CEN BIOTECH INC [CENBF] Filings

10-Q 1 cenb20220930_10q.htm FORM 10-Q cenb20220930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 000-55557

CEN BIOTECH, INC.

(Exact name of registrant as specified in its charter)

Ontario, Canada	-
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300-3295 Quality Way Windsor, Ontario Canada	N8T 3R9
(Address of principal executive offices)	(Zip code)

(519) 419-4958

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on

which registered

None

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 7, 2022, there were 64,126,432, shares of common stock, no par value per share (“common stock”), of the registrant outstanding.

TABLE OF CONTENTS

PART I

ITEM 1	FINANCIAL STATEMENTS	4

ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27

ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36

ITEM 4	CONTROLS AND PROCEDURES	36

PART II

ITEM 1	LEGAL PROCEEDINGS	37

ITEM 1A	RISK FACTORS	37

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37

ITEM 3	DEFAULTS UPON SENIOR SECURITIES	38

ITEM 4	MINE SAFETY DISCLOSURE	38

ITEM 5	OTHER INFORMATION	38

ITEM 6	EXHIBITS	38

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report of CEN Biotech, Inc. (the “Company”) includes “forward-looking statements” that represent our beliefs, projections and predictions about future events. There are statements in this quarterly report that are not historical facts. All statements other than statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. These “forward-looking statements” can be identified by use of terminology such as “anticipate,” “believe,” “estimate,” “expect,” “hope,” “intend,” “may,” “plan,” “positioned,” “project,” “propose,” “should,” “strategy,” “will,” or any similar expressions, as well as statements in the future tense. These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements.

Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Although we believe that our assumptions underlying such forward-looking statements are reasonable, we do not guarantee our future performance, and our actual results may differ materially from those contemplated by these forward-looking statements. Our assumptions used for the purposes of the forward-looking statements made in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances, including the development of our lines of business and any products that we may manufacture or sell and our ability to raise additional funding sufficient to implement our strategy, as well as assumptions regarding Canadian and U.S. laws regarding the consumer or retail sale of hemp products and accessories and the manufacture and distribution of such products and accessories, including zoning and banking regulations. We also assume that we will be able to raise additional capital to fund our operations while we develop a line of business to generate net revenues. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. In light of these numerous risks and uncertainties, we cannot provide any assurance that the results and events contemplated by our forward-looking statements contained in this quarterly report will in fact transpire. These forward-looking statements are not guarantees of future performance. You are cautioned to not place undue reliance on these forward-looking statements. Except as required by applicable laws, we do not undertake any obligation to update or revise any forward-looking statements.

PART I

ITEM 1.

FINANCIAL STATEMENTS

	Contents

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:	Page

Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021,	5

Consolidated Statements of Operations and Other Comprehensive (Loss) Income for the Three and Nine Months period ended September 30, 2022, and 2021	6

Consolidated Statements of Shareholders’ Deficit for the period ended September 30, 2022, and 2021	7

Consolidated Statements of Cash Flows for the period ended September 30, 2022 and 2021	8

Notes to the Consolidated Financial Statements	9

CEN BIOTECH, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2022			December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	148,151		$	193,198
Accounts receivable		11,278			193,094
Prepaid expenses and other assets		106,714			50,530
Income taxes refundable		34,385			35,399
Loan receivable from Emergence Global Enterprises Inc. - related party		-			-

Total current assets		300,528			472,221

Other assets
Operating lease right-of-use assets		95,432			138,103
Other receivable		5,413			-
Note receivable - CEN Biotech Ukraine LLC - related party		44,859			44,859
Advances to CEN Biotech Ukraine LLC - related party		1,299,328			1,299,328
Property and equipment, net		68,685			97,403
Deferred income taxes		2,720			2,720
Intangible assets, net		4,818,492			5,072,031
Goodwill		1,276,482			1,314,134

Total assets	$	7,911,939		$	8,440,799

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	395,602		$	440,332
Accounts payable – related parties		55,066			101,422
Loans payable		1,688,793			1,688,793
Loans payable – related parties		2,701,641			2,701,641
Convertible notes payable, net of unamortized discount		760,480			643,330
Convertible notes payable, net of unamortized discount - related parties		162,639			162,639
Accrued interest		1,422,531			1,361,689
Accrued interest – related parties		2,005,735			1,873,455
Operating lease liabilities		114,729			103,908
Governmental assistance payable		141,169			145,333
Accrued expenses		379,468			638,073

Total current liabilities		9,827,853			9,860,615

Operating lease liabilities, less current portion		159,485			206,763
CEBA loan payable		30,648			31,552

Total liabilities		10,017,986			10,098,930

Commitments and contingencies (Notes 4, 11, 12, 18, 19, 24, and 25)

Shareholders’ deficit
Common stock; unlimited authorized shares; 63,991,432 and 27,557,363 issued and outstanding as of September 30, 2022, and December 31, 2021, respectively. No par value.		-			-
Additional paid-in capital		44,921,236			44,339,973
Accumulated deficit		(46,991,528	)		(45,964,183	)
Accumulated other comprehensive loss		(35,755	)		(33,921	)
Total shareholders’ deficit		(2,106,047	)		(1,658,131	)
Total liabilities and shareholders’ deficit	$	7,911,939		$	8,440,799

See accompanying notes to condensed consolidated financial statements.

CEN BIOTECH, INC. AND SUBSIDIARY

Consolidated Statements of Operations and Other Comprehensive (Loss) Income

Period ended September 30, 2022, and 2021

	For the three months ended September 30,						For the nine months ended September 30,
	2022			2021			2022			2021
Revenue	$	135,856		$	272,166		$	678,333		$	272,166

Operating expenses
Consulting fees	$	56,751		$	308,782		$	205,590		$	1,205,782
Consulting fees – related parties		-			53,914			-			131,914
Stock based compensation		145,950			75,750			145,950			15,077,072
General and administrative		419,537			478,696			1,272,027			1,110,791

Total operating expenses		622,238			917,142			1,623,567			17,525,559

Loss from operations		(486,382	)		(644,976	)		(945,234	)		(17,253,393	)

Other income (expense)
Interest expense		(15,135	)		(71,567	)		(81,237	)		(365,170	)
Interest expense – related parties		(23,663	)		(101,845	)		(128,020	)		(338,495	)
Interest income		125,140			87			125,193			481
Change in fair value of patent acquisition liability		-			(52,900	)		-			1,025,100
Foreign exchange (loss) gain		(187	)		35,651			1,953			(20,273	)
Government assistance income		-			116,610			-			116,610
Other income (expense), net		86,155			(73,964	)		(82,111	)		418,253

Net (loss) income	$	(400,227	)	$	(718,940	)	$	(1,027,345	)	$	(16,835,140	)
Other comprehensive loss - Foreign currency translation		-			(44,379	)		(1,834	)		(44,379	)
Comprehensive (loss) income	$	(400,227	)	$	(763,319	)	$	(1,029,179	)	$	(16,879,519	)

Net loss per share:
Basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.44	)

Weighted average number of shares outstanding
Basic and diluted		63,991,432			47,341,589			63,991,432			38,625,095

CEN BIOTECH, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Deficit

Period ended September 30, 2022 and 2021

										*Accumulated*
			*Common*		*Additional*					*Other*			*Total*
	*Common*		*Shares*		*Paid-in*		*Accumulated*			*Comprehensive*			*Shareholders*’
	*Shares*		*Amount*		*Capital*		*Deficit*			*Loss*			*Deficit*


Balances, July 1, 2021		43,142,060	$	-	$	38,197,932	$	(43,176,727	)	$	-		$	(4,978,795	)

Stock-based compensation		-		-		75,750		-			-			75,750
Issuance of common stock – Acquisition of Clear Com Media		4,000,000		-		2,120,000		-			-			2,120,000
Issuance of common stock – Upon conversion of convertible notes		104,953		-		167,924		-			-			167,924
Issuance of common stock – Interest Shares		39,000		-		23,673		-			-			23,673
Issuance of common stock – Consulting		500,000		-		275,000		-						275,000
Net loss		-		-		-		(718,940	)		(44,379	)		(763,319	)

Balances, September 31, 2021		47,786,013		-		40,860,279		(43,895,667	)		(44,379	)		(3,079,767	)


Balances, July 1, 2022		61,804,729	$	-	$	44,746,286	$	(46,591,301	)	$	(35,755	)	$	(1,880,770	)

Issuance of common stock-Employee compensation		1,390,000				145,950		-			-			145,950
Issuance of common stock-convertible notes		796,703		-		29,000		-			-			29,000
Net loss				-		-		(400,227	)		-			(400,227	)

Balances, September 31, 2022		63,991,432	$	-	$	44,921,236	$	(46,991,528	)	$	(35,755	)	$	(2,106,047	)

See accompanying notes to condensed consolidated financial statements.

