UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
ACT OF 1934
For the quarterly period ended
ACT OF 1934
For the transition period from to
(Exact name of registrant as specified in its charter)
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(Address of Principal Executive Offices, including zip code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | ☐ Accelerated filer |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of April 5, 2023, there were
AURORA ACQUISITION CORP.
Quarterly Report on Form 10-Q/A
TABLE OF CONTENTS
2
EXPLANATORY NOTE
Background of Restatement
On March 26, 2023, the audit committee (the “Audit Committee”) of the board of directors of the Company (the “Board”) and the Board, in consultation with the Company’s management and its advisors, concluded that the Company’s previously issued unaudited interim financial statements included in the Original Quarterly Report for the three and six months ended June 30, 2022 (the “Restated Period”), filed with the SEC on August 15, 2022, should be restated and no longer be relied upon due to certain errors identified relating to, among other things, expenses that were not properly recorded in the period in which they occurred. The errors related to reconciliations surrounding expenses paid by related parties and accounts payable, and the classification of the underwriters’ over-allotment option liability, as more fully described in Note 2, Summary of Significant Accounting Policies, of the accompanying financial statements. As such, to correct the errors described above, the Company is restating the Company’s financial statements for the Restated Period in this Form 10-Q/A.
The financial information that has been previously filed or otherwise reported for the Restated Period is superseded by the information in this Form 10-Q/A, and the financial statements and related financial information contained in the Original Quarterly Report should no longer be relied upon. On March 29, 2023, the Company filed a Current Report on Form 8-K disclosing the Board’s and Audit Committee’s conclusion that the unaudited interim financial statements for the Restated Period should no longer be relied upon.
The restatement is more fully described in Note 2, Summary of Significant Accounting Policies, of the notes to the financial statements included in this Amendment. In addition, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 4 - Controls and Procedures of Part I hereof and Item 1A - Risk Factors of Part II hereof, have been updated to detail further disclosure of the effects and actions taken by the Company’s management and Board.
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by the Company’s principal executive officers and principal financial officer are filed as exhibits (in Exhibits 31.1, 31.2, 32.1 and 32.2) to this 10-Q/A under Item 6 of Part II hereof.
This Form 10-Q/A does not reflect adjustments for events occurring after August 15, 2022, the date of the filing with the SEC of the Original Quarterly Report, except to the extent they are otherwise required to be included and discussed herein and does not substantively modify or update those disclosures affected by subsequent events, other than as required to reflect the adjustments described above. Accordingly, this Form 10-Q/A should be read in conjunction with the Original Quarterly Report and the Company’s other filings with the SEC after the date hereof.
Internal Control Considerations
In connection with the restatement, management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of June 30, 2022. The Company’s management has concluded that, in light of the errors described above, additional material weaknesses exist in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective. Management plans to continue to enhance the system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced training of our personnel and third-party professionals with whom we consult regarding complex accounting applications and unusual transactions. In addition, the Company will implement sufficient and effective reconciliation procedures surrounding the expenses paid by related parties and accounts payable financial statement line items. For a discussion of management’s consideration of our disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Part I, Item 4, “Controls and Procedures” of this Form 10-Q/A.
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PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
AURORA ACQUISITION CORP.
UNAUDITED CONDENSED BALANCE SHEET
(RESTATED)
| June 30, 2022 |
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(Unaudited) | December 31, 2021 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash | $ | | $ | | ||
Related party receivable | — | | ||||
Prepaid expenses and other current assets |
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Total Current Assets | | | ||||
Cash held in Trust Account | | | ||||
Total Assets | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: | ||||||
Accounts payable and accrued offering costs | $ | | $ | | ||
Related party loans | | | ||||
Total Current Liabilities | | | ||||
Warrant Liability |
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Deferred underwriting fee payable |
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Total Liabilities |
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Commitments and Contingencies |
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Class A ordinary shares subject to possible redemption, | | | ||||
Shareholders’ Equity |
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Preference shares, $ |
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Class A ordinary shares, $ |
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Class B ordinary shares, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity | $ | | $ | | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
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AURORA ACQUISITION CORP.
UNAUDITED STATEMENT OF OPERATIONS
(RESTATED)
For the Three | For the Three | For the Six Months | For the Six Months | |||||||||
Months Ended June | Months Ended June | Ended June 30, | Ended June 30, | |||||||||
30, 2022 | 30, 2021 | 2022 | 2021 | |||||||||
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Formation and operating costs | $ | | $ | | $ | | $ | | ||||
Loss from operations | ( | ( | ( | ( | ||||||||
Other income (expense): |
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Interest earned on marketable securities held in Trust Account | | | | | ||||||||
Change in fair value of warrants | | ( | | ( | ||||||||
Change in fair value of over-allotment option liability | — | | — | | ||||||||
Offering costs allocated to warrants liability | — | — | — | ( | ||||||||
Gain on deferred underwriting fee | | — | | — | ||||||||
Net Income (loss) | $ | | $ | ( | $ | | $ | ( | ||||
Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption | | | | | ||||||||
Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption | $ | | $ | ( | $ | $ | ( | |||||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
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Basic and diluted net income (loss) per share, Non-Redeemable Class A and Class B Common Stock | $ | | $ | ( | $ | $ | ( | |||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
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AURORA ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2022 AND JUNE 30, 2021
(RESTATED)
Class A | Class B | Total | |||||||||||||||||
Ordinary | Ordinary | Additional | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
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Balance - January 1, 2022 |
| | $ | | | $ | | $ | | $ | ( | $ | | ||||||
Net income |
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Balance - March 31, 2022 |
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Remeasurement for Class A ordinary shares subject to redemption | — | — | — | — | ( | — | ( | ||||||||||||
Derecognition of deferred underwriting fee |
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Net income |
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Balance – June 30, 2022 |
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Ordinary | Ordinary | Additional | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid in Capital |
| Deficit |
| Equity | ||||||
Balance — January 1, 2021 |
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Sale of | | | — | — | | — | | ||||||||||||
Sale of | | | — | — | | — | | ||||||||||||
Sale of Private Placement Warrants | — | — | — | — | | — | | ||||||||||||
Ordinary shares subject to redemption (as restated) | ( | ( | — | — | ( | — | ( | ||||||||||||
Over-allotment option liability | — | — | — | — | ( | — | ( | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance — March 31, 2021 |
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Surrender and cancellation of Founder Shares | — | — | ( | ( | | — | — | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance — June 30, 2021 |
| | $ | | | $ | | $ | | $ | ( | $ | | ||||||
6
