2 unchanged sentences
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
−Removed: September 30, December 31,
+Added: March 31, December 31,
(Amounts in thousands, except share and per share amounts) 2024 2023
11 unchanged sentences
Prepaid expenses and other assets 55,661 56,179
−Removed: Bifurcated derivative, at fair value — 236,603
−Removed: Loan commitment asset — 16,119
Total Assets $ 841,586 $ 905,554
−Removed: Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
+Added: Liabilities and Stockholders’ Equity
Warehouse lines of credit $ 126,161 $ 126,218
−Removed: Post-Closing Convertible Notes (issued to a related party.
−Removed: See Note 10) 513,001 —
−Removed: Pre-Closing Bridge Notes — 750,000
−Removed: Corporate line of credit, net — 144,403
+Added: Convertible Note 514,758 514,644
Customer deposits 11,831 11,839
Accounts payable and accrued expenses 55,721 66,558
−Removed: Escrow payable 3,153 8,001
+Added: Escrow payable and other customer accounts 3,760 3,376
Derivative liabilities, at fair value 560 949
−Removed: Convertible preferred stock warrants — 3,096
Warrant and equity related liabilities, at fair value 1,509 2,331
Lease liabilities 29,199 31,202
−Removed: Other liabilities (includes $ 460 and $ 440 payable to related parties as of September 30, 2023 and December 31, 2022, respectively)
+Added: Other liabilities (includes $ 334 and $ 390 payable to related parties as of March 31, 2024 and December 31, 2023, respectively)
21,797 25,837
1 unchanged sentence
Commitments and contingencies (see Note 11)
−Removed: Convertible preferred stock, $ 0.0001 par value;
−Removed: none as of September 30, 2023;
−Removed: 602,405,839 shares authorized, 332,314,737 shares issued and outstanding and $ 420,742 liquidation preference as of December 31, 2022.
−Removed: Stockholders’ Equity (Deficit)
+Added: Stockholders’ Equity
Common stock $ 0.0001 par value;
−Removed: 3,300,000,000 and 1,086,027,188 shares authorized as of September 30, 2023 and December 31, 2022, respectively, and 737,585,438 and 299,783,421 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
+Added: 3,300,000,000 shares authorized as of March 31, 2024 and December 31, 2023, and 755,578,694 and 751,773,361 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
Notes receivable from stockholders ( 10,976 ) ( 10,111 )
2 unchanged sentences
Accumulated other comprehensive loss ( 2,027 ) ( 1,714 )
−Removed: Total Stockholders’ Equity (Deficit) 157,232 ( 610,100 )
−Removed: Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) $ 937,055 $ 1,086,522
+Added: Total Stockholders’ Equity 76,290 122,600
+Added: Total Liabilities and Stockholders’ Equity $ 841,586 $ 905,554
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1 unchanged sentence
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands, except share and per share amounts) 2024 2023
−Removed: Mortgage platform revenue, net $ 14,207 $ 11,087 $ 54,927 $ 106,586
−Removed: Cash offer program revenue — 9,739 304 226,096
−Removed: Other platform revenue 1,333 5,688 9,355 35,623
+Added: Gain on loans, net $ 15,652 $ 12,761
+Added: Other revenue 2,817 4,944
Net interest income
Interest income 8,636 6,390
−Removed: Warehouse interest expense ( 2,758 ) ( 2,838 ) ( 9,544 ) ( 14,775 )
+Added: Interest expense ( 4,854 ) ( 5,469 )
Net interest income 3,782 921
Total net revenues 22,251 18,626
−Removed: Mortgage platform expenses
−Removed: 19,166 55,545 70,809 292,915
−Removed: Cash offer program expenses — 9,813 398 227,509
−Removed: Other platform expenses 3,161 8,951 11,787 55,250
−Removed: General and administrative expenses
−Removed: 59,189 46,499 113,392 161,293
−Removed: Marketing and advertising expenses
−Removed: 5,128 9,948 17,122 59,801
−Removed: Technology and product development expenses 20,732 29,414 66,639 100,354
−Removed: Restructuring and impairment expenses (see Note 5)
−Removed: 679 45,781 11,798 212,490
+Added: Compensation and benefits 38,073 38,112
+Added: General and administrative 14,047 16,762
+Added: Technology 5,458 14,446
+Added: Marketing and advertising 4,554 7,760
+Added: Loan origination expense 2,577 5,202
+Added: Depreciation and amortization 9,074 11,477
+Added: Other expenses ( 183 ) 11,065
Total expenses 73,600 104,824
−Removed: Loss from operations ( 91,606 ) ( 177,298 ) ( 224,376 ) ( 733,164 )
−Removed: Interest and other income (expense), net
−Removed: Other income (expense) 977 746 5,187 861
−Removed: Interest and amortization on non-funding debt ( 11,939 ) ( 3,304 ) ( 18,237 ) ( 10,077 )
−Removed: Interest on Pre-Closing Bridge Notes — ( 80,099 ) — ( 213,513 )
−Removed: Change in fair value of warrant liabilities 861 — 861 —
−Removed: Change in fair value of convertible preferred stock warrants — 4,202 266 24,613
−Removed: Change in fair value of bifurcated derivative ( 237,667 ) 29,089 ( 236,603 ) 306,866
−Removed: Total interest and other expense, net ( 247,768 ) ( 49,366 ) ( 248,526 ) 108,750
Loss before income tax expense ( 51,349 ) ( 86,198 )
12 unchanged sentences
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
−Removed: For the Three Months Ended September 30, 2023
−Removed: Convertible preferred stock Common Stock
−Removed: (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par
−Removed: Value Notes Receivables from Stockholders Additional Paid-In
−Removed: Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit)
−Removed: Balance - June 30, 2023 108,721,433 $ 436,280 98,370,492 $ 10 $ ( 56,254 ) $ 642,551 $ ( 1,316,823 ) $ ( 1,732 ) $ ( 732,248 )
−Removed: Recapitalization of shares due to Business Combination (Note 3)
−Removed: 223,593,304 — 202,305,863 20 — ( 20 ) — — —
−Removed: Adjusted Balance as of June 30, 2023 332,314,737 436,280 300,676,355 30 ( 56,254 ) 642,531 ( 1,316,823 ) ( 1,732 ) ( 732,248 )
−Removed: Conversion of convertible preferred stock to common stock ( 332,314,737 ) ( 436,280 ) 332,314,737 33 — 436,247 — — 436,280
−Removed: Conversion of pre-closing bridge notes to common stock — — 105,000,000 12 — 749,988 — — 750,000
−Removed: Issuance of common stock upon Business Combination close — — 10,698,910 1 — 37,966 — — 37,967
−Removed: Exercise of warrants — — 14,576,174 1 — 4,289 — — 4,290
−Removed: Transaction costs related to the Business Combination — — — — — ( 21,437 ) — — ( 21,437 )
−Removed: Recognition of derivative liability related to earnout — — — — — ( 1,112 ) — — ( 1,112 )
−Removed: Assumption private & public placement warrants — — — — — ( 1,276 ) — — ( 1,276 )
−Removed: Issuance of common stock for options exercised — — 106,744 — — 2,253 — — 2,253
−Removed: Cancellation of common stock — — ( 2,865,535 ) — — — — — —
−Removed: Stock-based compensation — — — — — 27,547 — — 27,547
−Removed: Tax withholding upon vesting of restricted stock units — — — — — ( 4,790 ) — — ( 4,790 )
−Removed: Vesting of common stock issued via notes receivable from stockholders — — — — ( 1,041 ) — — — ( 1,041 )
−Removed: Forfeiture of shares — — ( 15,440,633 ) ( 2 ) 30,161 ( 30,159 ) — — —
−Removed: Forgiveness of officer loans — — — — 1,530 — — — 1,530
−Removed: Shares transferred in settlement of loans — — ( 7,481,314 ) ( 1 ) 15,200 ( 15,199 ) — — —
−Removed: Net loss — — — — — — ( 340,033 ) — ( 340,033 )
−Removed: Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — — — ( 698 ) ( 698 )
−Removed: Balance - September 30, 2023 $ — $ — $ 737,585,438 $ 74 $ ( 10,404 ) $ 1,826,848 $ ( 1,656,856 ) $ ( 2,430 ) $ 157,232
−Removed: The accompanying notes are an integral part of these unaudited consolidated financial statements.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
−Removed: For the Three Months Ended September 30, 2022
−Removed: Convertible preferred stock Common Stock
−Removed: (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In
−Removed: Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit)
−Removed: Balance - June 30, 2022 108,721,433 $ 436,280 98,326,436 $ 10 $ ( 48,403 ) $ 601,756 $ ( 691,865 ) $ ( 714 ) $ ( 139,216 )
−Removed: Recapitalization of shares due to Business Combination (Note 3)
−Removed: 223,593,304 — 202,215,259 — — — — — —
−Removed: Adjusted Balance as of June 30, 2022 332,314,737 436,280 300,541,695 10 ( 48,403 ) 601,756 ( 691,865 ) ( 714 ) ( 139,216 )
−Removed: Issuance of common stock — — 926,783 — — 5,304 — — 5,304
−Removed: Repurchase or cancellation of common stock — — ( 649,937 ) — — ( 3,163 ) — — ( 3,163 )
−Removed: Stock-based compensation — — — — — 11,765 — — 11,765
−Removed: Vesting of common stock issued via notes receivable from stockholders — — — — ( 3,011 ) — — — ( 3,011 )
−Removed: Net loss — — — — — — ( 226,612 ) — ( 226,612 )
−Removed: Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — — — ( 155 ) ( 155 )
−Removed: Balance - September 30, 2022 332,314,737 $ 436,280 300,818,541 $ 10 $ ( 51,414 ) $ 615,662 $ ( 918,477 ) $ ( 869 ) $ ( 355,088 )
−Removed: The accompanying notes are an integral part of these unaudited consolidated financial statements.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
−Removed: For the Nine Months Ended September 30, 2023
−Removed: Convertible preferred stock Common Stock
−Removed: (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par
+Added: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
+Added: For the Three Months Ended March 31, 2024
+Added: (Amounts in thousands, except share and per share amounts) Issued and Outstanding Par
Value Notes Receivables from Stockholders Additional Paid-In
1 unchanged sentence
Balance - December 31, 2023 751,773,361 74 ( 10,111 ) 1,838,427 ( 1,704,076 ) ( 1,714 ) 122,600
−Removed: Recapitalization of shares due to Business Combination (Note 3)
−Removed: 223,593,304 — 201,705,065 20 — ( 20 ) — — —
−Removed: Adjusted Balance as of December 31, 2022 332,314,737 436,280 299,783,421 30 ( 53,900 ) 626,608 ( 1,181,415 ) ( 1,423 ) ( 610,100 )
−Removed: Conversion of convertible preferred stock to common stock ( 332,314,737 ) ( 436,280 ) 332,314,737 33 — 436,247 — — 436,280
−Removed: Conversion of pre-closing bridge notes to common stock — — 105,000,000 12 — 749,988 — 750,000
−Removed: Issuance of common stock upon Business Combination close — — 10,698,910 1 — 37,966 — — 37,967
−Removed: Exercise of warrants — — 14,576,174 1 — 4,289 — — 4,290
−Removed: Transaction costs related to the Business Combination — — — — — ( 21,437 ) — — ( 21,437 )
−Removed: Recognition of derivative liability related to earnout — — — — — ( 1,112 ) — — ( 1,112 )
−Removed: Assumption private & public placement warrants — — — — — ( 1,276 ) — — ( 1,276 )
+Added: Adjustment of transaction costs related to the Business Combination — — — ( 2,372 ) — — ( 2,372 )
Issuance of common stock for options exercised 120,887 — — 19 — — 19
2 unchanged sentences
Tax withholding upon vesting of restricted stock units — — — ( 1,288 ) — — ( 1,288 )
+Added: Share issued for vested restricted stock units 4,358,419 1 — — — — 1
Vesting of common stock issued via notes receivable from stockholders — — ( 865 ) 857 — — ( 8 )
−Removed: Forfeiture of shares — — ( 15,440,633 ) ( 2 ) 30,161 ( 30,159 ) — — —
−Removed: Forgiveness of officer loans — — — — 1,530 — — — 1,530
−Removed: Shares transferred in settlement of loans — — ( 7,481,315 ) ( 1 ) 15,200 ( 15,199 ) — — —
Net loss — — — — ( 51,492 ) — ( 51,492 )
Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — ( 313 ) ( 313 )
−Removed: Balance—September 30, 2023 — $ — 737,585,438 $ 74 $ ( 10,404 ) $ 1,826,848 $ ( 1,656,856 ) $ ( 2,430 ) $ 157,232
+Added: Balance - March 31, 2024 755,578,694 $ 75 $ ( 10,976 ) $ 1,844,786 $ ( 1,755,568 ) $ ( 2,027 ) $ 76,290
The accompanying notes are an integral part of these unaudited consolidated financial statements.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
−Removed: For the Nine Months Ended September 30, 2022
+Added: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
+Added: For the Three Months Ended March 31, 2023
Convertible preferred stock Common Stock
−Removed: (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding
−Removed: Par Value Notes Receivables from Stockholders Additional Paid-In
+Added: (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In
Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit)
Balance - December 31, 2022 108,721,433 $ 436,280 98,078,356 $ 10 $ ( 53,225 ) $ 618,111 $ ( 1,167,656 ) $ ( 1,423 ) $ ( 604,183 )
−Removed: Recapitalization of shares due to Business Combination (Note 3)
−Removed: 223,593,304 — 203,738,608 — — — — — —
+Added: Recapitalization of shares due to Business Combination 223,593,304 — 201,705,065 — — — — — —
Adjusted Balance as of December 31, 2022 332,314,737 436,280 299,783,421 10 ( 53,225 ) 618,111 ( 1,167,656 ) ( 1,423 ) ( 604,183 )
Issuance of common stock — — 133,645 — — 1,353 — — 1,353
−Removed: Cancellation of common stock — — ( 6,408,889 ) — — ( 4,174 ) — — ( 4,174 )
+Added: Repurchase or cancellation of common stock — — ( 326,301 ) — — ( 8 ) — — ( 8 )
Stock-based compensation — — — — — 5,917 — — 5,917
+Added: Shares issued for vested restricted stock units — — 1,048,752 — — — — — —
Vesting of common stock issued via notes receivable from stockholders — — — — ( 2,210 ) 172 — — ( 2,038 )
1 unchanged sentence
Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — ( 146 ) — — ( 222 ) ( 368 )
−Removed: Balance—September 30, 2022 332,314,737 $ 436,280 300,818,541 $ 10 $ ( 51,414 ) $ 615,662 $ ( 918,477 ) $ ( 869 ) $ ( 355,088 )
+Added: Balance - March 31, 2023 332,314,737 $ 436,280 300,639,517 $ 10 $ ( 55,581 ) $ 625,545 $ ( 1,255,278 ) $ ( 1,645 ) $ ( 686,949 )
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1 unchanged sentence
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
5 unchanged sentences
Amortization of internal use software and other intangible assets 8,045 9,361
+Added: Gain on sale of loans, net ( 9,821 ) ( 12,524 )
Non-cash interest and amortization of debt issuance costs and discounts 1,217 164
−Removed: Other non-cash adjustments 2,138 1,529
Change in fair value of warrants ( 823 ) ( 553 )
−Removed: Change in fair value of convertible preferred stock warrants ( 266 ) ( 24,613 )
Change in fair value of bifurcated derivative — 1,887
Stock-based compensation 8,760 4,408
−Removed: Provision for loan repurchase reserve 178 25,125
+Added: (Recovery of)/Provision for loan repurchase reserve ( 3,563 ) 2,124
Change in fair value of derivatives ( 410 ) 4,520
4 unchanged sentences
Proceeds from sale of mortgage loans held for sale 662,965 696,635
−Removed: Operating lease obligations ( 11,247 ) ( 11,952 )
+Added: Operating lease liabilities ( 2,003 ) ( 3,968 )
Other receivables, net 5,404 ( 4,027 )
1 unchanged sentence
Accounts payable and accrued expenses ( 14,534 ) 18,219
−Removed: Escrow payable ( 4,848 ) ( 5,162 )
+Added: Escrow payable and other customer accounts 384 ( 273 )
Other liabilities 45 ( 2,584 )
−Removed: Net cash (used in)/provided by operating activities ( 76,167 ) 978,790
+Added: Net cash used in operating activities ( 42,806 ) ( 162,759 )
Cash Flows from Investing Activities:
3 unchanged sentences
Acquisitions of businesses, net of cash acquired — ( 2,658 )
−Removed: Deferred acquisition consideration — ( 3,847 )
Maturities of short-term investments 22,638 —
2 unchanged sentences
Cash Flows from Financing Activities:
−Removed: Issuance of post-closing convertible notes (issued to a related party.
−Removed: See Note 10) 528,586 —
−Removed: Exercise of convertible preferred stock warrants 1,460 —
−Removed: Proceeds from Business Combination 21,616 —
−Removed: Proceeds from issuance of common stock 16,351 —
−Removed: Borrowings on warehouse lines of credit 2,237,603 9,582,426
−Removed: Repayments of warehouse lines of credit ( 2,308,116 ) ( 11,072,666 )
+Added: Net (repayments)/ borrowings on warehouse lines of credit ( 57 ) 94,105
Repayments on finance lease liabilities — ( 205 )
−Removed: Net increase (decrease) in customer deposits ( 2,466 ) —
+Added: Net decrease in customer deposits ( 8 ) —
Repayments on corporate line of credit — ( 20,000 )
−Removed: Payment of debt issuance costs ( 3,561 ) —
+Added: Principal payments on convertible notes ( 1,103 ) —
Proceeds from exercise of stock options 20 —
−Removed: Payment of equity financing costs ( 16,634 ) —
Repurchase or cancellation of common stock — ( 104 )
−Removed: Net cash provided by/(used in) financing activities 327,671 ( 1,499,194 )
+Added: Net cash (used in)/ provided by financing activities ( 1,148 ) 73,796
Effects of currency translation on cash, cash equivalents, and restricted cash ( 123 ) ( 368 )
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Net Decrease in Cash, Cash Equivalents, and Restricted Cash ( 77,463 ) ( 95,378 )
1 unchanged sentence
Cash, cash equivalents, and restricted cash—End of period $ 450,603 $ 250,687
+Added: The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of the same such amounts shown on the previous page.
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
4 unchanged sentences
Interest paid $ 2,550 $ 2,526
−Removed: Income taxes (refunded)/ paid $ ( 5,886 ) $ 1,333
+Added: Income taxes paid/(refunded) $ 247 $ ( 6,017 )
Non-Cash Investing and Financing Activities:
2 unchanged sentences
Vesting of common stock issued via notes receivable from stockholders $ 865 $ 2,210
−Removed: Acquisition earnout $ 3,430 $ —
−Removed: Forgiveness of notes receivable from stockholders
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10 unchanged sentences
and offers a multitude of financial products and services to consumers via regulated entities obtained through acquisitions.
−Removed: On August 22, 2023 (the “Closing Date”), the Company consummated the previously announced Business Combination (the “Business Combination”), pursuant to the terms of the Agreement and Plan of Merger, dated as of May 10, 2021, as amended as of October 27, 2021, November 9, 2021, November 30, 2021, August 26, 2022, February 24, 2023 and June 23, 2023 (as amended, the “Merger Agreement”), by and among Aurora, Better Holdco, Inc.
−Removed: (“Better”), and Aurora Merger Sub I, Inc., formerly a wholly owned subsidiary of Aurora (“Merger Sub”).
−Removed: On the Closing Date, Merger Sub merged with and into Better, with Better surviving the merger (the “First Merger”) and Better merged with and into Aurora, with Aurora surviving the merger and changing its name to “Better Home & Finance Holding Company” (referred to as “Better Home & Finance” or the “Company”) (such merger, the “Second Merger,” and together with the First Merger, the “Business Combination” and the completion thereof, the “Closing”).
−Removed: Better Home & Finance Class A common stock and warrants are listed on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, under the ticker symbols “BETR” and “BETRW.”
+Added: On August 22, 2023 (the “Closing Date”), the Company consummated its business combination (the “Business Combination”), pursuant to the terms of the Agreement and Plan of Merger, dated as of May 10, 2021, as amended as of October 27, 2021, November 9, 2021, November 30, 2021, August 26, 2022, February 24, 2023 and June 23, 2023 (as amended, the “Merger Agreement”), by and among Aurora, Better Holdco, Inc.
+Added: (“Pre-Business Combination Better”), and Aurora Merger Sub I, Inc., formerly a wholly owned subsidiary of Aurora (“Merger Sub”).
+Added: On the Closing Date, Merger Sub merged with and into Pre-Business Combination Better, with Pre-Business Combination Better surviving the merger (the “First Merger”) and Pre-Business Combination Better merged with and into Aurora, with Aurora surviving the merger and changing its name to “Better Home & Finance Holding Company” (referred to as “Better Home & Finance” or the “Company”) (such merger, and together with the First Merger, the “Business Combination” and the completion thereof, the “Closing”).
