What changed in this filing

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Item 1A. Risk Factors

2024-11-05 compared with 2024-08-06 · 54 added, 58 removed, 1391 unchanged (7% of the section changed)

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We may not be effective in executing this or any other aspect of our growth strategy.

Our top three customers together accounted for 18% and 17% of our revenue for the years ended December 31, 2023 and 2022, respectively, and 17% and 20% of our revenue for the six months ended June 30, 2024 and 2023, respectively.

Our top three customers by revenue, for the six months ended June 30, 2024, have been with us for an average of nine years as of June 30, 2024.

Our top three customers together accounted for 18% and 17% of our revenue for the years ended December 31, 2023 and 2022, respectively, and 17% and 19% of our revenue for the nine months ended September 30, 2024 and 2023, respectively.

Our top three customers by revenue, for the nine months ended September 30, 2024, have been with us for an average of nine years as of September 30, 2024.

Certain of our customers, including customers that represent a significant portion of our business, have in the past reduced, and others may choose in the future to reduce, their spend with us or terminated their agreements with us, which has reduced our anticipated future payments or revenue from these customers, and which has required us to refund some previously paid amounts to these customers.

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• changes in the way we operate and maintain our platforms;

• unforeseen negative results in operations from our partnerships, including those accounted for under the equity method;

• unforeseen negative results in operations from our partnerships;

• changes in the competitive dynamics of our industry;

• the cost of and potential outcomes of existing and future claims or litigation, which could have a material adverse effect on our business;

• changes in laws and regulations that impact our business, such as the FASA;

• changes in laws and regulations that impact our business, such as the FASA or the EU AI Act (“EU AIA”);

• indemnification payments to our customers or other third parties;

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Our rapid growth in recent years may obscure the extent to which seasonality trends have affected our business and may continue to affect our business.

We expect that seasonality will continue to materially impact our business in the future and may become more pronounced over time.

We expect that seasonality will continue to materially impact our business in the future and may

become more pronounced over time.

The seasonality of our business may cause continued or increased fluctuations in our results of operations and cash flows, which may prevent us from achieving our quarterly or annual forecasts or meeting or exceeding the expectations of research analysts or investors, which in turn may cause a decline in the trading price of our Class A common stock.

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There is no assurance that our enhancements to our platforms or our new product features, capabilities, or offerings, including new platforms or product modules, such as AIP, will, either individually or in the aggregate, be compelling to our customers, gain market acceptance, or have a positive or material impact on our business, financial condition, or results of operations, in each case in a timely or cost-effective manner.

For example, we and our peers and competitors are investing more significantly in AI (including machine learning and large language models).

For example, we and our peers and competitors are investing more significantly in AI (including machine learning, large language and other generative AI models, and software functionality to operationalize the foregoing).

There are significant risks involved in deploying AI and there can be no assurance that using AI in our platforms and products will enhance or be beneficial to our business, including our profitability.

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Any delays could result in adverse publicity, loss of revenue or market acceptance, or claims by customers brought against us, any of which could harm our business.

Moreover, the design and development of new platforms or new features and capabilities to our existing platforms may require substantial investment,

and we have no assurance that such investments will be successful.

If customers do not widely adopt our new platforms, products, features, and capabilities, we may not be able to realize a return on our investment and our business, financial condition, and results of operations may be adversely affected.

Moreover, the design and development of new platforms or new features and capabilities to our existing platforms may require substantial investment, and we have no assurance that such investments will be successful.

If customers do not widely adopt our new platforms,

products, features, and capabilities, we may not be able to realize a return on our investment and our business, financial condition, and results of operations may be adversely affected.

Our new and existing platforms and changes to our existing platforms could fail to attain sufficient market acceptance for many reasons, including:

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We operate in a growing market and have experienced, and may continue to experience, significant expansion of our operations.

This growth has placed, and may continue to place, a

strain on our employees, management systems, operational, financial, and other resources.

As we have grown, we have increasingly managed larger and more complex deployments of our platforms and services with a broader base of government and commercial customers.

This growth has placed, and may continue to place, a strain on our employees, management systems, operational, financial, and other resources.

As we have grown, we have

increasingly managed larger and more complex deployments of our platforms and services with a broader base of government and commercial customers.

