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ITEM 1A. Risk Factors.
The Company is supplementing the risk factors previously disclosed in Part I, Item 1A of its 2023 Annual Report on Form 10-K for to update the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 28, 2024, to update the rollowing risk factors appearing under the heading Risk Factors Risks Related to Our Indebtedness:
The large amount of ownership of Our outstanding indebtedness and liabilities limits the cash flow availableShares. Except as set for our operations and exposes us to risks that could adversely affect our business, financial condition and results of operations.
As of June 30, 2024, our totth below, there have been no material consolidated indebtedness was approximately $617.0 million, representing our 1.25% convertible senior notes due 2026 (the existing convertible notes), net of unamortized debt discount and issuance costs. On August 8, hanges from the Risk Factors previously disclosed in Part 1, Item 1A, our 2024, we issued $100.0 million in aggregate principal amount of first-lien senior secured floating rate notes (the new senior secured notes) and exchanged approximately $421.9 million in aggregate principal amount of existing convertible notes for approximately $274.2 million in aggregate principal amount of newly issued second-lien convertible senior secured notes due 2030 (the new secured convertible notes and together with the existing convertible notes, the convertible notes, 3 Annual Report and in Part II, Item 1A, of our Second Quarter 2024 Report. You should carefully consider the Risk Factors discussed in our 2023 Annual Report and the Seconvertible notes and the new senior secured notes, the notes). The new senior secured notes bear interest at a fluctuating rate equal to Term SOFR plus 9.0%, subject to a Term SOFR floor of 3.0%, and the new secured convertible notes, which consists of two series, bear interest at 9.0% per annum and 11.5% per annum, respectively.
Our indebtedness d Quarter 2024 Report, as supplemented below, as they could have significant negative consequences for our security holders and omaterially affect our business, results of operations and finanfinancial condition by, among other things:d
increasing our vulnerability to adverse economic and industry conditiand future results of operations;
limiting o.
Our abilityfailure to obtain additional financing;
requiring tmeet the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amountcontinued listing requirements of cash available for other purposes;
limiting our flexibility to plan for, or react to, changes in our business;
diluNasdaq could result in a delisting the interests of our existing stockholders as a result of issuing shares of osecurities.
Our Class A common stock upon conversion of our convertible notes; and
placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtednessis currently listed on Nasdaq, which has qualitative and quantitative continued listing requirements, including the convertible notes and the new senior secured notecorporate governance requirements, public float requirements, and our cash needs may increase in the future. In addition, the new senior secured notes and the new secured convertiblea $1.00 minimum closing bid price requirement.
On October 15, 2024, we received written notes contain, and any future indebtednessice from Nasdaq notifying us that we may incur may contain, financial and other restrictive covenants that furare not in compliance with ther limit our ability to operate our business, raise capital or make pay minimum bid price requirements under our otherset forth indebtedness. If we fail to comply with these covenants Nasdaq listing rule 5450(a)(1) for to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becomcontinued listing on Nasdaq (the Minimum Bid Price Requirement). Nasdaq listing immediately payable in full.
The terms of our new senior secured notes and new rule 5450(a)(1) requires listed secured convertible notes require us to ities maintain a minimum liquidity and place restrictions on our oclosing bid price of $1.00 perating share, and financial flexibility. If we fail to comply with any covenants contained in the indentures governing our notes, holders may declare all of the applicable series of notes to be due and payable, and in the case of Nasdaq listing rule 5810(c)(3)(A) provides that a failure to meet the new senior secured notes and new secured convertible notes,minimum closing bid price requirement exercise righists with respect to collateral securing those notes.
The new senior secured notes are secured by a first pif the deficiency continues for a periority lien on, and the new d of 30 consecured convertible notes are secured by a second priority lien on, substantially all of our and ttive business days. Based on the guarantors assets (including intellectualclosing bid property) and are guaranteed by certainice of our current and future material subsidiaries on a senior secured basis and a second-ommon stock for the 30 consecutive business days priority senior secured basis, respectively, subject to certain c to the date of the writeria and exceptions.
The indenture governingten notice, we did not meet the new senior secured notes contMinimum Bid Price Requirement. To regains covenants that limit our and our subsidiaries ability to, among ompliance, ther th closings: (i) incur, assum bid price or guarantee additional indebtedness; (ii) grant or incur liens securing indebtedness; (iii) make certain restricted payments and investments; (iv) sell or otherwise dispose of assets, including capital stock of subsidiaries; (v) enter into transactionsf our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days with affiliates; (vi) in the casein 180 days of us and any guarantor, consolidate, amalgamate or merge with or intothe notice date, or sell all or substantially all of its assets to, another person; (vii) declare or pby April 14, 2025, which may dividends or make other distributions; and (viii) make modifications to be extended if certain of our material debt agreements. In addition,conditions are met. Since the indenture governingdate of the
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new senior secured notes contains a covenant that provides that we may not permit liquidity (calculated as the sum of (a) unusedotice letter from Nasdaq, our commitments then availableon stock has failed to be drawn under any revolving credit facility permitted under the indenture, plus (b) the amount of unrestricted cash and cash equivalents held by us and our subsidiary guarantors) to be less than $35 million as maintain a minimum closing bid price of $1.00 per share for at least 10 consecutive business days.
At a special meeting of the last day, or for more than 5 days, of any calendar month. The indenture governing the new secured convertible notes contain similar restrictive covenants and a similar mistockholders held on October 30, 2024, our stockholders approved, in connection with our failure to satisfy the Minimum liquidity reBid Price Requirement, but at a $31.5 million la revel.