+Added: Unless otherwise indicated, references to “Better,” “Better Home & Finance,” the “Company,” “we,” “us,” “our” and other similar terms refer to (i) Pre-Business Combination Better and its consolidated subsidiaries prior to the Closing and (ii) Better Home & Finance and its consolidated subsidiaries following the Closing.
+Added: The Company’s Class A common stock, par value $ 0.0001 per share (“Class A common stock”) and public warrants are listed on the Nasdaq Capital Market under the ticker symbols “BETR” and “BETRW,” respectively.
+Added: Going Concern Considerations— In connection with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Basis of Presentation - Going Concern , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.
+Added: On October 12, 2023, and on April 9, 2024, the Company was notified by the Listing Qualifications Staff of The Nasdaq Stock Market, LLC ("Nasdaq") that the Company’s Class A common stock was not in compliance with the $1.00 minimum bid price rule for continued listing on Nasdaq, and would be subject to delisting for failure to regain compliance with such rule within the first 180-day compliance period (ending April 9, 2024) or a subsequent 180-day compliance period (ending October 7, 2024).
+Added: If the Class A common stock is no longer listed on Nasdaq, or another national securities exchange, such delisting would constitute a fundamental change under the indenture for the Convertible Note (as defined below) that would require the Company to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of the Convertible Note plus accrued and unpaid interest to the redemption date.
+Added: As of March 31, 2024, the Company had cash and cash equivalents, together with short-term investments of $ 482.6 million, compared to $ 528.6 million principal amount outstanding under the Convertible Note.
+Added: If the Company is required to redeem the Convertible Note prior to maturity, the Company may not have sufficient available cash and cash equivalents or be able to obtain additional liquidity, on acceptable terms or at all, to enable the Company to redeem or refinance the Convertible Note and continue operating its business.
+Added: The Company is evaluating options for regaining compliance with the $1.00 minimum bid price rule.
+Added: The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: the Nasdaq Global Market to the Nasdaq Capital Market.
+Added: The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.”
+Added: On March 19, 2024, the Company’s board of directors approved a proposal for its annual meeting of stockholders in 2024 to seek stockholder approval to declare and effect one or more reverse stock splits designed to increase the price of the Class A common stock above the $1.00 minimum bid price rule to maintain its Nasdaq listing.
+Added: Directors and officers, certain senior employees, and significant stockholders, who together hold a majority of the voting power of our outstanding common stock, have indicated that they will vote to approve the reverse stock splits at the Company’s meeting of stockholders in June 2024.
+Added: On April 9, 2024, the Company received formal notice that Nasdaq granted the Company’s request for an additional 180-day period, or until October 7, 2024, to evidence compliance with the $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to the Bid Price Rule.
+Added: If at any time before October 7, 2024, the bid price of the Company’s Class A common stock closes at or above $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule.
Summary of Significant Accounting Policies
Basis of Presentation — The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.
−Removed: The Business Combination has been accounted for as a reverse recapitalization in accordance with U.S.
−Removed: Under this method of accounting, Aurora was treated as the “acquired” company for financial reporting purposes.
−Removed: Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Better issuing stock for the net assets of Aurora, accompanied by a recapitalization.
−Removed: All share amounts in periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization.
−Removed: The financials of Better are presented here for all comparative periods.
In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows.
−Removed: The results of operations and other information for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023.
−Removed: The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes of Better thereto for the year ended December 31, 2022.
+Added: The results of operations and other information for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024.
+Added: The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes of Pre-Business Combination Better thereto for the year ended December 31, 2023.
Consolidation — The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries.
3 unchanged sentences
Actual results could differ from those estimates.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Significant items subject to such estimates and assumptions include the fair value of mortgage loans held for sale, the fair value of derivative assets and liabilities, including bifurcated derivatives, interest rate lock commitments and forward sale commitments, the determination of a valuation allowance on the Company’s deferred tax assets, capitalization of internally developed software and its associated useful life, determination of fair value of the Company’s common stock, stock option and RSUs at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, the incremental borrowing rate used in determining lease liabilities and warrant liabilities.
−Removed: Business Combinations — The Company includes the financial results of businesses that the Company acquires from the date of acquisition.
−Removed: The Company records all assets acquired and liabilities assumed at fair value, with the excess of the purchase price over the aggregate fair values recorded as goodwill.
−Removed: Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies.
−Removed: During the measurement period the Company may record adjustments to the assets acquired and liabilities assumed.
−Removed: Transaction costs associated with business combinations are expensed as incurred.
+Added: Significant items subject to such estimates and assumptions include the fair value of mortgage loans held for sale, the fair value of derivative assets and liabilities, including bifurcated derivatives, interest rate lock commitments and forward sale commitments, the determination of a valuation allowance on the Company’s deferred tax assets, capitalization of internally developed software and its associated useful life, determination of fair value of the stock options at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, and the incremental borrowing rate used in determining lease liabilities and warrant liabilities.
Short-term investments — Short term investments consist of fixed income securities, typically U.K.
5 unchanged sentences
The Company has not recognized any impairments on these investments to date and any unrealized gains or losses on these investments are immaterial.
−Removed: Allowance for Credit Losses - Held to Maturity (“HTM”) Short-term Investments—The Company's HTM Short-term investments are also required to utilize the Current Expected Credit Loss (“CECL”) approach to estimate expected credit losses.
+Added: Allowance for Credit Losses – Held to Maturity (“HTM”) Short-term Investments —The Company’s HTM Short-term investments are also required to utilize the Current Expected Credit Loss approach to estimate expected credit losses.
Management measures expected credit losses on short-term investments on a collective basis by major security types that share similar risk characteristics, such as financial asset type and collateral type adjusted for current conditions and reasonable and supportable forecasts.
Management classifies the short term investments portfolio by security types, such as U.K.
−Removed: government agency.
+Added: government agency securities.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
government treasury securities and U.K.
3 unchanged sentences
government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of no credit losses.
−Removed: Therefore, credit losses for these securities were immaterial as the Company does not currently expect any material credit losses.
+Added: Therefore, credit losses for these securities were immaterial as the Company does not currently expect any material credit losses on these short-term investments.
Mortgage Loans Held for Sale, at Fair Value — The Company sells its mortgage loans held for sale (“LHFS”) to loan purchasers.
6 unchanged sentences
LHFS consists of loans originated for sale by BMC.
−Removed: The Company elects the fair value option, in accordance with Accounting Standard Codification (“ASC”) 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in mortgage platform revenue, net in the condensed consolidated statements of operations and comprehensive loss.
+Added: The Company elects the fair value option, in accordance with ASC 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in gain on loans, net in the condensed consolidated statements of operations and comprehensive loss.
Management believes that the election of the fair value option for LHFS improves financial reporting by presenting the most relevant market indication of LHFS.
The fair value of LHFS is based on market prices and yields at period end.
−Removed: The Company accounts for the gains or losses resulting from sales of mortgage loans based on the guidance of ASC 860-20 – Sales of Financial Assets (“ASC 860”).
−Removed: The Company issues interest rate lock commitments (“IRLC”) to originate mortgage loans and the fair value of the IRLC, adjusted for the probability that a given IRLC will close and fund, is recognized within mortgage platform revenue, net.
−Removed: Subsequent changes in the fair value of the IRLC are measured at each reporting period within mortgage platform revenue, net until the loan is funded.
−Removed: When the loan is funded, the IRLC is derecognized and the LHFS is recognized based
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: on the fair value of the loan.
−Removed: The LHFS is subsequently remeasured at fair value at each reporting period and the changes in fair value are included within mortgage platform revenue, net until the loan is sold on the secondary market.
−Removed: When the loan is sold on the secondary market, the LHFS is derecognized and the gain/(loss) is included within mortgage platform revenue, net based on the cash settlement.
+Added: The Company accounts for the gains or losses resulting from sales of mortgage loans based on the guidance of ASC 860-20 – Sales of Financial Assets .
+Added: The Company issues interest rate lock commitments (“IRLC”) to originate mortgage loans and the fair value of the IRLC, adjusted for the probability that a given IRLC will close and fund, is recognized within gain on loans, net.
+Added: Subsequent changes in the fair value of the IRLC are measured at each reporting period within gain on loans, net until the loan is funded.
+Added: When the loan is funded, the IRLC is derecognized and the LHFS is recognized based on the fair value of the loan.
+Added: The LHFS is subsequently remeasured at fair value at each reporting period and the changes in fair value are included within gain on loans, net until the loan is sold on the secondary market.
+Added: When the loan is sold on the secondary market, the LHFS is derecognized and the gain/(loss) is included within gain on loans, net based on the cash settlement.
LHFS are considered sold when the Company surrenders control over the loans.
1 unchanged sentence
The Company typically considers the above criteria to have been met upon receipt of sales proceeds from the loan purchaser.
−Removed: Loan Repurchase Reserve — The Company sells LHFS in the secondary market and in connection with those sales, makes customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws.
−Removed: In the event of a breach of its representations and warranties, the Company may be required to repurchase the loan with the identified defects.
−Removed: The loan repurchase reserve on loans sold relates to expenses incurred due to the potential repurchase of loans, indemnification of losses based on alleged violations or representations and warranties, which are customary to the mortgage banking industry.
−Removed: Provisions for potential losses are charged to expenses and are included within mortgage platform expenses on the consolidated statements of operations and comprehensive loss.
−Removed: The loan repurchase reserve represents the Company’s estimate of the total losses expected to occur and is considered to be adequate by management based upon the Company’s evaluation of the potential exposure related to the loan sale agreements over the life of the associated loans sold.
−Removed: The Company records the loan repurchase reserve within other liabilities on the consolidated balance sheets.
+Added: Loans Held for Investment — The Company holds a small amount of loans held for investment, for which management has the intent and ability to hold for the foreseeable future or until maturity or payoff and are reported at amortized cost, which is the principal amount outstanding, net of cumulative charge-offs, unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans.
+Added: Loans held for investment are included within prepaid expenses and other assets on the condensed consolidated balance sheets.
+Added: The allowance for credit losses is a valuation account that is deducted from the loans held for investment amortized cost basis to present the net amount expected to be collected on the loans.
+Added: Loans are charged-off against the allowance when management believes the loan balance is deemed to be uncollectible.
+Added: Management’s estimation of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, including expected defaults and prepayments.
+Added: The Company recognized an immaterial current expected credit loss for loans held for investment as of March 31, 2024 and December 31, 2023.
Fair Value Measurements — Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values.
2 unchanged sentences
The principal market is the market in which the Company would sell or transfer the asset with the greatest volume and level of activity for the asset.
−Removed: In determining the principal market for an asset or liability, it is assumed that the Company has access to the market as of the measurement date.
+Added: In determining the principal market for an asset or liability, it is assumed that the
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: Company has access to the market as of the measurement date.
If no market for the asset exists, or if the Company does not have access to the principal market, a hypothetical market is used.
4 unchanged sentences
Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
−Removed: Assets and liabilities measured at fair value on a recurring basis include LHFS, derivative assets and liabilities, including IRLCs and forward sale commitments, MSRs, bifurcated derivatives, convertible preferred stock warrants and warrant liabilities.
+Added: Assets and liabilities measured at fair value on a recurring basis include LHFS, derivative assets and liabilities, including IRLCs and forward sale commitments, mortgage servicing rights, bifurcated derivatives, convertible preferred stock warrants and warrant liabilities.
Common stock warrants are measured at fair value at issuance only and are classified as equity on the condensed consolidated balance sheets.
1 unchanged sentence
However, for certain instruments, the Company must utilize unobservable inputs in determining fair value due to the lack of observable inputs in the market, which requires greater judgment in measuring fair value.
−Removed: In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: reflect information and assumptions that management believes a market participant would use in pricing the asset or liability.
−Removed: Upon the Closing of the Business Combination and issuance of the Post-Closing Convertible Notes, the Loan commitment asset was reclassified as a discount to the Post-Closing Convertible Notes and was amortized as part of interest expense over the term of the note.
+Added: In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements reflect information and assumptions that management believes a market participant would use in pricing the asset or liability.
Warehouse Lines of Credit — Warehouse lines of credit represent the outstanding balance of the Company’s warehouse borrowings collateralized by mortgage loans held for sale or related borrowings collateralized by restricted cash.
−Removed: Generally, warehouse lines of credit are used as interim, short-term financing which bears interest at a fixed margin over an index rate, such as the Secured Oversight Financing Rate (“SOFR”).
+Added: Generally, warehouse lines of credit are used as interim, short-term financing which bears interest at a fixed margin over an index rate, such as the Secured Overnight Financing Rate (“SOFR”).
The outstanding balance of the Company’s warehouse lines of credit will fluctuate based on its lending volume.
2 unchanged sentences
The Company did not incur any significant issuance costs related to its warehouse lines of credit.
−Removed: Post-Closing Convertible Notes— As part of the Closing of the Business Combination, the Company issued convertible notes.
−Removed: Upon initial issuance, convertible notes are evaluated for redemption and conversion features that could result in embedded derivatives that require bifurcation from the notes.
+Added: Convertible Note— As part of the Closing of the Business Combination, the Company issued the Convertible Note.
+Added: Upon initial issuance, the Convertible Note is evaluated for redemption and conversion features that could result in embedded derivatives that require bifurcation from the notes.
Upon initial issuance, any embedded derivatives are measured at fair value.
−Removed: Convertible notes proceeds are allocated between the carrying value of the notes and the fair value of embedded derivatives on the initial issuance date.
+Added: Convertible Note proceeds are allocated between the carrying value of the note and the fair value of embedded derivatives on the initial issuance date.
Any portion of proceeds allocated to embedded derivatives are treated as reductions in, or discounts to, the carrying value of the convertible notes on the issuance date.
Embedded derivatives are adjusted to fair value at each reporting period, with the change in fair value included within the consolidated statements of operations and comprehensive income (loss).
−Removed: See Note 10 for further details on the Company’s Post-Closing Convertible Notes.
−Removed: Corporate Line of Credit, net of discount and debt issuance costs — The Company had a line of credit arrangement with a third-party lender.
−Removed: Debt and other related issuance costs are deferred and amortized through the maturity date of the line of credit as interest and amortization on non-funding debt expense.
−Removed: Any modifications of the line of credit arrangement are analyzed as to whether they are an extinguishment or modification of debt on a lender-by-lender basis, which is determined by whether (1) the lender remains the same, and (2) the change in the debt terms is considered substantial.
−Removed: Gains and losses on debt modifications that are considered extinguishments are recognized in current earnings.
−Removed: Debt modifications that are not considered extinguishments are accounted for prospectively through yield adjustments, based on the revised terms (see Note 10).
−Removed: Warrant Liabilities — The Company assumed publicly-traded warrants (“Public Warrants”) issued in Aurora’s initial public offering, private placement warrants issued by Aurora in connection with its formation and warrants attached to certain private placement units (collectively, the “Private Warrants” and, together with the Public Warrants, the “Warrants”).
−Removed: Each Warrant issued entitles the holder to purchase one share of Better Home & Finance Holding Company Class A common stock at an exercise price of $ 11.50 per share, subject to certain adjustments, at any time commencing 30 days after the consummation of the Business Combination (which for the avoidance of doubt was September 21, 2023).
−Removed: The Public Warrants are publicly traded and may be exercised on a cashless basis upon the occurrence of certain conditions.
−Removed: The Private Warrants are exercisable on a cashless basis and are not redeemable by the Company so long as they are held by the initial purchasers or their permitted transferees, subject to certain exceptions.
−Removed: If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.
−Removed: The Company evaluated the Public Warrants and Private Warrants and concluded that both meet the definition of a derivative and will be accounted for at fair value in accordance with ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity , as the Public Warrants and Private Warrants are not considered indexed to the Company's stock.
+Added: See Note 9 for further details on the Company’s Convertible Note.
Income Taxes — Income taxes are calculated in accordance with ASC 740, Accounting for Income Taxes .
1 unchanged sentence
At the end of each interim period, the estimated effective tax rate expected to be applicable for the full year is calculated.
−Removed: This method differs from that described in the Company’s income taxes policy footnote in the audited consolidated financial statements and related notes thereto for the
+Added: This method differs from that described in the Company’s income taxes policy footnote in the audited consolidated financial statements and related notes thereto for the year ended December 31, 2023, which describes the Company’s annual significant income tax accounting policy and related methodology.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: year ended December 31, 2022, which describes the Company’s annual significant income tax accounting policy and related methodology.
Revenue Recognition — The Company generates revenue from the following streams:
−Removed: 1) Mortgage platform revenue, net includes revenues generated from the Company's mortgage production process.
−Removed: The components of mortgage platform revenue, net are as follows:
−Removed: Net gain (loss) on sale of loans—This represents the premium or discount the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market.
−Removed: Net gain (loss) on sale of loans includes unrealized changes in the fair value of LHFS which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market.
+Added: 1) Gain on loans, net includes revenues generated from the Company’s mortgage production process.
+Added: The components of gain on loans, net are as follows:
+Added: Gain on sale of loans, net —This represents the premium the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market.
+Added: Gain on sale of loans, net includes unrealized changes in the fair value of LHFS, which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market.
The fair value of LHFS is measured based on observable market data.
−Removed: Also included within net gain (loss) on sale of loans is the day one recognition of the fair value of MSRs and any subsequent changes in the measurement of the fair value of the MSRs for loans sold servicing retained, including any gain or loss on subsequent sales of MSRs.
−Removed: Integrated relationship revenue (loss)—Includes fees that the Company receives for originating loans on behalf of an integrated relationship partner which are recognized as revenue (loss) upon the integrated relationship partner’s funding of the loan.
−Removed: Some of the loans originated on behalf of the integrated relationship partner are purchased by the Company.
−Removed: Subsequent changes in fair value of loans purchased by the Company are included as part of current period earnings.
−Removed: These loans may be sold in the secondary market at the Company’s discretion for which any gain on sale is included in this account.
−Removed: For loans sold on the secondary market, the integrated relationship partner will receive a portion of the execution proceeds.
−Removed: A portion of the execution proceeds that is to be allocated to the integrated relationship partner is accrued as a reduction of integrated relationship revenue (loss) when the loan is initially purchased from the integrated relationship partner.
−Removed: Changes in fair value of IRLCs and forward sale commitments—IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market.
−Removed: Fair value of forward sale commitments hedging IRLC and LHFS are measured based on quoted prices for similar assets.
−Removed: 2) Cash offer program revenue—The Company’s product offering includes a cash offer program (“Better Cash Offer”) where the Company works with a Buyer to identify and purchase a home directly from a property Seller.
−Removed: The Company will then subsequently sell the home to the Buyer.
−Removed: The Buyer may lease the home from the Company while the Buyer and Company go through the customary closing process to transfer ownership of the home to the Buyer.
−Removed: Arrangements where the Buyer leases the home from the Company are accounted for under ASC 842 while arrangements where the Buyer does not lease the home are accounted for under ASC 606.
−Removed: The Buyer does not directly or indirectly contract with the Seller.
−Removed: For arrangements under the Better Cash Offer program that do not involve a lease, upon closing on the sale of the home from the Seller to the Company, the Company holds legal title of the home.
−Removed: The Company is responsible for any obligations related to the home while it holds title and is the legal owner and such is considered the principal in the transaction.
−Removed: The Company holds in inventory any homes where the Buyer does not subsequently purchase from the Company as well as homes held while the Company is waiting to transfer the home to the Buyer.
−Removed: Inventory of homes are included within prepaid expenses and other assets on the condensed consolidated balance sheets.
−Removed: The Company recognizes revenue at the time of the closing of the home sale when title to and possession of the home are transferred to the Buyer.
−Removed: The amount of revenue recognized for each home sale is equal to the full sales price of the home.
−Removed: The contracts with the Buyers contain a single performance obligation that is satisfied upon the closing of the transaction and is typically completed in 1 to 90 days.
−Removed: The Company does not offer warranties for sold homes, and there are no continuing performance obligations following the transaction close date.
−Removed: Also included in Better Cash Offer program revenue is revenue from transactions where the Company purchases the home from the Seller and subsequently leases the home to the Buyer until the title is transferred to the Buyer which is accounted for under ASC 842 in line with the Company’s accounting policy on sales-type leases as described above.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: 3) Other platform revenue consists of revenue from the Company’s additional homeownership offerings which primarily consist of title insurance, settlement services, and other homeownership offerings.
−Removed: Title insurance, settlement services, and other homeownership offerings—Revenue from title insurance, settlement services, and other homeownership offerings is recognized based on ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).
+Added: This also includes activity for loans originated on behalf of the integrated partnership that are subsequently purchased by the Company as well as the portion of the sale proceeds to be received by the integrated partner.
+Added: The portion of the sale proceeds that is to be allocated to the integrated partner is accrued as a reduction of gain on sale of loans, net when the loan is initially purchased by the Company from the integrated partner.
+Added: Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments.
+Added: IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market.
+Added: Fair value of forward sale commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets.
+Added: Integrated partnership fees —Includes fees that the Company receives for originating loans on behalf of an integrated partnership, which are recognized as revenue upon the integrated partner’s funding of the loan.
