MemGPT/example-sec-filings · Datasets at Hugging Face

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default under the indenture governing the 2026 Notes. A default under
the indenture or the fundamental change itself could also lead to a
default under agreements governing our other indebtedness, which may
result in that other indebtedness becoming immediately payable in full.
If the repayment of such other indebtedness were to be accelerated after
any applicable notice or grace periods, then we may not have sufficient
funds to repay that indebtedness and repurchase the 2026 Notes or make
cash payments upon their conversion, if any.

*The accounting method for the 2026 Notes could adversely affect our
reported financial condition and results.*

The accounting method for reflecting the 2026 Notes on our balance sheet
and reflecting the underlying shares of our Class A common stock in our
reported diluted earnings per share may adversely affect our reported
earnings and financial condition.

We recorded the 2026 Notes entirely as a liability on our balance sheet,
net of issuance costs. Additionally, the new guidance modifies the
treatment of convertible debt securities that may be settled in cash or
shares by requiring the use of the "f-converted"method. Under that
method, diluted earnings per share would generally be calculated
assuming that all the 2026 Notes were converted solely into shares of
Class A common stock at the beginning of the reporting period, unless
the result would be anti-dilutive. In addition, in the future, we may,
in our sole discretion, irrevocably elect to settle the conversion value
of the 2026 Notes in cash up to the principal amount being converted.
Following such an irrevocable election, if the conversion value of the
2026 Notes exceeds their principal amount for a reporting period, then
we will calculate our diluted earnings per share by assuming that all of
the 2026 Notes were converted at the beginning of the reporting period
and that we issued shares of our Class A common stock to settle the
excess, unless the result would be anti-dilutive. The application of the
if-converted method may reduce our reported diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the 2026
Notes are satisfied, then, under certain conditions, we may be required
under applicable accounting standards to reclassify the liability
carrying value of the 2026 Notes as a current, rather than a long-term,
liability. This reclassification could be required even if no
noteholders convert their 2026 Notes and could materially reduce our
reported working capital.

*The capped call transactions entered into in connection with the
pricing of the 2026 Notes may affect the value of our Class A common
stock.*

In connection with the pricing of the 2026 Notes, we entered into
privately negotiated capped call transactions with certain option
counterparties. The capped call transactions will cover, subject to
customary adjustments, the number of shares of Class A common stock
initially underlying the 2026 Notes. The capped call transactions are
expected generally to reduce potential dilution to our Class A common
stock upon conversion of the 2026 Notes or at our election (subject to
certain conditions) offset any cash payments we are required to

22

make in excess of the aggregate principal amount of converted 2026
Notes, as the case may be, with such reduction or offset subject to a
cap.

We have been advised that, in connection with establishing their initial
hedges of the capped call transactions, the option counterparties or
their respective affiliates purchased shares of our Class A common stock
and/or entered into various derivative transactions with respect to our
Class A common stock concurrently with or shortly after the pricing of
the 2026 Notes.

In addition, we have been advised that the option counterparties or
their respective affiliates may modify their hedge positions by entering
into or unwinding various derivatives with respect to our Class A common
stock and/or purchasing or selling our Class A common stock or other
securities of ours in secondary market transactions following the
pricing of the 2026 Notes and prior to the maturity of the 2026 Notes
(and are likely to do so on each exercise date of the capped call
transactions and in connection with any early termination event in
respect of the capped call transactions). This activity could also cause
or avoid an increase or a decrease in the market price of our Class A
common stock.

*Provisions in the indenture governing the 2026 Notes could delay or
prevent an otherwise beneficial takeover of us.*

Certain provisions in the 2026 Notes and the indenture governing the
2026 Notes could make a third-party attempt to acquire us more difficult
or expensive. For example, if a takeover constitutes a fundamental
change (as defined in the indenture governing the 2026 Notes), then
noteholders will have the right to require us to repurchase their 2026
Notes for cash. In addition, if a takeover constitutes a make-whole
fundamental change (as defined in the indenture governing the 2026
Notes), then we may be required to temporarily increase the conversion
rate. In either case, and in other cases, our obligations under the 2026
Notes and the indenture governing the 2026 Notes could increase the cost
of acquiring us or otherwise discourage a third party from acquiring us
or removing incumbent management, including in a transaction that
noteholders or holders of our common stock may view as favorable.

