NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
1 — Description of Organization and Business Operations
Canna-Global
Acquisition Corp (the “Company”) is a blank check company incorporated in Delaware on April 12, 2021. The Company was formed
for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially
all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or
more businesses or entities (“Business Combination”). While the Company may pursue a business combination target in any business
or industry, it intends to focus our search on industries that complement our management team’s background and to capitalize on
the ability of our management team to identify and acquire a business focusing on the natural resources industry, specifically within
the oil and gas sectors where our management team has extensive experience.
As
of March 31, 2022, the Company had not commenced any operations. All activity for the period from April 12, 2021 (inception) through
March 31, 2022 relates to the Company’s formation and the Offering (as defined below). The Company will not generate any operating
revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income
in the form of interest income on cash and cash equivalents from the proceeds derived from the Offering. The Company has selected December
31 as its fiscal year end.
The
Company’s sponsor is Canna-Global LLC, a Delaware limited liability company (the “Sponsor”). The registration statement
for the Company’s Initial Public Offering was declared effective on November 29, 2021.
On
December 2, 2021, the Company consummated its Initial Public Offering of 20,000,000 units (the “Units” and, with respect
to the Class A common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross
proceeds of $200,000,000, and incurring offering costs of $11,885,300, of which $8,050,000 was for deferred underwriting commissions
(which amount includes deferred underwriting commissions attributable to the exercise of the underwriters’ election of their over-allotment
option, as described below) (see Note 6). The Company granted the underwriter a 45-day option to purchase up to an additional 3,000,000
Units at the Initial Public Offering price to cover over-allotments.
Simultaneously
with the consummation of the closing of the Offering, the Company consummated the private placement of an aggregate of 712,500 units
(the “Private Placement Units”) to Canna-Global LLC, the sponsor of the Company (the “Sponsor”), at a price of
$10.00 per Private Placement Unit, generating total gross proceeds of $7,125,000 (the “Private Placement”) (see Note 4).
Additionally,
on December 2, 2021, the Company consummated the closing of the sale of 3,000,000 additional units at a price of $10.00 per unit (the
“Units”) upon receiving notice of the underwriters’ election to fully exercise their overallotment option (“Overallotment
Units”), generating additional gross proceeds of $30,000,000 and incurred additional offering costs of $450,000 in underwriting
fees. Each Unit consists of one share of Class A common stock of the Company, par value $0.000001 per share (“Class A Common Stock”),
and one redeemable warrant of the Company (“Warrant”), with each whole Warrant entitling the holder thereof to purchase one
share of Class A Common Stock for $11.50 per share, subject to adjustment, pursuant to the Company’s registration statement on
Form S-1.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
1 — Description of Organization and Business Operations (Continued)
Simultaneously
with the exercise of the overallotment, the Company consummated the Private Placement of an additional 90,000 Private Placement Units
to Canna-Global LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $900,000.
A
total of $233,450,000, comprised of the proceeds from the Offering and the proceeds of private placements that each closed on December
2, 2021, net of the underwriting commissions, discounts, and offering expenses, was deposited in a trust account (“Trust Account”)
which may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company
that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the
Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account to the Company’s
stockholders, as described below.
We
incurred transaction costs in the IPO with the exercise of the overallotment totaling $15,335,300, consisting of $3,450,000 of cash underwriting
fees, $8,050,000 of deferred underwriting fees, $3,450,000 funded to the trust account and $385,300 of other costs related to the Initial
Public Offering.
Following
the closing of the Initial Public Offering and full exercise of underwriter’s over-allotment option, $853,288 of cash was held
outside of the Trust Account available for working capital purposes. As of March 31, 2022, we have available to us $117,081 of cash on
our balance sheet with a working capital surplus of $167,481.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of the Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that together have
a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (less any deferred underwriting commissions
and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter a Business Combination.
The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect
a Business Combination.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
1 — Description of Organization and Business Operations (Continued)
The
Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the
Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to
redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business
Combination only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor
of the Business Combination.
The
Company will have until December 2, 2022 (or up to June 2, 2023, as applicable) to consummate a Business Combination. If the Company
is unable to complete a Business Combination within 12 months from the closing of this offering (or up to 18 months from the closing
of this offering at the election of the Company in two separate three month extensions subject to satisfaction of certain conditions,
including the deposit of ($3,450,000 ($0.15 per unit) for each three month extension, into the trust account, or as extended by the Company’s
stockholders in accordance with our certificate of incorporation), the Company will (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve
and liquidate, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible
following our 12th month (or up to 18 months from the closing of this offering at the election of the Company in two separate three month
extensions subject to satisfaction of certain conditions, including the deposit of ($3,450,000 ($0.15 per unit) for each three month
extension, into the trust account, or as extended by the Company’s stockholders in accordance with our certificate of incorporation)
and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third
anniversary of such date.
