What changed in this filing

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Item 1. Legal Proceedings

2024-11-07 compared with 2024-08-01 · 32 added, 9 removed, 31 unchanged (57% of the section changed)

3 unchanged sentences

Ri sk Factors.

Except as set forth below, as of the date of this report, there are no material changes to our risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Our failure to generate sufficient cash flow from our business as a result of the proposed convertible notes restructuring and elevated interest rates would adversely affect our business, financial condition and results of operations.

Except as set forth below there are no material changes to our risk factors as previously disclosed in Part I, Item

1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Our failure to generate sufficient cash flow from our business to satisfy the interest rate of our 2028 Convertible Notes would adversely affect our business, financial condition and results of operations.

The interest rate on the $150.0 million aggregate principal amount of the 2028 Convertible Notes outstanding as of

September 30, 2024, is 7.50 percent, payable semi-annually.

Our ability to pay interest and required principal payments on our indebtedness depends upon cash flows generated by our operating performance.

As a result, prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to make these payments and reduce the level of our indebtedness over time.

The interest rate on our proposed convertible notes due October 2028 is 7.5%, and based on the anticipated exchange of approximately $161.2 million of our existing convertible notes due October 2026, our annual coupon payments would be significantly more than our current 2026 Convertible Notes.

Additionally, we anticipate spending approximately $108.7 million in cash on the repurchase of a portion of our outstanding convertible notes due October 2026.

If we do not generate sufficient cash flow from operations to satisfy our debt servicing obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets or seeking to raise additional capital.

Further, our anticipated spending in relation to the debt restructuring combined with elevated interest rates could have significant adverse consequences, including:

Further, our spending in relation to our debt restructuring combined with elevated interest rates could have significant adverse consequences, including:

reducing cash resources available to fund working capital, capital expenditures, product development efforts and other general corporate purposes;

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and placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.

The terms of the indenture (the “2028 Convertible Notes Indenture”) that will govern the 2028 Convertible Notes will impose restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests.

The 2028 Convertible Notes Indenture and the exchange agreement governing the exchange of 2026 Convertible Notes for 2028 Convertible Notes (to the extent the exchanging holder continues to hold a specified amount of 2028 Convertible Notes) will contain a number of restrictive covenants that impose significant operating and financial restrictions on us and limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability and the ability of our subsidiaries (to the extent any such subsidiaries incur or guarantee indebtedness) to:

The terms of the indenture (the “2028 Convertible Notes Indenture”) that govern the 2028 Convertible Notes impose restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests.

The 2028 Convertible Notes Indenture and the exchange agreement governing the exchange of 2026 Convertible Notes for 2028 Convertible Notes (to the extent the exchanging holder continues to hold a specified amount of 2028 Convertible Notes) contain a number of restrictive covenants that impose significant operating and financial restrictions on us and limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability and the ability of our subsidiaries (to the extent any such subsidiaries incur or guarantee indebtedness) to:

• incur additional indebtedness and guarantee indebtedness, including a limitation on incurring revolving credit facility indebtedness in excess of $25 million in aggregate amount (the “Senior Secured Revolving Indebtedness”) and the incurrence of any senior indebtedness;

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In addition, while we are not permitted to incur any additional senior indebtedness (other than the Senior Secured Revolving Indebtedness), the incurrence of subordinated indebtedness will be subject to the requirement that the 2028 Convertible Notes be secured by all of our assets (subject to customary exceptions) concurrently with any incurrence of subordinated indebtedness.

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A breach of the covenants under the 2028 Convertible Notes Indenture or under the 2026 Convertible Notes Indenture could result in an event of default under the applicable indebtedness.

Such a default, if not cured or waived, may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision.

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Furthermore, if we were unable to repay the amounts due and payable under the 2028 Convertible Notes Indenture and the 2028 Convertible Notes are then secured, holders of the 2028 Convertible Notes could proceed against the collateral securing such indebtedness.

If the holders of the 2028 Convertible Notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

We have undertaken, and may in the future undertake, restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition.

From time to time, we have implemented restructuring plans to support key strategic initiatives which include driving efficient revenue growth and delivering long-term profitability.

For example, we initiated a restructuring plan in September 2023, intended to, among other things, advance the Company's ongoing commitment to profitable growth, which was materially complete at the end of fiscal 2023.

This follows an earlier restructuring plan we initiated in December 2022 intended to reduce our cost structure through a reduction of Company workforce and office space, which was completed during the third quarter of fiscal year 2023.

In September 2024, we implemented a new restructuring plan which will include workforce reductions, reduction in real estate footprint, and costs incurred associated with asset impairments.

Our restructuring plans present potential risks that could have a material adverse effect on our operations, financial condition, results of operations, cash flow, or business reputation.

Changes resulting from our strategic restructuring plans and any future initiatives may not be successful in yielding our intended results and may not appropriately address the short-term and long-term strategic objectives for our business.

Implementation of the restructuring plans and any other cost-saving initiatives may be costly and disruptive to our business, the expected costs and charges may be greater than we have forecasted, and the estimated cost savings may be lower than we have anticipated.

Additionally, certain aspects of the 2024 Restructuring Plan, such as severance costs in connection with reducing our headcount, could negatively impact our cash flows.

In addition, our initiatives could result in personnel attrition beyond our planned reduction in headcount or reduced employee morale, which could in turn adversely impact productivity, including through a loss of continuity, loss of accumulated knowledge, inefficiency during transitional periods, or our ability to attract highly skilled employees.

If any restructuring activities we have undertaken or undertake in the future fail to achieve some or all of the expected benefits, our business, financial condition, and results of operations could be materially and adversely affected.

Losing key members of our management or operations teams could hinder our ability to attract and retain the necessary talent for continued operations and growth.

Our success depends substantially upon the continued services of our executive officers and other key members of management, particularly our chief executive officer.

From time to time, there may be changes in our management team resulting from the hiring, departure or realignment of executives.

For example, in September 2024, Brent Bellm, our former CEO and Chairman of our Board of Directors, departed from these positions with the Company.

Such changes may be disruptive to our business.

Bellm was with the Company for nine years and during this time developed institutional knowledge and relationships.

The departure of Mr.

Bellm could lead to a loss of leadership continuity, key relationships, and in-depth understanding of our business, operations, and industry.

Effective succession planning for management is important to our long-term success.

While we have a succession plan in place, a new CEO, Travis Hess, even with significant experience, may not possess the same level of institutional knowledge and partner relationships, potentially impacting our decision-making, strategic direction, and overall business performance during the transition period.

U nregistered Sales of Equity Securities and Use of Proceeds

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Defaults U pon Senior Securities

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Mine Sa fety Disclosures

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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 1. Legal Proceedings