CEN BIOTECH, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Period ended September 30, 2022, and 2021

	For the Nine months
	ended September 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(1,027,345	)	$	(16,835,140	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		28,718			10,968
Amortization		291,221			342,959
Amortization of debt discount					84,526
Lease expense					9,650
Stock-based compensation – employees		145,950			15,077,072
Stock-based compensation – non-employees		-			1,172,000
Shares issued for interest		5,030			127,023
Change in fair value of patent acquisition liability					(1,025,100	)
Foreign exchange loss (gain)					20,273
Changes in operating assets and liabilities which provided (used) cash
Account Receivables		181,816			34,268
Income tax		1,014			61,236
Operating lease liabilities		(31,850	)		-
Prepaid expenses and other assets		56,184			32,287
Other receivable		(5,413	)		89,370
Accounts payable		(44,730	)		(3,568	)
Accounts payable – related parties		(46,365	)		(786	)
Accrued interest – related and non-related parties		193,122			445,912
Accrued expenses		(258,605	)		101,019

Net cash used in operating activities		(511,253	)		(256,032	)

Cash flows used in investing activities
Cash acquired in acquisition of Clear Com Media Inc		-			259,470
Advances to Cen Biotech Ukraine LLC					(120,000	)
Capitalized software development					(53,751	)
Purchase of Equipment					(18,988	)

Net cash provided by (used in) investing activities					66,731

Cash flows provided by financing activities

Repayment of loans payable - related parties		-			(50,000	)
Issuance of convertible notes		152,750			412,830
Additional paid in capital		313,756
Issuance of convertible notes – related parties		466,506			48,000

Net cash provided by financing activities					410,830
Effect of exchange rate change on cash					(9,632	)
Net increase in cash and cash equivalents		(44,747	)		211,897

Cash and cash equivalents, beginning of period		193,198			1,908
Cash and cash equivalents, end of period	$	148,151		$	213,805
Supplemental cash flows disclosures
Cash paid for interest	$	-		$	25,821
Non-cash transactions - investing and financing activities
Issuance of common stock - settlement of interest	$	5,030		$	78,893
Issuance of common stock - settlement of accrued liability	$	401,283		$	13,390
Issuance of common stock – upon conversion of convertible notes	$	29,000		$	5,023,785
Issuance of common stock – upon conversion of convertible notes - related parties	$	-		$	68,000
Issuance of common stock – Employee compensation	$	145,950		$	68,000
Beneficial conversion feature in connection with issuance of convertible notes	$	-		$	111,306

See accompanying notes to condensed consolidated financial statements.

CEN BIOTECH, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2022, and December 31, 2021

(All amounts are in US dollars unless otherwise stated.)

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the condensed consolidated financial statements of the Company for the year ended December 31, 2021, and notes thereto.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

Loss per Share

Net loss per common share is computed pursuant to 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-months ended September 30, 2022, and 2021, the common stock equivalents of the convertible note agreements were not included in diluted earnings per share computations because their effect was antidilutive.

Recent Developments

In April of 2021, the Company’s common stock began to be quoted on the OTC Link alternative trading system (operated by OTC Markets Group Inc.) under the trading symbol “CENBF” on the OTC Pink tier. The Company’s common shares commenced trading on the OTCQB Venture Market® beginning on September 8, 2022. There is no assurance that an active trading market for our shares will develop or will be sustained if developed.

Recently Adopted Accounting Pronouncements

No pronouncements were adopted by the Company during the three-month period ended September 30, 2022.

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. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.

NOTE 2 – GOING CONCERN UNCERTAINTY / MANAGEMENT PLANS

The accompanying condensed consolidated financial statements have been prepared in contemplating the continuation of the Company as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, a substantial doubt has been raised with regard to the ability of the Company to continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception. The Company had an accumulated deficit of $46,991,528 At September 30, 2022 and had no committed source of additional debt or equity financing. The Company has not had any operating revenue and does not foresee any operating revenue in the near term. The Company has relied on the issuance of loans payable and convertible debt instruments to finance its expenses, including notes that are in default, as described in Notes 5, 6, 7, and 8. The Company will continue to raise additional capital through placement of our common stock, notes or other securities in order to implement its business plan or additional borrowings, including from related parties. The COVID-19 pandemic has hindered the Company’s ability to raise capital. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The Company’s cash position may not be sufficient to support the Company’s daily operations or its ability to undertake any business activity that will generate net revenue.

Appointments of Officers and Directors

On April 14, 2022, the Company’s Board of Directors (the “Board”) appointed Brian S. Payne as the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors and appointed Lawrence Lehoux as the Company’s President, effective at the close of business on April 14, 2022.

Appointment of Directors

On April 18, 2022, the Board appointed the following persons as members of its Board effective April 18, 2022:

●

Josef Tukacs

●

George Dragicevic

Dismissal of Independent Registered Accounting Firm

On May 2, 2022, the Board of Directors of the Company approved the dismissal of Mazars USA LLP (“Mazars”), as its independent registered accounting firm, effective immediately. Mazars was engaged by the Company on January 16, 2018. No audit report of Mazars for the years ended December 31, 2021 or December 31, 2020, contained an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, with the exception of providing an explanatory paragraph stating there was substantial doubt about the Company’s ability to continue as a going concern. During the Company’s two most recent fiscal years and through May 2, 2022, (i) there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Mazars on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of Mazars, would have caused Mazars to make reference to the subject matter of such disagreement in connection with its reports on the financial statements for such periods and (ii) there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).

Engagement of New Independent Registered Accounting Firm

On May 2, 2022, the Company’s Board approved the appointment of Olayinka Oyebola & Co (“OOC”) as the Company’s new independent registered public accounting firm effective immediately. During the Company’s two most recent fiscal years ended December 31, 2021 and 2020, and the subsequent interim period through May 2, 2022, neither the Company nor anyone acting on its behalf consulted with OOC regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, in connection with which either a written report or oral advice was provided to the Company that OOC concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).

NOTE 3 – ADVANCES TO CEN BIOTECH UKRAINE AND ACQUISITION OF CLEAR COM MEDIA

At September 30, 2022 and December 31, 2021, the Company had advances of $1,229,328 and $1,229,328, respectively, to CEN Biotech Ukraine, LLC, a related party (see Note 11). The advances were for the purpose of funding the operations of CEN Biotech Ukraine, LLC.

Bahige (Bill) Chaaban, our former Chief Executive Officer and member of our Board of Directors, and Usamakh Saadikh, a former member of our Board of Directors, each directly own 25.5% of CEN Ukraine respectively. The remaining 49% of CEN Ukraine is owned by XN Pharma, which is an entity jointly owned by Bahige (Bill) Chaaban and Usamakh Saadikh. Bahige (Bill) Chaaban and Usamakh Saadikh do not currently hold any positions with CEN Ukraine. CEN Ukraine is operated and controlled by its sole director. Pursuant to Ukrainian law, shareholders of a company do not have the ability to control the company or the actions of its director. CEN Ukraine is operated under the direction of its management pursuant to the guidelines of Ukrainian law. These loans are unsecured, non-interest bearing, and are due on demand.

CEN acquired CCM on July 9, 2021. The results of operations for CCM have been included in the accompanying consolidated financial statements from that date forward. The acquisition was made for the purpose of providing revenue to support CEN operations through the development, marketing and sales of certain digital products. Additionally, CCM will provide in-house IT support functions for CEN activities.

The merger was accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standards Codification (ASC) 805, “Business Combinations” (ASC 805), with CEN representing the accounting acquirer under this guidance. ASC 805 requires, among other things, an assignment of the acquisition consideration transferred to the sellers for the tangible and intangible assets acquired and liabilities assumed, using the bottom-up approach, to estimate their value at acquisition date. Any excess of the fair value of the purchase consideration over these identified net assets is to be recorded as goodwill.

The aggregate consideration for the acquisition of CCM was 4,000,000 shares of CEN common stock, which were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), in reliance upon exemptions from the registration requirements of the Act in transactions not involving a public offering, and which were valued at $2,120,000 based upon the closing stock price on July 9, 2021. The purchase price accounting was still in process as of September 30, 2021, our most recently reported quarterly interim reporting. However, as of December 31, 2021, subsequent adjustments to the initial purchase price accounting due to receipt of final appraisal reports and other adjustments resulted in an increase in accounts receivable of approximately $8,000, a decrease of identifiable intangibles by approximately $168,000, and an increase in current financial liabilities by approximately $23,000, with a corresponding increase to goodwill of approximately $184,000. The decreased value of identifiable intangibles, had it been reflected in the September 30, 2021 reporting, would have resulted in a decrease to accumulated amortization and associated amortization expense of approximately $15,000. The following represents the adjusted fair values of the assets acquired and the liabilities assumed by CEN in the transaction:

Cash	$	259,470
Accounts receivable		210,536
Property and equipment		97,911
Other assets		244,540
Identifiable intangibles		456,855
Current financial liabilities		(344,591	)
Other long-term liabilities		(140,078	)

Total identifiable net assets		784,643
Goodwill		1,335,357

Net assets acquired	$	2,120,000

Identified intangible assets acquired include trade names, customer relationships, and product technology whose fair value of $456,855 is based on an appraisal report utilizing a combination of market, income, and multi-period excess earnings methods. These trade names and customer relationships are being amortized over useful lives ranging of 3 and 7 years, respectively, and the product technology is not yet being amortized as not yet in service. These identifiable intangible assets will be reviewed for impairment at least annually or more frequently if indicators of impairment exist.

