Canna- Acquisition p(CNGL) - 2023 Q4 - Annual Report

Financial Performance - Total current assets as of December 31, 2023, amounted to $229,422, a significant increase from $85,826 in 2022, representing a growth of 167%[8] - Cash and marketable securities held in the trust account decreased to $12,304,455 in 2023 from $24,599,703 in 2022, a decline of 50%[8] - Total liabilities increased to $11,437,186 in 2023, up from $9,360,198 in 2022, reflecting a rise of 22%[8] - The company reported a working capital deficit of $3,157,764 as of December 31, 2023, compared to a working capital of $190,000 in 2022[17] - The accumulated deficit grew to $(11,207,771) in 2023 from $(7,693,908) in 2022, indicating an increase of 46%[10] - The total stockholders' deficit reached $(11,207,764) in 2023, compared to $(7,693,901) in 2022, marking a rise of 46%[10] - The company has cash available of only $743 on its balance sheet as of December 31, 2023, down from $853,288 in 2022[17] - The Company generated taxable income of $1,196,903 for the year ended December 31, 2023, with an income tax expense of $208,227, compared to taxable income of $1,042,912 and an income tax expense of $231,252 for 2022[34] - The Company incurred Delaware franchise tax of $149,324 for the year ended December 31, 2023, down from $206,719 in 2022, representing a decrease of approximately 28%[33] Trust Account and IPO - The total gross proceeds from the IPO were $200,000,000, with an additional $8,025,000 raised from private placements[22] - As of December 31, 2023, the balance in the Trust Account was $12,304,455, a decrease of 50% from $24,599,703 on December 31, 2022[23] - A total of $233,450,000 was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company after the IPO[98] - The Trust Agreement was amended to extend the liquidation date of the Trust Account from December 2, 2022, to December 2, 2023, with a deposit of $0.045 per share of Class A Common Stock per month[100] - An amendment to the Trust Agreement was approved to extend the liquidation date of the Trust Account to December 2, 2024, with a deposit of $0.045 per share per month[147] Business Combination Efforts - The company intends to focus its acquisition efforts on the natural resources industry, particularly in oil and gas sectors, leveraging its management team's expertise[13] - The Company has engaged in multiple agreements related to its business combination efforts, including a Bid Implementation and Business Combination Agreement dated June 15, 2023[10.13] - The Company has extended the time to complete a Business Combination five times, indicating ongoing efforts to finalize a suitable transaction[64] - The company aims to apply any unutilized cash from the trust account for general corporate purposes, including potential acquisitions and operational expansion[79] - The company has until December 2, 2024, to complete its initial business combination, with the possibility of one-month extensions[144] Redemption and Shareholder Rights - The company has a commitment to redeem public shares upon completion of a business combination, ensuring net tangible assets of at least $5,000,001[18] - Public stockholders can only receive funds from the trust account under specific conditions, including failure to complete an initial business combination within the designated period[72] - The company will not redeem public shares if it would cause net tangible assets to fall below $5,000,001 to avoid SEC's "penny stock" rules[70] - The company has agreed not to propose amendments affecting redemption obligations without providing public stockholders the opportunity to redeem their shares[71] - Stockholder approval will be required for the initial business combination if it results in a change of control[176] Market and Industry Focus - The market growth is driven by the expanding demand for legal cannabis, with increasing acceptance for medical marijuana treatments[62] - The adult-use segment of the cannabis market held a revenue share of 54.6% in 2020 and is expected to witness significant growth from 2021 to 2028[123] - North America dominated the legal marijuana market with a revenue share of 79.6% in 2020[123] - The chronic pain segment accounted for 44.8% of the cannabis market in 2020, indicating a strong demand for cannabis in pain management[125] - The global legal marijuana market was valued at $9.1 billion in 2020 and is expected to grow at a CAGR of 26.7% from 2021 to 2028[152] Management and Operational Considerations - The company intends to focus on companies with institutional-level operations and financial controls, scalability, and opportunities for value creation[128] - The management team is actively pursuing and reviewing potential business combination opportunities in the cannabis industry[121] - The company plans to evaluate additional opportunities in the cannabis industry to capture growth and value across the supply chain[121] - The company’s management team may not have significant experience in managing the operations of the target business post-acquisition[67] - Officers and directors may have fiduciary or contractual obligations to present business combination opportunities to other entities, which could affect the company's ability to pursue certain targets[197] Risks and Challenges - Risks may arise if the company completes a business combination with a financially unstable or early-stage business, which could impact future performance[199] - The company's success may depend on the performance of a single business post-combination, limiting diversification and increasing risk[200] - There is uncertainty regarding whether key personnel will remain with the combined company after the business combination[201] - The company may face regulatory restrictions that could limit its pool of potential acquisition targets[135] - The company may incur losses from costs associated with identifying and evaluating target businesses that do not result in a completed business combination[172]