Overview


This Management's Discussion and Analysis or Plan of Operations includes a
number of forward-looking statements that reflect Management's current views
with respect to future events and financial performance. You can identify these
statements by forward-looking words such as "may" "will," "expect,"
"anticipate," "believe," "estimate" and "continue," or similar words. Those
statements include statements regarding the intent, belief or current
expectations of us and members of our management team as well as the assumptions
on which such statements are based. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risk and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements.



Readers are urged to carefully review and consider the various disclosures made
by us in this report and in our other reports filed with the Securities and
Exchange Commission. Important factors currently known to management could cause
actual results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. We believe that our assumptions are
based upon reasonable data derived from and known about our business and
operations. No assurances are made that actual results of operations or the
results of our future activities will not differ materially from our
assumptions. Factors that could cause differences include, but are not limited
to, expected market demand for our products, fluctuations in pricing for our
products, and competition.



Unless the context indicates or suggests otherwise, references to "we," "our,"
"us," the "Company," or "GSRX" refer to GSRX Industries Inc., a Nevada
corporation, individually, or as the context requires, collectively with its
consolidated subsidiaries.



GSRX Industries Inc. was incorporated in Nevada under the name "Cyberspace Vita,
Inc." on November 7, 2006. The Company's original business plan was to create
and conduct an online business for the sale of vitamins and supplements;
however, Cyberspace never generated any meaningful revenues. On May 5, 2008,
Cyberspace discontinued its prior business and changed its business plan.



Following discontinuation of its initial business plan, the Company's business
plan was to seek, investigate, and, if warranted, acquire one or more properties
or businesses, and to pursue other related activities intended to enhance
stockholder value. The acquisition of a business opportunity may be made by
purchase, merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership.



On May 11, 2017, the Company entered into an Exchange Agreement with Project
1493, and the sole member of 1493, pursuant to which the member transferred all
of the outstanding membership interests of 1493 to the Company in exchange for
16,690,912 of its restricted shares of common stock and warrants to purchase up
to 3,000,000 shares of common stock at an exercise price of $0.50 per share.



As a result of the Exchange Agreement, 1493 became a wholly-owned subsidiary of
the Company, and the business of 1493 became the business of the Company. The
Company, together with its wholly-owned subsidiary, is in the business of
acquiring, developing and operating medical cannabis dispensaries in Puerto
Rico.



On May 12, 2017, the Company changed its name from "Cyberspace Vita, Inc." to
"Green Spirit Industries Inc." On June 22, 2018, the Company changed its name
from "Green Spirit Industries Inc." to "GSRX Industries Inc."



Effective August 28, 2019, eight shareholders of the Company entered into a
Share Exchange Agreement (the "Share Exchange Agreement") with Chemesis
International, Inc. ("Chemesis"), pursuant to which the shareholders exchanged
42,534,454 common shares and 1,000 shares of preferred stock of the Company for
14,880,705 shares of Chemesis. As a result and as of the date hereof, Chemesis
owns 54,151,035 common shares or 67.03% of the Company.



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As of the date of this Report, we have financed operations through a combination
of equity financings including net proceeds from the private placements of
stock. Although it is difficult to predict our liquidity requirements, based
upon our current operating plan, as of the date of this Report, we believe we
will have sufficient cash to meet our projected operating requirements until the
end of 2019, at which point we anticipate nearing or reaching cash-flow
breakeven. See "Liquidity and Capital Resources."



RESULTS OF OPERATIONS

Three Months Ended September 30, 2019 and September 30, 2018





The following table summarizes the results of our operations during the three
months ended September 30, 2019 and 2018, respectively, and provides information
regarding the dollar and percentage increase or (decrease) from the current
three-month period to the prior three-month period:



                                                                                        Percentage
                                     9/30/2019        9/30/2018         Increase         Increase
           Line Item                (unaudited)      (unaudited)       (Decrease)       (Decrease)
Revenues                               2,757,158          664,400         2,092,758          314.98 %
Cost of Goods Sold                     1,431,656          409,348         1,022,308          249.74 %
Operating expenses                    17,765,423        2,198,056        15,567,367          708.23 %
Net loss                             (22,816,790 )     (1,655,745 )     (21,161,045 )      1278.03. %
Loss per share of common stock     $       (0.31 )   $      (0.04 )   $    

   (.27 )       (675.00 )%

We recorded a net loss of $22,816,790 for the three months ended September 30, 2019.