As we continue to grow, we face challenges of integrating, developing, retaining, and motivating our employee base in various countries around the world.

For example, our headcount has grown from 313 full-time employees as of December 31, 2010 to 3,661 full-time employees as of June 30, 2024, with employees located both in the United States and outside the United States.

For example, our headcount has grown from 313 full-time employees as of December 31, 2010 to 3,892 full-time employees as of September 30, 2024, with employees located both in the United States and outside the United States.

In the event of continued growth of our operations, our operational resources, including our information technology systems, our employee base, or our internal controls and procedures may not be adequate to support our operations and deployments.

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Our success depends on our ability to effectively source and staff people with the right mix of skills and experience to perform services for our customers, including our ability to transition personnel to new assignments on a timely basis.

If we are unable

to effectively utilize our personnel on a timely basis to fulfill the needs of our customers, our business could suffer.

Further, if we are not able to utilize the talent we need because of increased regulation of immigration or work visas, including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our personnel on customer engagements and could increase our costs.

If we are unable to effectively utilize our personnel on a timely basis to fulfill the needs of our customers, our business could suffer.

we are not able to utilize the talent we need because of increased regulation of immigration or work visas, including limitations placed on the number of visas granted, limitations on the type of work performed or location in which the work can be performed, and new or higher minimum salary requirements, it could be more difficult to staff our personnel on customer engagements and could increase our costs.

We face intense competition for qualified personnel, especially engineering personnel, in major U.S.

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While these obligations remain outstanding and are cash collateralized, we do not have access to and cannot use the pledged cash for our operations or to repay our other indebtedness.

As of June 30, 2024, we were in compliance with all covenants and restrictions associated with our credit facility.

As of September 30, 2024, we were in compliance with all covenants and restrictions associated with our credit facility.

Variable rate indebtedness that we may incur under our credit facility will subject us to interest rate risk, which could cause our debt service obligations to increase significantly.

As of June 30, 2024, no borrowings were outstanding under our credit facility.

As of September 30, 2024, no borrowings were outstanding under our credit facility.

Any borrowings under the credit facility bear interest at variable rates, which would expose us to interest rate risk.

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Additionally, in connection with approving and signing the Investment Agreements, we and each Investee or an associated entity entered into a commercial contract for access to our products and services (collectively, the “Strategic Commercial Contracts”).

The total value of Strategic Commercial Contracts, which is calculated as the sum of the cumulative revenue recognized from Strategic Commercial Contracts and the remaining deal value of such contracts, was $373.3 million inclusive of $40.4 million of contractual options, as of June 30, 2024.

Strategic Commercial Contracts with remaining deal value as of June 30, 2024 have original contract terms, including contractual options, of five and seven years and are subject to termination for cause provisions.

The total value of Strategic Commercial Contracts, which is calculated as the sum of the cumulative revenue recognized from Strategic Commercial Contracts and the remaining deal value of such contracts, was $376.7 million, inclusive of $40.4 million of contractual options, as of September 30, 2024.

Strategic Commercial Contracts with remaining deal value as of September 30, 2024 have original contract terms, including contractual options, of five and seven years and are subject to termination for cause provisions.

When determining the total value of these Strategic Commercial Contracts, we assess customers’ financial condition, including the consideration of their ability and intention to pay, and whether all or some portion of the value of the contracts continue to meet the criteria for revenue recognition, among other factors.

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For example, some of our early-stage Investee customers filed for bankruptcy or terminated their contracts with us, and the remaining value of the commercial contracts with such customers that is not expected to be recognized as revenue has been excluded from the total value of Strategic Commercial Contracts above.

As of June 30, 2024, the cumulative amount of revenue recognized from Strategic Commercial Contracts was $287.0 million, of which $33.1 million was recognized by us during the six months ended June 30, 2024.

As of September 30, 2024, the cumulative amount of revenue recognized from Strategic Commercial Contracts was $296.6 million, of which $42.7 million was recognized by us during the nine months ended September 30, 2024.

The occurrence of any of these risks could have a material adverse effect on our business, results of operations, and financial condition.

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The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our financial condition.

Issues raised by the use of AI (including machine learning and large language models) in our platforms and business may result in reputational harm or liability.

