What changed in this filing

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Item 1A. Risk Factors

2020-11-05 compared with 2020-08-10 · 61 added, 63 removed, 713 unchanged (15% of the section changed)

9 unchanged sentences

The ongoing COVID-19 pandemic could materially and adversely affect our business, results of operations and financial condition.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.

Even though some of these original restrictions have been relaxed or lifted, additional or renewed limitations have been imposed as COVID-19 continues to spread.

The COVID-19 pandemic has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.

We are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures.

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In addition, given the economic uncertainty created by COVID-19, we have and may continue to see delays in our sales cycle, failures of customers to renew at all or to renew the anticipated scope their subscriptions with us, requests from customers for payment term deferrals as well as pricing or bundling concessions, which, if significant, could materially and adversely affect our business, results of operations and financial condition.

Although such events did not have a material adverse impact on our customer renewals for the first two quarters of fiscal 2020, our annualized recurring revenue (ARR) related to contracts in place at the end of the second quarter of fiscal year 2020 was lower than initially anticipated at the beginning of fiscal year 2020 as a result of the pull back on customer spending, in light of the economic uncertainty caused by the COVID-19 pandemic.

Negative conditions in the general economy both in the United States and abroad, including conditions resulting from the COVID-19 pandemic, changes in gross domestic product growth, financial and credit market fluctuations, energy costs, international trade relations and other geopolitical issues, the availability and cost of credit and the global housing and mortgage

markets could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S.

Although such events did not have a material adverse impact on our customer renewals for the first three quarters of fiscal 2020, our annualized recurring revenue (ARR) related to contracts in place at the end of the third quarter of fiscal year 2020 was lower than initially anticipated at the beginning of fiscal year 2020 as a result of the pull back on customer spending, in light of the economic uncertainty caused by the COVID-19 pandemic.

economy and abroad.

More generally, the COVID-19 pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could materially and adversely affect demand for our products and professional services and could materially and adversely impact our results and financial condition even after the pandemic is contained and the shelter-in-place orders are lifted.

products and professional services and could materially and adversely impact our results and financial condition even after the pandemic is contained and the shelter-in-place orders are lifted.

For example, we may be unable to collect receivables from those customers significantly impacted by COVID-19, which may be more pronounced in industry verticals more directly impacted by the COVID-19 pandemic.

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We will continue to evaluate the nature and extent of the impact of the COVID-19 pandemic on our business.

Although we expect that current cash and cash equivalent balances, including the proceeds of our recently completed convertible senior notes offering, together with cash flows that are generated from operations and availability under our new revolving credit facility, will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.

The full extent of the COVID-19 pandemic’s impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets, the timing of economic recovery and any new information that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others.

Although we expect that current cash and cash equivalent balances, including the proceeds of our convertible senior notes offering in May 2020, together with cash flows that are generated from operations and availability under our new revolving credit facility, will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.

The full extent of the COVID-19 pandemic’s impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the ultimate duration, spread and reemergence of the pandemic, its impact on capital and financial markets, the timing of economic recovery and any new information that may emerge concerning the severity of the virus, its spread to or reemergence in other geographic regions as well as the actions taken to contain it, among others.

Any of these impacts could have a material adverse impact on our business, results of operations and financial condition and ability to execute and capitalize on our strategies.

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Our operating results, including the levels of our revenue, ARR, renewal rates, cash flow, deferred revenue and gross margins, have historically varied from period to period, and we expect that they will continue to do so as a result of a number of factors, many of which are outside of our control, including:

• quarantine, private travel limitation, or business disruptions in regions affecting our operations, stemming from actual, imminent or perceived outbreak of contagious disease, including the COVID-19 pandemic;

• quarantine, travel limitation, or business disruptions in regions affecting our operations, stemming from actual, imminent or perceived outbreak of contagious disease, including the COVID-19 pandemic;

• the level of demand for our products and professional services;

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We have posted a net loss in each year since inception, including net losses of $53.8 million, $55.5 million and $45.5 million in the years ended December 31, 2019, 2018 and 2017, respectively.

As of June 30, 2020, we had an accumulated deficit of $562.8 million.

As of September 30, 2020, we had an accumulated deficit of $588.4 million.

While we have experienced significant revenue growth in recent periods, we may not obtain a high enough volume of sales of our products and professional services to sustain or increase our growth or achieve or maintain profitability in the future.

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We have experienced these errors or defects in the past in connection with new products, acquired products and product upgrades and we expect that these errors or defects will be found from time to time in the future in new, acquired or enhanced products after commercial release.

Defects may cause our products to be vulnerable to attacks, cause them to fail to detect vulnerabilities, or temporarily interrupt

customers’ networking traffic.

