Greenbrook TMS : Q4 2023

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Greenbrook TMS Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Greenbrook TMS Inc. (and subsidiaries) (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive loss, changes in equity (deficit), and cash flows for each of the years in the two year period ended December 31, 2023 and the related notes (collectively, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2(a) to the consolidated financial statements, the Company has experienced losses since inception, has negative cash flows from operations, negative working capital, risks associated with future non-compliance with covenants on loans payable and the uncertainty related to outcome of the litigation, that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2(a). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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.

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 effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our 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.

F-2

Table of Contents

/s/ KPMG LLP

Chartered Professional Accountants, Licensed Public Accountants

We have served as the Company's auditor since 2017.

Vaughan, Canada

April 25, 2024

F-3

Table of Contents

GREENBROOK TMS INC.

Consolidated Balance Sheets

(Expressed in U.S. dollars, unless otherwise stated)

		December 31,			December 31,
		2023				2022
Assets
Current assets:
Cash	$	3,323,708		$	1,623,957
Restricted cash (note 13)		1,000,000				1,000,000
Accounts receivable, net (note 20(b))		7,569,843				7,348,846
Prepaid expenses and other		3,079,785				2,520,676
Total current assets		14,973,336				12,493,479
Property, plant and equipment (note 6)		4,793,979				3,719,621
Intangible assets (note 7)		622,057				688,249
Goodwill (notes 5 and 7)		-			-
Finance right-of-use assets (note 8(a))		2,140,338				19,348,091
Operating right-of-use assets (note 8(b))		28,887,905				34,890,554
Total assets	$	51,417,615			$	71,139,994
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities (note 9)	$	13,701,630		$	20,271,624
Current portion of loans payable (note 10(a))		5,770,603				2,200,892
Current portion of finance lease liabilities (note 8(a))		622,730				6,532,175
Current portion of operating lease liabilities (note 8(b))		3,960,346				4,591,216
Current portion of shareholder loan (note 11)		505,161				46,995
Other payables (note 12)		5,730,781				629,381
Non-controlling interest loans (note 10(b))		63,174				94,136
Deferred and contingent consideration (note 13)		1,000,000				1,000,000
Advance for research collaboration (note 14)		1,300,000				-
Total current liabilities		32,654,425				35,366,419
Loans payable (note 10(a))		90,230,173				51,017,743
Finance lease liabilities (note 8(a))		235,107				10,449,725
Operating lease liabilities (note 8(b))		26,438,220				31,352,506
Shareholder loans (note 11)		2,807,480				2,065,443
Total liabilities		152,365,405				130,251,836
Shareholders' deficit:
Common shares (note 15)		120,741,061				114,120,362
Contributed surplus (note 16)		5,397,700				4,552,067
Deficit		(224,174,970)			(175,007,144)
Total shareholders' deficit excluding non-controlling interest		(98,036,209)				(56,334,715)
Non-controlling interest (note 24)		(2,911,581)			(2,777,127)
Total shareholders' deficit		(100,947,790)				(59,111,842)
Basis of presentation and going concern (note 2(a))
Contingencies (note 17)
Subsequent events (notes 2(a) and 26)
Related parties (note 22)
Total liabilities and shareholders' deficit	$	51,417,615			$	71,139,994
See accompanying notes to consolidated financial statements.

F-4

Table of Contents

GREENBROOK TMS INC.

Consolidated Statements of Comprehensive Loss (Expressed in U.S. dollars, unless otherwise stated)

