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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
____________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 001-40216
____________________________
Aurora Innovation, Inc.
(Exact name of registrant as specified in its charter)
____________________________
Delaware
98-1562265
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1654 Smallman St., Pittsburgh, Pennsylvania

15222
(Address of Principal Executive Offices)
(Zip Code)
(888) 583-9506
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.00001 per shareAURThe Nasdaq Stock Market LLC
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50AUROWThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
o
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The registrant had outstanding 724,030,853 shares of Class A common stock and 429,706,298 shares of Class B common stock as of July 29, 2022.


Table of Contents
TABLE OF CONTENTS
Page
Item 1A.
Risk Factors
2

Table of Contents
Part I - Financial Information
Item 1. Financial Statements
AURORA INNOVATION, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
June 30,
2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$549,411 $1,610,135 
Restricted cash
280 280 
Short-term investments829,353  
Contract asset 32,538 
Related party receivables 10,726 
Prepaid expenses and other current assets
19,264 23,765 
Total current assets
1,398,308 1,677,444 
Property and equipment, net
93,165 93,517 
Operating lease right-of-use assets
141,897 151,278 
Restricted cash, long-term
16,100 15,832 
Other assets
20,252 21,050 
Acquisition related intangible assets
618,025 617,200 
Goodwill
113,685 1,113,766 
Total assets
$2,401,432 $3,690,087 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$2,787 $7,901 
Related party payables
950 540 
Operating lease liabilities, current
11,399 12,274 
Accrued expenses and other current liabilities
51,342 70,006 
Total current liabilities
66,478 90,721 
Operating lease liabilities, long-term
126,086 134,551 
Deferred tax liabilities
3,905 3,905 
Warrant liabilities
8,447 65,678 
Earnout shares liability3,923 52,380 
Other long-term liabilities
2,639 1,150 
Total liabilities
211,478 348,385 
Commitments and contingencies
Stockholders’ equity
Common stock - $0.00001 par value, 1,146,572,506 and 1,122,829,814 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
11 11 
Additional paid-in capital
4,516,005 4,432,907 
Accumulated other comprehensive loss(3,861) 
Accumulated deficit
(2,322,201)(1,091,216)
Total stockholders’ equity
2,189,954 3,341,702 
Total liabilities and stockholders’ equity
$2,401,432 $3,690,087 
See accompanying notes to unaudited condensed consolidated financial statements
3

Table of Contents
AURORA INNOVATION, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Collaboration revenue$20,733 $ $62,731 $ 
Operating expenses
Research and development
183,785 159,812 337,875 318,921 
Selling, general and administrative
33,467 21,646 64,519 54,326 
Goodwill impairment
1,000,081  1,000,081  
Total operating expenses
1,217,333 181,458 1,402,475 373,247 
Loss from operations
(1,196,600)(181,458)(1,339,744)(373,247)
Other income (expense)
Change in fair value of derivative liabilities39,878  105,688  
Other income (expense), net
2,545 (353)3,073 173 
Loss before income taxes
(1,154,177)(181,811)(1,230,983)(373,074)
Income tax expense (benefit)
 1 2 (2,643)
Net loss
$(1,154,177)$(181,812)$(1,230,985)$(370,431)
Basic and diluted net loss per share
$(1.02)$(0.34)$(1.09)$(0.72)
Basic and diluted weighted-average shares outstanding
1,131,113,012 541,133,301 1,129,118,006 512,608,940 
See accompanying notes to unaudited condensed consolidated financial statements
4

Table of Contents
AURORA INNOVATION, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net loss
$(1,154,177)$(181,812)$(1,230,985)$(370,431)
Other comprehensive loss
Unrealized loss on investments
(2,186) (3,861) 
Other comprehensive loss
(2,186) (3,861) 
Comprehensive loss
$(1,156,363)$(181,812)$(1,234,846)$(370,431)
See accompanying notes to unaudited condensed consolidated financial statements
5

Table of Contents
AURORA INNOVATION, INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity
(in thousands, except share data)
(unaudited)

Redeemable convertible
preferred stock
Common stock
Additional
paid-in capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders’
equity (deficit)
SharesAmountSharesAmount
Balance as of December 31, 2020
290,300,547 $763,283 278,810,627 $3 $59,181 $ $(335,763)$(276,579)