+Added: Provision for loan repurchase reserve —In connection with the sale of loans on the secondary market, the Company makes customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws.
+Added: In the event of a breach of its representations and warranties, the Company may be required to repurchase the loan with the identified defects.
+Added: The provision for loan repurchase reserve, represents the charge for these potential losses.
+Added: 2) Net interest income includes interest income from LHFS calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment.
+Added: Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, as well as interest expense on the Convertible Note.
+Added: 3) Other revenue consists of revenue from the Company’s additional offerings which primarily consist real estate services, insurance, and international lending revenue which is recognized based on ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).
ASC 606 outlines a single comprehensive model in accounting for revenue arising from contracts with customers.
The core principle, involving a five-step process, of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
−Removed: The Company offers title insurance as an agent and works with third-party providers that underwrite the title insurance policies.
−Removed: For title insurance, the Company recognizes revenue from fees upon the completion of the performance obligation which is when the mortgage transaction closes.
−Removed: For title insurance, the Company is the agent in the transactions as the Company does not control the ability to direct the fulfillment of the service, is not primarily responsible for fulfilling the performance of the service, and does not assume the risk in a claim against a policy.
−Removed: Settlement services revenue includes fees charged for services such as title search fees, wire fees, policy and document preparation, and other mortgage settlement services.
−Removed: The Company recognizes revenues from settlement services upon completion of the performance obligation which is when the mortgage transaction closes.
−Removed: The Company may use a third-party to fulfill these services, but the Company is considered the principal in the transaction as it directs the fulfillment of the services and ultimately bears the risk of nonperformance.
−Removed: As the Company is the principal, revenues from settlement services are presented on a gross basis.
−Removed: Performance obligations for title insurance and settlement services are typically completed 40 to 60 days after the commencement of the loan origination process.
−Removed: Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction.
−Removed: Other homeownership offerings consists primarily of real estate services.
−Removed: For real estate services, the Company generates revenues from fees related to real estate agent services, including cooperative brokerage fees from the Company’s network of third-party real estate agents, as well as brokerage fees earned when the Company provides it’s in-house real estate agents to assist customers in the purchase or sale of a home.
+Added: For real estate services, the Company generates revenues from fees related to real estate agent services, mainly from cooperative brokerage fees from the Company’s network of third-party real estate agents, which assist customers in the purchase or sale of a home.
The Company recognizes revenues from real estate services upon completion of the performance obligation which is when the mortgage transaction closes.
−Removed: Performance obligations for real estate services are typically completed 40 to 60 days after the commencement of the home search process.
+Added: Performance obligations for real estate agent services are typically completed 40 to 60 days after the commencement of the home search process.
Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction.
−Removed: 4) Net interest income (expense)—Includes interest income from LHFS calculated based on the note rate of the respective loan as well as interest expense on warehouse lines of credit.
−Removed: Mortgage Platform Expenses — Mortgage platform expenses consist primarily of origination expenses, appraisal fees, processing expenses, underwriting, closing fees, servicing costs, and sales and operations personnel related expenses.
−Removed: Sales and operations personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount.
−Removed: These expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: Cash Offer Program Expenses — Better Cash Offer program expenses include the full cost of the home, including transaction closing costs and costs for maintaining the home before the legal title of the home is transferred to the Buyer.
−Removed: Better Cash Offer program expenses are recognized when title is transferred to the Buyer for arrangements recognized under ASC 606 and when the lease commences for arrangements recognized under ASC 842.
−Removed: Other Platform Expenses — Other platform expenses relate to other non-mortgage homeownership activities, including settlement service expenses, lead generation, and personnel related costs.
−Removed: Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents.
−Removed: Personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount.
−Removed: Other platform expenses
+Added: Also included in real estate services are settlement services which are revenue from fees charged for services such as title search fees, wire fees, policy and document preparation, and other mortgage settlement services.
+Added: The Company recognizes revenues from settlement services upon completion of the performance obligation which is when the mortgage transaction closes.
+Added: Insurance revenue primarily consists of fees earned on homeowners insurance policies and title insurance.
+Added: The Company generates revenues from agent fees on homeowners insurance policies obtained by customers through
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: General and Administrative Expenses — General and administrative expenses include personnel related expenses, including stock-based compensation and benefits for executive, finance, accounting, legal, and other administrative personnel.
−Removed: In addition, general and administrative expenses include external legal, tax and accounting services, and allocated occupancy expenses and related overhead based on headcount.
−Removed: General and administrative expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: Marketing and Advertising Expenses — Marketing and advertising expenses consist of customer acquisition expenses, brand costs, paid advertising, and personnel related costs for brand teams.
+Added: the Company’s marketplace of third-party insurance carriers.
+Added: The Company offers title insurance as an agent and works with third-party providers that underwrite the title insurance policies.
+Added: For title insurance, the Company recognizes revenue from fees upon the completion of the performance obligation which is when the mortgage transaction closes.
+Added: For homeowners insurance and title insurance, the Company is the agent in the transactions as the Company does not control the ability to direct the fulfillment of the service, is not primarily responsible for fulfilling the performance of the service, and does not assume the risk in a claim against a policy.
+Added: For international lending revenue, the Company generates revenue primarily from broker fees earned in the U.K.
+Added: The Company recognizes international lending revenue upon completion of the performance obligation which is when the mortgage transaction closes.
+Added: Compensation and Benefits — Compensation and benefits include salaries, wages, and incentive pay as well as stock-based compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes.
+Added: Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants, under the Company’s stock plans.
+Added: Compensation expense for the stock-based payments is based on the fair value of the awards on the grant date.
+Added: Compensation and benefits expenses are expensed as incurred with the exception of stock-based compensation, which is recognized in a straight-line basis over the requisite service period.
+Added: General and Administrative Expenses — General and administrative expenses include rent and occupancy expenses, insurance, and external legal, tax and accounting services.
+Added: General and administrative expenses are expensed as incurred.
+Added: Technology Expenses — Technology expenses consist of direct costs related to vendors engaged in product management, design, development, and testing of the Company’s websites and products.
+Added: Technology expenses are expensed as incurred.
+Added: Marketing and Advertising Expenses — Marketing and advertising expenses consist of direct costs related to customer acquisition expenses, brand costs, and paid marketing.
For customer acquisition expenses, the Company primarily generates loan origination leads through third-party financial service websites for which they incur “pay-per-click” expenses.
A majority of the Company’s marketing and advertising expenses are incurred from leads purchased from these third-party financial service websites.
−Removed: Personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount.
−Removed: Marketing and advertising expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
−Removed: Technology and Product Development Expenses — Technology and product development expenses consist of employee compensation, amortization of capitalized internal-use software costs related to the Company’s technology platform, and expenses related to vendors engaged in product management, design, development, and testing of the Company’s websites and products.
−Removed: Employee compensation consists of stock-based compensation and benefits related to the Company’s technology team, product and creative team, and engineering team.
−Removed: Technology and product development expenses also include allocated occupancy expenses and related overhead based on headcount.
−Removed: Technology and product development expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period.
+Added: Marketing and advertising expenses are expensed as incurred.
+Added: Loan Origination Expenses — Loan origination expenses consist of costs directly attributable to the production of loans such as appraisal fees, processing expenses, underwriting, closing fees, and servicing costs.
+Added: These expenses are expensed as incurred.
+Added: Other Expenses — Other expenses consist of direct costs related to other non-mortgage homeownership activities, including settlement service expenses, lead generation expenses, expenses incurred in relation to our international lending activities, and gains and losses from equity related liabilities.
+Added: Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents.
+Added: Other expenses are expensed as incurred.
Segments — The Company has one reportable segment.
The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a company-wide basis for purposes of allocating resources and evaluating financial performance.
−Removed: Emerging Growth Company and Smaller Reporting Company Status —Under the Jumpstart Our Business Startups Act of 2012 (“ JOBS Act”), emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies.
−Removed: The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards.
−Removed: The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.
−Removed: As a result, the consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
−Removed: Better’s consolidated revenues were below $1.235 billion for the year ended December 31, 2022.
−Removed: Aurora had no consolidated revenues for the year ended December 31, 2022 and qualified as an emerging growth company.
−Removed: As a result, Better Home & Finance qualifies as an emerging growth company and is eligible for relief from regulatory requirements provided to emerging growth companies.
−Removed: The Company also is a smaller reporting company, as defined in the rules under the Securities Exchange Act of 1934 (the “Exchange Act”).
−Removed: Even after the Company no longer qualifies as an emerging growth company, the Company may still qualify as a smaller reporting company, which would allow it to continue taking advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements.
−Removed: In addition, for so long as the Company continues to qualify as a non-accelerated filer, it will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
−Removed: Recently Adopted Accounting Standards
−Removed: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting .
−Removed: In addition, in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):
−Removed: Scope , which clarified the scope and application of the original guidance.
−Removed: Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting
+Added: Reclassification of Prior Period Presentation in the Statement of Operations and Comprehensive Loss — Reclassifications of the previously reported statement of operations and comprehensive loss have been made to conform to the current period’s presentation which provides increased transparency to the nature of the costs.
+Added: To conform to the current presentation, the following changes were made to the prior period statement of operations:
+Added: • Gain on loans, net (Previously mortgage platform revenue, net)—Loan repurchase reserve recovery (provision) has been reclassified from mortgage platform expenses to gain on loans, net.
+Added: The Company’s mortgage related activities that do not include originating and selling loans, namely in the U.K., have been reclassified to other revenue.
+Added: • Net interest income:
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: under existing U.S.
−Removed: GAAP, to address the expected phase out of the London Inter-bank Offered Rate (or “LIBOR”) by September 30, 2023.
−Removed: This guidance is effective upon issuance and allows application to contract changes as early as January 1, 2020.
−Removed: The guidance is effective for all companies as of March 12, 2020 and can generally be applied through December 31, 2022.
−Removed: In December 2022, FASB issued ASU 2022-06, Reference Rate Reform ("Topic 848"):
−Removed: Deferral of the Sunset Date of Topic 848 , because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.
−Removed: The adoption of the new guidance did not have a material impact on the condensed consolidated financial statements.
−Removed: Business Combination
−Removed: The Business Combination has been accounted for as a reverse recapitalization in accordance with U.S.
−Removed: Under this method of accounting, Aurora was treated as the “acquired” company for financial reporting purposes.
−Removed: Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Better issuing stock for the net assets of Aurora, accompanied by a recapitalization.
−Removed: The net assets of Aurora were recorded at fair value (which approximated historical cost considering the nature of the assets transferred), with no goodwill or other intangible assets recorded.
−Removed: Operations prior to the Business Combination are those of Better.
−Removed: At the Closing of and in connection with the Business Combination, the following occurred:
−Removed: • Exchange of Legacy Better Stock —Each outstanding share of Better common stock prior to the Business Combination (“Legacy Better Stock”), each warrant to purchase preferred stock was exercised and all series of preferred stock were converted to common stock and exchanged for approximately 3.06 shares (the "Exchange Ratio") of the Company’s common stock.
−Removed: Outstanding options to purchase Legacy Better common stock and restricted stock units ("RSUs") were converted into the right to receive options or warrants to purchase shares of Class B common stock or RSUs representing the right to receive shares of Class B common stock, as applicable, on the same terms and conditions that are in effect with respect to such options or RSUs on the day of the closing of the Business Combination, subject to adjustments using the Exchange Ratio.
−Removed: • Private and Public Warrants — 6,075,047 redeemable public warrants to acquire shares of Aurora (“Public Warrants”), together with 3,733,358 private warrants to acquire shares of Aurora (“Private Warrants” and, together with the Public Warrants, the “Warrants”), have converted into warrants to acquire shares of Better Home & Finance Class A common stock.
−Removed: As contemplated by the Sponsor Agreement, dated as of May 10, 2021, by and among Aurora and Novator Capital Sponsor Ltd.
−Removed: (“Sponsor”) (as amended, the “Sponsor Agreement”), Sponsor forfeited 1,715,014 Private Warrants, effective as of the Closing Date, which comprised 50 % of the Private Warrants held by Sponsor on May 10, 2021.
−Removed: Each Warrant entitles the holder to purchase one share of the Company’s Class A common stock at an exercise price of $ 11.50 per share, subject to certain adjustments.
−Removed: The Warrants became exercisable at any time commencing 30 days after the completion of the Business Combination (which for the avoidance of doubt was September 21, 2023), and will expire five years after the Business Combination or earlier upon redemption or liquidation.
−Removed: • Sponsor locked-up Shares —Pursuant to the Sponsor Agreement, the Sponsor forfeited upon Closing 50 % of the Aurora private warrants and 20 % of the Sponsor’s shares of Better Home & Finance Class A common stock as of the Closing became subject to transfer restrictions, contingent upon the price of Better Home & Finance Class A common stock exceeding certain thresholds (the “Sponsor Locked-Up Shares”).
−Removed: The Sponsor Locked-Up Shares will be released in three tranches if the volume weighted average price (the “VWAP”) of Better Home & Finance Class A common stock exceeds certain price thresholds:
−Removed: (i) one-third of such shares will be released if VWAP for any 20 trading days during any consecutive 30 -trading day period exceeds $ 12.50 per share, (ii) one-third of such shares will be released if the VWAP for any 20 trading days during any consecutive 30 -trading day period exceeds $ 15.00 per share, and (iii) one-third of such shares will be released if the VWAP for any 20 trading days during any consecutive 30 -trading day period exceeds $ 17.50 per share.
−Removed: In addition to the transfer restriction, upon certain change in control events included in the Sponsor Agreement, if there is a change in control event within five years following the Closing, the shares which have not reached the thresholds stated above will be forfeited.
−Removed: If after five years there is no such change in control event, the lock-up period will go on in perpetuity until the price thresholds are met.
+Added: • Interest income—Interest income from short-term investments has been reclassified from other income.
+Added: • Interest expense (Previously warehouse interest expense)—Interest expense and amortization on non-funding debt has been reclassified to interest expenses from interest expense and amortization on non-funding debt.
+Added: • Loan origination expense (Previously mortgage platform expenses)—The Company’s expenses that were not incurred to originate and sell loans, namely in the U.K., have been reclassified to other expenses.
+Added: • Other expenses (Previously other platform expenses)—Restructuring and impairment expenses, change in fair value of convertible preferred stock warrants, and change in fair value of bifurcated derivative have been reclassified to other expenses.
+Added: Previously Allocated Expenses
+Added: • Compensation and benefits—Compensation and benefits, which includes stock-based compensation, was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount is now presented as its own financial statement line item.
+Added: • Rent and occupancy—Rent and occupancy, which is now included within general and administrative expenses, was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount.
+Added: • Depreciation and amortization—Depreciation and amortization was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount is now presented as its own financial statement line item.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: • Aurora Trust Account —The Company received gross cash consideration of $ 21.4 million as a result of the reverse recapitalization as well as $ 0.2 million from Aurora’s operating cash account.
−Removed: • Post-Closing Convertible Notes —The Company received $ 528.6 million from SoftBank as a result of issuing notes, see Note 10 for further details.
−Removed: • Sponsor Share Purchase —The purchase for $ 17.0 million by the Sponsor of 1.7 million shares of Better Home & Finance Class A common stock.
−Removed: • Conversion of Convertible Preferred Stock and Exercise of Convertible Preferred Stock Warrants —See Note 17 for further details.
−Removed: • Conversion of Pre-Closing Bridge Notes —See Note 10 for further details.
−Removed: • Transaction or Exchange costs —The Company incurred $ 21.4 million of equity issuance costs, consisting of financial advisory, legal, share registration, and other professional fees, which are recorded to additional paid-in capital as a reduction of transaction proceeds.
−Removed: The number of shares of common stock issued immediately following the Business Combination was as follows:
−Removed: Number of Shares
−Removed: Class A Class B Class C
−Removed: Legacy Better Stockholders
−Removed: 40,601,825 574,407,420 6,877,283
−Removed: Legacy Aurora Shareholders
−Removed: Sponsor and affiliates of Aurora
−Removed: 10,488,812 — —
−Removed: Pre-Closing Bridge Note Investors
−Removed: 40,000,000 — 65,000,000
−Removed: Total 91,300,735 574,407,420 71,877,283
−Removed: Revenue and Sales-Type Leases
−Removed: Revenue — The Company disaggregates revenue based on the following revenue streams:
−Removed: Mortgage platform revenue, net consisted of the following :
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: (Amounts in thousands) 2023 2022 2023 2022
−Removed: Net gain (loss) on sale of loans $ 7,120 $ ( 10,125 ) $ 36,689 $ ( 59,105 )
−Removed: Integrated partnership revenue (loss) 3,067 2,265 9,797 ( 8,526 )
−Removed: Changes in fair value of IRLCs and forward sale commitments 4,019 18,947 8,441 174,217
−Removed: Total mortgage platform revenue, net $ 14,207 $ 11,087 $ 54,927 $ 106,586
−Removed: Cash offer program revenue consisted of the following:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: (Amounts in thousands) 2023 2022 2023 2022
−Removed: Revenue related to ASC 606 $ — $ 749 $ — $ 11,333
−Removed: Revenue related to ASC 842 — 8,991 304 214,764
−Removed: Total cash offer program revenue $ — $ 9,739 $ 304 $ 226,096
+Added: The impacts of the reclassifications on the condensed consolidated statements of operations and comprehensive loss are as follows:
+Added: (Amounts in thousands) Three Months Ended March 31, 2023
+Added: Caption name change As previously reported Reclassifications As reclassified
+Added: Mortgage platform revenue, net Gain on loans, net $ 15,964 $ ( 3,203 ) $ 12,761
+Added: Cash offer program revenue 3 ( 3 ) —
+Added: Other platform revenue Other revenue 3,845 1,099 4,944
+Added: Net interest income
+Added: Interest income 3,925 2,465 6,390
+Added: Interest expense ( 2,779 ) ( 2,690 ) ( 5,469 )
+Added: Net interest income 1,146 ( 225 ) 921
+Added: Total net revenues 20,958 ( 2,332 ) 18,626
+Added: Compensation and benefits — 38,112 38,112
+Added: Mortgage platform expenses Loan origination expense 30,623 ( 25,421 ) 5,202
+Added: Cash offer program expenses 103 ( 103 ) —
+Added: Other platform expenses Other expenses 4,693 6,372 11,065
+Added: General and administrative expenses 28,828 ( 12,066 ) 16,762
+Added: Marketing and advertising expenses 8,623 ( 863 ) 7,760
+Added: Technology and product development expenses 23,606 ( 9,160 ) 14,446
+Added: Restructuring and impairment expenses 9,137 ( 9,137 ) —
+Added: Depreciation and amortization — 11,477 11,477
+Added: Total expenses 105,613 ( 789 ) 104,824
+Added: Interest and other income (expense), net
+Added: Other income (expense) 2,481 ( 2,481 ) —
+Added: Interest and amortization on non-funding debt ( 2,690 ) 2,690 —
+Added: Change in fair value of convertible preferred stock warrants 553 ( 553 ) —
+Added: Change in fair value of bifurcated derivative ( 1,887 ) 1,887 —
+Added: Total interest and other expense, net ( 1,543 ) 1,543 —
+Added: Loss before income tax (benefit) expense ( 86,198 ) — ( 86,198 )
+Added: Income tax (benefit) expense 1,424 — 1,424
+Added: Net loss $ ( 87,622 ) $ — $ ( 87,622 )
+Added: Reclassification of the Statement of Cash Flows —To conform to the current presentation, borrowings on warehouse lines of credit and repayments of warehouse lines of credit on the statement of cash flows have been combined into net borrowings (repayments) on warehouse lines of credit within cash (used in)/provided by financing activities as well as the breakout for gain on sale of loans, net from proceeds from sale of mortgage loans held for sale within cash used in operating activities.
+Added: Recently Issued Accounting Standards Not Yet Adopted
+Added: In July 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718):
+Added: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.
+Added: 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Other platform revenue consisted of the following:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:
+Added: Income or Loss Applicable to Common Stock (“ASU 2023-03”).
+Added: This ASU amends or supersedes various Securities and Exchange Commission ("SEC") paragraphs within the applicable codification to conform to past SEC staff announcements.
+Added: This ASU does not provide any new guidance.
+Added: ASU 2023-03 will become effective for the Company once the addition to the FASB Codification is made available.
+Added: As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements.
+Added: In August 2023, the FASB issued ASU 2023-04, Liabilities (Topic 405):
+Added: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.
+Added: 121 (“ASU 2023-04”).
+Added: This ASU amends and adds various SEC paragraphs to the FASB Codification to reflect guidance regarding the accounting for obligations to safeguard crypto assets an entity holds for platform users.
+Added: This ASU does not provide any new guidance.
+Added: ASU 2023-04 will become effective for the Company once the addition to the FASB Codification is made available.
+Added: As of March 31, 2024, the Company does not expect ASU 2023-04 will have any impact on the consolidated financial statements.
+Added: In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:
+Added: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”).
+Added: This ASU incorporates certain SEC disclosure requirements into the FASB ASC.
+Added: The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.
+Added: ASU 2023-06 will become effective for each amendment on the effective date of the SEC’s corresponding disclosure rule changes.
