Management's Discussion and Analysis of Financial Condition and Results of Operations.

P1an of Operation

During the next twelve months, the Company plans to continue to grow the Rehabilitation and detox business organically or through acquisitions, should any opportunities present themselves.

Acquisition of Edgewater Recovery Centers, LLC

On October 22, 2024, we, through a wholly owned subsidiary, Aria Kentucky, entered into an asset purchase agreement to acquire the business of Edgewater Recovery Centers, LLC ("ERC") from ERC and John Elam (the "Seller"), located in Morehead and Paducah, Kentucky through a purchase of the assets of ERC, including but not limited to all current assets existing at the time of closing, all cash balances and rights to receive cash, all equipment, machinery, all warranties related to the business and acquired assets, all intangible personal property, intellectual property, all business inventories, all property leases associated with the business, all assumed contracts, all governmental authorizations; and all information and records, including patient records, as defined in the APA. Certain of the real prop associated with the operations of is fully leveraged and requires credit and personal guarantees which the Company is unable to provide. The entities owning the real property were acquired in a separate transaction by BH Properties, a company controlled by Mr. Shawn Leon, the Company's CEO and therefore a related party. BH Properties through its acquired subsidiaries then entered into lease agreements with ARIA Kentucky on an arms-length basis, at market related rates.

On January 9, 2025, we consummated the Acquisition of the Acquired Assets of ERC. Pursuant to the terms of the APA, at closing ARIA Kentucky paid the Seller $250,000 and assumed certain liabilities related to the Acquired Assets, including trade payables and liabilities under assumed contracts and certain specifically identified liabilities, including a settlement agreement with the United States government and the State of Kentucky and certain obligations as a borrower or guarantor related to banking obligations.

The results of ARIA Kentucky have been included in our unaudited condensed consolidated financial statements effective January 9, 2025.

Critical accounting policies and estimates

The significant accounting policies and estimates of the Company were described in Note 2 to the Audited Consolidated Financial Statements included in the Company's Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates from the information provided in Note 2 and Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2024 Form 10-K. The most recently adopted accounting pronouncements and accounting pronouncements to be adopted by the Company are described in Note 2 in the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Results of operations for the three months ended March 31, 2025 and 2024.

Revenues

Revenues were $3,517,775 and $1,300,100 for the three months ended March 31, 2025 and 2024, respectively, an increase of $2,217,675 or 170.6%. Revenues include $2,082,082 from the acquisition of the business of ERC. Revenue from existing business was $1,435,693 and $1,300,100 for the three months ended March 31, 2025 and 2024, respectively, an increase of $135,593 or 10.4%. The increase is primarily due to the acquisition of the Boca Raton rehab and detox facility during June 2024, which commenced revenue generating operations in January 2025, after obtaining all necessary regulatory approvals.

Operating Expenses

Operating expenses were $4,165,177 and $1,529,175 for the three months ended March 31, 2025 and 2024, respectively, an increase of $2,636,002 or 172.4%. Operating expenses include $2,146,235 from the acquisition of the business of ERC. Operating expenses from existing operations was $2,018,942 and $1,529,175 for the three months ended March 31, 2025 and 2024, respectively, an increase of $489,767 or 32.0%. The increase is primarily due to the following:

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General and administrative expenses was $809,745 and $274,546 for the three months ended March 31, 2025 and 2024, respectively, an increase of $535,199 or 194.9%. General and administrative expenses include $415,274 from the acquisition of the business of ERC. General and administrative expenses from existing operations was $394,471 and $274,546 for the three months ended March 31, 2025 and 2024, respectively, an increase of $119,925 or 43.7%. The increase is primarily due to an increase in advertising and promotional expenses of $65,216 to increase the patient count and an increase in client costs of $38,302, primarily due to the additional facility added in Boca Raton. The balance of the increase of $16,407 is primarily due to general inflationary increases of several individually insignificant expense line items

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Salaries and wages were $2,063,298 and $727,741 for the three months ended March 31, 2025 and 2024, respectively, an increase of $1,335,557 or 183.5%. Salaries and wages includes $1,178,324 from the acquisition of the business of ERC. Salaries and wages from existing operations was $884,975 and $727,741 for the three months ended March 31, 2025 and 2024, respectively, an increase of $157,234 or 21.6% The increase is due to the acquisition of the Boca Raton facility which was fully staffed up and operational beginning January 2025.