Amounts recognized as goodwill are expected to be fully deductible for Canadian income tax purposes. All goodwill has been included within the Digital segment.

Costs related to the acquisition, which include legal, accounting, and valuation fees, in the amount of approximately $80,000 have been charged directly to operations and are included in general and administrative expenses in the 2021 consolidated statement of operations.

Supplemental proforma financial information

The unaudited financial information in the table below summarizes the combined results of operations of CEN and CCM on a pro forma basis, as though the companies had been combined as of the January 1, 2020. These pro forma results were based on estimates and assumptions, which we believe are reasonable. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2020. The pro forma financial information assumes the 4,000,000 shares of CEN common stock were issued on January 1, 2020 and includes adjustments to amortization for acquired intangible assets and income tax expense.

The pro forma financial information for the year ended December 31, 2021 combines the results of CEN and CCM for 2021, which include the results of CCM subsequent to July 9, 2021, and the historical results for CCM for the period of January 1, 2021 to July 8, 2021. The pro forma financial information for the year ended December 31, 2020 combines CEN’s historical results for 2020 with the historical results of CCM for 2020.

The following table summarizes the pro forma financial information (unaudited):

	Years Ended
	December 31, 2021			December 31, 2020

Revenue	$	1,305,985		$	1,242,676
Operating expenses		20,437,863			3,720,279
Loss from operations		(19,131,878	)		(2,477,603	)
Other income, net		57,949			16,950,653
(Loss) income before income taxes		(19,073,929			14,473,050
Income tax expense		(61,032	)		32,892
Net (loss) income	$	(19,012,897		$	14,440,158

Net (Loss) Income Per Share
Basic	$	(0.43	)	$	0.46
Diluted	$	(0.43	)	$	0.39

Weighted Average Number of Shares Outstanding
Basic		44,488,649			31,264,072
Diluted		44,488,649			36,732,510

NOTE 4 – INTANGIBLE ASSETS

On September 12, 2016, the Company executed an agreement dated August 31, 2016, to acquire assets, including a patent related to LED Lighting, from Tesla Digital, Inc., a Canadian Corporation, and Stevan (Steve) Pokrajac (the “Sellers”).

Material consideration given by Company was: (a) Shares of CEN common stock equal to $5 million upon commencement of public trading (b) The transfer of real properties located at 135 North Rear Road, Lakeshore, Ontario, Canada having a fair value of $2,161,467 and 1517-1525 Ridge Road having a purchase cost (including other related disbursements) to the Company of $202,666.

The patent remains in the name of Tesla Digital, Inc. until full settlement of the terms of the agreement. In the interim, pursuant to an updated agreement executed on April 15, 2019 between the Company and the Sellers, CEN has reaffirmed the rights to use the patented technology.

In addition, the Company agreed to employ Stevan Pokrajac, by an LED subsidiary that the Company plans to form, but which has not yet been formed, in connection with the development of the acquired technology with compensation equal to $200,000 per year, commencing with the start of operations.

In March 2018, the Tesla agreement was amended to replace the $5 million stock consideration commitment with a commitment to issue one million registered shares of CEN common stock with a closing date of September 30, 2018. On October 4, 2018, this agreement was amended to extend the closing date to December 15, 2018. On April 3, 2019, the Company entered into an amendment which extended the closing date of the agreement to December 31, 2019. On March 16, 2020 the Company entered into an amendment extending the closing date until December 31, 2021. The March 2018 modification of the agreement converted a fixed value of shares to a fixed number of shares. Accordingly, the liability was reduced and additional paid in capital was increased by $4,380,000 to reflect the fair value of the shares committed at the date of the amendment. As of both September 30, 2022 and December 31, 2021, the fair value of this liability was $1,380,000. This liability will be remeasured at each reporting date using the current fair value of CEN’s common shares.

On October 7, 2021, the agreement was amended and finalized to increase the number of CEN common shares to be transferred to five million. Upon closing of the agreement, the CEN common stock, valued at $2,042,500 based upon the October 7, 2021 closing market price, was transferred to the Sellers and the transfer of the patent and real property was completed. Of this amount, $1,634,000 represented additional stock compensation expense for the additional four million shares issued. In addition, the Sellers assumed the mortgage and associated accrued interest on certain real property that was included in the original agreement, of $302,186, resulting in a net loss on final settlement of the lighting patent purchase of $1,331,814.

The Company intends to explore using the patented LED Lighting Technology across manufacturing operations and licensing opportunities across multiple industries such as horticultural, automotive, industrial and commercial lighting. The assets acquired, other than the patent, included certain machinery and raw materials, which were old and non-functioning and accordingly, had no fair value.

The intangible asset consists of the following at:

					Estimated
					Useful
					Life
	2022		2021		(years)

Lighting patent	$	6,797,000	$	6,797,000		16
Product technology		276,080		276,080		n/a
Customer relationships		149,872		149,872		7
Capitalized software development costs		105,730		105,730		n/a
Trade names		23,664		23,664		3
Total identifiable intangible assets		7,352,346		7,352,346
Less: Accumulated amortization		2,379,370		2,280,315

Net	$	4,972,976	$	5,072,031

As of December 31, 2021 and 2020, there is no impairment expense recognized based on the Company’s expectations that it will be able to monetize the intangible assets. Expected amortization expense for the lighting patent is $424,812 per year through 2031, with the remaining $283,215 to be amortized in 2032. Expected amortization expense for the customer relationships and trade names acquired as part of the CCM acquisition on July 9, 2021 are expected to be approximately $29,300 per year through 2023, 25,400 in 2024, $21,400 in 2025 and 2026, with the remaining $32,100 to be amortized through 2028. The product technology and capitalized software development costs are not yet available for general release to customers and thus are not yet amortized.

NOTE 5 – LOANS PAYABLE

Loans payable consist of the following At September 30, 2022 and December 31 2021:

	2022		2021
Loans payable, on demand, to a private investor for the original amount of CAD 1,104,713, bearing interest at 7% per annum.	$	871,398	$	871,398

Loans payable in default to multiple private investors bearing an interest at rates of up to 12% per annum, which matured at various dates between June 2018 and May 2021.		592,395		592,395

Loan payable in default to an individual, issued April 13, 2018, with a 30-day maturity, bearing share interest of 4,000 common shares per 30-day period. This is an unsecured loan which matures on April 16, 2022.		100,000		100,000

Loan payable to Global Holdings International, LLC, which bears interest at 15% per annum after defaulting on the maturity date of June 30, 2016. This note was previously secured by equipment that the Company disposed of on August 1, 2020.		75,000		75,000

Loan payable to an individual, issued January 17, 2018 with a 30-day maturity, bearing share interest of 2,000 common shares per 30-day period. This is an unsecured loan which matured on July 16, 2021.		50,000		50,000

Mortgage payable to ARG & Pals, Inc., for the original amount of CAD 385,000. The mortgage bears interest at 22% per annum, is unsecured, and matured on September 21, 2021. This was assumed on October 7, 2021 by the Sellers as described in Note 8.		-		-

Total loans payable (all current)	$	1,688,793	$	1,688,793

During 2020, $9,600,000 plus $11,579,043 in associated accrued interest payable to Global Holdings International, LLC (“GHI”) was derecognized. The note matured on June 30, 2016 and the Company was in default. As at no time since the default on the loan did GHI, its principal, agent or its attorneys reach out via mail, e-mail, text or phone to demand payment on the loan. The Company reached out numerous times and never received a response or demand for payment or notice of default on the loan. CEN’s last attempt occurred in November 2020. The note, related interest and venue for the agreement are governed by Ontario Law and according to the Ontario Limitations Act (Limitations Act, 2002, S.O. 2002, c. 24, Sched. B) the statute of limitations is 2 years from the date of default under the note. The date of default was June 30, 2016, which is over the 2-year Statute of Limitation (SOL) period, and therefore the lender is outside of the SOL and cannot bring an action in Court against the Company for the debt. As a result of the legal finding, and having exhausted all reasonable efforts to contact GHI, the Company exercised its legal rights to derecognize the principal and interest obligations related to the related note with GHI which in accordance with ASC 405-20-40-1(b), is when CEN is judicially released from its obligations under the note.

During both 2021 and 2020, 62,000 and 72,000 common shares, respectively, were issued to individuals in connection with interest terms of the above loans. As of December 31, 2021, 10,000 common shares earned by an individual in connection with one of the above loans were not yet issued totaling $4,012 and is included within accrued expenses. Accordingly, during 2021 and 2020, $57,876 and $63,720 in interest expense and $53,864 and $63,720 in additional paid-in capital was recorded, respectively.

