10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

Commission file number: 001-35671

LifeLock, Inc.

(Exact name of registrant as specified in its charter)

Delaware	56-2508977
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

60 East Rio Salado Parkway, Suite 400

Tempe, Arizona 85281

(Address of principal executive offices and zip code)

(480) 682-5100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of April 25, 2014, there were outstanding 92,399,121 shares of the registrant’s common stock, $0.001 par value.

LIFELOCK, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2014

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):	1
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations	2
Condensed Consolidated Statements of Comprehensive Loss	3
Condensed Consolidated Statements of Cash Flows	4
Notes to Condensed Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures About Market Risk	27
Item 4. Controls and Procedures	27
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	28
Item 1A. Risk Factors	28
Item 6. Exhibits	29
Signatures	30

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

LIFELOCK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	March 31, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	143,702		$	123,911
Marketable securities		47,522			48,688
Trade and other receivables, net		10,601			10,906
Deferred tax assets, net		16,668			13,117
Prepaid expenses and other current assets		9,777			6,961
Total current assets		228,270			203,583
Property and equipment, net		18,064			16,504
Goodwill		158,152			158,152
Intangible assets, net		44,982			47,213
Deferred tax assets, net – noncurrent		35,986			35,986
Other noncurrent assets		1,561			1,812
Total assets	$	487,015		$	463,250
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,493		$	2,422
Accrued expenses and other liabilities		34,067			34,926
Deferred revenue		136,319			119,106
Total current liabilities		174,879			156,454
Other noncurrent liabilities		5,411			4,640
Total liabilities		180,290			161,094
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 300,000,000 authorized at March 31, 2014      and December 31, 2013; 92,326,684 and 91,441,771 shares issued and outstanding at      March 31, 2014 and December 31, 2013, respectively		92			91
Preferred stock, $0.001 par value, 10,000,000 shares authorized and no shares issued      and outstanding at March 31, 2014 and December 31, 2013, respectively		-			-
Additional paid-in capital		479,365			469,636
Accumulated other comprehensive loss		(10	)		(18	)
Accumulated deficit		(172,722	)		(167,553	)
Total stockholders’ equity		306,725			302,156
Total liabilities and stockholders’ equity	$	487,015		$	463,250

See accompanying notes to condensed consolidated financial statements.

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LIFELOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	For the Three Months Ended March 31,
	2014			2013
Revenue:
Consumer revenue	$	100,995		$	75,094
Enterprise revenue		6,591			7,001
Total revenue		107,586			82,095
Cost of services		30,067			23,804
Gross profit		77,519			58,291
Costs and expenses:
Sales and marketing		56,847			41,793
Technology and development		13,148			9,024
General and administrative		13,972			9,424
Amortization of acquired intangible assets		2,231			1,966
Total costs and expenses		86,198			62,207
Loss from operations		(8,679	)		(3,916	)
Other income (expense):
Interest expense		(87	)		(67	)
Interest income		60			20
Other		(11	)		(4	)
Total other expense		(38	)		(51	)
Loss before provision for income taxes		(8,717	)		(3,967	)
Income tax (benefit) expense		(3,548	)		150
Net loss	$	(5,169	)	$	(4,117	)
Net loss attributable per share to common stockholders:
Basic	$	(0.06	)	$	(0.05	)
Diluted	$	(0.06	)	$	(0.05	)
Weighted-average common shares outstanding:
Basic		91,903			86,640
Diluted		91,903			86,640

See accompanying notes to condensed consolidated financial statements.

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LIFELOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	For the Three Months Ended March 31,
	2014			2013
Net loss	$	(5,169	)	$	(4,117	)
Other comprehensive gain, net of tax:
Unrealized gain on marketable securities		8			-
Comprehensive loss	$	(5,161	)	$	(4,117	)

See accompanying notes to condensed consolidated financial statements.

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LIFELOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Three Months Ended March 31,
	2014			2013
Operating activities
Net loss	$	(5,169	)	$	(4,117	)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		3,861			3,071
Share-based compensation		5,475			2,724
Provision for doubtful accounts		272			43
Accretion of marketable securities		366			-
Deferred income tax benefit		(3,551	)		-
Other		7			4
Change in operating assets and liabilities:
Trade and other receivables		(305	)		(239	)
Prepaid expenses and other current assets		(2,816	)		(2,720	)
Other non-current assets		251			313
Accounts payable		2,776			225
Accrued expenses and other liabilities		(835	)		1,048
Deferred revenue		17,213			12,477
Other non-current liabilities		771			(34	)
Net cash provided by operating activities		18,316			12,795
Investing activities
Acquisition of property and equipment		(3,927	)		(1,285	)
Purchase of marketable securities		(5,797	)		-
Sale and maturities of marketable securities		6,921			-
Net cash used in investing activities		(2,803	)		(1,285	)
Financing activities
Proceeds from:
Stock based compensation plans		4,432			36
Payments for:
Employee tax withholdings related to restricted stock units		(154	)		-
Debt issuance costs		-			(440	)
Net cash provided by (used in) financing activities		4,278			(404	)
Net increase in cash and cash equivalents		19,791			11,106
Cash and cash equivalents at beginning of period		123,911			134,197
Cash and cash equivalents at end of period	$	143,702		$	145,303

See accompanying notes to condensed consolidated financial statements.

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LIFELOCK, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

(unaudited)

1. Description of Business and Basis of Presentation

We provide proactive identity theft protection services to our consumer subscribers, whom we refer to as our members, on an annual or monthly subscription basis. We also provide fraud and risk solutions to our enterprise customers.

We were incorporated in Delaware on April 12, 2005 and are headquartered in Tempe, Arizona.  On March 14, 2012, we acquired ID Analytics, Inc. and its wholly-owned subsidiary IDA, Inc., collectively, ID Analytics, each of which is incorporated in Delaware.  On December 11, 2013, we acquired Lemon, Inc., or Lemon, which is incorporated in Delaware.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

The condensed consolidated balance sheet as of December 31, 2013 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the result of operations to be anticipated for the entire year ending December 31, 2014 or any future period.

Basis of Consolidation

The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. We eliminate all intercompany balances and transactions, including intercompany profits, and unrealized gains and losses in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider in forming a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities.

2. Summary of Significant Accounting Policies

Significant Accounting Policies

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements.  The updated guidance defines discontinued operations as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and expands the disclosure requirements for discontinued operations and adds new disclosures for individually significant dispositions that do not qualify as discontinued operations.  ASU No. 2014-08 is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014.  ASU No. 2014-08 would be applied to any future applicable transaction.