Issuance of Series U-1 redeemable convertible preferred stock at $9.06 per share in relation to acquisition
110,437,359 1,000,000 — — — — — — 
Issuance of Series U-2 redeemable convertible preferred stock at $9.06 per share, net of issuance costs of $2,138
44,174,944 397,862 — — — — — — 
Equity issued in relation to acquisitions— — 257,863,127 2 945,540 — — 945,542 
Equity issued under incentive compensation plans— — 5,438,300 — 2,347 — — 2,347 
Stock-based compensation
— — — — 80,583 — — 80,583 
Comprehensive loss
— — — — — — (370,431)(370,431)
Balance as of June 30, 2021
444,912,850 $2,161,145 542,112,054 $5 $1,087,651 $ $(706,194)$381,462 
Balance as of December 31, 2021
 $ 1,122,829,814 $11 $4,432,907 $ $(1,091,216)$3,341,702 
Equity issued under incentive compensation plans— — 23,742,692 — 7,573 — — 7,573 
Stock-based compensation
— — — — 75,525 — — 75,525 
Comprehensive loss
— — — — — (3,861)(1,230,985)(1,234,846)
Balance as of June 30, 2022
  1,146,572,506 11 4,516,005 (3,861)(2,322,201)2,189,954 
See accompanying notes to unaudited condensed consolidated financial statements
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AURORA INNOVATION, INC.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity
(in thousands, except share data)
(unaudited)

Redeemable convertible
preferred stock
Common stock
Additional
paid-in capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders’
equity
SharesAmountSharesAmount
Balance as of March 31, 2021
444,912,850 $2,161,145 539,544,481 $5 $1,044,574 $ $(524,382)$520,197 
Equity issued under incentive compensation plans— — 2,567,573 — 1,534 — — 1,534 
Stock-based compensation
— — — — 41,543 — — 41,543 
Comprehensive loss
— — — — —  (181,812)(181,812)
Balance as of June 30, 2021
444,912,850 $2,161,145 542,112,054 $5 $1,087,651 $ $(706,194)$381,462 
Balance as of March 31, 2022
 $ 1,127,581,556 $11 $4,464,191 $(1,675)$(1,168,024)$3,294,503 
Equity issued under incentive compensation plans— — 18,990,950 — 5,536 — — 5,536 
Stock-based compensation— — — — 46,278 — — 46,278 
Comprehensive loss— — — — — (2,186)(1,154,177)(1,156,363)
Balance as of June 30, 2022
 $ 1,146,572,506 $11 $4,516,005 $(3,861)$(2,322,201)$2,189,954 
See accompanying notes to unaudited condensed consolidated financial statements
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AURORA INNOVATION, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
20222021
Cash flows from operating activities
Net loss
$(1,230,985)$(370,431)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
11,357 7,146 
Reduction in the carrying amount of right-of-use assets
14,117 12,012 
Stock-based compensation
75,525 78,438 
Goodwill impairment1,000,081  
Change in fair value of derivative liabilities(105,688) 
Non-cash severance
 7,873 
Change in deferred tax asset valuation allowance
 (2,638)
Other966 2,106 
Changes in operating assets and liabilities:
Contract asset32,538  
Prepaid expenses and other current assets
16,835 1,847 
Other assets
(568)(2,872)
Accounts payable
(9,517)(3,389)
Operating lease liabilities
(12,384)(14,553)
Contract liability91 50,000 
Accrued expenses and other current and non-current liabilities
(17,810)(48,491)
Net cash used in operating activities
(225,442)(282,952)
Cash flows from investing activities
Purchases of property and equipment
(9,298)(13,128)
Net cash acquired in acquisitions
 294,439 
Purchase of short-term investments
(966,063) 
Maturities of short-term investments133,000  
Net cash (used in) provided by investing activities
(842,361)281,311 
Cash flows from financing activities
Proceeds from issuance of common stock
8,580 2,246 
Proceeds from issuance of Series U-2 preferred stock, net
 397,862 
Other
(1,233) 
Net cash provided by financing activities
7,347 400,108 
Net (decrease) increase in cash, cash equivalents and restricted cash
(1,060,456)398,467 
Cash, cash equivalents, and restricted cash at beginning of the period
1,626,247 399,828 
Cash, cash equivalents, and restricted cash at end of the period
$565,791 $798,295 
See accompanying notes to unaudited condensed consolidated financial statements
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AURORA INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
(1)    Overview and Basis of Presentation
Overview of the Organization
Aurora Innovation, Inc. and its consolidated subsidiaries (the “Company” or “Aurora”) was initially incorporated as a Cayman Islands exempted company on October 2, 2020 and was formerly known as Reinvent Technology Partners Y (“RTPY”).