During 2021, certain private investors amended their convertible notes payable totaling $1,463,793, which were convertible into 677,955 common shares. As a result of the amendments, these notes no longer contain a conversion feature and have been reclassified to loans payable from convertible notes payable.

The Canada Emergency Business Account (“CEBA”) loan payable of $31,552 (CAD 40,000) as of December 31, 2021, to Royal Bank of Canada is unsecured, non-interest bearing until December 2022 and interest bearing at 5% thereafter. If the loan is not repaid by December 31, 2023, the principal balance increases by $15,776 (CAD 20,000). The loan principal is due in full at the maturity date of December 2025.

The Canadian government enacted the Canada Emergency Wage Subsidy (“CEWS”) and Canada Emergency Rent Subsidy (“CERS”) in 2020 to provide a wage and rent subsidy to employers that suffered reductions in revenue resulting from the COVID-19 pandemic. CCM received $171,078 during 2021 related to CEWS and CERS and has included as a governmental assistance payable on the consolidated balance sheet as of December 31, 2021 as this represents an overpayment which is due back to the government.

NOTE 6 – LOANS PAYABLE- RELATED PARTY

Loans payable - related party consists of the following At September 30, 2022 and December 31 2021:

	2022		2021
Loan payable in default due to the spouse of Bill Chaaban, former CEO of CEN, which bears an interest at 12% per annum. This loan matured on August 17, 2020.	$	1,388,122	$	1,388,122

Loans payable in default to a former director of Creative, former parent company, bear interest at 10% per annum. This are unsecured loans that matured on December 31, 2018.		601,500		601,500

Loan payable in default to R&D Labs Canada, Inc., whose president is Bill Chaaban, also the former CEO of CEN, bearing interest at 8% per annum. This is an unsecured loan that matured on October 2, 2019. R&D Labs Canada is a company owned by Bill Chaaban’s spouse.		300,000		300,000

Loans payable in default to the spouse of Bill Chaaban, former CEO of CEN, for the original amounts of CAD 48,630 and USD $198,660, bear interest at 10% per annum. These are unsecured loans that matured on December 31, 2018.		237,019		237,019

Loan payable to the spouse of Joseph Byrne, a 5% shareholder and former President, CEO and member of the board of CEN, issued January 12, 2018 with a 30-day maturity, bearing share interest of 4,000 common shares per 30-day period. This is an unsecured loan that matures on April 16, 2022.		100,000		100,000

Loan payable to Alex Tarrabain, former CFO and Director of CEN, issued January 17, 2018 with a 30-day maturity, bearing share interest of 3,000 common shares per 30-day period. This is an unsecured loan that matures on April 16, 2022.		75,000		75,000

Loan payable to Joseph Byrne, a 5% shareholder and former President, CEO, and Member of the board of CEN, issued January 24, 2018 with a 30-day maturity, bearing share interest of 2,000 common shares per 30-day period. This loan was repaid in June 2021.		-		-

Total loans payable – related party (all current)	$	2,701,641	$	2,701,641

Attributable related party accrued interest was $671,665 and $568,969 as of December 31, 2021, and 2020, respectively. Interest expense attributable to related party loans was $189,182 and $202,640 in 2021 and 2020, respectively.

During both September 30, 2022, and December 31, 2021, 33,000 and 96,000 common shares, respectively, were issued to related parties in connection with interest terms of the above loans made to CEN. Accordingly, during September 30, 2022 and 2021, $174,950 and $74,757 in related party interest expense and additional paid-in capital was recorded, respectively.

NOTE 7 – CONVERTIBLE NOTES

Convertible notes payable consists of the following At September 30, 2022 and December 31 2021:

	2022			2021
Convertible notes payable in default to multiple private investors, including certain notes in default, bearing interest at 5% per annum with conversion rights for 363,767 common shares, which matured at various dates between May 2018 and October 2021.	$	576,472		$	576,472

Convertible notes payable with beneficial conversion features at original issuance to multiple private investors, bearing interest at 5% per annum with conversion rights for 550,965 common shares, maturing at various dates between June 2022 and December 2022.		145,000			145,000

Convertible note payable, due on demand, for the original amount of CAD 1,104,713, bearing interest at 7% per annum which had conversion rights for 335,833 common shares. Effective August 17, 2021, the note was amended and reclassified to loans payable as the conversion feature was removed, see Note 9.		-			-

Convertible note payable for the original amount of USD 70,000, bearing interest at 8% per annum which had conversion rights after 180 days and a due date of May 23, 2023. The Conversion Price shall be equal to the Variable Conversion Price (as defined herein)(subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount rate of 35%). “Market Price” means the lowest Trading Price for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.		70,000			-
Poet Capital LLC		29,000
Sixth Street Lending LLC		53,750
Repayment		(35,600	)
Total convertible notes payable		838,622			721,472
Less unamortized debt discount		78,142			78,142

Total convertible notes payable, net of unamortized debt discount		760,480			643,330
Less current portion		760,480			643,330

Convertible notes payable, less current portion	$	-		$	-

The Company issues convertible notes as a method to raise operating capital. These notes convert to a fixed number of shares specified in the convertible note, at the option of the note holder. Certain of these notes are considered to contain a beneficial conversion feature if in-the-money at the time of issuance. The Company has determined the value associated with the beneficial conversion feature in connection with the notes issued during 2021 to be $180,098. This value has been recorded as a component of equity during 2021 and the aggregate original issue discount is accreted and charged to interest expense as a financing expense from the date of issuance until maturity. Upon conversion, any remaining unaccreted discount is charged to interest expense. No convertible notes with beneficial conversion features were issued during 2020. These notes may be converted at the option of the note holder upon written notice by the note holder. These notes are convertible into a total of 914,732 common shares.

During the year 2022, certain private investors elected to exercise their convertible notes payable totaling $100,000 in exchange for 416,667 common shares. As a result, the associated convertible notes have been extinguished and reclassified as additional paid in capital.

During 2021, certain private investors elected to exercise their convertible notes payable totaling $5,173,785 in exchange for 3,488,883 common shares. As a result, the associated convertible notes have been extinguished and reclassified as additional paid in capital. There were no such elections to convert any of the convertible notes payable during 2021.

As of September 30, 2022, we are currently in default of $576,472 of convertible notes payable, which are convertible into 363,767 shares of common stock. There were no new notes issued during Q1 2022 and $70,000 in new notes during Q2 2022, $82,750 in new notes during the period ended September 2022

NOTE 8 – CONVERTIBLE NOTES – RELATED PARTY

Convertible notes – related party consists of the following At September 30, 2022 and December 31 2021:

	2022		2021

Convertible notes, in default, due to Joseph Byrne, former President, CEO, and Member of the board of CEN, bearing interest at 12% per annum. This note is convertible to 76,123 common shares and matured on August 17, 2020.	$	121,796	$	121,796

Convertible notes with beneficial conversion features due to the parents of Jeffery Thomas, a Director of CEN, bearing interest at 5% per annum. These notes are convertible to 94,488 common shares with a maturity date of May 24, 2022.		48,000		48,000

Total convertible notes payable – related parties		169,796		169,796

Less unamortized debt discount		7,157		7,157

Total convertible notes payable - related parties (all current)	$	162,639	$	162,639

Attributable related party accrued interest was $2,005,735 and $1,361,689 as of September 30, 2022, and December 31, 2021, respectively. Interest expense attributable to related party convertible notes was $229,318 and $229,318 in June 2022 and December 2021, respectively.

The Company issues convertible notes to related parties as a method to raise operating capital. These notes convert to a fixed number of shares specified in the convertible note, at the option of the note holder. Certain of these notes are considered to contain a beneficial conversion feature if in-the-money at the time of issuance.

The Company has determined the value associated with the beneficial conversion feature in connection with the notes issued to related parties during 2021 to be $18,141. This value has been recorded as a component of equity during 2021 and the aggregate original issue discount is accreted and charged to interest expense as a financing expense from the date of issuance until maturity. Upon conversion, any remaining unaccreted discount is charged to interest expense. No convertible notes to related parties with beneficial conversion features were issued during 2020. These notes may be converted at the option of the note holder upon written notice by the note holder. These notes are convertible into a total of 170,611 common shares.

During 2021, a convertible note due to Joseph Byrne in the amount of $102,395, convertible into 63,997 shares, was transferred to a private investor and reclassified.

As of August 14, 2022, we are currently in default of $121,796 of convertible notes payable, which are convertible into 76,123 shares of common stock.

NOTE 9 – INCOME TAXES

The Company has elected to file separate Canadian income tax returns for CEN (growth) and for CCM (digital).

