Filed by Clever Leaves Holdings Inc.
Pursuant to
Rule 425 under the Securities Act of 1933, and
deemed filed
pursuant to Rule 14a-12 under the
Securities
Exchange Act of 1934
Subject Companies:
Clever Leaves
International Inc.
Schultze Special
Purpose Acquisition Corp.
(Commission
File No. 001-38760)
How Clever Leaves is Disrupting the Cannabis Market on
a Global Scale
Clever Leaves joined a panel of cannabis movers and shakers from
across the globe at Benzinga’s Virtual Cannabis Capital Conference on October 15. Click here for more coverage of this event
with presentations from some of the top CEOs, investors and lenders in the cannabis space.
The majority of existing cannabis production facilities were built
in states where there has been a legal market -- not necessarily where it makes the most sense from an economic or environmental
perspective.
Naturally, cannabis companies have had to make do with conditions
that may not be the best for cultivation and may be more expensive in the long run.
Clever Leaves aims to disrupt this space by focusing on federally
legal markets with the environment to support low-cost cannabis cultivation.
As a multinational cannabis company, Clever Leaves has placed a
serious emphasis on ecologically sustainable, large-scale cultivation and processing.
Kyle Detwiler, CEO of Clever Leaves, spoke with Benzinga at the
Virtual Cannabis Capital Conference about the company’s operations in Latin America and Europe, advantage among peers, plans
to go public and more.
“We are focusing on being one of the most efficient and highest-quality
medical cannabis cultivators in the world. We are already one of the largest cultivators globally and we are one of only a handful
of EU GMP-certified cannabis companies in the world. Having raised over 125 million [USD], which is no small feat privately in
the sector, Clever Leaves is one of the last remaining large private cannabis companies.” said Detwiler.
Significance
of EU GMP Certification
One of Clever Leaves’ biggest cannabis assets is its EU GMP
certification. In Europe, when a company is selling pharmaceutical products in a pharmacy, it must have an EU GMP certification
to sell those products. It is typically very difficult for cannabis companies to obtain that certification because it has a number
of procedures, traceability requirements, documentation, and a significant upfront cost.
Detwiler claims it essentially took Clever leaves three years to
get EU GMP-certified and he believes that this certification can profit the company abundantly.
“Getting an EU GMP
certification unlocks new markets --if you don’t have this certification, you cannot sell in certain places in Europe. It
will also change the price game. There are thousands of cannabis companies but only a handful which are EU GMP-certified that
can command a higher price for their products. This quality stamp can increase our prices by 3x to 10x depending on the product.”
said Detwiler.
International
Footprint
Clever Leaves is one of the largest federally legal international
platforms with offices in the U.S., Canada, Colombia, Germany and Portugal. According to Detwiler, the company is most well-known
for its large operation in Latin America where they are one of the largest licensed producers in the region (with 1.8 million square
feet of the continent’s EU GMP-certified operations).
“As everyone knows about the international market, we try
to grow at low costs and sell at high prices. Distribution is the name of the game. And we’re spending most of our time trying
to effectuate distribution partnerships in Latin America and abroad.” said Detwiler.
Clever Leaves also has operations in Colombia. According
to Detwiler, the company initially sought out operations in Colombia for the cost, climate, and distribution advantages. Detwiler
argues that since Colombia is near to the equator, it receives 12 hours of sunlight in a day, which creates an ideal environment
for cannabis to grow. Therefore, in both the near and long term, Clever Leaves will maintain a cost of production advantage.
Another interesting thing about Colombia is that they
ration the amount of psychoactive cannabis that can be produced in the whole country based on the ruling from the U.N. The allowed
quota is about 56,000 kilograms of high psychoactive cannabis that can be produced.
Among other operators in Latin America, Detwiler claims
Clever Leaves has the authorization to cultivate 26,000 kilograms of that quota. This means that roughly half the country’s
quota belongs to Clever Leaves which makes the company about 50 percent bigger than its nearest competitor.
Clever Leaves has also focused on Europe because the prices
are higher, there are fewer operators, and there are challenging regulatory requirements like EU GMP certification.
Just a few weeks ago, the company became licensed in Portugal
so they are one of the few European continent-based cultivators of cannabis.
“Our operation in Portugal allows us to fulfil the
B2B suite. Since we can only produce extracts in Colombia, having an operation in Portugal, which is considered to be the “Colombia
of Europe” will allow us to sell flower products as a differentiated aspect of our business.” said Detwiler.
Apart from Portugal, the company is seeking access into
countries like Germany. According to Detwiler, the market in Germany is like California but with higher start-up costs and more
barriers to entry. There are no dispensaries in Germany and the medical cannabis products are only sold at pharmacies and require
the EU GMP certification.
Detwiler believes that the way that other countries around
the world are legalizing is going resemble Germany more than markets like the U.S. and Canada. For example, Brazil recently legalized
medical cannabis but domestic production is banned. Everything must be imported. It’s sold only at pharmacies and must be
GMP-certified. Only a handful of companies can fulfil such requirements and Detwiler claims that Clever Leaves is really the only
company that has the ability to compete with Latin American cost structure.