Defects may cause our products to be vulnerable to attacks, cause them to fail to detect vulnerabilities, or temporarily interrupt customers’ networking traffic.

Any errors, defects, disruptions in service or other performance problems with our products may damage our customers’ businesses and could hurt our reputation.

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We may also be subject to liability claims for damages related to errors or defects in our products.

A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our products may harm our business and operating results.

A material liability

claim or other occurrence that harms our reputation or decreases market acceptance of our products may harm our business and operating results.

Many federal, state and foreign governments have enacted laws requiring companies to notify individuals of data security breaches involving their personal data.

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In order for us to improve our operating results, it is important that our existing customers renew their subscriptions with us when the existing subscription term expires, and renew on the same or more favorable terms.

Our customers have no obligation to renew their subscriptions with us and we may not be able to accurately predict customer renewal rates.

Our customers have no obligation to renew their subscriptions with us and we may not be able to

accurately predict customer renewal rates.

Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction with our new or current product offerings, our pricing, the effects of economic conditions, including due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic, competitive offerings, our customers' perception of their exposure, or alterations or reductions in their spending levels.

96 unchanged sentences

We market and sell our products and professional services throughout the world and have personnel in many parts of the world.

For the six months ended June 30, 2020 and 2019, operations located outside of North America generated 17% and 16%, respectively, of our revenue.

For the nine months ended September 30, 2020 and 2019, operations located outside of North America generated 17% and 16%, respectively, of our revenue.

Our growth strategy is dependent, in part, on our continued international expansion.

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Internationally, virtually every jurisdiction in which we operate has established its own data security and privacy legal frameworks with which we, and/or our customers, must comply, including the European Union's General Data Protection Regulation, (EU) 2016/679 (GDPR), which went into effect in May 2018 and is designed to update current privacy laws to better reflect the digital economy and to unify data protection within the European Union (EU) under a single law and laws implemented by EU member states which contain derogations from, or exemptions or authorizations for the purposes of, the GDPR, or which are otherwise intended to supplement the GDPR and any legislation that replaces or converts into domestic law the GDPR or any other law relating to data protection, the processing of personal data and privacy as a consequence of the United Kingdom (UK) leaving the EU (European Data Protection Laws).

The European Data Protect Laws present significantly greater risks, compliance burdens and costs for companies with users and operations in the European Union.

The European Data Protection Laws present significantly greater risks, compliance burdens and costs for companies with users and operations in the EU and UK.

Under the GDPR, fines of up to 20 million euros or up to 4% of the annual global turnover of the infringer, whichever is greater, could be imposed for significant non-compliance.

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To facilitate the transfer of both customer and employee personal data from Europe to the United States, we self-certified under the EU-US Privacy Shield framework on December 20, 2016.

However, this framework was recently invalidated by a decision of the European Union’s highest court.

Authorities in the United Kingdom and Switzerland may similarly invalidate use of the Privacy Shield as a vehicle for lawful data transfers from those countries to the United States.

However, this framework was recently invalidated by a decision of the European Union’s highest court and authorities in the United Kingdom and Switzerland have similarly invalidated use of the Privacy Shield as a vehicle for lawful data transfers from those countries to the United States.

The same decision also cast doubt on the ability to use one of the primary alternatives to the Privacy Shield, namely, the European Commission’s Standard Contractual Clauses, to lawfully transfer personal data from Europe to the United States and most other countries.

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This may also reduce demand for our services from companies subject to European Data Protection Laws.

Loss of our ability to import personal data from Europe may also require us to increase our data processing capabilities in Europe at significant expense.

Loss of our ability to import personal data from Europe may also require us to increase our data processing capabilities in the EEA at significant expense.

Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.

176 unchanged sentences

dollar and we generate a majority of our revenue in U.S.

However, for each of the three months ended June 30, 2020 and 2019 we incurred 12% of our expenses outside of the United States in foreign currencies, primarily the British pound sterling and euro, principally with respect to salaries and related personnel expenses associated with our sales and research and development operations.

Additionally, for the three months ended June 30, 2020 and 2019, 9% and 7%, respectively, of our revenue was generated in foreign currencies.

However, for each of the nine months ended September 30, 2020 and 2019 we incurred 13% of our expenses outside of the United States in foreign currencies, primarily the British pound sterling and euro, principally with respect to salaries and related personnel expenses associated with our sales and research and development operations.

Additionally, for the nine months ended September 30, 2020 and 2019, 8% and 7%, respectively, of our revenue was generated in foreign currencies.

Accordingly, changes in exchange rates may have an adverse effect on our business, operating results and financial condition.

3 unchanged sentences

dollar could increase the cost in local currency of our products and services to customers outside the United States, which could adversely affect our business, results of operations, financial condition and cash flows.