Growth:

As of September 30, 2022, CEN has net operating loss carry forwards of approximately $46,991,528 that may be available to reduce future years’ taxable income. Such carry forwards typically expire after 20 years. CEN currently has carry forwards that begin to expire in 2034. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, because CEN believes that it is more likely than not that the carryforwards will expire unused and accordingly, CEN has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The deferred tax asset and associated valuation allowance are as follows for the years ended December 31:

	2022			2021

Deferred tax asset - net operating losses	$	8,300,000		$	3,400,000
Deferred tax asset valuation allowance		(8,300,000	)		(3,400,000	)

Net deferred tax asset	$	-		$	-

The change in the valuation allowance amounted to $4,900,000 and $3,400,000 for the years ended December 31, 2021 and 2020, respectively. All other temporary differences are immaterial both individually and in the aggregate to the consolidated financial statements.

Digital:

The tax benefit for CCM income taxes consists of the following components:

	December 31,
	2021

Current	$	(33,621	)
Deferred		(2,735	)

Net income tax benefit	$	(36,356	)

The net deferred income tax asset presented in the consolidated balance sheets is comprised of the following at:

	December 31,
	2021

Deferred tax assets
SR&ED credits	$	39,464

Deferred tax liabilities
Property and equipment		(11,357	)
Intangible assets, including goodwill		(25,387	)

Total deferred tax liabilities		(36,744	)

Net deferred tax asset	$	2,720

A reconciliation of the income tax benefit and the amount computed by applying the statutory Canadian federal income tax rate to CEN’s and CCM’s income before income tax benefit for the year ended December 31 is as follows:

	2021									2020
	Growth			Digital			Total			Growth			Digital		Total

Income tax (benefit) expense at statutory rate of 26.5%	$	(5,020,280	)	$	1,177		$	(5,019,103	)	$	3,776,156		$	-	$	3,776,156

Valuation allowance		5,020,280						5,020,280			(3,776,156	)		-		(3,776,156	)

SR&ED credits		-			(19,198	)		(19,198	)		-			-		-

Other		-			(18,335	)		(18,335	)		-			-		-

Income tax benefit	$	-		$	(36,356	)	$	(36,356	)	$	-		$	-	$	-

Company management analyzes its income tax filing positions in Canadian federal and provincial jurisdictions where it is required to file income tax returns, for all open tax years in these jurisdictions, to identify potential uncertain tax positions. As of December 31, 2021, there are no uncertain income tax positions taken or expected to be taken that would require recognition of a liability or disclosure in the consolidated financial statements. The Company is subject to routing audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Generally, the Company is no longer subject to income tax examinations for years prior to 2018.

NOTE 10 – SHAREHOLDERS’ DEFICIT / STOCK ACTIVITY

The Company is authorized to issue an unlimited number of common shares and an unlimited number of special voting shares. Common shares have no stated par value.

During the quarter end, 5,350,444 common shares was issued to former employee as settlement of employment related liability.

During the year 2022, 33,000 common shares was issued as share interest on loan payables.

As of December 31, 2021, 10,000 common shares earned by an individual in connection with one of the loans, as described in Note 9, were not yet issued.

As of December 31, 2021, 1,085,343 shares of common stock are committed to the holders of the convertible notes.

During the period ended September 30, 2022, 2,186,703 shares were issued in conjunction with Employee Agreements and the Conversion of debt to equity.

NOTE 11 – RELATED PARTY TRANSACTIONS

The Company has received loans from several related parties, as described above in Notes 6 and 8.

A loan totaling $17,901 was made to Emergence Global as of December 31, 2020. The loan was made for the business purpose of assisting Emergence with operating expenses. Emergence Global’s Chief Executive Officer is Joseph Byrne, a 5% shareholder and former CEO, and current President and member of the board of CEN. Joseph Byrne, previously served as the Chief Executive Officer and member of the Board of Directors of the Company from July 2017 until November 13, 2019. This note was repaid on May 6, 202.

There are advances of $1,229,328 and $1,179,328 to CEN Ukraine as of December 31, 2021 and 2020, respectively. Such advances were made for the purpose of funding the operations of CEN Ukraine as summarized in Note 7. CEN Ukraine was founded by Bill Chaaban. Prior to December 3, 2017, Bill Chaaban directly owned 51% of CEN Ukraine. CEN Ukraine was founded to seek agricultural and pharmaceutical opportunities in Ukraine. Bill Chaaban personally funded the establishment and initial phases of CEN Ukraine. On December 14, 2017, the Company entered into a controlling interest purchase agreement with Bill Chaaban, our interim Chief Executive Officer and member of our board of directors, and another shareholder of CEN Ukraine, Usamakh Saadikh, a member of our board of directors, for 51% of the outstanding equity interests of CEN Ukraine. The consideration will be paid by issuing common shares of the Company. The agreement, which is subject to certain conditions, has not closed as of April 14, 2022, as the Company needs to raise additional funds in order to proceed with the closing. Bahige (Bill) Chaaban, our Interim Chief Executive Officer and member of our Board of Directors, and Usamakh Saadikh, a member of our Board of Directors, each directly own 25.5% of CEN Ukraine respectively. The remaining 49% of CEN Ukraine is owned by XN Pharma, which is an entity jointly owned by Bahige (Bill) Chaaban and Usamakh Saadikh. Bahige (Bill) Chaaban and Usamakh Saadikh do not currently hold any positions with CEN Ukraine. CEN Ukraine is operated and controlled by its sole director. Pursuant to Ukrainian law, shareholders of a company do not have the ability to control the company or the actions of its director. CEN Ukraine is operated under the direction of its management per the guidelines of Ukrainian law.

During the years ended December 31, 2021 and 2020, the Company incurred consulting expenses with certain Board Members and Officers totaling $188,718 and $124,800, respectively. As of December 31, 2021 and 2020, $518,918 and $330,200 was payable to these related parties for consulting charges, which are included within accrued expenses.

During the year ended December 31, 2021, the Company incurred payroll expenses with Lawrence Lehoux, the Chief Technology Officer, of $94,553, which is included within general and administrative expenses.

During 2017, the Company purchased equipment from R&D Labs Canada, Inc., whose president is Bill Chaaban, in exchange for a $300,000 note payable. This equipment was then sold to CEN Ukraine for a loss of $255,141 in exchange for a $44,859 note receivable, payable in 10 equal installments beginning in 2017 through 2026. No payments have been received as of December 31, 2021. See Note 25 for a discussion of subsequent events in Ukraine.

As of December 31, 2021 and 2020, the Company owed $8,347 to Joe Byrne, a Director, for advances made to the Company, which is included within accounts payable – related parties.

During 2021, the Company utilized an entity owned by Alex Tarrabain, the Chief Financial Officer, for accounting advisory services totaling $13,320. As of December 31, 2021, the Company owed $13,320 to this entity and also owed Mr. Tarrabain $30,795 for reimbursable expenses, which are included within accounts payable – related parties.

As of December 31, 2021, the Company owed Lawrence Lehoux, the Chief Technology Officer, $48,960 for reimbursable expenses, which is included within accounts payable – related parties.

The Company currently leases certain facilities and equipment under noncancelable operating lease agreements that expire at various dates through 2024. Monthly rentals range from CAD 844 to CAD 5,595. In addition, the facilities lease calls for variable charges for common area usage which are expensed as incurred.

The Company also leased office space in Windsor, Ontario from RN Holdings Ltd. 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. Effective with the August 1, 2020 lease termination and abandonments, all property, plant, and improvements which were located at these properties were abandoned. As of April 14, 2022, 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, 2021 under its original contractual terms. As of December 31, 2021 and 2020 the associated liability was $177,686 and $164,997, respectively. During 2021 and 2020, lease expenses of approximately $13,000 and $35,000, respectively related to this agreement were recognized within general and administrative expenses.

The operating lease liability as of December 31, 2021 and 2020 was $310,671 and $164,997, respectively, utilizing a weighted average discount rate of approximately 6.76% over a weighted average remaining lease term of approximately 4.4 years. During 2021 and 2020, lease expenses of approximately $46,000 and $35,000, respectively, related to these agreements were recognized within general and administrative expenses.

Jamaal Shaban (“Lessor”), cousin of Bill Chaaban, leased a property at 20 North Rear Road 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, which had utilized an 8% discount rate, were written off in conjunction, resulting in a loss on lease termination of $53,692. During 2020, lease expenses of approximately $20,000 related to this agreement were recognized within general and administrative expenses.

The following is a schedule of future annual minimum rental payments required under operating leases with initial or remaining noncancelable lease terms in excess of one year for the 12 months subsequent to December 31:

	Amount
2022	$	119,543
2023		90,325
2024		61,897
2025		32,088
2026		32,088
Thereafter		24,066

Total lease payments	$	360,007
Less imputed interest		49,336
Present value of lease liability	$	310,671

NOTE 12 – STOCK BASED COMPENSATION

Adoption of Equity Compensation Plan

On November 29, 2017, the Board adopted the 2017 Equity Compensation Plan (the “Plan”) providing for the granting of options to purchase shares of common stock, restricted stock awards and other stock-based awards to directors, officers, employees, advisors and consultants. The Company reserved 20,000,000 shares of common stock for issuance under the Plan. The Plan is intended to provide equity incentives to persons retained by our Company.