AURORA ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
(RESTATED)
Six Months Ended | Six Months Ended | |||||
| June 30, 2022 |
| June 30, 2021 | |||
Cash Flows from Operating Activities: | ||||||
Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Change in fair value of warrant liability | ( | | ||||
Offering cost allocated to warrant liability | — | | ||||
Changes in fair value of over-allotment option liability | — | ( | ||||
Gain on deferred underwriting fee | ( | — | ||||
Interest earned on marketable securities held in Trust Account | — | ( | ||||
Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets | | ( | ||||
Related party receivable | | — | ||||
Accounts payable and accrued offering costs | | ( | ||||
Net cash used in operating activities |
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Cash Flows from Investing Activities | ||||||
Investment of cash into Trust Account | ( | ( | ||||
Net cash used in investing activities | ( | ( | ||||
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Cash Flows from Financing Activities: |
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Proceeds from sale of Units, net of underwriting discounts paid | — | | ||||
Proceeds from sale of Private Placement Units | — | | ||||
Proceeds from sale of Private Placement Warrants |
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Proceeds from promissory note – related party |
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Net cash provided by financing activities |
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Net Change in Cash |
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Cash — Beginning of period |
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Cash — End of period | $ | | $ | | ||
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Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
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Deferred Offering Cost | — | $ | | |||
Proceeds from Related Party for Offering Cost | — | $ | | |||
Class A ordinary share subject to possible redemption | — | $ | | |||
Initial Classification of Warrant liability | — | $ | | |||
Deferred underwriting fee payable | $ | | $ | | ||
Remeasurement for Class A ordinary shares to redemption amount | $ | | $ | — | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
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AURORA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2022
AURORA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
(RESTATED)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Aurora Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on October 7, 2020. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
Although the Company is not limited to a particular industry or geographic region for purposes of completing 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 May 10, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Aurora Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of the Company (“Merger Sub”), and Better HoldCo, Inc., a Delaware corporation (“Better”). All activity for the period from October 7, 2020 (inception) through June 30, 2022 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and activities in connection with entering into the Merger Agreement. Since our Initial Public Offering, our only costs have been identifying a target for our initial Business Combination, negotiating the transaction with Better, and maintaining our Company and SEC reporting. We do not expect to generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income in the form of interest income on cash and cash equivalents. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective Business Combination candidates.
The Company has selected December 31 as its fiscal year end.
The registration statement for the Company’s Initial Public Offering was declared effective on March 3, 2021. On March 8, 2021, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
8
Following the closing of Aurora’s Initial Public Offering on March 8, 2021, an amount equal to $
On March 10, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, the sale of the Novator Private Placement Units, the sale of the Private Placement Warrants and the partial exercise of the underwriters’ over-allotment option, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination and to pay the deferred portion of the underwriters’ discount associated with the Initial Public Offering and partial exercise of the underwriters’ over-allotment option. The Company must complete its initial Business Combination with one or more target businesses that together have a fair market value equal to at least
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares, with the exception of the founder shares and Novator private placement shares, upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $
9
If the Company seeks shareholder approval in connection with a Business Combination, it will need to receive an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who vote at a general meeting of the Company (assuming a quorum is present). If a shareholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor and the Company’s officers and directors have agreed to vote their Founder Shares (as defined in Note 5), Novator Private Placement Shares and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination and to waive their redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $
Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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
The Sponsor and the Company’s directors and officers have agreed (a) to waive their redemption rights with respect to any Founder Shares, Novator Private Placement 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 Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem
The Company will have until 24 months from the closing of the Initial Public Offering (the “Combination Period”) to complete a Business Combination. In the event that the Company does not consummate a Business Combination within 24 months from the consummation of the IPO, we can seek an extension (with no limit to such extension) provided we have our shareholder approval. If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than
The Sponsor and the Company’s directors and officers 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, any Public Shares acquired by the Sponsor or the Company’s directors and officers and Novator Private Placement 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 funds held in the Trust Account that will be available to fund the redemption of the Public Shares and Novator Private Placement 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 ($
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The Sponsor has agreed that it will 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 by 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 (1) $
As a condition to the consummation of the Business Combination, the board of directors of the Company has unanimously approved a change of the Company’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. In connection with the consummation of the Business Combination, the Company will change its name to “Better Home & Finance Holding Company.”
Risks and Uncertainties
Management has evaluated 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.
Liquidity and Management’s Plan (As Restated)
As of June 30, 2022, the Company had $
Prior to the completion of the Initial Public Offering, the Company lacked the liquidity it needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statement. The Company has since completed its Initial Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was released to the Company for general working capital purposes. In addition to the excess of funds, the Company issued an unsecured promissory note (the “Note”) to the Sponsor (“Payee”) pursuant to which the Company could borrow up to an aggregate principal amount of $
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements are presented in conformity in U.S. dollars with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
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Emerging growth company
The Company is an “emerging growth company,” as defined in Section 2(a) of 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 shareholder 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 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 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. Accordingly, a significant accounting estimate included in these financial statements is the valuation of the warrant liability. Such estimates may be subject to change as more current information becomes available.
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 did
Investments held in the Trust Account
At June 30, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in U.S. Treasury securities.
Deferred offering costs
Deferred offering costs consist of legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering and were charged to shareholders’ equity upon the completion of the Initial Public Offering.
