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

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agencies, our Hosts, guests, and data privacy and security regulators
could perceive such disclosure as a failure by us to comply with data
privacy and data security policies, notices, and laws, which could
result in proceedings or actions against us in the same or other
jurisdictions. Conversely, if we do not provide the requested
information to government agencies due to a disagreement, such as on the
interpretation of the law, we are likely to face enforcement action from
such government, engage in litigation, face increased regulatory
scrutiny, and experience an adverse impact on our relationship with
governments or our ability to offer our services within certain
jurisdictions. Any of the foregoing could materially adversely affect
our brand, reputation, business, results of operations, and financial
condition.

Our business also increasingly relies on machine learning, artificial
intelligence, and automated decision making to improve our services and
tailor our interactions with our customers. However, in recent years use
of these methods has come under increased regulatory scrutiny. New laws,
guidance, and/or decisions in this area may limit our ability to use our
machine learning and artificial intelligence, or require us to make
changes to our platform or operations that may decrease our operational
efficiency, result in an increase to operating costs and/or hinder our
ability to improve our services. For example, there are specific rules
on the use of automated decision making under global privacy laws that
require the existence of automated decision making to be disclosed to
the data subject with a meaningful explanation of the logic used in such
decision making in certain circumstances, and safeguards must be
implemented to safeguard individual rights, including the right to
obtain human intervention and to contest any decision. Further,
California recently introduced a law requiring disclosure of chatbot
functionality and more US states are contemplating similar laws.

Any failure or perceived failure by us to comply with consumer
protection, data privacy or data security laws, rules, and regulations;
policies; or enforcement notices and/or assessment notices (for a
compulsory audit) could result in proceedings or actions against us by
individuals,

25

consumer rights groups, government agencies, or others. We may also face
civil claims including representative actions and other class action
type litigation (where individuals have suffered harm), potentially
amounting to significant compensation or damages liabilities, as well as
associated costs, and diversion of internal resources. We could incur
significant costs in investigating and defending such claims and, if
found liable, pay significant damages or fines or be required to make
changes to our business. Further, these proceedings and any subsequent
adverse outcomes may subject us to significant negative publicity, and
an erosion of trust. If any of these events were to occur, our business,
results of operations, and financial condition could be materially
adversely affected.

*If we fail to prevent data security breaches, there may be damage to
our brand and reputation, material financial penalties, and legal
liability, along with a decline in use of our platform, which would
materially adversely affect our business, results of operations, and
financial condition.*

There are risks of security breaches both on and off our systems as we
increase the types of technology we use to operate our platform,
including mobile apps and third-party payment processing providers, and
as we collaborate with third parties that may need to process our Host
or guest data or have access to our infrastructure. The evolution of
technology systems introduces ever more complex security risks that are
difficult to predict and defend against. Further, there has been a surge
in widespread cyber-attacks during the COVID-19 pandemic. The increase
in the frequency and scope of cyber-attacks during the COVID-19 pandemic
has exacerbated data security risks. An increasing number of companies,
including those with significant online operations, have recently
disclosed breaches of their security, some of which involved
sophisticated tactics and techniques allegedly attributable to organized
criminal enterprises or nation-state actors. While we take measures to
guard against the type of activity that can lead to data breaches, the
techniques used by bad actors to obtain unauthorized access, disable or
degrade service, or sabotage systems change frequently and often are
unknown until launched against a target. As such, we may be unable to
anticipate these tactics and techniques or to implement adequate
preventative measures.

Further, with a large geographically disparate employee base, we are not
immune from the possibility of a malicious insider compromising our
information systems and infrastructure. This risk has grown in light of
the greater adoption of remote work. We also have a distributed
community support organization including third-party providers that have
access to personal information and systems. We and other companies in
our industry have dealt with incidents involving such insiders
exfiltrating the personal data of customers, stealing corporate trade
secrets and key financial metrics, and illegally diverting funds. No
series of measures can fully safeguard against a sufficiently determined
and skilled insider threat.