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3. Business Combinations

Acquisition of Lemon

On December 11, 2013, we acquired Lemon, a mobile wallet innovator. In connection with this acquisition, we launched our new LifeLock mobile application. The aggregate purchase price consisted of approximately $42,369 of cash paid at the closing (net of cash acquired of $3,315).  We preliminarily allocated the total purchase consideration to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management, and, with respect to identifiable intangible assets, by management with the assistance of a valuation provided by a third-party valuation firm. We recorded the excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed as goodwill in our consumer segment.  

The allocation of the purchase price of the acquired assets and liabilities as of December 31, 2013 was based on provisional measurements of fair value as determined by management.  Subsequent to the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, we determined that approximately $4,988 of Lemon’s net operating loss carryforwards would expire as a result of limitations under Section 382 of the Internal Revenue Code. As such, we reduced deferred tax assets, net – noncurrent by $2,033, increasing goodwill.  This adjustment has been reflected in the December 31, 2013 balances of deferred tax assets, net – noncurrent and goodwill in the accompanying condensed consolidated balance sheets.

We accounted for this acquisition using the acquisition method in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations. Accordingly, we allocated the purchase price of the acquired assets and liabilities based on their estimated fair values as of the acquisition date as summarized in the following table:

Net assets assumed	$	3,184
Deferred tax assets, net – noncurrent		9,896
Intangible assets acquired		3,880
Goodwill		28,724
Total purchase price consideration	$	45,684

4. Marketable Securities

The following is summary of marketable securities designated as available-for-sale as of March 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Corporate bonds	$	34,247	$	-	$	(19	)	$	34,228
Municipal bonds		12,798		1		(3	)		12,796
Certificates of deposit		498		-		-			498
Total marketable securities	$	47,543	$	1	$	(22	)	$	47,522

All marketable securities are classified as current regardless of contractual maturity dates because we consider such investments to represent cash available for current operations.

As of March 31, 2014, we did not consider any of our marketable securities to be other-than-temporarily impaired. When evaluating our investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer, our ability and intent to hold the security and whether it is more likely than not that we will be required to sell the investment before recovery of its cost basis.

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The following is a summary of amortized cost and estimated fair value of marketable securities as of March 31, 2014, by maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Due in one year or less	$	47,543	$	1	$	(22	)	$	47,522
Due after one year		-		-		-			-
Total marketable securities	$	47,543	$	1	$	(22	)	$	47,522

The following is summary of marketable securities designated as available-as-sale as of December 31, 2013:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Corporate bonds	$	37,399	$	1	$	(29	)	$	37,371
Municipal bonds		10,820		2		(3	)		10,819
Certificates of deposit		498		-		-			498
Total marketable securities	$	48,717	$	3	$	(32	)	$	48,688

The following is a summary of amortized cost and estimated fair value of marketable securities as of December 31, 2013, by maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Due in one year or less	$	47,398	$	3	$	(32	)	$	47,369
Due after one year		1,319		-		-			1,319
Total marketable securities	$	48,717	$	3	$	(32	)	$	48,688

5. Stockholders’ Equity

Share-Based Compensation

We issue stock-based awards to our employees in the form of stock options, restricted stock units, and restricted stock. We also have an employee stock purchase plan. The following table summarizes the components of share-based compensation expense included in our condensed consolidated statement of operations for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014		2013
	(in thousands)
Cost of services	$	343	$	206
Sales and marketing		894		333
Technology and development		1,973		515
General and administrative		2,265		1,670
Total share-based compensation	$	5,475	$	2,724

Unrecognized share-based compensation expenses totaled $86,732 as of March 31, 2014, which we expect to recognize over a weighted-average time period of 3.2 years.

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Stock Warrants

As of March 31, 2014, we had the following warrants to purchase common stock outstanding:

Expiration Date	Shares		Exercise Price
October 3, 2014		2,334,044		0.70
December 19, 2014		166,666		4.50

6. Fair Value Measurements

As of March 31, 2014 and December 31, 2013, the fair value of our financial assets was as follows:

	Level 1		Level 2		Level 3		Total
March 31, 2014
Assets:
Commercial paper (1)	$	-	$	45,134	$	-	$	45,134
Money market funds (1)		2,036		-		-		2,036
Corporate bonds (2)		-		34,228		-		34,228
Municipal bonds (2)		-		12,796		-		12,796
Certificates of deposit (2)		-		498		-		498
Total assets measured at fair value	$	2,036	$	92,656	$	-	$	94,692
December 31, 2013
Assets:
Commercial paper (1)	$	-	$	45,110	$	-	$	45,110
Money market funds (1)		911		-		-		911
Corporate bonds (2)		-		37,371		-		37,371
Municipal bonds (2)		-		10,819		-		10,819
Certificates of deposit (2)		-		498		-		498
Total assets measured at fair value	$	911	$	93,798	$	-	$	94,709

(1) Classified in cash and cash equivalents

(2) Classified in marketable securities

The fair values of our cash equivalents and available-for-sale securities included in the Level 1 and Level 2 categories are obtained from an independent pricing service, which uses a model driven valuation technique using observable market data or inputs corroborated by observable market data.

7. Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014			2013
Net loss	$	(5,169	)	$	(4,117	)
Denominator (basic and diluted):
Weighted average common shares outstanding		91,903,036			86,639,538
Net loss attributable per share to common stockholders:
Basic	$	(0.06	)	$	(0.05	)
Diluted	$	(0.06	)	$	(0.05	)

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For the three-month periods ended March 31, 2014 and 2013, potentially dilutive securities are not included in the calculation of diluted loss per share as their impact would be anti-dilutive. The following weighted-average number of outstanding stock options, restricted stock units and restricted stock awards, common equivalent shares from stock warrants, and shares purchased under our Employee Stock Purchase Plan, or ESPP, were excluded from the computation of diluted net loss per share for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014		2013
Stock options outstanding		4,475,301		5,562,516
Restricted stock units and restricted stock awards		217,010		49,484
Common equivalent shares from stock warrants		2,378,641		2,322,597
Shares purchased under ESPP		25,105		5,783
		7,096,057		7,940,380

8. Segment Reporting

Following our acquisition of ID Analytics in the first quarter of 2012, we began operating our business and reviewing and assessing our operating performance using two reportable segments: our consumer segment and our enterprise segment. In our consumer segment, we offer proactive identity theft protection services to our members on an annual or monthly subscription basis. In our enterprise segment, we offer fraud and risk solutions to our enterprise customers.