Cost Advantage Among Peers
Detwiler believes that Clever Leaves’ operational set up will
also have a superior cost advantage as compared to in the indoor cultivation facilities required in many parts of the U.S. and
Canada.
“To try and quantify
our operating cost advantage. Consider that we’re already cultivating for about 20 cents a gram. Our Canadian peers are
at approximately $1.89 [USD]. But, it’s not just about being the lowest cost today because you need to think about what
happens when the industry is multiplied 10 or 20 times its size. Then we might need to be able to expand our capacity. What’s
also potentially interesting for people to know is that we’ve built our capacity at $14 [USD] a square foot compared to
the Canadians at about $200 [USD].” said Detwiler.
Business
Combination Agreement And Expected NASDAQ Listing
Clever Leaves is in the process of a SPAC transaction and expects
to be a NASDAQ listed company before end of year. Upon listing, Clever Leaves would be the only cannabis company listed on a major
American stock exchange with Latin American operations that are EU GMP certified. The company has entered into a definitive Business
Combination Agreement with Schultze Special Purpose Acquisition Corp (NASDAQ: SAMA).
A newly formed holding company, Clever Leaves Holdings Inc., will
acquire SAMA and Clever Leaves and is anticipated to become a NASDAQ-listed public company trading under the ticker symbol “CLVR”
with an anticipated initial enterprise value of approximately USD $206 million.
Clever Leaves’ shareholders
will be rolling over 97% of their equity ownership. Clever Leaves will have an earn out of up to 1.4 million shares reflecting
an alignment of interests and limited dilution and the transaction is subject to a minimum cash condition of USD $26million.
Financial
Forecast
Overall, Detwiler believes Clever Leaves’ disruptive business
model should allow the company to generate high gross profit levels.
The company is targeting USD $13 million of revenue this year and
claims that they are going to grow very rapidly in 2021, mostly because of its GMP certification in Colombia that they received
in July and because there is normally a lag of 6-9 month in pharmaceutical sales. The company expects to be able to achieve GMP
price points after the first quarter of 2021.
Image Courtesy of Clever Leaves
Additional Information and Where
to Find It
In connection with the proposed business
combination between Schultze Special Purpose Acquisition Corp. (“SAMA”) and Clever Leaves International Inc. (“Clever
Leaves”) (the “Business Combination”), Clever Leaves Holdings Inc. (“Holdco”) has filed a Registration
Statement on Form S-4 (the “Registration Statement”) with the Securities and Exchange Commission (“SEC”)
which includes a prospectus with respect to Holdco’s securities to be issued in connection with the Business Combination
and a proxy statement with respect to SAMA’s stockholder meeting at which SAMA’s stockholders will be asked to vote
on the proposed Business Combination. SAMA, Clever Leaves and Holdco urge investors, stockholders and other interested persons
to read the Registration Statement, including the proxy statement/prospectus contained therein, as well as other documents filed
with the SEC, because these documents contain important information about the Business Combination. Following the Registration
Statement having been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to stockholders of
SAMA as of a record date to be established for voting on the Business Combination. SAMA’s stockholders will also be able
to obtain a copy of such documents, without charge, by directing a request to: Schultze Special Purpose Acquisition Corp, 800 Westchester
Avenue, Suite 632, Rye Brook, New York 10573; e-mail: sdu@samco.net. These documents, once available, can also be obtained, without
charge, at the SEC’s web site (http://www.sec.gov).
Participants in Solicitation
SAMA,
Clever Leaves, Holdco and their respective directors, executive officers and other members of their management and employees,
under SEC rules, may be deemed to be participants in the solicitation of proxies of SAMA stockholders in connection with the Business
Combination. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies
to SAMA’s stockholders in connection with the Business Combination is set forth in the preliminary proxy statement/prospectus
contained in the Registration Statement, and will also be included in the definitive proxy statement/prospectus for the Business
Combination when available. Information concerning the interests of SAMA’s and Clever Leaves’ participants in the
solicitation, which may, in some cases, be different than those of SAMA’s and Clever Leaves’ equity holders generally,
is also set forth in the proxy statement/prospectus contained in the Registration Statement, and will also be included in the
definitive proxy statement/prospectus for the Business Combination when available.
