406,~~000 (Approximately~~667 totaling $31320,000). by ~~The~~August ~~grant is interest free and CDN$~~ 10,~~000~~ is2024, ~~forgivable~~thereby ifextinguishing the ~~loan is repaid in full by December 31, 2022~~debt. ~~The maturity date of this loan was extended by an additional year to December 31, 2023.~~

~~On January~~May 1230, ~~2021,~~2024 CCH received a further CDN$ 20,000 Covid-19 related government assistance loan. The loan is interest free and if repaid by December 31, 2022, CDN$ 10,000 is forgivable. This loan was not repaid by December 31, 2022.Funding

On ~~June~~ May 30, ~~2023~~2024, the Company, ~~sold~~through its ~~interest~~subsidiary, inEvernia Health ~~CCH~~Center, toLLC ~~Leonite~~entered ~~Capital~~into a Receivables Sale Agreement with Fortunate Sons (“Fortunate”), ~~which~~whereby ~~includes~~$375,000 of the Receivables ~~Canadian~~of ~~government~~Evernia ~~assistance~~were ~~loan~~sold to Fortunate for gross proceeds of $300,000. ~~Refer~~The Company also incurred fees of $5,000, resulting in net proceeds of $295,000. The Company is obliged to ~~Note~~pay $10,750 per week commencing 4 ~~above~~weeks after the agreement was entered into until the amount of $375,000 is paid in full.

~~On May~~The 3,proceeds ~~2021, ARIA was granted a government assistance loan in the aggregate principal amount~~ of ~~$157,367. The loan is forgivable if~~ the ~~Company~~ ~~demonstrates~~receivables ~~that~~funding ~~the~~was ~~proceeds were~~ used ~~for~~to ~~expenses such as employee costs during the pandemic. Should the loan not be forgiven,~~acquire ~~interest is payable on~~ the ~~loan~~assets ~~at the rate~~ of 1%Boca ~~per~~Cove ~~annum and the principal is repayable and interest is payable over an 18 month period~~Detox.

~~On September~~The ~~21,~~Company ~~2022,~~has ~~ARIA~~repaid ~~received partial forgiveness of the government assistance loan of~~ $~~104~~118,~~368,~~250 and the balance ~~of the loan plus accrued~~outstanding ~~interest~~as isof ~~due~~December ~~and~~31, ~~payable.~~2024 Onwas ~~December 30~~$247, ~~2022~~998, ~~the~~net ~~Company sold ARIA to its Chairman and CEO and agreed to assume the repayment~~ of ~~the~~ ~~government~~unamortized ~~assistance~~debt ~~loan.~~discount As of ~~December 31, 2023, the balance outstanding, including interest thereon was~~ $358,~~482~~752.

~~13. Receivables~~August ~~funding~~30, 2024 Funding

On August 30, 2024, the Company, through its subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $312,500 of the ~~September~~Receivables 26of Evernia were sold to Itria, ~~2022~~for ~~Funding~~gross proceeds of $150,000. The Company also incurred fees of $2,000, resulting in net proceeds of $148,000. The Company is obliged to pay $4,808 per week until the amount of $187,500 is paid in full.

~~On September~~The ~~26, 2022, the~~ Company, ~~through~~made ~~its~~weekly ~~75%~~cash ~~held~~payments ~~subsidiary,~~of ~~Evernia Health Center~~$8, ~~LLC, entered into a Receivables Sale Agreement~~013 totaling ~~with Itria Ventures LLC (“Itria”), whereby~~ $~~310~~136,~~000~~218 and of the ~~Receivables~~balance ofoutstanding ~~Evernia~~as ~~were~~of ~~sold~~December ~~to Itria~~31, ~~for~~2024 ~~gross~~was ~~proceeds of~~ $~~250~~153,~~000. The Company also incurred fees of $5~~877,~~500,~~ ~~resulting in~~ net ~~proceeds~~ of ~~$244,500.~~unamortized ~~The~~debt ~~Company~~discount ~~is obliged to pay 7.41%~~ of ~~the~~ ~~receivables until the amount of~~ $~~310~~22,~~000 is paid in full, with periodic repayments of $6,458 per week~~405. ~~The guarantor of the funding is a minority shareholder in ATHI.~~

~~The Company~~October ~~made weekly cash payments of $6~~9,~~458~~ ~~totaling~~2024 ~~$310,000 by August 29, 2023, thereby settling the receivables funding.~~Funding

~~December~~On October 9, 2024, the Company, through its subsidiary, Evernia 13Health Center, ~~2022~~LLC ~~Funding~~entered into a Receivables Sale Agreement with Itria Ventures LLC (“Itria”), whereby $187,500 of the Receivables of Evernia were sold to Itria, for gross proceeds of $150,000. The Company also incurred fees of $2,000, resulting in net proceeds of $148,000. The Company is obliged to pay $4,808 per week until the amount of $187,500 is paid in full.

~~On December~~The ~~13, 2022, the~~ Company, ~~through~~made ~~its~~weekly ~~75%~~cash ~~held~~payments ~~subsidiary,~~of ~~Evernia Health Center~~$4, ~~LLC entered into a Receivables Sale Agreement~~808 totaling ~~with Itria Ventures LLC (“Itria”), whereby~~ $~~305~~52,~~000~~885 and of the ~~Receivables~~balance ofoutstanding ~~Evernia~~as ~~were~~of ~~sold~~December ~~to Itria~~31, ~~for~~2024 ~~gross~~was ~~proceeds of~~ $~~250~~114,~~000. The Company also incurred fees of $2~~372,~~500,~~ ~~resulting in~~ net ~~proceeds~~ of ~~$247,500.~~unamortized ~~The~~debt ~~Company~~discount ~~is obliged to pay 6.08%~~ of ~~the~~ ~~receivables until the amount of~~ $~~305~~20,~~000 is paid in full, with periodic repayments of $6,354 per week~~243. ~~The guarantor of the funding is a minority shareholder in ATHI.~~

~~The Company made weekly cash payments of $6,354 totaling $241,458 by September 12, 2023~~14. OnGovernment ~~September~~assistance ~~15, 2023, the Company repaid the remaining principal outstanding of $63,542 out of the proceeds received from the September 15, 2023 receivables funding with Itria.~~loans

~~January~~On May 3, 2021, ARIA was granted a government assistance loan 19in the aggregate principal amount of $157,367. ~~2023~~The ~~Funding~~loan is forgivable if the Company demonstrates that the proceeds were used for expenses such as employee costs during the pandemic. Should the loan not be forgiven, interest is payable on the loan at the rate of 1% per annum and the principal is repayable and interest is payable over an 18-month period.