Financial information about our segments during the three-month period ended March 31, 2014 and as of March 31, 2014 was as follows:

	Consumer			Enterprise			Eliminations			Total
Revenue
External customers	$	100,995		$	6,591		$	-		$	107,586
Intersegment revenue		-			1,514			(1,514	)		-
Loss from operations		(4,523	)		(4,156	)		-			(8,679	)
Goodwill		98,615			59,537			-			158,152
Total assets		376,457			111,073			(515	)		487,015

Financial information about our segments during the three-month period ended March 31, 2013 and as of December 31, 2013 was as follows:

	Consumer			Enterprise			Eliminations			Total
Revenue
External customers	$	75,094		$	7,001		$	-		$	82,095
Intersegment revenue		-			1,237			(1,237	)		-
Loss from operations		(633	)		(3,283	)		-			(3,916	)
Goodwill		98,615			59,537			-			158,152
Total assets		349,394			114,337			(481	)		463,250

We allocated goodwill between our segments by estimating the expected synergies to each segment.

We derive all of our revenue from sales in the United States, and substantially all of our long-lived assets are located in the United States.

9. Income Taxes

Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate.  Based on an estimated annual effective tax rate and discrete items, the estimated income tax (benefit) expense from operations for the three-month periods ended March 31, 2014 and 2013 was approximately $(3,548) and $150, respectively.  The determination of the interim period income tax provision utilizes the effective tax

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rate method, which requires us to estimate certain annualized components of the calculation of the income tax provision, including the annual effective tax rate by entity and jurisdiction.

In the fourth quarter of 2013, in connection with the acquisition of Lemon and the preliminary purchase price allocation, we analyzed Lemon’s prior ownership changes, including the change which arose as a result of our acquisition of Lemon.  As a result of the preliminary analysis, we estimated that none of Lemon’s net operating loss carryforwards would expire as a result of limitations under Section 382 of the Internal Revenue Code.  Subsequent to the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, we received responses from certain former shareholders who had held a 5% or greater ownership interest in Lemon prior to the acquisition and determined that due to the ownership changes of those former shareholders, approximately $4,988 of Lemon’s net operating loss carryforwards will expire solely as a result of the Section 382 limitations. As such, we retrospectively adjusted our preliminary purchase price allocation to reflect this information.

10. Contingencies

As part of our consumer services, we offer 24x7x365 member service support. If a member’s identity has been compromised, our member service team and remediation specialists will assist the member until the issue has been resolved. This includes our $1 million service guarantee, which is backed by an identity theft insurance policy, under which we will spend up to $1 million to cover certain third-party costs and expenses incurred in connection with the remediation, such as legal and investigatory fees. This insurance also covers certain out-of-pocket expenses, such as loss of income, replacement of fraudulent withdrawals, and costs associated with child and elderly care, travel, and replacement of documents. While we have reimbursed members for claims under this guarantee, the amounts in aggregate for the three-month periods ended March 31, 2014 and 2013 were not material.

In September 2012, Denise Richardson filed a complaint against our company and Todd Davis. Ms. Richardson claims that she was improperly classified as an independent contractor instead of an employee and that we breached the terms of an alleged employment agreement. Ms. Richardson claims she is entitled to equitable relief, compensatory damages, liquidated damages, statutory penalties, punitive damages, interest, costs, and attorneys’ fees. On March 31, 2014, our motion to dismiss was granted in part and denied in part with the court dismissing nine of the ten counts that were subject to the motion to dismiss, including the single count against Mr. Davis.  On April 23, 2014, Ms. Richardson filed an amended complaint against our company and Mr. Davis again claiming that she was improperly classified as an independent contractor instead of an employee and that we breached the terms of an alleged employment agreement. Ms. Richardson claims she is entitled to equitable relief, compensatory damages, liquidated damages, statutory penalties, punitive damages, interest, costs, and attorneys’ fees.  On April 29, 2014, Mr. Davis and we filed a motion to dismiss all but one of the counts in such amended complaint.  Ms. Richardson’s response is due on May 16, 2014..

On March 3, 2014, Dawn B. Bien, representing herself and seeking to represent a class of persons who acquired our securities from February 26, 2013 to February 19, 2014, inclusive, or the Class Period, filed a complaint in United States District Court for the District of Arizona against us, Todd Davis, and Chris Power.  We refer to this complaint as the Bien Complaint.  The Bien Complaint alleges that we and Messrs. Davis and Power, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act,  disseminated materially false or misleading information, or failed to disclose material facts during the Class Period in connection with our business and our operational and compliance policies, including our and Mr. Davis’s compliance with the  Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief entered into in March 2010 with the Federal Trade Commission, or the FTC Order, wherein we settled allegations by the Federal Trade Commission challenging certain of our advertising and marketing.  The Bien Complaint also contends that as a result of alleged violations of governmental laws, regulations, and the FTC Order, our financial statements were materially false and misleading at all relevant times.  The Bien Complaint seeks certification as a class action, compensatory damages, and attorneys’ fees and costs. On March 10, 2014, Joseph F. Scesny, representing himself and seeking to represent a class of persons who acquired our securities from February 26, 2013 to February 19, 2014, inclusive, filed a complaint in United States District Court for the District of Arizona against us, Todd Davis, and Chris Power.  We refer to this complaint as the Scesny Complaint. The Scesny Complaint is substantially similar to the Bien Complaint and seeks substantially similar relief. We anticipate that the Bien Complaint and Scesny Complaint will be consolidated into one action and that the court will select a lead plaintiff as provided by the federal securities laws governing purported class action cases.

On March 13, 2014, we received a request from the Federal Trade Commission, or the FTC, for documents and information related to our compliance with the FTC Order.   Prior to our receipt of the FTC’s request, we met with FTC Staff on January 17, 2014, at our request, to discuss issues regarding allegations that have been asserted in a whistleblower claim against us relating to our compliance with the FTC Order.  We are cooperating with the FTC in regards to its request and are currently in the process of providing the documents and information requested by the FTC.

On March 20, 2014, Michael D. Peters filed a complaint in United States District Court for the District of Arizona against our company, Kim Jones, and Cristy Schaan.  Mr. Jones is not affiliated with us.  Ms. Schaan is our Chief Information Security Officer.  In his complaint, Mr. Peters alleges that we violated the whistleblower protection provisions of the Sarbanes-Oxley Act of

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2002, or the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, by terminating Mr. Peters’ employment as a result of alleged disclosures that he made to us, and that Ms. Schaan defamed Mr. Peters.  Mr. Peters seeks from us two times his back pay, two times the value of certain stock options and bonus, moving expenses, damages for emotional harm and anxiety, damages for harm to reputation, litigation costs including attorneys’ fees, and interest, and seeks from Ms. Schaan actual damages, punitive damages, and interest.  On April 21, 2014, we filed an answer, affirmative defenses, and counterclaims, answering Mr. Peters’ claim under the Sarbanes-Oxley Act and asserting counterclaims against Mr. Peters for fraud, negligent misrepresentation, breach of contract, and unjust enrichment, based on our allegations that we were induced to hire Mr. Peters by his false statements and misrepresentations regarding his employment history and seeking to recover actual and consequential damages, punitive damages, attorneys’ fees, and the $15 signing bonus paid to Mr. Peters.  Mr. Peters’ response to the counterclaim is due on May 8, 2014.  On April 21, 2014, we also filed a motion to dismiss Mr. Peters’ claim under the Dodd-Frank Act.  Mr. Peters’ response to that motion to dismiss is due on May 15, 2014.  On April 25, 2014, Ms. Schaan filed a motion to dismiss Mr. Peters’ claim against her.  Mr. Peters’ response to that motion to dismiss is due on May 12, 2014.

