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

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prey to such schemes, which result in their accounts being taken over by
fraudsters intent on perpetrating fraud against them, other users, and
our platform. Bad actors may also employ other schemes aimed at
defrauding our Hosts or guests in ways that we may not anticipate or be
able to adequately guard against. Even if phishing and spamming attacks
and other fraud schemes are not carried out through our systems, victims
may nevertheless seek recovery from us. Because of our prominence, we
believe that we are a particularly attractive target for such attacks.
Though it is difficult to determine what, if any, harm may directly
result from any specific scheme or attack, any failure to maintain
performance, reliability, security, and availability of our offerings,
services, and technical infrastructure to the satisfaction of our Hosts
and guests may harm our reputation and our ability to retain existing
Hosts and guests and attract new Hosts and guests. The ability of
fraudsters to directly target our Hosts and guests with fraudulent
communications, or cause an account takeover, exposes us to significant
financial fraud risk, including costly litigation, which is difficult to
fully mitigate.

Generally, our practice is to encrypt certain sensitive data when it is
in transit and at rest. However, advances in computer capabilities,
increasingly sophisticated tools and methods used by hackers and cyber
terrorists, new discoveries in the field of cryptography, or other
developments may result in our failure or inability to adequately
protect sensitive data.

Our information technology infrastructure may be vulnerable to computer
viruses or physical or electronic intrusions that our security measures
may not detect. We have experienced security incidents in the past, and
we may face additional attempted security intrusions in the future. Any
circumvention of our security measures could result in the
misappropriation of confidential or proprietary information, interrupt
our operations, result in financial loss, damage our computers or those
of our Hosts and guests, or otherwise cause damage to our reputation and
business. Further, the ability to bypass our information security
controls could degrade our trust and safety programs, which could expose
individuals to a risk of physical harm or violence.

If there is a breach of our computer systems and we know or suspect that
certain personal data has been exfiltrated, accessed, or used
inappropriately, we may need to inform privacy regulators across the
world, as well as the Hosts or guests whose data was stolen, accessed,
or misused. This may subject us to significant regulatory fines and
penalties. Further, under certain regulatory schemes, such as the CCPA,
we may be liable for statutory damages on a per breached record basis,
irrespective of any actual damages or harm to the individual. This means
that in the event of a breach we could face government scrutiny or
consumer class actions alleging statutory damages amounting to hundreds
of millions, and possibly billions of dollars.

We rely on third-party service providers, including financial
institutions, to process some of our data and that of our Hosts and
guests, including payment information, and any failure by such third
parties to prevent or mitigate security breaches or improper access to,
or disclosure of, such information could have adverse consequences for
us similar to an incident directly on our systems. We have acquired and
will continue to acquire companies that are vulnerable to security
breaches, and we may be responsible for any security breaches of these
newly acquired companies. While we conduct due diligence of these
companies, we do not have access to the full operating history of the
companies and cannot be certain there have not been security breaches
prior to our acquisition.

We expend, and expect to continue to expend, significant resources to
protect against security related incidents and address problems caused
by such incidents. Even if we were to expend more resources, regulators
and complainants may not deem our efforts sufficient, and

26

regardless of the expenditure, the risk of security related incidents
cannot be fully mitigated. We have a heightened risk of security
breaches due to some of our operations being located in certain
international jurisdictions. Any actual or alleged security breaches or
alleged violations of federal, state, or foreign laws or regulations
relating to data privacy and data security could result in mandated user
notifications, litigation, government investigations, significant fines,
and expenditures; divert management' attention from operations; deter
people from using our platform; damage our brand and reputation; force
us to cease operations for some length of time; and materially adversely
affect our business, results of operations, and financial condition.
Defending against claims or litigation based on any security breach or
incident, regardless of their merit, will be costly and may cause
reputation harm. The successful assertion of one or more large claims
against us that exceed available insurance coverage, denial of coverage
as to any specific claim, or any change or cessation in our insurance
policies and coverages, including premium increases or the imposition of
large deductible requirements, could have a material adverse effect on
our business, results of operations, and financial condition.

