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.



41








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."



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 2020, at which point we anticipate nearing or reaching cash-flow
breakeven. See "Liquidity and Capital Resources."



RESULTS OF OPERATIONS

Twelve Months Ended December 31, 2019 Compared to December 31, 2018





The following table summarizes the results of our operations during the fiscal
years ended December 31, 2019 and 2018, respectively, and provides information
regarding the dollar and percentage increase or (decrease) from the current
12-month period to the prior 12-month period:



                                                                                           Percentage
                                                                         Increase           Increase
           Line Item                 12/31/19          12/31/18

(Decrease) (Decrease)



Revenues                           $  11,004,406     $   2,681,530     $   8,322,876              310.37 %
Operating expenses                    47,261,409        18,920,806        28,340,603              149.79 %
Interest expense                               0                 0                 0                 0.0 %
Net loss                             (36,257,003 )     (16,239,276 )      20,017,727              123.27 %

Loss per share of common stock     $       (0.56 )   $       (0.37 )   $   

   (.19)              (51.35 )%




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We incurred a net loss of $36,257,003 for the fiscal year ended December 31,
2019 as compared with a net loss of $16,239,276 for the fiscal year ended
December 31, 2018. The loss is primarily due to expenses incurred as operations
of dispensaries began in 2019, unrealized loss of investments and stock based
compensation. The loss was also decreased by the increase in revenues.

Net Cash Used in Operating Activities


We used $709,371 in operating activities during the year ended December 31,
2019. The use of cash was primarily a result of the use of cash in operations of
$5,686,635, which is derived from net loss of $36,257,003 less non-cash shared
based compensation of $19,135,617 and non-cash unrealized loss of investments of
$11,434,751. In addition, we used for inventory of $81,856. The use of cash was
offset by the increase in prepaid inventory of $143,252, prepaid expenses of
$23,800, accounts payable of $154,288 and accrued expenses of $369,926.

Net Cash Used in Investing Activities





We had a decrease of $1,195,666 in investing activities during the year ended
December 31, 2019. We used $549,982 in advance to parent and affiliate, $309,613
for deposits, $215,101 for fixed assets, $70,000 to invest in closely held
companies, $135,546 for Patent Application Costs and $215,424 for construction
in progress. We received $300,000 repayment of advance to parent.

Net Cash From Financing Activities





We received $2,696,897 from financing activities. We received $1,183,000 from
proceeds for the issuance of common stock and warrants. In addition, we received
proceeds of $1,514,997 from capital contributed by non-controlling interests.

Contractual Obligations and Commitments

Information regarding our Contractual Obligations and Commitments is contained in Note 8 to the Financial Statements.

Liquidity and Capital Resources





As of December 31, 2019, we had $604,274 cash on hand compared to $1,313,645 as
of December 31, 2018. We will continue to need additional cash during the
following twelve months and these needs will coincide with the cash demands
resulting from implementing our business plan and remaining current with our
Securities and Exchange Commission filings. There is no assurance that we will
be able to obtain additional capital as required, or obtain the capital on
acceptable terms and conditions.



During 2019, we have financed our operations during the year through proceeds
from offerings conducted by the Company in the amount of $1,183,000 and from
operations.



As of December 31, 2019, GSRX had $8,046,604 of total assets, a working capital
surplus of $775,319 and an accumulated equity of $4,461,301. The Company's
operating activities used $709,371 in cash for the fiscal year ended December
31, 2019. GSRX earned $11,004,406 of revenues during the fiscal year ended
December 31, 2019.



43

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 except for
accrued expenses, right of use, stock based compensation and realization on

investments.



Limited Operating History

There is limited historical financial information about us which to base an evaluation of our performance. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise in a complicated regulatory environment.





Plan of Operations



We will continue to generate revenues from our current business operations of
selling medical cannabis and cannabis products and limited revenues from our
sale of CBD products. We currently operate five (5) dispensaries in Puerto Rico
and one (1) in California, one (1) CBD kiosk and we have wholesale revenues and
online sales. We expect to complete construction at and receive the necessary
licensing to begin operations for three Puerto Rico dispensaries in 2020, the
manufacturing and distribution businesses in Point Arena are expected to begin
operations in the third quarter of 2020.



Over the next 12 months, we plan to continue operating medical cannabis
dispensaries. We currently operate 6 locations. Our current fixed overhead is
approximately $85,000 per month. We anticipate fixed overhead increasing when
the dispensaries begin operations.



Our primary source of revenue is expected to be derived from selling medical
cannabis and cannabis related products in the dispensaries. In order to acquire
a significant market share, we will have to advertise and market our products.
We plan to advertise online and use traditional advertising outlets. We have no
specific budget set forth at this time for either form of advertising. In order
to maximize our product sales, we will require additional market research and
testing to enable us to be efficient with purchasing and inventory management to
determine which products our customers will purchase. We may need to raise
additional equity for research and development of our inventory plan.

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