United States securities and exchange commission logo
September 3, 2020
Kyle Detwiler
Chief Executive Officer
Clever Leaves Holdings Inc.
489 Fifth Avenue, 27th Floor
New York, New York 10017
Re: Clever Leaves
Holdings Inc.
Registration
Statement on Form S-4
Filed August 6,
2020
File No. 333-241707
Dear Mr. Detwiler:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4, Filed August 6, 2020
Cover Page
1. Please ensure you are
registering the Holdco common shares subject to the Earnout Award
Plan.
Summary of Material Business Terms of the Business Combination, page 3
2. We note that up to
$7,500,000 will be payable to certain Clever Leaves shareholders that
will be identified in a
payment spreadsheet delivered by Clever Leaves and will be
calculated in
accordance with an agreed calculation methodology. Please describe the
process or basis for
selecting which shareholders will receive cash consideration, and
whether there is a
minimum or maximum number of shareholders that can receive cash
consideration. Section
3.01 of the Business Combination Agreement states the Cash
Kyle Detwiler
FirstName LastNameKyle Detwiler
Clever Leaves Holdings Inc.
Comapany 3,
September NameClever
2020 Leaves Holdings Inc.
September
Page 2 3, 2020 Page 2
FirstName LastName
Arrangement Consideration shall be allocated among the Company
Shareholders pursuant
to the Payment Spreadsheet and shall be calculated in accordance with
the Calculation
Methodology." The definition of Calculation Methodology in the
Business Combination
Agreement is as set forth on Exhibit F, which is not provided. Please
explain in your
response the basis for not including Exhibit F.
Questions and Answers about the Proposals, page 10
3. Please revise the disclosure on page 12 and elsewhere to clarify that
Clever Leaves (and
therefore Holdco) have only just begun sales operations in the
cannabinoid space
and outside of those related to the Herbal Life acquisition. We note,
as an example, your
statement on page 175 that [c]annabinoid revenue increased to $242
for the three months
ended March 31, 2020 from nil for the three months ended March 31,
2019, driven
primarily by the sale of cannabinoid products as the Company began to
carry out its go-to-
market strategy.
Risk Factors
Risks Related to the Business Combination and Post-Closing Operations of
Holdco, page 37
4. On page 39 you state that Holdco may elect not to avail itself of
this exemption from new
or revised accounting standards and, therefore, it may not be subject
to the same new or
revised accounting standards as other public companies that are not
emerging growth
companies. Please clarify whether you have elected not to use the
extended transition
period for complying with any new or revised financial accounting
standards provided
pursuant to Section 7(a)(2)(B) of the Securities Act.
5. Please describe the United States-Mexico-Canada Agreement mentioned on
page 41.
6. On page 42 please briefly describe the COVID-19 implications reflected
in the Business
Combination Agreement.
Risks Related to Ownership of Holdco Securities, page 43
7. On page 206 you state that [t]he form of Holdco Articles provide
that every motion put
to a vote at a meeting of shareholders will be decided by a show of
hands unless a poll is
directed by the chair or demanded by any shareholder entitled to vote
who is present in
person or by proxy. Votes by a show of hands or functional equivalent
result in each
person having one vote (regardless of the number of shares such person
is entitled to
vote). If voting is conducted by poll, each person is entitled to one
vote for each share
such person is entitled to vote. Please incorporate risk factor
disclosure describing this
limitation on shareholder voting rights.
8. Based on the disclosure on page 81, it appears the Closing is
contingent on the Holdco
common shares, warrants and common shares becoming issuable upon the
exercise of the
warrants being approved for listing on Nasdaq. Please state such in
your second risk
factor on page 43.
Kyle Detwiler
Clever Leaves Holdings Inc.
September 3, 2020
Page 3
SAMA s Board of Directors Reasons for the Approval of the Business
Combination, page 90
9. Please provide examples of the certain companies that may have
similar lines of business
which are solely listed on the Toronto Stock Exchange noted on page
91.
The Business Combination Proposal
SAMA s Board of Directors Reasons for the Approval of the Business
Combination, page 90
10. Please include discussion of the quantitative basis for determining
Clever Leaves fair
market value was at least 80% of SAMA s net assets (excluding taxes
payable on the
income accrued in the trust account) as quantitative factors are
necessary to understand
fair market value.
Certain Clever Leaves Projected Financial Information, page 93
11. On page 93 you state [f]urthermore, the financial projections do
not take into account any
circumstances or events occurring after the date they were prepared.
Please revise to
provide the date the projections were prepared and whether COVID-19
impact was
contemplated.
