NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1 — DESCRIPTION OF ORGANIZATION
AND BUSINESS OPERATIONS
Natural Order Acquisition
Corp. (the “Company”) was incorporated in Delaware on August 10, 2020. The Company was formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the “Business Combination”).
The Company is not limited
to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth
company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021,
the Company had not commenced any operations. All activity for the period from August 10, 2020 (inception) through December 31, 2020,
and for the three and nine months ended September 30, 2021, relates to the Company’s formation and the initial public offering (“Initial
Public Offering”) and expenses incurred in relation to the pursuit of a business combination, which are described below. The Company
will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates
non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement
for the Company’s Initial Public Offering was declared effective on November 10, 2020. On November 13, 2020 the Company consummated
the Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the shares of common stock included in the
Units sold, the “Public Shares”), which includes the full exercise by the underwriters of their over-allotment option in the
amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $230,000,000 which is described in Note 3.
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the sale of 6,800,000 warrants (the “Private Warrants”) at a price
of $1.00 per Private Warrant in a private placement to Natural Order Sponsor LLC (the “Sponsor”), generating gross proceeds
of $6,800,000, which is described in Note 4.
Transaction costs amounted to $13,173,201, consisting of $4,600,000
in cash underwriting fees, $8,050,000 of deferred underwriting fees and $523,201 of other offering costs. Of these total transaction costs,
$8,714 related to the issuance of the Private Warrants and were charged to expense and the remaining $13,164,487 were charged to temporary
equity.
Following the closing of
the Initial Public Offering on November 13, 2020, an amount of $230,000,000 ($10.00 per Unit) from the net proceeds of the sale of the
Units in the Initial Public Offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”),
located in the United States and invested only 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 selected by the Company meeting certain conditions
of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business
Combination or (ii) the distribution of the funds held in the Trust Account, as described below.
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 Private
Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or
more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the
net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the
Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of
the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it
not to be required to register as an investment company under the Investment Company Act.
The Company will provide
the 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. The decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their
Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest
then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with
respect to the Company’s warrants.
NATURAL ORDER ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company will only proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the
Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote
is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for
business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate
of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”)
and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction
is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business
or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s
Sponsor and any of the Company’s officers or directors that may hold Founder Shares (as defined in Note 5) (the “Initial Stockholders”)
have agreed to vote their Founder Shares and any Public Shares purchased during or after the Initial Public Offering in favor of approving
a Business Combination. Additionally, in order for a public stockholder to have his shares redeemed for cash in connection with any proposed
Business Combination, that public stockholder must vote either in favor of or against a proposed Business Combination. If a public stockholder
fails to vote in favor of or against a proposed Business Combination, whether that stockholder abstains from the vote or simply does not
vote, that stockholder would not be able to have his shares of Common Stock so redeemed to cash in connection with such Business Combination.
Notwithstanding the foregoing,
if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person
with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming its shares with respect to more than an aggregate
of 20% of the Public Shares.
The Initial Stockholders
have agreed (a) to waive their redemption rights with respect to the Founder Shares and Public Shares held by them in connection
with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to
modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to
redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below)
or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the
Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company has until November
13, 2022 (the “Combination Period”) to complete a Business Combination. If the Company has not consummated a Business Combination
by the Combination Period, 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 pay 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), and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in
each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless
if the Company fails to complete a Business Combination within the Combination Period.
NATURAL ORDER ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Initial Stockholders
have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination
within the Combination Period. However, if the Initial Stockholders acquire Public Shares in or after the Initial Public Offering, such
Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note
6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts
held in the Trust Account, the Initial Stockholders have agreed to be liable to the Company if and to the extent any claims by a third
party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering
into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per Public Share, 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 monies held
in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering
against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover,
in the event that an executed waiver is deemed to be unenforceable against a third party, the Initial Stockholders will not be responsible
to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Initial Stockholders
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for
the Company’s independent registered accounting firm), prospective target businesses and other entities with which the Company does
business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust
Account.
Going Concern
In connection with the Company’s
assessment of going concern considerations in accordance with FASB’s 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 unable to complete a Business Combination by November 13, 2022, then the Company will cease all operations except for the purpose of
liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to
continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required
to liquidate after November 13, 2022. The Company intends to complete a Business Combination before the mandatory liquidation date.
