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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)

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

For the quarterly period ended June 30, 2023

or

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: 001-39820

Clever Leaves Holdings Inc.
(Exact name of registrant as specified in its charter)

British Columbia, CanadaNot Applicable
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Bodega 19-B Parque Industrial Tibitoc P.H,
Tocancipá - Cundinamarca, Colombia
N/A
(Address of principal executive offices)(Zip Code)

(Registrant’s telephone number, including area code): (561) 634-7430
                                                        
(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 classTrading Symbol(s)Name of each exchange on which registered
Common shares without par valueCLVRThe Nasdaq Stock Market LLC
Warrants, each warrant exercisable for one common share at an exercise price of $11.50CLVRWThe Nasdaq Stock Market LLC

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, a 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 Rule 12b-2 of the Exchange Act). Yes ☐ No

The number of registrant’s common shares outstanding as of August 10, 2023 was 45,726,599.
1

Table of Contents
CLEVER LEAVES HOLDINGS INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
ITEM 1.
Condensed Consolidated Statements of Financial Position as of June 30, 2023 and December 31, 2022
Condensed Consolidated Statements of Operations for the Three and Six months ended June 30, 2023 and 2022
Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six months ended June 30, 2023 and 2022
Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2023 and 2022
Notes to Unaudited Condensed Consolidated Financial Statements
ITEM 2.
ITEM 3.
ITEM 4.
PART II - OTHER INFORMATION
ITEM 1.
ITEM 1A.
Risk Factors
ITEM 5.
ITEM 6.


2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. You should not place undue reliance on such statements because they are subject to numerous risks and uncertainties which are difficult to predict and many of which are beyond our control and could cause our actual results to differ from the forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “could,” “may,” “would,” “should,” “intend,” “plan,” “potential,” “predict,” “forecast,” “will,” “expect,” “budget,” “contemplate,” “believe,” “estimate,” “continue,” “project,” “positioned,” “strategy,” “outlook” and similar expressions. You should read statements that contain these words carefully because they:

discuss future expectations;
contain projections of future results of operations or financial condition; or
state other “forward-looking” information.

All such forward-looking statements are based on our current expectations and involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. We believe it is important to communicate our expectations to our security holders. However, there may be future events that we are not able to predict accurately or over which we have no control. The risk factors and cautionary language discussed in this Part I, Item 1A, “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022 (the “Annual Report” or “2022 Form 10-K”) provide examples of risks, contingencies, uncertainties, and events that may cause our actual results to differ materially from the expectations described by us in such forward-looking statements, including among other things:

our ability to continue as a going concern;
our ability to maintain the listing of our securities on Nasdaq;
changes adversely affecting the industry in which we operate;
our restructuring plans;
the availability or terms of future financing;
our ability to achieve our business strategies;
general economic conditions, including the ongoing military conflict between Russia and Ukraine (and resulting sanctions) on the global economy, global financial markets and our business;
regional political and economic conditions, including emerging market conditions;
the impact and magnitude of rising energy costs;
the impact and magnitude of inflation and currency fluctuations;
the regulation and legalization of adult-use, recreational cannabis;
our ability to retain our key employees; and
other factors that are more fully discussed in Part I, Item 1A of the "2022 Form 10-K" under the heading “Risk Factors”, and those discussed in other documents we file with the SEC.

These risks could cause actual results to differ materially from those implied by the forward-looking statements contained in this Form 10-Q.

All forward-looking statements included herein attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. These forward-looking statements speak only as of the date of this Form 10-Q. Except to the extent required by applicable laws and regulations, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

This Form 10-Q contains estimates, projections and other information concerning our industry, our business, and the markets for our products. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.
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ITEM 1. FINANCIAL STATEMENTS

CLEVER LEAVES HOLDINGS INC.
Condensed Consolidated Statements of Financial Position
(Amounts in thousands of U.S. Dollars, except share and per share data)
(Unaudited)                        
As ofAs of
Note
June 30, 2023December 31, 2022
Assets
 
Current:  
Cash and cash equivalents$5,077 $12,449 
Restricted cash64 439 
Accounts receivable, net2,590 2,252 
Prepaids, deposits and other receivables63,207 2,708 
Inventories, net57,470 8,399 
Total current assets18,408 26,247 
 
Investment – Cansativa75,777 5,679 
Property, plant and equipment, net of accumulated depreciation of $7,990 and $7,120 for June 30, 2023 and December 31, 2022, respectively
913,094 13,963 
Assets held for sale - Land1,500 1,500 
Intangible assets, net82,987 3,354 
Operating lease right-of-use assets, net18981 1,303 
Other non-current assets84 52 
Total Assets
$42,831 $52,098 
 
Liabilities
Current:
Accounts payable$2,300 $2,299 
Accrued expenses and other current liabilities3,115 4,238 
Loans and borrowings, current portion10471 465 
Warrant liability168 113 
Operating lease liabilities, current portion18663 1,239 
Deferred revenue845 1,072 
Total current liabilities7,562 9,426 
Loans and borrowing — long-term10908 1,065 
Operating lease liabilities — long-term18389 1,087 
Other long-term liabilities24 112 
Total Liabilities
$8,883 $11,690 
 
Contingencies and commitments
Shareholders’ equity
Preferred shares, without par value, unlimited shares authorized, nil shares issued and outstanding for each of June 30, 2023 and December 31, 2022
  