On ~~January~~ 19September 21, ~~2023~~2022, ~~the~~ARIA ~~Company,~~received ~~through~~partial ~~its~~forgiveness ~~75%~~of the ~~held~~government ~~subsidiary,~~assistance ~~Evernia~~loan ~~Health~~of ~~Center~~$104, ~~LLC~~368, ~~entered~~the ~~into~~balance ~~a Receivables Sales Agreement with Bizfund.com (“Bizfund)”), whereby $132,000~~ of the ~~Receivables~~loan ofplus ~~Evernia~~accrued ~~were~~interest ~~sold~~is todue ~~Bizfund,~~and ~~for~~payable. ~~gross~~On ~~proceeds~~December ~~of $100~~30,~~000.~~ ~~The~~2022, the Company issold ~~obliged~~ARIA to ~~pay~~its ~~15.0%~~Chairman ofand ~~the~~CEO ~~receivables~~and ~~until~~agreed to assume the ~~amount~~repayment of ~~$132,000~~the isgovernment ~~paid~~assistance inloan. ~~full,~~As ~~with periodic repayments~~ of $2December 31,~~750~~ ~~per week. The guarantor of~~ 2024, the ~~funding~~balance isoutstanding, aincluding ~~minority~~interest ~~shareholder~~thereon inwas ~~ATHI~~$21,237.

The Company made weekly cash payments of $2,750 totaling $49,500 by May 30, 2023. On June 2, 2023 the Company entered into another receivables funding agreement with Bizfund, whereby Bizfund forgave $8,250 of the premium due on the January 19, 2023 funding and transferred the remaining principal balance of $74,250 to the June 2, 2023 funding. The unamortized balance of the debt discount of $12,616 was expensed on June 2, 2023, thereby extinguishing the receivables funding.F-22

~~F-21~~ETHEMA HEALTH CORPORATION

~~ETHEMA~~NOTES ~~HEALTH~~TO ~~CORPORATION~~THE CONSOLIDATED FINANCIAL STATEMENTS

~~NOTES TO~~15. ~~THE~~Related ~~CONSOLIDATED~~party ~~FINANCIAL STATEMENTS~~payables

13. Receivables funding (continued)

Schedule of related party payable
	December 31,			December 31,
	2024			2023
Related party payables
Shawn E. Leon	$	144,353		$	61,267
Leon Developments Ltd.		—			1,092,701
Eileen Greene		488,965			1,418,324
Total related party payables	$	633,318		$	2,572,292

Related party advance
Eileen Greene
Principal outstanding	$	285,000		$	—
Repayments		(11,539	)		—
		273,461			—

Debt discount at inception		(35,000	)		—
Amortization of debt discount		26,505			—
		(8,495	)		—

Total Related party advances	$	264,966		$	—

~~February~~Shawn ~~14,~~E. ~~2023 Funding~~ Leon

OnAt ~~February~~December 1431, ~~2023,~~2024 ~~the~~and ~~Company,~~December ~~through its 75% held subsidiary~~31, ~~Evernia Health Center~~2023, ~~LLC,~~the ~~entered~~Company ~~into~~had a ~~Receivables~~payable ~~Sale~~to ~~Agreement with~~Shawn ~~Fox~~Leon ~~Business~~of ~~Funding (“Fox”)~~$144, ~~whereby~~ 353 and $~~118~~61,~~800 of the Receivables of Evernia were sold to Fox~~267, ~~for gross proceeds of~~ ~~$90,000~~respectively. ~~The~~Mr. ~~Company~~Leon is ~~obligated~~a todirector ~~pay~~and ~~8.0%~~CEO of the ~~receivables~~Company. ~~until~~The ~~the~~balances ~~amount~~receivable ofand ~~$118,800~~payable isare ~~paid~~non-interest inbearing ~~full,~~and ~~with~~have ~~periodic repayments~~no offixed ~~$2,970~~repayment ~~per week~~terms. ~~The guarantor of the funding is a minority shareholder in ATHI.~~

~~The~~During ~~Company~~the ~~made~~years ~~weekly~~ended ~~cash~~December ~~payments of $2~~31,~~970~~ ~~totaling~~2024 ~~$86,130~~and ~~by September 6~~2023, ~~2023~~Mr. OnLeon ~~September~~forfeited ~~15,~~management ~~2023,~~fees ~~the~~due ~~Company~~to ~~repaid the remaining principal outstanding of $32,670 out of the proceeds received from the September 15, 2023 receivables funding with Itria~~him.

~~June~~During 2July 2024, ~~2023~~the ~~Funding~~related party payable of $1,092,701 owing to Leon Developments and $500,000 of the related party payable to Eileen Greene was assigned by the respective parties to Mr. Leon.

On ~~June~~July 212, ~~2023~~2024, ~~the Company received funding from an agreement entered into through its 75% held subsidiary, Evernia Health Center, LLC entered into a Receivables Sale Agreement with Bizfund~~Mr.~~com~~ ~~(“Bizfund)”),~~Leon ~~whereby~~converted $~~198~~1,500,000 of the ~~Receivables~~related ofparty ~~Evernia~~payable ~~were sold~~into ~~to Bizfund~~3, ~~for gross proceeds of $150~~000,000,000 ~~made~~shares up of acommon ~~cash~~stock ~~payment~~at toa ~~the~~conversion ~~Company~~ price of $~~75,750 and the transfer of $74,250 of the January 19, 2023, outstanding principal to the June 2, 2023 funding agreement~~0..0005 ~~The Company is obliged to pay 15.0% of the receivables until the amount of $198,000 is paid in full, with periodic repayments of $4,950~~ per ~~week~~share. ~~The guarantor of the funding is a minority shareholder in ATHI.~~

~~The~~On ~~Company~~September ~~made~~27, ~~weekly~~2024, ~~cash~~Mr. ~~payments~~Leon ofconverted $46,~~950~~000 ~~totaling~~of ~~$138,600~~the byrelated ~~December~~party 19payable into 600,000 ~~2023.~~shares ~~The~~of ~~balance~~Series ~~outstanding~~A atPreferred ~~December~~stock ~~31,~~at ~~2023~~a ~~was~~conversion ~~$59,400,~~price ~~less unamortized discount~~ of $~~16,072~~0.01 per share.

~~September~~Leon 15Developments, ~~2022 Funding~~ Ltd.

OnLeon ~~September~~Developments ~~15,~~is ~~2023~~owned by Shawn Leon, the Company,’s ~~through~~CEO ~~its~~and ~~75%~~director. ~~held~~As ~~subsidiary,~~of ~~Evernia~~December ~~Health Center~~31, ~~LLC~~2024 ~~entered~~and ~~into~~December ~~a Receivables Sale Agreement with Itria Ventures LLC (“Itria”)~~31, ~~whereby $320~~2023,~~000~~ of the ~~Receivables~~Company owed ofLeon ~~Evernia were sold to Itria~~Developments, ~~for gross proceeds of $250,000~~Ltd. ~~The Company also incurred fees of $3~~,~~000,~~ ~~resulting in net proceeds of~~ $~~247,500. The Company is obliged to pay $6,666.67~~0 and ~~per week until the amount of~~ $~~320~~1,~~000 is paid in full~~092,701, respectively. ~~The guarantor of the funding is a minority shareholder in ATHI.~~

~~The~~During ~~Company~~July ~~made~~2024, ~~weekly~~the ~~cash~~related ~~payments~~party payable of $61,~~667 totaling $100~~092,~~000~~701 owing to byLeon ~~December~~Developments ~~29,~~was ~~2023.~~assigned ~~The~~by ~~balance~~Leon ~~outstanding~~Developments atto ~~December 31, 2023 was $220~~Mr.~~000,~~ ~~less unamortized discount of $51,367~~Leon.

