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Form S-1 Interactive Drafting Guide

Special Note Regarding Forward-Looking Statements

Section summary: This section is used to identify forward-looking statements, which take the form of soft information, such as estimates, projections, plans and objectives that are unverifiable. The statements in this section are protected and are treated differently for liability purposes when compared to factual, verifiable disclosure. This allows companies to disclose their beliefs and projections for the business with less fear of securities law violations. To gain this protection, the forward-looking statements must be identified as such and be accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those enumerated. Statements must also not be knowingly false or misleading.

This section will include a bulleted list of factors that may materially adversely affect future performance. These factors generally include:

  • projections of revenues, income (including loss), earnings (including loss) per share, capital expenditures, dividends, capital structure and other financial items;
  • plans and objectives of management for future operations, including those relating to products or services;
  • future economic performance, including discussion and analysis of financial condition by management or in the results of operations; and
  • assumptions underlying or relating to the above forward-looking statements.

This list tracks the more detailed risks disclosed separately in the “Risk Factors” section and includes a cross-reference to that section.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements about us and our industry that involve substantial risks and uncertainties, some of which cannot be predicted or quantified. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. In particular, information appearing under “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:

  • our ability to dominate the market and successfully compete with our (barely) competitors;
  • our ability to effectively manage our growth and maintain and transcend our disrupt-first, ask-questions-later culture;
  • our expectations regarding our rosy future financial performance;
  • our expectations regarding future operating performance, such as our future annual recurring revenue (ARR), dollar-based net retention rate, and customers;
  • our anticipated investments in new products and offerings that define amazingness;
  • our anticipated capital expenditures, excluding the founder’s private jet expenses, and our estimates regarding our capital requirements;
  • anticipated technology trends and developments, and our ability to address those trends and developments with our products and offerings;
  • the incomprehensively large size of our addressable markets, market share, category positions and market trends;
  • our ability to identify, recruit and retain skilled personnel, including (but mainly) our key spiritual leaders;
  • our expected exponential growth in the number of platform users, and our ability to promote our brand and attract and retain our zealous platform users;
  • our ability to maintain, protect and enhance our intellectual property rights (which again, are not like real property rights);
  • our ability to introduce new cash-cow products and offerings and enhance existing products and offerings;
  • our ability to successfully enter into new geographies where regulatory restrictions are rather lax;
  • our ability to meet the requirements of our existing debt, which we don’t want to repay when due;
  • our ability to keep hackers from prowling our information technology systems;
  • our ability to successfully defend litigation brought against us, which will never be material;
  • our ability to “comply” with existing, modified or new laws and regulations applying to our business;
  • our ability to implement and maintain a semblance of effective internal controls; and
  • our use of the net proceeds from this offering.

Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a highly competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus.

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The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this prospectus. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.6

The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.Jump to Cooley Color

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6 Largely a creature of a U.S. Supreme Court decision (Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U.S. 175 (2015)), statements of “we believe” can help shield liability under Section 11 as long as the company actually holds that belief. Such statements should not be used to blanketly couch any unverifiable claims; there must be a reasonable basis for forming such belief, including conducting an appropriate and adequate level of due diligence review to support the company’s belief in the statement.

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Forward-looking statements

The Private Securities Litigation Reform Act of 1995 (PSLRA) provides a safe harbor for forward-looking statements made by companies, shielding them from certain legal liabilities associated with these statements. Forward-looking statements are statements about future events, plans or expectations that involve uncertainties and risks. The safe harbor provisions of the PSLRA were introduced to encourage companies to provide forward-looking information to investors without the fear of facing excessive litigation if those projections do not materialize.

Here are key aspects of the safe harbor provisions under the PSLRA:

  1. Meaning of forward-looking statements: The PSLRA defines forward-looking statements broadly to include projections, estimates and other statements about future events. These statements often contain words such as “anticipate,” “believe,” “expect,” “plan” or similar expressions.
  2. Safe harbor protection: The safe harbor provisions provide companies with protection from certain legal actions related to forward-looking statements if the statements are identified as such and accompanied by meaningful cautionary language. If a company complies with the safe harbor requirements, it may be shielded from liability for material misstatements or omissions in these statements.
  3. Identification and cautionary language: To qualify for the safe harbor, companies must clearly identify forward-looking statements and include cautionary language that highlights the specific risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.
  4. Actual knowledge requirement: The safe harbor is not available if it is proven that the company had actual knowledge that the forward-looking statements were false or misleading at the time they were made.
  5. Safe harbor for forward-looking documents: The safe harbor provisions also apply to forward-looking statements made in documents filed with the SEC, such as annual reports, quarterly reports and registration statements.

While the safe harbor provisions of the PSLRA provide some protection for public companies making forward-looking statements, it’s important to note that compliance with these provisions involves certain conditions. Companies must act in good faith and have a reasonable basis for their forward-looking statements. Additionally, the safe harbor protection does not extend to statements made with actual knowledge of their falsity or statements made in connection with certain offerings of securities. Note, however, that the PSLRA safe harbor applies only to reporting companies and therefore does not apply to forward-looking statements made in connection with an IPO. It also does not apply to financial statements prepared in accordance with GAAP, meaning that any forward-looking statements made in the notes to the financial statements would not be protected by the PSLRA’s safe harbor. Nonetheless, issuers include this section in their S-1s because the “bespeaks caution” doctrine – another protection from securities fraud liability – can protect issuers much the same way the PSLRA can. In general, language that is sufficient to meet the requirements of the PSLRA safe harbor will also be sufficient to meet the requirements of the protection of the “bespeaks caution” doctrine.

Investors should carefully review forward-looking statements in the context of the accompanying cautionary language and assess the overall reasonableness of the projections. If companies fail to comply with the safe harbor requirements, they may be exposed to legal actions for alleged securities law violations.

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