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Item 2. Management’s Discussion and Analysis

2022-05-12 compared with 2021-11-15 · 115 added, 117 removed, 3 unchanged (99% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Except as otherwise expressly provided herein, the following discussion and analysis of the Company’s financial condition and results of operations does not reflect the consummation of the Aurora Business Combination, which, as discussed below, occurred subsequent to the period covered by this Quarterly Report.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We have based these forward-looking statements on our current expectations and projections about future events.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions.

Such statements include, but are not limited to, the expected results of the Aurora Business Combination and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Quarterly Report.

Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in the Risk Factors section of our final prospectus for the Initial Public Offering filed with the SEC on March 17, 2021 (the “IPO Prospectus”), in the Aurora Business Combination Registration Statement (as defined below) and in our other filings with the Securities and Exchange Commission (the “SEC”).

Our filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.

Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

We were incorporated on October 2, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

Our sponsor is Reinvent Sponsor Y LLC, a Cayman Islands exempted limited liability company (our “Sponsor”).

We completed our initial public offering (the “Initial Public Offering”) on March 18, 2021 and completed a Business Combination on November 3, 2021 as described below.

Recent Developments – Aurora Business Combination

On November 3, 2021, subsequent to the fiscal quarter ended September 30, 2021, the fiscal quarter to which this Quarterly Report relates, we consummated the previously announced business combination (the “Aurora Business Combination”) with Aurora Innovation, Inc., a Delaware corporation (“Aurora”), and RTPY Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of RTPY (“Merger Sub”), pursuant to an Agreement and Plan of Merger dated July 14, 2021 (the “Merger Agreement”), by and among RTPY, Aurora and Merger Sub.

Upon the consummation of the Aurora Business Combination:

Merger Sub merged with and into Aurora (the “Merger”) and the separate corporate existence of Merger Sub ceased, with Aurora surviving the Merger as our wholly-owned subsidiary;

as a result of the Merger, among other things, all outstanding shares of Aurora capital stock were cancelled in exchange for the right to receive shares of Aurora Innovation Class A common stock (at a deemed value of $10.00 per share) and shares of Aurora Innovation Class B common stock (at a deemed value of $10.00 per share), with the Aurora Innovation Class B common stock having the same economic terms as the Aurora Innovation Class A common stock, but the Aurora Innovation Class B common stock carrying ten votes per share while the Aurora Innovation Class A common stock carry one vote per share;

as a result of the Merger, all outstanding Aurora equity awards outstanding as of immediately prior to the effective time of the Merger converted into awards based on Aurora Innovation Class A common stock.

Prior to the consummation of the Aurora Business Combination, following the approval of our shareholders, and in accordance with the General Corporation Law of the State of Delaware, as amended (the “DGCL”), Cayman Islands Companies Act (as revised) (the “CICA”) and our amended and restated memorandum and articles of association, we effected a deregistration under the CICA and a domestication under Section 388 of the DGCL, pursuant to which our jurisdiction of incorporation was changed from the Cayman Islands to the State of Delaware (the “Domestication”).

In connection with the Domestication, (i) each of our then issued and outstanding Class A ordinary shares converted automatically, on a one-for-one

basis, into a share of Aurora Innovation Class A common stock, (ii) each of our then issued and outstanding Class B ordinary shares converted automatically, on a one-for-one

basis, into a share of Aurora Innovation Class A common stock, (iii) each of our then issued and outstanding warrants converted automatically into a warrant to acquire one share of Aurora Innovation Class A common stock (each a “Aurora Innovation Class A Warrant”), pursuant to the Warrant Agreement (the “Warrant Agreement”), dated March 15, 2021, between us and Continental Stock Transfer & Trust Company, as warrant agent, and (iv) each then issued and outstanding Unit separated automatically into a share of Aurora Innovation Class A common stock, on a one-for-one

basis, and one-eighth

of one Aurora Innovation Class A common stock.

