ALKAMI TECHNOLOGY INC

Current report

Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things:

Current report

•limiting our ability to obtain additional financing;

Current report

•diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the 2030 Convertible Notes; and

Current report

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the 2030 Convertible Notes and the Amended Credit Agreement, and our cash needs may increase in the future. If we fail to comply with certain covenants or 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 becoming immediately payable in full.

Current report

We may be unable to raise the funds necessary to repurchase the 2030 Convertible Notes for cash following a fundamental change or to pay any cash amounts due upon maturity or conversion of the 2030 Convertible Notes, and our other indebtedness may limit our ability to repurchase the 2030 Convertible Notes or to pay any cash amounts due upon their maturity or conversion.

Current report

Noteholders may, subject to a limited exception, require us to repurchase their 2030 Convertible Notes following a “fundamental change” (as defined in the Indenture) at a cash repurchase price generally equal to the principal amount of the 2030 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. Upon maturity of the 2030 Convertible Notes, we must pay their principal amount and accrued and unpaid interest in cash, unless they have been previously repurchased, redeemed or converted. In addition, upon conversion, we will satisfy part or all of our conversion obligation in cash unless we elect to settle conversions solely in shares of our common stock. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2030 Convertible Notes or pay the cash amounts, if any, due upon their maturity or conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2030 Convertible Notes or to pay the cash amounts, if any, due upon their maturity or conversion. For example, the Amended Credit Agreement includes restrictions on our ability to settle conversions of the 2030 Convertible Notes in cash. Our failure to repurchase 2030 Convertible Notes or to pay the cash amounts, if any, due upon their maturity or conversion when required will constitute a default under the Indenture. A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which 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 2030 Convertible Notes.

Current report

Certain provisions in the 2030 Convertible Notes and the Indenture could make a third-party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a fundamental change, then, subject to certain exceptions, noteholders will have the right to require us to repurchase their 2030 Convertible Notes for cash. In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate. In either case, and in other cases, our obligations under the 2030 Convertible Notes and the Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.

Current report

The accounting method for the 2030 Convertible Notes could adversely affect our reported financial condition and results.

Current report

The accounting method for reflecting the 2030 Convertible Notes on our balance sheet and accruing interest expense for the 2030 Convertible Notes may adversely affect our reported loss and financial condition.

Current report

In accordance with applicable accounting standards, we expect that the 2030 Convertible Notes will be reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2030 Convertible Notes, net of discount and issuance costs. The issuance costs will be treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the 2030 Convertible Notes. As a result of this amortization, the interest expense that we expect to recognize for the 2030 Convertible Notes for accounting purposes will be greater than the cash interest payments we will pay on the 2030 Convertible Notes, which will result in higher reported loss.

Current report

Furthermore, if any of the conditions to the convertibility of the 2030 Convertible Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2030 Convertible Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders convert their 2030 Convertible Notes and could materially reduce our reported working capital.

Current report

Transactions relating to our 2030 Convertible Notes may affect the value of our common stock.

Current report

The conversion of some or all of the 2030 Convertible Notes would dilute the ownership interests of existing stockholders to the extent we satisfy our conversion obligation by delivering shares of our common stock upon any conversion of such 2030 Convertible Notes. Our 2030 Convertible Notes may become, in the future, convertible at the option of their holders under certain circumstances. If holders of our 2030 Convertible Notes elect to convert their notes, in certain circumstances we will be required to settle our conversion obligation by delivering shares of our common stock, which would cause dilution to our existing stockholders.

Current report

In connection with the issuance of the 2030 Convertible Notes, we entered into Capped Calls with certain financial institutions (collectively, the “option counterparties”). The Capped Calls are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2030 Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2030 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.

Current report

From time to time, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2030 Convertible Notes (and are likely to do so (x) during any observation period related to a conversion of the 2030 Convertible Notes or following any repurchase of the 2030 Convertible Notes by us in connection with any redemption or fundamental change, (y) following any other repurchase of the 2030 Convertible Notes if we elect to unwind a corresponding portion of the Capped Calls in connection with such repurchase and (z) if we otherwise unwind all or a portion of the Capped Calls). This activity could cause or avoid an increase or a decrease in the market price of our common stock.

Current report

The option counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under the Capped Calls. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Past and recent global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Capped Calls with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.