In addition, bad actors have targeted and will continue to target our
Hosts and guests directly with attempts to breach the security of their
accounts or management systems, such as through phishing attacks where a
third party attempts to infiltrate our systems or acquire information by
posing as a legitimate inquiry or electronic communication, which are
fraudulent identity theft schemes designed to appear as legitimate
communications from us or from our Hosts or guests, partners, or
vendors. We have seen many instances of our Hosts and guests falling

agencies, our Hosts, guests, and data privacy and security regulators

could perceive such disclosure as a failure by us to comply with data

privacy and data security policies, notices, and laws, which could

result in proceedings or actions against us in the same or other

jurisdictions. Conversely, if we do not provide the requested

information to government agencies due to a disagreement, such as on the

interpretation of the law, we are likely to face enforcement action from

such government, engage in litigation, face increased regulatory

scrutiny, and experience an adverse impact on our relationship with

governments or our ability to offer our services within certain

jurisdictions. Any of the foregoing could materially adversely affect

our brand, reputation, business, results of operations, and financial

condition.

Our business also increasingly relies on machine learning, artificial

intelligence, and automated decision making to improve our services and

tailor our interactions with our customers. However, in recent years use

of these methods has come under increased regulatory scrutiny. New laws,

guidance, and/or decisions in this area may limit our ability to use our

machine learning and artificial intelligence, or require us to make

changes to our platform or operations that may decrease our operational

efficiency, result in an increase to operating costs and/or hinder our

ability to improve our services. For example, there are specific rules

on the use of automated decision making under global privacy laws that

require the existence of automated decision making to be disclosed to

the data subject with a meaningful explanation of the logic used in such

decision making in certain circumstances, and safeguards must be

implemented to safeguard individual rights, including the right to

obtain human intervention and to contest any decision. Further,

California recently introduced a law requiring disclosure of chatbot

functionality and more US states are contemplating similar laws.

Any failure or perceived failure by us to comply with consumer

protection, data privacy or data security laws, rules, and regulations;

policies; or enforcement notices and/or assessment notices (for a

compulsory audit) could result in proceedings or actions against us by

individuals,

25

consumer rights groups, government agencies, or others. We may also face

civil claims including representative actions and other class action

type litigation (where individuals have suffered harm), potentially

amounting to significant compensation or damages liabilities, as well as

associated costs, and diversion of internal resources. We could incur

significant costs in investigating and defending such claims and, if

found liable, pay significant damages or fines or be required to make

changes to our business. Further, these proceedings and any subsequent

adverse outcomes may subject us to significant negative publicity, and

an erosion of trust. If any of these events were to occur, our business,

results of operations, and financial condition could be materially

adversely affected.

*If we fail to prevent data security breaches, there may be damage to

our brand and reputation, material financial penalties, and legal

liability, along with a decline in use of our platform, which would

materially adversely affect our business, results of operations, and

financial condition.*

There are risks of security breaches both on and off our systems as we

increase the types of technology we use to operate our platform,

including mobile apps and third-party payment processing providers, and

as we collaborate with third parties that may need to process our Host

or guest data or have access to our infrastructure. The evolution of

technology systems introduces ever more complex security risks that are

difficult to predict and defend against. Further, there has been a surge

in widespread cyber-attacks during the COVID-19 pandemic. The increase

in the frequency and scope of cyber-attacks during the COVID-19 pandemic

has exacerbated data security risks. An increasing number of companies,

including those with significant online operations, have recently

disclosed breaches of their security, some of which involved

sophisticated tactics and techniques allegedly attributable to organized

criminal enterprises or nation-state actors. While we take measures to

guard against the type of activity that can lead to data breaches, the

techniques used by bad actors to obtain unauthorized access, disable or

degrade service, or sabotage systems change frequently and often are

unknown until launched against a target. As such, we may be unable to

anticipate these tactics and techniques or to implement adequate

preventative measures.

Further, with a large geographically disparate employee base, we are not

immune from the possibility of a malicious insider compromising our

information systems and infrastructure. This risk has grown in light of

the greater adoption of remote work. We also have a distributed

community support organization including third-party providers that have

access to personal information and systems. We and other companies in

our industry have dealt with incidents involving such insiders

exfiltrating the personal data of customers, stealing corporate trade

secrets and key financial metrics, and illegally diverting funds. No

series of measures can fully safeguard against a sufficiently determined

and skilled insider threat.

In addition, bad actors have targeted and will continue to target our

Hosts and guests directly with attempts to breach the security of their

accounts or management systems, such as through phishing attacks where a

third party attempts to infiltrate our systems or acquire information by

posing as a legitimate inquiry or electronic communication, which are

fraudulent identity theft schemes designed to appear as legitimate

communications from us or from our Hosts or guests, partners, or

vendors. We have seen many instances of our Hosts and guests falling