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than the independent public accounting
firm) for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter
of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to
below the lesser of (i) $10.15 per public share and (ii) the actual amount per public share held in the trust account as of the date
of the liquidation of the trust account, if less than $10.15 per public share due to reductions in the value of the trust assets, less
taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply
to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities
Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether
our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities
of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or
directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
1 — Description of Organization and Business Operations (Continued)
Liquidity
and Management’s Plans
Prior
to the completion of the Initial Public Offering, the Company lacked the liquidity it needed to sustain operations for a reasonable period
of time, which is considered to be one year from the issuance date of the financial statements. The Company has since completed its Initial
Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was
released to the Company for general working capital purposes. Accordingly, management has since re-evaluated the Company’s liquidity
and financial condition and determined that sufficient capital exists to sustain operations through the earlier of the consummation of
a Business Combination or one year from this filing and therefore substantial doubt has been alleviated. There is no assurance that the
Company’s plans to consummate an initial Business Combination will be successful within the Combination Period. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Going
Concern Consideration
The
Company expects to incur significant costs in pursuit of its financing and acquisition plans. In connection with the Company’s
assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company
is unsuccessful in consummating an initial business combination within the prescribed period of time from the closing of the IPO, the
requirement that the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial
doubt about the ability to continue as a going concern. The balance sheet does not include any adjustments that might result from the
outcome of this uncertainty. Management has determined that the Company has funds that are sufficient to fund the working capital needs
of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated in the Company’s
amended and restated memorandum of association. The accompanying financial statement has been prepared in conformity with generally accepted
accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going
concern.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
2 — Summary of Significant Accounting Policies (Continued)
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash
equivalents are carried at cost, which approximates fair value. The Company had $117,081 in cash and no cash equivalents as of March
31, 2022.
Marketable
Securities Held in Trust Account
At
March 31, 2022, substantially all of the assets held in the Trust Account were held in mutual funds. At March 31, 2022, the balance in
the Trust Account was $233,474,846.
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset
and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed
for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined the United States is the Company’s
only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income
tax expense. There were no unrecognized tax benefits as of March 31, 2022 and no amounts accrued for interest and penalties. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its
position. The Company is subject to income tax examinations by major taxing authorities since inception.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
2 — Summary of Significant Accounting Policies (Continued)
Class
A Common Stock Subject to Possible Redemption
All
of the Class A common stock sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the
redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in
connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate
of incorporation. In accordance with ASC 480, conditionally redeemable Class A common stock (including shares of Class A common stock
that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are classified as temporary equity. Ordinary liquidation events, which involve
the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although
the Company did not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its public
shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $5,000,001. However, the threshold
in its charter would not change the nature of the underlying shares as redeemable and thus public shares would be required to be disclosed
outside of permanent equity. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value
of redeemable common stock to equal the redemption value ($10.15 per share) at the end of each reporting period. Such changes are reflected
in additional paid-in capital, or in the absence of additional capital, in accumulated deficit.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. On March 31, 2022, the Company had not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Net
Loss Per Share
Net
income per share is computed by dividing net income by the weighted average number of common stock shares outstanding for the period.
The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the Initial
Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) since the exercise
of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The
Company’s statements of operations include a presentation of income per share for common stock shares subject to possible redemption
in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted, for redeemable Class
A common stock is calculated by dividing the net income allocable to Class A common stock subject to possible redemption, by the weighted
average number of redeemable Class A common stock outstanding since original issuance. Net income per common stock, basic and diluted,
for non-redeemable Class A and Class B common stock is calculated by dividing net income allocable to non-redeemable common stock, by
the weighted average number of shares of non-redeemable common stock outstanding for the periods. Shares of non-redeemable Class B common
stock include the founder shares as these common shares do not have any redemption features and do not participate in the income earned
on the Trust Account.