On June 22, 2022, Barclays resigned from its role as underwriter and financial advisor to Aurora. In connection with such resignations, Barclays waived its entitlement to a deferred underwriting fee of $
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Class A ordinary shares subject to possible redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption would be classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2022, Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
Warrant Liability
At June 30, 2022 and December 31, 2021, there were
The accounting treatment of derivative financial instruments required that the Company record the warrants as derivative liabilities at fair value upon the closing of the Initial Public Offering. The Public Warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. The warrant liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities are adjusted to current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A - Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $
Income taxes
The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
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ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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
The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Net income (loss) per share (As Restated)
Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares are reduced for the effect of an aggregate of
The Company’s statement of operations includes a presentation of income (loss) per share for Common Stock subject to possible redemption in a manner similar to the two-class method of income per common stock. According to SEC guidance, common stock that is redeemable based on a specified formula is considered to be redeemable at fair value if the formula is designed to equal or reasonably approximate fair value. When deemed to be redeemable at fair value, the weighted average redeemable shares would be included with the non-redeemable shares in the denominator of the calculation and initially calculated as if they were a single class of common stock.
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The following table reflects the calculation of basic and diluted net earnings (loss) per common share (in dollars, except per share amounts):
Three Months Ended | ||||||
| June 30, 2022 |
| June 30, 2021 | |||
Class A Common Stock subject to possible redemption |
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Numerator: Earnings (losses) attributable to Class A Common Stock subject to possible redemption |
| $ | |
| $ | ( |
Net earnings (losses) attributable to Class A Common Stock subject to possible redemption | $ | | $ | ( | ||
Denominator: Weighted average Class A Common Stock subject to possible redemption |
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Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption |
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Basic and diluted net income (loss) per share, Class A Common Stock subject to possible redemption | $ | | $ | ( | ||
Non-Redeemable Class A and Class B Common Stock |
|
|
|
| ||
Numerator: Net income (loss) minus net earnings |
|
|
|
| ||
Net income (loss) | $ | | $ | ( | ||
Less: Net earnings (losses) attributable to Class A Common Stock subject to possible redemption |
|
| ||||
Non-redeemable net income (loss) | $ | | $ | ( | ||
Denominator: Weighted average Non-Redeemable Class A and Class B Common Stock |
|
|
|
| ||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
| |
| | ||
Basic and diluted net income (loss) per share, Non-Redeemable Class A and Class B Common Stock | $ | | $ | ( | ||
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Six Months Ended | ||||||
| June 30, 2022 |
| June 30, 2021 | |||
Class A Common Stock subject to possible redemption |
|
|
|
| ||
Numerator: Earnings (losses) attributable to Class A Common Stock subject to possible redemption | $ | | $ | ( | ||
Net earnings (losses) attributable to Class A Common Stock subject to possible redemption | $ | | $ | ( | ||
Denominator: Weighted average Class A Common Stock subject to possible redemption |
|
|
|
| ||
Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption |
| |
| | ||
Basic and diluted net income (loss) per share, Class A Common Stock subject to possible redemption | $ | $ | ( | |||
Non-Redeemable Class A and Class B Common Stock |
|
|
|
| ||
Numerator: Net income (loss) minus net earnings |
|
|
|
| ||
Net income (loss) | $ | | $ | ( | ||
Less: Net earnings (losses) attributable to Class A Common Stock subject to possible redemption |
|
|
|
| ||
Non-redeemable net income (loss) | $ | | $ | ( | ||
Denominator: Weighted average Non-Redeemable Class A and Class B Common Stock |
|
|
|
| ||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
| |
| | ||
Basic and diluted net income (loss) per share, Non-Redeemable Class A and Class B Common Stock | $ | $ | ( | |||
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal Depository Insurance Coverage of $250,000 and up to £85,000 by the Financial Services Compensation Scheme per financial institution in the United Kingdom. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Recent issued accounting standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Restatement of Previously Issued Financial Statements
In connection with the preparation of the financial statements of the Company as of and for the year ended December 31, 2022, the Company discovered certain errors in its previously issued financial statements that should have been recorded in prior periods, and concluded it should restate its previously issued financial statements to properly correct these errors, as their impact was material to the financial statements in the aggregate. The Company will restate its previously issued financial statements as of and for the fiscal year ended December 31, 2021 and the quarterly periods ended September 30, 2021, March 31, 2022, June 30, 2022 and September 30, 2022 (collectively, the “Affected Periods”). As such, the Company is restating its previously issued financial statements for the three and six months ending June 30, 2022 in this Quarterly Report on Form 10-Q/A
One error related to an SEC filing fee that was incurred by the Company and paid by the Sponsor in the amount of approximately $
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incurred in the fourth quarter of 2021 and have also been corrected in this Form 10-Q/A. Certain errors have also been corrected in this Amendment, relating to the classification of the underwriters’ over-allotment option liability.
Finally, in connection with the preparation of the Company’s financial statements for the quarterly period ended September 30, 2022, management identified an error made in its historical financial statements, where the Class A ordinary shares subject to possible redemption was not being measured to its redemption value, which is equal to the amount held in the Trust Account less the $
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the changes required to correct these errors, and has determined that the related impacts were material to any previously presented financial statements and such previously presented financial statements could not still be relied upon. Additionally, the Company, in consultation with its Audit Committee, concluded that its previously issued financial statements impacted should be restated to report the correction of the errors described above. As such, the Company is reporting this restatement to the previously issued financial statements for the Restated Period in this filing.