On April 2, 2021, the Board of Directors of the Company adopted the 2021 Equity Compensation Plan (the “2021 Plan”) providing for the granting of options to purchase shares of common stock, restricted stock awards and other stock-based awards to directors, officers, employees, advisors and consultants of the Company and reserved an additional 20,000,000 shares of the Company’s common stock for issuance under the 2021 Plan.

Equity Compensation Grants

On November 30, 2017, the Company granted a one-time equity award (“Equity Award”) of restricted shares of the Company’s common stock pursuant to a Restricted Stock Agreement to certain executives and directors of the company. Donald Strilchuck, Director, received 1,000,000 restricted shares of the Company's common stock for security consulting services, of which 550,000 vested immediately and the remaining vesting ratably each month over the next 36 months until November 2020. Other individuals received a total of 1,870,000 restricted shares of the Company's common stock for consulting services performed, of which 1,330,000 vested immediately and the remaining vesting ratably each month over the next 36 months until November 2020. The expense related to the restricted stock awarded to non-employees for services rendered was recognized on the grant date.

On April 17, 2020, the Company entered into agreements with three individuals for the payment of business consulting services under which the Company issued 225,000 shares of its common stock. These awards vested immediately. The expense related to the restricted stock awarded to non-employees for services rendered of $162,000 was recognized on the grant date.

On August 27, 2020 and September 25, 2020, the Company entered into agreements with two individuals for the payment of business consulting services under which the Company issued an aggregate of 162,500 shares of its common stock. These awards vested immediately. The expense related to the restricted stock awarded to non-employees for services rendered of $117,000 was recognized on the grant date.

On April 2, 2021, a consulting agreement with CONFIEN SAS for business coaching was entered into for a period of 12 months. As payment for these services, 650,000 restricted shares, subject to applicable securities laws and regulations as set forth in the Restricted Stack Agreement, of the Company’s common stock were granted. Such shares vested immediately. The expense related to the restricted stock awarded to non-employees for services previously rendered of $897,000 was recognized on the grant date.

On July 13, 2021, the Company entered into agreements with two individuals for the payment of security and legal consulting services under which the Company issued an aggregate of 500,000 shares of its common stock. These awards vested immediately. The expense related to the restricted stock awarded to non-employees for services rendered of $275,000 was recognized on the grant date.

On September 7, 2022, the Company entered into agreements with Seven individuals for the compensation of employees and Directors of the company. under which the Company issued an aggregate of 1,390,000 shares of its common stock.

Employment Agreements

On November 30, 2017, employment agreements were entered into with four key members of management:

●

Under the Employment Agreement with Bahige (Bill) Chaaban, President of the Company, Mr. Chaaban will receive compensation in the form of a base annual salary of $31,200 and a grant of 8,750,000 shares of restricted stock of the Company, of which 7,400,000 vested immediately and the remaining vested ratably each month over the next 36 months until November 2020.

●

Under the Employment Agreement with Joseph Byrne, Chief Executive Officer of the Company, Mr. Byrne will receive compensation in the form of a base annual salary of $31,200 and a grant of 1,250,000 shares of restricted stock of the Company, of which 325,000 vested immediately and the remaining vesting ratably each month over the next 36 months until November 2020. Effective November 13, 2019, Mr. Byrne resigned and left the Company, at which point additional vesting and salary accruals ceased. As of April 2, 2020, the accrued salaries owed to Joe Byrne, which amounted to $58,500, were settled by allowing Joe Byrne to vest in the remaining 337,500 restricted shares that had not vested.

●

Under the Employment Agreement with Richard Boswell, Senior Executive Vice President and Chief Financial Officer of the Company, Mr. Boswell will receive compensation in the form of a base annual salary of $31,200 and a grant of 4,500,000 shares of restricted stock of the Company, of which 4,140,000 vested immediately and the remaining vested ratably each month over the next 36 months until November 2020.

●

Under the Employment Agreement with Brian Payne, Vice President of the Company, Mr. Payne will receive compensation in the form of a base annual salary of $31,200 and a grant of 750,000 shares of restricted stock of the Company, of which 300,000 vested immediately and the remaining vested ratably each month over the next 36 months until November 2020.

On May 16, 2019, an employment agreement, under similar terms, was entered into with Mr. Tarrabain. Under the Employment Agreement with Alex Tarrabain, Chief Financial Officer and as one of the Vice Presidents of the Company, Mr. Tarrabain will receive compensation in the form of a base annual salary of $31,200 and a grant of 1,250,000 shares of restricted stock of the Company, of which 350,000 vested immediately and the remaining vesting ratably each month over the next 36 months until May 2022.

On December 6, 2021, the Board of Directors appointed Rick Purdy as its Senior Vice President of Deals and Acquisitions. On this date, an employment agreement, under similar terms, was entered into with Mr. Purdy. Under the Employment Agreement, Mr. Purdy will receive compensation in the form of a base annual salary of $31,200 and a grant of 2,500,000 shares of restricted stock of the Company, of which 700,000 vested immediately and the remaining vesting ratably each month over the next 36 months until December 2024. The expense related to the restricted stock awarded to employees for services previously rendered of $238,000 was recognized on the grant date. Remaining expenses will be recognized ratably monthly as the restricted stock award vests.

On April 2, 2021, the Board of Directors appointed Ameen Ferris and Harold Aubrey De Lavenu to serve as Vice Presidents of the Company. Under the associated Executive Employment Agreements, they will each receive compensation in the form of a base annual salary of $31,200. In addition, Ameen Ferris was granted 1,000,000 and Harold Aubrey De Lavenu was granted 1,041,250 restricted shares, subject to applicable securities laws and regulations, as set forth in the Restricted Stock Agreement, of the Company’s common stock. Such shares vested immediately. The expense related to the restricted stock awarded to employees for services previously rendered of $2,816,925 was recognized on the grant date.

On April 2, 2021, the Company entered into an RSA (the “Boswell RSA”) with Richard Boswell. Pursuant to the Boswell RSA, the Company granted Mr. Boswell 2,185,679 restricted shares of the Company’s common stock under the 2021 Plan to vest immediately on the grant date. The shares issued are restricted shares that are subject to applicable securities laws and regulations. The expense related to the restricted stock awarded to employees for services previously rendered of $3,016,237 was recognized on the grant date.

On April 2, 2021, the Company entered into an RSA (the “Chaaban RSA”) with Bahige Chaaban. Pursuant to the Chaaban RSA, the Company granted Mr. Chaaban 3,106,122 restricted shares of the Company’s common stock under the 2021 Plan to vest immediately on the grant date. The shares issued are restricted shares that are subject to applicable securities laws and regulations. The expense related to the restricted stock awarded to employees for services previously rendered of $4,286,435 was recognized on the grant date.

On April 2, 2021, the Company entered into an RSA (the “Payne RSA”) with Brian Payne. Pursuant to the Payne RSA, the Company granted Mr. Payne 1,435,000 restricted shares of the Company’s common stock under the 2021 Plan to vest immediately on the grant date. The shares issued are restricted shares that are subject to applicable securities laws and regulations. The expense related to the restricted stock awarded to employees for services previously rendered of $1,980,300 was recognized on the grant date.

On April 2, 2021, the Company entered into an RSA (the “Saadikh RSA”) with Usamakh Saadikh. Pursuant to the Saadikh RSA, the Company granted Mr. Saadikh 1,000,000 restricted shares of the Company’s common stock under the 2021 Plan to vest immediately on the grant date. The shares issued are restricted shares that are subject to applicable securities laws and regulations. The expense related to the restricted stock awarded to employees for services previously rendered of $1,380,000 was recognized on the grant date.

On April 2, 2021, the Company entered into an RSA (the “Strilchuck RSA”) with Donald Strilchuck. Pursuant to the Strilchuck RSA, the Company granted Mr. Strilchuck 341,250 restricted shares of the Company’s common stock under the 2021 Plan to vest immediately on the grant date. The shares issued are restricted shares that are subject to applicable securities laws and regulations. The expense related to the restricted stock awarded to employees for services previously rendered of $470,925 was recognized on the grant date.

On April 2, 2021 and June 25, 2021, the Company entered into an RSA (the “Tarrabain RSA”) with Alex Tarrabain. Pursuant to the Tarrabain RSA, the Company granted Mr. Tarrabain 300,000 and 1,000,000, respectively, restricted shares of the Company’s common stock under the 2021 Plan to vest immediately on the grant date. The shares issued are restricted shares that are subject to applicable securities laws and regulations. The expense related to the restricted stock awarded to employees for services previously rendered of $899,000 was recognized on the grant date.