The Earnout Award Plan Proposal, page 112
12. We note that Exhibit D, the Earnout Plan Agreement, will be filed by
amendment. Please
provide a brief summary of the terms and conditions of the awards,
applicable vesting and
payment terms and post-termination exercise limitations. Please also
state the other forms
the awards could be settled in aside from Holdco common shares.
Other Information About SAMA, page 118
13. On pages 118-119, please provide the estimated per share amount on a
basis more recent
than March 31, 2020.
14. On page 120 you state that the Sponsor and SAMA s board of directors
have agreed not to
propose any amendment to SAMA s amended and restated certificate of
incorporation that
would alter the redemption right of SAMA s public shareholders,
please clarify what form
this agreement takes.
15. On page 121, please state whether you are aware of any third parties
(excluding SAMA s
FirstName LastNameKyle Detwiler
independent auditors) and any prospective target businesses that have
not executed
Comapany NameClever
agreements Leaves
waiving Holdings
any right, title,Inc.
interest or claim of any kind in
or to any monies held
in the
September 3, trust
2020account.
Page 3
FirstName LastName
Kyle Detwiler
FirstName LastNameKyle Detwiler
Clever Leaves Holdings Inc.
Comapany 3,
September NameClever
2020 Leaves Holdings Inc.
September
Page 4 3, 2020 Page 4
FirstName LastName
Management s Discussion and Analysis of Financial Condition and Results of
Operations of
SAMA
Recent Developments, page 130
16. On page 131, please state whether COVID-19 has impacted SAMA more
specifically,
including its ability to seek and diligence prospective target
companies.
Industry Overview, page 134
17. In connection with your statement based on the Arcview Market Research
report, please
state the percentage attributable to medicinal marijuana, whether
available through this
resource or another source, to the extent available. Please also tell
us whether you
purchased any cited reports.
18. We note your disclosure about your German operations on page 139.
Please clarify your
actual operations in Germany at this time, for instance, have you or
anyone on your behalf
imported any of your products in Germany? With respect to your
statements about your
operations and investments in Portugal, please revise the disclosure
throughout to ensure it
is clear that Clever Leaves is not currently commercially producing
products in Portugal.
Business of Clever Leaves, page 138
19. We note that the vast majority of your sales to date have been from
your Herbal Brands
subsidiary, which only operates in the US selling nutraceutical
products. Given this,
please balance the disclosure in this section and throughout the proxy
statement/prospectus, which is mainly focused on international
distribution of cannaboid
products.
20. In general, please describe what an EU GMP certification indicates and
the requirements
to obtain such certification. Additionally, please clarify how the EU
GMP certification
you obtained differs from the EU GMP certification you plan to seek at
a later date
mentioned on page 141.
Regulatory Environment, page 151
21. On page 161, please provide additional detail surrounding the
regulation of CBD products
in the United States at the federal level and the risks of regulatory
oversight involved
therewith.
Management s Discussion and Analysis of Financial Condition and Results of
Operations of
Clever Leaves
Key Operating Metrics, page 165
22. Please provide a breakdown of the countries for which you attributed
revenue in the
Cannabinoid segment for the periods presented.
Kyle Detwiler
FirstName LastNameKyle Detwiler
Clever Leaves Holdings Inc.
Comapany 3,
September NameClever
2020 Leaves Holdings Inc.
September
Page 5 3, 2020 Page 5
FirstName LastName
Management of Holdco Following the Business Combination, page 181
23. Please provide five years of experience for each director and officer
and briefly discuss
the specific experience, qualifications, attributes or skills that led
to the conclusion that the
person should serve as a director for the registrant at the time that
the disclosure is made,
in light of the registrant's business and structure. If material, this
disclosure should cover
more than the past five years, including information about the
person's particular areas of
expertise or other relevant qualifications. Refer to Item 18 of Form
S-4 and Item 401(e)
of Regulation S-K.
24. In addition to providing the names of the initial board committee
members once available,
please provide the information required by Item 407(a) of Regulation
S-K regarding
independent directors on pages 183-184.
Certain Relationships and Related Party Transactions, page 200
25. Please describe the Holdco related party policy that will be
implemented.
Description of Holdco Securities, page 205
26. Please include the following from Instruction 2 to Item 202 of
Regulation S-K in the
description of the Holdco securities:
A brief description of any limitations on the right of nonresident
or foreign owners to
hold or vote such securities imposed by foreign law or by the
charter or other
constituent document of Holdco, or if no such limitations are
applicable, so state;
A brief description of any governmental laws, decrees or
regulations in the country in
which the registrant is organized affecting the remittance of
dividends, interest and
other payments to nonresident holders of the securities being
registered;
A brief description of pertinent provisions of any reciprocal tax
treaty between such
foreign country and the United States regarding withholding or, if
there is no such
treaty, so state.
