Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Consolidation

CEN Biotech, Inc.’s (“CEN”) consolidated financial statements include the accounts of CEN, Clear Com Media, Inc. (“CCM”), and Eastern Starr (collectively, the “Company”). CCM is a Windsor, Ontario based digital marketing, and e-commerce company. CCM’s purpose is to develop, market and sell various digital products. Additionally, CCM will provide in-house IT support functions for CEN’s activities. Eastern Starr’s purpose is to facilitate future growth opportunities in the LED lighting sector. All material intercompany transactions are eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates and Assumptions

The accompanying condensed consolidated financial statements include certain estimates and assumptions which affect the reported amounts of assets and disclosure of contingent assets and liabilities at the date of the financial statements (including intangible assets and goodwill), and the reported amounts of revenues and expenses during the reporting period, including stock-based compensation. Accordingly, actual results may differ from those estimates.

Earnings Per Share, Policy [Policy Text Block]

Loss per Share

Net loss per common share is computed pursuant to Accounting Standards Codification (ASC) 260-10-45. Basic loss per share is computed based on the weighted average number of common shares outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the diluted weighted average common shares outstanding, which includes the effect of potentially dilutive securities. During periods when there is a net loss, all potentially dilutive shares are anti-dilutive and are excluded from the calculation of net loss per share. Diluted earnings per share is similarly computed except that the denominator includes the effect, using the treasury stock method, of unvested restricted stock and convertible notes, if including such potential shares of common stock is dilutive. For the three and nine-months ended September 30, 2021 and 2020, the common stock equivalents of the convertible note agreements were not included in diluted earnings per share computations because their effect was antidilutive.

Revenue from Contract with Customer [Policy Text Block]

Revenue from Contracts with Customers

The Company has agreements with third parties to provide multi-platform, internet-based products and services to their customers in the form of online marketing, business metrics, and other solutions. These services are recognized over time, as the services are performed, as the asset created has no alternative use and the Company is contractually entitled to payment for its performance to date in the event the contract is cancelled for convenience. For these contracts, revenue is recognized over time using input measures that correspond to the level of staff effort expended to satisfy the performance obligation on a rate per hour or equivalent basis. Variable consideration has not historically been significant. The Company does not include sales and other taxes in the transaction price and thus does not recognize these amounts as revenue.

The Company derived approximately 99% of its revenue from one customer during the three and nine-month periods ended September 30, 2021. The Company had no revenue prior to July 9, 2021.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

Accounts Receivable [Policy Text Block]

Accounts Receivable

Accounts receivable are customer obligations due under normal trade terms generally requiring payment within 30 to 60 days from the invoice date. Ongoing credit evaluations of customers’ financial condition are conducted and, generally, no collateral is required to support accounts receivable, which are stated at the amount management expects to collect from balances outstanding at year-end. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, it has estimated that realization of losses on balances outstanding at period-end will not be significant.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are recorded at cost. Major improvements and renewals are capitalized while ordinary maintenance and repairs are expensed. Management reviews these assets for impairment whenever events or changes in circumstances indicate the related carrying amount may not be recoverable. Depreciation is recognized on a straight-line basis over the estimated useful lives, which generally range from 2 to 7 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives or the period of the respective leases.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible Assets

Product Technology, Trade Names, and Customer Relationships: Identifiable intangible assets with finite useful lives are being amortized over periods ranging 3 to 7 years. See Note 3 regarding the initial measurement period for these intangibles acquired as part of the acquisition of CCM. Management reviews these assets for impairment whenever events or changes in circumstances indicate the related carrying amount may not be recoverable.

Capitalized Software Development Costs: The Company incurs costs from third-parties to develop software for internal-use during the application development stage. Costs incurred during preliminary and post-implementation stages of software for internal use are expensed as incurred. Capitalized software development costs will be amortized on a straight-line basis over the estimated useful life of the project once implemented. The capitalized software has not been implemented as of September 30, 2021.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill arising from business combinations represents the excess of purchase consideration exchanged by the Company over the estimated fair value of the net assets of acquired businesses. The Company evaluates goodwill for impairment on an annual basis. In completing this evaluation, the Company considers the profitability of Clear Com Media, Inc. and compares its best estimate of future cash flows with the net carrying value of goodwill.

Income Tax, Policy [Policy Text Block]

Income Taxes

Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the year plus or minus the change during the year in deferred tax assets and liabilities.

Tax Credits, Policy [Policy Text Block]

Tax Credits

The Company’s research and development activities in Canada may entitle the Company to claim benefits under the Scientific Research and Experimental Development Program (“SR&ED”), a Canadian federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada. Benefits under the program include credits to taxable income. The tax credits received are classified as tax credit income in the condensed consolidated statements of income.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency

Foreign denominated monetary assets and liabilities of CEN are translated at the rate of exchange prevailing at the consolidated balance sheet date. Other assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing when the assets were acquired or the liabilities incurred. Sales and expenses are translated at the average exchange rate over the reporting period. Transaction gains or losses are included in the determination of net income.