As previously announced, on July 14, 2021, concurrently with the execution of the Merger Agreement, we entered into subscription agreements with certain investors (collectively, the “PIPE Investors”), pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors collectively subscribed for 100 million shares of Aurora Innovation Class A common stock for an aggregate purchase price equal to $1 billion (the “PIPE Investment”).

The PIPE Investment was consummated substantially concurrently with the consummation of the Aurora Business Combination.

As previously announced, on July 14, 2021, concurrently with the execution of the Merger Agreement, the Company entered into the Sponsor Agreement with its sponsor, Reinvent Sponsor Y LLC, a Cayman Islands limited liability company (the “Sponsor”), and Aurora, pursuant to which the parties thereto agreed, among other things, that in the event that more than 22.5% of the outstanding Class A ordinary shares are redeemed, and the Sponsor, any affiliate of the Sponsor or any other person arranged by the Sponsor has not provided backstop or alternative financing to replace such redemptions above the 22.5% threshold, the Sponsor will forfeit a number of Class B ordinary shares then owned by the Sponsor immediately before the Domestication, with such number of forfeited Class B ordinary shares calculated on a sliding scale tied to the unreplaced redemptions.

77.196% of the outstanding Class A ordinary shares were redeemed, resulting in the Sponsor forfeiting 17,434,414 Class B ordinary shares.

The following discussion and analysis of the financial condition and results of operations of Aurora should be read together with Aurora’s unaudited financial statements as of and for the three months ended March 31, 2022 and 2021, together with related notes thereto, included elsewhere in this Quarterly Report.

The discussion and analysis should also be read together with the section entitled “Aurora’s Business” below.

The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance.

The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of Aurora’s control and actual results may differ significantly from those projected in the forward-looking statements.

Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in “Part II, Item 1A.

Risk Factors” of this Quarterly Report and under the heading “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report.

Percentage amounts included in this Quarterly Report have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding.

For this reason, percentage amounts in this Quarterly Report may vary from those obtained by performing the same calculations using the figures in our unaudited consolidated financial statements included elsewhere in this Quarterly Report.

Certain other amounts that appear in this Quarterly Report may not sum due to rounding.

Unless otherwise indicated or the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Aurora,” “we,” “us,” “our” and other similar terms refer to Legacy Aurora prior to the Business Combination and to Aurora and its consolidated subsidiaries after giving effect to the Business Combination.

Aurora’s Business

Aurora is developing the Aurora Driver based on what it believes to be the most advanced and scalable suite of self-driving hardware, software, and data services in the world to fundamentally transform the over $9 trillion global transportation market.

The Aurora Driver is designed as a platform to adapt and interoperate amongst vehicle types and applications.

To date, it has been successfully integrated into nine different vehicle platforms:

from passenger vehicles to light commercial vehicles to Class 8 trucks.

By creating one driver system for multiple vehicle types and use cases, Aurora’s capabilities in one market reinforce and strengthen its competitive advantages in others.

For example, highway driving capabilities developed for trucking will carry to highway segments driven by passenger vehicles in ride hailing applications.

We believe this approach will enable us to target and transform multiple massive markets, including the $4 trillion global trucking market, the $5 trillion global passenger mobility market, and the $400 billion U.S.

local goods delivery market.

We expect that the Aurora Driver will ultimately be commercialized in a Driver as a Service (“DaaS”) business model, in which we will supply self-driving technology.

We do not intend to own nor operate a large number of vehicles ourselves.

Throughout commercialization, we expect to earn revenue on a fee per mile basis.

We intend to partner with OEMs, fleet operators, and other third parties to commercialize and support Aurora-powered vehicles.

We expect that these strategic partners will support activities such as vehicle manufacturing, financing and leasing, service and maintenance, parts replacement, facility ownership and operation, and other commercial and operational services as needed.

We expect this DaaS model to enable an asset-light and high margin revenue stream for Aurora, while allowing us to scale more rapidly through partnerships.

During the start of commercialization, though, we expect to briefly operate our own logistics and mobility services, where we own and operate a small fleet of vehicles equipped with our Aurora Driver.

This level of control is useful during early commercialization as we will define operational processes and playbooks for our partners.