Schedule
of Anti-dilutive Basic and Diluted Earnings Per Share
| |
FOR
THE THREE MONTHS ENDED MARCH 31, 2022 (UNAUDITED) | |
Class
A common stock | |
| | |
Numerator:
net loss allocable to Class A common shares | |
$ | (176,093 | ) |
Numerator:
net loss allocable to non-redeemable Class B common stock | |
$ | (48,102 | ) |
Denominator:
weighted average number of Class A common shares | |
| 23,860,000 | |
Basic
and diluted net loss per Class A common share | |
$ | (0.01 | ) |
| |
| | |
Non-redeemable
Class B common shares | |
| | |
Numerator:
net loss allocable to non-redeemable Class B common stock | |
$ | (48,102 | ) |
Denominator:
weighted average number of non-redeemable Class B common shares | |
| 5,750,000 | |
Denominator:
weighted average number of common shares | |
| 5,750,000 | |
Basic
and diluted net income per non-redeemable Class B common shares | |
$ | (0.01 | ) |
Basic
and diluted net income (loss) of common shares | |
$ | (0.01 | ) |
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
2 — Summary of Significant Accounting Policies (Continued)
Offering
Costs Associated with the Initial Public Offering
Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly
related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public
Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant
liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with
the Class A common stock were charged to stockholders’ equity upon the completion of the Initial Public Offering.
Fair
Value of Financial Instruments
The
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
●
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
●
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s financial statements.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
3 —Initial Public Offering
Pursuant
to the Initial Public Offering the Company consummated on December 2, 2021, the Company sold 23,000,000 Units at a purchase price of
$10.00 per Unit generating gross proceeds to the Company in the amount of $230,000,000. Each Unit consists of one share of Class A common
stock and one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder purchase one share of Class
A common stock at an exercise price of $11.50 per whole share.
Note
4 — Private Placement
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private sale (the “Private Placement”) of an
aggregate of 802,500 units (the “Private Placement Units”) to Canna-Global LLC (the “Sponsor”) at a purchase
price of $10.00 per Private Placement Unit, generating gross proceeds to the Company in the amount of $8,025,000.
A
portion of the proceeds from the Private Placement Units was added to the proceeds from the Initial Public Offering held in the Trust
Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private
Placement Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable
law) and the Private Placement Units will be worthless.
The
Private Placement Warrants (including the Class A common stock issuable upon exercise of the Private Placement Warrants) will not be
transferable, assignable or salable until 30 days after the completion of an Initial Business Combination, subject to certain exceptions.
Note
5 — Related Party Transactions
Founder
Shares
On
July 13, 2021, the Sponsor purchased 5,750,000 of the Company’s Class B common stock (the “Founder Shares”) in exchange
for $25,000. The Founder Shares included an aggregate of up to 750,000 shares subject to forfeiture to the extent that the underwriters’
over-allotment is not exercised in full or in part, so that the number of Founder Shares will equal, on an as-converted basis, approximately
20% of the Company’s issued and outstanding shares of common stock after the Initial Public Offering. The Founder Shares are no
longer subject to forfeiture due to full exercise of the over-allotment by the underwriter.
The
holders of the Founder Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until
the earlier to occur of: (A) six months after the completion of a Business Combination and (B) subsequent to a Business Combination,
(x) if the last reported sale price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for share splits, share
capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital share exchange
or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of Class B common
stock for cash, securities or other property.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
5 — Related Party Transactions (Continued)
Promissory
Note — Related Party
On
April 12, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to
which the Company may borrow up to an aggregate principal amount of $300,000.
The Promissory Note is non-interest bearing and payable on the earlier of (i) March 31, 2022 or (ii) the consummation of the Initial
Public Offering. Following the IPO of the Company on December 2, 2021, a total of $154,288
under the promissory note was fully repaid on
January 21, 2022.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of
a Business Combination, without interest, or, at the lender’s discretion, up to $ of the notes may be converted upon completion
of a Business Combination into units at a price of $ per unit. Such units would be identical to the Private Placement Units. In
the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay
the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of March 31,
2022, there was $ drawn down from such Working Capital Loans.
Sponsor
Funding of Trust Account
In
order to fund the trust to the required level, the Sponsor has deposited $ into the trust account.
Representative
Shares
In
connection with the IPO, the Company issued the Representative 57,500 shares upon full exercise of the Over-allotment Option (the “Representative
Shares”) on December 2, 2021. The Representative has agreed not to transfer, assign or sell any such Representative Shares without
prior consent of the Company until the completion of the initial Business Combination. In addition, the Representative has agreed (i)
to waive its redemption rights (or right to participate in any tender offer) with respect to such shares in connection with the completion
of the initial Business Combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to
such shares if the Company fails to complete the initial Business Combination within 12 months (or up to 18 months, if applicable) from
the Closing of the Offering.
