Unless the context otherwise requires, all references in this section to the
"we," "us," "our," the "Company" or "Aurora" refer to Aurora prior to the
consummation of the business combination. 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 Aurora's financial condition and results of operations should be
read in conjunction with Aurora's consolidated financial statements and notes to
those statements included in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties. Aurora's actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors. Please see the section entitled "Cautionary Statement Regarding
Forward-Looking Statements" and "Risk Factors"
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
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businesses. In April 2021, we selected Better HoldCo, Inc. ("Better") as a
business combination target and initiated substantive discussions with Better
with respect to an initial business combination with us. On May 11, 2021, we and
Better, one of the fastest-growing digital homeownership platforms in the United
States, announced that we have entered into the Merger Agreement that will
transform Better, one of the fastest-growing digital homeownership platforms in
the United States, 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 Aurora
? Class B ordinary shares resulted in the issuance of Aurora Class A ordinary
shares on a greater than one-to-one basis upon conversion of the Aurora Class B
ordinary shares.
may subordinate the rights of holders of Aurora Class A ordinary shares if
? preference shares are issued with rights senior to those afforded our Aurora
Class A ordinary shares;
could cause a change in control if a substantial number of our Aurora 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 Aurora units, Aurora
Class A ordinary shares and/or Aurora public 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 Aurora 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 Aurora
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;
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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.
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 by September 30, 2023, we can seek a
further extension provided we have shareholder approval.
Recent Developments
On January 9, 2023, we received a notice from the Listing Qualifications
Department of The Nasdaq Stock Market LLC stating that the Company failed to
hold an annual meeting of shareholders within 12 months after its fiscal year
ended December 31, 2021, as required by Nasdaq Listing Rule 5620(a). In
accordance with Nasdaq Listing Rule 5810(c)(2)(G), we submitted a plan to regain
compliance on February 17, 2023. We believe the combined annual and
extraordinary general meeting we held on February 24, 2023 will satisfy this
requirement under Nasdaq rules.
On February 7, 2023, Aurora, Better and the Sponsor entered into a letter
agreement, pursuant to which, subject to Better receiving requisite approval
therefor (which Better has agreed to use reasonable best efforts to obtain), the
parties agreed that, if the Proposed Business Combination has not been
consummated by the maturity date of the bridge notes, the Sponsor will have the
option, without limiting its rights under the Bridge Note Purchase Agreement (as
defined below) to alternatively exchange its bridge notes on or before the
maturity date as follows: (x) for a number of shares of Better preferred stock
at a conversion price that represents a 50% discount to the $6.9 billion
pre-money equity valuation of Better or (y) for a number of shares of the
Company's Class B common stock at a price per share that represents a 75%
discount to the $6.9 billion pre-money equity valuation of Better. On the same
date, the Sponsor and Better agreed to defer the maturity date of the bridge
notes until September 30, 2023.
On February 8, 2023, we repaid an aggregate principal amount of $2.4 million
under the unsecured promissory note (the "Note") issued to the Sponsor ("Payee")
on May 10, 2021. After giving effect to this repayment, the amount outstanding
under the Note is approximately $412,395.
On February 23, 2023, we, the Sponsor, certain individuals, each of whom is a
member of our board of directors and/or management team (the "Insiders"), and
Better entered into a limited waiver (the "Limited Waiver") to the Amended and
Restated Letter Agreement (the "A&R Letter Agreement"), dated as of May 10,
2021, by and among us, the Sponsor and the Insiders. In the A&R Letter
Agreement, the Sponsor and each Insider waived, with respect to any shares of
Capital Stock (as defined in the A&R Letter Agreement) held by it, him or her,
if any, any redemption rights it, he or she may have in connection with (i) a
shareholder vote to approve the Business Combination (as defined in the A&R
Letter Agreement), or (ii) a shareholder vote to approve certain amendments to
the Company's amended and restated articles of association (the "Redemption
Restriction").