Future success will be dependent on our ability to continue to execute against our product roadmap, which includes milestones to commercialize the Aurora Driver in late 2023 for trucking and late 2024 for ride hailing.

We intend to launch trucking as our first driverless product, as we believe that is where we can make the largest impact the fastest, given the massive industry demand, attractive unit economics, and the ability to deploy on high volume highway-focused routes.

From there, we plan to leverage the extensibility of the Aurora Driver to deploy and scale into the passenger mobility and local goods delivery markets.

Results of Operations

Our entire activity since inception through September 30, 2021 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination, and the negotiation and execution of the proposed Aurora Business Combination.

We have neither engaged in any operations nor generated any operating revenues to date.

We will not generate any operating revenues until after completion of our initial Business Combination, at the earliest.

We will generate non-operating

income in the form of interest income on cash and cash equivalents.

We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

Additionally, we recognize non-cash

gains and losses within other income (expense) related to changes in recurring fair value measurement of our warrant liabilities at each reporting period.

For the three months ended September 30, 2021, we had a net loss of approximately $391,000, which consisted of approximately $7.2 million in general and administrative costs partially offset by approximately $6.8 million change in the fair value of derivative warrant liabilities and approximately $13,000 gain on the investments held in the Trust Account.

For the nine months ended September 30, 2021, we had a net loss of approximately $6.2 million, which consisted of approximately $8.2 million in general and administrative costs and $1.1 million in financing costs partially offset by approximately $3.0 million change in the fair value of derivative warrant liabilities and approximately $56,000 gain on the investments held in the Trust Account.

Comparison of the Three Months Ended March 31, 2022 to Three Months Ended March 31, 2021

The following table sets forth a summary of our consolidated results of operations for the periods indicated, and the changes between periods.

Three Months Ended March 31, $ Change % Change

(in thousands, except for percentages)

Collaboration revenue $ 41,998 $ — $ 41,998 n/m (1)

Operating expenses

Research and development 154,090 159,109 (5,019) (3.2) %

Selling, general and administrative 31,052 32,680 (1,628) (5.0) %

Total operating expenses 185,142 191,789 (6,647) (3.5) %

Loss from operations (143,144) (191,789) 48,645 (25.4) %

Other income (expense)

Interest and other income 581 570 11 1.9 %

Change in fair value of derivative liabilities 65,810 — 65,810 n/m (1)

Other expense (53) (44) (9) n/m (1)

Loss before income taxes (76,806) (191,263) 114,457 (59.8) %

Income tax expense (benefit) 2 (2,644) 2,646 n/m (1)

Net loss $ (76,808) $ (188,619) $ 111,811 (59.3) %

________________

(1) Not meaningful.

Collaboration Revenue

Collaboration revenue increased by $42.0 million in the three months ended March 31, 2022 due to the collaboration framework agreement and project plan signed in August 2021 with Toyota Motor Corporation.

Research and Development

Research and development decreased by $5.0 million, or 3.2%, to $154.1 million in the three months ended March 31, 2022 from $159.1 million in the three months ended March 31, 2021, primarily driven by a decrease in stock-based compensation and severance expense, partially offset by an increase in payroll costs and hardware development costs.

Selling, General and Administrative

Selling, general, and administrative decreased by $1.6 million, or 5.0%, to $31.1 million in the three months ended March 31, 2022 from $32.7 million in the three months ended March 31, 2021, primarily driven by a decrease in professional services costs, partially offset by an increase in insurance and payroll costs.

Change in Fair Value of Derivative Liabilities

Income recognized for the change in fair value of derivative liabilities was $65.8 million in the three months ended March 31, 2021 primarily due to the change in market price for the underlying instrument.

Income Tax Expense (Benefit)

An income tax benefit was recognized in the three months ended March 31, 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.

Liquidity and Capital Resources

As of September 30, 2021, we had approximately $263,000 in our operating bank account, negative working capital of approximately $6.2 million, and no interest income available in the Trust Account to fund our working capital requirements, subject to an annual limit of $701,250, and/or to pay our taxes, if any.