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Rent expense was $739,801 and $265,132 for the three months ended March 31, 2025 and 2024, respectively, an increase of $474,669 or 179.06%. Rent expense includes $352,503 from the acquisition of the business of ERC. Rental expense from existing operations was $387,298 and $265,132 for the three months ended March 31, 2025 and 2024, respectively, an increase of $122,166 or 46.1%. The increase is primarily due to the additional rent incurred at the Boca Cove detox facility of $95,256 which was acquired in June 2024, additional rental expense incurred for a residential property in West Palm Beach of $11,965 and annual rental escalations on the existing West Palm Beach facility and the Boca Raton facility.

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Professional fees were $356,112 and $150,550 for the three months ended March 31, 2025 and 2024, respectively, an increase of $205,562 or 136.5%. Professional fees includes $126,443 from the acquisition of the business of ERC. Professional fees from existing operations was $229,669 and $150,550 for the three months ended March 31, 2025 and 2024, respectively, an increase of $79,119 or 52.6%. The increase includes an increase in legal fees of $42,448, related to the acquisition of the business of ERC, an increase in other professional fees of $24,938, related to advisors used for the acquisition of the business of ERC.

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Depreciation and amortization expense was $196,221 and $111,206 for the three months ended March 31, 2025 and 2024, respectively, an increase of $85,015 or 76.4%. Depreciation and amortization includes depreciation and amortization from the acquisition of the business of ERC amounting to $73,692. Depreciation and amortization expense from existing operations was $122,529 and $111,206 for the three months ended March 31, 2025 and 2024, respectively, an increase of $11,323 or 10.2%. The increase is primarily due to additional deprecation incurred on assets acquired with the Boca Raton facility in June 2024.

Operating loss

Operating loss was $647,402 and $229,075 for the three months ended March 31, 2025 and 2024, respectively, an increase in loss of $418,327 or 182.6%. Operating loss includes operating loss of $64,153 from the acquisition of the business of ERC. The operating loss from existing operations was $583,249 and $229,075 for the three months ended March 31, 2025 and 2024, respectively, an increase of $354,174 or 154.6%. The increase in operating loss is primarily due to an increase in patient revenues of $135,593, offset by an increase in operating expenses from existing operations by $489,766, as discussed above. The additional revenues from the Boca Raton facility was not sufficient to cover increased operating costs as revenue and patient count takes time to reach profitable levels, whilst a full complement of staff and a certain level of fixed operational expenses are incurred from the outset.

Other income

Other income was $172,240 and $0 for the three months ended March 31, 2025 and 2024, respectively, an increase of $172,240 or 100.0%. The increase in other income was primarily related to management fees earned from Edgewater Recovery based on business profitability during the management period and an employee retention credit received from the federal government during the current period.

Interest income

Interest income was $1,219 and $575 for the three months ended March 31, 2025 and 2024, an increase of $644 or 112.0%. The interest earned on positive cash balances during the current period.

Interest expense

Interest expense was $292,857 and $93,186 for the three months ended March 31, 2025 and 2024, respectively, an increase of $199,671 or 214.3%. Included in interest expense is interest of $92,028 related to the acquisition of the business of ERC. Interest expense on the existing business was $200,829 and $93,186 for the three months ended March 31, 2025 and 2024, respectively, an increase of $107,643, primarily due to an increase in interest expense related to default interest on letter of credit funding and additional interest on Series R promissory notes which were entered into during the period March to May 2024, and interest on promissory notes issued to acquire the assets of the Boca Raton facility and the minority shareholders interest in the prior year.

Amortization of debt discount

Amortization of debt discount was $129,882 and $63,162 for the three months ended March 31, 2025 and 2024, respectively, a decrease of $66,720 or 105.6%. The amortization of debt discount relates primarily to short-term receivables funding. In the current period the Company increased its receivables funding to fund working capital prior to the Boca Raton facility becoming operational while the Company, in the prior year receivables funding balances were significantly higher in the current period.

Foreign exchange movements

Foreign exchange movements were $(757) and $10,645 for the three months ended March 31, 2025 and 2024, respectively, representing the realized exchange gains and (losses) on monetary assets and liabilities settled during the current year as well as mark to market adjustments on monetary assets and liabilities reflected on the balance sheet and denominated in Canadian Dollars. The Dollar weakened slightly against the Canadian Dollar during the current period, resulting in an unrealized loss on Canadian denominated assets.

Net loss before income taxes

Net loss before income taxes was $897,439 and $374,203 for the three months ended March 31, 2025 and 2024, respectively, an increase of $523,236 or 139.8%. The increase was primarily due to the increase in operating loss and an increase in interest expense and amortization of debt discount, offset by other income and interest income, which is fully discussed above.

