Better.com SPAC partner to restate financial reports

The special purpose acquisition company set to merge with Better.com has reported a "material weakness" in its financial reporting, and said it will restate SPAC earnings dating back to late 2021.

The financial statements in question are from Aurora Acquisition Corp. and don't include past disclosures of Better's own earnings, according to Securities and Exchange Commission filings Wednesday. The SPAC said it doesn't expect the unspecified errors to have any impact on its cash position or amounts held in a trust account connected with its initial public offering.

A source familiar with Aurora Thursday morning told National Mortgage News the SPAC is still working toward its proposed merger with the digital lender. A representative for Better confirmed the filings related to Aurora's own processes and procedures and not the mortgage company's.

Aurora shareholders in late February voted to extend the merger deadline from early March to Sept. 30 of this year. The companies first announced the planned merger in May 2021. Better, which in the past discussed its quarterly earnings through SEC filings with Aurora, hasn't reported its performance since last July, when it revealed a $327.7 million loss in the three months of 2022.

The SPAC's Audit Committee and board of directors, in consultation with management and advisors, determined earlier this week that its previous financial filings shouldn't be relied upon, according to Wednesday's notices. The determination followed a review of expenses and an unspecified "related-party transaction." 

"The Company's management has concluded that, in light of the errors described above, a material weakness exists in the Company's internal control over financial reporting for the affected periods," said one of the filings. 

Aurora said its financial reports for the year-end 2021 and quarterly periods between Sept. 31, 2021 and Sept. 30, 2022, which describe the amount of cash the SPAC holds, "should no longer be relied upon." Aurora's upcoming 2022 10-K annual report, which was delayed, will describe the issue in more detail. Arnaud Massenet, CEO of the SPAC, signed the filings.

The news follows a series of challenges at Better, which in the past year undertook massive layoffs and posted big losses. It's also embroiled in two federal lawsuits and an SEC probe. It's unclear when the lender will provide any updates regarding its quarterly or annual financial statements. Private lawsuits from two former employees also are pending in a New York federal court.

Meanwhile, Better has continued to roll out new products this year, including a One Day Mortgage. It's also added a program that allows Amazon employees to include their company shares in mortgage down payments.