We are subject to other legal proceedings and claims that have arisen in the ordinary course of business. Although there can be no assurance as to the ultimate disposition of these matters and the proceedings disclosed above, we believe, based upon the information available at this time, that a material adverse outcome related to the matters is neither probable nor estimable.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013. This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act, including, but not limited to, statements regarding our expectations, beliefs, intentions, strategies, future operations, future financial position, future revenue, projected expenses, and plans and objectives of management. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “continue,” “objective,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These forward-looking statements reflect our current views about future events and involve known risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievement to be materially different from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a leading provider of proactive identity theft protection services for consumers and fraud and risk solutions for enterprises. We protect our members by constantly monitoring identity-related events, such as new account openings and credit-related applications. If we detect that a member’s personally identifiable information is being used, we offer notifications and alerts, including proactive, near real-time, actionable alerts that provide our members peace of mind that we are monitoring use of their identity and allow our members to confirm valid or unauthorized identity use. If a member confirms that the use of his or her identity is unauthorized, we can proactively take actions designed to protect the member’s identity. We also provide remediation services to our members in the event that an identity theft actually occurs. We protect our enterprise customers by delivering on-demand identity risk and authentication information about consumers. Our enterprise customers utilize this information in real time to make decisions about opening or modifying accounts and providing products, services, or credit to consumers to reduce financial losses from identity fraud.

The foundation of our differentiated services is the LifeLock ecosystem. This ecosystem combines large data repositories of personally identifiable information and consumer transactions, proprietary predictive analytics, and a highly scalable technology platform. Our members and enterprise customers enhance our ecosystem by continually contributing to the identity and transaction data in our repositories. We apply predictive analytics to the data in our repositories to provide our members and enterprise customers actionable intelligence that helps protect against identity theft and identity fraud. As a result of our combination of scale, reach, and technology, we believe that we have the most proactive and comprehensive identity theft protection services available, as well as the most recognized brand in the identity theft protection services industry.

On December 11, 2013, we acquired mobile wallet innovator Lemon for approximately $42.4 million in cash and launched our new LifeLock Wallet mobile application. The LifeLock Wallet mobile application allows consumers to replicate and store a digital copy of their personal wallet contents on their smart device for records backup, as well as transaction monitoring and mobile use of items such as credit, identification, ATM, insurance, and loyalty cards. The LifeLock Wallet mobile application also offers our members one-touch access to our identity theft protection services.

We derive the substantial majority of our revenue from member subscription fees. We also derive revenue from transaction fees from our enterprise customers.

We offer our consumer identity theft protection services on a monthly or annual subscription basis.  We currently offer our consumer services under our basic LifeLock, LifeLock Command Center, LifeLock Junior, and premium LifeLock Ultimate services. Our average revenue per member is lower than our retail list prices due to wholesale or bulk pricing that we offer to strategic partners in our embedded product, employee benefits, and breach distribution channels to drive our membership growth. In our embedded product channel, our strategic partners embed our consumer services into their products and services and pay us on behalf of their customers; in our employee benefit channel, our strategic partners offer our consumer services as a voluntary benefit as part of their employee benefit enrollment process; and in our breach channel, enterprises that have experienced a data breach pay us a fee to provide our services to the victims of the data breach. We also offer special discounts and promotions from time to time to incentivize prospective members to enroll in one of our consumer services. Our members pay us the full subscription fee at the beginning of each

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subscription period, in most cases by authorizing us to directly charge their credit or debit cards. We initially record the subscription fee as deferred revenue and then recognize it ratably on a daily basis over the subscription period. The prepaid subscription fees enhance our visibility of revenue and allow us to collect cash prior to paying our fulfillment partners.

Our enterprise customers pay us based on their monthly volume of transactions with us, with approximately 30% of them committed to monthly transaction minimums. We recognize revenue at the end of each month based on transaction volume for that month and bill our enterprise customers at the conclusion of each month.

We have historically invested significantly in new member acquisition and expect to continue to do so for the foreseeable future. Our largest operating expense is advertising for member acquisition, which we record as a sales and marketing expense. This is comprised of radio, television, and print advertisements; direct mail campaigns; online display advertising; paid search and search-engine optimization; third-party endorsements; and education programs. We also pay internal and external sale commissions, which we record as a sales and marketing expense. In general, increases in revenue and cumulative ending members occur during and after periods of significant and effective direct retail marketing efforts.

Our revenue grew from $82.1 million for the three-month period ended March 31, 2013 to $107.6 million for the three-month period ended March 31, 2014, an increase of 31%, including year-over-year growth within our consumer segment of 34%. We generated a loss from operations of $8.7 million and a net loss of $5.2 million for the three-month period ended March 31, 2014.

Our Business Model

Following our acquisition of ID Analytics in the first quarter of 2012, we began operating our business and reviewing and assessing our operating performance using two reportable segments: our consumer segment and our enterprise segment. We review and assess our operating performance using segment revenue, income (loss) from operations, and total assets. These performance measures include the allocation of operating expenses to our reportable segments based on management’s specific identification of costs associated to those segments.

Consumer Services

We evaluate the lifetime value of a member relationship over its anticipated lifecycle. While we generally incur member acquisition costs in advance of or at the time of the acquisition of the member, we recognize revenue ratably over the subscription period. As a result, a member relationship is not profitable at the beginning of the subscription period even though it is likely to have value to us over the lifetime of the member relationship.

When a member’s subscription automatically renews in each successive period, the relative value of that member increases because we do not incur significant incremental acquisition costs. We also benefit from decreasing fulfillment and member support costs related to that member, as well as economies of scale in our capital and operating and other support expenditures.

Enterprise Services

In our enterprise business, the majority of our costs relate to personnel primarily responsible for data analytics, data management, software development, sales and operations, and various support functions. We incur minimal third-party data expenses, as our enterprise customers typically provide us with their customer transaction data as part of our service. New customer acquisition is often a lengthy process requiring significant investment in the sales team, including costs related to detailed retrospective data analysis to demonstrate the return on investment to prospective customers had our services been deployed over a specific period of time. Since most of the expenses in our enterprise business are fixed in nature, as we add new enterprise customers, there are typically modest incremental costs resulting in additional economies of scale.