Our liquidity needs have been satisfied prior to the completion of the Initial Public Offering through receipt of a $25,000 capital contribution from our Sponsor to cover certain expenses in exchange for the issuance of the Founder Shares (as defined in Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities), a loan of $295,000 from our Sponsor under a promissory note (the “Note”).

We fully repaid the Note in March 2021.

Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs were satisfied from the proceeds from the consummation of the Private Placement not held in the Trust Account.

We continue to evaluate the impact of the COVID-19

pandemic and has concluded that the specific impact is not readily determinable as of the date of the balance sheet.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We used substantially all of the funds held in the Trust Account to complete the Aurora Business Combination.

Funds held in the Trust Account were also used to fund the redemption of common stock.

Contractual Obligations

As of September 30, 2021, we did not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement with Reinvent Capital LLC (“Reinvent Capital”) (the “Support Services Agreement”) to pay support services fees to Reinvent Capital that total $1,875,000 per year for support and administrative services, as well as reimburse Reinvent Capital for any out-of-pocket

expenses it incurs in connection with providing services or for office space under this agreement.

As of September 30, 2021, we paid $0 to Reinvent Capital as part of the Support Services Agreement and recognized approximately $468,800 and $937,500 which was recognized in the unaudited condensed consolidated statement of operations and included in Due to related party on the condensed consolidated balance sheet at September 30, 2021.

For the three and nine months ended September 30, 2021, we incurred approximately $113,000 and $207,300 in reimbursable expenses paid by our Sponsor recognized in the unaudited condensed consolidated statement of operations.

As of September 30, 2021, $968,700 was included in Due to related party on our condensed consolidated balance sheet at September 30, 2021.

Critical Accounting Policies

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses.

We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

We have identified the following as its critical accounting policies:

Derivative Warrant Liabilities

We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed

at the end of each reporting period.

The warrants issued in the Initial Public Offering and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815.

Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period.

The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations.

The fair value of warrants issued in connection with the Initial Public Offering and Private Placement were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model at each measurement date.

The fair value of Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants

Class A Ordinary Shares Subject to Possible Redemption

We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC 480.

Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value.

Conditionally redeemable Class A ordinary shares (including Class ordinary shares that features redemption rights that were either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity.

At all other times, Class A ordinary shares are classified as shareholders’ equity.

Our Class A ordinary shares feature certain redemption rights that were considered to be outside of our control and subject to the occurrence of uncertain future events.

Accordingly, as of September 30, 2021, 97,750,000 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheet.

There were no Class A ordinary shares issued or outstanding as of December 31, 2020.

Immediately upon the closing of the Initial Public Offering, we recognized the accretion from initial book value to redemption amount.

The change in the carrying value of redeemable shares of Class A ordinary shares resulted in charges against additional paid-in

capital and accumulated deficit.

Net Income (Loss) Per Ordinary Share

We have two classes of shares:

Class A ordinary shares and Class B ordinary shares.

Income and losses are shared pro rata between the two classes of shares.

Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the periods.

We have not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 21,118,750, of the Company’s Class A ordinary shares in the calculation of diluted net income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method.

As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2021.

Accretion associated with the Class A ordinary shares subject to possible redemption is excluded from earnings per share as the redemption value approximates fair value.

Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-06, “Debt—Debt

with Conversion and Other Options (Subtopic 470-20) and

Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which

simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas.

The Company adopted ASU 2020-06 on

January 1, 2021.

Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

Our management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on our unaudited condensed consolidated financial statements.

Sheet Arrangements

As of September 30, 2021, we did not have any off-balance

sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

We qualify as an “emerging growth company” and, under the JOBS Act, are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging

growth companies.

As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging

growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

As of March 31, 2022, our principal sources of liquidity were $504.3 million of cash and cash equivalents and $964.4 of short-term investments, exclusive of short-term and long-term restricted cash of $0.3 million and $16.1 million, respectively.

Cash and cash equivalents primarily consist of money market funds and U.S.

government securities.

Short-term investments consist of U.S.

government securities.