Revenue. Total revenue for the three months ended September 30, 2019 and 2018
was $2,757,158 and $664,400, respectively. The increase of $2,092,758, or
314.98%, was due to the revenues generated by operations of the five (5) Green
Spirit RX dispensaries in Puerto Rico, and The Green Room dispensary, CBD sales
from Pure and Natural and retail sales from the Pure and Natural One kiosk
during the third quarter.



Cost of Goods Sold. Total cost of revenue for the three months ended September
30, 2019 and 2018 was $1,431,656 and $409,348, respectively. The increase of
$1,022,308, or 249.74%, was due to an increase in inventory purchases of
cannabis products, including flowers, cream, oils and edibles, and
cannabis-related accessories, including cartridges and pipes, related to the
retail operations of the six dispensaries and CBD products purchased during the
third quarter necessary for the increase in revenues.



Total Operating Expenses Selling, general, administrative and operating expenses
for the three months ended September 30, 2019 and 2018 was $17,765,423 and
$2,198,056, respectively. The increase of $15,567,367, or 708.23%, was primarily
due to a significant increase of the stock-based compensation; and an increase
in operating expenses of the six dispensaries, labor, taxes, store supplies,
marketing and security expenses, professional fees and consulting fees.



Net Loss. Net loss for the three months ended September 30, 2019 and 2018 was
$22,816,790 and $1,655,745, respectively. The increase of $21,161,045, or
1278.03%, was primarily due to an increase in revenues offset by the increase of
stock-based compensation, increases in cost of goods sold, operating expenses
related to retail operations of the six dispensaries and CBD location.

Nine Months Ended September 30, 2019 and September 30, 2018

We recorded a net loss of $28,099,596 for the nine months ended September 30, 2019.





Revenue. Total revenue for the nine months ended September 30, 2019 and 2018 was
$9,062,462 and $1,020,026, respectively. The increase of $8,042,436, or 788.45%,
was primarily due to operations increasing from four to six retail dispensaries,
website and retail sales of CBD products.



Cost of Goods Sold. Total cost of revenue for the nine months ended September
30, 2019 and 2018 was $4,910,120 and $610,526, respectively. The increase of
$4,299,594 or 704.45%, was due to operations increasing from four to six retail
dispensaries, website and retail sales of CBD products.



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Total Operating Costs. Selling, general, administrative and operating expenses
for the nine months ended September 30, 2019 and 2018 was $25,609,037 and
$14,517,450, respectively. The increase of $11,091,587, or 76.40%, was primarily
due to significant increase in stock based compensation paid to officers,
directors and consultants for services rendered and increase in overhead
expenses incurred to operate the business as additional locations opened.



Net Loss. Net Loss for the nine months ended September 30, 2019 and 2018 was
$28,099,596 and $13,647,636, respectively. The increase of $14,451,960, or
105.89%, was primarily due to stock based compensation paid to officers,
directors and consultants for services rendered and overhead expenses incurred
to operate the business as additional locations opened.

Off Balance Sheet Arrangements





We do not have any off balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that are material to an investor

in
our securities.



Seasonality

Our operating results were not affected by seasonality.





Inflation

Our business and operating results are not affected in any material way by inflation.





Critical Accounting Policies



The Securities and Exchange Commission issued Financial Reporting Release No.
60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies"
suggesting that companies provide additional disclosure and commentary on their
most critical accounting policies. In Financial Reporting Release No. 60, the
Securities and Exchange Commission has defined the most critical accounting
policies as the ones that are most important to the portrayal of a company's
financial condition and operating results, and require management to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. The nature of our business
generally does not call for the preparation or use of estimates. Due to the fact
that the Company does not have any operating business, we do not believe that we
have any such critical accounting policies.



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LIQUIDITY AND CAPITAL RESOURCES





We have never reported net income. We incurred net losses for the nine months
ended September 30, 2019 and 2018 of $28,099,596 and $13,647,636, respectively,
and have an accumulated deficit of $70,421,832 as of September 30, 2019.

As of September 30, 2019, the Company had $1,110,139 cash on hand as compared to $1,313,645 as of December 31, 2018. For the nine months ended September 30, 2019, the Company reported loss from operations of $28,099,596 and net cash decrease of $203,506.