~~14. Derivative~~Eileen ~~liability~~Greene

~~In prior years, the short-term convertible~~During ~~notes,~~July ~~together with certain warrants issued to convertible note holders disclosed in note 9 above and 15 below~~2024, ~~had fixed conversion price rights~~Ms. ~~The~~Greene ~~convertible~~assigned ~~notes~~$500,000 asof ~~well as~~ the ~~warrants~~Related ~~were~~party ~~afforded~~payable ~~down-round~~to ~~protection~~her ~~which~~to ~~in terms of previous guidance resulted in a derivate liability~~Mr. ~~The Company adopted ASU 2020-06 with effect from January 1, 2022, which excluded down-round protection from the determination of a derivative liability~~Leon.

~~The~~On ~~consolidated~~July ~~financial~~12, ~~statements for the year ended December 31~~2024, ~~2021~~Ms. ~~and~~Greene ~~years~~converted ~~prior to that~~$500,000 ~~have~~of ~~not~~the ~~been~~related ~~retrospectively~~party ~~adjusted and~~payable ~~continue~~into to1,000,000,000 beshares ~~reported~~of ~~under~~common ~~the~~stock ~~accounting~~at ~~standards~~a inconversion ~~effect~~price of ~~for~~$0.0005 ~~those~~per ~~periods~~share.

~~The~~On July 4, 2024, Ms. Greene advanced the Company $250,000 with an original ~~derivative~~issue ~~financial~~discount ~~liability~~of ~~was~~$35,000, ~~valued~~totaling at$285,000. ~~inception~~The atamount is being repaid in instalments of $15,~~959~~769 as and when the Company has the cash flow to make the payments,~~959~~ ~~using~~the aloan ~~Black-Scholes~~is ~~valuation~~expected ~~model~~to be fully repaid in June 2025 or earlier depending on cash flow.

AsAt of December 31, ~~2021~~2024, the ~~derivative~~Company ~~liability~~owed ~~was~~Eileen ~~valued~~Greene, atthe spouse of its CEO, Shawn Leon, related party payables of $~~515~~488,~~901~~965 and related party advances of $264,966, net of unamortized debt discount of $8,495.

~~The~~At ~~movement~~December in31, ~~derivative~~2023, ~~liability~~The isCompany asowed ~~follows:~~ Eileen Greene, related party payables of $1,418,324.

~~Schedule~~The amounts ofowing ~~Derivative~~to ~~Instruments~~Ms. Greene are non-interest bearing and has no fixed repayment terms.

	December 31, 2022
Opening balance	$	515,901
Elimination of derivative liability on adoption of ASU 2020-06		(515,901	)
Mark-to-market adjustments on converted notes		—
Derivative liability on issued convertible notes		—
Fair value adjustments to derivative liability		—
Closing balance	$	—

F-23

~~15.~~ETHEMA ~~Related party~~HEALTH ~~payables~~CORPORATION

~~Schedule~~NOTES ofTO ~~Related~~THE ~~party~~CONSOLIDATED ~~payable~~FINANCIAL STATEMENTS

	December 31,		December 31,
	2023		2022
Due to related parties
Shawn E. Leon	$	61,267	$	411,611
Leon Developments Ltd.		1,092,701		850,657
Eileen Greene		1,418,324		1,451,610
Total related party payables	$	2,572,292	$	2,713,878

15.

Related party payables (continued)

~~Shawn~~Leonite Capital, E.LLC ~~Leon~~and Leonite Fund I, LLP

AsLeonite ofCapital ~~December~~is ~~31,~~considered ~~2023~~a ~~and~~related ~~December~~party ~~31,~~due ~~2022,~~to ~~the~~its ~~Company~~previous ~~had~~investment aof ~~payable~~$700,000 toin ~~Shawn~~Series ~~Leon~~A ofPreferred ~~$61,267~~stock ~~and~~interest ~~$411~~in CCH,~~611,~~ ~~respectively.~~which ~~Mr. Leon is~~was previously a ~~director~~wholly ~~and~~owned ~~CEO~~subsidiary of the Company., ~~The~~and ~~balances~~its ~~payable~~previous ~~are~~investment ~~non-interest~~of ~~bearing~~$400,000 ~~and~~in ~~have~~Series noB ~~fixed~~Preferred ~~repayment~~stock ~~terms~~of the Company, as of December 31, 2022.

OnPrior ~~December~~to ~~30, 2022,~~ the ~~Company~~disposal ~~sold~~of ~~its~~CCH ~~wholly-owned~~to ~~subsidiaries,~~Leonite ~~Greenestone~~Capital ~~Muskoka~~on ~~and~~June ~~ARIA~~30, to2023, ~~Mr.~~and ~~Leon~~the ~~for~~simultaneous ~~gross~~cancellation ~~proceeds~~ of ~~$0. The Company~~the ~~realized~~Series aB ~~gain~~Preferred onstock ~~disposal~~as ~~of $628~~discussed below,~~567~~ ~~which~~the ~~was~~accrued ~~recorded~~dividends ason anthe ~~increase~~CCH inSeries ~~Additional~~A ~~Paid~~Preferred inshares ~~Capital~~was ~~due~~$184,545 toand the ~~related party~~accrued ~~nature~~dividends ofon the ~~transaction~~Series B Preferred shares was $61,184.

On ~~August~~ 4June 30, 2023, the ~~company~~Company ~~repaid~~entered into aan ~~personal~~exchange ~~loan~~agreement bywith Leonite Capital towhereby ~~Shawn~~it ~~Leon~~exchanged the 400,000 Series B shares with a value of $28400,~~438~~000 plus accrued dividends thereon of $61,184 ~~which~~for ~~repayment~~its ~~reduced~~entire ~~the~~stockholding ~~related~~in ~~party~~its property owning subsidiary, Cranberry Cove Holdings. The Series ~~payable~~B toshares ~~Shawn~~and ~~Leon~~the accrued dividends thereon were extinguished and cancelled upon consummation of the transaction.

Due to the ~~current~~related ~~financial~~party ~~position~~nature of the ~~Group~~transaction, ~~Mr.~~the ~~Leon~~net ~~forfeited~~result of the ~~management~~disposal ~~fees~~of ~~due~~$1,334,885 toand ~~him~~the ~~for~~$700,000 of the ~~years~~CCH ~~ended~~Series ~~December~~A 31Preferred shares, ~~2023 and~~totaling ~~2022~~$2,034,885, was recorded as a credit to additional paid-in-capital.