*We track certain operational metrics, which are subject to inherent
challenges in measurement, and real or perceived inaccuracies in such

default under the indenture governing the 2026 Notes. A default under

the indenture or the fundamental change itself could also lead to a

default under agreements governing our other indebtedness, which may

result in that other indebtedness becoming immediately payable in full.

If the repayment of such other indebtedness were to be accelerated after

any applicable notice or grace periods, then we may not have sufficient

funds to repay that indebtedness and repurchase the 2026 Notes or make

cash payments upon their conversion, if any.

*The accounting method for the 2026 Notes could adversely affect our

reported financial condition and results.*

The accounting method for reflecting the 2026 Notes on our balance sheet

and reflecting the underlying shares of our Class A common stock in our

reported diluted earnings per share may adversely affect our reported

earnings and financial condition.

We recorded the 2026 Notes entirely as a liability on our balance sheet,

net of issuance costs. Additionally, the new guidance modifies the

treatment of convertible debt securities that may be settled in cash or

shares by requiring the use of the "f-converted"method. Under that

method, diluted earnings per share would generally be calculated

assuming that all the 2026 Notes were converted solely into shares of

Class A common stock at the beginning of the reporting period, unless

the result would be anti-dilutive. In addition, in the future, we may,

in our sole discretion, irrevocably elect to settle the conversion value

of the 2026 Notes in cash up to the principal amount being converted.

Following such an irrevocable election, if the conversion value of the

2026 Notes exceeds their principal amount for a reporting period, then

we will calculate our diluted earnings per share by assuming that all of

the 2026 Notes were converted at the beginning of the reporting period

and that we issued shares of our Class A common stock to settle the

excess, unless the result would be anti-dilutive. The application of the

if-converted method may reduce our reported diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the 2026

Notes are satisfied, then, under certain conditions, we may be required

under applicable accounting standards to reclassify the liability

carrying value of the 2026 Notes as a current, rather than a long-term,

liability. This reclassification could be required even if no

noteholders convert their 2026 Notes and could materially reduce our

reported working capital.

*The capped call transactions entered into in connection with the

pricing of the 2026 Notes may affect the value of our Class A common

stock.*

In connection with the pricing of the 2026 Notes, we entered into

privately negotiated capped call transactions with certain option

counterparties. The capped call transactions will cover, subject to

customary adjustments, the number of shares of Class A common stock

initially underlying the 2026 Notes. The capped call transactions are

expected generally to reduce potential dilution to our Class A common

stock upon conversion of the 2026 Notes or at our election (subject to

certain conditions) offset any cash payments we are required to

22

make in excess of the aggregate principal amount of converted 2026

Notes, as the case may be, with such reduction or offset subject to a

cap.

We have been advised that, in connection with establishing their initial

hedges of the capped call transactions, the option counterparties or

their respective affiliates purchased shares of our Class A common stock

and/or entered into various derivative transactions with respect to our

Class A common stock concurrently with or shortly after the pricing of

the 2026 Notes.

In addition, we have been advised that the option counterparties or

their respective affiliates may modify their hedge positions by entering

into or unwinding various derivatives with respect to our Class A common

stock and/or purchasing or selling our Class A common stock or other

securities of ours in secondary market transactions following the

pricing of the 2026 Notes and prior to the maturity of the 2026 Notes

(and are likely to do so on each exercise date of the capped call

transactions and in connection with any early termination event in

respect of the capped call transactions). This activity could also cause

or avoid an increase or a decrease in the market price of our Class A

common stock.

*Provisions in the indenture governing the 2026 Notes could delay or

prevent an otherwise beneficial takeover of us.*

Certain provisions in the 2026 Notes and the indenture governing the

2026 Notes could make a third-party attempt to acquire us more difficult

or expensive. For example, if a takeover constitutes a fundamental

change (as defined in the indenture governing the 2026 Notes), then

noteholders will have the right to require us to repurchase their 2026

Notes for cash. In addition, if a takeover constitutes a make-whole

fundamental change (as defined in the indenture governing the 2026

Notes), then we may be required to temporarily increase the conversion

rate. In either case, and in other cases, our obligations under the 2026

Notes and the indenture governing the 2026 Notes could increase the cost

of acquiring us or otherwise discourage a third party from acquiring us

or removing incumbent management, including in a transaction that

noteholders or holders of our common stock may view as favorable.

*We track certain operational metrics, which are subject to inherent

challenges in measurement, and real or perceived inaccuracies in such