Zynga 2011 Annual Report Download - page 25

Table of Contents
Our facilities are located near known earthquake fault zones, and the occurrence of an earthquake or other natural disaster could cause
damage to our facilities and equipment, which could require us to curtail or cease operations.
Our principal offices and network operations centers are located in the San Francisco Bay Area, an area known for earthquakes, and are
thus vulnerable to damage. We are also vulnerable to damage from other types of disasters, including power loss, fire, explosions, floods,
communications failures, terrorist attacks and similar events. If any disaster were to occur, our ability to operate our business at our facilities
could be impaired.
We may require additional capital to meet our financial obligations and support business growth, and this capital might not be available on
acceptable terms or at all.
We intend to continue to make significant investments to support our business growth and may require additional funds to respond to
business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure
or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure
additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could
suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our
Class A common stock. Any debt financing that we secure in the future could involve restrictive covenants relating to our capital raising
activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business
opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are
unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business
growth and to respond to business challenges could be significantly impaired, and our business may be harmed.
Risks Related to Our Class A Common Stock
The three class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior
to our initial public offering, including our founder and Chief Executive Officer and our other executive officers, employees and directors
and their affiliates; this limits our other stockholders’ ability to influence corporate matters.
Our Class C common stock has 70 votes per share, our Class B common stock has seven votes per share and our Class A common stock
has one vote per share. The holders of Class B common stock and Class C common stock, including our founder and Chief Executive Officer,
Mark Pincus, and our other executive officers, employees and directors and their affiliates, collectively hold approximately 97.8% of the voting
power of our outstanding capital stock. Mr. Pincus beneficially owns approximately 36.0% of the total voting power of our outstanding capital
stock. As a result, Mr. Pincus and the other holders of our Class B common stock will continue to have significant influence over the
management and affairs of the company and control over matters requiring stockholder approval, including the election of directors and
significant corporate transactions, such as a merger or other sale of our company or our assets, for the foreseeable future.
Future transfers or sales by holders of Class B common stock or Class C common stock will result in those shares converting to Class A
common stock, which will have the effect, over time, of increasing the relative voting power of those stockholders who retain their existing
shares of Class B or Class C common stock. In addition, as shares of Class B common stock are transferred or sold and converted to Class A
common stock, the sole holder of Class C common stock, Mr. Pincus, will have greater relative voting control to the extent he retains his existing
shares of Class C common stock, and as a result he could in the future control a majority of our total voting power. Mr. Pincus is entitled to vote
his shares in his own interests and may do so.
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