Pursuant to the Limited Waiver, the Company and the Insiders agreed to waive the
Redemption Restriction as it applies to the Sponsor to the limited extent
required to allow the redemption of up to an aggregate of $17 million worth of
Novator Private Placement Shares held by it in connection with the shareholder
vote to approve an amendment to the Company's amended and restated memorandum
and articles of association held on February 24, 2023
As consideration for the Limited Waiver, the Sponsor agreed: (a) if the Proposed
Business Combination is completed on or before September 30, 2023, to subscribe
for and purchase common stock of Better Home & Finance (the "Better Common
Stock"), for aggregate cash proceeds to Better equal to the actual aggregate
amount of Novator Private Placement Shares redeemed by it in connection with the
Limited Waiver (the "Sponsor Redeemed Amount") at a purchase price of $10.00 per
share of Better Common Stock on the closing date of the Proposed Business
Combination; or (b) if the Proposed Business Combination is not completed on or
before September 30, 2023, to subscribe for and purchase for $35 million
aggregate cash proceeds to Better, at the Sponsor's election, (x) a number of
newly issued shares of Better's Company Series D Equivalent Preferred Stock (as
defined in the Bridge Note Purchase Agreement (as defined below)) at a price per
share that represents a 50% discount to the Pre-Money Valuation (as defined
below) or (y) for a number of shares of Better's Class B common stock at a price
per share that represents a 75% discount to the Pre-Money Valuation.
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"Pre-Money Valuation" means the $6.9 billion pre-money equity valuation of
Better based on the aggregate amount of fully diluted shares of Better's common
stock on an as-converted basis.
As further consideration for the Limited Waiver, the Sponsor agreed to reimburse
the Company for reasonable and documented expenses incurred by the Company in
connection with the Proposed Business Combination, up to the Sponsor Redeemed
Amount, to the extent such expenses are not otherwise subject to reimbursement
by Better pursuant to the Merger Agreement.
On February 24, 2023, Aurora, Merger Sub and Better entered into Amendment No. 5
to the Merger Agreement, pursuant to which the parties agreed to extend the
Agreement End Date (as defined in the Merger Agreement) from March 8, 2023 to
September 30, 2023.
We held a combined annual and extraordinary general meeting on February 24,
2023, and extended the date by which the Company has to consummate a business
combination from March 8, 2023 to September 30, 2023. As part of the meeting,
public shareholders redeemed 24,087,689 ordinary shares and the Sponsor
redeemed 1,663,760 ordinary shares for an aggregate cash balance of
approximately $263,123,592.
Results of Operations and Known Trends or Future Events
Aurora's entire activity since inception through December 31, 2022 related to
Aurora's 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 that culminated in signing the Merger Agreement with Better
on May 11, 2021. Aurora has neither engaged in any operations nor generated any
revenues to date. Aurora will not generate any operating revenues until after
completion of its business combination. Aurora will generate non-operating
income in the form of interest income on cash and cash equivalents. Aurora
expects 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 years ended December 31, 2022 and 2021, we had net income (loss) of
$8,735,542 and ($6,527,175), respectively, which consisted of a $12,868,205 and
$1,576,196 gain (loss), respectively, from changes in the fair value of
derivative warrant liabilities, $0 and $296,905 gain (loss), respectively, from
changes in the fair value of over-allotment option liabilities, $182,658 and $0,
gain respectively, on the deferred underwriting fee, offering costs allocated to
warrant liabilities of $0 and $299,523, respectively, and $8,577,543 and
$8,120,280, respectively, in general and administrative costs.
Aurora classifies 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 years
ended December 31, 2022 and 2021, the change in fair value of warrants was a
decrease of $12,868,205 and $1,576,196, respectively.
Liquidity and Capital Resources
As indicated in the accompanying financial statements, as of December 31, 2022,
Aurora had working capital deficiency of $14,605,202.
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 and includes the deferred underwriting commissions
described above. The proceeds held in the Trust Account were, since our IPO
until February 24, 2023 held only in U.S. "government securities" within the
meaning of Section 2(a)(16) of the Investment Company Act having a maturity of
185 days or less or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act which invest only in direct
U.S. government treasury obligations. On or around February 24, 2023, Aurora
instructed Continental to liquidate the securities held in the Trust Account and
thereafter to hold all funds in the Trust Account in cash (i.e., in one or more
bank accounts).
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Aurora intends 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 its initial
business combination. Aurora may withdraw interest to pay its income taxes, if
any.
Aurora's annual income tax obligations will depend on the amount of interest and
other income earned on the amounts held in the Trust Account. Aurora expects the
interest earned on the amount in the Trust Account will be sufficient to pay its
income taxes. To the extent that Aurora's equity or debt is used, in whole or in
part, as consideration to complete its 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 Aurora's growth strategies.
As of December 31, 2022, Aurora had $285,307 of cash 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, prepare and make required securities
filings, listing application and pay legal and professional fees.