NOTE 2 — REVISION OF PREVIOUSLY ISSUED
FINANCIAL STATEMENTS
In connection with the preparation of the Company’s financial
statements as of September 30, 2021, the Company concluded it should revise its financial statements to classify all Public Shares in
temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480, paragraph 10-S99,
redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside
of permanent equity. The Company previously determined the common stock subject to possible redemption to be equal to the redemption value
of $10.00 per common stock while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001.
Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with
these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. Accordingly, effective
with this filing, the Company presents all redeemable common stock as temporary equity and recognizes accretion from the initial book
value to redemption value at the time of its Initial Public Offering and in accordance with ASC 480.
As a result, management has noted a reclassification adjustment related
to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the common stock subject to
possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and common stock.
The Company will present this revision in a prospective manner in all future filings. Under this approach, the previously issued Initial
Public Offering Balance Sheet, Form 10-K/A and Form 10-Q’s will not be amended, but historical amounts presented in the current and
future filings will be recast to be consistent with the current presentation, and an explanatory footnote will be provided.
NATURAL ORDER ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
In connection with the change
in presentation for the common stock subject to redemption, the Company also revised its income (loss) per common share calculation to
no longer present redeemable and non-redeemable common stock per share and to present earnings per share for common stock as a whole.
This presentation contemplates a Business Combination as the most likely outcome.
There has been no change
in the Company’s total assets, liabilities or operating results.
The impact of the revision
on the Company’s financial statements is reflected in the following table.
Balance Sheet as of December 31, 2020 (audited)
|
|
As
Previously
Revised
|
|
|
Adjustment
|
|
|
As Revised
|
|
Common stock subject to possible redemption
|
|
$
|
212,768,570
|
|
|
$
|
17,231,430
|
|
|
$
|
230,000,000
|
|
Common stock
|
|
$
|
747
|
|
|
$
|
(172
|
)
|
|
$
|
575
|
|
Additional paid-in capital
|
|
$
|
6,947,196
|
|
|
$
|
(6,947,196
|
)
|
|
$
|
-
|
|
Accumulated Deficit
|
|
$
|
(1,947,942
|
)
|
|
$
|
(10,284,062
|
)
|
|
$
|
(12,232,004
|
)
|
Total Stockholders’ Equity (Deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(17,231,430
|
)
|
|
$
|
(12,231,429
|
)
|
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited
condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation
S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP
have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do
not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash
flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of
a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for
the periods presented.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended
December 31, 2020 as filed with the SEC on May 24, 2021, which contains the audited financial statements and notes thereto. The financial
information as of December 31, 2020 is derived from the audited financial statements presented in the Company’s Annual Report on
Form 10-K/A for the year ended December 31, 2020. The interim results for the three and nine months ended September 30, 2021, are not
necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
NATURAL ORDER ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (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 independent registered public accounting firm 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.
Use of Estimates
The preparation of the 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. One of the more significant accounting estimates included in these financial statements are the determination
of the fair value of the warrant liabilities. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $1,010,087
and $1,401,165 in cash as of September 30, 2021 and December 31, 2020, respectively. The Company did not have any cash equivalents, outside
of the funds held in the Trust Account, as of September 30, 2021 or December 31, 2020.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations 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. The Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such account.
Marketable Securities Held in Trust Account
At September 30, 2021 and
December 31, 2020, substantially all of the assets held in the Trust Account were held in U.S. treasury securities.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption,
if any, in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities
from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value.
Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as
temporary equity. At all other times, common stock is classified as stockholders’ equity. Common stock issued in the IPO features
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events. Accordingly, at September 30, 2021 and December 31, 2020, common stock subject to possible redemption is presented as temporary
equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
NATURAL ORDER ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
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
at the end of each reporting period.