Common shares, without par value, unlimited shares authorized: 45,704,459 and 43,636,783 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively
11  
Additional paid-in capital222,530 221,313 
Accumulated deficit(188,582)(180,905)
Total shareholders' equity
33,948 40,408 
Total liabilities and shareholders' equity
$42,831 $52,098 
See accompanying notes to the condensed consolidated financial statements
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CLEVER LEAVES HOLDINGS INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Amounts in thousands of U.S. Dollars, except share and per share data)
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
Note2023202220232022
Revenue, net16$4,981 $4,100 $8,959 $9,141 
Cost of sales(2,255)(1,619)(3,999)(4,067)
Gross profit2,726 2,481 4,960 5,074 
Expenses
General and administrative124,805 6,424 10,172 13,422 
Sales and marketing469 728 1,018 1,461 
Research and development403 359 615 771 
Restructuring expenses13   3,842 
Depreciation and amortization224 318 460 644 
Total expenses5,901 7,829 12,265 20,140 
Loss from operations(3,175)(5,348)(7,305)(15,066)
Other Expense (Income), net
Interest and amortization of debt issuance cost35 645 18 2,754 
Loss (Gain) on remeasurement of warrant liability1111 (1,323)55 (1,813)
Gain on investment7 (6,851) (6,851)
Loss on debt extinguishment, net10   2,263 
Foreign exchange loss67 264 22 475 
Other (income) expense, net(27)61 12 9 
Total other expenses (income), net86 (7,204)107 (3,163)
Loss (income) before income taxes and equity investment loss$(3,261)$1,856 $(7,412)$(11,903)
Equity investment share of loss   64 
Loss (income) from continuing operations$(3,261)$1,856 $(7,412)$(11,968)
Loss from discontinued operations(334)(2,902)(264)(5,218)
Net loss$(3,595)$(1,046)$(7,676)$(17,186)
Net loss per share:
Basic and diluted from continuing operations17$(0.07)$0.05 $(0.17)$(0.35)
Basic and diluted from discontinued operations(0.01)(0.08)(0.01)(0.16)
Net loss per share$(0.08)$(0.03)$(0.18)$(0.51)
Weighted-average common shares outstanding:44,866,179 39,559,793 44,387,392 33,792,261 
Basic and diluted17(0.08)(0.03)(0.18)(0.51)

See accompanying notes to the condensed consolidated financial statements.
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CLEVER LEAVES HOLDINGS INC.
Condensed Consolidated Statements of Shareholders’ Equity
(Amounts in thousands of U.S. Dollars, except share and per share data)
(Unaudited)


Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total
Shareholders’
Equity
SharesAmountAmountAmountAmount
Balance at December 31, 202126,605,797$ $187,510 $(114,740)$72,770 
Issuance of common shares, gross11,047,567 — 23,400 — 23,400 
Issuance of common shares upon vesting RSUs247,453 — — — — 
Stock option exercise116,112 — 22 — 22 
Stock-based compensation expense— — 500 — 500 
Equity issuance costs—  (1,177) (1,177)
Beneficial conversion feature of Convertible Note 1,749  1,749 
Conversion of Convertible Note to common shares607,000 1,324  1,324 
Net loss—   (16,140)(16,140)
Balance at March 31, 202238,623,929$ $213,328 $(130,880)$82,448 
Issuance of common shares upon vesting RSUs39,898 — — — — 
Stock option exercise35,582 — — — — 
Stock-based compensation expense— — 1,148 — 1,148 
Conversion of Convertible Note to common shares900,000 — 2,039 — 2,039 
Net loss—   (1,046)(1,046)
Balance at June 30, 202239,599,409$ $216,515 $(131,926)$84,589 
Note

Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total
Shareholders’
Equity
SharesAmountAmountAmountAmount
Balance at December 31, 202243,636,783 $ $221,313 $(180,905)$40,408 
Issuance of common shares upon vesting RSUs370,489 — — — — 
Stock-based compensation expense— — 468 — 468 
Equity issuance costs— — (25)— (25)
Net loss— — — (4,081)(4,081)
Balance at March 31, 202344,007,272 $ $221,756 $(184,986)$36,770 
Issuance of common shares upon vesting RSUs14137,614 — — — — 
Stock-based compensation expense12— — 433 — 433 
Issuance of common stock - gross1,559,573 — 438 — 438 
Equity issuance costs $ (97)$ (97)
Net loss(3,595)(3,595)
Balance at June 30, 202345,704,459 $ $222,530 $(188,582)$33,948 
See accompanying notes to the condensed consolidated financial statements.
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CLEVER LEAVES HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands of U.S. Dollars)
(Unaudited)

Six Months Ended June 30,
 20232022
Cash Flow from Operating Activities:
 
Loss from continuing operations(7,412)(11,968)
Loss from discontinued operations(264)(5,218)
Net loss(7,676)(17,186)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization1,242 1,984 
Amortization of debt discount and debt issuance cost 1,949 
Inventory provision5326 2,126 
Restructuring and related costs13 3,430 
(Gain) loss on remeasurement of warrant liability1155 (1,813)
Loss on disposal of fixed assets72  
Non-cash lease expense18322 155 
Foreign exchange loss22 652 
Stock-based compensation expense14901 1,648 
Equity investment share of loss 64 
Gain on investment7 (6,851)
Loss on debt extinguishment, net10 2,263 
Other non-cash expense, net 600 
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(338)(1,169)
(Increase) in prepaid expenses6(499)(1,014)
Decrease (increase) in other receivables and other non-current assets(34)178 
(Decrease) in lease liability18(614) 
(Increase) decrease in inventory602 (3,458)
(Decrease) in accounts payable and other current liabilities(2,059)(1,957)
(Decrease) increase in accrued and other non-current liabilities(86)(185)
Net cash used in operating activities(7,764)(18,584)
Cash Flow from Investing Activities:
Purchase of property, plant and equipment(79)(1,601)
Proceeds from partial sale of equity method of investment 2,498 
Net cash provided by (used in) investing activities(79)897 
Cash Flow from Financing Activities:
Repayment of debt10(257)(22,665)
Other borrowings 73 
Proceeds from issuance of shares11438 23,400 
Equity issuance costs11(123)(1,177)
Stock option exercise 22 
Net cash (used in) provided by financing activities58 (347)
Effect of exchange rate changes on cash, cash equivalents & restricted cash38 (202)
Decrease in cash, cash equivalents & restricted cash(7,747)(18,236)
Cash, cash equivalents & restricted cash, beginning of period (a)
12,888 37,699 
Cash, cash equivalents & restricted cash, end of period (a)
5,141 19,463 
(a) These amounts include restricted cash of $64 and $454 as of June 30, 2023 and June 30, 2022, respectively, which are comprised primarily of cash on deposits for certain lease arrangements.