Key Metrics

We regularly review a number of operating and financial metrics to evaluate our business, determine the allocation of our resources, measure the effectiveness of our sales and marketing efforts, make corporate strategy decisions, and assess operational efficiencies.

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Key Operating Metrics

The following table summarizes our key operating metrics for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014			2013
	(in thousands, except percentages and per member data)
	(Unaudited)
Cumulative ending members		3,221			2,636
Gross new members		344			249
Member retention rate		87.5	%		87.2	%
Average cost of acquisition per member	$	156		$	156
Monthly average revenue per member	$	10.81		$	9.80
Enterprise transactions		52,709			58,483

Cumulative ending members. We calculate cumulative ending members as the total number of members at the end of the relevant period. Most of our members are paying subscribers who have enrolled in our consumer services directly with us on a monthly or annual basis. A small percentage of our members receive our consumer services through third-party enterprises that pay us directly, often as a result of a breach within the enterprise or by embedding our service within a broader third- party offering. We monitor cumulative ending members because it provides an indication of the revenue and expenses that we expect to recognize in the future.

As of March 31, 2014, we had approximately 3.2 million cumulative ending members, an increase of 22% from March 31, 2013. This increase was driven by several factors, including the success of our marketing campaigns, increased awareness of data breaches, media coverage of identity theft, and our continued strong annual retention rate.

Gross new members. We calculate gross new members as the total number of new members who enroll in one of our consumer services during the relevant period. Many factors may affect the volume of gross new members in each period, including the effectiveness of our marketing campaigns, the timing of our marketing programs, the effectiveness of our strategic partnerships, and the general level of identity theft coverage in the media. We monitor gross new members because it provides an indication of the revenue and expenses that we expect to recognize in the future. For the three-month period ended March 31, 2014, we enrolled approximately 344,000 gross new members, up from approximately 249,000 for the three-month period ended March 31, 2013. This increase was driven by the success of our marketing campaigns, the continued success of our LifeLock Ultimate service, which accounted for more than 40% our gross new members during the three-month period ended March 31, 2014, and increased awareness of data breaches and identity theft.

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Member retention rate. We define member retention rate as the percentage of members on the last day of the prior year who remain members on the last day of the current year, or for quarterly presentations, the percentage of members on the last day of the comparable quarterly period in the prior year who remain members on the last day of the current quarterly period. A number of factors may increase our member retention rate, including increases in the number of members enrolled on an annual subscription, increases in the number of alerts a member receives, and increases in the number of members enrolled through strategic partners with which the member has a strong association. Conversely, factors reducing our member retention rate may include increases in the number of members enrolled on a monthly subscription, and the end of programs in our embedded product and breach channels. In addition, the length of time a member has been enrolled in one of our services will impact our member retention rate.  Historically, the member retention rate for our premium services has been lower than the member retention rate for our LifeLock Basic service, which we believe is driven primarily by price.

As of March 31, 2014, our member retention rate was 87.5%, which was our sixth consecutive quarter above 87%.  The decrease in retention rate from the fourth quarter of 2013 was driven, in part, by the cancellation of breach members who enrolled in previous years and the impact of an increased number of member credit and debit cards that were replaced as a result of large data breaches in the fourth quarter of 2013.

Average cost of acquisition per member. We calculate average cost of acquisition per member as our sales and marketing expense for our consumer segment during the relevant period divided by our gross new members for the period. A number of factors may influence this metric, including shifts in the mix of our media spend. For example, when we engage in marketing efforts to build our brand, our cost of acquisition per member increases in the short term with the expectation that it will decrease over the long term. In addition, when we introduce new partnerships in our embedded product channel, such as our partnership with AOL in the fourth quarter of 2011, our average cost of acquisition per member decreases due to the volume of members that enroll in our consumer services in a relatively short period of time. We monitor average cost of acquisition per member to evaluate the efficiency of our marketing programs in acquiring new members. For the three-month periods ended March 31, 2014 and 2013, our average cost of acquisition per member was $156. Our member retention rate and the increasing monthly average revenue per member, primarily from the continued penetration of our LifeLock Ultimate service, results in a higher lifetime value of a member relationship which enables us to absorb a higher average cost of acquisition per member.

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Monthly average revenue per member. We calculate monthly average revenue per member as our consumer revenue during the relevant period divided by the average number of cumulative ending members during the relevant period (determined by taking the average of the cumulative ending members at the beginning of the relevant period and the cumulative ending members at the end of each month in the relevant period), divided by the number of months in the relevant period. A number of factors may influence this metric, including whether a member enrolls in one of our premium services; whether we offer the member any promotional discounts upon enrollment; the distribution channel through which we acquire the member, as we offer wholesale pricing in our embedded product, employee benefit, and breach channels; and whether a new member subscribes on a monthly or annual basis, as members enrolling on an annual subscription receive a discount for paying for a year in advance. While our retail list prices have historically remained unchanged, our average revenue per member for the three-month period ended March 31, 2014 increased approximately 10% from the three month period ended March, 31, 2013.  This growth was primarily driven by increased adoption of our higher priced premium services by a greater percentage of our members, a trend we expect will continue. We monitor monthly average revenue per member because it is a strong indicator of revenue in our consumer business and of the performance of our premium services. The increase in our monthly average revenue per member resulted primarily from the continued success of our LifeLock Ultimate service, which accounted for more than 40% of our gross new members for the three month period ended March 31, 2014.

Our monthly average revenue per member for the three-month period ended March 31, 2014 was $10.81, an increase of 10% from the three-month period ended March 31, 2013.

Enterprise transactions. We calculate enterprise transactions as the total number of enterprise transactions processed for either an identity risk or credit risk score during the relevant period. Our enterprise transactions are processed by ID Analytics, which we acquired in the first quarter of 2012. Accordingly, the enterprise transactions data includes transactions processed by ID Analytics before the acquisition. Enterprise transactions have historically been higher in the fourth quarter as the level of credit applications and general consumer spending increases. We monitor the volume of enterprise transactions because it is a strong indicator of revenue in our enterprise business.

We processed 52.7 million enterprise transactions for the three-month period ended March 31, 2014, a decrease of 10% from the three-month period ended March 31, 2013. The reduction in enterprise transactions related to us giving notice of non-renewal to several customers who compete in our consumer business and allowing such contracts to lapse.  In addition, in the quarter ended June 30, 2013 we had a large telecommunications customer stop scoring their new wireline customers due to low levels of fraud in the business line.  While we were able to reengage and commence scoring a portion of the volume in the quarter ended March 31, 2014, there was still a reduction year over year from this customer.

