Company: CRVO
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001437749-25-007829
Chunk: 121

Company: CervoMed Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 8
Chunk 121
---
 on the level of subject enrollment and activity according to the related agreement and makes judgments and estimates in determining the amount of research and development expense and related accrued or prepaid balance in each reporting period. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and may be reflected in the consolidated financial statements as an accrued or prepaid expense. Research and development expenses related to clinical trials, as described above, are included within the $18.8 million of research and development expenses recorded on the Company’s statement of operations. The Company's accrual for clinical development costs totaled $1.2 million at December 31, 2024, as disclosed in Note 6 and prepayment for clinical expenses totaled $1.4 million at December 31, 2024, as disclosed in Note 7.

We identified the research and development expenses related to clinical trials to be a critical audit matter because auditing the Company’s expenses is complex as the information necessary to make an estimate is accumulated from multiple sources and there may be delays in invoicing from clinical study sites and other vendors, or payments may depend on factors such as the completion of clinical trial milestones. Additionally, in certain circumstances, it requires judgment, as the timing and pattern of vendor invoicing may not correspond to the level of services provided.

90

Our audit procedures to test the research and development expenses related to clinical trials included, among others:

  We inspected contracts and purchase orders with certain third parties and agreed key milestones, activities, timing, and costs to management’s schedules.  

  We tested the completeness and accuracy of the underlying data used by management to estimate the service performed and associated costs incurred to date.  

  We corroborated the progress of research and development activities through inquiries with the Company’s research and development personnel and sent confirmations directly to certain third part...  

  We tested invoices received from third parties and cash disbursements before and after year end to assess completeness of accrued expenses or the existence of prepaid expenses.  
 ────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────

/s/RSM US LLP

We have served as the Company's auditor since 2017.

Boston, Massachusetts

March 17, 2025

91

CervoMed Inc.

Consolidated Balance Sheets

                                                                                                                                                                                                December 31,                        December 31,                    
                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                2024                                2023                            
 ─────────────────────────────────