See accompanying notes to the condensed consolidated financial statements.
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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)

1. CORPORATE INFORMATION

Clever Leaves Holdings Inc., (the “Company”) is a multi-national U.S. based holding company focused on cannabinoids. In addition to the cannabinoid business, the Company is also engaged in the non-cannabinoid business of nutraceutical and other natural remedies and wellness products. The Company is incorporated under the Business Corporations Act of British Columbia, Canada.

The mailing address of the Company's principal executive office is Bodega 19-B Parque Industrial Tibitoc P.H, Tocancipá - Cundinamarca, Colombia.
2. BASIS OF PRESENTATION

The accompanying interim condensed consolidated financial statements (“Financial Statements”) are unaudited. These Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of regulation S-X. Accordingly, they do not include all disclosures required for annual financial statements. These Financial Statements reflect all adjustments, which, in the opinion of the management, are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances have been eliminated. All adjustments were of a normal recurring nature. Interim results are not necessarily indicative of results to be expected for the full year.

The Financial Statements include the accounts of the Company and its wholly owned subsidiaries. Company’s subsidiaries and respective ownership percentage has not changed from the year ended December 31, 2022.

These Financial Statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2022, included in its Annual Report on Form 10-K, as filed with the SEC on March 30, 2023 (the "Annual Report").

Discontinued Operations

During the fiscal year 2022, the Company undertook various strategic initiatives aimed at reducing costs, improving organizational efficiency, and optimizing its business model. As part of these initiatives, the Company implemented several restructuring activities.

Additionally, in December 2022, the Company made the decision to shut down its Portugal operations in order to preserve cash. In January 2023, the Company further approved the wind-down of its entire Portuguese operations to enhance operating margin and focus solely on cannabis cultivation and production in Colombia. As part of this restructuring plan, the Company has completed the cessation of its Portuguese flower cultivation, post-harvest processes, and manufacturing activities and is expected to fully shut down the remainder of its operations by the end of the second quarter of 2023. Subsequently, the post harvest facility has been sold and preparations are currently underway for the sale process of the farm land with the objective of concluding the sale during the fiscal year ending December 31, 2023.

Considering the nature and extent of the restructuring activities undertaken, in accordance with Accounting Standards Codification (ASC) 205, Presentation of Financial Statements, the Company has determined that these operations meet the "discontinued operations" criteria as of June 30, 2023. As a result, the condensed consolidated statements of financial position, the condensed consolidated statements of operations, the condensed consolidated statements of cash flows, and the notes to the consolidated financial statements have been restated for all periods presented to reflect the discontinuation of these operations in accordance with ASC 205.

Please refer to Note 19, "Discontinued Operations," for further details regarding the discontinued businesses. The discussion in the notes to these financial statements, unless otherwise noted, pertains solely to the Company's continuing operations.


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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)

Going Concern

These interim condensed financial statements have been prepared in accordance with U.S. GAAP, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months from the date of issue.

As shown in the accompanying interim condensed financial statements, the Company had an accumulated deficit as of June 30, 2023, as well as operating losses and negative cash flows from operations since inception and expects to continue to incur net losses for the foreseeable future until such time that it can generate significant revenue from the sale of its available inventories.

At June 30, 2023, the Company had cash and cash equivalents of $5,077. As of June 30, 2023, the Company’s current working capital, anticipated operating expenses and net losses, and the uncertainties surrounding its ability to raise additional capital as needed, raise substantial doubt as to whether existing cash and cash equivalents will be sufficient to meet its obligations as they come due within twelve months from the date the consolidated financial statements were issued. The consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s ability to execute its operating plans through 2023 and beyond depends on its ability to obtain additional funding, which may include several initiatives such as raising capital, reducing working capital, and monetizing non-core assets, to meet planned growth requirements and to fund future operations, which may not be available on acceptable terms, or at all.
Principles of Consolidation
The Financial Statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.



3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company's significant accounting policies are disclosed in its audited consolidated financial statements for the year ended December 31, 2022, included in the Annual Report. Except as noted below, there have been no other changes in the Company's significant accounting policies as discussed in the Annual Report.

Use of Accounting Estimates

The preparation of these Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Financial Statements and accompanying notes in the reported period. These estimates include, but are not limited to, allowance for doubtful accounts, inventory valuation, determination of fair value of stock-based awards and estimate of incremental borrowing rate for determining the present value of future lease payments, intangible assets, useful lives of property and equipment, revenue recognition and income taxes and related tax asset valuation allowances. While the significant estimates made by management in the preparation of the consolidated financial statements are reasonable, prudent, and evaluated on an ongoing basis, actual results may differ materially from those estimates.

Recently Adopted Accounting Pronouncements

ASU No. 2016-13- Credit Losses on Financial Instruments (Topic 326)
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses for certain financial instruments and financial assets. For trade receivables, we are required to estimate lifetime expected credit losses. ASU 2016-13 is effective for the Company’s fiscal year beginning January 1, 2023. We have adopted the provisions of Accounting Standards
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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
Update (ASU) No. 2016-13, Credit Losses on Financial Instruments (Topic 326). After careful consideration and analysis, we have determined that the adoption of this pronouncement has not had a material impact on our financial reporting. Therefore, our financial statements and disclosures have not been significantly affected by the adoption of this standard.