On November 3, 2021 (the “Closing Date” or “Closing”), the Company filed a notice of deregistration with the Cayman Islands Registrar of Companies, domesticated as a Delaware corporation, and changed its name to Aurora Innovation, Inc. As contemplated by the Agreement and Plan of Merger dated July 14, 2021 (the “Merger Agreement”), Aurora consummated the merger transaction (the “Merger”) whereby RTPY Merger Sub, Inc., a direct subsidiary of the Company, merged with and into Aurora Innovation Holdings, Inc. (“Legacy Aurora”), a Delaware corporation f/k/a Aurora Innovation, Inc. The Company’s common stock is listed on the NASDAQ under the symbol “AUR” and the Company’s warrants to purchase shares of Class A common stock are listed on the NASDAQ under the symbol “AUROW”. The Merger was accounted for as a reverse capitalization and operations prior to the Closing presented are those of Legacy Aurora.
The Company designs and develops the Aurora Driver, which is the hardware, software, and data services that allow vehicles to drive themselves.
Basis of Presentation and Principles of Consolidation
The unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the Company and its consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rule and regulations of the Securities and Exchange Commission (“SEC”).
The information included herein should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2021 for additional disclosures. The condensed consolidated balance sheet as of December 31, 2021 included in the condensed consolidated financial statements was derived from the audited financial statements as of that date but does not contain all of the footnote disclosures from the annual financial statements.
The condensed consolidated financial statements reflect, in the opinion of management, all adjustments of a normal, recurring nature necessary for a fair statement of our financial position, results of operations, and cash flows for the periods presented but are not necessarily indicative of the expected results for the full fiscal year or any future period.
(2)    Significant Accounting Policies
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties Including Business and Credit Concentrations
The Company’s principal operations are the research, design, and implementation of the Aurora Driver. The Company is currently researching and developing its proprietary technology with the goal of commercializing the Aurora Driver. The Company expects that it will need to raise additional capital to support its development and commercialization activities. Risks and uncertainties to the Company’s operations include failing to secure additional funding and the threat of other companies developing and bringing to market similar technology at an earlier time than the Company.
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Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company maintains its cash and cash equivalents at U.S. commercial banks. Cash and cash equivalents deposited with domestic commercial banks generally exceed the Federal Deposit Insurance Corporation insurable limit. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company typically invests in U.S. Treasury securities and classifies its short-term investments as available-for-sale. In general, these investments are free of trading restrictions. The Company carries these at fair value, based on quoted market prices or other readily available market information and recognizes gains and losses when realized.
Recently Issued Accounting Standards – Adopted in Fiscal 2022
In December 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, which simplifies accounting for income taxes by revising or clarifying existing guidance in ASC 740, Income Taxes, as well as removing certain exceptions within ASC 740. The new standard is effective for annual periods beginning after December 15, 2021 and earlier adoption is permitted. The Company adopted the standard effective January 1, 2022 and there was not a material impact on the interim financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that replaces the incurred loss impairment methodology in current GAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other instruments. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company adopted the standard effective January 1, 2022 and there was not a material impact on the interim financial statements.
(3)    Balance Sheet Detail
(a)Fair Value of Financial Instruments
The Company uses a three-level hierarchy, which prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information for fair value measurement based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risk associated with those financial instruments.
The three-level hierarchy for fair value measurements is defined as follows:
Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2: Inputs to the valuation methodology included quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and
Level 3: Inputs to the valuation methodology, which are significant to the fair value measurement, are unobservable.
An asset or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
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The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021:
As of June 30, 2022
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds
$549,199 $ $ $549,199 
Total cash equivalents
$549,199 $ $ $549,199 
Short-term investments:
U.S. government securities$ $829,353 $ $829,353 
Total short-term investments$ $829,353 $ $829,353 
Liabilities:
Public warrants$4,887 $ $ $4,887 
Private placement warrants 3,560  3,560 
Earnout shares liability  3,923 3,923 
Total liabilities$4,887 $3,560 $3,923 $12,370 
As of December 31, 2021
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds
$1,609,919 $ $ $1,609,919 
Total cash equivalents
$1,609,919 $ $ $1,609,919 
Liabilities:
Public warrants
$37,999 $ $ $37,999 
Private placement warrants
 27,679  27,679 
Earnout shares liability  52,380 52,380 
Total liabilities$37,999 $27,679 $52,380 $118,058 
The public warrants and private placement warrants (see Note 7: Derivative Liabilities) are measured at fair value on a recurring basis. The public warrants are valued based on the closing price of the publicly traded instrument. The private placement Warrants are valued using observable inputs for similar liabilities resulting in Level 2 classification.