At September 30, 2021, the
common stock reflected in the condensed balance sheet is reconciled in the following table:
Gross Proceeds
|
|
$
|
230,000,000
|
|
Less:
|
|
|
|
|
Proceeds allocated to Public Warrants
|
|
|
(6,440,000
|
)
|
Offering costs allocated to common stock subject to redemption
|
|
|
(13,164,487
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
19,604,487
|
|
Common stock subject to redemption
|
|
$
|
230,000,000
|
|
Offering Costs
Offering costs were 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 warrant liabilities were expensed as incurred and presented as non-operating expenses in the
unaudited condensed statements of operations. Offering costs associated with the common stock issued were charged against the carrying
value of the common stock subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred
underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets
or require the creation of current liabilities.
Income Taxes
The Company follows the asset
and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September
30, 2021 and December 31, 2020, the Company had deferred tax assets of approximately $161,000
and $21,678, respectively, which had full valuation allowances recorded against them.
ASC 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 recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020.
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.
Net Income (Loss) per Common Share
The Company complies with accounting
and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per common share is calculated
by dividing the net income (loss) by the weighted average number of common shares outstanding for the respective period. The Company has
not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 14,900,000 shares of common
stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future
events and the inclusion of such warrants would be anti-dilutive.
As a result, diluted net
income (loss) per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2021 and for
the period from August 10, 2020 (inception) through September 30, 2020. Accretion associated with the redeemable Class A common shares
is excluded from earnings per share as the redemption value approximates fair value.
NATURAL
ORDER ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
As of September 30, 2021
and 2020, basic and diluted shares are the same as there are no non-redeemable securities that are dilutive to the Company’s stockholders.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,”
approximates the carrying amounts represented in the condensed balance sheets, primarily due to their short-term nature.
Warrant
Liability
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging
(“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. As of
September 30, 2021 and December 31, 2020, the Public Warrants met all of the criteria for equity classification whereas the Private Warrants
did not. See Note 8 for further discussion of the methodology used to determine the fair value of warrants classified as liability-classified
instruments.
Recent
Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,
Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s
Own Equity (Subtopic 815-40)(“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if- converted method for
all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis,
with early adoption permitted beginning on January 1, 2021. The Company has not early adopted ASU 2020-06 effective January 1, 2021,
but the Company intends to adopt on January 1, 2022. The Company does not expect the adoption of ASU 2020-06 to have a material impact
on the financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards,
if currently adopted, would have a material effect on the Company's financial statements.
NOTE
4 — INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 23,000,000 Units, which includes the full exercise by the underwriters of their over-allotment
option in the amount of 3,000,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one redeemable
warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one-half share of common stock at a
price of $11.50 per share, subject to adjustment (see Note 7).
NATURAL
ORDER ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
NOTE
5 — PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 6,800,000 Private Warrants at a price of $1.00
per Private Warrant for $6,800,000. Each Private Warrant is exercisable to purchase one-half share of common stock at a price of $11.50
per share, subject to the same adjustment mechanism that applies to the Public Warrants (see Note 7). The proceeds from the sale of the
Private Warrants were added to the net 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 Warrants 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 Warrants will expire
worthless.
The
Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private
Warrants will be exercisable for cash (even if a registration statement covering the issuance of the common stock issuable upon exercise
of such warrants is not effective) or on a cashless basis, at the holder’s option and will not be redeemable by the Company, in
each case so long as they are held by the initial purchasers or their affiliates.
NOTE
6 — RELATED PARTIES
Founder
Shares
In
August 2020, the Company issued an aggregate of 7,187,500 shares of common stock to the Initial Stockholders (the “Founder Shares”)
for an aggregate purchase price of $25,000. In October 2020, the Sponsor transferred 100,000 Founder Shares to certain officers and each
director. On November 5, 2020, the Sponsor effected a cancellation and surrender of 1,437,500 Founder Shares to the Company for no consideration,
resulting in a decrease in the number of shares of common stock outstanding from 7,187,500 to 5,750,000 shares. The Founder Shares included
an aggregate of 750,000 shares that were subject to forfeiture depending on the extent to which the underwriters’ over-allotment
option was exercised, so that the number of Founder Shares would equal approximately 20% of the Company’s issued and outstanding
common stock after the Initial Public Offering. As a result of the underwriters’ election to fully exercise their over-allotment
option, 750,000 Founder Shares were no longer subject to forfeiture.