On April 14, 2022, the following persons resigned from the following positions from Company. Bahige (Bill) Chaaban resigned from his positions as Chief Executive Officer, President, Chairman of the Board of Directors Company effective at the close of business on April 14, 2022. Alex Tarrabain resigned from his positions as the Company’s Chief Financial Officer and Director effective at the close of business on April 14, 2022. Rick Purdy resigned from his positions as Company’s Senior Vice President of Deals and Acquisitions and Director effective at the close of business on April 14, 2022. Amen Ferris resigned from his positions as Company’s Vice President and Director effective at the close of business on April 14, 2022. Joseph Byrne resigned from his positions as a Director of the Company effective at the close of business on April 14, 2022. Additionally, Richard Boswell resigned from his positions as the Company’s Senior Executive Vice President and Director effective as of April 15, 2022.

On April 19, 2022, Dr. Usamakh Saadikh resigned from his position as a director on the Board of Directors (the “Board”) of the “Company as well as all other positions with the Company effective immediately. Dr. Usamakh Saadikh, was a member of our Board and the Vice President of International Business Development since June 2018.

The foregoing resignations shall be referred to together herein as the “Resignations”. Subsequent to the effectiveness of the above Resignations, the above name persons no longer hold any positions with the Company. The Resignations were not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices by any of the above persons.

Settlement Agreements with Departing Officers and Directors

As reported by the Company on its Current Report on Form 8-K filed with the Securities and Exchange Commission on April 19, 2022, on April 14, 2022, the following persons resigned from the following positions from the Company. Bahige (Bill) Chaaban resigned from his positions as Chief Executive Officer, President, Chairman of the Board of Directors Company effective at the close of business on April 14, 2022. Alex Tarrabain resigned from his positions as the Company’s Chief Financial Officer and Director effective at the close of business on April 14, 2022. Rick Purdy resigned from his positions as Company’s Senior Vice President of Deals and Acquisitions and Director effective at the close of business on April 14, 2022. Amen Ferris resigned from his positions as Company’s Vice President and Director effective at the close of business on April 14, 2022. Joseph Byrne resigned from his positions as a Director of the Company effective at the close of business on April 14, 2022. Additionally, Richard Boswell resigned from his positions as the Company’s Senior Executive Vice President and Director effective as of April 15, 2022. The foregoing resignations shall be referred to together herein as the “Resignations”. Subsequent to the effectiveness of the above Resignations, the above named persons no longer hold any positions with the Company. In connection with the Resignations, the Company has entered into the settlement agreements described below with the following persons.

On April 19, 2022, the Company, entered into a settlement agreement with Bahige (Bill) Chaaban (the “Chaaban Settlement Agreement”) pursuant to which the Company agreed to issue Mr. Chaaban 1,785,096 restricted shares of its common stock in exchange for the accrued salary of $133,882.19 owed to Mr. Chaaban as of the date of his resignation from the Company pursuant to his employment agreement with the Company. Pursuant to the Chaaban Settlement Agreement, Mr. Chaaban’s Employment Agreement with the Company dated November 30, 2017, was terminated as of April 14, 2022. Pursuant to the Chaaban Settlement Agreement, Mr. Chaaban agreed to release the Company from any claims, as such term is defined thereunder, that Mr. Chaaban may have against the Company.

On April 19, 2022, the Company, entered into a settlement agreement with Alex Tarrabain (the “Tarrabain Settlement Agreement”) pursuant to which the Company agreed to issue Mr. Tarrabain 1,196,673 restricted shares of its common stock in exchange for the accrued salary of $89,682.19 owed to Mr. Tarrabain as of the date of his resignation from the Company pursuant to his employment agreement with the Company. Pursuant to the Tarrabain Settlement Agreement, Mr. Tarrabain’s Employment Agreement with the Company dated May 21, 2019, was terminated as of April 14, 2022. Pursuant to the Tarrabain Settlement Agreement, Mr. Tarrabain agreed to release the Company from any claims, as such term is defined thereunder, that Mr. Tarrabain may have against the Company.

On April 19, 2022, the Company, entered into a settlement agreement with Rick Purdy (the “Purdy Settlement Agreement”) pursuant to which the Company agreed to issue Mr. Purdy 150,483 restricted shares of its common stock in exchange for the accrued salary of $11,286.19 owed to Mr. Purdy as of the date of his resignation from the Company pursuant to his employment agreement with the Company. Pursuant to the Purdy Settlement Agreement, Mr. Purdy’s Employment Agreement with the Company dated December 6, 2021, was terminated as of April 14, 2022.

On April 19, 2022, the Company, entered into a settlement agreement with Ameen Ferris (the “Ferris Settlement Agreement”) pursuant to which the Company agreed to issue Mr. Ferris 433,096 restricted shares of its common stock in exchange for the accrued salary of $32,482.19 owed to Mr. Ferris as of the date of his resignation from the Company pursuant to his employment agreement with the Company. Pursuant to the Ferris Settlement Agreement, Mr. Ferris’s Employment Agreement with the Company dated April 2, 2021, was terminated as of April 14, 2022.

On April 19, 2022, the Company, entered into a settlement agreement with Richard Boswell (the “Boswell Settlement Agreement”) pursuant to which the Company agreed to issue Mr. Boswell 1,785,096 restricted shares of its common stock in exchange for the accrued salary of $133,882.19 owed to Mr. Boswell as of the date of his resignation from the Company pursuant to his employment agreement with the Company. Pursuant to the Boswell Settlement Agreement, Mr. Boswell’s Employment Agreement with the Company dated November 30, 2017, was terminated as of April 15, 2022.

Restricted Stock Awards

Restricted stock awards relate to common shares that are subject to applicable securities laws and regulations as set forth in the RSAs and other equity compensation grants.

The total grant-date fair value of the restricted shares granted through employment agreements and equity compensation grants was $29,885,063 and $13,013,241 as of December 31, 2021 and 2020, respectively. During 2021 and 2020, 15,059,291 restricted shares with a grant date fair value of $16,871,822 and 387,500 restricted shares with a grant date fair value of $279,000, respectively, were awarded. Prior to the start of trading on April 5, 2021 via the OTC Link alternative trading system (operated by OTC Markets Group Inc.), the grant-date fair value was calculated utilizing an enterprise valuation model as of the date the awards are granted. Beginning April 5, 2021, the grant-date fair value is calculated utilizing the daily closing price as published via the OTC Link.

With the exception of immediately vesting portions of awards, shares typically vest pro-rata over the requisite service period, which is generally three years from the grant-date. Non-vested restricted stock awards participate in dividends and recipients are entitled to vote these restricted shares during the vesting period.

During 2021 and 2020, 13,559,291 and 1,987,500 of these shares vested, respectively. The fair value of the restricted stock which vested amounted to $16,562,822 and $1,237,250 for 2021 and 2020, respectively.

Compensation expense, broken out by allocation, recognized in connection with the restricted stock awards was as follows for the years ended December 31:

	2022		2021

Stock Based Compensation	$	-	$	15,390,822
Professional fees		-		1,172,000

Total	$	-	$	16,562,822

Non-vested restricted stock award activity for the years ended September 30, 2022 and 2021 are as follows:

				Weighted-		Weighted-
				Average		Average
				Grant		Remaining
				Date Fair		Contractual
	Number of			Value		Term
	Shares			per Share		(Years)
Non-vested at December 31, 2021		1,925,000		$	1.01		1.50
Granted		39,051,155			1.12		-
Vested		(36,559,545	)		1.22		-
Forfeited		-			-		-
Non-vested at September 30, 2022		4,416,610		$	0.38		2.84

The fair value of the restricted stock grants was based on the valuation of a third-party specialist prior to April 5, 2021. Beginning April 5, 2021, the fair value of the restricted stock grants is based upon the daily closing price per the OTC Link. As of December 31, 2021, unrecognized compensation expense totaled $738,250, which will be recognized on a straight-line basis over the vesting period or requisite service period through December 2024.

