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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
January 23, 2023
Clever Leaves Holdings Inc.
(Exact
name of registrant as specified in its charter)
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British Columbia, Canada |
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001-39820 |
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Not Applicable |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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Bodega 19-B Parque Industrial Tibitoc P.H,
Tocancipá - Cundinamarca, Colombia
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N/A |
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(Address of principal executive offices) |
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(Zip Code) |
(561) 634-7430
(Registrant’s
telephone number, including area code)
Not Applicable
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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☐ |
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol (s) |
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Name of each exchange on which registered |
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Common shares without par value |
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CLVR |
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The Nasdaq Stock Market LLC |
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Warrants, each warrant exercisable for one common share at an
exercise price of $11.50 |
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CLVRW |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Item 2.05. Costs Associated with Exit or Disposal
Activities.
On January 17, 2023, Clever Leaves Holdings Inc.’s (the “Company”)
board of directors authorized a restructuring plan that is designed
to improve operating margin and support the Company’s growth, scale
and profitability objectives. As part of that restructuring plan,
the Company has begun to wind-down its operations in Portugal which
has historically been comprised of cultivation, post-harvesting and
manufacturing activities which will result in approximately 96%
reduction to the Company’s workforce in Portugal and 21% reduction
to the Company’s total workforce. Potential position eliminations
in Portugal are subject to local law and consultation requirements.
The Company expects to complete these actions in the first half of
fiscal 2023.
The Company currently estimates that it will incur charges of
approximately $19 million to $21 million in connection
with the restructuring plan. The total expected range includes
approximately $0.7 million to $0.9 million related to
severance and employee benefits, and approximately $12 million
to $13 million related to real estate and equipment exit
costs, consisting of lease impairment and property and equipment
abandonment charges. The total expected range also includes
approximately $6 million to $7 million related to the
write-off of inventories that will not be sold.
The Company expects approximately $7 million in gross
annualized run rate savings to be realized from these actions by
2023. These savings will partially mitigate the impact of higher
labor costs and headwinds from the macroeconomic environment, as
well as fund additional investments to continue to drive a more
efficient cost structure long term.
The Company expects to provide its full year 2023 outlook during
its fourth quarter 2022 earnings call in March 2023. The charges
that the Company expects to incur are subject to a number of
assumptions and actual expenses may differ from the estimates
disclosed above.
Item 2.06 Material Impairments.
The information contained in Item 2.05 relating to impairment
charges is hereby incorporated by reference.
Forward-Looking Statements
This Current Report on Form 8-K includes certain statements that
are not historical facts but are forward-looking statements for
purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as “aim,”
“anticipate,” “believe,” “can,” “continue,” “could,” “estimate,”
“evolve,” “expect,” “forecast,” “future,” “guidance,” “intend,”
“may,” “opportunity,” “outlook,” “pipeline,” “plan,” “predict,”
“potential,” “projected,” “seek,” “seem,” “should,” “will,” “would”
and similar expressions (or the negative versions of such words or
expressions) that predict or indicate future events or trends or
that are not statements of historical matters. Such forward-looking
statements, including statements relating to the Company’s
wind-down of its operations in Portugal and the expected costs and
cost savings of such wind-down, are subject to risks and
uncertainties, which could cause actual results to differ from the
forward-looking statements. Important factors that may affect
actual results or the achievability of the Company’s expectations
include, but are not limited to: (i) expectations with respect to
future operating and financial performance and growth, including if
or when Clever Leaves will become profitable; (ii) Clever Leaves’
ability to execute its business plans and strategy and to receive
regulatory approvals (including its goals in its key markets);
(iii) Clever Leaves’ ability to capitalize on expected market
opportunities, including the timing and extent to which cannabis is
legalized in various jurisdictions; (iv) expectations with respect
to restructuring costs and savings, including in connection with
the wind-down of the Company’s Portugal operations (v) global
economic and business conditions, including economic sanctions
against Russia and their effects on the global economy; (vi)
geopolitical events (including the ongoing military conflict
between Russia and Ukraine), natural disasters, acts of God and
pandemics, including the economic and operational disruptions and
other effects of COVID-19 such as the global supply chain crisis,
travel restrictions, delays or disruptions to physical shipments
(including outright bans on imported products), delays in issuing
licenses and permits, delays in hiring necessary personnel to carry
out sales, cultivation and other tasks, and financial pressures
upon Clever Leaves and its customers; (vii) regulatory developments
in key markets for the Company's products, including international
regulatory agency coordination and increased quality standards
imposed by certain health regulatory agencies, and failure to
otherwise comply with laws and regulations; (viii) uncertainty with
respect to the requirements applicable to certain cannabis products
as well as the permissibility of sample shipments, and other risks
and uncertainties; (ix) consumer, legislative, and regulatory
sentiment or perception regarding Clever Leaves’ products; (x) lack
of regulatory approval and market acceptance of Clever Leaves’ new
products which may impede its ability to successfully commercialize
its CBD brand in the United States; (xi) the extent to which Clever
Leaves’ is able to monetize its existing THC market quota within
Colombia; (xii) demand for Clever Leaves’ products and Clever
Leaves’ ability to meet demand for its products and negotiate
agreements with existing and new customers, including the sales
agreements identified as a part of the Company’s 2022 strategic
growth objectives; (xiii) developing product enhancements and
formulations with commercial value and appeal; (xiv) product
liability claims exposure; (xv) lack of a history and experience
operating a business on a large scale and across multiple
jurisdictions; (xvi) limited experience operating as a public
company; (xvii) changes in currency exchange rates and interest
rates; (xviii) weather and agricultural conditions and their impact
on the Company’s cultivation and construction plans; (xix) Clever
Leaves’ ability to hire and retain skilled personnel in the
jurisdictions where it operates; (xx) Clever Leaves’ rapid growth,
including growth in personnel; (xxi) Clever Leaves’ ability to
remediate a material weakness in its internal control cover
financial reporting and to develop and
maintain effective internal and disclosure controls; (xxii)
potential litigation; and (xxiii) access to additional financing.
The foregoing list of factors is not exclusive. Additional
information concerning certain of these and other risk factors is
contained in Clever Leaves’ most recent filings with the SEC. All
subsequent written and oral forward-looking statements concerning
Clever Leaves and attributable to Clever Leaves or any person
acting on its 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. Clever Leaves 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 its expectations with respect thereto or any
change in events, conditions or circumstances on which any
statement is based.
Item 7.01. Regulation FD Disclosure.
Attached as Exhibit 99.1 and incorporated herein by reference is a
copy of the Company’s press release dated January 23, 2023
announcing its decision to wind-down its operations in
Portugal.
Item 9.01. Financial Statements and Exhibits.
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Exhibit No. |
Description |
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99.1 |
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104 |
Cover Page Interactive Data File (the cover page XBRL tags are
embedded within the Inline XBRL document)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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Clever Leaves Holdings Inc. |
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By: |
/s/ David M. Kastin |
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Name: |
David M. Kastin |
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Title: |
General Counsel and Corporate Secretary |
Date: January 23, 2023
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