Impact of the Restatement
The impact of the restatement of the Company’s previously issued financial statements is reflected in the following table:
Unaudited Balance Sheet as of June 30, 2022 and Statement of Changes in Shareholders’ Equity (Deficit) | As Previously | |||||
for the six months ending June 30, 2022 |
| Reported |
| Adjustments |
| As Restated |
Current liabilities: |
|
|
| |||
Accounts payable and accrued offering costs | | | | |||
Commitments and Contingencies: | ||||||
Class A ordinary shares subject to possible redemption, | | | | |||
Additional paid in capital |
| |
| |
| |
Accumulated deficit |
| ( |
| ( |
| ( |
Total shareholders’ equity |
| |
| ( |
| |
Statement of Cash Flows (Supplemental non-cash disclosure) for the six months ending June 30, 2022 | ||||||
Remeasurement for Class A ordinary shares subject to redemption | — | | |
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering (and the partial exercise of the underwriter’s over-allotment option), the Company sold
In connection with the IPO, the Company granted the underwriters a 45-day option to purchase up to
17
NOTE 4. PRIVATE PLACEMENTS
Simultaneously with the closing of the Initial Public Offering, the Sponsor, and certain of the Company’s directors and officers purchased an aggregate of
In connection with the execution of the Merger Agreement, the Sponsor entered into a letter agreement (the “Sponsor Agreement”) with Aurora on November 9, 2021, pursuant to which the Sponsor will forfeit upon Closing
The Sponsor and certain of the Company’s directors and officers also purchased
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On December 9, 2020, the Sponsor paid $
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares (or Novator Private Placement Shares) until the earlier to occur of: (A)
18
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Director Services Agreement and Director Compensation
On October 15, 2021, Merger Sub entered into a Director’s Services Agreement (the “DSA”) by and among Merger Sub, Caroline Jane Harding (the “Director”), and the Company, effective as of May 10, 2021. Under the terms of the DSA, the Director is to provide services to Merger Sub which include acting as a non-executive director and president and secretary of Merger Sub in consideration of $
In addition, with respect to Ms. Harding, our Company remunerates her for professional services rendered to our Company in her role as chief financial officer of at the rate of $
Promissory Note from Related Party
On May 11th, 2021, the Company issued an unsecured promissory note (the “Note”) to the Sponsor (“Payee”), pursuant to which the Company could borrow up to an aggregate principal amount of $
Should the Company’s operating costs, in relation to its proposed business combination, exceed the amounts still available and not currently drawn under the promissory note, the Sponsor shall increase the amount available under the promissory note to cover such costs, subject to an aggregate cap of $
Capital Contribution from Sponsor
In July of 2021, the Sponsor paid an SEC filing fee for the amount of approximately $
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NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry 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 and shareholder rights agreement entered into on March 3, 2021, the Sponsor and the Company’s directors and executive officers have rights to require the Company to register any of its securities held by them for resale under the Securities Act. These holders will be entitled to make up to
Underwriting Agreement
In connection with the IPO, the Company granted the underwriters a 45-day option to purchase up to
In addition, the underwriters will be entitled to a deferred fee of $
On June 22, 2022, Barclays resigned from its role as underwriter and financial advisory to the Company. In connection with such resignation, Barclays waived its entitlement to a deferred underwriting fee of $
Litigation Matters
Aurora and its affiliate, Merger Sub (together, “Aurora”), were named as co-defendants with Better in a lawsuit initially filed in July 2021 by Pine Brook. Pine Brook sought, among other things, declaratory judgments and damages in relation to a side letter agreement that had been entered into with Better in 2019, as well as a lockup provision restricting the transfer of stock after the merger with Better for any holders of
In addition, Aurora has also received
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In the second quarter of 2022, after the balance sheet date, Aurora received a voluntary request for documents from the Division of Enforcement of the Securities and Exchange Commission (“SEC”) indicating that it is conducting an investigation relating to Aurora and Better to determine if violations of the federal securities laws have occurred. The SEC has requested that Better and Aurora voluntarily provide the SEC with certain information and documents. Aurora is cooperating with the SEC. As the investigation is ongoing, Aurora is unable to predict how long it will continue or whether, at its conclusion, the SEC will bring an enforcement action against either Better or Aurora and, if it does, what remedies it may seek.
NOTE 7. SHAREHOLDERS’ EQUITY
Preference Shares — The Company is authorized to issue
Class A Ordinary Shares — The Company is authorized to issue
Class B Ordinary Shares — The Company is authorized to issue
Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.
The Founder Shares will automatically convert into Class A ordinary shares on the day of the closing of an initial Business Combination, or earlier at the option of the holders thereof, at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis,
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)
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The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating thereto is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than
Redemption of Warrants for Cash When the Price per Class A Ordinary Share Equals or Exceeds $
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon not less than |
| ● | if, and only if, the reported last sales price of the Class A ordinary shares equals or exceeds $ |
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Warrants for Class A Ordinary Shares When the Price per Class A Ordinary Share Equals or Exceeds $
| ● | in whole and not in part; |
| ● | at $ |
| ● | upon a minimum of |
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
| ● | There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial shareholders, directors and officers have entered into agreements with us, pursuant to which they have agreed |
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| to waive their redemption rights with respect to their founder shares, Novator private placement shares and any public shares they may acquire during or after this offering in connection with the completion of our initial business combination. |
The exercise price and number of ordinary shares issuable upon exercise of the Public 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 Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional Class A ordinary shares 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 $
The Private Placement Warrants and Novator Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Novator Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Warrants will not be transferable, assignable or salable until
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. 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. |
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| Level 3: | Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
At June 30, 2022, investments held in the Trust Account were comprised of $
The Company utilizes a Modified Black Scholes model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liabilities are determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement for the three and six months ended June 30, 2022 and 2021, and the Company had
The fair value of the Public Warrants issued in connection with the Initial Public Offering are measured based on the listed market price of such warrants, a Level 1 measurement.
