CV Sciences Inc (CVSI)

[DarthYoda]

Hey Fangster, on 2/27, you said...

Let’s see if they convince auditors that the intangibles are not further impaired!

And I replied with...

Intangible assets consisted of in-process research and development with an indefinite life of $1.5 million as of September 30, 2022 and December 31, 2021.

Then CVSI fulfilled the "Prophecy of Further Impairment"...

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Evaluation of Indefinite-Lived Intangible Assets

Critical Audit Matter Description

As disclosed in Notes 2 and 5 to the financial statements, indefinite-lived intangible assets are tested for impairment at least annually and more frequently if indicators of impairment require the performance of an interim impairment assessment. As a result of management’s assessment, the Company recognized an impairment charge of $1,234,000 related to indefinite-lived intangible assets during the year ended December 31, 2022.

Our assessment of management’s impairment test is significant to our audit because the Company’s indefinite-lived intangible assets are material to the financial statements and management’s assessment process involves significant judgments with respect to estimating the fair value of the Company’s reporting units.

How the Critical Audit Matter was Addressed in the Audit

We obtained management’s impairment assessment analysis and performed the following procedures:
•We made inquiries of management to obtain an understanding of the Company’s process to evaluate indefinite-lived intangible assets for impairment to ensure consistency with U.S. generally accepted accounting principles.
•We evaluated management’s assessment of qualitative and quantitative impairment indicators.
•We assessed management’s estimates of the Company’s enterprise value, the estimated fair value of the Company’s reporting units and the estimated fair value of indefinite-lived intangible assets and tested the reasonableness of significant assumptions and underlying data used by management.
•We tested the mathematical accuracy of the computed impairment charges.


/s/ Haskell & White LLP
HASKELL & WHITE LLP

We have served as the Company’s auditor since 2021.

Irvine, California
March 30, 2023

https://www.otcmarkets.com/filing/html?id=16529697&guid=9lm-kWHM7T-FJth