The
Representative will not sell, transfer, assign, pledge or hypothecate the Representative Shares, or cause the Representative Shares to
be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition
of the Representative Shares by any person, for a period of 180 days (pursuant to Rule 5110(e)(1) of the Conduct Rules of FINRA) following
the Effective Date to anyone other than (i) the Representative or an underwriter or selected dealer in connection with the Offering,
or (ii) a bona fide officer or partner of the Representative or of any such underwriter or selected dealer. On and after the 181st day
following the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
5 — Related Party Transactions (Continued)
Administrative
Support Agreement
Commencing
on the date the Units are first listed on the Nasdaq, the Company has agreed to pay the Sponsor a total of $ per month for office
space, utilities and secretarial and administrative support for up to 18 months. Upon completion of the Initial Business Combination
or the Company’s liquidation, the Company will cease paying these monthly fees. As of March 31, 2022, $ had been paid to
the Sponsor under the Administrative Support Agreement in the three months then ended.
Note
6 — Commitments and Contingencies
Registration
Rights
The
holders of the Founder Shares, Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans (and
shares of Class A common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the
Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights
agreement signed prior to or on the effective date of Initial Public Offering requiring the Company to register such securities for resale
(in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be
entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion
of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities
Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or
cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters
Agreement
The
Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 3,000,000 additional Units
to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.
The
underwriters were entitled to a cash underwriting discount of $0.15 per Unit, or $3,000,000 in the aggregate (or $3,450,000 in the aggregate
if the underwriters’ over-allotment option was exercised in full), payable upon the closing of the Initial Public Offering. In
addition, the underwriters were entitled to a deferred fee of $0.35 per Unit, or $7,000,000 in the aggregate (or $8,050,000 in the aggregate
if the underwriters’ over-allotment option was exercised in full). The deferred fee will become payable to the underwriters from
the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of
the underwriting agreement.
On
December 2, 2021, the underwriters purchased an additional 3,000,000 Option Units pursuant to the exercise of the over-allotment option.
The Option Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $30,000,000.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
7 – Stockholders’ Equity
Preferred
Shares — The Company is authorized to issue 2,000,000 shares of preferred stock with a par value of $0.000001 per share
with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. As of
March 31, 2022, there were no shares of preferred stock issued or outstanding.
Class
A Common Stock — Our Certificate of Incorporation will authorize the Company to issue 200,000,000 shares of Class A common
stock with a par value of $0.000001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each
share. As of March 31, 2022, there were 860,000 shares of Class A common stock issued and outstanding (excluding 23,000,000 shares subject
to possible redemption).
Class
B Common stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.000001
per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. As of March 31, 2022 there were
5,750,000 shares of Class B common stock issued and outstanding, such that the Initial Stockholders will maintain ownership of at least
20% of the issued and outstanding shares after the Proposed Public Offering.
Only
holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders
of Class A Common Stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of
our Stockholders except as otherwise required by law. In connection with our initial business combination, we may enter into a Stockholders
agreement or other arrangements with the Stockholders of the target or other investors to provide for voting or other corporate governance
arrangements that differ from those in effect upon completion of this offering.
The
shares of Class B common stock will automatically convert into Class A Common Stock at the time of a Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A Common Stock,
or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to
the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A Common
Stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of shares of Class A Common Stock issuable upon conversion of
all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all
shares of Class A common stock outstanding upon the completion of Initial Public Offering plus all shares of Class A Common Stock and
equity-linked securities issued or deemed issued in connection with a Business Combination (net of the number of shares of Class A Common
Stock redeemed in connection with a Business Combination), excluding any shares or equity-linked securities issued or issuable to any
seller of an interest in the target to us in a Business Combination.
Warrants
— Public Warrants may only be exercised for a whole number of shares. The Public Warrants will become exercisable on the later
of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The
Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any shares of Class A Common Stock pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class
A Common Stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A
Common Stock is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from
registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue
any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
CANNA-GLOBAL
ACQUISITION CORP
NOTES
TO FINANCIAL STATEMENTS
March
31, 2022
Note
7 – Stockholders’ Equity (Continued)
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination,
the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have
declared effective, a registration statement covering the issuance of the shares of Class A Common Stock issuable upon exercise of the
warrants and to maintain a current prospectus relating to those shares of Class A Common Stock until the warrants expire or are redeemed.
Notwithstanding the above, if the Class A Common Stock is at the time of any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the
Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to
file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available.
Redemption
of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the
Company may redeem the outstanding Public Warrants:
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in
whole and not in part; |
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at
a price of $0.01 per Public Warrant; |
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upon
a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
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if,
and only if, the last reported sale price of the Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganization, recapitalizations and the like) 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 sends the notice of redemption to warrant holders. |
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
If
the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that
wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise
price and number of Class A Common Stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including
in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except
as described below, the Public Warrants will not be adjusted for issuances of Class A Common Stock at a price below its exercise price.
Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a
Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public
Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
The
Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering.
Note
8 – Subsequent Events
In
accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure
of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or
transactions that occurred up to the date the audited financial statements were available to issue. Based upon this review, the Company
did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.