+Added: As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements.
+Added: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .
+Added: This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
+Added: This ASU is effective for our annual fiscal year 2024, and interim periods starting in fiscal year 2025.
+Added: Early adoption is permitted.
+Added: A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements.
+Added: The Company is currently assessing the impact of the disclosure requirements on the consolidated financial statements.
+Added: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures , which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid.
+Added: The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted.
+Added: The amendments should be applied prospectively;
+Added: however, retrospective application is also permitted.
+Added: The Company is currently assessing the impact of the disclosure requirements on the consolidated financial statements.
+Added: Recent Securities and Exchange Commission (SEC) Final Rules Not Yet Adopted
+Added: In March 2024, the SEC adopted final rules under SEC Release No.
+Added: The Enhancement and Standardization of Climate-Related Disclosures for Investors , which requires registrants to provide certain climate-related information in their registration statements and annual reports.
+Added: The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.
+Added: The required information about climate-related risks will also include disclosure of a registrant’s greenhouse gas emissions.
+Added: In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements.
+Added: These requirements are effective for the Company in various fiscal years, starting with its fiscal year beginning January 1, 2027.
+Added: Disclosures will be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing.
+Added: On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges.
+Added: The Company is currently evaluating the impact of these final rules on its consolidated financial statements and disclosures.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: Revenue — The Company disaggregates revenue based on the following revenue streams:
+Added: Gain on loans, net consisted of the following :
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
−Removed: Real estate services $ 651 $ 3,983 $ 6,214 $ 20,735
−Removed: Title insurance 13 220 45 6,975
−Removed: Settlement services 2 130 15 4,190
−Removed: Other homeownership offerings 668 1,355 3,082 3,723
−Removed: Total other platform revenue $ 1,333 $ 5,688 $ 9,355 $ 35,623
−Removed: Sales-type Leases —The following table presents the revenue and expenses recognized at the commencement date of sales-type leases for the periods indicated:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Gain on sale of loans, net $ 9,821 $ 12,524
+Added: Integrated partnership fees 2,268 2,361
+Added: Loan repurchase reserve recovery/(provision) 3,563 ( 2,124 )
+Added: Total gain on loans, net $ 15,652 $ 12,761
+Added: Other revenue consisted of the following:
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
−Removed: Cash offer program revenue $ — $ 8,991 $ 304 $ 214,764
−Removed: Cash offer program expenses $ — $ 8,944 $ 278 $ 215,972
+Added: International lending revenue $ 1,108 $ 988
+Added: Insurance Services 639 629
+Added: Real estate services 347 2,870
+Added: Other revenue 723 457
+Added: Total other revenue $ 2,817 $ 4,944
Restructuring and Impairments
In December 2021, the Company initiated an operational restructuring program that included plans for costs reductions in response to a difficult interest rate environment as well as a slowing housing market.
−Removed: The restructuring program, which continued during the nine months ended September 30, 2023, consists of reductions in headcount and any associated costs which primarily include one-time employee termination benefits.
+Added: The restructuring program, which continued during the three months ended March 31, 2024, consists of reductions in headcount and any associated costs which primarily include one-time employee termination benefits.
The Company expects the restructuring initiatives to continue at least through the end of 2024.
−Removed: Due to the reduced headcount, the Company has also reduced its real estate footprint.
+Added: Due to reduced headcount, the Company has also reduced its real estate footprint.
The Company has impaired right-of-use assets related to office space that is no longer in use or has been completely abandoned.
3 unchanged sentences
In February 2023, the Company impaired the right-of-use asset of $ 13.0 million and removed the lease liability of $ 13.0 million related to one of the office spaces and as part of the amendment the Company incurred a loss of $ 5.3 million which included a $ 4.7 million payment in cash to the third party and $ 0.6 million other related fees to terminate the lease early.
−Removed: For the three months ended September 30, 2023 and 2022, the Company impaired property and equipment of none and $ 0.2 million, respectively, which was related to termination of lease agreement and sale of laptops resulting from a reduction in the workforce.
−Removed: For the nine months ended September 30, 2023 and 2022, the Company impaired property and equipment of $ 4.8 million and $ 3.1 million, respectively, which was related to the termination of the lease agreements and sale of laptops resulting from a reduction in the workforce.
−Removed: The Company assessed the loan commitment asset for impairment as there were factors that indicated that it was probable that the asset had been impaired on September 30, 2022 as the probability of the Company meeting the criteria to draw on the Post-Closing Convertible declined.
+Added: For the three months ended March 31, 2024 and 2023, the Company impaired property and equipment of none and $ 4.5 million, respectively, which was related to termination of lease agreement and sale of laptops resulting from a reduction in the workforce.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: For the three and nine months ended September 30, 2023 and 2022, the Company’s restructuring and impairment expenses consists of the following:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: For the three months ended March 31, 2024 and 2023, the Company’s restructuring and impairment expenses consist of the following:
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
Employee one-time termination benefits (1)
−Removed: Impairment of loan commitment asset — 38,330 — 105,604
−Removed: Impairments of Right-of-Use Assets — 1,897 413 4,391
Real estate restructuring loss (2)
1 unchanged sentence
Impairment of property and equipment (2)
−Removed: Other impairments 80 80
Total Restructuring and Impairments $ 721 $ 9,137
−Removed: As of September 30, 2023 and December 31, 2022, respectively, the Company had an immaterial liability related to employee one-time termination benefits that were yet to be paid.
−Removed: The cumulative amount of one-time termination benefits, impairment of loan commitment asset, impairment of right-of-use assets, and impairment of property and equipment as of September 30, 2023 is $ 121.6 million, $ 105.6 million, $ 6.6 million, and $ 8.9 million, respectively.
+Added: _______________
+Added: (1) Employee one-time termination benefits are included in compensation and benefits on the condensed consolidated statements of operations and comprehensive loss.
+Added: (2) Real estate restructuring loss, gain on lease settlement, and impairment of property and equipment are included in other expenses on the condensed consolidated statements of operations and comprehensive loss.
+Added: The cumulative amount of one-time termination benefits, impairment of loan commitment assets, impairment of right-of-use assets, and impairment of property and equipment as of March 31, 2024 is $ 123.0 million, $ 105.6 million, $ 8.5 million, and $ 12.0 million, respectively.
Mortgage Loans Held for Sale and Warehouse Lines of Credit
The Company has the following outstanding warehouse lines of credit:
−Removed: (Amounts in thousands) Maturity Facility Size September 30, 2023 December 31, 2022
−Removed: Funding Facility 1 (1)
−Removed: October 31, 2023 $ 100,000 $ — $ 89,673
+Added: (Amounts in thousands) Maturity Facility Size March 31, 2024 December 31, 2023
Funding Facility 1 (1)
−Removed: August 4, 2023 — — 9,845
+Added: July 31, 2024 $ 100,000 $ 40,266 $ 61,709
Funding Facility 2 (2)
4 unchanged sentences
__________________
−Removed: (1) Interest charged under the facility is the greater of i) a) thirty day term SOFR plus three and one-eighth percent for each repurchase and non-qualifying mortgage loans, and b) interest rate charged on the note (“Note Rate”) minus one and one-half percent and ii) a) thirty day term SOFR plus two and one-eight percent for each mortgage loans that is not a non-qualifying or a repurchase mortgage loan, and b) the Note Rate minus one and one-eighth percent.
+Added: (1) Interest charged under the facility is at the 30-day term SOFR plus 2.125 % .
Cash collateral deposit of $ 15.0 million is maintained and included in restricted cash.
−Removed: Subsequent to September 30, 2023, the facility matured on October 31, 2023 and the Company extended the maturity to November 30, 2023.
−Removed: (2) Interest charged under the facility is at the one month SOFR plus 1.77 %.
−Removed: There is no cash collateral deposit maintained as of September 30, 2023.
−Removed: The facility matured on August 4, 2023 and the Company did not extend beyond maturity.
−Removed: (3) Interest charged under the facility is at the one month SOFR plus 1.60 % - 2.25 %.
+Added: (2) Interest charged under the facility is at the 30-day term SOFR plus 2.10 % - 2.25 %.
Cash collateral deposit of $ 3.8 million is maintained and included in restricted cash.
−Removed: The Company extended the maturity from September 8, 2023 to December 8, 2023 during the three months ended September 30, 2023.
−Removed: (4) Interest charged under the facility is at the one month SOFR plus 1.75 % - 3.75 %.
−Removed: There is no cash collateral deposit maintained as of September 30, 2023.
−Removed: For the nine months ended September 30, 2023 and 2022, the weighted average interest rate for the warehouse lines of credit was 6.92 % and 4.94 %, respectively.
−Removed: The warehouse lines of credit contain certain restrictive covenants that require the Company to maintain certain minimum net worth, liquid assets, current ratios, liquidity ratios, leverage ratios, and earnings.
−Removed: In addition, these warehouse lines also require the Company to maintain compensating cash balances which aggregated to $ 18.8 million and $ 15.0 million as of September 30, 2023 and December 31, 2022, respectively, and are
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: included in restricted cash on the accompanying condensed consolidated balance sheets.
−Removed: The Company was in compliance with all financial covenants under the warehouse lines as of September 30, 2023.
+Added: (3) Interest charged under the facility is at the 30-day term SOFR plus 1.75 % - 3.75 %.
+Added: There is no cash collateral deposit maintained as of March 31, 2024.
The unpaid principal amounts of the Company’s LHFS are also pledged as collateral under the relevant warehouse funding facilities.
The Company’s LHFS are summarized below by those pledged as collateral and those fully funded by the Company:
−Removed: (Amounts in thousands) September 30, 2023 December 31, 2022
+Added: (Amounts in thousands) March 31, 2024 December 31, 2023
Funding Facility 1 $ 40,582 $ 63,483
7 unchanged sentences
Total LHFS at fair value $ 166,214 $ 170,150
−Removed: Average days loans held for sale, other than Company-funded LHFS and Company-funded HELOC, for the three and nine months ended September 30, 2023 and 2022 were approximately 21 days, 14 days and 21 days and 17 days, respectively.
−Removed: This is defined as the average days between funding and sale for loans funded during each period.
−Removed: As of September 30, 2023 and December 31, 2022, the Company had $ 1.6 million ( 4 loans) and $ 3.0 million ( 7 loans), respectively, in unpaid principal balance of loans either 90 days past due or non-performing.
−Removed: In July 2023 , the Company sold the majority of Company-funded LHFS in bulk to a single loan purchaser for a total sale price of $ 113.2 million.
−Removed: These Company funded LHFS were pledged as collateral under the Company’s 2023 Credit Facility (see Note 10) and as such of the total sale price, $ 98.4 million of cash was remitted directly to the Lender (as defined in Note 10) and $ 14.8 million of cash was remitted to the Company.
−Removed: Goodwill and Internal Use Software and Other Intangible Assets, Net
−Removed: In January 2023, the Company completed an acquisition of Goodholm Finance Ltd.
−Removed: (“Goodholm”), a regulated U.K.
−Removed: based mortgage lender and servicer, providing outsourced administration of mortgages, loans and collection portfolios.
−Removed: The Company paid a total cash consideration of $ 2.9 million for the acquisition.
−Removed: In connection with this acquisition, the Company recognized the following assets and liabilities:
−Removed: (Amounts in thousands) As of Acquisition Date
−Removed: Cash and cash equivalents $ 283
−Removed: Property and equipment 20
−Removed: Indefinite lived intangibles - Licenses 1,186
−Removed: Goodwill 1,741
−Removed: Other assets (1)
−Removed: Accounts payable and accrued expenses (1)
−Removed: Other liabilities (1)
−Removed: Net assets acquired $ 2,941
−Removed: __________________
−Removed: (1) Carrying value approximates fair value given their short-term maturity periods
−Removed: Intangible assets acquired consist of regulatory licenses.
−Removed: The acquisition was not material to the Company's condensed consolidated financial statements.
−Removed: Accordingly, pro forma results of this acquisition have not been presented.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: In April 2023, the Company completed the acquisition of a U.K.-based banking entity after obtaining regulatory approval from the financial control authorities in the U.K.
−Removed: The Company acquired Birmingham Bank Ltd.
−Removed: (“Birmingham”), a regulated bank, offering a range of financial products and services to consumers and small businesses.
−Removed: The acquisition will allow the Company to grow and expand operations in the U.K.
−Removed: by enabling the Company to improve the mortgage process for U.K.
−Removed: mortgage borrowers.
−Removed: The Company acquired 100 % of the equity of Birmingham for a total consideration of $ 19.3 million, which consists of $ 15.9 million in cash and $ 3.4 million in deferred consideration in the form of an earn out which is included within other liabilities on the condensed consolidated balance sheet at the acquisition date.
−Removed: In connection with this acquisition, the Company recognized the following assets and liabilities:
−Removed: (Amounts in thousands) As of Acquisition Date
−Removed: Cash and cash equivalents $ 2,907
−Removed: Accounts receivable (1)
−Removed: Short-term investments 8,729
−Removed: Other assets 7,530
−Removed: Property and equipment 83
−Removed: Finite lived intangibles 854
−Removed: Indefinite lived intangibles - Licenses 31
−Removed: Goodwill 12,300
−Removed: Accounts payable and accrued expenses (1)
−Removed: Customer deposits ( 12,374 )
−Removed: Other liabilities (1)
−Removed: Net assets acquired $ 19,286
−Removed: __________________
−Removed: (1) Carrying value approximates fair value given their short-term maturity periods
−Removed: Intangible assets acquired consist of trade name, core deposits intangibles, and regulatory licenses.
−Removed: The acquisition was not material to the Company's condensed consolidated financial statements.
−Removed: Accordingly, pro forma results of this acquisition have not been presented.
+Added: Average days loans held for sale, other than Company-funded LHFS and Company-funded HELOC, for the three months ended March 31, 2024 and 2023 were approximately 20 days.
+Added: This is defined as the average days between funding and sale for loans funded during each period.
+Added: As of March 31, 2024 and December 31, 2023, the Company had an immaterial amount of loans either 90 days past due or non-performing.
+Added: For the three months ended March 31, 2024 and 2023, the weighted average interest rate for the warehouse lines of credit was 7.39 % and 6.67 %, respectively.
+Added: The warehouse lines of credit contain certain restrictive covenants that require the Company to maintain certain minimum net worth, liquid assets, current ratios, liquidity ratios, and leverage ratios.
+Added: In addition, these warehouse lines also require the Company to maintain compensating cash balances which aggregated to $ 18.8 million as of March 31, 2024 and December 31, 2023 and are included in restricted cash on the accompanying condensed consolidated balance sheets.
+Added: The Company was in compliance with all financial covenants under the warehouse lines as of March 31, 2024 .
+Added: Goodwill and Internal Use Software and Other Intangible Assets, Net
Changes in the carrying amount of goodwill, net consisted of the following:
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
Balance at beginning of period $ 32,390 $ 18,525
−Removed: Goodwill acquired—Goodholm & Birmingham 14,041
+Added: Goodwill acquired—Goodholm — 1,741
Effect of foreign currency exchange rate changes ( 181 ) 240
Balance at end of period $ 32,209 $ 20,507
−Removed: No impairment of goodwill was recognized for the three and nine months ended September 30, 2023 and 2022.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: No impairment of goodwill was recognized for the three months ended March 31, 2024 and 2023.
Internal use software and other intangible assets, net consisted of the following:
−Removed: As of September 30, 2023
+Added: As of March 31, 2024
(Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value
1 unchanged sentence
Internal use software and website development 3.0 $ 137,655 $ ( 111,572 ) $ 26,083
−Removed: Intellectual property and other 6.2 4,322 ( 1,402 ) 2,920
+Added: Other 5.7 1,000 ( 294 ) 706
Total Intangible assets with finite lives, net 138,654 ( 111,866 ) 26,788
3 unchanged sentences
Total Internal use software and other intangible assets, net $ 142,715 $ ( 111,866 ) $ 30,849
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2023
8 unchanged sentences
Total Internal use software and other intangible assets, net $ 141,967 $ ( 103,841 ) $ 38,126
−Removed: The Company capitalized $ 5.0 million and $ 3.0 million in internal use software and website development costs during the three months ended September 30, 2023 and 2022, respectively.
−Removed: Included in capitalized internal use software and website development costs are $ 2.5 million and $ 0.8 million of stock-based compensation costs for the three months ended September 30, 2023 and 2022, respectively.
−Removed: Amortization expense totaled $ 9.3 million and $ 9.0 million during the three months ended September 30, 2023 and 2022, respectively.
−Removed: For the three months ended September 30, 2023 and 2022, no impairment was recognized relating to intangible assets.
−Removed: The Company capitalized $ 12.4 million and $ 22.8 million in internal use software and website development costs during the nine months ended September 30, 2023 a nd 2022, respectively.
−Removed: Included in capitalized internal use software and website development costs are $ 3.9 million and $ 3.0 million of stock-based compensation costs for the nine months ended September 30, 2023 and 2022, respectively.
−Removed: Amortization expense totaled $ 28.1 million and $ 26.1 million during the nine months ended September 30, 2023 and 2022, respectively.
−Removed: For the nine months ended September 30, 2023 and 2022, no impairment was recognized relating to intangible assets.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: The Company capitalized $ 0.4 million and $ 3.5 million in internal use software and website development costs during the three months ended March 31, 2024 and 2023, respectively.
+Added: Included in capitalized internal use software and website development costs are $ 0.4 million and $ 0.7 million of stock-based compensation costs for the three months ended March 31, 2024 and 2023, respectively.
+Added: Amortization expense totaled $ 8.0 million and $ 9.4 million during the three months ended March 31, 2024 and 2023, respectively.
+Added: For the three months ended March 31, 2024 and 2023, no impairment was recognized relating to intangible assets.
Prepaid Expenses and Other Assets
Prepaid expenses and other assets consisted of the following:
−Removed: As of September 30, As of December 31,
+Added: As of March 31, As of December 31,
(Amounts in thousands) 2024 2023
3 unchanged sentences
Loans held for investment 7,900 4,793
−Removed: Prepaid compensation asset — 5,615
−Removed: Inventory—Homes — 1,139
−Removed: Net investment in lease $ — $ 944
Total prepaid expenses and other assets $ 55,661 $ 56,179
−Removed: Prepaid Compensation Asset —Prepaid compensation asset, which is related to prepaid expenses and other assets as shown in the table above, consists of a one-time retention bonus given to Kevin Ryan, Chief Financial Officer of the Company, in the form of a forgivable loan of $ 6.0 million, with an annual compounding interest rate of 3.5 % on August 18, 2022.
−Removed: Subject to Mr.
−Removed: Ryan’s active employment by the Company and status of good standing on each of December 1, 2023, December 1, 2024, December 1, 2025 and December 1, 2026, 25 % of the principal amount of, and accrued and unpaid interest on, the loan will be forgivable on each such dates.
−Removed: Further, the outstanding principal and interest will be forgivable upon Mr.
−Removed: Ryan’s death, termination as part of a reduction in force, the elimination or substantial reduction of Mr.
−Removed: Ryan’s role, a change in control of the Company, the Company’s insolvency or filing of bankruptcy or Mr.
−Removed: Ryan’s termination by the Company without cause.
−Removed: The loan will also be forgiven if it would violate applicable law, including Section 402 of the Sarbanes-Oxley Act as implemented in Section 13(k) of the Exchange Act.
−Removed: In the event of Mr.
−Removed: Ryan’s voluntary separation from the Company or termination by the Company for cause, any outstanding principal and interest will be due in full on the date that is twenty-four ( 24 ) months from the date of termination.
−Removed: The Company was recognizing the expense ratably over time until December 1, 2026 or until forgiveness based on the events discussed above.
−Removed: In August 2023, in connection with and prior to the closing of the Merger, the Company has forgiven Mr.
−Removed: Ryan’s loan in the amount of $ 6.0 million plus accrued interest of $ 0.2 million and as such the Company is in compliance with Section 402 of the Sarbanes-Oxley Act as implemented in Section 13(k) of the Exchange Act.
−Removed: As a result of the forgiveness, the Company has recognized $ 4.8 million and $ 0.1 million of compensation expense during the three months ended September 30, 2023 and 2022, respectively.
−Removed: The Company has recognized $ 5.5 million and $ 0.1 million of compensation expense during the nine months ended September 30, 2023 and 2022, respectively.
−Removed: In addition, the Company has agreed to reimburse and make whole Mr.
−Removed: Ryan with the withholding taxes incurred in connection with the forgiveness of the loan which resulted in additional compensation expense of $ 3.9 million for the three and nine months ended September 30, 2023.
−Removed: Loans Held for Investment —The Company holds a small amount of loans held for investment, which were acquired as part of the Birmingham acquisition in April 2023.
−Removed: For these loans, management has the intent and ability to hold for the foreseeable future or until maturity or payoff and are reported at amortized cost, which is the principal amount outstanding, net of cumulative charge-offs, unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans.
−Removed: The allowance for credit losses is a valuation account that is deducted from the loans held for investment amortized cost basis to present the net amount expected to be collected on the loans.