4. FAIR VALUE MEASUREMENTS

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities, except for those assets and liabilities that are short term in nature and approximate the fair values, as of the periods presented:
Level 1
 
Level 2
 
Level 3
 
Total
As of June 30, 2023
Assets:
Investment – Cansativa  5,777 5,777 
Total Assets$ $ $5,777 $5,777 
Liabilities:
Loans and borrowings 1,379  1,379 
Warrant liability  168 168 
Total Liabilities$ $1,379 $168 $1,547 
As of December 31, 2022
Assets:
Investment – Cansativa  5,679 5,679 
Total Assets$ $ $5,679 $5,679 
Liabilities:
Loans and borrowings 1,530  1,530 
Warrant liability  113 113 
Total Liabilities$ $1,530 $113 $1,643 

Investment – Cansativa

Our investment in Cansativa's equity securities does not have a “readily determinable fair value,” or is not traded in a verifiable public market. The Company accounted for this investment under ASC 321, Investments - Equity Securities. The Company used the practical expedient available under ASU 2016-01, the cost method investment which presents and carries this investment using the alternative measurement method which is cost minus impairment, if any, plus or minus changes resulting from observable price changes in “orderly transactions,” as defined in ASC 321, for the identical or a similar investment of the same issuer. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As of June 30, 2023, the carrying value of its cost method investments were recoverable in all material respects. For more information, refer to Note 7 to our Financial Statements for the six months ended June 30, 2023.

The following table provides a summary of changes in fair value of the Company’s level 3 investments for the six months ended June 30, 2023:





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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
Level 3
Balance, December 31, 2022$5,679 
Change in value due to foreign exchange gain74 
Balance, March 31, 2023$5,753 
Change in value due to foreign exchange gain$24 
Balance, June 30, 2023$5,777 

During the six months ended June 30, 2023, there were no transfers between fair value measurement levels.

The change in fair value of warrant liabilities related to private warrants during the six months ended June 30, 2023, is as follows:
Private Placement Warrants:Total Warrant Liability
Warrant liability at December 31, 2022$113 
Change in fair value of warrant liability44 
Warrant liabilities at March 31, 2023$157 
Change in fair value of warrant liability11 
Warrant liabilities at June 30, 2023$168 

The Company determined the fair value of its private warrants using the Monte Carlo simulation model. The following assumptions were used to determine the fair value of the Private Warrants as of June 30, 2023 and December 31, 2022:
As of
June 30,
2023
December 31,
2022
Risk-free interest rate
4.69%
4.23%
Expected volatility
145%
105%
Share Price
$0.20
$0.31
Exercise Price
$11.50
$11.50
Expiration dateDecember 18, 2025December 18, 2025
The risk-free interest rate assumptions are based on U.S. dollar zero curve derived from swap rates at the valuation date, with a term to maturity matching the remaining term of warrants.
The expected volatility assumptions are based on average of historical volatility based on comparable industry volatilities of public warrants.

5. INVENTORIES, NET

Inventories are comprised of the following items as of the periods presented:
June 30,
2023
 December 31,
2022
Raw materials$1,063 $1,204 
Work in progress – harvested cannabis and extracts
141 21 
Finished goods – cannabis extracts
5,806 6,703 
Finished goods – other
460 471 
Total
$7,470 $8,399 

During the three and six months ended June 30, 2023 the Company recorded inventory provisions for approximately $205 and $326, respectively, to cost of sales to write-down obsolete inventories. During the three and six months ended June 30, 2022, the Company recorded inventory provisions for approximately $236 and $548, respectively, to cost of sales to write-down
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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
obsolete inventory.


6. PREPAID, DEPOSITS AND OTHER RECEIVABLES
Prepaid and advances are comprised of the following items as of the periods presented:
June 30,
2023
December 31,
2022
Prepaid expenses$1,155 $590 
Indirect tax receivables1,981 2,007 
Deposits52 51 
Other receivable and advances19 60 
Total
$3,207 $2,708 
Prepaid expenses and deposits represent amounts paid upfront to vendors for director and officer's insurance, security deposits and supplies.

7. INVESTMENTS

Cansativa

On December 21, 2018, the Company, through its subsidiary Northern Swan Deutschland Holdings, Inc., entered into a seed investment agreement with the existing stockholders of Cansativa GmbH (“Cansativa”), a German limited liability company primarily focused on the import and sale of cannabis products for medical use and related supplements and nutraceuticals. Prior to the Company’s investment, Cansativa’s registered and fully paid-in share capital amounted to 26,318 common shares. Under the investment agreement, the Company has agreed with the existing stockholders to invest up to EUR 7,000 in Cansativa in three separate tranches of, respectively, EUR 1,000, EUR 3,000 and up to a further EUR 3,000. The first EUR 1,000 (specifically, EUR 999.92, approximately $1,075, or “Seed Financing Round”) was invested in Cansativa to subscribe for 3,096 newly issued preferred voting shares at EUR 322.97 per preferred share, and as cash contributions from the Company to Cansativa. The seed EUR 322.97 per share price was based on a fully diluted pre-money valuation for Cansativa of EUR 8,500, and the increase of Cansativa’s registered share capital by the 3,096 preferred shares in the Seed Financing Round provided the Company with 10.53% of the total equity ownership of Cansativa. The Company paid the seed investment subscription by, first, an initial nominal payment of EUR 3.1, (i.e., EUR 1.00 per share) upon signing the investment agreement to demonstrate the Company’s intent to invest, and the remainder of EUR 996.82 was settled in January 2019 to officially close the investment deal after certain closing conditions have been met by the existing stockholders and Cansativa. The Company accounted for its investment in Cansativa using the equity accounting method, due to the Company's significant influence, in accordance with ASC 323, Investments — Equity Method and Joint Ventures.