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Key Financial Metrics

The following table summarizes our key financial metrics for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014			2013
	(in thousands)
Consumer revenue	$	100,995		$	75,094
Enterprise revenue		6,591			7,001
Total revenue		107,586			82,095
Adjusted net income (loss)		(1,014	)		573
Adjusted EBITDA		657			1,879
Free cash flow		14,389			11,510

Adjusted Net Income (Loss)

Adjusted net income (loss) is a non-GAAP financial measure that we calculate as net income (loss) excluding amortization of acquired intangible assets, share-based compensation, income tax benefits and expenses resulting from changes in our deferred tax assets, and acquisition related expenses.  Historically, we also excluded from net income (loss) changes in fair value of warrant liabilities and change in fair value of embedded derivatives in the periods in which those items occurred. We do not currently have any warrant liabilities or embedded derivatives; accordingly, we will only include those items of income and expense in our reconciliation of adjusted net income (loss) for period-over-period comparisons.  We have included adjusted net income (loss) in this Quarterly Report on Form 10-Q because it is a key measure used by us to understand and evaluate our core operating performance and trends. In particular, the exclusion of certain expenses in calculating adjusted net income (loss) can provide a useful measure for period-to-period comparisons of our core business.

Accordingly, we believe that adjusted net income (loss) provides useful information to investors and others in understanding and evaluating our operating results in the same manner as we do. We believe the exclusion of certain items of income and expense from net income (loss) in calculating adjusted net income (loss) is useful because (i) the amount of such income and expense in any specific period may not directly correlate to the underlying operational performance of our business, and/or (ii) such income and expense can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets.

Our use of adjusted net income (loss) has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include the following:

· although amortization of intangible assets is a non-cash charge, additional intangible assets may be acquired in the future and adjusted net income (loss) does not reflect cash capital expenditure requirements for new acquisitions;

· adjusted net income (loss) does not reflect the cash requirements for new acquisitions;

· adjusted net income (loss) does not reflect changes in, or cash requirements for, our working capital needs;

· adjusted net income (loss) does not consider the potentially dilutive impact of share-based compensation;

· adjusted net income (loss) does not reflect the deferred income tax benefit from the release of the valuation allowance or income tax expenses which reduce our deferred tax asset for net operating losses or other net changes in deferred tax assets;

· adjusted net income (loss) does not reflect the expenses incurred for new acquisitions; and

· other companies, including companies in our industry, may calculate adjusted net income (loss) or similarly titled measures differently, limiting their usefulness as a comparative measure.

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Because of these limitations, you should consider adjusted net income (loss) alongside other financial performance measures, including various cash flow metrics, net income (loss), and our other GAAP results. The following table presents a reconciliation of net loss to adjusted net income (loss) for applicable items of income and expense that impacted each of the periods indicated:

	For the Three Months Ended March 31,
	2014			2013
	(in thousands)
Reconciliation of Net Loss to Adjusted Net Income (Loss):
Net loss	$	(5,169	)	$	(4,117	)
Amortization of acquired intangible assets		2,231			1,966
Share-based compensation		5,475			2,724
Deferred income tax benefit		(3,551	)		-
Adjusted net income (loss)	$	(1,014	)	$	573

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income (loss) excluding depreciation and amortization, share-based compensation, interest expense, interest income, other income (expense), income tax (benefit) expense, and acquisition related expenses. Historically, we also excluded from net income (loss) changes in fair value of warrant liabilities and change in fair value of embedded derivatives in the periods in which those items occurred. We do not currently have any warrant liabilities or embedded derivatives; accordingly, we will only include those items of income and expense in our reconciliation of adjusted EBITDA for period-over-period comparisons.  We have included adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure used by us to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, adjusted EBITDA is a key financial measure used in determining management’s incentive compensation.

Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as we do. We believe the exclusion of certain items of income and expense from net income (loss) in calculating adjusted EBITDA is useful because (i) the amount of such income and expense in any specific period may not directly correlate to the underlying operational performance of our business, and/or (ii) such income and expense can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include the following:

· although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

· adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

· adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;

· adjusted EBITDA does not reflect cash interest income or expense;

· adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

· adjusted EBITDA does not reflect the expenses incurred for new acquisitions; and

· other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, limiting their usefulness as a comparative measure.

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Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss), and our other GAAP results. The following table presents a reconciliation of net loss to adjusted EBITDA for applicable items of income and expense that impacted each of the periods indicated:

	For the Three Months Ended March 31,
	2014			2013
	(in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss	$	(5,169	)	$	(4,117	)
Depreciation and amortization		3,861			3,071
Share-based compensation		5,475			2,724
Interest expense		87			67
Interest income		(60	)		(20	)
Other expense		11			4
Income tax (benefit) expense		(3,548	)		150
Adjusted EBITDA	$	657		$	1,879

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less net cash used in investing activities for acquisitions of property and equipment.  We use free cash flow as a measure of our operating performance; for planning purposes, including the preparation of our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to determine capital requirements; to facilitate a comparison of our results with those of other companies; and in communications with our board of directors concerning our financial performance.

We use free cash flow to evaluate our business because, although it is similar to net cash provided by (used in) operating activities, we believe it typically presents a more conservative measure of cash flow as purchases of property and equipment are necessary components of ongoing operations. We believe that this non-GAAP financial measure is useful in evaluating our business because free cash flow reflects the cash surplus available to fund the expansion of our business after payment of capital expenditures relating to the necessary components of ongoing operations. We also believe that the use of free cash flow provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Although free cash flow is frequently used by investors in their evaluations of companies, free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include the following:

· free cash flow does not reflect our future requirements for contractual commitments to third- party providers;

· free cash flow does not reflect the non-cash component of employee compensation or depreciation and amortization of property and equipment; and

· other companies, including companies in our industry, may calculate free cash flow or similarly titled measures differently, limiting their usefulness as comparative measures.

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Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by operating activities, net income (loss), and our other GAAP results. The following table presents a reconciliation of net cash provided by operating activities to free cash flow for each of the periods indicated:

	For the Three Months Ended March 31,
	2014			2013
	(in thousands)
Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow:
Net cash provided by operating activities	$	18,316		$	12,795
Acquisitions of property and equipment		(3,927	)		(1,285	)
Free cash flow	$	14,389		$	11,510

Factors Affecting Our Performance

Customer acquisition costs. We expect to continue to make significant expenditures to grow our member and enterprise customer bases. Our average cost of acquisition per member and the number of new members we generate depends on a number of factors, including the effectiveness of our marketing campaigns, changes in cost of media, the competitive environment in our markets, the prevalence of identity theft issues in the media, publicity about our company, and the level of differentiation of our services. Shifts in the mix of our media spend also influence our member acquisition costs. For example, when we engage in marketing efforts to build our brand, our member acquisition costs increase in the short term with the expectation that they will decrease over the long term. We also continually test new media outlets, marketing campaigns, and call center scripting, each of which impacts our average cost of acquisition per member. In addition, given the success of our LifeLock Ultimate service since its launch in the fourth quarter of 2011, we expect to be able to absorb a higher average cost of acquisition per member and still recognize value over the lifetime of our member relationships.