Issues raised by the use of AI (including machine learning, large language and other generative AI models, and software functionality to operationalize the foregoing) in our platforms and business may result in reputational harm or liability.

AI is enabled by or integrated into some of our technology platforms and is a significant and growing element of our business.

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Third-party AI capabilities that can be integrated with our platforms could also produce false or “hallucinatory” inferences about customer data or enterprises, or other information or subject matter.

If the recommendations, forecasts, or analyses that AI applications assist in producing are deficient, unreliable or inaccurate, we could be subject to competitive harm, potential legal liability, including under forthcoming and new proposed legislation regulating AI in jurisdictions such as the European Union (“EU”), and brand or reputational harm.

If the recommendations, forecasts, or analyses that AI applications assist in producing are deficient, unreliable or inaccurate, we could be subject to competitive harm, potential legal liability, including under existing, forthcoming, or proposed legislation regulating AI in jurisdictions such as the European Union (“EU”), and brand or reputational harm.

The rapid evolution of AI and its evolving regulatory landscape may also require additional resources to develop, test, and maintain our platforms and products to help ensure that AI is implemented appropriately in order to minimize unintended or harmful impact, which may be costly and may not produce the benefits and results that we expect.

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For example, Connecticut, Virginia, Colorado and Utah each has enacted legislation similar to the CCPA and CPRA that took effect in 2023;

Florida, Montana, Oregon, and Texas each has enacted similar legislation that have become, or will become, effective in 2024;

Florida, Montana, Oregon, and Texas each has enacted similar legislation that took effect in 2024;

Tennessee, Iowa, Delaware, New Hampshire, New Jersey, Maryland, Minnesota, and Nebraska each has enacted similar legislation that will take effect in 2025;

and Indiana and Kentucky each has enacted similar legislation that will become effective in 2026.

and Indiana, Kentucky, and Rhode Island each has enacted similar legislation that will become effective in 2026.

We cannot yet fully assess the impact of these laws and other new laws or regulations on our business or operations, but developments regarding these and all privacy and data protection laws and regulations around the world may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to maintain compliance on an ongoing basis.

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For example, governmental bodies have implemented laws and are considering further regulation of AI (including machine learning), which could negatively impact our ability to use and develop platforms and products incorporating these technologies.

The European Union Parliament adopted the EU AI Act (“EU AIA”), that, when effective, would impose onerous obligations related to the development, sale and use of AI-related systems.

The European Union Parliament adopted the EU AIA, that, when effective, would impose onerous obligations related to the development, sale and use of AI-related systems.

In addition, Colorado has passed a Consumer Protections for Artificial Intelligence bill introducing state-level oversight of “high-risk” AI systems, which mirrors language and several provisions appearing in the EU AIA.

Further, certain administrations, including in the United States, have encouraged companies to sign on to voluntary commitments to manage the risks posed by AI alongside related legislative or regulatory efforts, some of which we have signed.

When such legislation or commitments, or if similar legislation or commitments in other jurisdictions, are enacted or adopted, compliance with such obligations may be

difficult, onerous, and costly, and could adversely affect our business, reputation, financial condition, results of operations, and growth prospects.

When such legislation or commitments, or if similar legislation or commitments in other jurisdictions, are enacted or adopted, compliance with such obligations may be difficult,

onerous, and costly, and could adversely affect our business, reputation, financial condition, results of operations, and growth prospects.

Many governments have enacted laws requiring companies to provide notice of data security breaches or incidents involving certain types of data, including personal data.

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• volatility in the trading prices and trading volumes of technology stocks;

• the inclusion, exclusion, or deletion of our Class A common stock from any major trading indices, such as the S&P 500 Index;

• the inclusion, exclusion, or deletion of our Class A common stock from any major trading indices, such as the Standard & Poor’s (“S&P”) 500 Index;

• changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

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In addition to the supply and demand and volatility risk factors discussed above, sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur in large quantities, could cause the trading price of our Class A common stock to decline.

As of June 30, 2024, approximately 1.1 million options will expire through December 2024 if not exercised prior to their respective expiration dates, and we expect many holders will elect to exercise such options prior to expiration.

