Carbonite 2011 Annual Report Download - page 31

Table of Contents
our internal controls may distract our officers and employees, entail substantial costs to modify our existing processes, and take significant time to
complete. These changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy,
or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business. In addition,
investors’
perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm
our stock price and make it more difficult for us to effectively market and sell our solutions to new and existing customers.
Our failure to raise additional capital or generate the cash flows necessary to expand our operations and invest in our business could reduce our
ability to compete successfully.
Although we currently anticipate that our available funds, including the net proceeds of our initial public offering and our available bank line of
credit, will be sufficient to meet our cash needs for at least the next 12 months, we may require additional financing in the future. Our ability to obtain
financing will depend, among other things, on our development efforts, business plans, operating performance and condition of the capital markets at the
time we seek financing. If we need to raise additional funds, we may not be able to obtain additional debt or equity financing on favorable terms, if at
all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per share value of
our common stock could decline. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional
indebtedness and force us to maintain specified liquidity or other ratios. If we need additional capital and cannot raise it on acceptable terms, we may not
be able to, among other things:
A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of
our common stock to drop significantly, even if our business is doing well.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could adversely
affect the market price of our common stock. In connection with the expiration on February 26, 2012 of lock-up agreements entered into with the
underwriters of our initial public offering, approximately 17.9 million shares of our common stock became eligible from sale by stockholders, subject to
applicable volume and other limitations under federal securities laws. In August 2011, we filed a Form S-8 under the Securities Act registering
5,177,658 shares of our common stock for issuance under our equity incentive plans. These shares may be sold in the public market upon issuance,
subject to the terms of contractual restrictions. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the
market price of our common stock could decline.
We also may issue shares of our common stock or securities convertible into our common stock from time to time in connection with financing,
acquisition, investment, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of
our common stock to decline.
Our directors, executive officers, and principal stockholders have substantial control over us and could delay or prevent a change in corporate
control.
Our directors, executive officers, and holders of more than 5% of our common stock, together with their affiliates, hold a majority of our
outstanding shares of common stock and have the ability to control the outcome of matters submitted to our stockholders for approval, including the
election of directors and any merger,
28
•
develop or enhance our solutions;
•
continue to expand our development, sales, and marketing organizations;
•
acquire complementary technologies, products, or businesses;
•
expand our operations in the U.S. or internationally;
•
hire, train, and retain employees;
•
respond to competitive pressures or unanticipated working capital requirements; or
•
continue our operations.