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

Annual report pursuant to Section 13 and 15(d)

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2022

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 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

As of December 31, 2021
Assets:

Investment – Cansativa	—		—		1,458		1,458
Total Assets	$	—	$	—	$	1,458	$	1,458
Liabilities:
Loans and borrowings	$	—	$	7,396	$	—	$	7,396
Warrant Liability	—		—		2,205		$	2,205
Convertible notes	—		17,699		—		17,699
Total Liabilities	$	—	$	25,095	$	2,205	$	27,300

Investment – Cansativa

Our investment in Cansativa’s equity securities that was previously accounted for using the equity method was partially divested during the three months ended June 30, 2022. Given that this investment 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 December 31, 2022, the Company believes the carrying value of its cost method investments were recoverable in all material respects. Refer to Note 7 for more information.

The following table provides a summary of changes in fair value of the Company’s Level 3 investments for the year ended December 31, 2022:


	Level 3
Balance, December 31, 2021 (Measured at equity method)	$	1,458
Share of Equity investment loss	$	(64)
Partial sale on investments	$	(515)
Gain due to change in fair value included in earnings	$	4,868
Change in value due to foreign exchange loss	$	(68)
Balance, December 31, 2022	$	5,679

During the years ended December 31, 2022 and December 31, 2021, there were no transfers between fair value measurement levels.

The change in fair value of warrant liabilities related to private warrants during the year ended December 31, 2022 is as follows:


Private Placement Warrants:	Total Warrant Liability
Warrant liability at December 31, 2021	$	2,205
Change in fair value of warrant liability	(2,092)
Warrant liability at December 31, 2022	$	113

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 December 31, 2022 and December 31, 2021:


	As of
	December 31, 2022			December 31, 2021
Risk-free interest rate	4.23		%	1.11		%
Expected volatility	105		%	60		%
Share Price	$	0.31		$	3.10
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.

- 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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