The Company recorded its investment in Cansativa at the cost basis of an aggregated amount of EUR 999.92, approximately $1,075, which is comprised of EUR 3.10 for the initial nominal amount of the Seed Financing Round and EUR 996.82 for the remaining Seed Financing Round (i.e., Capital Reserve Payment), with no transaction costs.

In accordance with the seed investment agreement, in September 2019, the Company made an additional investment of approximately EUR 650, or approximately $722, for 2,138 shares in Cansativa, thereby increasing its equity ownership to 16.6% of the book value of Cansativa’s net assets of approximately EUR 1,233, and approximately EUR 1,122 of equity method goodwill as Cansativa was still in the process of getting the licenses and expanding its operations. As of September 30, 2020, the balance of Tranche 2 option expired un-exercised and as a result the Company recognized a loss on investment of approximately $370 in its Statement of Operations and Comprehensive Loss and the carrying value of the Tranche 2 option was reduced to nil.

In December 2020, Cansativa allocated shares of its common stock to a newly installed employee-stock ownership plan (“ESOP”). As a result of the ESOP installment, the Company’s equity ownership of Cansativa, on a fully-diluted basis, decreased from 16.59% to 15.80% of the book value of Cansativa’s net assets. Additionally, Cansativa raised additional capital through the issuance of Series A preferred stock (“Cansativa Series A Shares”) to a third-party investor at a per share price of
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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
EUR 543.31. As a result of the Series A Share issuance, the Company’s equity ownership of Cansativa, on a fully diluted basis, decreased from 15.80% to 14.22% of the book value of Cansativa’s net assets. The Company accounted for the transaction as a proportionate sale of ownership share and recognized a gain of approximately $211 in its consolidated statement of operations within loss on investments line. This change did not impact the equity method classification.

In April 2022, the Company sold 1,586 shares in Cansativa to an unrelated third-party for approximately EUR 2,300.
Additionally Cansativa issued 10,184 series B and 992 ESOP shares. As a result, the Company's equity ownership of Cansativa, on a fully diluted basis, decreased from 14.22% to 7.6% of the book value of Cansativa's net assets. Furthermore, the Company relinquished the board seat, indicating that the Company's influence was no longer "significant", to which the equity method of accounting was applicable. The Company started to account for this investment under ASC 321, Investments – Equity Securities. The Company utilized the practical expedient under ASC 321 as the investment does not qualify for the practical expedient under ASC 820 and there is no readily determinable fair value for these privately held shares of Cansativa on a recurring basis.
At the time of the sale, the Company compared the transaction value of the shares sold to the carrying value of shares sold and recognized a gain of $1,983. Immediately following the sale, the Company then remeasured its retained interest which resulted in an additional gain of $4,868. No gain or loss on investments was recorded in other income in the Consolidated Statements of Operations during the three and six months ended June 30, 2023. Using the measurement alternative, as defined in ASC 321, the Company will remeasure the value of its retained interest if and when additional sales of Cansativa shares occur with third parties. For the six months ended June 30, 2023 and 2022, the Company’s share of net losses from the investment were $nil and $64, respectively.

8. INTANGIBLE ASSETS, NET

As part of the Herbal Brand acquisition in 2019, the Company acquired finite-lived intangible assets with a gross value of approximately $7,091. During the three months ended June 30, 2023 and 2022 the Company recorded $175 and $191, respectively, of amortization related to its finite-lived intangible assets. During the six months ended June 30, 2023 and 2022 the Company recorded $366 and $382, respectively, of amortization related to its finite-lived intangible assets.The following tables present details of the Company’s total intangible assets as of June 30, 2023 and December 31, 2022. The value of product formulation intangible asset is included in the value of Brand:
June 30, 2023
 Gross
Carrying
Amount
 Accumulated
Amortization
 Net
Carrying
Amount
 Weighted-
Average
Useful Life
(in Years)
Finite-lived intangible assets:
       
Customer contracts$925 $925 $ 0.0
Customer relationships1,000 745 255 2.8
Customer list650 542 107 0.8
Trade name4,516 1,891 2,625 5.8
Total finite-lived intangible assets$7,091 $4,103 $2,987 
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)

December 31, 2022
 Gross
Carrying
Amount
 Accumulated
Amortization
 Net
Carrying
Amount
 Weighted-
Average
Useful Life
(in Years)
Finite-lived intangible assets:
       
Customer contracts$925 $925 $ 0.0
Customer relationships1,000 669 331 3.0
Customer list650 478 172 1.3
Trade name4,516 1,665 2,851 6.3
Total finite-lived intangible assets$7,091 $3,737 $3,354 
 
Indefinite-lived intangible assets:
Licenses$19,000 N/A$19,000 
Impairment Charge$(19,000)N/A$(19,000)
Total indefinite-lived intangible assets$ $ 
Total intangible assets$7,091 $3,737 $3,354 

Annual Impairment Testing

In accordance with ASC Topic 350, “Intangibles – Goodwill and Other,” the Company performs its annual impairment test as
of December 31 of each year. As part of the review, the Company has performed a qualitative assessment to determine whether indicators of impairment existed, along with considering, among other factors, the financial performance, industry conditions, as well as microeconomic developments. The Company also reviews intangibles for impairment whenever events or changes in circumstances indicate that the carrying value of its intangibles may not be recoverable. After the close of each interim quarter,
management assesses whether any indicators of impairment exist requiring the Company to perform an interim goodwill and other intangible assets impairment analysis.

Impairment Testing - Finite-Lived Intangibles

In conjunction with the 2022 annual impairment testing, the Company reviewed finite-lived intangible assets for impairment. In performing such review, the Company makes judgments about the recoverability of purchased finite lived intangible assets whenever events or changes in circumstances indicate that an impairment may exist. The Company recognizes an impairment if the carrying amount of the long-lived asset group exceeds the Company’s estimate of the asset group’s undiscounted future cash flows. For the six months ended June 30 2023, no impairment was recognized related to the carrying value of any of the Company's finite lived intangible assets. The Company will perform an impairment test at fiscal year ending December 31, 2023.

