CLEVER LEAVES HOLDINGS INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) – Marketscreener.com

Amounts in thousands of U.S. dollars, except as otherwise noted.

Our Company

We manage our business in two segments: the Cannabinoid and Non-Cannabinoidsegments.

Factors Impacting our Business

We believe that our future success will primarily depend on the followingfactors:

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Key Operating Metrics

N/M: Not a meaningful percentage

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(a)Kilograms (dry flower) harvested - represents the weight of dried plantspost-harvest both for sale and for research and development purposes. Thisoperating metric is used to measure the productivity of our farms.

(b)Costs to produce - includes costs associated with cultivation, extraction,depreciation, quality assurance and supply chain related to kilograms (dryflower) harvested.

(d)Prior year information was revised to conform to the current periodpresentation.

During the six months ended June 30, 2022 and 2021 we sold 6,184 and 4,877kilograms, respectively, of dry flower equivalent. For the six months endedJune 30, 2022, our Cannabinoid segment sales were primarily in Australia,Israel, Germany and Brazil. The increase in sale of dry flower equivalent forthe Cannabinoid segment was primarily due to increased sales activity andselling more products which have higher margins.

Recent Developments

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Licensing Requirement - Decree 811

2024 Convertible Note Settlement

Herbal Brands Loan Settlement

Impact of COVID-19 Pandemic

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Equity Distribution Agreement

Components of Results of Operations

Operating Expenses - We classify our operating expenses as general andadministrative, sales and marketing, and research and development expenses.

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General and administrative expenses include salary and benefit expenses foremployees, other than in sales and marketing and research and development,including share-based compensation, costs of legal expenses, professionalservices, general liability insurance, rent and other office and generalexpenses.

Sales and marketing expenses consist primarily of services engaged in marketingand promotion of our products and costs associated with initiatives anddevelopment programs and salary and benefit expenses for certain employees.

Results of Operations

Three and six months ended June 30, 2022 compared to three and six months endedJune 30, 2021

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CLEVER LEAVES HOLDINGS INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) - Marketscreener.com