To date, we have not engaged in any hedging strategies, and any such strategies, such as forward contracts, options and foreign exchange swaps related to transaction exposures that we may implement to mitigate this risk may not eliminate our exposure to foreign exchange fluctuations.

W e implemented a hedging program during the third quarter of 2020 and have entered into forward contracts designated as cash flow hedges in order to mitigate our exposure to foreign currency fluctuations resulting from certain operating expenses denominated in certain foreign currencies.

These forward contracts and other hedging strategies such as options and foreign exchange swaps related to transaction exposures that we may implement to mitigate this risk in the future may not eliminate our exposure to foreign exchange fluctuations.

Changes in financial accounting standards may adversely impact our reported results of operations.

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If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.

Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Any debt financing that we may secure in the future could involve

restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

We may not be able to obtain additional financing on terms favorable to us, if at all.

For example, while the potential impact and

duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

For example, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

Although we expect that current cash and cash equivalent balances, including the proceeds from the issuance our 2.25% convertible senior notes due 2025 (2025 Notes) and cash flows that are generated from operations will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months, if we are unable to obtain adequate financing or financing on terms satisfactory to us if and when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.

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We are periodically involved in disputes brought by non-practicing entities alleging patent infringement and we may, from time to time, be involved in other such disputes in the ordinary course of our business.

Some companies, including some of our competitors, own large numbers of patents, copyrights and trademarks, which they may use to assert claims against us.

Some companies, including some of our competitors, own large numbers of patents, copyrights

and trademarks, which they may use to assert claims against us.

Many of these companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights.

Third parties have in the past and may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us and we are currently

involved in legal proceedings with Finjan, Inc., which has filed a complaint against us and our wholly-owned subsidiary, Rapid7 LLC, in the United States District Court, District of Delaware, alleging patent infringement.

Third parties have in the past and may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us and we are currently involved in legal proceedings with Finjan, Inc., which has filed a complaint against us and our wholly-owned subsidiary, Rapid7 LLC, in the United States District Court, District of Delaware, alleging patent infringement.

Third parties may also assert claims against our customers or channel partners, whom we typically indemnify against claims that our solutions infringe, misappropriate or otherwise violate the intellectual property rights of third parties.

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These encryption products may be exported outside of the United States only with the required export authorizations, including by a license, a license exception or other appropriate government authorizations, including the filing of a product classification request.

In addition, various countries regulate the import and domestic use of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries.

Governmental regulation of encryption technology and regulation of imports or exports of encryption products, or our failure to obtain required import or export approval for our products, when applicable, could harm

our international sales and adversely affect our revenue.

In addition, various countries regulate the import and domestic use of certain encryption technology, including through import permitting and licensing requirements, and have

enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries.

Compliance with applicable laws and regulations regarding the export and import of our products, including with respect to new products or changes in existing products, may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products globally or, in some cases, could prevent the export or import of our products to certain countries, governments, entities or persons altogether.

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During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain.

In addition, our tax obligations and effective tax rates could be adversely affected by

changes in the relevant tax, accounting and other laws, regulations, principles and interpretations by recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, by changes in foreign currency exchange rates, or by changes in the valuation of our deferred tax assets and liabilities.

In addition, our tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations by recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, by changes in foreign currency exchange rates, or by changes in the valuation of our deferred tax assets and liabilities.

We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value-added taxes against us.

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The market price of our common stock may be highly volatile and may fluctuate substantially as a result of a variety of factors, some of which are related in complex ways.

Since shares of our common stock were sold in our initial public offering, or IPO, in July 2015 at a price of $16.00 per share, our stock price has ranged from an intraday low of $9.05 to an intraday high of $66.01 through July 31, 2020.

Factors that may affect the market price of our common stock include:

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In the future, we may sell additional shares of our common stock or equity-linked securities to raise capital.

In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise of stock options, settlement of

other equity incentive awards and upon conversion of the Notes.

In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise of stock options, settlement of other equity incentive awards and upon conversion of the Notes.

The indentures for the Notes do not restrict our ability to issue additional common stock or equity-linked securities in the future.

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• establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees;

• establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms;

• require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or amend or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting;

• establish that our board of directors is divided into three classes, with directors in each class elected prior to our 2021 annual meeting serving three-year staggered terms;

• prior to June 30, 2022 require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or amend or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting;

• prohibit cumulative voting in the election of directors;

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We may not have sufficient cash flow from our business to pay our substantial debt when due.

As of December 31, 2019, we had $230.0 million aggregate principal amount of indebtedness under the 2023 Notes and we issued an additional $230.0 million aggregate principal amount of indebtedness under the 2025 Notes on May 1, 2020.

