NOTE

– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Company’s financial statements are prepared using the accrual method of accounting in accordance with generally accepted accounting principles in the United States. The Company has elected a calendar year end.

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company has adopted the provisions of ASC

260.

Cash and

Cash Equivalents

For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of

three

months or less at the time of issuance to be cash equivalents

Fair Value of Financial Instruments

The fair value of our financial instruments reflects the amounts that we estimate to receive in connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company’s financial instruments including cash and accounts payable are assumed to be carried at fair value due to their short term maturities.

Property and Equipment

Property and equipment is recorded at cost. Depreciation and amortization of property and equipment is provided using the straight-line method for financial reporting purposes at deemed sufficient to recover the cost over the estimated useful lives of the assets. We have recorded

1,325

depreciation expense as of

December

31,

2016.

Classification	Estimated Useful Life (in years)
Furniture and fixtures		7
Equipment		5
Computer equipment		3

The cost of asset additions and improvements that extend the useful lives of property and equipment are capitalized. Routine maintenance and repair items are charged to current operations. The original cost and accumulated depreciation of asset dispositions are removed from the accounts and any gain or loss is reflected in the statement of operations in the period of disposition.

CEN Biotech capitalizes expenditures for real property improvements including improvements to leased property and reviews long-lived assets to assess recoverability using undiscounted cash flows. When certain events or changes in operating or economic conditions occur, an impairment assessment is performed on the recoverability of the carrying value of these assets. If the asset is determined to be impaired, the loss is measured based on the difference between the asset's fair value and its carrying value. If quoted market prices are not available, Cen Biotech estimates fair value using a discounted value of estimated future cash flows.

Impairment of Long-Lived Assets

The Company's recently acquired a patent which is accounted for as a definite-lived intangible asset in accordance with ASC

360

"Impairment and Disposal of Long-Lived Assets" ("ASC

360").

We periodically review the carrying value of our long-lived assets, such as property and equipment, and intangibles, including goodwill, whenever current events or circumstances indicate that the carrying amount of an asset

may

not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset or an actual

third

-party valuation. If the carrying amount of an asset exceeds its estimated future cash flows or

third

-party valuation, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Revenue Recognition

The Company applies paragraph

605

S99

of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned less an amount for estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered, (iii) the sales price for the services is fixed or determinable, and (iv) collectability is reasonably assured.

Research and Development Expenditures

Cen Biotech expenses all research and development expenses when incurred.

Income Taxes

Income taxes will be provided in accordance with ASC

740,

Income Taxes

. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Foreign Currency Transactions and Balances

Foreign currency transactions in Canadian dollars are recorded in the Company’s financial records in US Dollars at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are subsequently remeasured at the balance sheet date exchange rate into the functional currency. All gains and losses resulting from the settlement of foreign currency transactions and from the re-measurement of monetary assets and liabilities denominated in foreign currencies are included in the income statement.

Loss per Share

Net loss per common share is computed pursuant to ASC

260

45.

Basic and diluted net income per common share has been calculated by dividing the net income for the period by the basic and diluted weighted average number of common shares outstanding assuming that the Company incorporated as of the beginning of the

first

period presented. There were

dilutive shares outstanding as of

December

31,

2016

2015.

Subsequent Events

The Company follows the guidance in ASC

855

for the disclosure of subsequent events. The Company evaluates subsequent events from the date of the balance sheet through the date when the financial statements are issued. Pursuant to ASU

2010

of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them with the SEC on the EDGAR system.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect as of the date of the issuance of these financial statements. The following pronouncements will significantly impact future reporting of financial positon and results of operations. Management is currently assessing implementation.

FASB Accounting Standards Update No.

2017

01,

Business Combinations (Topic

805):

Clarifying the Definition of a Business

The FASB has issued Accounting Standards Update (ASU) No.

2017

01,

Business Combinations (Topic

805):

Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business.

For public companies, the amendments are effective for annual periods beginning after

December

15,

2017,

including interim periods within those periods.

FASB Accounting Standards Update No.

2016

—

Leases (Topic

842)

The FASB has issued its new lease accounting guidance in Accounting Standards Update (ASU) No.

2016

02,

Leases (Topic

842).

Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

●

A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and

●

A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

●

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic

606,

Revenue from Contracts with Customers.

●

The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.

Public business entities should apply the amendments in ASU

2016

for fiscal years beginning after

December

15,

2018,

including interim periods within those fiscal years (i.e.,

January

2019,

for a calendar year entity).

FASB Accounting Standards Update No.

2016

09,

Compensation —Stock Compensation (Topic

718):

Improvements to Employee Share-Based Payment Accounting

The FASB has issued Accounting Standards Update (ASU) No.

2016

09,

Compensation - Stock Compensation (Topic

718):

Improvements to Employee Share-Based Payment Accounting.

The

amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees.

Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.

For public companies, the amendments are effective for annual periods beginning after

December

15,

2016,

and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after

December

15,

2017,

and interim periods within annual periods beginning after

December

15,

2018.

Early adoption is permitted for any organization in any interim or annual period.

FASB Accounting Standards Update No.

2016

10,

Revenue from Contracts with Customers (Topic

606):

Identifying Performance Obligations and Licensing

The FASB has issued Accounting Standards Update No.

2016

10,

Revenue from Contracts with Customers (Topic

606):

Identifying Performance Obligations and Licensing. The amendments clarify the following

two

aspects of Topic

606:

(a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic

606.

The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic

606.

Public entities should apply the amendments for annual reporting periods beginning after

December

15,

2017,

including interim reporting periods therein (i.e.,

January

2018,

for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after

December

15,

2016,

including interim reporting periods within that reporting period. The effective date for nonpublic entities is deferred by

one

year.