The
Initial Stockholders have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of their Founder Shares
until, with respect to 50% of the Founder Shares, the earlier of six months after the consummation of a Business Combination and the
date on which the closing price of the common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after a Business Combination
and, with respect to the remaining 50% of the Founder Shares, until the six months after the consummation of a Business Combination,
or earlier, in either case, if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or
other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common
stock for cash, securities or other property.
Administrative
Support Agreement
The Company entered into
an agreement, commencing on November 10, 2020 through the earlier of the Company’s consummation of a Business Combination or its
liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial support. However, pursuant to
the terms of such agreement, the Company may delay payment of such monthly fee upon a determination by the audit committee that the Company
lacks sufficient funds held outside the Trust Account to pay actual or anticipated expenses in connection with a Business Combination.
Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of a Business Combination.
The Company will cease to pay such fees upon the consummation of a Business Combination. For the three months and nine months ended September
30, 2021, the Company incurred $30,000 and $90,000, respectively, in fees for these services of which $20,000 is included in accrued expenses
in the accompanying condensed balance sheet. As of December 31, 2020, amounts accrued under this agreement were equal to $20,000 of which
$10,000 was included in accrued expenses in the accompanying condensed balance sheet.
Promissory
Notes — Related Party
In
August 2020, the Company entered into unsecured promissory notes (the “Promissory Notes”) with affiliates of the Sponsor,
pursuant to which the Company could borrow up to an aggregate principal amount of $200,000. The Promissory Notes were non-interest bearing
and payable on the earlier of (i) the completion of the Initial Public Offering or (ii) the date on which the Company determined
not to conduct the Initial Public Offering. The outstanding balance under the Promissory Note of $200,000 was repaid at the closing of
the Initial Public Offering on November 13, 2020.
NATURAL
ORDER ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Initial Stockholders, or an affiliate of the Initial
Stockholders, 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 $500,000 of the notes may be
converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to
the Private Warrants. 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. At September 30, 2021 and December 31, 2020, no amounts were outstanding under the Working Capital Loans.
NOTE
7 — COMMITMENTS AND CONTINGENCIES
Risks
and Uncertainties
Management
continues to evaluate 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 these financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Registration
Rights
Pursuant
to a registration rights agreement entered into on November 10, 2020, the holders of the Founder Shares, Private Warrants and securities
that may be issued upon conversion of Working Capital Loans will be entitled to registration and stockholder rights. The holders of a
majority of these securities are entitled to make up to two demands that the Company registers such securities. The holders of the majority
of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which
these shares of common stock are to be released from escrow. The holders of a majority of the Private Warrants (and underlying securities)
can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation
of a Business Combination. The registration rights agreement does not contain liquidating damages or other cash settlement provisions
resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting
Agreement
The
underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,050,000 in the aggregate. 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.
NOTE
8 — STOCKHOLDERS’ EQUITY
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with
such designations, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At September
30, 2021 and December 31, 2020, there were no shares of preferred stock issued and outstanding.
Common stock — The
Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders of common stock are
entitled to one vote for each share. There were 5,750,000 and 5,750,000 shares of common stock issued and outstanding, as well as 23,000,000
and 23,000,000 shares of common stock classified as subject to possible redemption, as of September 30, 2021 and December 31, 2020, respectively.
Public
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional shares will
be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the completion of
a Business Combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years
from the completion of a Business Combination or earlier upon redemption or liquidation.
NATURAL
ORDER ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
No
Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares
of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding
the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective
within 120 days from the closing of a Business Combination, warrant holders may, until such time as there is an effective registration
statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants
on a cashless basis pursuant to an available exemption from registration under the Securities Act.
The
Company may redeem the Public Warrants:
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per warrant;
|
|
|
|
|
●
|
at any time while the warrants become exercisable;
|
|
|
|
|
●
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder;
|
|
|
|
|
●
|
if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $18.00 per share, for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to warrant holders; and
|
|
|
|
|
●
|
if, and only if, there is a current registration statement in effect with respect to the issuance of the common stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The
exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except
as described below, the warrants will not be adjusted for issuance of shares of common stock at a price below its exercise price. The
Company has agreed to use its best efforts to have declared effective a prospectus relating to the common stock issuable upon exercise
of the warrants and keep such prospectus current until the expiration of the warrants. However, if the Company does not maintain a current
prospectus relating to the common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants for
cash and the Company will not be required to net cash settle or cash settle the warrant exercise. There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s 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 warrants will not
receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In
addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in
connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.50 per share of common
stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in
the case of any such issuance to the Sponsors or its affiliates, without taking into account any Founder Shares held by the Initial Stockholders
or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of its common stock during the
20 trading day period starting on the trading day prior to the day on which the Company consummates its Business Combination (such price,
the “Market Value”) is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to
be equal to 115% of the Market Value and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal
to 180% of the Market Value.