Taxation

Taxation was a credit of $12,342 and $0 for the three months ended March 31, 2025 and 2024, respectively, an increase of $12,342 or 100.0%. The taxation charge represents the deferred tax movement on the value of certain identifiable intangibles acquired from Edgewater.

Net loss

Net loss was $885,097 and $374,203 for the three months ended March 31, 2025 and 2024, respectively, an increase of $510,894 or 136.5%. The increase was primarily due to the increase in net loss before income taxes and the movement in taxation as discussed above.

Commitments and contingencies

The Company has commitments under operating and finance leases as follows:

Finance lease liability

The amount of future minimum lease payments under finance leases at March 31, 2025 is as follows:

		Amount
Remainder of 2025		$	7,372
2026			6,195
2027			1,707
		$	15,274

Operating lease liability

The amount of future minimum lease payments under operating leases are as follows:

		Amount
Remainder of 2025		$	2,010,187
2026			2,688,015
2027			2,553,337
2028			2,230,672
2029			2,230,672
2029 and thereafter			19,069,434
Total undiscounted minimum future lease payments		$	30,782,317

The Company also has commitments under convertible loans and short-term loans. If the convertible loans, as disclosed in note 10, above are not converted they will need to be repaid.

Liquidity and Capital Resources

Cash used in operating activities was $73,416 and $105,969 for the three months ended March 31, 2025 and 2024, respectively, a decrease of $32,553. Cash generated by operating activities from the acquisition of the business of ERC was $130,423. The cash used in operating activities from the existing business was $203,839 and $106,569 for the three months ended March 31, 2025 and 2024, respectively, an increase of $97,270.

The decrease is primarily due to the following:

●	An increase in net loss of $510,894, as discussed under results of operations above.

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Offset by an increase in the movement of non-cash items of $440,511, primarily due to the movement in the right of use asset of $198,106, the movement in provision for credit losses of $103,012, which relates to the acquisition of the business of ERC, the movement in depreciation and amortization of $85,015 and the movement in amortization of debt discount of $66,720.

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Working capital movements increased by $102,936 primarily due to a decrease in the movement of accounts payable and accrued liability balances of $383,776, an increase in related party accruals of $47,758 offset by a decrease in operating liability movement of $(178,404) and the movement in accounts receivable balances of $(180,187).

Cash provided by investing activities was $12,152 and cash used in investing activities was $52,462 for the three months ended March 31, 2025 and 2024, respectively. In the current period, we acquired the business of ERC for gross proceeds of $250,000 add back cash on acquisition of $299,492, resulting in a net cash generated on acquisition of $49,492. In the current period we invested in property and equipment post-acquisition of ERC of $12,627 and deposits related to properties leased from third parties and certain new utility deposits of $24,713.

Cash provided by financing activities was $26,566 and $238,014 for the three months ended March 31, 2025 and 2024. During the current period, we raised $667,875 from receivables funding and repaid $486,509, a net movement of $181,366, we repaid assumed liabilities of $76,172 and bank loans of $25,000, both related to the acquisition of the business of ERC, a further $30,000 on the promissory note due on the acquisition of the minority shareholders interest of ATHI, and a net repayment of $21,429 to related parties. During the prior period we raised funding from promissory notes of $302,000 and $87,898 from related parties, offset by the repayment of receivables funding of $146,067.

Over the next twelve months we estimate that the Company will require approximately $0.5 million in working capital as it continues to develop its Florida and Kentucky operations. We are also exploring several other treatment center options and sources of patients throughout the country. The Company may have to raise equity or secure debt. 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.

Going Concern

Our unaudited condensed consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that we will be able to meet our obligations and continue our operations in the normal course of business. At March 31, 2025, we had a working capital deficiency of $11.7 million, and total liabilities in excess of assets in the amount of $8.3 million. We believe that current available resources will not be sufficient to fund our planned expenditures over the next 12 months. Accordingly, we will be dependent upon the raising of additional capital through placement of common shares, and/or debt financing in order to implement our business plan and generate sufficient revenue in excess of costs. If we 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 to those of the holders of common stock or convertible senior notes. If we raise additional funds by issuing debt, we may be subject to limitations on our operations, through debt covenants or other restrictions. 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 unaudited condensed 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.

Recently Issued Accounting Pronouncements

The recent Accounting Pronouncements are fully disclosed in note 2 to our unaudited condensed consolidated financial statements.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying unaudited condensed consolidated financial statements.

Off balance sheet arrangements

We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.

Inflation

The effect of inflation on our revenue and operating results was not significant.

Climate Change

We believe that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.