Mix of members by services, billing cycle, and distribution channel. Our performance is affected by the mix of members subscribing to our various consumer services, by billing cycle (annual versus monthly), and by the distribution channel through which we acquire the member. Our adjusted EBITDA, adjusted net income (loss), free cash flow, and average cost of acquisition per member are all affected by this mix. We have seen a recent shift to more monthly members, in large part due to the increase in the number of members enrolling through our embedded product channel in which our members enroll on a monthly basis. We also have seen an increase in the number of LifeLock Ultimate members as a percentage of our gross new members.

Customer retention. Our ability to maintain our current member retention rate may be affected by a number of factors, including the effectiveness of our services, the performance of our member services organization, external media coverage of identity theft, the continued evolution of our service offerings, the competitive environment, the effectiveness of our media spend, the timing of employee benefit and breach service enrollments, and other developments.

Our enterprise business relies on the retention of enterprise customers to maintain the effectiveness of our services because our enterprise customers typically provide us with their customer transaction data as part of our service. Losing a significant number of these customers would reduce the breadth and effectiveness of our services. In addition, we believe approximately 13% of the revenue of ID Analytics for the three-month period ended March 31, 2014, or less than 1% of our overall revenue for such period, was derived from direct competitors to our consumer business. As we have given notice of non-renewal to competitors in our consumer business, we have allowed such contracts to lapse, and accordingly, this percentage may decline over time.

Investments to grow our business. We will continue to invest to grow our business. Investments in the development and marketing of new services and the continued enhancement of our existing services will increase our operating expenses in the near term and thus may negatively impact our operating results in the short term, although we anticipate that these investments will grow and improve our business over the long term.

Regulatory developments. Our business is subject to regulation by federal, state, local, and foreign authorities. Any changes to the existing applicable laws, regulations, or rules; any determination that other laws, regulations, or rules are applicable to us; or any determination that we have violated any of these laws, regulations, or rules could adversely impact our operating results. In addition, as previously disclosed, on January 17, 2014, we met with FTC Staff, at our request, to discuss issues regarding allegations that have been asserted in a whistleblower claim against us relating to our compliance with the FTC Order. On March 13, 2014, we received a request from the FTC for documents and information related to our compliance with the FTC Order. A determination that we are in violation of the FTC Order could result in liability for fines, damages, or other penalties or require us to make changes to our services

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and business practices, and cause us to lose customers, any of which could have a material adverse impact on our business, operating results, financial condition, and prospects.  We also collect and remit sales tax in several states related to the sale of our consumer services. Other states or one or more countries or other jurisdictions may seek to impose sales or other tax collection obligations on us in the future. A successful assertion by any state, country, or other jurisdiction that we should be collecting sales or other taxes on the sale of our services could, among other things, increase the cost of our services, create significant administrative burdens for us, result in substantial tax liabilities, discourage current members and other consumers from purchasing our services, or otherwise substantially harm our business and operating results.

For additional factors and risks facing our business see “Risk Factors”.

Basis of Presentation and Key Components of Our Results of Operations

Following our acquisition of ID Analytics in the first quarter of 2012, we began operating our business and reviewing and assessing our operating performance using two reportable segments: our consumer segment and our enterprise segment. We review and assess our operating performance using segment revenue, income (loss) from operations, and total assets. These performance measures include the allocation of operating expenses to our reportable segments based on management’s specific identification of costs associated to those segments.

Revenue

We derive revenue in our consumer segment primarily from fees paid by our members for identity theft protection services offered on a subscription basis. Our members subscribe to our consumer services on a monthly or annual, automatically renewing basis and pay us the full subscription fee at the beginning of each subscription period, in most cases by authorizing us to directly charge their credit or debit cards. In some cases, we offer members a free trial period, which is typically 30 days. Our members may cancel their membership with us at any time without penalty and, when they do, we issue a refund for the unused portion of the canceled membership. We recognize revenue for member subscriptions ratably on a daily basis from the latter of cash receipt, activation of a member’s account, or expiration of free trial periods to the end of the subscription period.

We also provide consumer services for which the primary customer is an enterprise purchasing identity theft protection services on behalf of its employees or customers. In such cases, we defer revenue for each member until the member’s account has been activated. We then recognize revenue ratably on a daily basis over the term of the subscription period.

We derive revenue in our enterprise segment from fees paid by our enterprise customers for fraud and risk solutions, which we provide under multi-year contracts, many of which renew automatically. Our enterprise customers pay us based on their monthly volume of transactions with us, and approximately30% of them are committed to paying monthly minimum fees. We recognize revenue based on a negotiated fee per transaction. Transaction fees in excess of any of the monthly minimum fees are billed and recorded as revenue in addition to the monthly minimum fees. In some instances, we receive up-front non-refundable payments against which the monthly minimum fees are applied. The up-front non-refundable payments are recorded as deferred revenue and recognized as revenue monthly over the usage period. If an enterprise customer does not meet its monthly minimum fee, we bill the negotiated monthly minimum fee and recognize revenue for that amount. We derive a small portion of our enterprise revenue from special projects in which we are engaged to deliver a report at the end of the analysis, which we record upon delivery and acceptance of the report.

Cost of Services

Cost of services in our consumer segment consists primarily of costs associated with our member services organization and fulfillment partners. Our member support operations include wages and benefits for personnel performing these functions and facility costs directly associated with our sales and service delivery functions. We also pay fees to third-party service providers related to the fulfillment of our consumer services, including the premiums associated with the identity theft insurance that we provide to our members, and merchant credit card fees.

Cost of services in our enterprise segment includes the costs related to data analytics and data management, primarily consisting of wages and benefits of personnel and facility costs directly associated with the data analytics and data management.

We expect our cost of services to increase if we continue to increase the number of our members and enterprise customers. Our cost of services is heavily affected by prevailing salary levels, which affect our internal direct costs and fees paid to third-party service providers. Increases in the market rate for wages would increase our cost of services.

