MACHINERY AND EQUIPMENT

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

MACHINERY AND EQUIPMENT

NOTE 9. - MACHINERY AND EQUIPMENT

Machinery and equipment at December 31, 2015 and 2014 consists of the following:

	December 31, 2015		December 31, 2014
Cigarette manufacturing equipment	$	3,016,246	$	3,031,375
Office furniture, fixtures and equipment		95,361		55,355
		3,111,607		3,086,730
Less: accumulated depreciation		555,814		236,115
Machinery and equipment, net	$	2,555,793	$	2,850,615

On December 11, 2013 and January 13, 2014, the Company acquired machinery and equipment in the amount of $3,220,000 and $210,000, respectively, as described in Note 8. A portion of the equipment from these two transactions was not required for the Company’s manufacturing operations and was subsequently sold at auction during the first quarter of 2014. The Company allocated $457,696 and $88,167 of the purchase price of these sold assets from the two transactions, respectively. The Company realized net proceeds from the auction sale of $631,484, resulting in a gain on the sale of assets of $85,621. The remaining cigarette manufacturing equipment was placed in service during the second quarter of 2014. Depreciation expense was $319,699, $230,012 and $3,028 for the years ended December 31, 2015, 2014 and 2013, respectively.