LifeLock 2013 Annual Report Download - page 27

that are presently not known to us. Therefore, there can be no assurance that any pending or future litigation will not have a material adverse effect on our
business, reputation, operating results, and financial condition.
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Our success depends to a significant extent upon the continued services of our current management team, including Todd Davis, our Chairman and
Chief Executive Officer. The loss of Mr. Davis or one or more of our other key executives or employees could have a material adverse effect on our business.
Other than Mr. Davis and the Chief Analytics and Science Officer at ID Analytics, we do not maintain “key person” insuran ce policies on the lives of our
executive officers or any of our other employees. We employ all of our executive officers and key employees on an at-will basis, and their employment can be
terminated by us or them at any time, for any reason and without notice, subject, in certain cases, to severance payment rights. In order to retain valuable
employees, in addition to salary and cash incentives, we provide stock options or other share-based compensation that vest over time. The value to employees
of share-based compensation that vest over time will be significantly affected by movements in our stock price that are beyond our control and may at any
time be insufficient to counteract offers from other companies.
Our success also depends on our ability to attract, retain, and motivate additional skilled management personnel. We plan to continue to expand our
work force to continue to enhance our business and operating results. We believe that there is significant competition for qualified personnel with the sk ills and
knowledge that we require. Many of the other companies with which we compete for qualified personnel have greater financial and other resources than we do.
They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-
quality candidates than those which we have to offer. If we are not able to attract and retain the necessary qualified personnel to accomplish our business
objectives, we may experience constraints that will impede significantly the achievement of our business objectives and our ability to pursue our business
strategy. New hires require significant training and, in most cases, take significant time before they achieve full productivity. New employees may not become
as productive as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals. If our recruiting, training, and retention efforts
are not successful or do not generate a corresponding increase in revenue, our business will be harmed.
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Our consumer services include identity theft insurance for our members that provides coverage for certain out-of-pocket expenses to our members, such
as loss of income, replacement of fraudulent withdrawals, and costs associated with child and elderly care, travel, and replacement of documents. This
identity theft insurance also backs our $1 million service guarantee. Any failure or refusal of our insurance providers to provide the expected insurance
benefits could damage our reputation, cause us to lose m embers, expose us to liability claims by our members, negatively impact our sales and marketing
efforts, and have a material adverse effect on our business, operating results, and financial condition.
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
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Events such as a security breach at a large organization (including major financial institutions, retailers, and Internet service providers) could
compromise the personally identifiable information of a significant number of our members. Any such event could in turn result in a large number of identity-
related events that we must address, placing severe strain on our operations. Any failure in our ability to appropriately and timely process and address a large
number of identity-related events taking place at the same time could result in a loss of members, harm to our reputation, and other damage to our business.
Moreover, any related remediation services we provide may not meet member expectations and further exacerbate these risks. Furthermore, if these events result
in significant claims made under our identity theft insurance, this could negatively impact our insurance premiums and our ability to continue to provide what
we refer to as our guarantee on a cost-effective basis, or at all.
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To fund our expanding business, we must have sufficient working capital to continue to make significant investments in our service offerings,
advertising, technology, and other activities. As a result, in addition to the revenue we generate from our business, we may need additional equity or debt
financing to provide the funds required for these endeavors. If such financing is not available on satisfactory terms or at all, we may be unable to operate or
expand our business in the manner and at the rate desired. Debt financing increases expenses, may contain covenants that restrict the operation of our
business, and must be repaid regardless of operating results. Equity financing, or debt financing that is convertible into equity, could result in additional
dilution to our existing stockholders, and any new securities we issue could have rights, preferences, and privileges superior to those associated with our
common stock.
In addition, the current economic environment may make it difficult for us to raise additional capital or obtain additional credit, when needed, on
acceptable terms or at all.
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