The functional currency of CCM is the Canadian dollar. The accounts of CCM were translated to United States dollars equivalents at exchange rates as follows: balance sheet assets and liabilities were converted at period-end rates, equity at historical rates, and income statement accounts at average rates for the period. The resulting translation gain or loss is reflected in other comprehensive loss and accumulated other comprehensive loss in the condensed consolidated statements of operations and comprehensive loss and consolidated statements of shareholders’ deficit, respectively.

Recent Developments, Policy [Policy Text Block]

Recent Developments

On April 20, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with Clear Com Media Inc., an Ontario, Canada corporation (“CCM”), each of the shareholders of CCM as set forth on the signature pages of the Agreement (the “CCM Shareholders”) and Lawrence Lehoux as the Representative of the CCM Shareholders (the “Shareholders’ Representative”, each of CCM and the CCM Shareholders may be referred to collectively herein as the “CCM Parties”). Pursuant to the Agreement, the Company agreed to acquire from the CCM Shareholders, all of the common shares of CCM, which is 10,000 shares of CCM common shares (the “CCM Stock”) held by the CCM Shareholders in exchange (the “Exchange”) for the issuance by the Company to the CCM Shareholders of 4,000,000 restricted shares of the Company’s common stock, no par value per share (the “Company Common Stock”). The Agreement closed on July 9, 2021 (the “Closing”). At Closing, the CCM Shareholders delivered the CCM Stock to the Company and the Company delivered the Company Common Stock to the CCM Shareholders, and CCM became a wholly owned subsidiary of the Company.

At Closing, the Company increased the number of members on its Board of Directors (the “Board”) by one and to appoint and name the Shareholder Representative as a member of the Board of the Company. Additionally, at Closing, the Company appointed and named the Shareholder Representative as the Company’s Chief Technology Officer.

At Closing, the Company entered into an employment agreement (the “Employment Agreement”) with Mr. Lehoux. Pursuant to the Employment Agreement, during the term of the Employment Agreement, the Company agreed to employ, and Mr. Lehoux agreed to accept employment with the Company as the Company’s Chief Technology Officer. Pursuant to the Employment Agreement, the Company agreed to pay Mr. Lehoux an annual base salary of $31,200.

On October 7, 2021 (“Closing Date”), the Company completed and closed the definitive agreement with Tesla Digital Inc., an Ontario, Canada corporation, Tesla Digital Global Group, Inc., an Ontario, Canada corporation, as well as Steven Pokrajac individually (together, the “Sellers”), pursuant to which the parties completed the sale and assignment of certain assets of the Sellers (the “Purchased Assets”) related to a Light Emitting Diode Driver Circuit, as more specifically set forth in the Asset Purchase Agreement, Patent Assignment and Bill of Sale (together, the “Transaction Documents”).

Pursuant to the Transaction Documents, the Company agreed to complete the purchase, acquisition and acceptance from the Sellers of the Purchased Assets, which include all of the Sellers’ right, title, and interest in and to United States patent number U.S. 8,723,425 (the “Patent”), in and to the inventions therein set forth and any reissue, reexamination, renewal, divisional, or continuation thereof, in addition to, any related manufacturing machinery plus inventory on hand, and all know-how pertaining to manufacture, use, operation maintenance, development, enjoyment and exploitation of the Patent and the related manufacturing machinery (the “Property”).

U.S. Patent Application No.	Application Filing Date	Status	U.S. Patent No.	Issue Date	Subject Matter
13/525,703	06/18/2012	Issued U.S. Patent	8,723,425	05/13/2014	Light Emitting Diode Driver Circuit

The Sellers cooperated with the Company to perfect the sale and assignment of the Patent and Property, including through execution of the Patent Assignment and recordation of the same with the U.S. Patent Office, on October 7, 2021. The Company had full rights to utilize the patented technology prior to the Patent Assignment. These rights were granted by the Seller as a part of the transaction with the Company started in August of 2016.

As consideration for the sale, assignment and transfer of the Purchased Assets (the “Tesla Digital Transaction”), on the Closing Date the Company agreed to pay to the Sellers (i) 5,000,000 shares of the Company’s Common Stock, at no par value per share (the “Shares”), (ii) that parcel of real property known as 1517-1525 Ride Road, Essex, Ontario (Canada), which the Parties acknowledged has already been satisfactorily tendered by Company to Sellers with assumption of mortgage, and (iii) that parcel of real property known as 135 North Rear Road, Town of Lakeshore, Ontario (Canada), which the Parties acknowledged has already been satisfactorily tendered by Company to Sellers with assumption of mortgage.

Pursuant to notice given to its current transfer agent on Closing Date, the Company has authorized and instructed transfer agent to reserve the Shares of the Company for issuance upon the written request of any of the Sellers in accordance with the terms therein and following written confirmation by the Company.

The Transaction Documents are the definitive agreements between the Company and Sellers, following a Sale Purchase Agreement for the sale of certain assets, properties and rights dated August 31, 2016, as well as its Amending Agreements dated March 29, 2018, September 30, 2018, April 3, 2019 and March 16, 2020.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

No pronouncements were adopted by the Company during the nine-month period ended September 30, 2021.

Recent Accounting Pronouncements Not Yet Adopted

In August 2020, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. As a smaller reporting company, as defined by the SEC, this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company intends to adopt this standard effective January 1, 2022.