			December 31,			December 31,
			2023				2022
Revenue:
Service revenue	$	73,786,778		$	66,825,959
Expenses:
Direct center and patient care costs			53,765,678				42,137,465
Other regional and center support costs (note 25)			20,050,778				27,459,048
Depreciation (notes 6 and 8(a))			2,703,186				3,510,611
			76,519,642				73,107,124
Regional operating loss			(2,732,864)			(6,281,165)
Center development costs			525,782				660,356
Corporate, general and administrative expenses (note 25)			29,559,892				25,524,224
Share-based compensation (note 16)			726,679				347,787
Amortization (note 7(a))			66,192				1,358,212
Interest expense			12,048,071				5,979,829
Interest income			(231)			(12,250)
Loss on extinguishment of loans (note 10(a)(ii))			14,274				2,331,917
Loss on settlements (note 12(d) and 12(e))			3,295,904				-
Impairment loss (note 7(b), note 7(c) and note 8(b))			285,390				45,834,688
Loss before income taxes			(49,254,817)			(88,305,928)
Income tax expense (note 19)			-			-
Loss for the year and comprehensive loss		$	(49,254,817)			$	(88,305,928)
Non-controlling interest (note 24)			(340,755)			(634,812)
Loss for the year and comprehensive loss attributable to Greenbrook		$	(48,914,062)			$	(87,671,116)
Net loss per share (note 23):
Basic	$	(1.25)	$	(3.77)
Diluted			(1.25)			(3.77)

See accompanying notes to consolidated financial statements.

F-5

Table of Contents

GREENBROOK TMS INC.

Consolidated Statements of Changes in Equity (Deficit) (Expressed in U.S. dollars, unless otherwise stated)

																								Non-				Total
				Common shares				Contributed									controlling
															interest				equity
Year ended December 31, 2022		Number				Amount				surplus				Deficit				(note 24)				(deficit)
Balance, December 31, 2021		17,801,885			$	98,408,917			$	4,204,280			$	(87,332,687)			$	(1,325,406)			$	13,955,104
Net comprehensive loss for the year		-				-				-				(87,671,116)				(634,812)				(88,305,928)
Issuance of common shares (note 15)	11,634,660				15,711,445				-				-				-				15,711,445
Share-based compensation (note 16)		-				-				347,787				-				-				347,787
Distributions to non-controlling
interest		-				-				-				-				(320,250)				(320,250)
Acquisition of subsidiary non-
controlling interest (note 24)		-				-				-				(3,341)				(496,659)				(500,000)
Balance, December 31, 2022		29,436,545			$	114,120,362			$	4,552,067	$	(175,007,144)	$	(2,777,127)	$	(59,111,842)
																								Non-				Total
				Common shares			Contributed									controlling
														interest				equity
Year ended December 31, 2023			Number				Amount					surplus				Deficit				(note 24)				(deficit)
Balance, December 31, 2022			29,436,545		$		114,120,362			$		4,552,067			$	(175,007,144)			$		(2,777,127)			$	(59,111,842)
Net comprehensive loss for the year		-				-				-				(48,914,062)				(340,755)					(49,254,817)
Issuance of common shares (note 15)	13,337,466					6,620,699					-				-				-				6,620,699
Share-based compensation (note 16)		-				-				726,679					-				-				726,679
Issuance of lender warrants		-				-				79,132					-				-				79,132
Gain on extinguishment of
shareholder loan		-				-				39,822					-				-				39,822
Acquisition of subsidiary non-
controlling interest (note 24)		-				-				-				(253,764)				253,251					(513)
Distribution to non-controlling
interest		-				-				-				-				(46,950)					(46,950)
Balance, December 31, 2023		42,774,011		$		120,741,061			$		5,397,700			$	(224,174,970)			$		(2,911,581)			$	(100,947,790)

See accompanying notes to consolidated financial statements.

F-6

Table of Contents

GREENBROOK TMS INC. Consolidated Statements of Cash Flows (Expressed in U.S. dollars, unless otherwise stated)