FIn addition, due to the related party nature of the transaction, the cancellation of the Series B Preferred stock, of $400,000 and the dividends thereon of $61,184, totaling $461,184, was recorded as an extinguishment of debt reflected in additional paid-22in-capital.

~~ETHEMA~~On ~~HEALTH~~August ~~CORPORATION~~4, 2023, the company repaid Leonite Capital $1,449,000 consisting of repayments of short-term convertible notes of $995,257, promissory notes of $420,069, additional penalty on settlement of $5,236 and a personal loan by Leonite to Shawn Leon of $28,438, which repayment reduced the related party payable to Shawn Leon, as disclosed above.

~~NOTES~~All TOrelated ~~THE~~party ~~CONSOLIDATED~~transactions ~~FINANCIAL~~occur ~~STATEMENTS~~in the normal course of operations and in terms of agreements entered into between the parties.

1516. ~~Related~~ ~~party~~Stockholder’s ~~payables (continued)~~deficit

~~Leon Developments, Ltd~~a. Common shares

~~Leon~~Authorized ~~Developments is owned by Shawn Leon, the Company’s CEO~~ and ~~director. As of December 31, 2023 and December 31, 2022, the Company owed Leon Developments, Ltd., $1,092,701 and $850,607, respectively.~~outstanding

OnThe ~~June~~Company ~~30,~~has ~~2023~~authorized 10,000,000,000 shares ~~the~~with ~~Company~~a ~~assumed~~par ~~the~~value ~~liability~~of ~~owing~~$0.01 per toshare. The ~~Leon~~company ~~developments~~has ofissued ~~CDN$1~~7,~~974~~729,~~012 (approximately $1~~053,~~490,946)~~805 and ~~from its subsidiary~~3, ~~CCH~~729,053,805 ~~immediately~~shares ~~prior~~of tocommon ~~the~~stock ~~disposal~~at ofDecember ~~CCH~~31, to2024 aand ~~related~~December ~~party~~31, ~~Leonite~~2023, ~~Capital LLC~~respectively.

~~The~~ On July 12, 2024, the Company ~~paid~~issued 4,000,000,000 shares of common stock to Mr. Shawn Leon, ~~Developments~~the acompany ~~management~~CEO ~~fee~~and ofhis ~~CDN$250~~spouse,~~000~~ ~~(approximately~~Ms. ~~$185~~Eileen Greene,~~503)~~ ~~and~~both $0related parties, for the ~~years~~conversion ~~ended~~of ~~December 31~~$2,000,000 ~~2023~~of ~~and 2022~~related party payables, ~~respectively~~see note 15 above.

~~Eileen~~On ~~Greene~~November 17, 2024, the Company entered into a subscription agreement with a party related to Shawn Leon, whereby 165,000,000 shares of common stock were subscribed for at $0.0012 per share, for gross proceeds of $198,000. These shares have not been issued yet and the proceeds of $198,000 is recorded as a Share subscription liability until such time as the common shares are issued.

~~As of December 31, 2023 and December 31, 2022, the Company owed Eileen Greene, the spouse of our CEO, Shawn Leon, $1,418,324 and $1,451,610, respectively~~b. ~~The~~Series ~~amount~~A ~~owed~~Preferred ~~to Ms. Greene is non-interest bearing and has no fixed repayment terms.~~shares

~~Leonite Capital~~Authorized, issued ~~LLC~~ and ~~Leonite Fund I, LLP~~outstanding

~~Leonite~~The ~~Capital~~Company ishas ~~considered a related party due to its previous investment of $700~~authorized 10,000 in ,000 Series A ~~Preferred~~preferred ~~stock~~shares ~~interest~~with ina ~~CCH,~~par ~~which~~value ~~was previously~~of a$0.01 per ~~wholly-owned~~share. The ~~subsidiary~~company has ofissued ~~the~~and ~~Company~~outstanding 4,765,000 and ~~its previous investment of $400~~4,000,000 in Series BA Preferred ~~stock~~shares ofat ~~the~~December ~~Company~~31, as of2024 and December 31, 2023, ~~2022~~respectively.

~~The~~On ~~Series~~September A27, ~~Preferred~~2024, ~~stock~~the ~~interest~~Company inissued ~~CCH~~600,000 shares of ~~$700,000~~Series ~~was~~A ~~recorded~~Preferred asstock ato ~~minority~~Mr. ~~shareholder~~Shawn ~~interest~~Leon asfor the conversion of ~~December~~$6,000 31of related party payables, ~~2022~~see note 15 above.

~~Accrued~~On ~~dividends~~November on17, ~~the~~2024, ~~CCH~~165,000 ~~Series A Preferred~~ shares of ~~$145,547 and accrued dividends on the~~ Series BA Preferred ~~shares~~stock ~~of $49,282~~ was ~~owed~~ sold to ~~Leonite~~a ~~Capital~~relative as of ~~December 31, 2022~~Mr. ~~Prior~~Leon tofor ~~the~~gross ~~disposal~~proceeds of ~~CCH to Leonite Capital on June 30, 2023, and the simultaneous cancellation of the Series B Preferred stock as discussed below, the accrued dividends on the CCH Series A Preferred shares was~~ $~~184~~1,~~545 and the accrued dividends on the Series B Preferred shares was $61,184~~650.

On June 30, 2023, the Company entered into an exchange agreement with Leonite Capital whereby it exchanged the 400,000 Series B shares with a value of $400,000 plus accrued dividends thereon of $61,184 for its entire shareholding in its property owning subsidiary, Cranberry Cove Holdingsc. ~~The~~ Series B ~~shares~~Preferred ~~and the accrued dividends thereon were extinguished and cancelled upon consummation of the transaction.~~shares

~~Due~~Authorized ~~to the related party nature of the transaction, the net result of the disposal of $1,334,885~~ and ~~the $700,000 of the CCH Series A Preferred shares, totaling $2,034,885, was recorded as a credit to additional paid-in-capital.~~outstanding

InThe ~~addition,~~Company ~~due~~has toauthorized ~~the~~400,000 ~~related~~Series ~~party~~B ~~nature~~preferred ofshares ~~the~~with ~~transaction,~~a ~~the~~par ~~cancellation~~value of ~~the~~$1.00 ~~Series~~per Bshare. The ~~Preferred~~company ~~stock,~~has ofno ~~$400,000~~issued and ~~the dividends~~outstanding Series ~~thereon~~B ofPreferred ~~$61,184,~~shares ~~totaling~~at ~~$461~~December 31,~~184,~~ ~~was~~2024 ~~recorded~~and asDecember an31, ~~extinguishment of debt reflected in additional paid-in-capital~~2023.