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 by level within the fair value hierarchy:
Quoted Prices in | Significant Other | Significant Other | |||||||
Active Markets | Observable Inputs | Unobservable | |||||||
| (Level 1) |
| (Level 2) |
| Inputs (Level 3) | ||||
Assets: |
|
|
|
|
|
| |||
Investments held in Trust Account – money market funds | $ | | $ | — | $ | — | |||
Liabilities: |
|
|
|
|
|
| |||
Derivative public warrant liabilities |
| |
| — |
| — | |||
Derivative private warrant liabilities |
| — |
| — |
| | |||
Total Fair Value | $ | | $ | — | $ | | |||
The following table provides the significant unobservable inputs used in the Modified Black Scholes model to measure the fair value of the Private Placement Warrants:
At March 8, 2021 (Initial | As of December 31, | As of June 30, | |||||
| Measurement) |
| 2021 |
| 2022 | ||
Stock price |
| |
| | | ||
Strike price |
| |
| | | ||
Probability of completing a Business Combination |
| | % | | % | | % |
Remaining term (in years) |
| |
| | | ||
Volatility |
| | % | | % | | % |
Risk-free rate |
| | % | | % | | % |
Fair value of warrants |
| |
| | |
24
The following table provides a summary of the changes in the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis:
| Level 3 |
| Level 1 |
| Warrant Liabilities | ||||
Fair value as of December 31, 2020 | $ | — | $ | — | $ | — | |||
Initial measurement at March 8, 2021 |
| |
| |
| | |||
Initial measurement of over-allotment warrants |
| |
| |
| | |||
Change in valuation inputs or other assumptions |
| ( |
| ( |
| ( | |||
Fair value as of December 31, 2021 | | | | ||||||
Change in valuation inputs or other assumptions | | ( | ( | ||||||
Fair value as of March 31, 2022 | | | | ||||||
Change in valuation inputs or other assumptions | ( | ( | ( | ||||||
Fair value as of June 30, 2022 | $ | | $ | | $ | | |||
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to August 15, 2022, the date that the financial statement was issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.
On August 3, 2022 the Sponsor signed a commitment to increase the amount available under the Promissory Note subject to an aggregate cap of $
25
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Aurora Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to Novator Capital Sponsor Ltd. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q/A includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q/A including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its initial public offering (the “Initial Public Offering”) filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Restatement of Previously Issued Financial Statements
In connection with the preparation of the Company’s financial statements for the year ended December 31, 2022, the Company’s management and its advisors determined that certain errors relating to, among other things, the reconciliations surrounding expenses paid by related parties and accounts payable were not properly recorded in the period in which they occurred, as further described in Note 2, Summary of Significant Accounting Policies, to the accompanying financial statements. After further review and taking into consideration the amount of the expense and that one of the relevant transactions was a related-party transaction, on March 26, 2023, the Audit Committee and the Board, in consultation with the Company’s management and its advisors, concluded that the Company’s previously issued financial statements as of and for the three and six months ended June 30, 2022 should be restated to correct the errors described above. See Note 2, Summary of Significant Accounting Policies, to the accompanying financial statements.
Overview
We are a blank check company incorporated on October 7, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. As of June 30, 2022, we have selected a business combination target and have initiated substantive discussions, directly or indirectly, with a business combination target with respect to an initial Business Combination with us. On May 11, 2021, Better HoldCo, Inc. (“Better”), one of the fastest-growing digital homeownership platforms in the United States and we announced that we have entered into a definitive merger agreement that will transform Better into a publicly-listed company. This transaction reflects an implied equity value for Better of approximately $6.9 billion and a post-money equity value of approximately $7.7 billion.
The issuance of additional shares in a business combination:
| ● | may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares; |
26
| ● | may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares; |
| ● | could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present executive officers and directors; |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and |
| ● | may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants. |
Similarly, if we issue debt securities or otherwise incur significant debt, it could result in:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
| ● | our inability to pay dividends on our Class A ordinary shares; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt; and |
| ● | other disadvantages compared to our competitors who have less debt. |
We expect to continue to incur significant costs in the pursuit of our initial Business Combination. We cannot assure you that our plans to complete our initial Business Combination will be successful. In the event that the Company does not consummate a Business Combination within 24 months from the consummation of the IPO, we can seek an extension (with no limit to such extension) provided we have our shareholder approval.
Results of Operations (As Restated)
Our entire activity since inception through June 30, 2022 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. In the event that the Company does not consummate a Business Combination within 24 months from the consummation of the IPO, we can seek an extension (with no limit to such extension) provided we have our shareholder approval. We will generate non-operating income in the form of interest income on cash and cash equivalents. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2022 and 2021, we had net gain (loss) of $1,785,906 and $(4,848,547), which consisted of a $3,813,346 and $(4,198,067) gain (loss) from changes in the fair value of derivative warrant liabilities, $0 and $559,839 gain from changes in the fair value of the over-allotment option liabilities, $182,658 and $0 gain on the deferred underwriting fee, $420,489 and $3,123 interest earned on investments held in Trust Account, and $2,630,587 and $1,213,442 in general and administrative costs.
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For the six months ended June 30, 2022 and 2021, we had net gain (loss) of $2,795,946 and $(7,346,392), which consisted of a $5,891,413 and $(6,035,035) gain (loss) from changes in the fair value of derivative warrant liabilities, $0 and $296,905 gain from changes in the fair value of the over-allotment option liabilities, offering costs allocated to warrant liabilities of $0 and $299,523, $182,658 and $0 gain on the deferred underwriting fee, $443,751 and $3,123 interest earned on investments held in the Trust Account, and $3,721,876 and $1,311,862 in general and administrative costs.
We classify the warrants issued in connection with our Initial Public Offering and the sale of the Novator Private Placement Units and the Private Placement Warrants as liabilities at their fair value and adjust the warrant instruments to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. For the three months ended June 30, 2022 and 2021, the change in fair value of warrants was a decrease of $3,813,346 and an increase of $4,198,067. For the six months ended June 30, 2022 and 2021, the change in fair value of warrants was a decrease of $5,891,413 and an increase of $6,035,035.
Liquidity and Capital Resources (As Restated)
As indicated in the accompanying financial statements, as of June 30, 2022, we had a working capital deficiency of $9,749,535.
