Clever Leaves Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INTANGIBLE ASSETS, NET

INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

The Company had acquired cannabis-related licenses as part of a business combination in 2018 with a gross value of approximately $19,000, having indefinite useful lives and expected to generate economic benefit to the Company in perpetuity.

However, in the year ended December 31, 2022 due to continued decline in the Company’s stock price and that year’s projected revenues falling behind the target, the Company performed an interim impairment assessment on its indefinite-lived intangible assets and recognized an impairment charge of $19,000 along with the related deferred tax liability write-off of $6,650 for the year then ended. In addition, 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 years ended December 31, 2023 and 2022 the Company recorded approximately $701 and $763, respectively, of amortization related to its finite-lived intangible assets.

The following tables present details of the Company’s total intangible assets as of December 31, 2023 and December 31, 2022.

The value of product formulation intangible asset is included in the value of Brand:


	December 31, 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 relationships	1,000		790		210		2.3
Customer list	650		607		43		0.3
Brand	4,516		2,116		2,400		5.3
Total finite-lived intangible assets	$	7,091	$	4,438	$	2,653


	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 relationships	1,000		669		331		3.0
Customer list	650		478		172		1.3
Brand	4,516		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	$	—	N/A		$	—
Total intangible assets	$	7,091	$	3,737	$	3,354

Impairment Testing - Finite-Lived Intangibles

Due to the continued decline in the Company’s stock price and the current year’s projected revenues falling behind target, the Company considered these as triggering events and performed ASC 360 analysis. 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). 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 year ended December 31, 2023 and 2022, no impairment was recognized related to the carrying value of any of the Company's finite lived intangible assets.

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 December 31, 2023:


	Estimated Amortization Expense
2024	$	585
2025	542
2026	482
2027	452
2028	451
Thereafter	141
Total	$	2,653