OnThe ~~August~~Series 4,B ~~2023,~~preferred ~~the~~shares ~~company~~were ~~repaid~~senior ~~Leonite~~secured ~~Capital~~and ~~$1,449,000~~were ~~consisting~~mandatorily ofredeemable ~~repayments~~by ofthe ~~short-term~~Company ~~convertible~~on ~~notes~~July of1, ~~$995~~2021,~~257,~~ ~~promissory notes~~and ofwere ~~$420,069,~~originally ~~additional~~classified as ~~penalty~~mezzanine ondebt. ~~settlement~~These ofSeries ~~$5,236~~B ~~and~~preferred ashares ~~personal~~meet ~~loan~~the bydefinition ~~Leonite~~of toliabilities ~~Shawn~~in ~~Leon~~terms of ~~$28,438,~~ASC ~~which~~480- ~~repayment reduced~~debt ~~the~~and ~~related~~are ~~party~~no ~~payable~~longer contingently convertible, due to ~~Shawn~~the ~~Leon,~~fact asthat ~~disclosed~~the ~~above~~redemption date has passed.

AsOn ~~disclosed~~June in30, ~~note 9 above~~2023, the Company ~~owed~~entered ~~Leonite~~into ~~Capital~~an ~~and~~exchange ~~Leonite~~agreement ~~Funds~~with I,Leonite ~~LP,~~Capital anwhereby ~~entity~~it ~~under~~exchanged ~~common~~the ~~control~~shares ~~with~~in ~~Leonite~~its ~~Capital,~~wholly owned ~~short-term~~subsidiary, ~~convertible~~CCH ~~notes,~~for ~~including~~the ~~principal~~return and ~~interest~~cancellation ~~thereon~~ of ~~$905,579~~the asSeries ofB ~~December~~preferred 31shares, ~~2022~~together with the dividends accrued thereon. Refer to note 4 above.

In addition, as disclosed in note 10 above, the Company owed Leonite capital, secured promissory notes, including principal, monitoring fees and interest thereon totaling $340,281 as of December 31, 2022.F-24

~~All~~ETHEMA ~~related~~HEALTH ~~party transactions occur in the normal course of operations and in terms of agreements entered into between the parties.~~CORPORATION

~~F-23~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~ETHEMA HEALTH~~16. ~~CORPORATION~~Stockholder’s deficit (continued)

~~NOTES TO~~d. ~~THE~~Stock ~~CONSOLIDATED FINANCIAL STATEMENTS~~options

16Our board of directors adopted the Greenstone Healthcare Corporation 2013 Stock Option Plan (the “Plan”) to promote our long-term growth and profitability by (i) providing our key directors, officers and employees with incentives to improve stockholder value and contribute to our growth and financial success and (ii) enable us to attract, retain and reward the best available persons for positions of substantial responsibility. A total of 10,000,000 shares of our common stock have been reserved for issuance upon exercise ~~Stockholder’s~~of options granted pursuant to the Plan. The Plan allows us to grant options to our employees, officers and directors and those of our ~~deficit~~subsidiaries, provided that only our employees and those of our subsidiaries may receive incentive stock options under the Plan. We have no issued options at December 31, 2024 under the Plan.

ae. ~~Common shares~~Warrants

~~Authorized~~All ~~and~~of ~~outstanding~~ the warrants have cashless exercise terms whereby in-the-money warrants may be exercised by reducing the number of shares issued in terms of the warrant exercise to offset the proceeds due on the exercise.

~~The~~All ~~Company~~of ~~has~~the ~~authorized 10,000,000,000 shares~~warrants ~~with~~have aprice ~~par~~protection ~~value~~features whereby any securities issued subsequent to the date of ~~$0.01 per~~the ~~share. The~~warrant ~~company~~issuance ~~has~~date, were issued 3at a lower price,~~729~~ or have conversion features that are lower than the current exercise price,~~053~~ or were converted at a lower price,~~805~~ ~~shares~~or ofare ~~common~~exercisable ~~stock~~ at ~~December~~a 31lower price, ~~2023~~to ~~and~~the ~~December~~current 31warrant exercise price, ~~2022~~will result in the exercise price of the warrant being set to the lower issue, ~~respectively~~conversion or exercise price.

OnWarrant ~~February~~exchange ~~28, 2022, the Company issued 150,000,000 shares of common stock to Leonite in connection with a conversion notice received, converting principal of $149,250.~~agreement

bOn June 28, 2023 the Company entered into a Warrant Exchange Agreement with Leonite that exchanged a Warrant outstanding to Leonite originally issued on June 12, 2020 for a new Warrant dated June 30, 2023. ~~Series~~The Asubstantial ~~Preferred~~changes to the warrant affect the number of shares in the warrant, the exercise price and the term. The original warrant provided for Leonite to have a continuing right to purchase a 20% share of the outstanding common shares until it expired on June 12, 2025 which was originally set at 326,286,847 shares. The new warrant is exercisable for 745,810,761 shares, 20% of the current number of common shares outstanding, with no allowance for adjustment, except normal adjustments due to splits or consolidations, until the new expiry date of June 30, 2027. The exercise price in the original warrant was $0.10, with allowance for adjustments, which when applied resulted in an exercise price of $0.0004 per share. The exercise price on the new warrant is $0.001 and is only adjustable if the Company issues any shares at a price less than the exercise price during the warrant period except for any issuance of shares to the Company’s president or related parties on any debt outstanding to those parties as of June 30, 2023, and limited to a conversion price of $0.0005 per share. The Warrant Exchange agreement was conditional on Leonite receiving a full payment of all of its outstanding loans originally set as by July 20, 2023. This date was extended and all of the notes were repaid on August 4, 2023. Leonite held several notes at June 30, 2023, some of which were convertible into shares at variable rates, see notes 9 and 10 above. The total amount repaid to settle all of the outstanding liabilities was $1,449,000.

~~Authorized~~The replacement warrants were valued effective June 30, 2023, the effective date of issuance of the warrants, as the difference between the ~~issued~~fair value of the original warrant exercisable for 326,286,847 shares of common stock and ~~outstanding~~ the fair value of the replacement four-year warrant exercisable for 745,810,861 shares of common stock at an exercise price of $0.001 per share.