The earnout shares liability (see Note 7: Derivative Liabilities) is measured at fair value on a recurring basis. The fair value was determined using a Monte Carlo simulation with a risk free rate of 2.99%and 1.52% and volatility of 50.00% and 50.00% as of June 30, 2022 and December 31, 2021, respectively.
Earnout shares liability
Balance as of December 31, 2021
$52,380 
Change in fair value
(48,457)
Balance as of June 30, 2022
$3,923 
The amortized cost, unrealized gains and estimated fair values of the Company’s short-term investments as of June 30, 2022 was:
As of June 30, 2022
Amortized costUnrealized lossesFair value
U.S. government securities$833,214 $(3,861)$829,353 
Total short-term investments$833,214 $(3,861)$829,353 
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(b)Property and Equipment, Net
Property and equipment, net consist of the following as of June 30, 2022 and December 31, 2021:
As of
June 30,
2022
December 31,
2021
Land
$13,503 $13,503 
Furniture and fixtures
10,976 10,893 
Test and lab equipment
13,400 11,984 
Leasehold improvements
64,399 61,173 
Computer and equipment
8,463 7,839 
Computer software
3,586 3,321 
Automobile
5,523 3,444 
Buildings
1,190 1,040 
121,040 113,197 
Less accumulated depreciation and amortization
(27,875)(19,680)
Total property and equipment, net
$93,165 $93,517 
(c)Goodwill
The changes in the carrying amount of goodwill for the six months ended June 30, 2022, are as follows:
Total
Balance as of December 31, 2021:
Goodwill$1,113,766 
Accumulated impairment loss 
Carrying amount of goodwill1,113,766 
Impairment loss(1,000,081)
Balance as of June 30, 2022:
Goodwill1,113,766 
Accumulated impairment loss(1,000,081)
Carrying amount of goodwill$113,685 
During the second quarter of 2022, the market price of the Company’s Class A common stock and its market capitalization declined significantly. As a result, the Company determined that a triggering event had occurred and an interim goodwill impairment assessment was performed.
The Company utilized a market approach valuation method utilizing the observable market price of the Company’s Class A common stock as it represented the best evidence of the fair value of its reporting unit. Based on the results, the Company recognized a $1,000,081 goodwill impairment during the three and six months ended June 30, 2022.
(d)Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following as of June 30, 2022 and December 31, 2021:
As of
June 30,
2022
December 31,
2021
Accrued compensation
$30,272 $51,401 
Accrued expenses
17,553 16,074 
Other
3,517 2,531 
Total accrued expenses and other current liabilities
$51,342 $70,006 
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(4)    Collaboration Revenue
In January 2021, the Company entered into a collaboration framework agreement with Toyota Motor Corporation (“Toyota”) with the intention of deploying the Aurora Driver into a fleet of Toyota Sienna vehicles, subject to further agreement of a collaboration projection plan that was signed in August 2021. In the six months ended June 30, 2022 and June 30, 2021, the Company received payments of $95,360 and $50,000, respectively, under the agreement. To date, the Company has received cumulative payments under the agreement of $145,360 through June 30, 2022 and expects to receive the remaining $5,000 in 2022.
Collaboration revenue is recognized using the input measure of hours expended as a percentage of total estimated hours to complete the project. In the three and six months ended June 30, 2022, the Company recognized collaboration revenue of $20,733 and $62,731, respectively. To date, the Company has recognized cumulative revenue under the agreement of $145,269 through June 30, 2022.
Differences between collaboration revenue recognized and payments collected under the agreement are recognized as a contract asset or contract liability at the end of each reporting period.
(5)    Acquisitions
Apparate USA LLC
On January 19, 2021, the Company acquired 100% of the voting interests of Apparate USA LLC (“Uber Advanced Technologies Group” or “ATG”) which was a company developing self-driving technology.
The ATG acquisition date fair value of the consideration transferred for ATG was approximately $1,915,708 which consisted of stock consideration. The stock consideration transferred comprised 110,437,359 shares of the Company’s Series U-1 preferred stock and 252,194,518 shares of the Company’s common stock. The preferred stock was valued referencing the concurrent purchase of the Company’s Series U-2 redeemable convertible preferred stock. The common stock was valued based on the fair value as of January 19, 2021, as determined by a third-party valuation expert using an Option Pricing Method model.
The transaction costs associated with the acquisition were approximately $15,113 and were recorded in general and administrative expense in 2021, including $6,854 and $15,113 recorded in the three and six months ended June 30, 2021.