Restricted Stock Agreement with Lawrence Lehoux

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “RSA”) under the Plan with Lawrence Lehoux, the Company’s Chief Technology Officer, President and a Director. Pursuant to the RSA, the Company granted Mr. Lehoux 2,000,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Restricted Stock Agreement with Brian S. Payne

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “Payne RSA”) under the Plan with Brian S. Payne, the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board. Pursuant to the Payne RSA, the Company granted Mr. Payne 3,000,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the Payne RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Restricted Stock Agreement with Donald Strilchuck

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “Strilchuck RSA”) under the Plan with Donald Strilchuck, a member of the Company’s Board. Pursuant to the Strilchuck RSA, the Company granted Mr. Strilchuck 250,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the Strilchuck RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Restricted Stock Agreement with George Dragicevic

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “Dragicevic RSA”) under the Plan with George Dragicevic a member of the Company’s Board. Pursuant to the Dragicevic RSA, the Company granted Mr. Dragicevic 250,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the Dragicevic RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Restricted Stock Agreement with Harold Andre Aubrey de Lavenu

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “Lavenu RSA”) under the Plan with Harold Andre Aubrey de Lavenu, a Vice President and Director of the Company. Pursuant to the Lavenu RSA, the Company granted Mr. Lavenu 250,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the Lavenu RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Restricted Stock Agreement with Jeffrey Thomas

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “Thomas RSA”) under the Plan with Jeffrey Thomas, a member of the Company’s Board. Pursuant to the Thomas RSA, the Company granted Mr. Thomas 250,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the Thomas RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Restricted Stock Agreement with Josef Tukacs

On August 29, 2022, the Company entered into a Restricted Stock Agreement (the “Tukacs RSA”) under the Plan with Josef Tukacs, a member of the Company’s Board. Pursuant to the Tukacs RSA, the Company granted Mr. Tukacs 250,000 shares of the Company’s common stock (the “Restricted Shares”) under the Plan to vest as set forth in the Tukacs RSA. Notwithstanding the foregoing, the Restricted Shares shall become immediately vested upon a change of control of the Company.

Employment Agreement with Lawrence Lehoux

On August 26, 2022, the Company entered into an Executive Employment Agreement with Lawrence Lehoux, the Company’s Chief Technology Officer, President and a Director, (the “Employment Agreement”) with an effective date of September 1, 2022. 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 its President and Chief Technology Officer. Pursuant to the Employment Agreement, the Company agreed to issue Mr. Lehoux 1,750,000 shares of the Company’s common stock subject to the provisions of a Restricted Stock Agreement under the Company’s 2021 Equity Compensation Plan (the “Plan”). Additionally, pursuant to the Employment Agreement, the Company agreed to pay Mr. Lehoux a base salary of $240,000.00. The term of the Employment Agreement is a period of five (5) years. The Employment Agreement can be terminated by Mr. Lehoux for “Good Reason” as such term is defined in the Employment Agreement or without “Good Reason” by giving a minimum of thirty (30) days’ prior written notice to advise the Company that he is resigning his employment. In the event of termination of the Employment Agreement by Mr. Lehoux by resignation without “Good Reason,” no sums will be payable by the Company except for: (i) any unpaid base salary through the effective date of resignation and (ii) reimbursement for any expenses for which Mr. Lehoux had not been reimbursed. In the event of a termination of the Employment Agreement by Mr. Lehoux for “Good Reason,” the Company would have a period of thirty (30) days following receipt of such notice from Mr. Lehoux to cure or revoke the event constituting “Good Reason.” The Company can also terminate the Employment Agreement for “Cause” as such term is defined in the Employment Agreement, and if that occurs, no sums will be payable by the Company except for: (i) any unpaid base salary through the date of termination, (ii) reimbursement for any expenses for which the Mr. Lehoux had not been reimbursed and (iii) only if the act of “Cause” does not constitute willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Company, any other amount due under the Employment Agreement for termination pay or severance pay. The Company can also terminate the Employment Agreement without “Cause” at any time. Pursuant to the Employment Agreement, in connection with the sale of the Company or any other transaction constituting a “Change in Control” as such term is defined in the Employment Agreement or a strategic transaction, the Company may, but will not be obligated, to provide Mr. Lehoux with additional compensation (including, but not limited to additional stock options or restricted stock) for services outside of general scope of duties and responsibilities of Mr. Lehoux.

Employment Agreement with Brian S. Payne

On August 26, 2022, the Company entered into an Executive Employment Agreement with Brian S. Payne, the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board, (the “Payne Employment Agreement”) with an effective date of September 1, 2022. Pursuant to the Payne Employment Agreement, during the term of the Payne Employment Agreement, the Company agreed to employ, and Mr. Payne agreed to accept employment with the Company as its Chief Executive Officer and Chairman. Pursuant to the Payne Employment Agreement, the Company agreed to issue Mr. Payne 2,750,000 shares of the Company’s common stock subject to the provisions of a Restricted Stock Agreement under the Plan. Additionally, pursuant to the Payne Employment Agreement, the Company agreed to pay Mr. Payne a base salary of $240,000.00. The term of the Payne Employment Agreement is a period of five (5) years. The Payne Employment Agreement can be terminated by Mr. Payne for “Good Reason” as such term is defined in the Payne Employment Agreement or without “Good Reason” by giving a minimum of thirty (30) days’ prior written notice to advise the Company that he is resigning his employment. In the event of termination of the Payne Employment Agreement by Mr. Payne by resignation without “Good Reason,” no sums will be payable by the Company except for: (i) any unpaid base salary through the effective date of resignation and (ii) reimbursement for any expenses for which Mr. Payne had not been reimbursed. In the event of a termination of the Payne Employment Agreement by Mr. Payne for “Good Reason,” the Company would have a period of thirty (30) days following receipt of such notice from Mr. Payne to cure or revoke the event constituting “Good Reason.” The Company can also terminate the Payne Employment Agreement for “Cause” as such term is defined in the Payne Employment Agreement, and if that occurs, no sums will be payable by the Company except for: (i) any unpaid base salary through the date of termination, (ii) reimbursement for any expenses for which the Mr. Payne had not been reimbursed and (iii) only if the act of “Cause” does not constitute willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Company, any other amount due under the Payne Employment Agreement for termination pay or severance pay. The Company can also terminate the Payne Employment Agreement without “Cause” at any time. Pursuant to the Payne Employment Agreement, in connection with the sale of the Company or any other transaction constituting a “Change in Control” as such term is defined in the Payne Employment Agreement or a strategic transaction, the Company may, but will not be obligated, to provide Mr. Payne with additional compensation (including, but not limited to additional stock options or restricted stock) for services outside of general scope of duties and responsibilities of Mr. Payne.

NOTE 13 – NET LOSS PER SHARE

During periods when there is a net loss, all potentially dilutive shares are anti-dilutive and are excluded from the calculation of diluted net loss per share. Based on the Company’s application of the as converted and treasury stock methods, all common stock equivalents were excluded from the computation of diluted earnings per share due to net losses as of December 31, 2021. During 2020, the potential common shares from the Tesla Agreement, which were contingent on certain events as described in Note 8, were excluded as the effect of conversion was anti-dilutive. Common stock equivalents that were excluded for the period ended June 30, and December 2021 because they were anti-dilutive are as follows:

	2021		2020
Convertible debt		1,085,343		-
Tesla agreement		-		1,000,000

The following table shows the computation of basic and diluted earnings per share for 2021:

	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amount
Basic EPS
Income available to common stockholders	$	607,152		61,341,187	$	0.00

Effect of Dilutive Securities
Convertible debt		-		-		-

Diluted EPS
Income available to common stockholders with assumed conversions	$	607,152		61,341,187	$	0.00

NOTE 14 – CONTINGENCY

In connection with the distribution by Creative of CEN’s common stock on February 29, 2016 and the Form 10 registration statement filed by CEN to register its shares of common stock under the Exchange Act, CEN received comments by the Staff of the Securities and Exchange Commission, including a letter dated May 4, 2016 in which the Staff noted that they “…continue to question the absence of Securities Act registration of the spin-off distribution”. In the event that the distribution of shares of CEN’s common stock was a distribution that required registration under the Securities Act, then the Company could be subject to enforcement action by the SEC that claims a violation of Section 5 of the Securities Act and could be subject to a private right of action for rescission or damages. Based on management’s estimate, any potential liability related to this matter would not be material.

NOTE 15 – FAIR VALUE DISCLOSURES

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.

The fair value of the Company’s financial instruments are as follows:

	Fair Value Measured at Reporting Date Using
	Carrying Amount		Level 1		Level 2		Level 3		Fair Value
At September 30, 2022:
Cash and cash equivalents	$	148,151	$	-	$	148,151	$	-	$	148,151
Note receivable – CEN Biotech Ukraine, LLC – related party	$	44,859	$	-	$	-	$

CEN BIOTECH INC [CENBF] Filings
10-Q	[2022-11-14]
10-Q	[2022-08-22]
10-Q	[2022-05-20]
10-K	[2022-04-14]
10-Q	[2021-11-19]
10-Q	[2021-08-12]
10-Q	[2021-05-12]
10-K	[2021-03-12]
10-Q	[2020-11-06]
10-Q	[2020-07-31]
S-1	[2020-06-19]
10-Q	[2020-06-12]
10-K	[2020-04-14]
10-Q	[2019-11-18]
10-Q	[2019-08-19]
10-Q	[2019-05-20]
10-K	[2019-04-16]
10-Q	[2018-11-13]
10-Q	[2018-08-14]
10-Q	[2018-05-21]
10-K	[2018-04-16]
10-Q	[2017-11-20]
10-Q	[2017-08-21]
10-Q	[2017-05-22]
10-K	[2017-04-13]
10-Q	[2016-11-14]
10-Q	[2016-08-15]
10-Q	[2016-05-16]
10-K	[2016-04-14]
10-Q	[2015-11-18]