Aurora may have insufficient funds available to operate its business prior to
its 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 Aurora's estimates and expenses relating to payments due to
one of Aurora's officers), Aurora's Sponsor or its affiliates may, but are not
obligated to, loan Aurora funds as may be required. If Aurora completes its
initial business combination, Aurora would repay such loaned amounts. Should
Aurora's operating costs, in relation to its proposed business combination,
exceed the amounts still available and not currently drawn under the Note, the
Sponsor shall increase the amount available under the Note to cover such costs,
subject to an aggregate cap of $12,000,000. This amount would be reflective of
estimated total costs of Aurora through November 15, 2023 in relation to the
business combination, in the event the business combination is unsuccessful. The
Note is non-interest bearing and payable by check or wire transfer of
immediately available funds or as otherwise determined by Aurora to such account
as the Payee may from time to time designate by written notice in accordance
with the provision of the Note.
In the event that the Proposed Business Combination does not close, Aurora may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from Aurora's 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 Aurora's initial business combination, Aurora does not expect to
seek loans from parties other than its Sponsor or an affiliate of the Sponsor as
Aurora does 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 Aurora's
Trust Account.
On August 26, 2022, Aurora, Merger Sub and Better entered into Amendment No. 4
to the Merger Agreement whereby Better has also agreed to reimburse Aurora for
reasonable transaction expenses as defined in the Merger Agreement, an aggregate
amount not to exceed $15,000,000, structured in three tranches. Within five
business days of the execution of Amendment No.4 to the Merger Agreement, Better
paid Aurora the first tranche of $7,500,000 and, on February 6, 2023, Better
paid Aurora the second tranche of $3,750,000, each as part of Better's agreement
to reimburse Aurora for transaction expenses as defined in the Merger Agreement.
The third payment of up to $3,750,000 shall be paid on April 1, 2023. On
February 24, 2023, Aurora, Merger Sub and Better entered into Amendment No. 5 to
the Merger Agreement, pursuant to which the parties agreed to extend the
Agreement End Date (as defined in the Merger Agreement) from March 8, 2023 to
September 30, 2023.
In addition, pursuant to the Limited Waiver, the Sponsor has agreed to reimburse
the Company for reasonable and documented expenses incurred by the Company in
connection with the Proposed Business Combination, up to the Sponsor Redeemed
Amount, to the extent such expenses are not otherwise subject to reimbursement
by Better pursuant to the Merger Agreement.
We initially 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 a
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.
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These amounts were estimates and have differed materially from our actual
expenses. In addition, Aurora could use a portion of the funds not being placed
in trust to pay commitment fees for financing, among other things.
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.
Going Concern
In connection with the Company's going concern considerations in accordance with
guidance in the Financial Accounting Standards Board (the "FASB") Accounting
Standards Codification ("ASC") 205-40, Presentation of Financial Statements -
Going Concern, the Company has until September 30, 2023 to consummate a business
combination. The Company's mandatory liquidation date, if a business combination
is not consummated, raises substantial doubt about the Company's ability to
continue as a going concern. These audited financial statements do not include
any adjustments related to the recovery of the recorded assets or the
classification of the liabilities should the Company be unable to continue as a
going concern. As discussed in Note 1, in the event of a mandatory liquidation,
within ten business days, the Company will redeem the Public Shares, at a
per-share price, payable in cash, equal to the allocated amount towards the
Public Shares (in this case, not including the existing Novator Private
Placement Shares) then on deposit in the Trust Account including the allocated
interest earned on the funds held in the Trust Account and not previously
released to the Company to pay taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding Public Shares.
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.
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 our initial public offering or
until we are no longer an "emerging growth company," whichever is earlier.
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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
Aurora 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 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 Aurora's control) are classified as temporary equity.
At all other times, ordinary shares are classified as shareholders' equity.
Aurora's Class A ordinary shares feature certain redemption rights that are
considered to be outside of Aurora's control and subject to the occurrence of
uncertain future events.
Accordingly, at December 31, 2022, Class A ordinary shares subject to possible
redemption are presented as temporary equity, outside of the shareholders'
equity section of Aurora's balance sheet. The Sponsor and Aurora'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 a business combination.
Net Loss Per Ordinary Share
Aurora complies 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
December 31, 2022 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 Aurora's 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 ordinary shares subject to possible redemption in a manner similar
to the two-class method of income per ordinary share. According to SEC guidance,
ordinary shares that are 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 ordinary shares.
Derivative Warrant Liabilities
The 6,075,072 Aurora public warrants and the 5,448,372 Private Placement
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 Aurora 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
Private Placement 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 Private Placement Warrants has been
estimated using a Black-Scholes Option Pricing Model each measurement date. The
fair value of Aurora public warrants issued in connection with our initial
public offering has subsequently been measured based on the listed market price
of such Aurora 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
Aurora's financial statements.
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