The Company accounted for the ATG acquisition as a business combination, and therefore the assets acquired and liabilities assumed were recognized at their fair values on the date of the ATG acquisition.
During the three months ended June 30, 2021, we recorded a measurement period adjustment to reduce the preliminary fair value of property and equipment acquired by $21,652, resulting in a $1,676 cumulative reduction in depreciation expense previously recognized during the three months ended March 31, 2021. During the three months ended December 31, 2021, we recorded a measurement period adjustment to increase the preliminary fair value of deferred tax liabilities assumed by $3,342. These measurement period adjustments were made to reflect the facts and circumstances that existed as of the acquisition date.
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The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of the ATG acquisition:
Fair Value
Cash and cash equivalents
$310,540 
Prepaid expenses and other current assets
6,229 
Property and equipment, net
63,395 
Operating lease right-of-use assets
41,915 
Other assets
18,351 
Acquisition related intangible assets
545,500 
Goodwill
1,060,159 
Accounts payable
(1,860)
Related party payable
(46,970)
Accrued expenses and other current liabilities
(37,796)
Operating lease liabilities
(40,413)
Deferred tax liability(3,342)
Total
$1,915,708 
The sole identifiable intangible asset acquired in the ATG acquisition was in-process research and development (IPR&D) and has an indefinite useful life as of the date of the acquisition. The fair value of the IPR&D intangible asset was determined through a replacement cost approach, which identifies the costs that would be necessary to recreate the asset if the Company were to internally develop the acquired technology. Significant unobservable inputs include overhead costs, profit margin, opportunity cost, and obsolescence.
The asset has not been placed into service and there have been no impairments related to the intangible asset as of June 30, 2022.
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce, and is not deductible for tax purposes.
During the three months ended March 31, 2021, the Company recognized $7,873 in non-cash compensation expense for severance payments by the former parent of ATG. This amount was allocated from total equity consideration transferred.
OURS Technology, Inc.
On March 5, 2021, the Company acquired 100% of the voting interests in OURS Technology, Inc. (“OURS”), a silicon photonics company. The Company has included the financial results of OURS in the condensed consolidated financial statements prospectively from the date of acquisition. The OURS acquisition date fair value of the consideration transferred for OURS was approximately $40,821, which consisted of the following
Fair Value
Cash
$16,107 
Stock consideration
24,105 
Assumed liabilities related to third-party expenses
609 
Total
$40,821 
As part of the OURS acquisition, the Company assumed certain OURS compensation agreements, including the conversion of certain shares of OURS restricted stock into rights to receive the Company’s restricted stock, and assuming certain stock options with an estimated fair value of $3,789. For the stock options assumed, based on the service period related to the period prior to the OURS acquisition date, $2,145 was allocated to the purchase price, and $1,644 relating to post-acquisition services which will be recorded as operating expenses over the remaining requisite service periods.
The stock consideration transferred comprised 6,064,675 shares of the Company’s common stock including 396,067 shares of restricted stock granted. The restricted stock awards (RSAs) were valued based on the March 5, 2021 fair value, as determined by a third party valuation expert using an Option Pricing Method model, and the estimated fair
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value of the stock options assumed by the Company was determined using the Black-Scholes option pricing model. The RSAs vest monthly over a 2-year period starting on the vesting commencement date and expire once the holder ceases to be a service provider of the Company.
The Company has accounted for the OURS acquisition as a business combination, and therefore the assets acquired and liabilities assumed were recognized at their fair values on the date of the OURS acquisition.
The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of the OURS acquisition:
Fair Value
Cash and cash equivalents
$153 
Prepaid expenses and other current assets
23 
Property and equipment, net
218 
Other assets
9 
Acquisition related intangible assets
19,000 
Goodwill
23,477 
Accounts payable
(46)
Deferred tax liability
(2,013)
Total
$40,821 
The sole identifiable intangible asset acquired in the OURS acquisition was in-process research and development (IPR&D) and has an indefinite useful life as of the date of the acquisition. The fair value of the IPR&D intangible asset was determined through a replacement cost approach, which identifies the costs that would be necessary to recreate the asset if the Company were to internally develop the acquired technology. Significant unobservable inputs include profit margin and opportunity cost.
The asset has not been placed into service and there have been no impairments related to the intangible asset as of June 30, 2022.
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce, and is not deductible for tax purposes.
(6)    Stockholders’ Equity
Preferred Stock
The Company is authorized to issue 1,000,000,000 shares of preferred stock with a par value of $0.00001 per share. There were no shares of preferred stock issued and outstanding at June 30, 2022 and December 31, 2021.