Impairment Testing - Indefinite-Lived Intangibles

In 2022, due to the continued decline in the Company’s stock price and the projected revenues falling behind target, the Company performed an interim impairment assessment on its indefinite-lived intangible assets, consisting of cannabis related licenses for its Colombian operations. Significant assumptions used in the impairment analysis include financial projections of free cash flow (including assumptions about revenue projections, regulations, operating margins, capital requirements and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted periods and discount rates. Utilizing a discounted cash flow model with a weighted average cost of capital (“WACC”) of 24%, the Company performed the assessment and recognized an impairment charge of $19,000 along with the related deferred tax liability write-off of $6,650 for the year ended December 31, 2022. As a result of this recognition in 2022, no indefinite-lived intangible assets exist as of June 30, 2023.
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CLEVER LEAVES HOLDINGS INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)


Amortization Expense

The following table reflects the estimated future amortization expense for each period presented for the Company’s finite-lived intangible assets as of June 30, 2023:
Estimated
Amortization
Expense
2023$336 
2024585 
2025541 
2026482 
2027452 
Thereafter591 
Total$2,987 

9. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:
June 30,
2023
 December 31,
2022
Land$1,806 $1,806 
Building & warehouse7,736 7,658 
Laboratory equipment6,426 6,416 
Agricultural equipment1,480 1,477 
Computer equipment1,397 1,397 
Furniture & appliances785 785 
Construction in progress130 240 
Other1,324 1,304 
Property, plant and equipment, gross21,084 21,083 
Less: accumulated depreciation(7,990)(7,120)
Property, plant and equipment, net$13,094 $13,963 

10. DEBT
June 30,
2023
 December 31,
2022
Loans and borrowings, current portion
$471 $465 
Loans and borrowings, non-current portion908 1,065 
Total debt
$1,379 $1,530 

Portugal Debt

In January 2021, Clever Leaves Portugal Unipessoal LDA borrowed €1,000 ($1,213) (the "Portugal Debt"), from a local lender (the "Portugal Lender") under the terms of its credit line agreement. The Portugal Debt pays interest quarterly at a rate of Euribor plus 3.0 percentage points. For the three months ended June 30, 2023 and 2022, the company recognized interest expense of approximately €10 ($11) and €7 ($8), respectively, and repaid principal of approximately €63 ($68) and €63 ($67),
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
respectively, of the Portugal Debt in accordance with the terms of the loan agreement. For the six months ended June 30, 2023 and 2022, the company recognized interest expense of approximately €20 ($21) and €15 ($17), respectively, and repaid principal of approximately €125 ($134) and €125 ($137), respectively, of the Portugal Debt in accordance with the terms of the loan agreement. As of June 30, 2023 and December 31, 2022, the outstanding principal balance of the Portugal Debt was €625 ($671) and €875 ($1,076), respectively.

Colombia Debt

Ecomedics S.A.S. has entered into loan agreements with multiple local lenders (collectively, the "Colombia Debt"), under which the Company borrowed approximately COP$5,305,800 ($1,295) of mainly working capital loans. The working capital loans are secured by mortgage of our farm land in Colombia as collateral. These loans bear interest at a range of 10.96% to 12.25% per annum denominated in Colombian pesos. The first payment of the principal and interest will be repaid six months after receiving the loan. After the first payment, the principal and interest will be repaid semi-annually. For the period ended June 30, 2023 and December 31, 2022, the outstanding principal balance was approximately COP$3,390,173 ($708) and COP$3,471,576 ($725), respectively.



11. CAPITAL STOCK
Common Shares

As of June 30, 2023 and December 31, 2022, a total of 45,704,459 and 43,636,783 common shares were issued and outstanding, respectively. The increase in outstanding shares was primarily the result of shares issued under the ATM. See Equity Distribution Agreement disclosed below.

Equity Distribution Agreement

On January 14, 2022, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Canaccord Genuity LLC, as sales agent (the “Agent”). Under the terms of the Equity Distribution Agreement, the Company may issue and sell its common shares, without par value, having an aggregate offering price of up to $50,000 from time to time through the Agent. The issuance and sale of the common shares under the Equity Distribution Agreement have been made, and any such future sales will be made, pursuant to the Company’s effective registration statement on Form S-3 (File No. 333-262183), which includes an “at-the-market” (“ATM”) offering prospectus supplement (the "Prospectus Supplement"), as amended from time to time.

Following the filing of the 2022 Form 10-K, we are subject to the limitations under General Instruction I.B.6. of Form S-3. As such, we filed Amendment No. 3 to the Prospectus Supplement, updating our proposed maximum offering amount based on the aggregate market value of our outstanding common shares held by non-affiliates as of March 27, 2023. On such date our public float was $22,548, which is calculated based on 40,996,523 of our common shares outstanding held by non-affiliates at a price of $0.55 per share. This calculation of our public float reduced our proposed offering amount to up to $7,516. If our public float increases such that we may sell additional amounts under the Equity Distribution Agreement and the Prospectus Supplement, we will file another amendment to the Prospectus Supplement prior to making additional sales.

For the three and six months ended June 30, 2023, 1,559,573 shares and 1,559,573 shares, respectively were sold for total gross proceeds of $438 pursuant to the ATM offering and $123 of equity issuance costs.

As of June 30, 2023, the Company had issued and sold 11,047,567 shares pursuant to the ATM offering, for aggregate net proceeds of $22,223, which consisted of gross proceeds of $23,400 and $1,177 of equity issuance costs.