The net proceeds from (i) the sale of the units in the Initial Public Offering, after deducting offering expenses of $581,484 and underwriting commissions of $4,860,057 based on the underwriters’ partial exercise of their over-allotment option (excluding deferred underwriting commissions of $8,505,100) (ii) the sale of the private placement warrants for a purchase price of $1.50 which accounts for the underwriters’ partial exercise of their over-allotment option and (iii) the Novator private placement units equaled $278,002,870, which is held in the trust account (the “Trust Account”) and includes the deferred underwriting commissions described above. The proceeds held in the Trust Account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay our income taxes, if any.
Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used to repay such debt, as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Prior to the completion of our Business Combination, we have used $3,971,279 of proceeds held outside the Trust Account. The use of these funds is to primarily identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, to prepare and make required securities filings, listing application and pay legal and professional fees.
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination or to fund certain other expenses (including officer expenses to the extent in excess of our estimates and expenses relating to payments due to one of our officers) our Sponsor or its affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. Should the Company’s operating costs, in relation to its proposed business combination, exceed the amounts still available and not currently drawn under the promissory note, the Sponsor shall increase the amount available under the promissory note to cover such costs, subject to an aggregate cap of $12,000,000. This amount would be reflective of estimated total costs of the Company through August 15, 2023 in relation to the business combination, in the event the business combination is unsuccessful. In the
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event that the Company does not consummate a Business Combination within 24 months from the consummation of the IPO, we can seek an extension (with no limit to such extension) provided we have our shareholder approval. The loan is non-interest bearing and payable by check or wire transfer of immediately available funds or as otherwise determined by the Company to such account as the Payee may from time to time designate by written notice in accordance with the provision of the loan.
In the event that our Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
We expected our primary liquidity requirements during that period to include approximately $300,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations; $100,000 for legal and accounting fees related to regulatory reporting requirements; $250,000 for consulting, travel and miscellaneous expenses incurred during the search for an initial business combination target; $75,000 for Nasdaq continued listing fees; and $35,000 for general working capital that will be used for miscellaneous expenses and reserves.
These amounts were estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the potential business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.
Related Party Transactions (As Restated)
On December 9, 2020 our Sponsor paid $25,000, or $0.004 per share, to cover certain offering and formation costs of the company in exchange for 5,750,000 founder shares. During February 2021, we effectuated a share dividend of 1,006,250 Class B ordinary shares and subsequently cancelled 131,250 Class B ordinary shares resulting in an aggregate of 6,625,000 founder shares being issued and outstanding. In March 2021, the Company effectuated a share dividend of 575,000. As of June 30, 2022, the total founder shares outstanding equaled 6,950,072 Class B ordinary shares due to the expiration of the 45 day window to exercise the full over-allotment, of which 249,928 Class B ordinary shares were cancelled. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares upon completion of the Initial Public Offering, the exercise of the underwriters’ over-allotment option, and the sale of the Novator Private Placement Units. The per share purchase price of the founder shares was determined by dividing the amount of cash contributed to our Company by the aggregate number of founder shares issued. If we increase or decrease the size of the offering we will effect a share dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B ordinary shares immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial shareholders at 20.0% of our issued and outstanding ordinary shares upon the consummation of this offering and the Novator private placement.
Our initial shareholders, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our Audit Committee will review on a quarterly basis all payments that were made to our Sponsor, executive officers,
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directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our Sponsor, as well as certain of our directors and executive officers, purchased an aggregate of 3,500,000 units in a separate private placement which occurred concurrently with the closing of our Initial Public Offering. Each such Unit consists of one Class A ordinary share and one-quarter of one warrant and was offered at a price of $10.00 per unit, for an aggregate purchase price of $35,000,000. The gross proceeds of the private placement were deposited into the Trust Account.
In addition, our sponsor and certain of our officers and directors purchased an aggregate of 4,266,667 Private Placement Warrants in a separate private placement which occurred concurrently with the closing of our Initial Public Offering for an aggregate purchase price of $6,400,000.
Additionally, our Sponsor on February 23, 2022 amended the Promissory Note to increase the note to $4,000,000 to be used for a portion of the expenses of our Initial Public Offering. As of June 30, 2022, $2,312,295 was outstanding under the Promissory Note and due to the Sponsor. Should the Company’s operating costs, in relation to its proposed business combination, exceed the amounts still available and not currently drawn under the promissory note, the Sponsor shall increase the amount available under the promissory note to cover such costs, subject to an aggregate cap of $12,000,000.
On October 15, 2021, Merger Sub entered into a Director’s Services Agreement (the “DSA”) by and among Merger Sub, Caroline Jane Harding (the “Director”), and the Company, effective as of May 10, 2021. Under the terms of the DSA, the Director is to provide services to Merger Sub which include acting as a non-executive director and president and secretary of Merger Sub in consideration of $50,000 of annual payments (and in certain circumstances an incremental hourly fee of $500). On October 29, 2021, the DSA was amended and was ratified by Compensation Committee on November 3, 2021. As of June 30, 2022 and December 31, 2021, $50,000 and $0 was accrued, and as of June 30, 2022 and June 30, 2021, $50,000 and $0 was expensed.
In addition, with respect to Ms. Harding, our Company remunerates her for professional services rendered to our Company in her role as chief financial officer of at the rate of $10,000 per month and for her service on our board of directors at the rate of $15,000 per year, an incremental hourly fee in certain circumstances of $500. Additionally, Ms. Harding received a $50,000 payment on March 21, 2021 in contemplation of her services to Aurora and will receive a $75,000 payment on the earlier of March 21, 2023 or the date on which Aurora is liquidated. As of June 30, 2022 and December 31, 2021, $0 and $100,000 was accrued and as of June 30, 2022 and June 30, 2021, $67,500 and $122,500 was expensed for these services. If we do not have sufficient funds to make the payments due to Ms. Harding as set forth herein professional services provided by her, we may borrow funds from our sponsor or an affiliate of the initial shareholders or certain of our directors and officers to enable us to make such payments.
In July of 2021, the Sponsor paid an SEC filing fee for the amount of approximately $669,000 on behalf of the Company. The Company accounted for the material filing fee as an expense incurred for the period, as well as a capital contribution from the Sponsor.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
As of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus, as we have conducted no operations to date.