Common stock
The Company is authorized to issue 51,000,000,000 shares of common stock with a par value of $0.00001 per share; of which 50,000,000,000 shares are designated Class A common stock and 1,000,000,000 shares are designated Class B common stock. Class A common stock holders are entitled to one vote for each share and Class B common stock holders are entitled to ten votes for each share. Class A and Class B have identical liquidation and dividend rights. Class B shares are convertible into Class A upon election by the holder or upon transfer (except for certain permitted transfers).
At June 30, 2022, the Company had 716,866,208 shares of Class A common stock and 429,706,298 shares of Class B common stock issued and outstanding.
(7)    Derivative Liabilities
Common Stock Warrants
On the consummation of the Merger, 12,218,750 publicly traded warrants for Class A common stock at an exercise price per share of $11.50 and 8,900,000 private placement warrants held by the Sponsor with an exercise price per share of $11.50 converted automatically into warrants of Aurora common stock.
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Public warrants outstanding were 12,218,291 and 12,218,420 as of June 30, 2022 and December 31, 2021, respectively. During the six months ended June 30, 2022, 129 public warrants were exercised for total cash proceeds of $1.
Private placement warrants outstanding were 8,900,000 and 8,900,000 as of June 30, 2022 and December 31, 2021, respectively.
The estimated fair value of the warrant liabilities was $8,447 and $65,678 at June 30, 2022 and December 31, 2021, respectively. For the three and six months ended June 30, 2022, a gain of $22,808 and $57,231, respectively, was recognized in changes in fair value of derivative liabilities in the consolidated statements of operations.
Public Warrants
Public warrants were exercisable beginning on December 3, 2021. The Company may redeem the public warrants when the last reported sales price of Class A common stock for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) exceeds $10.00 or $18.00. Warrants are redeemable in whole and upon a minimum of 30 days’ prior written notice.
If the Reference Value exceeds $18.00, warrants are redeemable at $0.01 per warrant, in whole and upon a minimum of 30 days prior written notice that holders will be able to exercise their warrants.
If the Reference Value exceeds $10.00, warrants are redeemable at $0.10 per warrant, in whole and upon a minimum of 30 days prior written notice that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the fair market value of Class A ordinary shares. Fair market value of Class A common stock is the volume-weighted average price of Class A ordinary shares for the 10 trading days following the date on which the notice of redemption is sent. The number of ordinary shares received upon exercise is capped at 0.361 shares of Aurora Class A common stock per warrant.
Private Placement Warrants
Private placement warrants are not redeemable by the Company as long as they are held by a Sponsor or its permitted transferees. If the Reference value exceeds $18.00 per share and the Company elects to redeem the public warrants, the private placement warrants are exercised.
If the public warrants are redeemed by the Company when the Reference Value equals or exceeds $10.00, the private placement warrants are also concurrently called for redemption on the same terms as of the public warrants.
If the public warrants are redeemed by the Company when the Reference Value exceeds $18.00 per share, the Sponsor will exercise the private placement warrants for cash or on a cashless basis.
Earnout Shares Liability
In connection with the execution of the Merger Agreement, the Company, Legacy Aurora and the Sponsor entered into the Sponsor Agreement on July 14, 2021. Under the agreement, existing Sponsor shares not forfeited due to redemptions are subject to lock-up and price-based vesting as follows:
1,720,772 shares vest when it has been at least 1 year since the Closing;
1,720,772 shares vest when it has been at least 2 years since the Closing and the volume weighted average price (“VWAP”) of the Company’s class A common stock equals or exceeds $15.00 for 20 trading days of any consecutive 30 trading day period
1,720,771 shares vest when it has been at least 3 years since the Closing and the VWAP equals or exceeds $17.50 for 20 trading days of any consecutive 30 trading day period; and,
1,720,771 shares vest when it has been at least 4 years since the Closing and the VWAP equals or exceeds $20.00 for 20 trading days of any consecutive 30 trading day period.
The estimated fair value of the earnout shares liability was $3,923 and $52,380 at June 30, 2022 and December 31, 2021, respectively. For the three and six months ended June 30, 2022, a gain of $17,070 and $48,457, respectively, was recognized in changes in fair value of derivative liabilities in the consolidated statements of operations. No earnout shares vested as of June 30, 2022.