The ~~Company~~warrants ~~has~~were ~~authorized 10,000,000 Series~~valued Ausing ~~preferred shares with~~ a ~~par~~Black-Scholes ~~value~~valuation ~~of $0~~model.~~01 per~~ ~~share.~~ The ~~company~~following ~~has issued~~assumptions ~~and~~were ~~outstanding 4,000,000 Series~~used Ain ~~Preferred~~the ~~shares~~valuation ~~at December 31, 2023 and December 31, 2022.~~model:

c. Series B Preferred shares

Schedule of assumptions
	Year ended December 31, 2023
Exercise price	$	0.001
Risk free interest rate		4.31 to 4.87	%
Expected life of options		2 to 4 years
Expected volatility of underlying stock		205.5 to 243.0	%
Expected dividend rate		0	%

~~Authorized and outstanding~~ F-25

~~The~~ETHEMA ~~Company~~HEALTH has authorized 400,000 Series B preferred shares with a par value of $1.00 per share. The company has issued and outstanding 0 and 400,000 Series B Preferred shares at December 31, 2023 and December 31, 2022, respectively.CORPORATION

~~The~~NOTES ~~Series~~TO BTHE ~~preferred~~CONSOLIDATED ~~shares~~FINANCIAL were senior secured and were mandatorily redeemable by the Company on July 1, 2021, and were originally classified as mezzanine debt. These Series B preferred shares meet the definition of liabilities in terms of ASC 480- debt and are no longer contingently convertible, due to the fact that the redemption date has passed.STATEMENTS

On June 30, 2023, the Company entered into an exchange agreement with Leonite Capital whereby it exchanged the shares in its wholly owned subsidiary, CCH for the return and cancellation of the Series B preferred shares, together with the dividends accrued thereon16. ~~Refer to~~Stockholder’s ~~note~~deficit ~~4 above.~~(continued)

de. ~~Stock~~Warrants ~~options~~(continued)

~~Our~~A ~~board~~summary of ~~directors adopted~~ the ~~Greenstone~~Company’s ~~Healthcare~~warrant ~~Corporation~~activity ~~2013~~during ~~Stock Option Plan (~~the ~~“Plan”)~~period tofrom ~~promote~~January ~~our long-term growth and profitability by (i) providing our key directors~~1, ~~officers~~2023 ~~and employees with incentives~~ to improve stockholder value and contribute to our growth and financial success and (ii) enable us to attract, retain and reward the best available persons for positions of substantial responsibility. A total of 10,000,000 shares of our common stock have been reserved for issuance upon exercise of options granted pursuant to the Plan. The Plan allows us to grant options to our employees, officers and directors and those of our subsidiaries; provided that only our employees and those of our subsidiaries may receive incentive stock options under the Plan. We have no issued options at December 31, ~~2023~~2024 ~~under~~is ~~the~~as ~~Plan.~~follows:

e. Warrants

No. of shares

Exercise price
per share

Weighted
average exercise
price

Outstanding as of January 1, 2023

602,852,506

$0.000675 to $0.00205

0.001306

Granted

745,810,761

0.001

Forfeited/cancelled

(326,286,847

)

0.000675

Exercised

–

Outstanding as of December 31, 2023

1,022,376,420

$0.001 to $0.00205

0.0012840

Granted

–

Forfeited/cancelled

–

Exercised

–

Outstanding as of December 31, 2024

1,022,376,420

$0.001 to $0.00205

0.0012840

~~All~~The offollowing ~~the~~table ~~warrants~~summarizes ~~have~~information ~~cashless~~about ~~exercise terms whereby in-the-money~~ warrants ~~may~~outstanding beat ~~exercised~~December by31, ~~reducing the number of shares issued in terms of the warrant exercise to offset the proceeds due on the exercise.~~2024:

All of the warrants have price protection features whereby any securities issued subsequent to the date of the warrant issuance date, were issued at a lower price, or have conversion features that are lower than the current exercise price, or were converted at a lower price, or are exercisable at a lower price, to the current warrant exercise price, will result in the exercise price of the warrant being set to the lower issue, conversion or exercise price.

Schedule of warrants outstanding	Schedule of warrants outstanding
		Warrants outstanding						Warrants exercisable
Exercise price		No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price

$0.001			745,810,761		2.50	$	0.001000		745,810,761	$	0.001000
$0.002050			276,565,659		1.01		0.002050		276,565,659		0.002050
			1,022,376,420		2.09	$	0.001284		1,022,376,420	$	0.001284

~~F-24~~All of the warrants outstanding at December 31, 2024 are vested. The warrants outstanding at December 31, 2024 have an intrinsic value of $0.

~~ETHEMA HEALTH~~17. ~~CORPORATION~~Segment information

~~NOTES~~The Company TOoperates ~~THE~~and ~~CONSOLIDATED~~manages ~~FINANCIAL~~its ~~STATEMENTS~~business as one reportable and operating segment, since the disposal of CCH on June 30, 2023, the Company only provides rehabilitation services to customers, these services are provided to customers at its Evernia, Addiction Recovery Institute of America facility.

~~17.~~Prior ~~Stockholder’s~~to ~~deficit~~that date, ~~(continued)~~the Company had two reportable segments and also derived rental income from the property owned by its CCH subsidiary.

eThe Company’s CODM reviews financial information presented and decides how to allocate resources based on net operating income (loss). ~~Warrants~~Net income (~~continued~~loss) is used for evaluating financial performance.

~~Warrant~~Significant ~~exchange~~segment ~~agreement~~expenses include Salaries and wages, rent expense, professional fees, management fees, food expenses, marketing and advertising expenses, insurance expenses and depreciation and amortization expenses. Other operating expenses include all remaining costs necessary to operate our business, which primarily include other administrative expenses. The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM:

On June 28, 2023 the Company entered into a Warrant Exchange Agreement with Leonite that exchanged a Warrant outstanding to Leonite originally issued on June 12, 2020 for a new Warrant dated June 30, 2023. The substantial changes to the warrant affect the number of shares in the warrant, the exercise price and the term. The original warrant provided for Leonite to have a continuing right to purchase a 20% share of the outstanding common shares until it expired on June 12, 2025 which was originally set at 326,286,847 shares. The new warrant is exercisable for 745,810,761 shares, 20% of the current number of common shares outstanding, with no allowance for adjustment, except normal adjustments due to splits or consolidations, until the new expiry date of June 30, 2027. The exercise price in the original warrant was $0.10, with allowance for adjustments, which when applied resulted in an exercise price of $0.0004 per share. The exercise price on the new warrant is $0.001 and is only adjustable if the Company issues any shares at a price less than the exercise price during the warrant period except for any issuance of shares to the Company’s president or related parties on any debt outstanding to those parties as of June 30, 2023, and limited to a conversion price of $0.0005 per share. The Warrant Exchange agreement was conditional on Leonite receiving a full payment of all of its outstanding loans originally set as by July 20, 223. This date was extended and all of the notes were repaid on August 4, 2023. Leonite held several notes at June 30, 2023, some of which were convertible into shares at variable rates, see notes 9 and 10 above. The total amount repaid to settle all of the outstanding liabilities was $1,449,000.F-26

~~The~~ETHEMA ~~replacement~~HEALTH warrants were valued effective June 30, 2023, the effective date of issuance of the warrants, as the difference between the fair value of the original warrant exercisable for 326,286,847 shares of common stock and the fair value of the replacement four-year warrant exercisable for 745,810,861 shares of common stock at an exercise price of $0.001 per share.CORPORATION

~~The~~NOTES ~~warrants~~TO ~~were~~THE ~~valued~~CONSOLIDATED ~~using~~FINANCIAL ~~a Black-Scholes valuation model. The following assumptions were used in the valuation model:~~ STATEMENTS