As of September 30, 2024, approximately 0.2 million options will expire through December 2024 if not exercised prior to their respective expiration dates, and we expect many holders will elect to exercise such options prior to expiration.

Upon exercise, the holders will receive shares of our Class A or Class B common stock, which may subsequently be sold.

As of June 30, 2024, there were 2,140,808,840 shares of our Class A common stock outstanding, 96,125,336 shares of our Class B common stock outstanding and 1,005,000 shares of our Class F common stock outstanding.

As of September 30, 2024, there were 2,172,437,083 shares of our Class A common stock outstanding, 96,366,544 shares of our Class B common stock outstanding and 1,005,000 shares of our Class F common stock outstanding.

Substantially all of these shares may be immediately sold, although sales by our affiliates remain subject to compliance with the volume limitations of Rule 144.

Further, as of June 30, 2024, there were outstanding options to purchase an aggregate of 75,297,101 shares of our Class A common stock and 181,667,001 shares of our Class B common stock, 31,633,660 shares of our Class A common stock and 35,700,000 shares of Class B common stock subject to RSUs, 42,575,489 shares of our Class A common stock subject to SARs and 1,197,516 shares of our Class A common stock subject to P-RSUs.

Further, as of September 30, 2024, there were outstanding options to purchase an aggregate of 61,457,243 shares of our Class A common stock and 171,899,715 shares of our Class B common stock, 38,819,951 shares of our Class A common stock and 33,675,000 shares of Class B common stock subject to RSUs, 47,963,098 shares of our Class A common stock subject to SARs, and 861,875 shares of our Class A common stock subject to P-RSUs.

All shares of our common stock reserved for future issuance under our equity compensation plans have been registered for sale under the Securities Act.

Subject to compliance with Rule 144 or the availability of an alternative exemption, the shares issued upon exercise of stock options or SARs, or upon settlement of RSUs or P-RSUs will be available for immediate resale in the United States in the open market.

While the registration rights of our non-affiliates pursuant to our Amended and Restated Investors’ Rights Agreement dated August 24, 2020 requiring us to register shares owned by them for public sale in the United States have expired under the terms of that agreement, our affiliates who are party to the Amended and Restated Investors’ Rights Agreement, including our Founders and certain of the entities affiliated with Peter Thiel, will retain the right to cause us to register shares held by them for resale until such rights terminate in accordance with our Amended and Restated Investors’ Rights Agreement.

Any registration statement we file to register additional shares, whether as a result of registration rights or otherwise and whether in

connection with the exercise of stock options, the settlement of RSUs or P-RSUs, or the exercise or settlement of other awards or otherwise, could cause the trading price of our Class A common stock to decline or be volatile.

We also may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments or otherwise.

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• certain transactions, other than restructuring transactions or transactions that otherwise do not involve a Change of Control (as defined in our amended and restated certificate of incorporation), which transactions require, pursuant to Section 251(c) or Section 271(a) of the Delaware General Corporation Law, the approval of the holders of a majority of the voting power of all of the outstanding shares of our capital stock entitled to vote thereon, will require approval by the holders of at least 55.0% of the voting power of all of the outstanding shares of our capital stock entitled to vote thereon if the record date for determining the stockholders entitled to vote to approve such transaction occurs prior to the Final Class F Conversion Date;

approval by either (i) the holders of at least 66 2/3% of the voting power of all of the outstanding shares of our capital stock, voting together as a single class, or (ii) an Independent Committee (as defined in our amended and restated bylaws);

• certain transactions prior to the Final Class F Conversion Date, that would require disclosure pursuant to Item 404(a) of Regulation S-K, between any of our Founders (or their controlled affiliates), on the one hand, and us, on the other, in which consideration exchanges hands between our Founders (or their controlled affiliates) and us, and such consideration has a fair market value in excess of $50.0 million as determined in accordance with our amended and restated bylaws will require approval by either (i) the holders of at least 66 2/3% of the voting power of all of the outstanding shares of our capital stock, voting together as a single class, or (ii) an Independent Committee (as defined in our amended and restated bylaws);

• the acquisition of our equity securities by our Founders (including their controlled affiliates), prior to the Final Class F Conversion Date, in a “Rule 13e-3 transaction” (as defined in Rule 13e-3 under the Exchange Act) will be conditioned on approval by (i) an Independent Committee and (ii) the holders of a majority of the voting power of our capital stock that is held by our stockholders other than the Founders (including their controlled affiliates) and any holder of the Class F Common Stock;

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Further, if there are only two Founders who are party to the Founder Voting Agreement, one Founder will be able to effectively defeat any stockholder action, except for the election of directors or other matters that are decided by a plurality of votes, if his instruction to vote the shares of Class F common stock differs from the other Founder.

