Clever Leaves Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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 September 30, 2023
Assets:
Investment – Cansativa	—		—		1,896		1,896
Total Assets	$	—	$	—	$	1,896	$	1,896
Liabilities:
Loans and borrowings	—		1,336		—		1,336
Warrant liability	—		—		108		108

Total Liabilities	$	—	$	1,336	$	108	$	1,444

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.

On October 17, 2023,Northern Swan Deutschland Holdings, Inc. (“Northern Swan”), a wholly-owned subsidiary of the Company entered into an agreement for sale of its remaining investments in the shares of Cansativa. The Company considered the sale price as fair value of the investment and recognized an impairment loss of $3,705 as the difference between fair value and carrying value of these investment at September 30, 2023. For more information, refer to Note 7 and Note 20.

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


	Level 3
Balance, December 31, 2022	$	5,679
Change in value due to foreign exchange gain	74
Balance, March 31, 2023	$	5,753

Change in value due to foreign exchange gain	24
Balance, June 30, 2023	$	5,777
Change in value due to foreign exchange loss	(176)
Impairment loss	(3,705)
Balance, September 30, 2023	$	1,896

During the nine months ended September 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 nine months ended September 30, 2023, is as follows:


Private Placement Warrants:	Total Warrant Liability
Warrant liability at December 31, 2022	$	113
Change in fair value of warrant liability	44
Warrant liabilities at March 31, 2023	$	157
Change in fair value of warrant liability	11
Warrant liabilities at June 30, 2023	$	168
Change in fair value of warrant liability	(60)
Warrant liabilities at September 30, 2023	$	108

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 September 30, 2023 and December 31, 2022:


	As of
	September 30, 2023	December 31, 2022
Risk-free interest rate	4.98%	4.23%
Expected volatility	160%	105%
Share Price	$0.12	$0.31
Exercise Price	$11.50	$11.50
Expiration date	December 18, 2025	December 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.

•Exercise price and Share price at September 30, 2023 are adjusted post Reverse Share Split.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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