27. We note that your forum selection provision on page 209 identifies the
Supreme Court of
the Province of British Columbia, Canada and the appellate courts
therefrom, as the
exclusive forum for certain litigation, including any derivative
action. We note on page
47 you state: "The exclusive jurisdiction provision would not prevent
derivative
shareholder actions based on claims arising under U.S. federal
securities laws from being
raised in a U.S. court." Please clarify whether this provision applies
to actions arising
under the Securities Act or Exchange Act. If the provision applies to
Securities Act
claims, please also revise your prospectus, including page 229 and
233, to state that there
is uncertainty as to whether a court would enforce such provision and
that investors
cannot waive compliance with the federal securities laws and the rules
and regulations
thereunder, similar to the disclosure on page 47. If this provision
does not apply to
actions arising under the Securities Act or Exchange Act, please also
revise the exclusive
forum provision in the Form of Articles to state this clearly, or tell
us how you will inform
Kyle Detwiler
FirstName LastNameKyle Detwiler
Clever Leaves Holdings Inc.
Comapany 3,
September NameClever
2020 Leaves Holdings Inc.
September
Page 6 3, 2020 Page 6
FirstName LastName
investors in future filings that the provision does not apply to any
actions arising under the
Securities Act or Exchange Act.
Condensed Consolidated Statements of Loss and Comprehensive Loss, page F-34
28. Consistent with ASC 350-20-45-2, please revise to present the goodwill
impairment loss
as a separate line item before the subtotal loss from operations.
Independent Auditor's Report, page F-62
29. We note that your independent auditor conducted their audit in
accordance with PCAOB
standards. Accordingly, please have them revise their report to fully
comply with PCAOB
AS 3101.06 through .10. This includes the title, Report of
Independent Registered Public
Accounting Firm , addressing the report to both shareholders and the
board of directors,
the opinion included as part of the first section of the report and a
statement containing the
year they began serving consecutively as auditor.
Consolidated Statements of Financial Position, page F-64
30. Please revise the balance sheet to separately present your common and
preferred share
accounts along with the shares authorized, issued, and outstanding for
both classes.
Note 12. Long-term Liabilities
Series C, page F-93
31. We note on page F-94 you disclose the use of a third-party to
determine the fair value of a
derivative instrument and similar disclosure on page F-82 for the
valuation of a
warrant. Please revise the filing to clarify the nature and extent of
the third-party s
involvement in determining the fair value of these instruments and
management s reliance
on the work of the third-party. In so doing, please refer to Question
141.02 of the
Compliance and Disclosure Interpretations on Securities Act Sections,
which can be found
at http://www.sec.gov/divisions/corpfin/guidance/sasinterp.htm.
Note 15. Stock-based compensation, page F-96
32. For each year for which an income statement is presented, please
revise to disclose total
compensation cost for share-based payment arrangements recognized in
income as well as
the total related recognized tax benefit per ASC 718-10-50-2(h).
33. During the year-ended December 31, 2019 you issued approximately 1.8
million common
stock options with the estimated fair value of common shares
underlying the options
ranging from $5.54 to $31.17. We also see that the common shares are
valued using
income and market approaches. Please expand your critical accounting
policy
disclosures on page 179 to provide additional details regarding your
use of the income and
market approaches including the nature of the material assumptions
involved. To the
extent third party valuations were performed, please discuss the
results of such valuations
and whether such valuations corroborated any internal valuations
performed. Finally,
Kyle Detwiler
Clever Leaves Holdings Inc.
September 3, 2020
Page 7
provide additional detail regarding the extent to which recent sales of
preferred stock
and/or common stock in arms-length transactions represented significant
inputs to provide
investors with context of the extent to which your estimates were complex
and subjective.
Exhibits and Financial Statement Schedules, page II-2
34. Please tell us whether there were any agreements entered in connection
with your minority
investment in Cansativa and, if so, your basis for not including them as
exhibits.
35. Please revise Annex A or the exhibit index to include a list briefly
identifying the contents
of all omitted schedules for your Business Combination Agreement. Refer
to Item
601(b)(2) of Regulation S-K.
General
36. Please provide us with copies of the materials that any financial advisor
prepared and
shared with the Clever Leaves or SAMA board in connection with this
transaction,
including any board books, transcripts and summaries of oral
presentations made to the
board. We may have additional comments after we review those materials.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Gary Newberry at 202-551-3761 or Kevin Kuhar at
202-551-3662 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Margaret Schwartz at 202-551-7153 or Celeste Murphy at 202-551-3257
with any other
questions.
Sincerely,
FirstName LastNameKyle Detwiler
Division of
Corporation Finance
Comapany NameClever Leaves Holdings Inc.
Office of Life
Sciences
September 3, 2020 Page 7
cc: Sebastian Fain
FirstName LastName