*Our platform is highly complex, and any undetected errors could
materially adversely affect our business, results of operations, and
financial condition.*

Our platform is a complex system composed of many interoperating
components and software, including algorithms that incorporate machine
learning and exhibit characteristics of artificial intelligence. Our
business is dependent upon our ability to prevent system interruption on
our platform, to effectively implement updates to our systems and to
appropriately monitor and maintain our systems. Our software, including

prey to such schemes, which result in their accounts being taken over by

fraudsters intent on perpetrating fraud against them, other users, and

our platform. Bad actors may also employ other schemes aimed at

defrauding our Hosts or guests in ways that we may not anticipate or be

able to adequately guard against. Even if phishing and spamming attacks

and other fraud schemes are not carried out through our systems, victims

may nevertheless seek recovery from us. Because of our prominence, we

believe that we are a particularly attractive target for such attacks.

Though it is difficult to determine what, if any, harm may directly

result from any specific scheme or attack, any failure to maintain

performance, reliability, security, and availability of our offerings,

services, and technical infrastructure to the satisfaction of our Hosts

and guests may harm our reputation and our ability to retain existing

Hosts and guests and attract new Hosts and guests. The ability of

fraudsters to directly target our Hosts and guests with fraudulent

communications, or cause an account takeover, exposes us to significant

financial fraud risk, including costly litigation, which is difficult to

fully mitigate.

Generally, our practice is to encrypt certain sensitive data when it is

in transit and at rest. However, advances in computer capabilities,

increasingly sophisticated tools and methods used by hackers and cyber

terrorists, new discoveries in the field of cryptography, or other

developments may result in our failure or inability to adequately

protect sensitive data.

Our information technology infrastructure may be vulnerable to computer

viruses or physical or electronic intrusions that our security measures

may not detect. We have experienced security incidents in the past, and

we may face additional attempted security intrusions in the future. Any

circumvention of our security measures could result in the

misappropriation of confidential or proprietary information, interrupt

our operations, result in financial loss, damage our computers or those

of our Hosts and guests, or otherwise cause damage to our reputation and

business. Further, the ability to bypass our information security

controls could degrade our trust and safety programs, which could expose

individuals to a risk of physical harm or violence.

If there is a breach of our computer systems and we know or suspect that

certain personal data has been exfiltrated, accessed, or used

inappropriately, we may need to inform privacy regulators across the

world, as well as the Hosts or guests whose data was stolen, accessed,

or misused. This may subject us to significant regulatory fines and

penalties. Further, under certain regulatory schemes, such as the CCPA,

we may be liable for statutory damages on a per breached record basis,

irrespective of any actual damages or harm to the individual. This means

that in the event of a breach we could face government scrutiny or

consumer class actions alleging statutory damages amounting to hundreds

of millions, and possibly billions of dollars.

We rely on third-party service providers, including financial

institutions, to process some of our data and that of our Hosts and

guests, including payment information, and any failure by such third

parties to prevent or mitigate security breaches or improper access to,

or disclosure of, such information could have adverse consequences for

us similar to an incident directly on our systems. We have acquired and

will continue to acquire companies that are vulnerable to security

breaches, and we may be responsible for any security breaches of these

newly acquired companies. While we conduct due diligence of these

companies, we do not have access to the full operating history of the

companies and cannot be certain there have not been security breaches

prior to our acquisition.

We expend, and expect to continue to expend, significant resources to

protect against security related incidents and address problems caused

by such incidents. Even if we were to expend more resources, regulators

and complainants may not deem our efforts sufficient, and

26

regardless of the expenditure, the risk of security related incidents

cannot be fully mitigated. We have a heightened risk of security

breaches due to some of our operations being located in certain

international jurisdictions. Any actual or alleged security breaches or

alleged violations of federal, state, or foreign laws or regulations

relating to data privacy and data security could result in mandated user

notifications, litigation, government investigations, significant fines,

and expenditures; divert management' attention from operations; deter

people from using our platform; damage our brand and reputation; force

us to cease operations for some length of time; and materially adversely

affect our business, results of operations, and financial condition.

Defending against claims or litigation based on any security breach or

incident, regardless of their merit, will be costly and may cause

reputation harm. The successful assertion of one or more large claims

against us that exceed available insurance coverage, denial of coverage

as to any specific claim, or any change or cessation in our insurance

policies and coverages, including premium increases or the imposition of

large deductible requirements, could have a material adverse effect on

our business, results of operations, and financial condition.

*Our platform is highly complex, and any undetected errors could

materially adversely affect our business, results of operations, and

financial condition.*

Our platform is a complex system composed of many interoperating

components and software, including algorithms that incorporate machine

learning and exhibit characteristics of artificial intelligence. Our

business is dependent upon our ability to prevent system interruption on

our platform, to effectively implement updates to our systems and to

appropriately monitor and maintain our systems. Our software, including