~~Share-Based Payment~~17. ~~Arrangement,~~Segment ~~Performance~~information ~~Shares, Activity~~ (continued)

	Year ended December 31, 2023
Exercise price	$	0.001
Risk free interest rate		4.31 to 4.87	%
Expected life of options		2 to 4 years
Expected volatility of underlying stock		205.5 to 243.0	%
Expected dividend rate		0	%

The segment operating results of the one reportable segment for the year ended December 31, 2024 is disclosed as follows:

A summary of the Company’s warrant activity during the period from January 1, 2022 to December 31, 2023 is as follows:

Schedule of segment information
		Year ended December 31, 2024
		In Patient Services

Revenue	$		6,017,204

Salaries and wages			3,072,654
Rent expense			1,304,127
Professional fees			955,801
Management fees			—
Food expenses			308,660
Marketing and advertising expenses			371,229
Insurance expenses			146,357
Depreciation and amortization expense			466,952
Other operating expenses			724,553

Operating loss			(1,333,129	)

Other (expense) income
Other income			110,000
Other expense			(1,160	)
Interest income			2,292
Interest expense			(565,343	)
Amortization of debt discount			(416,120	)
Foreign exchange movements			37,523
Net (loss) before income taxes	$		(2,165,937	)

~~Schedule~~The segment operating results of ~~warrants~~the ~~outstanding~~reportable segments for the year ended December 31, 2023 is disclosed as follows:

	No. of shares			Exercise price per share			Weighted average exercise price
	Year ended December 31, 2023
Outstanding as of January 1, 2022		623,777,506			$0.000675 to $0.12		$	0.0052875
	Rental Operations			In-Patient services			Total
Granted		—			—			—
Revenue	$	180,522		$	5,164,454		$	5,344,976
Forfeited/cancelled		(20,925,000	)		$0.12			0.12
Salaries and wages		—			2,656,267			2,656,267
Exercised		—			—			—
Rent expense		—			614,793			614,793
Outstanding as of December 31, 2022		602,852,506			$0.000675 to $0.00205		$	0.001306
Professional fees		—			707,413			707,413
Granted		745,810,761			$0.001			0.001
Management fees		185,503			182,500			368,003
Forfeited/cancelled		(326,286,847	)		$0.000675			0.000675
Food expenses		—			260,921			260,921
Exercised		—			—			—
Marketing and advertising expenses		—			142,462			142,462
Outstanding as of December 31, 2023		1,022,376,420			$0.001 to $0.00205		$	0.0012840
Insurance expenses		—			150,478			150,478
Depreciation and amortization expense		59,921			438,998			498,919
Other operating expenses		103			487,537			487,640
Operating loss		(65,005	)		(476,915	)		(541,920	)
Other (expense) income
Intercompany gain (loss) on debt forgiveness		3,481,332			(3,481,332	)		—
Gain on disposal of property		—			2,484,172			2,484,172
Loss on debt extinguishment		—			(277,175	)		(277,175	)
Extension fee on property purchase		—			(140,000	)		(140,000	)
Penalty on convertible notes		—			(34,688	)		(34,688	)
Interest income		—			676			676
Interest expense		(95,464	)		(404,762	)		(500,226	)
Amortization of debt discount		—			(281,354	)		(281,354	)
Foreign exchange movements		(81,033	)		(13,999	)		(95,032	)
Net income (loss) before taxes	$	3,239,830		$	(2,625,377	)	$	614,453

~~The following table summarizes information about warrants outstanding at December 31, 2023:~~F-27

~~Schedule~~ETHEMA ofHEALTH ~~assumption~~CORPORATION

	Warrants outstanding							Warrants exercisable
Exercise price	No. of shares		Weighted average remaining years		Weighted average exercise price			No. of shares		Weighted average exercise price
$0.001		745,810,761		3.50					745,810,761
$0.002050		276,565,659		2.01					276,565,659
		1,022,376,420		3.10		$	0.001284		1,022,376,420		$	0.001284

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~All of the warrants outstanding at December 31, 2023 are vested~~18. ~~The~~Net ~~warrants~~(loss) ~~outstanding~~income atper ~~December~~common ~~31, 2023 have an intrinsic value of $0.~~ share

FFor the year ended December 31, 2024, the following warrants exercisable for shares and convertible securities convertible into a number of shares were excluded from the computation of diluted net loss per share as the results would have been anti-25dilutive.

ETHEMA HEALTH CORPORATION


	Year ended December 31, 2024

Shares issuable upon exercise of warrants		1,022,376,420
Shares issuable on conversion of convertible notes		180,960,977
		1,203,337,397

~~NOTES~~For TOthe ~~THE~~year ~~CONSOLIDATED~~ended ~~FINANCIAL~~December ~~STATEMENTS~~31, 2023, the computation of basic and diluted earnings per share is calculated as follows:

17. Segment information

			Number of		Per share
	Amount		shares		amount

Basic earnings per share
Net income per share available for common stockholders	$	1,129,374		3,729,053,805	$	0.00

Effect of dilutive securities
Warrants		—		—		—
Convertible debt		198,684		174,617,879		0.00

Diluted earnings per share
Net income per share available for common stockholders	$	1,328,058		3,903,671,684	$	0.00

The Company had two reportable operating segments until the disposal of its property owning subsidiary, CCH on June 30, 2023, thereafter the Company has one operating segment in one geographic location, Rehabilitation services in West Palm Beach, Florida.F-28

~~The operating segments~~ETHEMA ~~disclosed~~HEALTH ~~below consist of:~~CORPORATION

a.NOTES TO ~~Rental~~THE ~~income~~CONSOLIDATED ~~from~~FINANCIAL the property owned by CCH subsidiary located at 3571 Muskoka Road, #169, Bala, on which the operations of the Canadian Rehab Clinic were located prior to disposal on February 14, 2017 and subsequently leased to the purchasers of the business of the Canadian Rehab Clinic, for a period of 5 years renewable for a further three five-year periods and with an option to acquire the property at a fixed price.STATEMENTS

b19. ~~Rehabilitation~~Commitments ~~Services~~and ~~provided to customers, these services were provided to customers at our Evernia, Addiction Recovery Institute of America operations.~~contingencies

~~The segment~~a. ~~operating~~Options ~~results~~granted ofto ~~the~~purchase ~~reportable~~shares ~~segments~~in ~~for the year ended December 31, 2023 is disclosed as follows:~~ATHI

~~Schedule~~On July 12, 2020, the Company entered into a five year option agreement with Leonite Capital LLC (“Leonite”) and other investors (collectively the “Transferees”). The Company agreed to sell to Leonite a portion of ~~segment~~the ~~information~~total outstanding shares of ATHI from the shares of ATHI held by the company. The Company provided Leonite an option to purchase 4,000,000 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $400), based on the advances that Leonite made to the Company totaling $396,000. Leonite shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Leonite to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

