Note 4 - Property and Construction in Progress

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4 – PROPERTY AND CONSTRUCTION IN PROGRESS

The Company’s fixed assets consist of the following: a property at 135 North Rear Road, and leasehold improvements at 20 North Rear Road. The company paid $1,064,651 in order to buy 135 North Rear Road, which is intended to serve as an office and an experimental growing space for the Company. This amount was capitalized as an asset in the balance sheet called “land.” All of these assets were acquired during 2014.

The Company leases 20 North Rear Road from a cousin of Mr. Chaaban, the Company’s President (see note 8). Over the course of 2014, the Company constructed improvements to this property, including structures and equipment for growing marijuana, security fencing required for licensing as a marijuana producer, and other infrastructure. According to the terms of the lease, the owner of the property will retain possession of any immovable improvements upon the termination of the lease, but the Company believes it can realize the value of these assets once it begins operations. The Company also believes renewal of the lease is likely, but this cannot be guaranteed (see Note 8 for more on the lease).

The assets will be classified on the balance sheet as “construction in progress” and “leasehold improvements in progress” until the Company obtains a license to produce pharmaceutical-grade medical marijuana and is able to begin operations. Until that time, the Company cannot make the final additions that will be necessary for the sites to function as growing spaces. Although there are currently grow rooms outfitted and ready to grow.  The amount listed represents the capitalized costs the Company incurred in constructing the improvements, some of which were paid to related parties (see Note 7). This amount includes the cost of materials and labor, including some consulting services. At December 31, 2015 and 2014, construction in progress at 135 North Rear Road amounted to $1,096,816, while leasehold improvements in progress at 20 North Rear Road totaled $6,130,644 and $6,082,971, respectively.

The planning and construction of CEN’s facility was overseen by R.X.N.B., Inc. which is an entity that is 45% owned by Mr. Chaaban. Through September 30, 2014, R.X.N.B. had billed and collected $2,439,900 (of which $1,542,000 is part of the cost of building and equipment and $897,900 is included in operating expenses) for its work on the project.