NATURAL
ORDER ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
NOTE
9 — FAIR VALUE MEASUREMENTS
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level
1:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level
2:
|
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level
3:
|
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments
- Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to
hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheets and adjusted
for the amortization or accretion of premiums or discounts.
At
September 30, 2021 assets held in the Trust Account were comprised of $1,110 in cash and
$230,077,357 in U.S. Treasury securities. At December 31, 2020, assets held in the Trust
Account were comprised of $842 in cash and $230,019,766 in U.S. Treasury securities.
The
following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis at September 30, 2021 and December 31, 2020 and indicate the fair value hierarchy of the valuation inputs the Company utilized
to determine such fair value. The gross holding gains and fair value of held-to-maturity securities at September 30, 2021 and December
31, 2020 are as follows:
|
|
|
|
|
September 30, 2021
|
|
|
|
Held-To-Maturity
|
|
Level
|
|
Amortized
Cost
|
|
|
Gross
Holding
Loss
|
|
|
Fair Value
|
|
Assets
|
|
|
U.S. Treasury Securities (matures 12/2/2021)
|
|
1
|
|
$
|
230,077,357
|
|
|
$
|
(954
|
)
|
|
$
|
230,076,403
|
|
Liabilities
|
|
|
Private Warrants
|
|
3
|
|
|
|
|
|
|
|
|
|
$
|
3,536,000
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
|
Held-To-Maturity
|
|
Level
|
|
|
Amortized
Cost
|
|
|
Gross
Holding
Gain
|
|
|
Fair Value
|
|
Assets
|
|
|
U.S. Treasury Securities (Matured on 2/11/2021)
|
|
|
1
|
|
|
$
|
230,019,766
|
|
|
$
|
3,451
|
|
|
$
|
230,023,217
|
|
Liabilities
|
|
|
Private Warrants
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
$
|
5,780,000
|
|
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. There were no transfers during the period.
The
Private Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Company’s
condensed balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair
value presented within change in fair value of warrant liabilities in the condensed statement of operations.
NATURAL
ORDER ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
Fair
Value Measurement
The Private Warrants are
measured at fair value on a recurring basis, using a Black-Scholes Model and are considered Level 3 liabilities with inherent uncertainties
involved. If factors or assumptions change, the estimated fair values could be materially different.. The key inputs into the Black-Scholes
Model for the Private Warrants were as follows:
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Risk-free interest rate
|
|
|
1.08
|
%
|
|
|
0.49
|
%
|
Expected term (years)
|
|
|
5
|
|
|
|
5
|
|
Expected volatility
|
|
|
15.4
|
%
|
|
|
22.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
9.81
|
|
|
$
|
10.03
|
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
following table presents the changes in the fair value of warrant liability:
|
|
Warrant
Liability
|
|
Warrant liability on August 10, 2020
|
|
$
|
-
|
|
Issuance of Private Warrants
|
|
|
3,944,000
|
|
Change in fair value of warrant liability
|
|
|
1,836,000
|
|
Fair value as of December 31, 2020
|
|
|
5,780,000
|
|
Change in fair value of warrant liability
|
|
|
(68,000
|
)
|
Fair value as of March 31, 2021
|
|
|
5,712,000
|
|
Change in fair value of warrant liability
|
|
|
(748,000
|
)
|
Fair value as of June 30, 2021
|
|
|
4,964,000
|
|
Change in fair value of warrant liability
|
|
|
(1,428,000
|
)
|
Fair value as of September 30, 2021
|
|
|
3,536,000
|
|
NOTE
10 — SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed
financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the unaudited condensed financial statements.