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A common stock continues to be listed on the Nasdaq Global Select Market, we will be required to comply with 
the  provision  that  our  NGC  be  comprised  entirely  of  independent  directors  within  the  applicable  transition 
period. 

We  operate  as  a  Delaware  public  benefit  corporation.  As  a  public  benefit  corporation,  we 
cannot provide any assurance that we will achieve our Company Purpose. 

As  a  PBC,  we  are  intended  to  produce  a  public  benefit  or  benefits  and  to  operate  in  a  responsible  and 
sustainable  manner,  balancing  our  stockholders’  pecuniary  interests,  the  best  interests  of  those  materially 
affected  by  our  conduct,  and  the  Company  Purpose  identified  in  our  amended  and  restated  certificate  of 
incorporation. We cannot assure you that we will achieve our Company Purpose or that the expected positive 
impact  from  being  a  PBC  will  be  realized,  which  could  adversely  affect  our  reputation,  business,  financial 
condition,  and  results  of  operations.  As  a  PBC,  we  are  required,  under  Section  366  of  the  Delaware  General 
Corporation  Law  (“DGCL”)  and  pursuant  to  our  amended  and  restated  bylaws,  to  disclose  to  stockholders  a 
report at least biennially on our overall performance in promoting the public benefit identified in our amended 
and restated certificate of incorporation and the best interests of those materially affected by our conduct and 
on our assessment of our success in achieving our Company Purpose and in promoting those interests. If we are 
not timely or are unable to provide this report, or if the report is not viewed favorably by parties doing business 
with  us,  regulators,  others  reviewing  our  credentials,  or  other  stakeholders,  including  holders  of  our  Class  A 
common stock, our reputation as a PBC may be adversely affected.

Our  focus  on  the  long-term  best  interests  of  our  company  as  a  PBC,  and  the  duty  of  our 
directors  to  balance  the  pecuniary  interests  of  our  stockholders,  the  best  interests  of  those 
stakeholders  materially  affected  by  our  conduct,  and  our  Company  Purpose,  may  conflict 
with short-, medium-, or long-term financial interests and business performance, which may 
negatively impact the value of our Class A common stock.

We  have  made,  and  may  in  the  future  make,  decisions  that  we  believe  balance  the  pecuniary  interests  of  our 
stockholders, the best interests of those materially affected by our conduct, and the Company Purpose set forth 
in  our  amended  and  restated  certificate  of  incorporation,  even  if  such  decisions  may  negatively  impact  the 
short-, medium-, or long-term performance of our business, financial condition, and results of operations or the 
short-,  medium-,  or  long-term  performance  of  our  Class  A  common  stock.  This  may  impact  the  value  of  our 
Class A common stock and make owning our Class A common stock less appealing to investors who are focused 
on returns. Our decisions and actions in pursuit of long-term success may not result in the long-term benefits 
we expect, which could adversely affect our business, financial condition, and results of operations, as well as 
the market price of our Class A common stock. Such decisions and actions may include changes to our models, 
platform, and applications; limitations on certain uses of our models, platform, and applications; moderating 
the  pace  of  the  development  of  our  models  for  safety-related  reasons;  adjustments  to  the  timing  of  new 
offerings;  changes  in  how  we  deliver  customer  support;  investments  in  our  relationships  with  partners  and 
employees; investments in and introductions of new models, platforms, and applications; investments in social 
impact  initiatives  consistent  with  our  public  benefit  objectives;  and  changes  in  our  approach  to  working  with 
local or national jurisdictions on laws and regulations governing our business.

Our policies, including those on usage, currently prohibit, or may be revised in the future to prohibit, certain 
usage or other actions, which may have adverse commercial consequences to us. For example, our usage policy 
prohibits the use of our models, platform, and applications to develop or operate fully autonomous weapons or 
to conduct mass surveillance, including mass domestic surveillance, and we have declined to permit such uses 
based on our Company Purpose, notwithstanding the revenue those or similar uses could generate. Maintaining 
these limitations has had, and may continue to have, adverse commercial and financial consequences. We have 
also  restricted  or  delayed  the  availability  of  certain  capabilities  for  safety  reasons.  For  example,  we  initially 
released our Mythos model only as a gated research preview through Project Glasswing rather than making it 
broadly  available  to  the  public.  Similarly,  we  have  chosen  not  to  develop  certain  commercially  attractive 
offerings, such as image and video generation models, in order to direct our compute toward our research and 
safety  priorities.  Our  public  advocacy,  and  the  decisions  we  make  to  moderate  the  pace  of  AI  development, 
delay or restrict the release of models or features, or forgo commercial opportunities for safety-related reasons, 
may not maximize stockholder value, could have a negative impact on the value of our Class A common stock, 
and could result in litigation. Each of these decisions reflects our directors’ balancing of the pecuniary interests 
of our stockholders, the best interests of those materially affected by our conduct, and the Company Purpose. 

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