We have incurred negative cash flows from operating activities and significant losses from operations in the past as reflected in our accumulated deficit of $1,168.0 million as of March 31, 2022.

We expect to continue to incur operating losses at least for the next 12 months due to the investments that we intend to make in our business and, as a result, we may require additional capital resources to grow our business.

We believe our cash on hand will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report.

We may need additional funding due to changing business conditions or other developments, including unanticipated regulatory developments and competitive pressures.

Our future capital requirements will depend on several factors, including but not limited to, the rate of our growth, our ability to attract and retain customers and partnerships and their willingness to pay for our services, and the timing and extent of spending to support our efforts to develop our Aurora Driver.

Further, we may enter into future arrangements to acquire or invest in businesses, products, services, strategic partnerships, and technologies.

To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing.

If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to scale back our existing operations, which could have an adverse impact on our business and financial prospects.

The following table summarizes our cash flows for the periods indicated (in thousands):

Three Months Ended March 31,

(in thousands)

Net cash used in operating activities

$ (135,813) $ (150,974)

Net cash (used in) provided by investing activities

(971,576) 291,058

Net cash provided by financing activities

1,835 398,479

Net (decrease) increase in cash

(1,105,554) 538,563

Cash, beginning of period

1,626,247 399,828

Cash, end of period

$ 520,693 $ 938,391

Cash Flows Used in Operating Activities

Net cash used in operating activities was $135.8 million for the three months ended March 31, 2022, a decrease of $15.2 million from $151.0 million for the three months ended March 31, 2021.

During the three months ended March 31, 2022, operating cash flows were affected by $47.5 million of cash received in connection with the collaboration agreement, partially offset by increased incentive compensation payments.

The change in operating cash flows also benefited from professional fees and other expenses paid in connection with the acquisition of ATG in the three months ended March 31, 2021, which did not recur in the current period.

Cash Flows (Used in) Provided by Investing Activities

Net cash used in investing activities increased by $1,262.6 million from the three months ended March 31, 2021 to three months ended March 31, 2022, primarily due to the purchases of short-term investments of $966.1 million and the comparative period including $294.4 million in net cash acquired in acquisitions.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities decreased by $396.6 million from three months ended March 31, 2021 to three months ended March 31, 2022, due to the comparative period including net proceeds from the issuance of Series U-2 preferred stock of $397.9 million.

Contractual Obligations, Commitments and Contingencies

Aurora may be party to various claims within the normal course of business.

Legal fees and other costs associated with such actions are expensed as incurred.

We assess the need to record a liability for litigation and other loss contingencies, with reserve estimates recorded if we determine that a loss related to the matter is both probable and reasonably estimable.

We did not record any material losses for 2019 or 2020.

Our future contractual commitments related to future minimum payments for purchase obligations at March 31, 2022 are $47.5 million in the remainder of 2022, $64.4 million in 2023, $62.5 million in 2024, $64.0 million in 2025, and $27.1 million in 2026.

Our future contractual commitments related to future minimum payments under non-cancelable operating leases at March 31, 2022 are $20.0 million in 2022, $25.3 million in 2023, $62.5 million in 2024, $64.0 million in 2025, $21.3 million in 2026, and $61.6 million thereafter.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles, or U.S.

Preparation of the financial statements requires our management to make judgments, estimates and assumptions that impact the reported amount of net sales and expenses, assets and liabilities and the disclosure of contingent assets and liabilities.

We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on our consolidated financial statements.

Our significant accounting policies are described in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report and in the notes to the consolidated financial statements included in Part II, Item 8 of the Annual Report on Form 10-K for the year-ended December 31, 2021 (the “Annual Report”).

There have been no material changes to our critical accounting estimates since our Annual Report.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have elected to take advantage of the benefits of this extended transition period.

The Company expects to remain an emerging growth company at least through the end of 2022, when we expect to qualify as a large accelerated filer, and will have the benefit of the extended transition period.

This may make it difficult to compare our financial results with the financial results of other public companies that are either not emerging growth companies or emerging growth companies that have chosen not to take advantage of the extended transition period.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis