Business context and reporting period
This is Aurora Acquisition Corp.’s Form 10-Q for the quarter ended September 30, 2021, not an operating-company filing by Better Home & Finance. Aurora was a blank-check company formed to complete a business combination. It had signed a merger agreement with Better HoldCo, Inc. in May 2021; the transaction was pending at quarter-end. Aurora described the proposed deal as implying approximately $6.9 billion of Better equity value and $7.7 billion post-money equity value.
Financial results and position
- Revenue and operations: No operating revenue; activity consisted of formation, public-company costs, and pursuing the Better transaction.
- Loss: Net loss was $867,127 for the three months and $8,510,424 for the nine months ended September 30, 2021. Nine-month formation and operating costs were $3,625,580. Results included a $4,597,738 nine-month loss from the change in warrant fair value; the quarter included a $1,437,297 gain from that change.
- Cash flow: Operating activities used $2,213,409 in cash during the nine months. Financing provided $280,333,523, while $278,002,870 was placed in the trust account.
- Liquidity: Cash outside the trust was $117,244; trust assets were $278,015,286, substantially invested in U.S. Treasury-related instruments. Working capital deficit was $2,202,064.
- Liabilities: Total liabilities were $31,189,511, including $19,514,651 of warrant liabilities, $8,505,100 of deferred underwriting fees, and $462,295 outstanding on a non-interest-bearing sponsor note. The filing reports no conventional operating-company debt metrics or margins.
- Equity and redemption: 24,300,287 Class A shares, with a $243,002,870 redemption value, were classified as temporary equity. This is separate from shareholders’ equity of $4,790,601.
Changes versus the prior comparable period
The filing provides no prior-year quarterly operating comparison: Aurora had no business activity in 2020 and had not begun operating. The nine-month figures principally reflect the 2021 IPO and transaction-search period. Versus December 31, 2020, cash rose from zero to $117,244 and total assets rose from $562,663 to $278,982,982, primarily because of the IPO and trust funding.
Outlook, risks, contingencies, and unusual items
- Merger and funding: Management expected to fund operations through the earlier of a business combination or one year from the filing date. The sponsor note allowed borrowing up to $2 million, with a stated potential increase subject to a $5 million cap. After quarter-end, Aurora borrowed another $800,000 under the note.
- SPAC deadlines and redemptions: Aurora had 24 months from the March 2021 IPO closing to complete a business combination. If unsuccessful, it must wind up and redeem public shares under the disclosed terms. Redemption levels could reduce cash available for the transaction; additional financing might be needed.
- Restatement and controls: Aurora restated previously issued financial statements to classify redeemable Class A shares at full redemption value. The filing says the prior statements were materially misstated and should not be relied upon. Management reported a material weakness and ineffective disclosure controls as of September 30; remediation plans were underway, with no assurance of effectiveness.
- Litigation: The Pine Brook case was settled after quarter-end and dismissed with prejudice. Aurora also received two shareholder demand letters alleging omissions in the business-combination registration statement; no lawsuits had been filed in connection with those demands.
- Other risks: Management said COVID-19 could adversely affect the company or its target search, but the impact was not quantifiable. Warrant liabilities are remeasured at fair value and can materially affect reported earnings. The filing reported no material change to IPO prospectus risk factors.
- No operating guidance: The filing gives no Better operating forecast or post-merger financial guidance.
Important facts for investors to verify
- Confirm the merger’s final terms, completion status, financing, and dilution/redemption assumptions in later filings.
- Review the restatement, its effects on prior filings, and progress in remediating the reported material weakness.
- Check subsequent disclosures on the sponsor note, transaction costs, and the two shareholder demand letters.
- Distinguish restricted trust assets from cash available for operations; the reported $278.0 million trust balance was not ordinary operating liquidity.
- Verify warrant counts, fair values, and potential dilution, as well as the timing and terms of any shareholder redemptions.