Natural Order Acquisition Corp. (NOAC) is a special purpose acquisition company (SPAC) that was formed in 2020 with the goal of identifying and completing a business combination. However, after failing to find a suitable target within the required timeframe, NOAC's board of directors has determined that it is in the best interests of the shareholders to dissolve and liquidate the company.

Business Overview

NOAC was incorporated in Delaware in August 2020 with the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. NOAC raised $230 million through its initial public offering in November 2020, with the proceeds held in a trust account to be used for a future business combination.

Over the past two years, NOAC has been actively searching for a suitable target company to acquire. However, NOAC was unable to identify and complete a business combination by the end of the combination period, which was set at 24 months from the effective date of the IPO. As a result, NOAC's board of directors has decided to dissolve and liquidate the company in accordance with the terms of its amended and restated certificate of incorporation.

Financials

For the full year 2022, NOAC reported net income of $4,163,322, with no revenue generated. NOAC's annual operating cash flow and free cash flow were both -$1,248,678. These financial results reflect NOAC's focus on identifying and completing a business combination, rather than generating revenue or operating cash flow.

On a quarterly basis, NOAC reported net income of $970,646 and $3,237,179 for the three and nine months ended September 30, 2022, respectively. NOAC's quarterly operating cash flow and free cash flow were both negative during this period, as NOAC continued to incur expenses related to its search for a business combination target.

Liquidation and Redemption of Public Shares

Due to NOAC's inability to complete a business combination by the end of the combination period, NOAC's board of directors has determined that it is in the best interests of the shareholders to dissolve and liquidate the company. NOAC plans to redeem all of its outstanding 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 pay taxes, divided by the number of then outstanding public shares.

Net of taxes, NOAC currently expects the per-share redemption price for the public shares to be approximately $10.07. The redemption will completely extinguish the public shareholders' rights as stockholders, including the right to receive further liquidating distributions, if any. There will be no redemption rights or liquidating distributions with respect to NOAC's warrants, which will expire worthless.

Risks and Challenges

NOAC's inability to complete a business combination within the required timeframe has created

substantial doubt about its ability to continue as a going concern

. NOAC's liquidation and the resulting redemption of its public shares may result in public shareholders receiving less than the $10.00 per share that was paid in the initial public offering.

Additionally, NOAC's dissolution and liquidation may be subject to legal and regulatory risks, including potential challenges from creditors or other stakeholders. NOAC has sought to mitigate these risks by endeavoring to have all vendors, service providers, prospective target businesses, and other entities with which it does business execute agreements waiving any right, title, interest, or claim of any kind in or to any monies held in the trust account.

Conclusion

Natural Order Acquisition Corp. has been unable to complete a business combination within the required timeframe, leading its board of directors to determine that dissolution and liquidation is the best course of action for the company and its shareholders. While NOAC's financial performance during its search for a target was limited, the upcoming redemption of public shares will provide shareholders with a return of their initial investment, albeit at a potential discount to the original offering price.

The failure to complete a business combination highlights the challenges faced by SPACs in the current market environment, as well as the importance of strict timelines and disciplined execution in order to deliver value to shareholders. As NOAC prepares to wind down its operations, investors will be closely watching to see how the company's liquidation process unfolds and whether any lessons can be learned for the SPAC market going forward.