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JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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Additionally, we have relied on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, we, as an “emerging growth company”, have elected to utilize certain exceptions, so that we are not required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of the independent registered public accounting firm providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier.
Critical Accounting Policies; Recent Accounting Pronouncements
The preparation of 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 expenses during the reporting period. Actual results could materially differ from those estimates. Aurora has identified the following critical accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.
Accordingly, at June 30, 2022 and December 31, 2021, Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our balance sheet. The Sponsor and the Company’s directors and officers have agreed to waive their redemption rights with respect to any Founder Shares, Novator Private Placement Shares and Public Shares held by them in connection with the completion of the business combination.
Net Loss Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted-average number of shares of ordinary shares outstanding during the period excluding ordinary shares subject to forfeiture. An aggregate of 24,300,287 Class A ordinary shares subject to possible redemption on June 30, 2022 and December 31, 2021 have been excluded from the calculation of basic loss per ordinary share, since such shares, if redeemed, only participate in their pro rata share of the trust earnings. Aurora has not considered the effect of the warrants sold in our initial public offering (including the consummation of the over-allotment units) and private placement to purchase an aggregate of 11,523,444 ordinary shares in the calculation of diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the period presented.
The Company’s statement of operations includes a presentation of income (loss) per share for Common Stock subject to possible redemption in a manner similar to the two-class method of income per common stock. According to SEC guidance, common stock that is redeemable based on a specified formula is considered to be redeemable at fair value if the formula is designed to equal or reasonably approximate fair value. When deemed to be redeemable at fair value, the weighted average redeemable shares would be included with the non-redeemable shares in the denominator of the calculation and initially calculated as if they were a single class of common stock.
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Derivative Warrant Liabilities
The Company’s 6,075,072 public warrants and the 5,448,372 private warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of the Company’s public warrants issued in connection with our initial public offering was initially measured at fair value using a combination of Monte Carlo and Binomial Lattice models. The fair value of the Company’s private warrants issued in connection with our initial public offering was initially measured at fair value using a Black-Scholes Option Pricing Model and subsequently, the fair value of the Company’s private warrants has been estimated using a Black-Scholes Option Pricing Model each measurement date. The fair value of the Company’s public warrants issued in connection with our initial public offering has subsequently been measured based on the listed market price of such Company’s public warrants.
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily credit risk and, to a lesser extent, interest rate fluctuations.
Credit Risk
Financial instruments that potentially subject our Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 and up to £85,000 by the Financial Services Compensation Scheme per financial institution in the United Kingdom. Aurora has not experienced losses on this account and management believes Aurora is not exposed to significant risks on such account.
Interest Rate Risk
The net proceeds of the Initial Public Offering, the sale of the Novator private placement units and the sale of the Aurora private placement warrants held in the Trust Account will be invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
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Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2022. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective, due to the material weaknesses in our internal control over financial reporting related to the Company’s: (i) accounting for complex financial instruments and unusual transactions, including in connection with the classification of the underwriters’ over-allotment option; and (ii) reconciliations surrounding expenses paid by related parties and accounts payable. The background to the errors and resulting restatement is more fully described in Note 2, Summary of Significant Accounting Policies, of the notes to the financial statements accompanying this Form 10-Q/A. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report for Form10-Q/A, as restated, present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Restatement of Previously Issued Financial Statements
We restate our prior position on accounting for complex accounting transactions and correction of the error described in Note 2 of the accompanying financial statements and have provided an update to our Restated Period financial statements for the three and six months ending June 30, 2022 and 2021 to correct the errors due to accounting for complex financial instruments and unusual transactions, including in connection with the classification of the underwriters’ over-allotment option, and the correction of the error due to the reconciliations surrounding expenses paid by related parties and accounts payable as described in Note 2, Summary of Significant Accounting Policies, of the accompanying financial statements. However, the non-cash adjustments to the financial statement do not impact the amounts previously reported for our cash and cash equivalents or total assets.
Changes in Internal Control Over Financial Reporting
During the fiscal quarter ended June 30, 2022, other than as described below, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In light of the restatement to the classification of over-allotment option liability and the correction of errors in the aggregate included in the unaudited financial statements for the Restated Period, as described in Note 2, Summary of Significant Accounting Policies, of the notes to the financial statements accompanying this Form 10-Q/A, management has implemented remediation steps to improve our internal control over financial reporting. In light of the restatement for the correction of errors in the aggregate included in the restated financial statements for the Affected Periods, as described above, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Specifically, our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. In addition, the Company will implement sufficient and effective reconciliation procedures surrounding expenses paid by related parties and accounts payable. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
There have been no material changes to our risk factors, except as noted below, since we last reported under Part I, Item 1A, in our Annual Report on Form 10-K for the year ended December 31, 2021.
We have identified material weaknesses in our internal control over financial reporting. If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner and we may be unable to maintain compliance with applicable stock exchange listing requirements, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The first material weakness in our internal control over financial reporting relates to our accounting for complex financial instruments and unusual transactions, including in connection with the classification of the underwriters’ over-allotment option. The second material weakness identified in our internal control over financial reporting relates to reconciliations surrounding expenses paid by related parties and accounts payable. We have concluded that these material weaknesses arose because we did not have the business processes, personnel and related internal controls necessary to satisfy applicable accounting and financial reporting requirements.
In connection with the preparation of our financial statements as of and for the fiscal year ended December 31, 2022, after consultation with our advisors, our management and our Audit Committee concluded that the previously issued financial statements as of and for the quarterly period ended June 30, 2022 should be restated to, among other things, report the reconciliations surrounding expenses paid by related parties and accounts payable. See Note 2, Summary of Significant Accounting Policies, to the accompanying financial statements.
Our ongoing material weaknesses, and any new material weaknesses or significant deficiencies we identify in the future, could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such cases, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses or significant deficiencies.