−Removed: Loans are charged-off against the allowance when management believes the loan balance is deemed to be uncollectible.
−Removed: Management's estimation of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, including expected defaults and prepayments.
−Removed: The Company recognized an immaterial current expected credit loss for loans held for investment as of September 30, 2023.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Customer Deposits
+Added: Customer Deposits —In relation to the Company’s banking activities tied to the Company’s acquisition of Birmingham Bank in the U.K., the Company offers individual savings accounts and other depository products with differing maturities and interest rates to its customers.
+Added: The balance of customer deposits as of both March 31, 2024 and December 31, 2023 was $ 11.8 million on the condensed consolidated balance sheets.
The following table presents average balances and weighted average rates paid on deposits for the periods indicated:
−Removed: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022
−Removed: (Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid
−Removed: Notice $ 2,190 2.92 % $ — — %
−Removed: Term 2,962 2.13 % — — %
−Removed: Savings 4,991 2.18 % — — %
−Removed: Total Deposits $ 10,143 2.41 % $ — — %
−Removed: Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022
−Removed: (Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid
+Added: Three Months Ended March 31,
+Added: (Amounts in thousands) Average Balance Average Rate Paid
Notice $ 2,406 2.85 %
2 unchanged sentences
Total Deposits $ 12,098 2.97 %
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents maturities of customer deposits:
−Removed: (Amounts in thousands) As of September 30, 2023
+Added: (Amounts in thousands) As of March 31, 2024
Demand deposits
Total $ 11,831
−Removed: Interest Expense on deposits is recorded in warehouse interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows:
−Removed: Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023
+Added: Interest Expense on deposits is recorded in interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows:
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024
−Removed: Notice $ 22 $ — $ 43 $ —
−Removed: Term 4 — 10 —
−Removed: Savings 26 — 54 —
Total Interest Expense $ 105
1 unchanged sentence
banking clients and are protected up to £ 85.0 thousand ($ 107.3 thousand) per eligible person by the Financial Services Compensation Scheme in the U.K.
−Removed: Of the total customer deposits as of September 30, 2023, $ 1.0 million were over the applicable insured amount.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Corporate Line of Credit and Preclosing Bridge Notes
−Removed: Corporate Line of Credit —As of September 30, 2023 and December 31, 2022, the Company had none and $ 144.4 million, respectively, of outstanding borrowings on the line of credit, which are recorded net of the unamortized portion of the warrant discount and debt issuance costs within corporate line of credit, net in the condensed consolidated balance sheets.
−Removed: The Company had none and $ 2.0 million of unamortized warrant issuance related discount and debt issuance costs as of September 30, 2023 and December 31, 2022, respectively .
−Removed: In February 2023, the Company entered into a loan and security agreement (the “2023 Credit Facility”) with Clear Spring Life and Annuity Company, an entity affiliated with the previous agent and acting as an agent for such lenders (together, the “Lender”) to amend its previously existing loan and security agreement (the “2021 Credit Facility”).
−Removed: The terms of the 2023 Credit Facility granted relief from the acceleration of payments under minimum revenue triggers from the 2021 Credit Facility.
−Removed: The 2023 Credit Facility split the principal balance into two tranches, tranche “AB” in the amount of $ 96.7 million and Tranche “C” in the amount of $ 26.9 million.
−Removed: Tranche AB was backed by assets that the Company pledged, mainly loans held for sale that the Company fully owned while Tranche C was secured by other assets of the Company.
−Removed: Tranche AB had a fixed interest rate of 8.5 % and Tranche C had a variable interest rate based on the SOFR reference rate for a one-month tenor plus 9.5 %.
−Removed: During the nine months ended September 30, 2023, the Company paid off $ 144.4 million owed in principal balance on the 2023 Credit Facility.
−Removed: The Company made the final principal payment to the Lender in August 2023 and as the Company repaid the 2023 Credit Facility in full earlier than what was contractually required, the Company paid a make-whole amount that represents minimum interest for the Lender in the amount of $ 4.5 million.
−Removed: The Company also amortized the remaining unamortized debt issuance costs in the amount of $ 5.1 million as part of interest and amortization on non-funding debt expense within the consolidated statements of operations and comprehensive loss.
−Removed: For the three months ended September 30, 2023, the Company recorded a total of $ 11.3 million related to interest expense as follows:
−Removed: $ 6.1 million in interest expense related to the line of credit and $ 5.2 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense, net within the condensed consolidated statements of operations and comprehensive loss.
−Removed: For the nine months ended September 30, 2023, the Company recorded a total of $ 17.6 million related to interest expense as follows:
−Removed: $ 11.5 million in interest expense related to the line of credit and $ 6.0 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense, net within the condensed consolidated statements of operations and comprehensive loss.
−Removed: For the three months ended September 30, 2022, the Company recorded a total of $ 2.8 million related to interest expense as follows:
−Removed: $ 2.4 million in interest expense related to the line of credit and $ 0.3 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense within the consolidated statements of operations and comprehensive loss.
−Removed: For the nine months ended September 30, 2022, the Company recorded a total of $ 9.6 million related to interest expense as follows:
−Removed: $ 8.5 million in interest expense related to the line of credit and $ 0.8 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense within the consolidated statements of operations and comprehensive loss.
−Removed: Pre-Closing Bridge Notes —The carrying value of the Pre-Closing Bridge Notes as of December 31, 2022 is $ 750.0 million and is included in the condensed consolidated balance sheets.
−Removed: In connection with the Closing of the Business Combination, the Pre-Closing Bridge Notes held by SoftBank in an aggregate principal amount of $ 650.0 million automatically converted into Better Home & Finance Class C common stock at a conversion price of $ 10.00 per share (the “Bridge Note Conversion”).
−Removed: In connection with the Bridge Note Conversion, the Company issued an aggregate 65.0 million shares of Better Home & Finance Class C common stock to a trust designated by SoftBank to distribute such shares to SoftBank upon satisfaction of certain conditions.
−Removed: In addition, pursuant to the letter agreement, dated as of February 7, 2023, by and among Aurora, the Company and the Sponsor (the “Second Novator Letter Agreement”) and the letter agreement, dated August 22, 2023, by and among Aurora, Better and the Sponsor (the “Novator Exchange Agreement”), the Pre-Closing Bridge Notes held by the Sponsor in an aggregate principal amount of $ 100.0 million were exchanged for 40.0 million shares of Better Home & Finance Class A common stock.
−Removed: The Company recorded none and $ 80.1 million in interest expense on Pre-Closing Bridge Notes from the amortization of the discount during the three months ended September 30, 2023 and 2022, respectively, included within the condensed
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: consolidated statements of operations and comprehensive loss.
−Removed: The Company recorded none and $ 213.5 million in interest expense on Pre-Closing Bridge Notes from the amortization of the discount during the nine months ended September 30, 2023 and 2022, respectively, included within the condensed consolidated statements of operations and comprehensive loss.
−Removed: Issuance of Post-Closing Convertible Notes— In connection with the Closing of the Business Combination, the Company issued to SoftBank senior subordinated convertible notes in the aggregate principal amount of $ 528.6 million (the “Post-Closing Convertible Notes”), $ 550.0 million less approximately $ 21.4 million released to the Company at the Closing from Aurora’s trust account, pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”).
−Removed: The Post-Closing Convertible Notes bear 1 % interest per annum and mature on August 22, 2028, unless earlier converted or redeemed.
+Added: Of the total customer deposits as of March 31, 2024, $ 1.0 million were over the applicable insured amount.
+Added: Corporate Line of Credit and Convertible Note
+Added: Corporate Line of Credit —The Company made the final principal payment on its corporate line of credit in August 2023 and as such incurred no interest expense under the corporate line of credit during the three months ended March 31, 2024.
+Added: For the three months ended March 31, 2023, the Company recorded a total of $ 2.6 million related to interest expense as follows:
+Added: $ 2.3 million in interest expense related to the line of credit and $ 0.3 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest expense within the condensed consolidated statements of operations and comprehensive loss.
+Added: Convertible Note— In connection with the Closing of the Business Combination, the Company issued to SB Northstar LP, a Cayman Islands exempted limited partnership and an affiliate of SoftBank Group Corp., a senior subordinated convertible note in the aggregate principal amount of $ 528.6 million (the “Convertible Note”), $ 550.0 million less approximately $ 21.4 million released to the Company at the Closing from Aurora’s trust account, pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”).
+Added: The Convertible Note bears 1 % interest per annum and matures on August 22, 2028, unless earlier converted or redeemed.
Per the Indenture, the Company may elect to pay all or any portion of interest in kind by issuing to the holder of such note an additional note or in cash.
−Removed: Upon issuing the Convertible Notes, the loan commitment asset on Better’s balance sheet as of December 31, 2022 in the amount of $ 16.1 million, associated with the right to draw the Post-Closing Convertible Notes, is reflected as a debt discount which will be amortized as part of interest expense over the term of the Post-Closing Convertible Notes.
−Removed: As of September 30, 2023, the carrying amount of the Post-Closing Convertible Notes was $ 513.0 million on the condensed consolidated balance sheets.
−Removed: The Post-Closing Convertible Notes are convertible, at the option of SoftBank, into shares of the Company’s Class A common stock, with an initial conversion rate per $1,000 principal amount of Post-Closing Convertible Notes equal to (a) $1,000 divided by (b) a dollar amount equal to 115 % of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein.
+Added: The Convertible Note is convertible, at the option of SB Northstar, into shares of the Company’s Class A common stock, with an initial conversion rate per $1,000 principal amount of Convertible Note equal to (a) $1,000 divided by (b) a dollar amount equal to 115 % of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein.
The Indenture provides that the First Anniversary VWAP may be no less than $ 8.00 and no greater than $ 12.00 , subject to adjustments as described therein.
−Removed: The Post-Closing Convertible Notes may be redeemed at the option of the Company at a redemption price of 115 % of par plus accrued interest in cash, at any time on or before the 30th trading day prior to the maturity date of the Post-Closing Convertible Notes if the last reported sale price of the Class A common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the date of notice of optional redemption.
−Removed: The Post-Closing Convertible Notes permit the Company to designate up to $ 150 million of indebtedness that is senior to the Post-Closing Convertible Notes, in addition to certain other customary exceptions.
−Removed: In addition, the Indenture requires that if a domestic subsidiary of the Company guarantees other senior indebtedness of the Company, such subsidiary would also be required to guarantee the notes, subject to certain exceptions for non-profit subsidiaries and regulated mortgage origination subsidiaries.
−Removed: For the three and nine months ended September 30, 2023, the Company recorded a total of $ 0.5 million and $ 0.5 million respectively, of interest expense related to the Post-Closing Convertible Notes.
−Removed: Interest expense from the Post-Closing Convertible Notes is included in interest and amortization on non-funding debt expense, net within the condensed consolidated statements of operations and comprehensive loss.
+Added: The Convertible Note may be redeemed at the option of the Company at a redemption price of 115 % of par pl us accrued interest in cash, at any time on or before the 30th trading day prior to the maturity date of the Convertible Note if the last reported sale price of the Class A common stock has been at least 130 % of
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the d ate of notice of optional redemption.
+Added: The Convertible Note is redeemable prior to maturity in the event of a fundamental change under the Indenture, such as the removal of the Company’s Class A common stock from the Nasdaq.
+Added: In this event, the Company would be required to redeem the Convertible Note for an amount in cash equal to the principal balance plus accrued and unpaid interest on the redemption date.
+Added: As of March 31, 2024 and December 31, 2023, the carrying amount of the Convertible Note was $ 514.8 million and $ 514.6 million on the condensed consolidated balance sheets, respectively.
+Added: For the three months ended March 31, 2024, the Company recorded a total of $ 2.7 million of interest expense related to the Convertible Note.
+Added: Interest expense from the Convertible Note is included in interest expense within the condensed consolidated statements of operations and comprehensive loss.
+Added: In February 2024, the Company made a cash payment in the amount of $ 2.5 million, representing interest expense from the issuance of the Convertible Note through February 15, 2024.
Related Party Transactions
The Company has entered into a number of commercial agreements with related parties, which management believes provide the Company with products or services that are beneficial to its commercial objectives.
−Removed: Often these products and services have been tailored to the Company’s specific needs or are part of new pilot programs, both for the Company and the counterparty, for which there are not clear alternative vendors offering comparable services to compare pricing with.
+Added: Often these products and services have been tailored to the Company’s specific needs or are part of pilot programs, both for the Company and the counterparty, for which there are no clear alternative vendors offering comparable services to compare pricing with.
It is reasonable to assume that none of these related party commercial agreements were structured at arm’s length and therefore may be beneficial to the counterparty.
−Removed: 1/0 Capital —The Company is a party to an employee and expense allocation agreement with 1/0 Capital, LLC (“1/0 Capital”), an entity affiliated with 1/0 Real Estate, LLC (“1/0 Real Estate”) (an entity wholly owned by 1/0 Holdco, in which Vishal Garg, the Chief Executive Officer of the Company, and the Company’s executive officers each hold a more than five percent ownership interest).
+Added: 1/0 Capital —The Company is a party to an employee and expense allocation agreement with 1/0 Capital, LLC (“1/0 Capital”), an entity affiliated with 1/0 Real Estate, LLC (“1/0 Real Estate”) (an entity wholly owned by 1/0 Holdco LLC, in which Vishal Garg, the Chief Executive Officer of the Company, and the Company’s executive officers each hold a more than five percent ownership interest).
Under the employee and expense allocation agreement, 1/0 Capital provides the Company access to certain employees in exchange for reasonable consideration in the form of fees based on their time, as well as IT support services.
2 unchanged sentences
The services provided by 1/0 Capital are not integral to the Company’s technology platform and amounts incurred are not material to the Company.
−Removed: In connection with this agreement, the Company reduced the accrued expense by $ 27.0 thousand and $ 187.3 thousand in the three months ended September 30, 2023 and 2022, respectively.
−Removed: As part of this agreement, the Company may provide access to certain of its employees for use by 1/0 Capital which reduced the amounts owed to 1/0 Capital by
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: none and none for the three months ended September 30, 2023 and 2022, respectively.
−Removed: The Company recorded a reduction of expenses of $ 27.0 thousand and $ 187.3 thousand for the three months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the consolidated statements of operations and comprehensive loss.
−Removed: The Company incurred gross expenses of $ 6.4 thousand and $ 386.8 thousand in the nine months ended September 30, 2023 and 2022, respectively.
−Removed: As part of this agreement, the Company may provide access to certain of its employees for use by 1/0 Capital which reduced the amounts owed to 1/0 Capital by none and $ 18.2 thousand for the nine months ended September 30, 2023 and 2022, respectively.
−Removed: The Company recorded net expenses of $ 6.4 thousand and $ 368.6 thousand for the nine months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the consolidated statements of operations and comprehensive loss.
−Removed: The Company is invoiced on a net basis and recorded a $ 144.4 thousand and $ 177.0 thousand payable as of September 30, 2023 and December 31, 2022, respectively, included within other liabilities, respectively, on the condensed consolidated balance sheets.
+Added: In connection with this agreement, the Company incurred gross expense of none and $ 28 thousand in the three months ended three months ended March 31, 2024 and 2023, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.
+Added: As part of this agreement, the Company may provide access to certain of its employees for use by 1/0 Capital which reduced the amounts owed to 1/0 Capital by none for both the three months ended March 31, 2024 and 2023, respectively.
+Added: The Company is invoiced on a net basis and recorded a $ 152 thousand and $ 153 thousand payable as of March 31, 2024 and December 31, 2023, respectively, included within other liabilities on the condensed consolidated balance sheets.
TheNumber —The Company originally entered into a data analytics services agreement in August 2016 with TheNumber, LLC (“TheNumber”), an entity affiliated with both Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate.
In September 2021, the Company and TheNumber entered into a technology integration and license agreement, which was amended in November 2021, to develop a consumer credit profile technology which is to be launched in three stages.
−Removed: The first stage involves testing TheNumber’s limited graph Application Programming Interface (“API”) in a testing environment with test data.
+Added: The first stage involves testing TheNumber’s limited graph Application Programming Interface in a testing environment with test data.
The second stage involves data such as credit, income, and assets of staged borrowers meeting certain measures of speed and performance.
4 unchanged sentences
The services provided by TheNumber are not integral to the Company’s technology platform and amounts incurred are not material to the Company.
−Removed: In connection with these agreements, the Company paid expenses of $ 66.9 thousand and $ 617.7 thousand for the three months ended September 30, 2023 and 2022 respectively, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: The Company paid expenses of $ 438.0 thousand and $ 1,123.0 thousand for the nine months ended September 30, 2023 and 2022 respectively, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss and had a payable of $ 204.3 thousand and $ 232.0 thousand as of September 30, 2023 and December 31, 2022, respectively, within other liabilities on the condensed consolidated balance sheets.
−Removed: Holy Machine —In January 2018, the Company entered into a consulting agreement (the “2018 Holy Machine Consulting Agreement”) with Holy Machine LLC (“Holy Machine”) an entity controlled by Aaron Schildkrout, a former member of Better’s board of directors (the “Better Board”).
−Removed: Aaron Schildkrout resigned from the Better Board on June 8, 2022 and as an advisor shortly thereafter.
−Removed: The 2018 Holy Machine Consulting Agreement provided for consulting services related to executive recruiting and such other services as mutually agreed upon, and grants Holy Machine 603,024 options with a 4 -year vesting period and no cliff at two times the fair market value of the Company.
−Removed: Further, any inventions, discoveries, improvements or works of authorship made by Holy Machine and the results thereof that may be considered works made for hire shall be assigned to the Company and be the Company’s exclusive property to which the Company has the exclusive right to obtain and own all copyrights.
−Removed: In May 2020, the parties entered into an amendment to the 2018 Holy Machine Consulting Agreement to insert terms relating to compliance with applicable laws, contracts, and indemnification among the parties.
−Removed: No other terms of the 2018 Holy Machine Consulting Agreement were altered.
−Removed: The agreement ended in November 2022.
−Removed: In July 2020, the Company and Holy Machine entered into a new consulting agreement (the “2020 Holy Machine Consulting Agreement”).
−Removed: The 2020 Holy Machine Consulting Agreement granted Holy Machine (i) the option to purchase 764,143 shares of Better’s common stock, with an accompanying stock option agreement having a term of 10 years, at the then fair market value at the time of the grant and (ii) the option to purchase 764,143 shares of Better’s common stock, with an accompanying stock option agreement having a term of 10 years, with an exercise price per share equal to (a) $ 5.14 minus (b) the then current fair market value at the time of grant.
−Removed: Both tranches of granted options vest each month on the same day of the month as the vesting commencement date of April 18, 2020, subject to Holy Machine continuing to provide consulting services through each such date, and both have change in control vesting provisions which would result
+Added: In connection with these agreements, the Company paid expenses of $ 62 thousand and $ 301 thousand for the three months ended March 31, 2024 and 2023 respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and had a payable of $ 171 thousand and $ 230 thousand as of March 31, 2024 and December 31, 2023, respectively, within other liabilities on the condensed consolidated balance sheets.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: in 100 % of unvested options vesting should there be a change of control of the Company, as defined in such a stock option agreement.
−Removed: The services provided by Holy Machine were not integral to the Company’s technology platform and amounts incurred were not material to the Company.
−Removed: During the second quarter of 2022, Aaron Schildkrout resigned from the Better Board and resigned as an advisor to Better shortly thereafter.
−Removed: The Company recorded none and $ 37.5 thousand of expenses during the three months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: The Company recorded none and $ 137.5 thousand of expenses during the nine months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and a payable of none and none as of September 30, 2023 and December 31, 2022, respectively, within other liabilities on the condensed consolidated balance sheets.
Notable —In October 2021, the Company entered into a private label and consumer lending program agreement (the “2021 Notable Program Agreement”) to provide home improvement lines of credit to qualified borrowers of the Company with Notable Finance, LLC (“Notable”), an entity in which Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate collectively hold a majority ownership interest.
−Removed: The program is intended to be used by qualified customers of the Company for home improvement purchases (the “Home Improvement Line of Credit”).
+Added: The program is intended to be used by qualified customers of the Company for home improvement purchases.
This program required Notable to originate and service the loan and in consideration, the Company pays Notable $ 600 for each loan originated pursuant to the agreement.
In connection with the 2021 Notable Program Agreement, Notable provided an unsecured personal loan product with an initial 12-month “draw period” during which the customers can use the approved loan amount and only pay interest on the used loan fund.
−Removed: Following this initial 12-month draw period, the customers are no longer able to withdraw funds and there is a 3 or 5-year “fixed” period to pay back the loan in full in months installments.
−Removed: For the three months ended September 30, 2023, the Company incurred $ 16.3 thousand of expenses under the agreement, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: For the three months ended September 30, 2022, the Company incurred $ 74.3 thousand of expenses under the agreement, $ 31.9 thousand of which are included within marketing expenses and $ 42.4 thousand of which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: For the nine months ended September 30, 2023, the Company incurred $ 38.5 thousand of expenses under the agreement, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: For the nine months ended September 30, 2022, the Company incurred $ 74.3 thousand of expenses under the agreement, $ 31.9 thousand of which are included within marketing expenses and $ 42.4 thousand of which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: The Company recorded a payable of $ 10.0 thousand and $ 15.0 thousand included within other liabilities on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.