As of December 31, 2019, we had $230.0 million aggregate principal amount of indebtedness under the convertible senior notes due 2023 (the 2023 Notes) and we issued an additional $230.0 million aggregate principal amount of indebtedness under the 2025 Notes on May 1, 2020 (collectively, the Notes).

In addition, we may also incur indebtedness under our senior secured credit facility.

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In addition, the lenders under our senior secured credit facility would have the right to proceed against the collateral in which we granted a security interest to them, which consists of substantially all our assets.

If the debt under our senior secured credit facility were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately materially and adversely affect our cash flows, business, results of operations, financial condition and our ability to make payments under our indebtedness, including the Notes, when due.

If the debt under our senior secured credit

facility were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately materially and adversely affect our cash flows, business, results of operations, financial condition and our ability to make payments under our indebtedness, including the Notes, when due.

Further, the terms of any new or additional financing may be on terms that are more restrictive or on terms that are less desirable to us.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion features of the Notes are triggered, holders of the Notes will be entitled to convert their Notes at any time during specified periods at their option.

If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering

any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.

In addition, even if holders of Notes do not elect to convert their Notes, when they are able to do so, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert their Notes at any time during specified periods at their option.

If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.

As disclosed in Note 8 to our consolidated financial statements, the conditional conversion feature of the 2023 Notes was triggered as of September 30, 2020, and the 2023 Notes are currently convertible at the option of the holders, in whole or in part, between October 1, 2020 and December 31, 2020.

Whether the 2023 Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.

As of September 30, 2020, the 2025 Notes are not convertible at the option of the holder.

In addition, even if holders of Notes do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.

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We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method.

For example, in July 2019, the FASB issued an exposure draft that proposes to change the accounting for the convertible debt instruments described above.

Under the exposure draft, an entity may no longer be required to separately account for the liability and equity components of convertible debt instruments.

This could have the impact of reducing non-cash interest expense, and thereby increasing net income.

Additionally, as currently proposed, the treasury stock method for calculating earnings per share will no longer be allowed for convertible debt instruments whose principal amount may be settled using shares.

Rather, the if-converted method may be required.

For example, in August 2020, the FASB issued ASU 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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity which changes the accounting for the convertible debt instruments described above.

Under this new standard, an entity is no longer required to separately account for the liability and equity components of convertible debt instruments.

Adopting this guidance will reduce non-cash interest expense, and thereby increase net income, in our consolidated financial statements.

Additionally, the treasury stock method for calculating earnings per share will no longer be allowed for convertible debt instruments whose principal amount may be settled using shares.

Rather, the if-converted method will be required.

Application of the “if converted” method may reduce our reported diluted earnings per share.

We cannot be sure that this exposure draft will be issued, or will be issued in its current format.

We also cannot be sure whether other changes may be made to the current accounting standards related to the Notes, or otherwise, that could have an adverse impact on our financial statements.

The standard is effective for us in our first quarter of fiscal 2022 and can be adopted on a full or modified retrospective basis.

Early adoption is permitted from our first quarter of fiscal 2021.

We are currently evaluating whether this standard will have a material impact on our consolidated financial statements.

We cannot be sure whether other changes may be made to the current accounting standards related to the Notes, or otherwise, that could have an adverse impact on our financial statements.

The capped call transactions may affect the value of the Notes and our common stock.

In connection with the pricing of the Notes and the exercise by the initial purchasers of their option to purchase additional Notes, we entered into capped call transactions with certain counterparties (Capped Calls).

The Capped Calls cover, subject to customary adjustments, the number of shares of our common stock initially underlying the Notes.

The Capped Calls cover, subject to

customary adjustments, the number of shares of our common stock initially underlying the Notes.

The Capped Calls are expected to offset the potential dilution as a result of conversion of the Notes.

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Recent global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions.

If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings

with a claim equal to our exposure at the time under such transaction.

If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under such transaction.

Our exposure will depend on many factors but, generally, our exposure will increase if the market price or the volatility of our common stock increases.

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The conversion of some or all of the Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Notes.

The Notes may become in the future convertible at the option of their holders prior to their scheduled terms under certain circumstances.

As disclosed in Note 9 to our consolidated financial statements, the conditional conversion feature of the 2023 Notes was triggered as of September 30, 2020, and the 2023 Notes are currently convertible at the option of the holders, in whole or in part, between October 1, 2020 and December 31, 2020.

Whether the Notes will be convertible following such fiscal quarter will depend on the continued satisfaction of this condition or another conversion condition in the future.

As of September 30, 2020, the 2025 Notes are not convertible at the option of the holder.

Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.

Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Recent Sales of Unregistered Equity Securities

(b) Use of Proceeds from Initial Public Offering of Common Stock

Defaults Upon Senior Securities.

Not applicable.

Mine Safety Disclosures.

Not applicable.

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