			December 31,			December 31,
			2023				2022
Cash provided by (used in)
Operating activities:
Loss for the year	$	(49,254,817)	$	(88,305,928)
Adjusted for:
Amortization			66,192				1,358,212
Depreciation			2,703,186				3,510,611
Operating lease expense			7,941,831				6,511,921
Interest expense			12,048,071				5,979,829
Interest income			(231)			(12,250)
Share-based compensation			726,679				347,787
Loss (gain) on extinguishment of loan			14,274				2,331,917
Loss on settlements (note 12)			3,295,904				-
Credit facility amendment fee (note 10(a))			1,000,000				-
Neuronetics Note non-cash financing costs (note 10(a))			116,356				-
Gain on lender warrants (note 12(a))			(6,567)			(38,430)
(Gain) loss on deferred share units (note 12(b))			(201,495)			372,724
Gain on performance share units (note 12(c))			(43,706)			(53,100)
Impairment loss (note 7)			285,390				45,834,688
Change in non-cash operating working capital:
Accounts receivable			(220,997)			3,105,826
Prepaid expenses and other			(559,109)			196,097
Advance for research collaboration (note 14)			1,300,000				-
Other payables			(3,475,000)			-
Accounts payable and accrued liabilities			3,605,174				5,610,578
Interest paid			(7,221,240)			(4,839,280)
Interest received			231				12,250
Payment of operating lease liabilities			(8,032,848)			(6,105,387)
			(35,912,722)				(24,181,935)
Financing activities:
Net proceeds on issuance of common shares (note 15)			6,620,699				-
Finance costs incurred (note 10(a))			(984,709)			(3,074,459)
Bank loans advanced			26,731,638				55,000,000
Bank loans repaid (note 10(a))			(152,627)			(30,766,513)
Promissory notes advanced (note 10(a) and note 11)			9,695,000				-
Promissory notes repaid (note 10(a))			(800,000)			-
Principal repayment of finance lease liabilities			(3,419,265)			(5,896,579)
Non-controlling interest loans advanced			8,526				8,922
Non-controlling interest loans repaid			(24,000)			-
Distribution to non-controlling interest			(46,950)			(320,250)
			37,628,312				14,951,121
Investing activities:
Acquisition, net of cash acquired (note 5)			-			688,958
Change in restricted cash			-			250,000
Acquisition of subsidiary non-controlling interest (note 24)			(513)			(500,000)
Deferred and contingent consideration paid (note 13)			-			(250,000)
Purchase of property, plant and equipment			(15,326)			(33,866)
			(15,839)				155,092
Increase (decrease) in cash			1,699,751				(9,075,722)
Cash, beginning of the year			1,623,957				10,699,679
Cash, end of the year		$	3,323,708			$	1,623,957
See accompanying notes to consolidated financial statements.
	F-7

Table of Contents

GREENBROOK TMS INC.

Notes to Consolidated Financial Statements (Expressed in U.S. dollars, unless otherwise stated)

Years ended December 31, 2023 and December 31, 2022

1. Reporting entity:
   Greenbrook TMS Inc. (the "Company"), an Ontario corporation along with its subsidiaries, controls and operates a network of outpatient mental health services centers that specialize in the provision of Transcranial Magnetic Stimulation ("TMS") therapy, Spravato® (esketamine nasal spray) and other treatment modalities for the treatment of depression and related psychiatric services.
   The Company's head and registered office is located at 890 Yonge Street, 7th Floor, Toronto, Ontario, Canada, M4W 3P4. The Company's United States corporate headquarters is located at 8401 Greensboro Drive, Suite 425, Tysons Corner, Virginia, USA, 22102.
2. Basis of presentation:
3. 1. Going concern:
      These consolidated financial statements have been in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") and the basis of presentation outlined in note 2(b) on the assumption that the Company is a going concern and will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the next 12 months.
      The Company has experienced losses since inception and has negative cash flow from operating activities of $35,912,722 for the year ended December 31, 2023 ($24,181,935 - year ended December 31, 2022). The Company's cash balance, excluding restricted cash as at December 31, 2023 was $3,323,708 ($1,623,957 as at December 31, 2022) and negative working capital as at December 31, 2023 was $17,681,089 (negative working capital of $22,872,940 as at December 31, 2022).
      On July 14, 2022, the Company entered into a credit agreement (the "Madryn Credit Agreement"), as amended, for a $75,000,000 secured credit facility (the "Madryn Credit Facility") with Madryn Fund Administration, LLC and its affiliated entities (collectively, "Madryn"). Upon closing of the Madryn Credit Facility, the Company drew a $55,000,000 term loan under the Madryn Credit Facility. In addition, the Madryn Credit Facility permits the Company to draw up to an additional $20,000,000 in a single draw at any time on or prior to December 31, 2024 for purposes of funding future mergers and acquisition activity.
      On March 23, 2023, the Company completed a non-brokered private placement (the "2023 Private Placement"), for aggregate gross proceeds to the Company of approximately $6,250,000. The 2023 Private Placement included investments by Madryn, together with certain of the Company's other major shareholders, including Greybrook Health Inc. ("Greybrook Health") and affiliates of Masters Special Situations LLC ("MSS"). See note 15.
      On July 13, 2023, the Company entered into a purchase agreement (the "Alumni Purchase Agreement") with Alumni Capital LP ("Alumni"). The Alumni Purchase Agreement provides equity line financing for sales from time to time of up to $4,458,156 of common shares. As at December 31, 2023, the Company has issued an aggregate of 1,761,538 Purchase Shares (as defined below) under the Alumni Purchase Agreement for gross proceeds of $481,437. See note 15.