The Founders who are then party to the Founder Voting Agreement will retain the right to direct the voting of the Class F common stock without regard to their employment status with us.

The Founders who are then party to the Founder

Voting Agreement will retain the right to direct the voting of the Class F common stock without regard to their employment status with us.

All shares of our Class F common stock are held in the Founder Voting Trust and voted pursuant to the Founder Voting Trust Agreement.

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Shares of our Class B common stock may be transferred (without converting into shares of Class A common stock) to, among others, our Founders or their affiliates, and such transfers to our Founders or their affiliates could increase the total voting power of the Founders and their affiliates above 49.999999% of the Voting Power with respect to such matter.

Excluding the voting power of the Class F common stock, our Founders and their affiliates owned shares entitled to approximately 24.2% of the voting power of our outstanding capital stock in the aggregate as of July 31, 2024.

Excluding the voting power of the Class F common stock, our Founders and their affiliates owned shares entitled to approximately 22.9% of the voting power of our outstanding capital stock in the aggregate as of October 28, 2024.

In addition, if one or two Founders withdraw from the Founder Voting Agreement, the total voting power of the Founders and their affiliates in the aggregate could exceed 49.999999% of the Voting Power.

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The shares identified by Mr.

Thiel as Designated Founders’ Excluded Shares represented less than 5% of the voting power of our outstanding capital stock as of July 31, 2024.

Thiel as Designated Founders’ Excluded Shares represented less than 5% of the voting power of our outstanding capital stock as of October 28, 2024.

In the future, Mr.

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The Ownership Threshold that must be met on any applicable record date is currently 100,000,000 Corporation Equity Securities, which is a small minority of our outstanding Corporation Equity Securities.

While the number of outstanding

Corporation Equity Securities may exceed the number of shares of our outstanding capital stock, as a comparison, there were 2,237,939,176 shares of our common stock outstanding as of June 30, 2024.

While the number of outstanding Corporation Equity Securities may exceed the number of shares of our outstanding capital stock, as a comparison, there were 2,269,808,627 shares of our common stock outstanding as of September 30, 2024.

Except for certain equitable adjustments as provided in our amended and restated certificate of incorporation, future issuances of Corporation Equity Securities by us will not increase the Ownership Threshold that must be met on any applicable record date and, accordingly, will decrease the percentage of outstanding Corporation Equity Securities represented by the Ownership Threshold.

Upon the withdrawal, or removal, of one or more of our Founders from the Founder Voting Agreement (including as a result of death or disability), the Ownership Threshold that must be met on the applicable record date will be reduced on a pro rata basis based on the ownership of Corporation Equity Securities of the Founders and certain of their affiliates as of August 10, 2020.

based on the ownership of Corporation Equity Securities of the Founders and certain of their affiliates as of August 10, 2020.

We expect that the Ownership Threshold will be reduced by approximately 57 million Corporation Equity Securities upon the withdrawal or removal from the Founder Voting Agreement of Alexander Karp, approximately 12 million Corporation Equity Securities upon the withdrawal or removal of Stephen Cohen, and approximately 31 million Corporation Equity Securities upon the withdrawal or removal of Peter Thiel if such withdrawals or removals were to happen.

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Each of these agreements could remain in place until the death of our last living Founder.

As of June 30, 2024, our Founders were 56, 56, and 41 years old.

As of September 30, 2024, our Founders were 56, 56, and 42 years old.

Further, upon a discretionary or compulsory withdrawal of a Founder as a beneficiary of the Founder Voting Trust Agreement, the Trustee will instruct our transfer agent and us to convert the withdrawing Founder’s pro rata portion of the shares of Class F common stock held in the Founder Voting Trust at the time of the withdrawal into shares of Class B common stock in accordance with our amended and restated certificate of incorporation.