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(8)    Equity Incentive Plans
We maintain four equity compensation plans: the 2021 Equity Incentive Plan (the “Plan”), the 2017 Equity Incentive Plan (the “2017 Plan”), the Blackmore Sensors & Analytics, Inc. 2016 Equity Incentive Plan (the “Blackmore Plan”), and the OURS Technology Inc 2016 Stock Incentive Plan (the “OURS Plan”). The Company assumed stock options under the Blackmore Plan and the OURS Plan to the extent such employees continued as employees of the Company.
On November 2, 2021, the Company adopted the Plan. The Plan makes available for issuance Class A common shares equal to 120,900,000 shares plus any shares subject to awards assumed in the Merger that are forfeited or otherwise expire after the Closing. Additionally, the Plan includes an annual increase on the first day of each fiscal year beginning in fiscal 2022 and ending in fiscal 2031 equal to the lesser of (i) 120,900,000, (ii) 5% of total shares outstanding on the last day of the preceding fiscal year, and (iii) a lesser number of shares determined by the Plans’ administrator. Any stock options, restricted stock units (“RSU”s) or other awards from the 2017 Plan, the Blackmore Plan, or the OURS Plan that, on or after the Closing, expire or otherwise terminate without having been exercised or issued in full are added to the Plan up to a maximum of 120,692,205 shares. As of June 30, 2022, 106,439,376 shares were available for grant under the Plan.
Under the Plan, equity-based compensation in the form of RSUs, restricted stock awards, incentive stock options, nonqualified stock options, stock appreciation rights, and performance units may be granted to employees, officers, directors, consultants, and others.
Stock Options
The Company granted stock options under the 2017 Plan. No stock options have been granted under the Plan and the assumed stock option plans are immaterial.
Stock options under the 2017 Plan may be outstanding for periods of up to 10 years following the grant date. The exercise price of stock options for the purchase of shares of common stock under the 2017 Plan may not be less than 100% of the fair value of the Company’s common stock on the date of the grant, as determined by the board of directors. In the case of an incentive stock option granted to an employee who owns stock representing more than 10% of the voting shares, the price of each share will be at least 110% of the fair value on the date of grant. Stock options generally vest over four years starting on the vesting commencement date (with a one-year cliff) and expire, if not exercised, 10 years from the date of grant or, if earlier, three months after the option holder ceases to be a service provider of the Company. Stock options granted to a stockholder that owns greater than 10% of the company expire, if not exercised, five years from the date of grant.
Stock option activity under the 2017 Plan in the six months ended June 30, 2022 is as follows:
Options outstanding
Number of
shares
Weighted
average
exercise price
Weighted average remaining contractual term (in years)Aggregate intrinsic value
Balance, December 31, 2021
79,644,550 $1.44 
Exercised
(14,192,960)0.59 
Forfeited
(2,702,952)2.24 
Balance, June 30, 2022
62,748,638 $1.60 6.846,791
Exercisable, June 30, 2022
44,973,713 $1.24 6.341,871
The compensation expense recognized for options for the six months ended June 30, 2022 and 2021 was $8,786 and $12,458, respectively. The unrecognized deferred compensation expense was $24,588 as of June 30, 2022 and will be recognized over an estimated weighted average amortization period of approximately 1.75 years.
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Restricted Stock Units
The Company has granted RSUs under the Plan and the 2017 Plan.
The vesting of most RSUs granted under the 2017 Plan is based on the satisfaction of two separate vesting requirements: (1) a time-based vesting requirement, and (2) a liquidity event. Generally, the time-based vesting requirement is quarterly over four years starting on the vesting commencement date (with a one-year cliff). The liquidity event vesting requirement was satisfied with the closing of the Merger in November 2021.
RSUs granted under the Plan generally are subject to time-based vesting. Generally, the time-based vesting requirement is four years starting on the vesting commencement date (with a one-year cliff for new hire awards) except for retention grants which generally vest over one to two years.
RSU activity under the Plan and the 2017 Plan is as follows:
Unvested RSUs outstanding
Number of
shares
Weighted-
average grant
date fair value
Aggregate Intrinsic value
Balance, December 31, 2021
34,054,713 4.72
Granted
82,788,961 4.06
Released(14,141,974)4.07
Forfeited
(7,679,851)4.32
Balance, June 30, 2022
95,021,849 4.27$183,392 
Stock-based compensation related to RSUs granted to employees was $59,755 and $0 in six months ended June 30, 2022 and June 30, 2021, respectively. The unrecognized deferred compensation expense for future years’ compensation expense related to unvested RSUs was approximately $343,161 at June 30, 2022. Unrecognized deferred compensation will be recognized over an estimated weighted average amortization period of approximately 2.9 years.