+Added: Following this initial 12-month draw period, the customers are no longer able to withdraw funds and there is a 3 or 5-year “fixed” period to pay back the loan in full in monthly installments.
In January 2022, Better Trust I, a subsidiary of the Company, entered into a master loan purchase agreement (the “Notable MLPA”) with Notable to purchase from Notable up to $ 20.0 million of unsecured home improvement loans underwritten and originated by Notable for the Company’s customers.
2 unchanged sentences
The services provided by Notable are not integral to the Company’s technology platform and expenses incurred are not material to the Company.
−Removed: As of September 30, 2023 and December 31, 2022, the Company had $ 6.8 million and $ 8.3 million of unsecured home improvement loans from Notable, which are included within mortgage loans held for sale, at fair value on the condensed consolidated balance sheets.
+Added: As of March 31, 2024 and December 31, 2023, the Company had $ 5.8 million and $ 6.3 million of unsecured home improvement loans from Notable, which are included within mortgage loans held for sale, at fair value on the condensed consolidated balance sheets.
+Added: For the three months ended March 31, 2024, the Company incurred $ 16 thousand of expenses for amortization of internal use software under the agreement, which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.
+Added: For the three months ended March 31, 2023, the Company incurred $ 21 thousand of expenses under the agreement, $ 5 thousand of which are included within marketing expenses and $ 16 thousand of which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.
Truework —The Company is a party to a data analytics services agreement with Zethos, Inc., (“Truework”), an entity in which Vishal Garg, the Chief Executive Officer of the Company, is an investor.
Under the data analytics services agreement, Truework provides digital Verification of Employment (“VOE”) and Verification of Income (“VOI”) services to the Company during the mortgage loan origination process to confirm the employment and income of borrowers seeking a mortgage.
−Removed: This is data required for underwriting mortgages to the specifications of FNMA, FMCC, and private loan purchasers.
+Added: This is data required for underwriting mortgages to the specifications of Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FMCC"), and private loan purchasers.
These data services are standard product offerings of Truework, which they offer to a number of mortgage lenders.
1 unchanged sentence
The Company uses the two vendors interchangeably based on estimated lowest cost and turnaround time.
−Removed: The Company originally entered into the data services agreement in September 2020, and amended the agreement in October 2021 to run until September 30, 2023.
−Removed: In connection with usage of the services, the Company reduced the accrued expense of $ 8.6 thousand for the three months ended September 30, 2023, which is included within
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: The Company incurred expenses of $ 414.3 thousand for the three months ended September 30, 2022, which is included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive.
−Removed: The Company reduced the accrued expense of $ 7.4 thousand for the nine months ended September 30, 2023 and recorded the expense of $ 414.3 thousand nine months ended September 30, 2022, respectively, which is included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss.
−Removed: The Company recorded a payable of $ 101.2 thousand and $ 16.2 thousand included within other liabilities on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.
−Removed: Share Repurchases —During the first quarter of 2022, Better repurchased from former member of the Better Board, Gabrielle Toledano, a total of 33,995 shares of Better’s common stock for an aggregate purchase price of $ 254,154 to defray taxes associated with vesting of equity awards of such shares.
−Removed: Toledano subsequently resigned from the Better Board in April 2022.
−Removed: During the third quarter of 2022, Better repurchased from General Counsel and Chief Compliance Officer Paula Tuffin a total of 82,527 shares of Better common stock for an aggregate purchase price of $ 399,600 to defray taxes associated with vesting of equity awards of such shares.
−Removed: Notes Receivable from Stockholders —The Company, previously at times, entered into promissory note agreements with certain employees for the purpose of financing the exercise of the Company’s stock options.
−Removed: These employees may have the ability to use the promissory notes to exercise stock options that have not yet been vested by the respective employees.
−Removed: Interest is compounded and accrued based on any unpaid principal balance and is due upon the earliest of maturity, 120 days after an employee leaves the Company, the date the employee sells shares acquired through the promissory note agreement without prior written consent of the Company, or the day prior to the date that any change in the employee’s status would cause the loan to be a prohibited extension or maintenance of credit under Section 402 of the Sarbanes-Oxley Act.
−Removed: The Company no longer enters into promissory note agreements for the purpose of financing the exercise of the Company’s stock options and no longer allows for the early exercise of stock options
−Removed: The Company included $ 10.4 million and $ 53.9 million of the notes, which include the outstanding principal amount and accrued interest, within notes receivable from stockholders in stockholders’ equity (deficit) on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.
−Removed: The balance as of September 30, 2023 does not include any promissory notes due from directors and officers of the Company.
−Removed: The balance as of December 31, 2022 includes $ 43.6 million of promissory notes due from directors and officers of the Company, of which $ 40.2 million was due from Vishal Garg.
−Removed: During the three months ended September 30, 2023, the Company reduced interest income from the promissory notes of $ 0.5 million, and during three months ended September 30, 2022, the Company recognized interest income from the promissory notes of $ 0.1 million which is included within interest income on the condensed consolidated statements of operations and comprehensive loss.
−Removed: During the nine months ended September 30, 2023, the Company reduced interest income from the promissory notes of $ 0.3 million, and nine months ended September 30, 2022, the company recognized interest income from the promissory notes of $ 0.3 million, which is included within interest income on the condensed consolidated statements of operations and comprehensive loss.
−Removed: The notes range in maturity from May 2025 to January 2026 and include interest rates ranging from 0.5 % to 2.5 % per annum.
−Removed: See Note 17 for further details on the accounting for notes receivable from stockholders.
−Removed: In August 2023, Better derecognized $ 46.4 million related to the partial forgiveness by Better to executive officers Vishal Garg, Kevin Ryan, and Paula Tuffin for their outstanding notes and cancellation of the shares collateralizing the notes to satisfy the remaining principal which was forgiven and cancelled upon the Closing.
−Removed: Additionally, for the nine months ended September 30, 2023, the Company recognized additional compensation expense of $ 0.4 million to certain of the Company's executives in connection with taxes due for capital gains on the sale of shares for settlement of the notes outstanding.
+Added: The Company originally entered into the data services agreement in March 2021, and amended the agreement in October 2021 to run until September 30, 2023.
+Added: In connection with usage of the services, the Company incurred expenses of $ 8 thousand and $ 43 thousand for the three months ended March 31, 2024 and 2023 respectively, which are included within loan origination expenses on the consolidated statements of operations and comprehensive loss .
Commitments and Contingencies
Litigation —The Company, among other things, engages in mortgage lending, title and settlement services, and other financial technology services.
−Removed: The Company operates in a highly regulated industry and may be subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, audits, examinations, investigations, employee labor disputes, and potential enforcement actions from regulatory agencies.
−Removed: While the ultimate outcome of these matters cannot be predicted with certainty due to inherent uncertainties in litigation, management is of the opinion that these matters will not have a material impact on the condensed
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: consolidated financial statements of the Company.
+Added: The Company operates in a highly regulated industry and may be subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, audits, examinations, investigations, employee labor disputes, vendors, and potential enforcement actions from regulatory agencies.
+Added: While the ultimate outcome of these matters cannot be predicted with certainty due to inherent uncertainties in litigation, management is of the opinion that these matters will not have a material impact on the condensed consolidated financial statements of the Company.
The Company accrues for losses when they are probable to occur and such losses are reasonably estimable, and discloses pending litigation if the Company believes a possibility exists that the litigation will have a material effect on its financial results.
1 unchanged sentence
The Company is currently a party to pending legal claims and proceedings regarding an employee related labor dispute brought forth during the third quarter of 2020.
−Removed: The dispute alleges that the Company has failed to pay certain employees for overtime and is in violation of the Fair Labor Standards Act and labor laws in the State of California and the State of Florida.
+Added: The dispute alleges that the Company has failed to pay certain employees for
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: overtime and is in violation of the Fair Labor Standards Act and labor laws in the State of California and the State of Florida.
The case is still in its early stages and has not yet reached the class certification stage and as such the ultimate outcome cannot be predicted with certainty due to inherent uncertainties in the legal claims.
−Removed: As part of the dispute, the Company included an estimated liability of $ 8.4 million as of both September 30, 2023 and December 31, 2022, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.
−Removed: No additional expense was accrued for the nine months ended September 30, 2023.
+Added: As part of the dispute, the Company included an estimated liability of $ 8.4 million as of both March 31, 2024 and December 31, 2023, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.
+Added: No additional expense was accrued for the three months ended March 31, 2024.
During the first quarter of 2023, the Company settled its employee related labor dispute in the State of Florida for an immaterial amount.
−Removed: In September 2022, the former Head of Sales and Operations of the Company, Sarah Pierce, filed litigation against the Company, the Company’s founder and CEO Vishal Garg, and the Company’s Chief Administrative Officer and Senior Counsel Nicholas Calamari.
−Removed: The complaint alleges several causes of action including:
−Removed: violation of certain state labor laws, breach of fiduciary duty and defamation against Mr.
−Removed: Garg, aiding and abetting breach of fiduciary duty against Mr.
−Removed: Calamari, and intentional infliction of emotional distress against Mr.
−Removed: On September 29, 2023, the Court filed an Order granting the Company's motions to dismiss in part and denying the Company’s motions to dismiss in part.
−Removed: The following motions were granted:
−Removed: (i) the Company’s motion to dismiss Ms.
−Removed: Pierce’s Sarbanes-Oxley claim was granted;
−Removed: (ii) the Company’s motion to dismiss Ms.
−Removed: Pierce’s Dodd-Frank claim was granted;
−Removed: Calamari’s motion to dismiss Ms.
−Removed: Pierce’s claim for breach of fiduciary duty was granted;
−Removed: (iv) the Company's motion to dismiss Ms.
−Removed: Pierce’s defamation claim was granted;
−Removed: Calamari’s motion to dismiss Ms.
−Removed: Pierce’s claim for intentional infliction of emotional distress was granted;
−Removed: Calamari’s motion to dismiss Ms.
−Removed: Pierce’s claim for tortious interference with contract was granted;
−Removed: and (vii) the Company’s motion to dismiss Ms.
−Removed: Pierce’s breach of contract claim was granted.
−Removed: The Company’s motion to dismiss Ms.
−Removed: Pierce's claim of retaliation was dismissed.
−Removed: Garg’s motion to dismiss Ms.
−Removed: Pierce’s defamation claim was denied, and the Company’s motion to dismiss Ms.
−Removed: Pierce’s defamation claim under the theory of respondeat superior was denied.
−Removed: The Company intends to vigorously defend this action.
+Added: On June 7, 2022, Sarah Pierce, Pre-Business Combination Better’s former Head of Sales and Operations, filed litigation against Pre-Business Combination Better, Mr.
+Added: Garg, and Nicholas Calamari, our Chief Administrative Officer and Senior Counsel.
+Added: Pierce has since voluntarily dismissed her claims against the Company and Messrs.
+Added: Garg and Calamari with prejudice and withdrawn her appeal of a separate judgment obtained by the Company against her.
Regulatory Matters —In the third quarter of 2021, following third-party audits of samples of loans produced during the fiscal years 2018, 2019, and 2022, the Company became aware of certain TILA-RESPA Integrated Disclosure (“TRID”) defects in the loan production process that resulted in the final closing costs disclosed in the closing disclosure, in some instances, being greater than those disclosed in the loan estimate.
Some of these defects were outside applicable tolerances under the TRID rule, which resulted in potential overcharges to consumers.
−Removed: As of September 30, 2023 and December 31, 2022, the Company included an estimated liability of $ 9.3 million and $ 11.9 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets.
−Removed: For the three months ended September 30, 2023, the Company reduced the accrual for these potential TRID defects by $ 3.0 million and is included within mortgage platform expenses in the condensed consolidated statement of operations and comprehensive loss.
−Removed: For the nine months ended September 30, 2023, the Company reduced the accrual for these potential TRID defects by $ 2.7 million and is included within mortgage platform expenses in the condensed consolidated statement of operations and comprehensive loss.
+Added: As of March 31, 2024 and December 31, 2023, the Company included an estimated liability of $ 8.7 million and $ 8.6 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets.
+Added: For the three months ended March 31, 2024, the Company recorded an additional accrual for these potential TRID defects of $ 0.1 million and is included within loan origination expense in the condensed consolidated statement of operations and comprehensive loss.
This accrual is the Company’s best estimate of potential exposure on the larger population of loans based on the results obtained by the audited sample.
The accrued amounts are for estimated refunds potentially due to consumers for TRID tolerance errors for loans produced from 2018 through 2024.
−Removed: The Company completed a TRID audit of 2022 files and is continuing to remediate TRID tolerance defects as necessary.
−Removed: In the second quarter of 2022, Better and Aurora received a voluntary request for documents from the Division of Enforcement of the Securities and Exchange Commission (the “SEC”) and subsequently received several subpoenas, indicating that it is conducting an investigation relating to Aurora and Better to determine if violations of the federal securities laws had occurred.
−Removed: The SEC requested that Aurora and Better provide the SEC with certain information and documents.
−Removed: The voluntary and subpoena requests covered, among other things, certain aspects of Better’s business and operations, certain matters relating to certain actions and circumstances of the Company’s founder and Chief Executive Officer, Vishal Garg, and his other business activities, related party transactions, public statements made about the Company’s proprietary mortgage platform, Better’s financial condition, and allegations made in litigation filed by Sarah
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Pierce, Better’s former Head of Sales and Operations.
−Removed: On August 3, 2023, the SEC Division of Enforcement informed Aurora and Better that it has concluded its previously announced investigation and that the SEC does not intend to recommend an enforcement action against Aurora or Better.
+Added: The Company is continuing to remediate TRID tolerance defects as necessary.
+Added: Minimum Bid Price Notice —On October 12, 2023, the Company received a letter from Nasdaq notifying the Company that it is not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing.
+Added: The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
+Added: The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from the Nasdaq Global Market to the Nasdaq Capital Market.
+Added: The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.”
+Added: In accordance with the Compliance Period Rule, the Company has 180 calendar days, from the date of notification, October 12, 2023, to regain compliance.
+Added: On April 9, 2024, the Company received formal notice that Nasdaq granted the Company’s request for an additional 180-day period, or until October 7, 2024, to evidence compliance with the $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to the Bid Price Rule.
+Added: If at any time before October 7, 2024, the bid price of the Company’s Class A common stock, par value $ 0.0001 per share closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule.
+Added: If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Class A common stock will be subject to delisting.
+Added: The Company would then be entitled to appeal that determination to a Nasdaq hearings panel.
Loan Commitments —The Company enters into IRLCs to fund mortgage loans, at specified interest rates and within a specified period of time, with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria.
−Removed: As of September 30, 2023 and December 31, 2022, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $ 211.9 million and $ 225.4 million, respectively.
−Removed: The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of September 30, 2023 and December 31, 2022, respectively, on the condensed consolidated balance sheets.
+Added: As of March 31, 2024 and December 31, 2023, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $ 262.7 million and $ 227.4 million, respectively.
+Added: The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets.
Forward Sale Commitments —In the ordinary course of business, the Company enters into contracts to sell existing LHFS or loans committed but yet to be funded into the secondary market at specified future dates.
−Removed: As of September 30, 2023 and December 31, 2022, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $ 294.0 million and $ 422.0 million, respectively.
−Removed: The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of September 30, 2023 and December 31, 2022, respectively, on the condensed consolidated balance sheets.
+Added: As of March 31, 2024
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: and December 31, 2023, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $ 356.0 million and $ 265.0 million, respectively.
+Added: The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets.
Concentrations —See below for areas considered to be concentrations of credit risk for the Company:
Significant loan purchasers are those which represent more than 10% of the Company’s loan volume.
−Removed: During the three months ended September 30, 2023, the Company had three loan purchasers that accounted for 56 %, 22 % and 11 % of loans sold by the Company.
−Removed: During the three months ended September 30, 2022, the Company had one loan purchaser that accounted for 59 % of loans sold by the Company.
−Removed: During the nine months ended September 30, 2023 and 2022, the Company had one loan purchaser that accounted for 68 % and 65 % of loans sold by the Company.
+Added: During the three months ended March 31, 2024, the Company had three loan purchasers that accounted for 53 %, 17 % and 18 % of loans sold by the Company.
+Added: During the three months ended March 31, 2023, the Company had one loan purchaser that accounted for 79 % of loans sold by the Company.
Concentrations of credit risk associated with the LHFS carried at fair value are limited due to the large number of borrowers and their dispersion across many geographic areas throughout the United States.
−Removed: As of September 30, 2023, the Company originated 12 % and 11 % of its LHFS secured by properties in Texas and Florida, respectively.
−Removed: As of December 31, 2022, the company originated 11 % of its LHFS secured by properties in each of California and Texas and 10 % of its LHFS secured by properties in Florida.
+Added: As of March 31, 2024 , the company originated 10 % of its LHFS secured by properties in Florida.
+Added: As of December 31, 2023 , the Company originated 12 % and 11 % of its LHFS secured by properties in Florida and Texas, respectively.
The Company maintains cash and cash equivalent balances at various financial institutions.
Cash accounts at each bank are insured by the Federal Deposit Insurance Corporation for amounts up to $0.25 million.
−Removed: As of September 30, 2023 and December 31, 2022, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions.
−Removed: Advanced Loan Origination Fees (Deferred Revenue) —Deferred revenue primarily consists of advance payments for loan origination and servicing on behalf of an integrated relationship partner.
−Removed: The total advance was for $ 50.0 million and were recognized in revenue starting in August 2022 through August 2023.
−Removed: The Company must repay the advance in three tranches, $ 20.0 million due December 2022, $ 15.0 million due April 2023, and $ 15.0 million due October 2023, each to be reduced by the amount of loan origination revenue earned between the tranches.
−Removed: The Company repaid $ 12.9 million of the first tranche after reductions for loan origination revenue earned within mortgage platform revenue from August 2022 through December 31, 2022.
−Removed: In April 2023, the Company repaid $ 12.7 million of the second tranche after reductions for loan origination revenue earned within mortgage platform revenue from January 2023 through March 2023.
−Removed: As of September 30, 2023 and December 31, 2022, the Company included deferred revenue of $ 12.9 million and $ 30.0 million, respectively within other liabilities on the condensed consolidated balance sheets after reductions for loan origination revenue earned within mortgage platform revenue.
−Removed: Subsequent to September 30, 2023, in October 2023, the Company paid off $ 12.9 million of the third tranche.
−Removed: Escrow Funds —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement.
+Added: As of March 31, 2024 and December 31, 2023, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions.
+Added: Escrow Payable and Other Customer Accounts —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement.
The Company administers escrow deposits representing undisbursed amounts received for payment of property taxes, insurance and principal, and interest on mortgage loans held for sale.
1 unchanged sentence
These funds are shown as restricted cash and there is a corresponding escrow payable on the consolidated balance sheet, as they are being held on behalf of the borrower or customer.
−Removed: The balance in these accounts as of September 30, 2023 and December 31, 2022 was $ 3.2 million and $ 8.0 million, respectively.
−Removed: In some instances the Company may
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: administer funds that are legally owned by a third-party which are excluded from the condensed consolidated balance sheets which amounted to none and $ 0.3 million as of September 30, 2023 and December 31, 2022, respectively.
−Removed: Customer Deposits —In relation to the Company’s banking activities tied to the Birmingham acquisition in the U.K., the Company offers individual savings accounts and other depository products with differing maturities and interest rates to its customers.
−Removed: The balance of customer deposits as of September 30, 2023 and December 31, 2022 was $ 9.9 million and none , respectively on the condensed consolidated balance sheets.
+Added: The balance in these accounts as of March 31, 2024 and December 31, 2023 was $ 3.8 million and $ 3.4 million, respectively.
Risks and Uncertainties
9 unchanged sentences
Through this program, mortgage-backed securities are purchased and sold forward.
−Removed: For all counterparties with open positions as of September 30, 2023, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis.
+Added: For all counterparties with open positions as of March 31, 2024, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis.
Net settlements entail paying or receiving cash based upon the change in market value of the existing instrument.
1 unchanged sentence
These short-term instruments, which do not require any payments to be paid to the counterparty in connection with the execution of the commitments, are generally executed simultaneously.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Credit Risk —The Company’s hedging program is not designated as formal hedging from an accounting standpoint, contains an element of risk because the counterparties to its mortgage securities transactions may be unable to meet their obligations.
7 unchanged sentences
In addition, if loans pay-off within a specified time frame the Company may be required to refund a portion of the sales proceeds to the loan purchasers.
−Removed: The Company repurchased $ 3.6 million ( 11 l oans) and $ 37.9 million ( 82 l oans) in unpaid principal balance of loans during the three months ended September 30, 2023 and 2022, respectively, related to its loan repurchase obligations.
−Removed: The Company repurchased $ 20.8 million ( 52 loans) and $ 97.0 million ( 221 loans) in unpaid principal balance of loans during the nine months ended September 30, 2023 and 2022, respectively, related to its loan repurchase obligations.
