Note 15 - Lease (Including Related Parties)

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE

15

–

LEASE (INCLUDING RELATED PARTIES)

The Company leased

20

North Rear Road, a

10.4

acre site of land in Canada, through a sublease from a relative of the Company's President. There are

two

buildings on the site –

one

of

27,000

square feet and

one

of

53,000

square feet. There is also a

4,000

square foot vault for security purposes. 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. These improvements were fully impaired during the

4

th

quarter of

2018.

Jamaal Shaban (“Lessor”), cousin of Bill Chaaban, leased the

20

North Rear Road property to the Company under an agreement effective

January 2017

for monthly rental payments of CAD

4,000

plus taxes for a period of

five

years. This lease was assigned by the Lessor to Jamsyl Group, a

third

-party, when Jamsyl Group purchased the property from Jamaal Shaban in

October 2019.

Effective

August 1, 2020,

the Company entered into a mutual termination and release agreement with Jamsyl Group in exchange for

36,500

shares of CEN common stock, valued at

$50,700,

which vested immediately, based upon remaining lease payments owed. The lease had been accounted for as an operating lease. All remaining associated right-of-use assets as of

August 1, 2020

of

$48,110

and associated liabilities of

$45,118

were written off in conjunction, resulting in a loss on lease termination of

$53,692.

As of

December 31, 2019,

the operating right of use asset was

$68,547,

and the associated liability was

$65,467,

utilizing an

8%

discount rate. During

2020

and

2019,

lease expenses of approximately

$20,000

and

$33,000,

respectively, related to this agreement were recognized within general and administrative expenses.

The Company also leases office space in Windsor, Ontario from R&D Labs Canada, Inc., whose president is Bill Chaaban. This lease was subsequently assigned to RN Holdings Ltd, a

third

-party, on

May 8, 2019

when RN holdings purchased the building. Under the lease agreement effective

October 1, 2017,

monthly rents of CAD

2,608

are due through

September 2022,

at which point monthly rents of CAD

3,390

are due. Effective

August 1, 2020,

the Company ceased making payments and abandoned the leased space. Accordingly, the Company determined that there was

no

future economic value to the associated right-of-use asset and recognized a full impairment loss of

$146,795

on

August 1, 2020.

As of

March 12, 2021,

the Company has

not

reached an agreement with RN Holdings Ltd to modify or to settle the remaining contractual liability, which therefore remains recorded as of

December 31, 2020

under its original contractual terms. As of

December 31, 2019,

the operating right of use asset was

$160,737,

and the associated liability as of

December 31, 2020

and

2019

was

$164,997

and

$163,157,

respectively, utilizing an

8%

discount rate. During

2020

and

2019,

lease expenses of approximately

$35,000

and

$26,000,

respectively related to this agreement were recognized within general and administrative expenses.

Maturities of the operating lease liability at

December 31, 2020

was as follows:

	Amount
2021	$	34,822
2022		26,423
2023		31,952
2024		31,952
2025		31,952
Thereafter		55,916
Total lease payments	$	213,017
Less imputed interest		48,020
Present value of lease liabilities	$	164,997