Each of Barclays Capital, Inc. and Citigroup Global Markets Inc. has resigned from its financial advisory role in connection with the Business Combination, and investors should not put any reliance on the fact that any such investment bank was involved with any aspect of the Business Combination. Although not formally retained by Better, Bank of America also has indicated it is resigning from any role it had.
On June 22, 2022, Barclays Capital Inc. (“Barclays”), resigned from its role as financial advisor to the Company. On June 23, 2022, Citigroup Global Markets Inc. (“Citigroup”) resigned from its role as financial advisor to Better. Neither Barclays nor Citigroup provided a reason for its resignation and neither Aurora nor Better will speculate as to their motivations for resigning their respective roles. Neither Barclays nor Citigroup communicated to Aurora or Better, and neither Aurora nor Better are aware, that the resignations were the result of any dispute or disagreement with us or Better, including any disagreement relating to the disclosure in the registration statement, the scope of their respective engagements or their ability to complete such engagements, or any matter relating to Aurora’s or Better’s operations, prospects, policies, procedures or practices. The primary services rendered by Barclays in connection with the Business Combination included serving as financial advisor to our board of directors, PIPE placement agent and providing general advisory services in the context of proposed targets of Aurora, including but not limited to valuation advice. The primary services rendered by Citigroup in connection with the Business Combination included financial advice to Better’s board of directors, review of investor
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materials, assistance in preparation of certain dilution analysis and assistance in preparation of the beneficial ownership data presented in the registration statement.
In connection with such resignations, Barclays and Citigroup waived their entitlement to certain fees which would be owed upon completion of the Business Combination, which were comprised of approximately $8.5 million for Barclays as a deferred underwriting fee and financial advisory fee and $7.5 million for Citigroup, as a financial advisory fee. The waiver of these fees will result in additional cash of $16 million being available to Better Home & Finance Holding Company after the closing of the Business Combination. Aside from underwriting fees paid to Barclays in connection with our initial public offering, neither Barclays nor Citigroup has received any fees in connection with the Business Combination, notwithstanding that their services have been largely complete and, as such, their fee waiver could be characterized as gratuitous upon completion of the Business Combination.
Each of Barclays and Citigroup claim no remaining role in the Business Combination and have disclaimed any responsibility for any portion of the proxy statement/prospectus filed by Aurora with the SEC, despite having previously rendered services in connection with the Business Combination and assistance in preparation of the proxy statement/prospectus, but have not withdrawn any advice or materials previously rendered. Furthermore, Aurora, Better and, following completion of the Business Combination, Better Home & Finance Holding Company, will remain liable for the provisions of the engagement letters with Barclays and Citigroup that survive their resignation, including, for example, with respect to indemnity and contribution.
In addition, on June 30, 2022, with effect from June 9, 2022, Bank of America resigned its purported role as financial advisor to Better, although Bank of America was not formally retained as its financial advisor pursuant to an engagement letter and did not render any material advice or conduct any significant work associated with the Business Combination at Better’s instructions and accordingly has not had any meaningful involvement in the negotiation of the Business Combination or preparation of the registration statement. Bank of America did not provide a reason for its resignation and neither Aurora nor Better will speculate as to its motivations for resigning. Bank of America has not received any fees in connection with the Business Combination.
It is the understanding of both Aurora and Better that the SEC has received similar resignation letters from investment banks in connection with other business combination transactions involving special purpose acquisition companies. When a financial institution is named in a registration statement, it typically presumes a level of due diligence and independent analysis on the part of such financial institution ordinarily associated with a professional engagement. The withdrawal of Barclays and Citigroup and the purported resignation of Bank of America (although Bank of America is not otherwise named in the registration statement) indicates that they do not want to be associated with the disclosure or the underlying business analysis related to this transaction, and the resignation of these banks from other business combination transactions involving special purpose acquisition companies indicates that they do not want to be associated with such disclosure or business analysis for any companies undergoing such transactions. Investors should not place any reliance upon the fact that any of Barclays, Bank of America or Citigroup previously were involved with the Business Combination.
Because Barclays’ and Citigroup’s financial advisory services on the Business Combination were complete, and Better believes that Bank of America never rendered any such financial advisory services on the Business Combination, Aurora and Better do not believe that these resignations will impact in any way the consummation of the Business Combination and neither Aurora nor Better expects to hire any other financial advisors in connection with the Business Combination. Aurora’s board of directors has not revisited its financial analysis with respect to the Business Combination in light of Barclays’ resignation because Aurora already is committed to complete the transactions. Nonetheless, it is possible that Barclays’, Bank of America’s or Citigroup’s resignation may adversely affect market perception of the Business Combination generally. If market perception of the Business Combination is negatively impacted, an increased number of Aurora shareholders may vote against the proposed Business Combination or seek to redeem their shares for cash.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q/A.
No. |
| Description of Exhibit |
2.1 | ||
2.2 | ||
2.3 | ||
2.4 | ||
2.5 | ||
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
10.1 | ||
10.2 |
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10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 |
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10.21# | ||
10.22# | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31 | ||
*31.1 | ||
*31.2 | ||
*32.1 | ||
*32.2 | ||
99.1 | ||
*101.INS | XBRL Instance Document. | |
*101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
*101.SCH | XBRL Taxonomy Extension Schema Document. | |
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
*101.LAB | XBRL Taxonomy Extension Labels Linkbase Document. | |
*101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
*104 | Cover page Interactive Data file (Formatted as inline XBRL and contained in Exhibit 101) |
*Filed herewith
#Indicates management contract or compensatory plan
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AURORA ACQUISITION CORP. | ||
Date: April 14, 2023 | /s/ Arnaud Massenet | |
Name: | Arnaud Massenet | |
Title: | Chief Executive Officer | |
(Principal Executive Officer) | ||
Date: April 14, 2023 | /s/ Caroline Harding | |
Name: | Caroline Harding | |
Title: | Chief Financial Officer | |
(Principal Financial and Accounting Officer) | ||
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