Forward
Looking Statements
This publication includes forward-looking
statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts and may
be identified by the words "estimates," "projected," "expects," "anticipates," "forecasts,"
"plans," "intends," "believes," "seeks," "may," "will," "should,"
"future," "propose" and variations of these words or similar expressions (or the negative versions of such
words or expressions). Such forward-looking statements are subject to risks and uncertainties, which could cause actual results
to differ from the forward-looking statements. Factors that may cause such differences include, without limitation, SAMA’s
and Clever Leaves’ inability to complete the transactions contemplated by the Business Combination; matters discovered by
the parties as they complete their respective due diligence investigation of the other; the inability to recognize the anticipated
benefits of the Business Combination, which may be affected by, among other things, the amount of cash available following any
redemptions by SAMA stockholders and the ability to close the private placement with certain institutional investors; the ability
to meet Nasdaq's listing standards following the consummation of the Business Combination; costs related to the Business Combination;
expectations with respect to future operating and financial performance and growth, including when Clever Leaves or Holdco will
become cash flow positive; the timing of the completion of the Business Combination; Clever Leaves’ ability to execute its
business plans and strategy and to receive regulatory approvals; potential litigation involving the parties; global economic conditions;
geopolitical events, natural disasters, acts of God and pandemics, including, but not limited to, the economic and operational
disruptions and other effects of COVID-19; regulatory requirements and changes thereto; access to additional financing; and other
risks and uncertainties indicated from time to time in filings with the SEC. Other factors include the possibility that the proposed
transaction does not close, including due to the failure to receive required security holder approvals or the failure to satisfy
other closing conditions. The foregoing list of factors is not exclusive. Additional information concerning certain of these and
other risk factors is contained in SAMA’s most recent filings with the SEC and the Registration Statement, including the
proxy statement/prospectus included therein. All subsequent written and oral forward-looking statements concerning SAMA, Clever
Leaves or Holdco, the transactions described herein or other matters and attributable to SAMA, Clever Leaves, Holdco or any person
acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Readers are cautioned not
to place undue reliance upon any forward-looking statements, which speak only as of the date made. Each of SAMA, Clever Leaves
and Holdco expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in their expectations with respect thereto or any change in events, conditions
or circumstances on which any statement is based.
Certain Clever Leaves Unaudited Financial Projections
This publication contains certain unaudited
projected financial information of Clever Leaves. These projections have not been prepared in accordance with GAAP and IFRS. Clever
Leaves’ independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with
respect to the projections and does not express an opinion on or any form of assurance related to the projections. The projections
were based on numerous variables and assumptions that are inherently uncertain and many of which are beyond the control of Clever
Leaves. The actual results could differ materially from these projections.
Additionally, the projections are inherently
forward looking and span multiple years. Consequently, the projections, as with all forward-looking information, become subject
to greater unpredictability and uncertainty with each successive year. The assumptions upon which the projections were based necessarily
involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market
conditions, all of which are difficult or impossible to predict or estimate and most of which are beyond Clever Leaves’ control.
The projections also reflect assumptions regarding the continuing nature of certain business decisions that, in reality, would
be subject to change. Important factors that may affect actual results or the achievability of the projections include, but are
not limited to, failure to implement Clever Leaves’ business strategy; failure to capitalize on Clever Leaves’ expected
market opportunities; lack of regulatory approval and market acceptance of Clever Leaves’ products, Clever Leaves’
ability to fully monetize its existing THC market quota within Colombia; product enhancements; regulatory developments in key markets
for the company's products, and their related impact on its operations and business; decreased demand and/or prices for Clever
Leaves’ products; changing consumer preferences; Clever Leaves’ ability to construct additional facilities to supply
necessary demand; Clever Leaves’ ability to obtain or maintain licenses, certifications, quotas or accreditations, including
for cultivation, export and import of its products; the timing of receipt of quality assurance certificates (including EU GMP and
GACP) in relevant jurisdictions; product liability claims exposure; failure to otherwise comply with laws and regulations; changes
in general economic and business conditions; changes in currency exchange rates and interest rates; and other risks and uncertainties.
In addition, the achievability of the forecast assuming incremental THC sales is based on the opening up of the global markets
for export of cannabis from Colombia into key end markets, which would create the opportunity to sell additional high THC extract.
However, the timing and the extent to which this opportunity materializes is outside of Clever Leaves’ control. If the full
quota is not utilized, Clever Leaves will not achieve any or all incremental THC sales.
Accordingly, there can be no assurance
that the projections will be realized and actual results may vary materially from those projected. The inclusion of projections
in this publication should not be regarded as an indication that Clever Leaves or any of its affiliates, officers, directors, advisors
or other representatives considered or consider the projections to be necessarily predictive of actual future events or results
of Clever Leaves’ operations, and, consequently, the projections should not be relied on in such a manner. Neither Clever
Leaves nor any of its affiliates, officers, directors, advisors or other representatives can give any assurance that actual results
will not differ from the projections. The financial projections do not take into account any circumstances or events occurring
after November 9, 2020. Neither Clever Leaves nor any of its affiliates, officers, directors, advisors or other representatives
undertakes any obligation, and each expressly disclaims any responsibility, to update or otherwise revise or reconcile the projections
to reflect circumstances existing or developments and events occurring after the date of the projections or that may occur in the
future, even in the event that any or all of the assumptions underlying the projections are not realized or change. Clever
Leaves does not intend to make available publicly any update or other revision to the projections, except as otherwise required
by law. None of Clever Leaves nor any of its affiliates, officers, directors, advisors or other representatives has made or
makes any representation to any Clever Leaves shareholder, SAMA stockholder, investor or other person regarding the ultimate performance
of Clever Leaves compared to the information contained in the projections or that the projections will be achieved. Clever Leaves
has not made any representations to SAMA concerning the projections.
In light of the foregoing factors and
the uncertainties inherent in the projections, Clever Leaves’ and SAMA shareholders and investors are cautioned not to place
undue, if any, reliance on the information presented in the projections.
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