If we fail to comply with these or any of the otherse stock split of our covenants under the indentures governing the notes and are unable to obtain a waiver or amendment, the holders of notes may, among other thmmon stock prior to December 31, 2024, at a ratio rangings, declare all of the applicable series of notes from 1:5 to be due and payable and1:20, with respect to tthe new senior secured notes and new secured convertible notes, exercise rights with respect to collateral securing those notes, each of which could significantly harm our business, financial conditionratio to be determined by the Board. On November 13, 2024, the Board set and prospects and could cause the priceapproved a ratio of our common stock to decline.
Unde1-for-15 for the indentures goreverning the new senior secured notesse stock split and new securauthorized convertible notes, if we do not reduce the outstanding principal amount of management to proceed with the existing conrevertible notes to less than $100 million by June 30, 2026, the maturity date of the new senior secured notes andse stock split. Although we expect that the new secured conrevertible notesse stock split will advanchave to September 15, 2026.
The new senior secured notes will mature on the earlier of (i) August 15, 2028 or (ii) if more than $100 million of the existing convertible notes remain outstandimmediate effect of increasing as of June 30, 2026, then September 15, 2026. The new secured convertible notes will mature on the earlier market price of (i) January 15, 2030 or (ii) if more than $100 milliour common of the existing convertible notes remain outstanding as of June 30, 2026, then September 15, 2026. If stock to above $1.00, we are unable to reduccannot guarantee the outstanding principal amount of at the existing conrevertible notes to less than $100 mse stock split willion by June 30, 2026, we may not have sufficient cash or be able to raise funds sufficient to pay the new senior secured notes and new secured result in the trading price of our convertible notes on their earlier maturity date.
We may be unable to raismmon stock remaining above the funds necessary to repurchase the notes for cash following a fundaMinimum Bid Price Requiremental change, or to pay any cash amounts due upon conhat the reversion, and our existing and other indebtedness may limit our ability to repurchase the notes or pay cash upon their conversion.
Undere stock split will result in a long-term increase in the indenture governingmarket price of our new senior secured notes, if a change of control occurs, and under the icommon stock, which would be dependenture governing our new secured convertible note on many factors, if a fundamentncluding general change occurs, then the respective holders may require us to repurchase their respective notes at a cash repurchase price equal to 103% and 100%, respectively, of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any. A holdeconomic, market and industry conditions, our business and other that elects to convert its new secured convertiblefactors.
If we do notes regain connectionmpliance with a fundamental change may be entitled to receive a make-whole adjustthe Minimum Bid Price Requirement to the conversion rate for such notes in connection with such corporate event in certain circumstances. The definition of fundamental change includes certain business combination transactions involving us and certain de-listing events with respect to o, or if we are unable to satisfy any of the other continued listing requirements, Nasdaq may take steps to delist our Class A common stock. In addition, upon conversion, we may satisfy part or all of our conversion obliSuch a delisting would likely have a negation in cash, shares of our Class A common stock or a combinationve effect on the price of cash and shares, at our election. We may not have enough available cash or bthe securities and would impair the able to obtain financing at the time we are required to reility of stockholders to sell or purchase the notes or pay any cash amounts due upon conversion. In air securities. Addition, applicable law, regulatory authoally, if our securities and the agreements governing our exre not listing and any future indebed on, or become delistedness may restrict ou from, Nasdaq for ability to repurchase the notes or pay any cash amounts due upny reason, and are quoted on conversion. Our failure to repurchase notes or to pay any cash amounts due upon conversan inter-dealer automated quotation or when otherwise rsystem for equired will constitute a default underty securities the indentures governing the notes. A default underat is not a national securities exchange, the indenture governingliquidity and price of our new senior sesecured notities or a default under the indenture governing the new secured convertible notes or the fundamental change itself could also lead to a default undmay be more limited than if we were quoted or listed on Nasdaq or another agreements governing other indebtedness which we have incurred or may incur, which national securities exchange. You may result in that other indebtedness becoming immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the notes.
The conditional conversion feature of our convertible notes, if triggered, maybe unable to sell your securities unless a market can be established or sustained. Delisting would also adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the existability to obtain financing for our continuing convertible notes is triggered, holders of such notes will be entitled to operations. In addition, delisting would convert the notes at any time during specified periods at their option and holders of the new secured convertible notes are entitled to convert their notstitute a fundamental change under the indentures at any time at their option. If one or more holders elect to cothat govern our convert theirible notes, unless we elect to satisfy our conversion obligation by delivering solely shawhich could res of our Class A common stock (other than paying cash in lieu of deliveriult in our being any fractional share), we would be rerequired to settle a portion or all of orepurchase our conversion obligation through the payment of cash, which could adversely affect our liquidity. If a significant portion of our convertible notes were converted, ttible notes and other outstanding indebtedness. See the number of shares of Class A common stock that would be issued upon conversion will cause substantial dilution to our stockholders. In addition, upon conversion of the new secured convertiblrisk factor entitled "We may be unable to raise the funds necessary to repurchase the notes (except a conversionfor cash following certain events that constitute a make-whole a fundamental change), we would be required, or to pay a make-whole premium uny cash amounts due upon conversion equal to the lesser of (i) all regularly scheduled interest payments that would be due on , and our existing and othe portion of such new secured convertible notes being redeemed for the succeeding two year period and (ii) all regularly scheduled interest r indebtedness may limit our ability to repurchase the notes or payments that would be due cash upon the portion of such new securedir convertible notes being redeemed through the maturity date, and is capped at the maximum numbersion" in Part II, Item 1A, of shares that would be issuable in our Seconnection with a make-whole fundamental change.
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d Quarter 2024 Report.