Sources of Liquidity



We have not been able to generate sufficient cash from operating activities to
fund our ongoing operations. Since May 2017, we have raised capital through
private sales of our securities and joint ventures. Our future success is
dependent upon our ability to achieve profitable operations and generate cash
from operating activities. There is no guarantee that we will be able to
generate sufficient revenue and/or raise capital to support our operations.



During the nine months ended September 30, 2019, we financed our operations
through the remaining proceeds from various private placement offerings
conducted by the Company during 2018 and the first, second and third quarters of
2019. On March 8, 2019, the Company conducted a private placement, pursuant to
which sold 621,600 shares of the Company's common stock at a purchase price of
$1.25 per share, resulting in net proceeds to the Company of $777,000. On June
4, 2019, the Company conducted a private placement, pursuant to which it sold
400,000 shares of the Company's common stock at purchase price of $0.50 per
share, resulting in net proceeds to the Company of $200,000. On July 5, 2019,
the Company conducted a private placement, pursuant to which it sold 412,000
shares of the Company's common stock at purchase price of $0.50 per share,
resulting in net proceeds to the Company of $206,000.



We anticipate requiring additional capital for the continued development and
implementation of our business plan, including the remaining build-out of our
facilities in California, completing construction on our dispensaries in Puerto
Rico, and working capital for our retail dispensary operations.



We will be required to raise additional cash through public or private
financing, additional collaborative relationships or other arrangements until we
are able to raise revenues to a point of positive cash flow. We believe our
existing and available capital resources will be sufficient to satisfy our
funding requirements through the fourth quarter of 2019. However, we continue to
evaluate various options to further reduce our cash requirements to operate at a
reduced rate, as well as options to raise additional funds, including obtaining
loans for real estate purchases and selling common stock. There is no guarantee
that we will be able to generate enough revenue and/or raise capital to support
our operations, or if we are able to raise capital, that it will be available to
us on acceptable terms, on an acceptable schedule, or at all.



The issuance of additional securities may result in a significant dilution in
the equity interests of our current stockholders. Obtaining loans, assuming
these loans would be available, will increase our liabilities and future cash
commitments. There is no assurance that we will be able to obtain further funds
required for our continued operations or that additional financing will be
available for use when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will not be able to meet our other obligations
as they become due and we will be forced to scale down or perhaps even cease our
operations.

Operating Cash Flows. Net cash used in operating activities for the nine months ended September 30, 2019 was $1,972,458 which was due to the net loss from operations, net of common stock issued for services and unrealized loss on investments, abandonment of option to purchase a building and write off of leasehold improvements and rent deposits; and the decrease of accounts receivable and inventory. The loss was offset by the increase in prepaid inventory, prepaid expenses, accounts payable, accrued expenses and current portion of lease liability.





Investing Cash Flows. Net cash used in investing activities for the nine months
ended September 30, 2019 was $918,411, which was due to increase of deposits,
purchase of leasehold improvements and equipment; legal fees on patent
application costs; investments in closely held businesses and construction on
facilities still not put into service.



Financing Cash Flows. Net cash provided by financing activities for the nine
months ended September 30, 2019 was $2,687,363, which was due to our March, June
and July 2019 capital raises, sale of equity investments in California
subsidiaries and contributions by non-controlling interests.

Material Capital Expenditure Commitments

The Company has upcoming capital commitments:

Remaining construction of three remaining dispensaries in Puerto Rico

                                                                   $

600,000

Purchase of equipment, furniture and fixtures and finish out of Palm Springs dispensary

                                                     $

600,000


Purchase of equipment in Point Arena                                   $  

80,000




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The capital committed is for construction of existing leased units in Puerto
Rico, which are currently in different phases of construction. The Company
estimates construction to be completed by March 31, 2020. However, no assurance
can be given. The Company plans to use current funds to complete construction of
its dispensary locations in Puerto Rico. The Company estimates construction of
Palm Springs dispensary to be completed in the second quarter 2020. However, no
assurance can be given. The Company estimates purchase of equipment and
beginning of operations of manufacturing in Point Arena to begin in the fourth
quarter 2019. However, no assurance can be given. The Company has capital raises
open for the Palm Springs dispensary and Point Arena manufacturing operation. As
of September 30, 2019, approximately $1,070,341 has been raised.

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