Because of the ten-to-one voting ratio between our Class B and Class A common stock, even if the Class F common stock converts to Class B common stock, our Founders will collectively control a significant portion of the voting power of our

capital stock based on their current ownership.

Future transfers by holders of shares of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes and transfers between related entities.

The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those individual holders of Class B common stock who retain their shares in the long term.

If our Founders and their affiliates, individually or collectively, retain a significant portion of their holdings of Class B common stock for an extended period of time, they could, in the future, individually or collectively, continue to control a significant portion of the combined voting power of our Class A common stock and Class B common stock, even without the use of the Class F common stock, and such voting power could enable holders of Class B common stock to effectively control all matters subject to the stockholder approval.

holders of Class B common stock to effectively control all matters subject to the stockholder approval.

Shares of our Class B common stock may remain outstanding in perpetuity.

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In addition, our multi-class governance structure may make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track such indices would not invest in our stock.

For example, from 2017 until recently, Standard & Poor’s did not allow most newly public companies utilizing dual- or multi-class capital structures to be included in their indices.

These policies may depress our valuation compared to those of other similar companies that do not have multi-class governance structures.

For example, S&P did not allow most newly public companies utilizing dual- or multi-class capital structures to be included in their indices from 2017 until a change in their eligibility requirements for such companies in 2023.

Following this change, we joined the S&P 500 index in September 2024.

Any such existing or new policies may depress our valuation compared to those of other similar companies that do not have multi-class governance structures.

Future issuances of our Class A common stock will dilute the voting power of our Class A common stockholders but may not result in further dilution of the voting power of our Founders who are then party to the Founder Voting Agreement.

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In response to high levels of inflation and recession fears, the U.S.

Federal Reserve, the European Central Bank, and the Bank of England have raised, and may continue to raise, interest rates and implement fiscal policy interventions.

Even if these interventions lower inflation, they may also reduce economic growth rates, create a recession, and have other similar effects.

Federal Reserve, the European Central Bank, and the Bank of England have raised interest rates and implemented fiscal policy interventions in recent periods.

These interventions may lower inflation, however, they may also reduce economic growth rates, create a recession, and have other similar effects.

A further downturn in macroeconomic conditions, including heightened interest rates;

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Our customers may suffer from reduced operating budgets, which could cause them to defer, reduce, or forego purchases of our platforms or services.

Moreover, competitors may respond to market conditions by lowering prices and attempting to lure away our customers, and the increased pace of

consolidation in certain industries may result in reduced overall spending on our offerings.

Moreover, competitors may respond to market conditions by lowering prices and attempting to lure away our customers, and the increased pace of consolidation in certain industries may result in reduced overall spending on our offerings.

Uncertainty about global and regional economic conditions, a downturn in the technology sector or any sectors in which our customers operate, or a reduction in information technology spending even if economic conditions are stable, could adversely impact our business, financial condition, and results of operations in a number of ways, including longer sales cycles, extended or alternative payment terms or delayed payments from our customers, lower prices for our platforms and services, material default rates among our customers, contract terminations or renegotiations by our customers, reduced sales of our platforms or services, difficulty attracting new customers or retaining and expanding relationships with existing customers, and lower or no growth.

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While we seek to mitigate our business risks associated with climate change, there are inherent climate-related risks wherever business is conducted.

Any of our primary locations may be vulnerable to the adverse

effects of climate change.

Any of our primary locations may be vulnerable to the adverse effects of climate change.

For example, our Colorado headquarters have experienced and may continue to experience, climate-related events and at an increasing frequency, including drought, water scarcity, heat waves, wildfires and resultant air quality impacts and power shutoffs associated with the wildfires.

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As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from the day-to-day management of our business, which could harm our business, financial condition, and results of operations.

Although we have already hired additional employees to assist us in complying with these requirements, we may need to hire more employees in the future or engage outside consultants, which will increase our

operating expenses.

Additionally, as a public company subject to additional rules and regulations and oversight, we may not have the same flexibility we had as a private company.

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These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.

This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by

ongoing revisions to disclosure and governance practices.

We have and intend to continue to invest substantial resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities.

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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 1A. Risk Factors