F-8

Table of Contents

GREENBROOK TMS INC.

Notes to Consolidated Financial Statements (continued) (Expressed in U.S. dollars, unless otherwise stated)

Years ended December 31, 2023 and December 31, 2022

2. Basis of presentation (continued):

1. Going concern (continued):
   During the year ended December 31, 2023, the Company received an aggregate of $36,426,638 in debt financing, of which $31,231,638 was financed by Madryn, while the remaining amount of $5,195,000 was funded by certain significant shareholders of the Company, and other investors, in order to satisfy short-term cash requirements. In addition, the amendments to the Madryn Credit Facility were also effected to amend the Company's minimum liquidity covenant. See note 10 and note 11.
   The terms of the Madryn Credit Facility require the Company to satisfy various financial covenants including a minimum liquidity and minimum consolidated revenue amounts that became effective on July 14, 2022 and September 30, 2022, respectively. A failure to comply with these covenants, or failure to obtain a waiver for any non-compliance, would result in an event of default under the Madryn Credit Agreement and would allow Madryn to accelerate repayment of the debt, which could materially and adversely affect the business, results of operations and financial condition of the Company. On February 21, 2023, March 20, 2023, June 14, 2023, July 3, 2023, July 14, 2023, August 1, 2023, August 14,2023, September 15, 2023, September 29, 2023, October 12, 2023, November 15, 2023, December 14, 2023, January 19, 2024 , February 15, 2024, March 15, 2024 and March 29, 2024, the Company received waivers from Madryn with respect to the Company's non-compliance with the minimum liquidity covenant which has been extended to April 30, 2024. In addition, the Company also received a waiver relating to the requirement to deliver financial statements within 90 days of each fiscal year end until April 26, 2024, and audited financial statements for such fiscal year, accompanied by a report and opinion of an independent certified public accountant which is not subject to any "going concern" or like qualification or exception or any qualification or exception as to the scope of such audit. As at December 31, 2023, the Company was in compliance with the financial covenants of the Madryn Credit Agreement, as amended.
   On January 19, 2024, February 5, 2024, February 15, 2024, March 1, 2024, March 15, 2024, March 19,2024 and April 15,2024, the Company received an aggregate of $14,543,148 in debt financings from Madryn in order to satisfy the Company's short-term cash requirements. On February 26, 2024, the Company completed a registered direct offering of 2,828,249 common shares at a price of $0.20 per common share, for gross proceeds of approximately $565,649. See note 26.
   On February, 22, 2024, the Company received the final delisting notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC ("Nasdaq") due to the continued failure to satisfy either the $1.00 minimum bid price listing requirement in Nasdaq Listing Rule 5550(a)(2) or the minimum stockholders' equity requirements in Nasdaq Listing Rule 5550(b). Consequently, the trading of the Company's common shares was suspended as of the open of trading on February 26, 2024. The Company determined that it was in the overall best interests of the Company not to appeal the decision. Subsequently, the Company's shares have been quoted on OTC Markets.

F-9

Table of Contents

GREENBROOK TMS INC.