Warrants

As of June 30, 2023, the Company had 12,877,361 of its public warrants classified as a component of equity and 4,900,000 of its private warrants recognized as liability. Each warrant entitles the holder to purchase one common share at an exercise price
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
of $11.50 per share commencing 30 days after the closing of the Business Combination and will expire on December 18, 2025, at 5:00 p.m., New York City time, or earlier upon redemption. Once the warrants are exercisable, the Company may redeem the outstanding public warrants at a price of $0.01 per warrant if the last reported sales price of the Company’s common shares equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the Company will send the notice of redemption to the warrant holders. The private warrants were issued in the same form as the public warrants, but they (i) are not redeemable by the Company and (ii) may be exercised for cash or on a cashless basis at the holder’s option, in either case as long as they are held by the initial purchasers or their permitted transferees (as defined in the warrant agreement). Once a private warrant is transferred to a holder other than an affiliate or permitted transferee, it is treated as a public warrant for all purposes. The terms of the warrants may be amended in a manner that may be adverse to holders with the approval of the holders of at least a majority 50.1% of the then outstanding warrants.

In accordance to ASC 815, certain provisions of private warrants that do not meet the criteria for equity treatment are recorded as liabilities with the offset to additional paid-in capital and are measured at fair value at inception and at each reporting period in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of operations and comprehensive loss in the period of change.

As of June 30, 2023, the Company performed a valuation of the private warrants and as a result recorded a net loss on remeasurement for the three and six months ended June 30, 2023, of approximately $11 and $55, respectively, in its statement of operations.

As of June 30, 2022, the Company performed a valuation of the private warrants and as a result recorded, in the statement of operations, a net gain on remeasurement for the three and six months ended June 30, 2022 of approximately $1,323 and $1,813, respectively.

12. GENERAL AND ADMINISTRATION
The components of general and administrative expenses were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Salaries and benefits$2,536 $3,171 $5,201 $6,938 
Office and administration754 1,074 1,432 2,073 
Professional fees903 850 2,266 2,398 
Share based compensation434 1,148 901 1,648 
Rent199 200 386 430 
Other (a)
(21)(19)(14)(65)
Total
$4,805 $6,424 $10,172 $13,422 
(a) For the six months ended June 30, 2023 and 2022, other general and administrative costs includes freight-out cost of approximately $328 and $438, respectively, related to costs of packaging, labelling, and courier services, respectively.
13. RESTRUCTURING EXPENSE

The Company has been reviewing, planning and implementing various strategic initiatives targeted principally at reducing costs, enhancing organizational efficiency and optimizing its business model. As part of this process, the Company recorded a restructuring charge related to asset write off, severance, and other related costs during the year 2022. For the six months ended
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
June 30, 2023 and 2022, the Company recorded no restructuring charge related to asset write off, severance, and other related costs

Our restructuring charges are comprised primarily of costs related to asset abandonment, including future lease commitments, and employee termination costs related to headcount reductions.

The following table summarizes the activities related to the restructuring program for the six months ended June 30, 2023:

Employee severance and related benefitsCosts associated with Exit and Disposal ActivitiesTotal
Balance at December 31, 2022$1,407 $830 $2,237 
Cash payment(857)$(319)$(1,176)
Balance at June 30, 2023$550 $511 $1,061 

14. SHARE-BASED COMPENSATION

Stock-Based Compensation Plans

The Company's 2018 Equity Incentive Plan, 2020 Equity Incentive Plan and Earnout Plan are described in the Company's 2022 Form 10-K.

Share-Based Compensation Expense

The following table summarizes the Company's share-based compensation expense for each of its awards, included in the Consolidated Statements of Operations for the three and six months ended June 30, 2023.

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Share-based compensation award type:
Stock Options39 85 127 270 
RSUs395 1,063 774 1,378 
Total Shared Based Compensation Expense$434 $1,148 901 1,648 

The Company recognized share-based compensation expense in general and administrative expense.
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)

Stock Options

The following table is a summary of options activity for the Company’s equity incentive plans for the six months ended June 30, 2023:
Stock Options
Weighted-Average
Exercise Price
 
Weighted-Average
Remaining
Contractual
Term (Years)
Aggregate Intrinsic Value
Balance as at December 31, 2022410,477 $7.15 2.56$ 
Forfeited(8,029)$11.03 — — 
Expired(48,066)$15.54 — — 
Balance as of June 30, 2023354,382 $5.93 2.28$ 
Vested and expected to vest as of June 30, 2023343,849 $5.79 2.32$ 
Vested and exercisable as of June 30, 2023314,495 $5.11 1.97$ 

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common shares for all stock options that had exercise prices lower than the fair value of the Company’s common shares.

The share-based compensation expense related to unvested stock options awards not yet recognized as of June 30, 2023 and December 31, 2022, was $211 and $392, respectively, which is expected to be recognized over a weighted average period of 1.1 and 1.0 years respectively.

Restricted Share Units
Time-based Restricted Share Units
The fair value for time-based RSUs is based on the closing price of the Company’s common shares on the grant date.

The following table summarizes the changes in the Company’s time-based restricted share unit activity during the six months ended June 30, 2023:

Restricted Share Units
Weighted-Average
Grant Date Fair Value
Non-vested as of December 31, 20221,368,151 $3.50 
Granted1,358,000 0.25 
Vested(508,103)2.65 
Canceled/forfeited(12,269)7.34 
Non-vested as of June 30, 2023
2,205,779 $1.67 

Market-based Restricted Share Units

The Company has previously granted RSUs with both a market condition and a service condition (market-based RSUs) to the Company’s employees. No such market-based RSUs were granted during the six months ended June 30, 2023. The market-based condition for these awards requires that (i) the Company’s common shares maintain a closing price equal to or greater than $12.50 for any 20 trading days within any consecutive 30 trading day period on or before December 18, 2022 (which
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
condition was met on March 16, 2021) or (ii) the Company's common shares maintain a closing price equal to or greater than $15.00 for any 20 trading days within any consecutive 30 trading day period on or before December 18, 2024. Provided that the market-based condition is satisfied, and the respective employee remains employed by the Company, the market-based restricted share units will vest in four equal annual installments on the applicable vesting date.

