Company: CRVO
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001437749-25-007829
Chunk: 135

Company: CervoMed Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 8
Chunk 135
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 Convertible Notes were no longer outstanding. Upon issuance, the Company elected the fair value option for the Convertible Notes in accordance with ASC 825, “ Financial Instruments,” pursuant to which the entire instrument, including interest expense, is measured at fair value with the initial change in fair value deemed to be a capital contribution and any subsequent changes in fair value being recorded to other income (expense) on the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2024 there were nofair value adjustments recognized, as the Convertible Notes were no longer outstanding. The fair value adjustment recognized in other income was $5.4million for the year ended December 31, 2023.

As a result of the Merger (Note 4), pursuant to the terms thereof, the Convertible Notes converted into shares of EIP Common Stock which were subsequently converted into the right to exchange such shares for897,272shares of the Company’s common stock (or, in certain cases, pre-funded warrants to purchase the Company’s common stock in lieu thereof). Accordingly, the Convertible Notes were adjusted to fair value prior to conversion by multiplying the trading price of the Company’s common stock at the date of the Effective Time and the795,905common shares and101,367pre-funded warrants issued upon conversion. The Company recorded a gain on the fair value adjustment of the Convertible Notes of $5.4million for year ended December 31, 2023 and recorded $7.0million to additional paid in capital for the issuance of common stock upon settlement of the Convertible Notes.

Note 10. Commitments and Contingencies

Operating Leases

The Company has a short-term lease for office space in Boston, Massachusetts and previously had a short-term agreement to utilize membership-based co-working space in Charlottesville, Virginia, the latter of which was terminated during the three months ended March 31, 2024. Lease expense was approximately $34,692and $34,000for the years ended December 31, 2024 and 2023, respectively.

Research and Development Arrangements

In the course of normal business operations, the Company enters into agreements with universities and CROs to assist in the performance of research and development activities and with CMOs to assist with chemistry, manufacturing, and controls related activities. Expenditures to CROs and other CMOs represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing,