Business context and reporting period
This is Aurora Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2023, not an operating-company quarterly report for Better Home & Finance. Aurora was a blank-check company pursuing a merger with Better HoldCo, Inc.; the transaction had not closed by quarter-end. The filing says the proposed combination contemplated an implied Better pre-money equity value of approximately $6.9 billion and post-money equity value of approximately $7.7 billion.
Aurora reported no operating revenue. Its activity consisted of pursuing the transaction, maintaining the company and meeting SEC reporting requirements.
Financial performance and position
| Metric | Q1 2023 / March 31, 2023 | Comparable period / December 31, 2022 |
|---|---|---|
| Operating revenue | None | None |
| Formation and operating costs | $1.83 million | $1.09 million in Q1 2022 |
| Net income (loss) | $(128,000) | $1.01 million in Q1 2022 |
| Trust-account interest income | $1.96 million | $23,000 in Q1 2022 |
| Change in warrant fair value | $(261,000) expense | $2.08 million gain in Q1 2022 |
| Cash outside Trust Account | $992,000 | $285,000 |
| Cash in Trust Account | $21.12 million | $282.28 million |
| Total assets | $22.17 million | $282.70 million |
| Total liabilities | $18.21 million | $15.50 million |
| Shareholders’ equity | $1.77 million | $20.58 million |
Margins are not meaningful because Aurora had no operating revenue. Reported operating cash flow was positive $3.11 million, although the cash-flow statement labels the line “net cash used in operating activities”; the filing text does not clarify this presentation. Investing cash flow was positive $263.12 million, primarily Trust Account withdrawals for redemptions, offset by financing cash outflows of $265.52 million. Cash increased by $706,000 during the quarter.
At March 31, current liabilities were $17.48 million and working capital was in deficit by $16.44 million. Key liabilities included $5.82 million of accounts payable and accrued offering costs, $412,000 under a related-party promissory note, $11.25 million of deferred credit liability, and $734,000 of warrant liabilities. The filing provides no operating-company debt or liquidity metrics for Better.
Material changes versus the prior comparable period
- Net loss of $128,000 in Q1 2023 compared with net income of $1.01 million in Q1 2022. The change reflected higher operating costs, a smaller warrant-related result that was an expense rather than a gain, and substantially higher Trust Account interest.
- On February 24, 2023, shareholders approved an extension of the business-combination deadline to September 30, 2023. Public shareholders and the Sponsor redeemed 25.75 million shares in total, and $263.12 million was released from the Trust Account. The Trust Account fell from $282.28 million at year-end to $21.12 million.
- The Trust Account was moved from Treasury-related investments into cash around February 24, 2023; Aurora expected minimal, if any, interest thereafter.
- Aurora repaid $2.4 million on its Sponsor note in February; $412,395 remained outstanding at quarter-end.
- The merger agreement end date was extended to September 30, 2023. Better had agreed to reimburse up to $15 million of Aurora transaction expenses; $11.25 million had been received by quarter-end, with a further tranche transferred April 4, 2023.
Outlook, risks, contingencies and unusual items
- Transaction deadline and going concern: Aurora must complete a business combination by September 30, 2023, unless shareholders approve a further extension. The filing says the deadline raises substantial doubt about Aurora’s ability to continue as a going concern. Management nevertheless stated that available capital was sufficient through a transaction or one year from the filing date, citing Better reimbursements and potential Sponsor financing.
- Potential liquidation: If no transaction or further extension occurs, Aurora must cease operations and redeem eligible shares. Public warrants could expire worthless; redemption proceeds per share could be below the original $10 IPO price.
- Bridge financing and dilution: Better had issued $750 million of pre-closing bridge notes to SoftBank’s SB Northstar and the Sponsor. The Sponsor’s notes were extended to September 30, 2023, with negotiated potential conversion alternatives at discounts to Better’s stated $6.9 billion pre-money valuation if the transaction does not close. The filing describes complex potential conversion outcomes and dilution.
- Nasdaq listing: After quarter-end, Nasdaq notified Aurora that it did not meet the 500,000 publicly held-share minimum and required a compliance plan by June 8, 2023. The notice did not immediately affect trading, but delisting remained a risk. Aurora also received an earlier notice regarding its timing of an annual shareholder meeting and believed the February meeting addressed that issue.
- Legal and regulatory matters: The SEC’s Division of Enforcement had requested documents in an ongoing investigation concerning Aurora and Better; Aurora said it was cooperating and could not predict the outcome. Two shareholder demand letters alleged omissions in merger-related disclosures; no lawsuits had been filed. A separate Pine Brook lawsuit was settled and dismissed in 2021.
- Controls and reporting: Management concluded disclosure controls were ineffective due to material weaknesses involving complex financial instruments and unusual transactions, and reconciliations of related-party expenses and accounts payable. Prior-period financial statements had been restated in April 2023. Remediation was underway, with no assurance the measures would be effective.
- Unusual accounting and contingencies: Warrant liabilities are remeasured at fair value, with changes affecting reported earnings. The $11.25 million deferred credit liability reflects Better’s expense reimbursements before the merger; the filing says it would be addressed upon merger or liquidation.
Important facts for investors to verify
- Confirm the filing entity and scope: this 10-Q is for Aurora Acquisition Corp., not Better’s operating business, and contains no Better revenue, profit, cash-flow or margin data.
- Check whether the Better merger closed by September 30, 2023, whether the deadline was further extended, and the final treatment of the bridge notes and Sponsor commitments.
- Verify the actual cash available to the transaction after redemptions, subsequent reimbursements, transaction costs and any additional financing.
- Track Nasdaq compliance, the public-float deficiency and any effect on the listing or trading of Aurora securities.
- Review subsequent disclosures on the SEC investigation, shareholder claims, control remediation and any further financial-statement corrections.