−Removed: The Company’s loan repurchase reserve as of September 30, 2023 and December 31, 2022 was $ 21.8 million and $ 26.7 million, respectively, and is included within other liabilities on the condensed consolidated balance sheets.
−Removed: The provision
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: for the loan repurchase reserve is included within mortgage platform expenses on the condensed consolidated statement of operations and comprehensive loss.
+Added: The Company repurchased $ 2.0 million ( 6 l oans) and $ 8.2 million ( 21 l oans) in unpaid principal balance of loans during the three months ended March 31, 2024 and 2023, respectively, related to its loan repurchase obligations.
+Added: The Company’s loan repurchase reserve is included within other liabilities on the consolidated balance sheets.
+Added: The (recovery of)/provision for the loan repurchase reserve is included within gain on loans, net on the consolidated statements of operations and comprehensive loss.
The following presents the activity of the Company’s loan repurchase reserve:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
Loan repurchase reserve at beginning of period $ 19,472 $ 26,745
−Removed: Provision 866 11,683 178 25,125
+Added: (Recovery)/provision ( 3,563 ) 2,124
Charge-offs ( 468 ) ( 2,278 )
3 unchanged sentences
If the Company’s principal lenders decided to terminate or not to renew any of the warehouse lines with the Company, the loss of borrowing capacity could be detrimental to the Company’s condensed consolidated financial statements unless the Company found a suitable alternative source.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Net Loss Per Share
The computation of net loss per share and weighted average shares of the Company's common stock outstanding during the periods presented is as follows:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands, except for share and per share amounts) 2024 2023
18 unchanged sentences
Diluted $ ( 0.07 ) $ ( 0.29 )
+Added: Basic and diluted loss per share are the same for each class of common stock (i.e., Class A, Class B and Class C) because they are entitled to the same dividend rights.
+Added: Basic and diluted loss per share are presented together as the amounts for basic and diluted loss per share are the same (i.e., the Company’s other equity-linked instruments outstanding are anti-dilutive for the periods presented).
+Added: There were no preferred dividends declared or accumulated during the three months ended March 31, 2024 and 2023.
+Added: Historically, the Company applied the two-class method which requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed.
+Added: The Company’s outstanding convertible preferred stock was a participating security as the holders of such shares participated in earnings but did not contractually participate in the Company’s losses and therefore no losses were allocated to the convertible preferred stock in prior periods.
+Added: The Company's potentially dilutive securities, which include stock options, convertible preferred stock that would have been issued under the if-converted method, warrants to purchase shares of common stock, warrants to purchase shares of preferred stock, and stock options exercised, not vested, have been excluded from the computation of diluted net loss per share, as the effect would be anti-dilutive.
+Added: The Company excluded the following
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Basic and diluted earnings (loss) per share are the same for each class of common stock because they are entitled to the same dividend rights.
−Removed: Basic and diluted earnings (loss) per share are presented together as the amounts for basic and diluted earnings (loss) per share are the same for each class of common stock.
−Removed: There were no preferred dividends declared or accumulated during the three months ended September 30, 2023 and 2022.
−Removed: There were no preferred dividends declared or accumulated during the nine months ended September 30, 2023 and 2022.
−Removed: The Company applies the two-class method which requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed.
−Removed: The Company’s outstanding convertible preferred stock is a participating security as the holders of such shares participate in earnings but do not contractually participate in the Company’s losses.
−Removed: The Company's potentially dilutive securities, which include stock options, convertible preferred stock that would have been issued under the if-converted method, warrants to purchase shares of common stock, warrants to purchase shares of preferred stock, and stock options exercised, not vested, have been excluded from the computation of diluted net loss per share, as the effect would be to reduce the net loss per share.
−Removed: The Company excluded the following securities, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated as including them would have had an anti-dilutive effect:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: securities, presented based on amounts outstanding at each year end, from the computation of diluted net loss per share attributable to common stockholders for the years indicated as including them would have had an anti-dilutive effect:
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
−Removed: Options to purchase common stock (1)
+Added: RSUs and Options to purchase common stock (1)
49,562 141,059
Convertible preferred stock (2)
−Removed: — 108,721 — 108,721
Pre-Closing Bridge Notes
−Removed: — 247,777 — 247,777
Warrants to purchase convertible preferred stock (1)
−Removed: — 6,649 — 6,649
+Added: Public Warrants (1)
+Added: Private Warrants (1)
+Added: Sponsor locked-up shares (1)
+Added: Warrants to purchase common stock (1)
Total 60,064 1,258,378
4 unchanged sentences
The Company’s financial instruments measured at fair value on a recurring basis are summarized below:
−Removed: September 30, 2023
+Added: March 31, 2024
(Amounts in thousands) Level 1 Level 2 Level 3 Total
13 unchanged sentences
— — 1,716 1,716
−Removed: Bifurcated derivative, at fair value — — 236,603 236,603
Total Assets $ — $ 170,150 $ 1,716 $ 171,866
1 unchanged sentence
$ — $ 872 $ 77 $ 949
−Removed: Convertible preferred stock warrants (2)
+Added: Warrant and equity related liabilities, at fair value (2)
972 1,359 — 2,331
1 unchanged sentence
__________________
−Removed: (1) As of September 30, 2023 and December 31, 2022, derivative assets and liabilities represent both IRLCs and forward sale commitments.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: (1) As of March 31, 2024 and December 31, 2023, derivative assets and liabilities represent both IRLCs and forward sale commitments.
(2) Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility.
3 unchanged sentences
The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and receipt of principal payments associated with the relevant LHFS.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Derivative Assets and Liabilities —The Company uses derivatives to manage various financial risks.
2 unchanged sentences
The fair value of IRLCs, which are related to mortgage loan commitments, is based on quoted market prices, adjusted by the pull-through factor, and includes the value attributable to the net servicing fee.
−Removed: The Company evaluated the significance and unobservable nature of the pull-through factor and determined that the classification of IRLCs should be Level 3 as of September 30, 2023 and December 31, 2022.
+Added: The Company evaluated the significance and unobservable nature of the pull-through factor and determined that the classification of IRLCs should be Level 3 as of March 31, 2024 and December 31, 2023.
Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement.
1 unchanged sentence
for example, entering into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, will decrease the value of IRLC.
−Removed: The Company had purchases/issuances of approximately $ 0.1 million and $ 2.4 million of IRLCs during the three months ended September 30, 2023 and 2022, respectively.
−Removed: The Company had purchases/issuances of approximately $ 0.6 million and $ 5.0 million of IRLCs during the nine months ended September 30, 2023 and 2022, respectively.
−Removed: The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of September 30, 2023 was approximately 60 days on average.
+Added: The Company had purchases/issuances of approximately $ 2.6 million and $ 0.9 million of IRLCs during the three months ended March 31, 2024 and 2023, respectively.
+Added: The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of March 31, 2024 was approximately 51 days on average.
The Company attempts to match the maturity date of the IRLCs with the forward commitments.
Derivatives are presented in the condensed consolidated balance sheets under derivative assets, at fair value and derivative liabilities, at fair value.
−Removed: During the three months ended September 30, 2023, the Company recognized $ 0.9 million of loss and $ 5.0 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively.
−Removed: During the nine months ended September 30, 2023, the Company recognized $ 0.1 million and $ 8.4 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively.
−Removed: During the three months ended September 30, 2022, the Company recognized $ 7.0 million of losses and $ 26.2 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively.
−Removed: During the nine months ended September 30, 2022, the Company recognized $ 14.3 million of losses and $ 188.6 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively.
−Removed: Gains and losses related to changes in the fair value of IRLCs and forward sale commitments are included in mortgage platform revenue, net within the condensed consolidated statements of operations and comprehensive loss.
−Removed: Unrealized activity related to changes in the fair value of forward sale commitments were $ 1.5 million of gains and $ 13.2 million of gains, included in the $ 5.0 million of gains and $ 26.2 million of gains, during the three months ended September 30, 2023 and 2022, respectively.
−Removed: Unrealized activity related to changes in the fair value of forward sale commitments were $ 0.8 million of gains and $ 14.1 million of gains, included in the $ 8.4 million of gains and $ 188.6 million of gains, during the nine months ended September 30, 2023 and 2022, respectively.
+Added: During the three months ended March 31, 2024, the Company recognized none of losses and $ 2.5 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively.
+Added: During the three months ended March 31, 2023, the Company recognized $ 4.2 million of gains and $ 4.5 million of losses related to changes in the fair value of IRLCs and forward sale commitments, respectively.
+Added: Gains and losses related to changes in the fair value of IRLCs and forward sale commitments are included in gain on loans, net within the condensed consolidated statements of operations and comprehensive loss.
+Added: Unrealized activity related to changes in the fair value of forward sale commitments were $ 3.8 million of gains and $ 8.8 million of losses, included in the $ 2.5 million of gains and $ 4.5 million of losses, during the three months ended March 31, 2024 and 2023, respectively.
The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows:
(Amounts in thousands) Notional Value Derivative Asset Derivative Liability
−Removed: Balance as of September 30, 2023
+Added: Balance as of March 31, 2024
IRLCs $ 262,715 $ 1,717 $ 42
5 unchanged sentences
Total $ 1,716 $ 949
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Warrant and equity related liabilities— The warrant liability consists of Warrants and the Sponsor-Locked up Shares.
−Removed: The Warrants consist of Public Warrants and Private Warrants.
+Added: Warrant and equity related liabilities— The warrant liability consists of Warrants and certain shares issued to Novator Capital Sponsor Ltd.
+Added: ("Sponsor") that are subject to transfer restrictions contingent on the price of Class A common stock exceeding certain thresholds (the "Sponsor-Locked-Up Shares").
+Added: The warrants consist of the Company's publicly traded warrants ("Public Warrants") and private warrants to acquire shares of Aurora that have been converted into warrants to acquire shares of Class A common stock ("Private Warrants").
The Public Warrants trade on the Nasdaq Capital Market under the ticker symbol “BETRW” and as such is considered a Level 1 input from an active market to derive the value.
The Private Warrants and Sponsor-Locked up Shares, although not publicly traded on an active market, use inputs from the publicly traded Public Warrants and the Company’s publicly traded common stock, respectively, and are further calibrated using unobservable inputs representing Level 2 measurements within the fair value hierarchy.
−Removed: Convertible Preferred Stock Warrants —The Company issued Former Preferred Stock Warrants to certain investors and to the Lender under its corporate line of credit (see Note 10).
−Removed: The Company obtained a fair value analysis from a third party to assist in determination of the fair value of warrants.
−Removed: The Company used the Black-Scholes-Merton option-pricing model to estimate the fair value of the warrants at the issuance date and as of December 31, 2022, which is based on significant inputs not observable in the market representing a Level 3 measurement within the fair value hierarchy.
−Removed: Significant changes in the unobservable inputs could result in significant changes in the fair value of the convertible preferred stock warrants.
−Removed: The warrant valuation was based on the intrinsic value of the Company’s underlying stock price and included certain assumptions such as risk free rate, volatility rate, and expected term.
−Removed: Bifurcated Derivative —The Company’s Pre-Closing Bridge Notes included embedded features that were separately accounted for and were marked to fair value at each reporting period with changes included in change in fair value of bifurcated derivative on the consolidated statements of operations and comprehensive loss.
−Removed: The Company obtained a fair value analysis from a third party to assist in determination of the fair value of the bifurcated derivative.
−Removed: In estimating the fair value of the bifurcated derivative, management considered factors management believed were material to the valuation process, including, but not limited to, the price at which recent equity was issued by the Company to independent third parties or transacted between third parties, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors.
−Removed: As there was no active market for the Company’s equity, the fair value of the bifurcated derivative was based on significant inputs not observable in the market representing a Level 3 measurement within the fair value hierarchy.
−Removed: Management believed the combination of these factors provided an appropriate estimate of the expected fair value and reflected the best estimate of the fair value of the bifurcated derivative.
−Removed: As of September 30, 2023 and December 31, 2022, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants.
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: As of March 31, 2024 and December 31, 2023, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants.
The following table presents the rollforward of Level 3 IRLCs:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
3 unchanged sentences
The following table presents the rollforward of Level 3 bifurcated derivative:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
3 unchanged sentences
The following table presents the rollforward of Level 3 convertible preferred stock warrants:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
3 unchanged sentences
Balance at end of period $ — $ 2,543
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Counterparty agreements for forward sale commitments contain master netting agreements, which contain a legal right to offset amounts due to and from the same counterparty and can be settled on a net basis.
3 unchanged sentences
Balance as of:
−Removed: September 30, 2023:
−Removed: $ 3,525 $ ( 19 ) $ 3,506
+Added: March 31, 2024:
December 31, 2023 $ — $ — $ —
1 unchanged sentence
Balance as of:
−Removed: September 30, 2023:
+Added: March 31, 2024:
+Added: $ 311 $ ( 828 ) $ ( 517 )
December 31, 2023 $ 168 $ ( 1,041 ) $ ( 872 )
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Significant Unobservable Inputs — The following table presents quantitative information about the significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy:
−Removed: September 30, 2023
+Added: March 31, 2024
(Amounts in dollars, except percentages) Range Weighted Average
5 unchanged sentences
Pull-through factor 0.77 % - 100.00 %
−Removed: Bifurcated derivative
−Removed: Risk free rate 4.69 % 4.69 %
−Removed: Expected term (years) 0.75 0.75
−Removed: Fair value of new preferred or common stock $ 10.63 - $ 19.05
−Removed: Convertible preferred stock warrants
−Removed: Risk free rate 3.94 % - 4.04 %
−Removed: Volatility rate 40.4 % - 123.8 %
−Removed: Expected term (years) 4.24 - 5.74
−Removed: Fair value of common stock $ 0.00 - $ 6.60
GAAP requires disclosure of fair value information about financial instruments, whether recognized or not recognized in the condensed consolidated financial statements, for which it is practical to estimate the fair value.
1 unchanged sentence
Considerable judgment is necessary to interpret market data and develop estimates of fair value in both inactive and orderly markets.
−Removed: Accordingly, fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments in a current market
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: Accordingly, fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments in a current market exchange.
The use of market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.
1 unchanged sentence
The following table presents the carrying amounts and estimated fair value of financial instruments that are not recorded at fair value on a recurring or non-recurring basis:
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
(Amounts in thousands) Fair Value Level Carrying Amount Fair Value Carrying Amount Fair Value
1 unchanged sentence
Loans held for investment Level 3 $ 7,900 $ 8,258 $ 4,793 $ 5,103
−Removed: Post-Closing Convertible Notes Level 3 $ 513,001 $ 252,796 $ — $ —
−Removed: Loan commitment asset Level 3 $ — $ — $ 16,119 $ 54,654
−Removed: Pre-Closing Bridge Notes Level 3 $ — $ — $ 750,000 $ 269,067
−Removed: Corporate line of credit Level 3 $ — $ — $ 144,403 $ 145,323
+Added: Convertible Note Level 3 $ 514,758 $ 322,803 $ 514,644 $ 309,135
In determining the fair value of the Short term investments, management used observable inputs such as quoted prices in active markets for identical assets.
The fair value of loans held for investment is determined by management estimates of the specific credit risk attributes of each pool of loans, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan.
−Removed: The corporate line of credit was valued using a Black Derman Toy model which incorporates the option to prepay given the make-whole premium as well as other inputs such as risk-free rates and credit spreads.
−Removed: In determining the fair value of the loan commitment asset and the Pre-Closing Bridge Notes, management used factors that are material to the valuation process, including but not limited to, the price at which recent equity was issued by the Company to independent third parties or transacted between third parties, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors.
−Removed: As a number of assumptions and estimates were involved that are largely unobservable, loans held for investment, loan commitment asset and Corporate line of credit were classified as Level 3 inputs within the fair value hierarchy.
−Removed: On a consolidated basis, the Company recorded total income tax expense (benefit) of $ 0.7 million and $( 0.1 ) million for the three months ended September 30, 2023 and 2022, respectively.
−Removed: The Company recorded total income tax expense of $ 2.5 million and $ 1.5 million for the nine months ended September 30, 2023 and 2022, respectively.
+Added: In determining the fair value of the Convertible Note, management used factors that are material to the valuation process, including but not limited to, the trading price of the Company’s securities, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors.
+Added: As a number of assumptions and estimates were involved that are largely unobservable, loans held for investment and the Convertible Note were classified as Level 3 inputs within the fair value hierarchy.
+Added: On a consolidated basis, the Company recorded total income tax expense (benefit) of $ 0.1 million and $ 1.4 million for the three months ended March 31, 2024 and 2023, respectively.
The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including the ability to accurately project the Company’s pre-tax income or loss for the year and the mix of earnings among various tax jurisdictions.
−Removed: The year-to-date effective tax rate, after discrete items, of ( 0.19 )% for the three months ended September 30, 2023, changed from 0.02 % for the three months ended September 30, 2022, as the Company is forecasting reduction in losses for 2023.
−Removed: The year-to-date effective tax rate, after discrete items, of ( 0.53 )% for the nine months ended September 30, 2023, changed from ( 0.23 )% for the nine months ended September 30, 2022, as the Company was subject to withholding taxes and is forecasting reduction in losses for 2023.
−Removed: The income tax expense for the three months ended September 30, 2023 primarily relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns.
−Removed: The income tax expense for the nine months ended September 30, 2023 relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns.
+Added: The year-to-date effective tax rate, after discrete items, of ( 0.28 )% for the three months ended March 31, 2024, changed from ( 1.65 )% for the three months ended March 31, 2023, as the Company is forecasting reduction in losses for 2024.
+Added: In addition, the
+Added: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
+Added: Company was subject to withholding taxes on a dividend in 2023.
+Added: The income tax expense for the three months ended March 31, 2024 primarily relates to the pre-tax income projections in certain foreign jurisdictions where the Company files standalone returns.
+Added: The income tax expense for the three months ended March 31, 2023 relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns.
As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets.
−Removed: The Company is in a three year cumulative loss position as of September 30, 2023.
+Added: The Company is in a three-year cumulative loss position as of March 31, 2024.
Further, due to losses being estimated in the future, management continues to believe it is more likely than not that the benefit of the deferred income tax assets will not be realized.
In recognition of this risk, the Company continues to provide a full valuation allowance on deferred income tax assets.
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Convertible Preferred Stock
−Removed: In connection with the Business Combination, as described in Note 3, all series of Better convertible preferred stock were converted into Better common stock and subsequently converted to the Company’s common stock at the Exchange Ratio of approximately 3.06 .
−Removed: All share amounts in periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization.
−Removed: As of December 31, 2022, the Company had outstanding the following series of convertible preferred stock:
−Removed: December 31, 2022
−Removed: (Amounts in thousands, except share amounts) Shares
−Removed: Authorized Shares Issued and
−Removed: Series D Preferred Stock 26,178,574 23,786,379
−Removed: Series D-1 Preferred Stock 26,178,574 —
−Removed: Series D-2 Preferred Stock 21,305,758 20,390,896
−Removed: Series D-3 Preferred Stock 914,862 914,862
−Removed: Series D-4 Preferred Stock 1,062,009 1,062,009
−Removed: Series D-5 Preferred Stock 1,062,009 —
−Removed: Series C Preferred Stock 132,946,826 100,138,544
−Removed: Series C-1 Preferred Stock 132,946,826 8,939,693
−Removed: Series C-2 Preferred Stock 18,624,354 14,018,524
−Removed: Series C-3 Preferred Stock 19,741,818 8,367,368
−Removed: Series C-4 Preferred Stock 2,171,064 2,171,064
−Removed: Series C-5 Preferred Stock 18,624,354 4,605,830
−Removed: Series C-6 Preferred Stock 19,741,818 11,374,450
−Removed: Series C-7 Preferred Stock 9,833,660 4,469,846
−Removed: Series B Preferred Stock 39,753,024 28,583,364
−Removed: Series B-1 Preferred Stock 12,531,940 11,169,660
−Removed: Series A Preferred Stock 93,850,533 69,267,349
−Removed: Series A-1 Preferred Stock 24,937,838 23,054,899
−Removed: Total convertible preferred stock 602,405,839 332,314,737
+Added: In connection with the Business Combination, as described in Note 1, all series of Pre-Business Combination Better convertible preferred stock were converted into Pre-Business Combination Better common stock and subsequently converted to the Company’s common stock at an exchange ratio of approximately 3.06 .
Convertible Preferred Stock Warrants —Immediately prior to the Closing of the Business Combination, certain convertible preferred stock warrant holders exercised their warrants on a cash basis and the remaining convertible preferred stock warrant holders exercised their warrants on a net basis at the Closing.
−Removed: In August 2023, the Company received $ 1.5 million from preferred stock warrant holders that exercised their warrants on a cash basis with an offset to additional
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: paid-in-capital and as the remaining convertible preferred stock warrants were exercise the entire convertible preferred stock liability of $ 2.8 million was reclassified to additional paid-in-capital.
−Removed: As of December 31, 2022, the Company had outstanding the following convertible preferred stock warrants:
−Removed: (Amounts in thousands, except no.