	Year ended December 31, 2023
	Rental Operations			In-Patient services			Total
Revenue	$	180,522		$	5,164,454		$	5,344,976
Operating expenses		245,527			5,641,369			5,886,896
Operating loss		(65,005	)		(476,915	)		(541,920	)
Other (expense) income
Intercompany gain (loss) on debt forgiveness		3,481,332			(3,481,332	)		—
Gain on disposal of property		—			2,484,172			2,484,172
Loss on debt extinguishment		—			(277,175	)		(277,175	)
Extension fee on property purchase		—			(140,000	)		(140,000	)
Penalty on convertible notes		—			(34,688	)		(34,688	)
Interest income		—			676			676
Interest expense		(95,464	)		(404,762	)		(500,226	)
Amortization of debt discount		—			(281,354	)		(281,354	)
Foreign exchange movements		(81,033	)		(13,999	)		(95,032	)
Net income (loss) before taxes		3,239,830			(2,625,377	)		614,453
Taxes		—			391,962			391,962
Net income (loss)	$	3,239,830		$	(2,233,415	)	$	1,006,415

On September 14, 2020, the Company entered into a five year option agreement with Ed Blasiak (“Blasiak”) whereby the Company agreed to sell to Blasiak a portion of the total outstanding shares of ATHI. The Company provided Blasiak an option to purchase 571,428 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $57), based on the advances that Blasiak made to the Company totaling $50,000. Blasiak shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Blasiak to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

~~The~~On ~~operating~~October ~~assets~~29, ~~and~~2020, ~~liabilities~~the Company entered into a five year option agreement with First Fire whereby the Company agreed to sell to First Fire a portion of the ~~reportable~~total ~~segments~~outstanding asshares of ~~December~~ATHI. 31The Company provided First Fire an option to purchase 1,428,571 ~~2023~~shares isof ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $143), based on the advances that First Fire made to the Company totaling $120,000. First Fire shall share in all distributions by ATHI to the Company, on an as ~~follows:~~exercised basis, equal to the advances made by First Fire to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

	December 31, 2023
	Rental Operations			In-Patient services			Total
Purchase of fixed assets	$	(43,611	)	$	5,293,489		$	5,249,878
Assets
Current assets		—			403,100			403,100
Non-current assets		—			11,116,076			11,116,076
Liabilities
Current liabilities		—			(8,298,904	)		(8,298,904	)
Non-current liabilities		—			(9,420,552	)		(9,420,552	)
Net liability position	$	—		$	(6,200,280	)	$	(6,200,280	)

On October 29, 2020, the Company entered into a five year option agreement entered into with Bauman, so that the Company agreed to sell to Bauman a portion of the total outstanding shares of ATHI. The Company provided Bauman an option to purchase 1,428,571 shares of ATHI from the Company for a purchase consideration of $0.0001 per share (a total consideration of $143), based on the advances that Bauman made to the Company totaling $120,000. Bauman shall share in all distributions by ATHI to the Company, on an as exercised basis, equal to the advances made by Bauman to the Company, thereafter the option will be reduced to 50% of the shares exercisable under the option.

~~F-26~~b. Other

~~ETHEMA~~The ~~HEALTH~~Company ~~CORPORATION~~has principal and interest payment commitments under the Convertible notes disclosed under Note 10 above. Conversion of these notes are at the option of the investor, if not converted these notes may need to be repaid.

~~NOTES~~ From TOtime ~~THE~~to ~~CONSOLIDATED~~time, ~~FINANCIAL~~the ~~STATEMENTS~~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.

1720. ~~Segment information~~ ~~(continued)~~Income taxes

The ~~segment~~Company ~~operating~~is ~~results~~current ofin ~~the~~its ~~reportable~~US ~~segments~~and ~~for~~Canadian ~~the~~tax ~~year~~filings ~~ended~~as of December 31, 2022, istax ~~disclosed~~filings are due for the Company as ~~follows:~~of December 31, 2023 and 2024.

	Year ended December 31, 2022
	Rental Operations			In-Patient services			Total
Revenue	$	368,591		$	4,452,156		$	4,820,747
Operating expenses		129,427			4,202,203			4,331,630
Operating income		239,164			249,953			489,117
Other (expense) income
Other income		—			15,760			15,760
Forgiveness of government relief loan		—			104,368			104,368
Penalty on convertible notes		—			(60,075	)		(60,075	)
Interest income		—			78			78
Interest expense		(205,133	)		(383,344	)		(588,477	)
Amortization of debt discount		—			(624,683	)		(624,683	)
Foreign exchange movements		97,842			973,478			1,071,320
Net income before taxes		131,873			275,535			407,408
Taxes		—			(112,220	)		(112,220	)
Net income	$	131,873		$	163,315		$	295,188

The Company’s operations are based in the US and currently enacted tax laws in the US are used in the calculation of income taxes.

~~The operating assets and liabilities of the reportable segments as of December 31, 2022 is as follows:~~F-29

	December 31, 2022
	Rental Operations			In-Patient services			Total
Purchase of fixed assets	$	—		$	315,822		$	315,822
Assets
Current assets		2,615			540,281			542,896
Non-current assets		2,469,190			3,551,208			6,020,398
Liabilities
Current liabilities		(4,973,187	)		(8,315,944	)		(13,289,131	)
Non-current liabilities		(622,635	)		(1,484,071	)		(2,106,706	)
Mandatory redeemable preferred shares		—			(400,000	)		(400,000	)
Intercompany balances		(1,420,438	)		1,420,438			—
Net liability position	$	(4,544,455	)	$	(4,688,088	)	$	(9,232,543	)

ETHEMA HEALTH CORPORATION

~~18.~~NOTES ~~Net income~~TO ~~per~~THE ~~common~~CONSOLIDATED ~~share~~FINANCIAL STATEMENTS

~~For the~~20. ~~year~~Income ~~ended~~taxes ~~December 31, 2023, the computation of basic and diluted earnings per share is calculated as follows:~~(continued)

~~Schedule~~Federal ofIncome ~~Earnings~~Tax ~~Per~~- ~~Share,~~United ~~Basic and Diluted~~States

			Number of		Per share
	Amount		shares		amount
Basic earnings per share
Net income per share available for common stockholders	$	1,129,374		3,729,053,805	$	0.00
Effect of dilutive securities
Warrants		—		—
Convertible debt		198,684		174,617,879
Diluted earnings per share
Net income per share available for common stockholders	$	1,328,058		3,903,671,684	$	0.00

On December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxes, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be effective in the future). Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.

~~F-27~~Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of December 31, 2024 and 2023, there have been no interest or penalties incurred on income taxes.

~~ETHEMA~~The ~~HEALTH~~provision ~~CORPORATION~~for income taxes consists of the following:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


	Year ended December 31, 2024		Year ended December 31, 2023
Current
Federal	$	—	$	174,511
State		—		—
Foreign		—		—
Current, Total	$	—	$	174,511
Deferred
Federal	$	—	$	217,451
State

Filing Compare · ETHEMA HEALTH Corp