Stock-based payments awarded by a related party
Prior to the ATG acquisition, employees of ATG received grants of RSUs in the former ultimate parent company of ATG, which became a related party of the Company after the closing of the transaction. These awards were modified after the transaction to allow the awards to continue to vest for the first year subsequent to the closing of the acquisition as long as personnel remain employees of the Company. These awards are compensation for services provided to the Company and accounted for as stock-based compensation.
Awards representing 2,928,854 shares were modified on the acquisition date and 538,140 shares were forfeited before the final vesting in January 2022. The fair value of these awards was equal to the market value of the related party’s common stock on the date of modification. Stock-based compensation of $6,200 was recognized in the six months ended June 30, 2022. No unrecognized deferred compensation expense remains as of June 30, 2022.
Stock-based Compensation Expense
Stock-based compensation is allocated on a departmental basis, based on the classification of the option holder or grant recipient. No income tax benefits have been recognized in the statement of operations for stock-based compensation arrangements and no stock-based compensation has been capitalized as of June 30, 2022.
Total stock-based compensation expense by function was as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Research and development
$41,424 $39,499 $67,651 $74,314 
Selling, general, and administrative
4,854 2,044 7,874 4,124 
Total
$46,278 $41,543 $75,525 $78,438 
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(9)    Income Taxes
An income tax benefit was recognized in the six months ended June 30, 2021 due to the release of a deferred tax asset valuation allowance as a result of deferred tax liabilities incurred from the acquisition of OURS Technology, Inc.
(10)    Leases
The Company leases its office facilities, data centers, and warehouses under non-cancelable operating lease agreements that expire between 2022 through 2042, including renewal options that are reasonably certain to be exercised by the Company.
As of June 30, 2022, the Company’s operating leases had a weighted average remaining lease term of 8.5 years and a weighted average discount rate of 6.3%.
Operating lease expense was $7,255 and $14,117 in the three and six months ended June 30, 2022, respectively, and was $5,942 and $12,012 in the three and six months ended June 30, 2021, respectively.
(11)    Commitments and Contingencies
From time to time the Company may be party to various claims in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses the need to record a liability for litigation and loss contingencies. Reserve estimates are recorded when and if it is determined that a loss related to certain matters is both probable and reasonably estimable. No material losses were recorded in the three and six months ended June 30, 2022 and 2021.
(12)    Employee Benefit Plan
The Company sponsors the Aurora 401(k) plan. All employees are eligible to participate in the plans after meeting eligibility requirements. Participants may elect to have a portion of their salary deferred and contributed to the plan up to the limit allowed by applicable income tax regulations. The Company may make a matching contribution at the discretion of the board of directors. The Company recognized no matching contributions in the three and six months ended June 30, 2022 and 2021.
(13)    Supplemental Cash Flow Information
Non-cash investing and financing activities were as follows:
Six Months Ended
June 30,
20222021
Noncash investing and financing activities:
Property and equipment included in accounts payable
$2,110 $3,023 
Vesting of early exercised stock options
11 143 
Non-cash acquisition
 1,939,804 
Cash paid for income taxes and interest were not significant in the six months ended June 30, 2022 and 2021.
(14)    Earnings Per Share
The Company computes earnings per share of common stock using the two-class method required for participating securities and does not apply the two-class method in periods of net loss. The computation of basic and diluted earnings per share is the same as the inclusion of all potential common stock would have been anti-dilutive in a period of net loss.
The Company has two classes of common stock subsequent to the Merger: Class A and Class B. As both classes have identical liquidation and dividend rights, the net loss is allocated to the classes on a proportionate basis and results in an identical net loss per share for each class under the two-class method.
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Redeemable convertible preferred stock, unvested restricted stock awards, and unvested early exercised stock options are participating securities in periods of income as the securities participate in undistributed earnings. The participating securities do not share in losses.
Share amounts and net loss per share have been recast for the three and six months ended June 30, 2021 to reflect the Exchange Ratio from the Merger.
Three Months Ended June 30,
20222021
 Class AClass BClass AClass B
Numerator:
Net Loss
$(700,044)$(454,133)$(181,812)$ 
Net loss per share:
Basic and diluted
$(1.02)$(1.02)$(0.34)$ 
Denominator:
Weighted average common shares outstanding - basic and diluted
686,055,230 445,057,782 541,133,301  
Six Months Ended June 30,
20222021
 Class AClass BClass AClass B
Numerator:
Net Loss
$(726,124)$(504,861)$(370,431)$ 
Net loss per share:
Basic and diluted
$(