Notes to Consolidated Financial Statements (continued) (Expressed in U.S. dollars, unless otherwise stated)

Years ended December 31, 2023 and December 31, 2022

2. Basis of presentation (continued):

1. Going concern (continued):
   Although the Company believes it will become cash flow positive in the future, the timing of this is uncertain given that the Company has historically not been able to meet its forecast, and is also dependent on the continued execution of the Restructuring Plan (as defined below) (see note 25), our ability to meet our debt obligations and remain in compliance with debt covenants and the outcome of the pending Delaware Complaint (as defined below) (see note 17). The Company will require additional financing in order to fund its operating and investing activities, including making timely payments to certain vendors, landlords, lenders (including shareholders) and similar other business partners. The delay in such payments may result in potential defaults under the terms of the agreements the Company has with various parties. As such, additional financing is required in order for the Company to repay its short-term obligations. The Company has historically been able to obtain financing from supportive shareholders, its lenders and other sources when required; however, the Company may not be able to access further equity or debt financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. If additional financing is not obtained, the Company may not be able to repay its short-term obligations and will need to obtain additional amendments from Madryn in order to remain compliant with the covenants or waivers from Madryn to
   waive its rights to accelerate repayment of the debt; however, there can be no assurances that such amendments or waivers will be obtained, which may result in a requirement to file for bankruptcy protection.
   The existence of the above-described conditions indicate substantial doubt as to the Company's ability to continue as a going concern as of December 31, 2023.
   These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumptions were not appropriate. If the going concern basis was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses, and the consolidated balance sheet classification used, and these adjustments may be material.
2. Basis of measurement:
   These consolidated financial statements have been prepared on a historic cost basis except for financial instruments classified as fair value through profit or loss, which are stated at their fair value. Other measurement bases are described in the applicable notes.
   Presentation of the consolidated balance sheet differentiates between current and non - current assets and liabilities. The consolidated statements of comprehensive loss are presented using the function classification of expense.
   Regional operating income (loss) presents regional operating income (loss) on an entity-wide basis and is calculated as total service revenue less direct center and patient care costs, other regional and center support costs, and depreciation. These costs encapsulate all costs (other than incentive compensation such as share-based compensation granted to senior regional employees) associated with the center and regional management infrastructure, including the cost of the delivery of treatments to patients and the cost of the Company's regional patient acquisition strategy.

F-10

Table of Contents

GREENBROOK TMS INC.

Notes to Consolidated Financial Statements (continued) (Expressed in U.S. dollars, unless otherwise stated)

Years ended December 31, 2023 and December 31, 2022

2. Basis of presentation (continued):

1. Basis of consolidation:
   The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (VIE) or voting interest model (VOE). The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. ASC 810, Consolidation ("ASC 810") defines the criteria for determining the existence of VIEs and provides guidance for consolidation.
   An entity is considered to be a VIE if (i) the entity does not have enough equity to finance its own activities without additional support, (ii) the entity's at-risk equity holders lack the characteristics of a controlling financial interest, or (iii) the entity is structured with non-substantive voting rights. The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the performance of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. A VIE can have only one primary beneficiary but may not have a primary beneficiary if no party meets the criteria described above.
   If the Company determines it does not hold a variable interest in a VIE, the Company applies the VOE model. To the extent the entity does not meet the definition of a VIE, the ASC 810 guidance for voting interest entities is applied. The usual condition for a controlling financial interest, and therefore consolidation by the Company, is ownership of a majority
   voting interest of a corporation or a majority of kick-out rights for a limited partnership. The Company has determined that all its subsidiaries are VOEs primarily because it holds a majority voting interest in the entities.
   All significant intercompany balances and transactions have been eliminated on consolidation.
2. Use of estimates and judgments:
   The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. As additional information becomes available or actual amounts are determinable, the recorded estimates are revised and reflected in operating results in the period in which they are determined.
   Significant estimates in connection with these consolidated financial statements include the measurement and determination of the transaction price in the estimation of revenue and accounts receivable, estimated useful life of property, plant and equipment; estimated value and useful life of intangible assets; amounts recorded as accrued liabilities; amounts recorded as performance share units, convertible instruments, deferred income taxes provisions; goodwill; assessment of contingent consideration; inputs used in the valuation of warrants and stock options granted; and the estimate of lease terms.
   Significant judgments in connection with these consolidated financial statements include assessment of control of subsidiaries; assessment of conditions relating to the Company's ability to continue as a going concern; determination of functional currency; determination of the Company's reporting units and asset groups; determination of whether a contract is or contains a lease; and determination of the incremental borrowing rate used to measure lease liabilities.

F-11