CAPITAL STOCK |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Equity [Abstract] | |
| CAPITAL STOCK | CAPITAL STOCK Common Shares
As of December 31, 2023 and 2022, a total of 1,727,698 and 1,454,559 (on a post-Reverse Share Split basis) 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.
In April 2022, the Company fully repaid its 2024 Convertible Note with accrued interest. In connection with the convertible note purchase agreement, the Company issued a total of 50,233 (Pre-split 1,507,000) common shares upon debt conversion to the note holder as of December 31, 2022.
Reverse Share Split
On June 28, 2023, the board of directors of the Company approved a 1-for-30 reverse share split. On August 24, 2023, the Company effected the reverse share split in order to demonstrate compliance with Nasdaq’s Minimum Bid Price Requirement prior to the end of the Second Compliance Period, in accordance with Nasdaq rules. As a result of the reverse share split, the Company’s outstanding common shares were reduced from approximately 45.7 million to approximately 1.5 million, based on the number of common shares outstanding as of August 24, 2023. All share and per share information in these financial statements has been retroactively adjusted to reflect the reverse share split. No fractional shares were issued in connection with the reverse share split. Instead, pursuant to the Business Corporations Act (British Columbia), each fractional share remaining after completion of the reverse share split that is less than half of a whole share was rounded down and canceled without consideration to the holders thereof and each fractional share that was at least half of a whole share was rounded up to one whole common share. The reverse share split was applied to all the Company’s outstanding common shares and therefore did not affect any shareholder’s ownership percentage of the shares, except for changes as a result of the elimination of fractional shares. The reverse share split did not alter the voting rights or other rights attached to the shares.
The reverse share split was effected to, regain compliance with Nasdaq Listing Rule 5550(a)(2), which required the Company, to maintain a minimum bid price of at least $1.00 per share. On September 11, 2023, the Company received a letter from Nasdaq confirming it had regained compliance with Listing Rule 5550(a)(2).
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 this Form 10-K, we expect to continue to be subject to the limitations under General Instruction I.B.6. of Form S-3. As such we will not be able to sell more than one-third of the aggregate market value of the voting and non-voting
common equity held by non-affiliates, with such aggregate market value calculated using figures from a date or dates, as the case may be, within the preceding 60 days from the filing of this Form 10-K. We will file any prospectus supplements as may be required to reflect such lower maximum offering amount. 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 year ended December 31, 2023, the Company issued and sold 253,898 shares (on a post-Reverse Share Split basis) pursuant to the ATM offering, for aggregate net proceeds $1,140, which consisted of gross proceeds of $1,339 and $199 equity issuance costs. No shares were sold pursuant to the ATM offering during the three months ended December 31, 2023.
Warrants
As of December 31, 2022, excluding the Rock Cliff warrants, 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. In connection with the Reverse Share Split, the warrants were adjusted in accordance with their terms such that each warrant entitles the holder to purchase 1/30 common share at an exercise price of $11.50 per warrant. The warrants expire on December 18, 2025, at 5:00 p.m., New York City time, or earlier upon redemption. 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 $540.00 per share (on a post-Reverse Share Split basis) 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 in the period of change.
For the year ended December 31, 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 of approximately $2,092, respectively in its consolidated statement of operations.
On December 10, 2023, the Company terminated the private warrants and recorded a net gain of approximately $107 on termination of which is included in the statement of operations for the year ended on December 31, 2023 along with the net gain of $6 directly attributable to remeasurement of the warrant liability at the end of each quarter during the year. As of December 31, 2023 there were no private warrants recognized as a liability.
Herbal Brands Acquisition
In April 2019, the Company issued the Rock Cliff Warrants to purchase 193,402 Clever Leaves Class C convertible preferred shares on a 1:1 basis, at a strike price of $8.79 per share. The fair value of the Rock Cliff Warrants was $717. The warrants can be exercised in part or in whole at any time prior to the expiration date of May 3, 2021, and are not assignable, transferable, or negotiable. The equity classified warrants are amortized to interest expense over the life of the debt.
In August 2020 and in connection with the Company's modification to the Herbal Brands Loan, the Company extended the expiration date of the Rock Cliff Warrants to May 3, 2023 and the Rock Cliff Warrants expired on that date.
In May 2022, the Company fully repaid the Herbal Brands Loan in the amount of approximately $5,642, including interest and fees, in full satisfaction of Herbal Brands' obligations under the Loan and Security Agreement. As a result of the full repayment of the Herbal Brand Loan, the Company recorded the remaining amortization balance of the Rock Cliff Warrants within interest and amortization of debt issuance cost in the consolidated statement of operation as of June 30, 2022.
During the years ended December 31, 2023 and 2022, the Company recorded $nil and $38, respectively, to interest expense.
Subsequent to year end, we sold our non cannabinoid business segment comprised of nutraceutical and other natural remedies, wellness products, detoxification products, and nutritional and dietary supplements. See Note 22 to our consolidated financial statements for the year ended December 31, 2023 included in this Form 10-K for more information.
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