−Removed: warrants and strike prices) December 31, 2022 Strike Valuation at Issuance
−Removed: September 2018 Series C Preferred 9/28/2018 9/28/2028 2,312,296 $ 0.59 $ 170
−Removed: February 2019 Series C Preferred 2/6/2019 9/28/2028 153,807 $ 0.59 $ 12
−Removed: March 2019 Series C Preferred 3/29/2019 3/29/2026 1,146,214 $ 1.12 $ 87
−Removed: April 2019 Series C Preferred 4/17/2019 4/17/2029 3,575,879 $ 1.12 $ 313
−Removed: March 2020 Series C Preferred 3/25/2020 3/25/2027 410,228 $ 1.64 $ 201
−Removed: Total 7,598,424
−Removed: The Company valued these warrants at issuance and at each reporting period, using the Black-Scholes-Merton option-pricing model and their respective terms, as can be seen below:
−Removed: (Amounts in thousands, except per share amounts) December 31, 2022
−Removed: Issuance Fair value per share Fair Value
−Removed: September 2018 $ 0.54 $ 1,256
−Removed: February 2019 $ 0.54 84
−Removed: March 2019 $ 0.35 397
−Removed: April 2019 $ 0.35 1,240
−Removed: March 2020 $ 0.29 119
−Removed: Total $ 3,096
−Removed: Warrants for Series C Preferred Stock, related to the above issuances, were recorded as liabilities at fair value, resulting in a liability of $ 3.1 million as of December 31, 2022.
−Removed: The change in fair value of warrants for the three months ended September 30, 2023 and 2022 was a gain of none and a gain of $ 4.2 million, respectively, and was recorded in change in fair value of convertible preferred stock within the condensed consolidated statements of operations and comprehensive loss.
−Removed: The change in fair value of warrants for the nine months ended September 30, 2023 and 2022 was a gain of $ 0.3 million and a gain of $ 24.6 million, respectively, and was recorded in change in fair value of convertible preferred stock warrants within the condensed consolidated statements of operations and comprehensive loss.
+Added: The change in fair value of warrants for the three months ended March 31, 2024 and 2023 was a gain of none and a gain of $ 0.6 million, respectively, and was recorded in change in fair value of convertible preferred stock within the condensed consolidated statements of operations and comprehensive loss.
Stockholders' Equity
−Removed: On the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement and on August 24, 2023, Better Home & Finance Class A common stock began trading and Public Warrants continued trading on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, under the ticker symbols “BETR” and “BETRW”, respectively.
−Removed: Each outstanding share of Legacy Better common stock was exchanged for approximately 3.06 shares of the Company’s Class B common stock.
−Removed: The Company’s authorized capital stock consists of 1.8 billion shares of Class A common stock, 700.0 million shares of Class B common stock, and 800.0 million shares of Class C common stock, each with a par value per share of $ 0.0001 .
−Removed: Each holder of Class A common stock has the right to one vote per share and each holder of Class B common stock has the right to three votes per share.
−Removed: Except as described below or otherwise provided by the Company’s certificate of incorporation or required by applicable law, shares of Class C common stock are non-voting and will not entitle the holder thereof to any voting power.
−Removed: Shares of Class A common stock, Class B common stock and Class C common stock are treated equally, identically and ratably, on a per share basis, with respect to any dividends or distributions as may be declared and paid from time to time.
−Removed: Upon the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, holders of Class A common stock, Class B common stock and Class C common stock will be entitled to receive ratably all assets of the Company available for distribution to its stockholders unless disparate or different treatment
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: of the shares of each such class with respect to distributions upon any such liquidation, dissolution or winding up is approved in advance by the affirmative vote of the holders of a majority of the then-outstanding shares of Class A common stock, Class B common stock and Class C common stock, each voting separately as a class.
−Removed: Further, each share of Class B common stock is convertible into one fully paid and nonassessable share of Class A common stock or Class C common stock at the option of the holder thereof at any time upon written notice to the Company.
−Removed: Each share of Class C common stock is convertible into one fully paid and nonassessable share of Class A common stock at the option of the holder thereof at any time upon written notice to the Company.
−Removed: All share amounts in periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization.
−Removed: The Company's equity structure prior to the Closing consisted of different classes of common stock which is presented in the order of liquidation preference below:
−Removed: As of December 31, 2022
−Removed: (Amounts in thousands, except share amounts) Shares Authorized Shares Issued and outstanding Par Value
−Removed: Common A Stock 24,452,565 24,452,565 $ 1
−Removed: Common B Stock 588,261,164 171,441,780 5
−Removed: Common B-1 Stock 236,938,220 — —
−Removed: Common O Stock 236,375,239 103,889,076 4
−Removed: Total common stock 1,086,027,188 299,783,421 $ 10
−Removed: Pre-Closing Common Stock Warrants —Immediately prior to the Closing of the Business Combination, all common stock warrant holders exercised their warrants on a net basis.
−Removed: The Company had outstanding the following common stock warrants as of December 31, 2022:
−Removed: (Amounts in thousands, except warrants, price, and per share amounts)
−Removed: Issuance Share
−Removed: Date Expiration
−Removed: Warrants Strike Valuation at Issuance
−Removed: March 2019 Common B 3/29/2019 3/29/2026 1,146,214 $ 0.23 $ 179
−Removed: March 2020 Common B 3/25/2020 3/25/2027 4,584,856 $ 1.12 $ 271
−Removed: Total equity warrants 5,731,070
−Removed: Private and Public Warrants— As of September 30, 2023 and December 31, 2022, the Company had a total of $ 1.1 million and none , respectively, of Warrants included as warrant liabilities within the condensed consolidated balance sheets.
−Removed: The change in fair value of Warrants for the three and nine months ended September 30, 2023 was a gain of $ 0.21 million and $ 0.21 million, respectively, and is included in change in fair value of warrant liabilities within the condensed consolidated statements of operations and comprehensive loss.
−Removed: Sponsor locked-up Shares— As of September 30, 2023 and December 31, 2022, the Company had a total of $ 0.5 million and none , respectively, of Sponsor locked-up Share liabilities which are included within warrant liabilities in the condensed consolidated balance sheets.
−Removed: The change in fair value of Sponsor locked-up Shares for the three and nine months ended September 30, 2023was a gain of $ 0.65 million and $ 0.65 million, respectively, and was recorded in change in fair value of warrant liabilities within the condensed consolidated statements of operations and comprehensive loss.
−Removed: Notes Receivable from Stockholders —The Company, in previous years, issued notes to stockholders to fund the payment of the exercise price of the stock options granted to such stockholders.
−Removed: The Company previously allowed stock option holders to early exercise stock options prior to the vesting date but no longer allows for the early exercise of stock options.
−Removed: The notes issued to stockholders to fund the exercises may include the exercise of stock options that have been vested by the holder as well as stock options that have not yet been vested by the holder.
−Removed: As of September 30, 2023 and December 31, 2022, the Company had a total of $ 19.1 million and $ 65.2 million, respectively, of outstanding promissory notes.
+Added: On the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement.
+Added: The Company’s Class A common stock and Public Warrants currently trade on the Nasdaq Capital Market, under the ticker symbols “BETR” and “BETRW”, respectively.
+Added: Each outstanding share of Pre-Business Combination Better common stock was exchanged for approximately 3.06 shares of the Company’s Class A or Class B common stock, par value $ 0.0001 per share (“Class B common stock”).
+Added: Private and Public Warrants— As of March 31, 2024 and December 31, 2023, the Company had a total of $ 1.3 million and $ 1.9 million, in respect of Private Warrants and Public Warrants, respectively, included as warrant and equity related liabilities within the condensed consolidated balance sheets.
+Added: The change in fair value of Warrants for the three months ended March 31, 2024 was a gain of $ 0.6 million and is included in other expenses within the condensed consolidated statements of operations and comprehensive loss.
+Added: There was no activity for the three months ended March 31, 2023 as the Warrants were assumed at the Closing of the Business Combination.
+Added: Sponsor Locked-up Shares— As of March 31, 2024 and December 31, 2023, the Company had a total of $ 0.2 million and $ 0.4 million, respectively, in respect of Sponsor Locked-up Share liabilities which are included within warrant and equity liabilities in the condensed consolidated balance sheets.
+Added: The change in fair value of Sponsor Locked-up Shares for the three months ended March 31, 2024 was a gain of $ 0.2 million and was included in other expenses within the condensed consolidated statements of operations and comprehensive loss.
+Added: There was no activity for the three months ended March 31, 2023 as the Sponsor Locked-up shares were assumed at the Closing of the Business Combination.
+Added: Notes Receivable from Stockholders —The Company, previously at times, entered into promissory note agreements with certain employees for the purpose of financing the exercise of the Company’s stock options.
+Added: These employees may have the ability to use the promissory notes to exercise stock options that have not yet been vested by the respective employees.
+Added: Interest is compounded and accrued based on any unpaid principal balance and is due upon the earliest of maturity, 120 days after an employee leaves the Company, the date the employee sells shares acquired through the promissory note agreement without prior written consent of the Company, or the day prior to the date that any change in the employee’s status would cause the loan to be a prohibited extension or maintenance of credit under Section 402 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”).
+Added: The Company no longer enters into promissory note agreements for
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Of the notes outstanding as of September 30, 2023 and December 31, 2022, $ 10.5 million and $ 53.9 million, respectively, were issued for the exercise of stock options vested and are recorded as a component of stockholders’ equity within the condensed consolidated balance sheets.
−Removed: Of the notes outstanding as of September 30, 2023 and December 31, 2022, $ 8.5 million and $ 12.3 million, respectively, were issued for the early exercise of stock options not yet vested.
+Added: the purpose of financing the exercise of the Company’s stock options and no longer allows for the early exercise of stock options.
+Added: As of March 31, 2024 and December 31, 2023, the Company had a total of $ 17.9 million and $ 18.3 million, respectively, of outstanding promissory notes.
+Added: Of the notes outstanding as of March 31, 2024 and December 31, 2023, $ 11.0 million and $ 10.1 million, respectively, were issued for the exercise of stock options vested and are recorded as a component of stockholders’ equity within the condensed consolidated balance sheets.
+Added: The balance as of March 31, 2024 does not include any promissory notes due from directors and officers of the Company.
+Added: During the three months ended March 31, 2024 and 2023 the Company recognized interest income from the promissory notes of $ 0.1 million, and $ 0.1 million, respectively which is included within interest income on the condensed consolidated statements of operations and comprehensive loss.
+Added: Of the notes outstanding as of March 31, 2024 and December 31, 2023, $ 6.9 million and $ 8.2 million, respectively, were issued for the early exercise of stock options not yet vested.
Notes issued for the early exercise of stock options not yet vested are not reflected within stockholders’ equity on the condensed consolidated balance sheets as they relate to unvested share awards and therefore are considered non-substantive exercises.
−Removed: As the unvested share awards, exercised in conjunction with the notes, vest, they are recognized in the statement of equity within vesting of common stock issued via notes receivable from stockholders.
−Removed: The notes bear annual interest payable upon maturity of the respective note (see Note 11).
+Added: As the unvested share awards vest and are exercised in conjunction with the notes, they are recognized in the statement of equity within vesting of common stock issued via notes receivable from stockholders.
+Added: The notes range in maturity from May 2025 to January 2026 and include interest rates ranging from 0.5 % to 2.5 % per annum.
Stock-Based Compensation
−Removed: Equity Incentive Plans —On November 3, 2016, Better’s board of directors and stockholders adopted the Better 2016 Equity Incentive Plan (the “2016 Plan”), which provides for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”) and deferred stock to eligible employees, directors and consultants of the Company.
−Removed: As of September 30, 2023, awards with respect to 1,212,059 shares of Class A common stock issuable upon the conversion of shares of Class B common stock into which such awards can be exercised have been granted under the 2016 Plan.
−Removed: Stock options granted under the 2016 Plan are generally subject to a one-year cliff vesting period with respect to 25 % of the award, and then 1/48 th of the award vests each month thereafter so that the entire award is vested on the fourth anniversary of the vesting start date.
−Removed: On May 15, 2017, Better’s board of directors and stockholders adopted the Better 2017 Equity Incentive Plan (the “2017 Plan”), which provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards and RSUs to eligible employees, directors and consultants of the Company.
−Removed: The 2017 Plan was most recently amended and approved by the stockholders of Better in August 2020.
−Removed: As of September 30, 2023, awards with respect to 77,053,345 shares of Class A Common Stock issuable upon the conversion of shares of Class B common stock into which such awards can be exercised have been granted under the 2017 Plan.
−Removed: Stock options and RSUs granted under the 2017 Plan are generally subject to a one-year cliff vesting period with respect to 25 % of the award, and then 1/48 th of the award vests each month thereafter so that the entire award is vested on the fourth anniversary of the vesting start date.
−Removed: Certain RSUs were also subject to a liquidity vesting condition that was satisfied in connection with the Business Combination.
−Removed: In connection with the Business Combination, the Better Home & Finance’s 2023 Incentive Equity Plan (the “2023 Plan”) became effective on August 22, 2023.
−Removed: The 2023 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock awards, RSUs and other equity and equity-based awards for issuance to Better Home & Finance’s service providers.
−Removed: A total of 88,626,665 shares of Class A common stock were initially reserved for issuance pursuant to the 2023 Plan (the “Initial Share Reserve”).
−Removed: Shares subject to awards granted under the 2017 Plan that become available for issuance will again become available for issuance pursuant to the terms of the 2023 Plan, subject to certain adjustments as set forth in the 2023 Plan.
−Removed: The Initial Share Reserve will automatically increase on January 1 of each year beginning January 1, 2024 and ending in 2033, in an amount equal to the lesser of (i) five percent ( 5 %) of the shares of Class A common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of Class A common stock as is determined by the Board or committee of the Board;
−Removed: provided, however, that no more than 614,343,928 shares of Class A common stock may be issued upon the exercise of incentive stock options.
−Removed: As of September 30, 2023, no awards have been granted under the 2023 Plan.
−Removed: In connection with the Business Combination, the Better Home & Finance 2023 Employee Stock Purchase Plan (the “ESPP”) became effective on August 22, 2023, pursuant to which eligible employees may purchase shares of Class A common stock at a discounted rate.
−Removed: A total of 16,113,939 shares of Class A common stock were initially reserved for issuance pursuant to the ESPP (the “ESPP Share Reserve”).
−Removed: The ESPP Share Reserve will automatically increase on January 1 of each year beginning January 1, 2024 and ending in 2033, in an amount equal to the lesser of (i) one percent ( 1 %) of the shares of Class A common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of Class A common stock as is determined by the Board;
−Removed: provided, however, that no more
−Removed: BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: than 120,854,543 shares of Class A common stock may be issued under the ESPP.
−Removed: As of September 30, 2023, no shares have been issued under the ESPP.
−Removed: The Company no longer allows for the early exercise of awards under the 2016 Plan or the 2017 Plan.
−Removed: Stock-Based Compensation Expense — The total of all stock-based compensation expense related to employees are reported in the following line items within the condensed consolidated statements of operations and comprehensive loss:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Stock-Based Compensation Expense —Stock-based compensation expense is included within compensation and benefits in the condensed consolidated statements of operations and comprehensive loss.
+Added: The Company recognized stock-based compensation expense as follows:
+Added: Three Months Ended March 31,
(Amounts in thousands) 2024 2023
−Removed: Mortgage platform expenses 4,176 1,491 5,905 4,941
−Removed: Other platform expenses 1,493 426 1,837 675
−Removed: General and administrative expenses 16,828 6,862 25,123 20,479
−Removed: Marketing expenses 146 369 216 709
−Removed: Technology and product development expenses (1)
−Removed: 2,401 1,825 4,317 4,217
−Removed: Total stock-based compensation expense 25,044 10,973 37,398 31,021
−Removed: __________________
−Removed: (1) Technology and product development expense excludes $ 2.5 million and $ 0.8 million for the three months ended September 30, 2023 and 2022, respectively.Technology and product development expense excludes $ 3.9 million and $ 3.0 million of stock-based compensation expense for the nine months ended September 30, 2023 and 2022, which was capitalized (see Note 7) .
+Added: Stock-based compensation expense 8,760 4,408
+Added: Stock-based compensation expense excludes $ 0.4 million and $ 0.7 million of stock-based compensation expense for the three months ended March 31, 2024 and 2023, which was capitalized (see Note 6).
Regulatory Requirements
−Removed: The Company is subject to various local, state, and federal regulations related to its loan production by the various states it operates in, as well as federal agencies such as the Consumer Financial Protection Bureau (“CFPB”), HUD, and the FHA and is subject to the requirements of the agencies to which it sells loans, such as FNMA and FMCC.
+Added: The Company is subject to various local, state, and federal regulations related to its loan production by the various states it operates in, as well as federal agencies such as the Consumer Financial Protection Bureau, the U.S.
+Added: Department of Housing and Urban Development ("HUD"), and the Federal Housing Administration ("FHA") and is subject to the requirements of the agencies to which it sells loans, such as FNMA and FMCC.
As a result, the Company may become involved in requests for information, periodic reviews, investigations, and proceedings by such various federal, state, and local regulatory bodies and agencies.
The Company is required to meet certain minimum net worth, minimum capital ratio and minimum liquidity requirements, including those established by HUD, FMCC and FNMA.
−Removed: As of September 30, 2023, the Company was in compliance with all necessary requirements.
−Removed: Additionally, the Company is subject to other financial requirements established by FNMA, which include a limit for a decline in net worth and quarterly profitability requirements.
−Removed: On March 12, 2023 and subsequently on May 19, 2023, FNMA provided notification to the Company that the Company had failed to meet FNMA’s financial requirements due to the Company’s decline in profitability and material decline in net worth.
−Removed: The material decline in net worth and decline in profitability permit FNMA to declare a breach of the Company’s contract with FNMA.
−Removed: The Company, following certain forbearance agreements from FNMA that instituted additional financial requirements on the Company that are pending FNMA’s administrative process for completion, remains in compliance with these requirements as of the date hereof.
−Removed: FNMA and other regulators and GSEs are not required to grant any forbearances, amendments, extensions or waivers and may determine not to do so.
−Removed: As a result of failing to meet FNMA’s financial requirements, the Company has entered into a Pledge and Security Agreement with FNMA on July 24, 2023, to post additional cash collateral starting with $ 5.0 million which will be held through December 31, 2023.
−Removed: Each quarterly period after December 31, 2023, the required cash collateral will be calculated based on an amount equal to the greater of:
−Removed: (i) FNMA’s origination representation and warranty exposure to the Company, multiplied by the average repurchase success rate for FNMA single-family responsible parties or (ii) $ 5.0 million.
−Removed: Subsequent Events
−Removed: The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of September 30, 2023 through the date of the release of financial statements, and has determined that, there have been no subsequent events that require recognition or disclosure in the condensed consolidated financial statements, except as described i n Note 1, Note 6, Note 10, Note 12 and as follows:
−Removed: Nasdaq Delisting Notice —On October 12, 2023, the Company received a letter from the listing qualifications staff (the “Staff”) of Nasdaq notifying the Company that it is not in compliance with the minimum bid price requirement set
+Added: As of March 31, 2024, the Company was in compliance with all necessary requirements.
+Added: Additionally, the Company is subject to other financial requirements established by government-sponsored enterprises (“GSEs”), which include a limit for a decline in net worth and quarterly profitability requirements.
+Added: On March 12, 2023 and subsequently on May 19, 2023, the Company failed to meet the additional financial requirements due to the Company’s decline in profitability and decline in net worth.
+Added: The decline in net worth and decline in profitability permit GSEs to declare a breach of the Company’s contract.
+Added: The Company instituted additional financial requirements and remains in compliance with these requirements as of March 31, 2024.
+Added: As a result of failing to meet additional financial requirements, the Company has entered into a Pledge and Security Agreement in July 2023, to post additional cash collateral against the representation and warranty exposed to the Company.
BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing.
−Removed: The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
−Removed: The Notice has no immediate effect on the listing of the Company’s Class A common stock, par value $ 0.0001 per share (the “Common Stock”), which continues to trade on The Nasdaq Global Market under the symbol “BETR.”
−Removed: In accordance with the Compliance Period Rule, the Company has 180 calendar days to regain compliance.
−Removed: If the Company does not regain compliance during this 180-day period, then the Company may be eligible to transfer to The Nasdaq Capital Market and the Staff may grant the Company a second 180 calendar day period to regain compliance pursuant to the Compliance Period Rule, provided the Company meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement.
−Removed: In addition, the Company would be required to notify Nasdaq of its intent to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split if necessary.
−Removed: The Company will continue to monitor the closing bid price of its Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods.
+Added: As of March 31, 2024, there have been no changes to the required cash deposit amount, which is included within the prepaid expenses and other assets on the consolidated balance sheet.
+Added: Subsequent Events
+Added: The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of March 31, 2024 through the date of the release of financial statements, and has determined that, there have been no subsequent events that require recognition or disclosure in the condensed consolidated financial statements, except as described in Note 1 and Note 11.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.