The following table summarizes the changes in the Company’s market-based restricted share unit activity during the six months ended June 30, 2023:
Restricted Share Units
Weighted-Average
Grant Date Fair Value
Non-vested as of December 31, 2022529,793 $12.79 
Granted  
Vested  
Canceled/forfeited(63,428)13.34 
Non-vested as of June 30, 2023466,365 $12.71 
15. REVENUE

The Company’s policy is to recognize revenue at an amount that reflects the consideration that the Company expects that it will be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer. The Company evaluates the transfer of control through evidence of the customer’s receipt and acceptance, transfer of title, the Company’s right to payment for those products and the customer’s ability to direct the use of those products upon receipt. Typically, the Company’s performance obligations are satisfied at a point in time, and revenue is recognized, either upon shipment or delivery of goods. In instances where control transfers upon customer acceptance, the Company estimates the time period it takes for the customer to take possession and the Company recognizes revenue based on such estimates. The transaction price is typically based on the amount billed to the customer and includes estimated variable consideration where applicable.

Disaggregation of Revenue
Refer to Note 16 Segment Reporting to our unaudited condensed consolidated interim financial statements for the period ended June 30, 2023 included in this Form 10-Q for disaggregation of revenue data.

Contract Balances

The timing of revenue recognition, billing and cash collections results in billed accounts receivable and deferred revenue primarily attributable to advanced customer payment, on the Consolidated Statements of Financial Position. Accounts receivables are recognized in the period in which the Company's right to the consideration is unconditional. The Company's contract liabilities consist of advance payment from a customer, which is classified on the Consolidated Statements of Financial Position as current and non-current deferred revenue.

As of June 30, 2023, the Company's deferred revenue, included in current and non-current liabilities was $845 and $nil, respectively.

As of December 31, 2022, the Company's deferred revenue, included in current and non-current liabilities was $1,072 and $nil, respectively.
16. SEGMENT REPORTING
Operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the Company’s Chief Executive Officer, “CEO”) in deciding how to allocate resources and in assessing the Company’s performance.
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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
Operating segments for the Company are organized by product type and managed by segment managers who are responsible for the operating and financial results of each segment. Due to the similarities in the manufacturing and distribution processes for the Company’s products, much of the information provided in these consolidated financial statements and the footnotes to the consolidated financial statements, is similar to, or the same as, that information reviewed on a regular basis by the Company’s CEO.

The Company’s management evaluates segment profit/loss for each of the Company’s operating segments. The Company defines segment profit/loss as income from continuing operations before interest, taxes, depreciation, amortization, share-based compensation expense, gains/losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt and miscellaneous expenses. Segment profit/loss also excludes the impact of certain items that are not directly attributable to the reportable segments’ underlying operating performance. Such items are shown below in the table reconciling segment profit/(loss) to consolidated income/(loss) from continuing operations before income taxes. The Company does not have any material inter-segment sales. Information about total assets by segment is not disclosed because such information is not reported to or used by the Company’s CEO. Segment intangible assets, net, are disclosed in Note 8.
As of June 30, 2023, the Company’s operations were organized in the following two reportable segments:
1.The Cannabinoid operating segment: comprised of the Company’s cultivation, extraction, manufacturing and commercialization of cannabinoid products. This operating segment is in the early stages of commercializing cannabinoid products internationally pursuant to applicable international and domestic legislation, regulations, and other permits. The Company’s principal customers and sales for its products are primarily outside of the U.S.
2.Non-Cannabinoid operating segment: comprised of the brands acquired as part of the Herbal Brands acquisition in April 2019. The segment is engaged in the business of formulating, manufacturing, marketing, selling, distributing, and otherwise commercializing nutraceutical and other natural remedies, wellness products, detoxification products, nutraceutical, and nutritional and dietary supplements. The Company’s principal customers for its Herbal Brands products include mass retailers, specialty and health retailer and distributors in the U.S.

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Notes to the Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands of U.S. dollars, except share and per share amounts and where otherwise noted)
The following table is a comparative summary of the Company’s net sales and segment profit by reportable segment for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
 20232022 (*)20232022 (*)
Segment Net Sales:
Cannabinoid$1,873 $745 $3,095 $2,553 
Non-Cannabinoid3,108 3,355 5,864 6,588 
Total net sales4,981 4,100 8,959 9,141 
 
Segment Profit (Loss):
Cannabinoid(1,697)(2,706)(4,012)(8,412)
Non-Cannabinoid831 666 1,278 1,014 
Total segment loss$(866)$(2,040)$(2,734)$(7,398)
 
Reconciliation:
Total segment loss(866)(2,040)(2,734)(7,398)
Unallocated corporate expenses(2,571)(1,843)(4,129)(5,376)
Non-cash share-based compensation(434)(1,148)(902)(1,648)
Depreciation and amortization696 (317)460 (644)
Loss from continuing operations before income taxes$(3,175)$(5,348)$(7,305)$(15,066)
 
Loss on debt extinguishment, net   2,263 
Loss (Gain) on remeasurement of warrant liability11 (1,323)55 (1,813)
Gain on investment (6,851) (6,851)
Foreign exchange loss67 264 22 475 
Interest and amortization of debt issuance cost35 645 18 2,754 
Other (income) expense, net(27)61 12 9 
Income (loss) before loss from equity investment$(3,261)$1,856 $(7,412)$(11,903)
(*)Prior period numbers are re-stated to exclude discontinued operations to make it comparative with current period numbers.

The following table disaggregates the Company’s revenue by channel for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Mass retail$2,991 $1,683