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Gross Margin

Gross profit as a percentage of total revenue, or gross margin, has been and will continue to be affected by a variety of factors. Increases in personnel and facility costs directly associated with the provision of our services can negatively affect our gross margin, as can higher fulfillment costs due to enhancements in our services or the introduction of new services, such as the addition of insurance coverage in our consumer services. A significant increase in the number of members we enroll through our strategic partner distribution channels can also negatively affect our gross margin because we offer wholesale pricing to our strategic partners. In prior periods, our gross margin has also been negatively impacted by sales taxes we paid on behalf of our members and settlements with state tax authorities. Conversely, operating efficiencies in our member services organization can improve our gross margin. We expect that our gross margin may fluctuate from period to period depending on all of these factors.

Sales and Marketing

Sales and marketing expenses consist primarily of direct response advertising and online search costs, commissions paid on a per-member basis to our online affiliates and on a percentage of revenue basis to our co-marketing partners, and wages and benefits for sales and marketing personnel. Direct response marketing costs include television, radio, and print advertisements as well as costs to create and produce these advertisements. Online search costs consist primarily of pay-per-click payments to search engines and other online advertising media, such as banner ads. Advertising costs are expensed as incurred and historically have occurred unevenly across periods. Our sales and marketing expenses also include payments related to our sponsorship, and promotional. In order to continue to grow our business and the awareness of our services, we plan to continue to commit substantial resources to our sales and marketing efforts. As a result, we expect our sales and marketing expenses will continue to increase in absolute dollars for the foreseeable future and vary as a percentage of revenue depending on the timing of those expenses.

Technology and Development

Technology and development expenses consist primarily of personnel costs incurred in product development, maintenance and testing of our websites, enhancing our existing services and developing new services, internal information systems and infrastructure, data privacy and security systems, third-party development, and other internal-use software systems. Our development costs are primarily incurred in the United States and directed at enhancing our existing service offerings and developing new service offerings. In order to continue to grow our business and enhance our services, we plan to continue to commit resources to technology and development. In addition, ID Analytics has historically spent a higher portion of its revenue on technology and development. As a result, we expect our technology and development expenses will continue to increase in absolute dollars for the foreseeable future.

General and Administrative

General and administrative expenses consist primarily of personnel costs, professional fees, and facility-related expenses associated with our executive, finance, human resources, legal, and governmental affairs organizations. Our professional fees principally consist of outside legal, auditing, accounting, and other consulting fees. Legal costs included within our general and administrative expenses also include costs incurred to litigate and settle various legal matters. We expect our general and administrative expenses will increase in absolute dollars for the foreseeable future as we hire additional personnel and expand our office facilities to support our overall growth and incur additional costs associated with our public company and regulatory compliance.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets is the amortization expense associated with core technology, customer relationships, and trade names and trademarks resulting from business acquisitions. As of March 31, 2014, we had $45.0 million in intangible assets, net of amortization, as a result of our acquisitions of ID Analytics and Lemon. The intangible assets have useful lives of between one and ten years and we expect to recognize approximately $8.9 million of amortization expense in the year ending December 31, 2014.

Provision for Income Taxes

We are subject to federal income tax as well as state income tax in various states in which we conduct business. Our effective tax rate for the three-month period ended March 31, 2014 approximates the U.S. federal statutory tax rate plus the impact of state taxes and permanent and other temporary differences.  For the three-month period ended March 31, 2013, our effective tax rate differed from the statutory rate primarily as a result of our valuation allowance on our deferred taxes, state taxes, and non-deductible expenses.

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Results of Operations

Comparison of the Three-Month Periods Ended March 31, 2014 and 2013

Total Revenue

	For the Three Months Ended March 31,
	2014		2013		% Change
	(in thousands)
Consumer revenue	$	100,995	$	75,094		34.5	%
Enterprise revenue		6,591		7,001		-5.9	%
Total revenue		107,586		82,095

Consumer revenue for the three-month period ended March 31, 2014 was $101.0 million, an increase of $25.9 million, or 34.5%, over consumer revenue for the three-month period ended March 31, 2013. The increase in our consumer revenue related primarily to an increase in the number of our members, which grew from 2.6 million as of March 31, 2013 to 3.2 million as of March 31, 2014, an increase of 22%. In addition, our monthly average revenue per member increased 10% to $10.81 for the three-month period ended March 31, 2014 from $9.80 for the three-month period ended March 31, 2013.  The increase in members and monthly average revenue per member resulted from the continued success of our LifeLock Ultimate service offering and our advertising and marketing campaigns designed to increase the overall awareness of our services and identity theft.    

Enterprise revenue for the three-month period ended March 31, 2014 was $6.6 million, a decrease of $0.4 million, or 5.9%, over enterprise revenue for the three-month period ended March 31, 2013. Enterprise revenue decreased due to a reduction in revenue from enterprise customers who compete with our consumer business as those contracts have been allowed to lapse.  In addition, we saw a decrease in transactions from certain end customers due to a slowdown in their business.

Cost of Services and Gross Profit

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
Cost of services	$	30,067		$	23,804			26.3	%
Percentage of revenue		27.9	%		29.0	%
Gross profit		77,519			58,291			33.0	%
Percentage of revenue		72.1	%		71.0	%

Gross profit for the three-month period ended March 31, 2014 was $77.5 million, or 72.1% of revenue, an increase of $19.2 million, or 33.0%, over gross profit of $58.3 million, or 71.0% of revenue, for the three-month period ended March 31, 2013. The increase in our gross profit resulted primarily from increased revenue associated with the growth in the number of our members and increased monthly average revenue per member. The increase in our gross margin resulted primarily from efficiencies in our member services organization and scalability within certain third party fulfillment contracts as our member base continued to grow.

Sales and Marketing

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
Sales and marketing	$	56,847		$	41,793			36.0	%
Percentage of revenue		52.8	%		50.9	%

Sales and marketing expenses for the three-month period ended March 31, 2014 were $56.8 million, or 52.8% of revenue, compared with $41.8 million, or 50.9% of revenue, for the three-month period ended March 31, 2013. The increase in our sales and marketing expenses resulted from increases in our advertising expenses and external sales commissions. The increase in our sales and marketing expenses reflected our investment to drive new membership growth, our continued advertising of our LifeLock Ultimate service, and our efforts to highlight the growing identity theft issue and to educate consumers.

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Technology and Development

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
Technology and development	$	13,148		$	9,024			45.7	%
Percentage of revenue		12.2	%		11.0	%

Technology and development expenses for the three-month period ended March 31, 2014 were $13.2 million, or 12.2% of revenue, compared with $9.0 million, or 11.0% of revenue, for the three-month period ended March 31, 2013. The increase in our technology and development expenses resulted primarily from increases in our personnel costs, as we continue to invest in the talent within the organization.

General and Administrative

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
General and administrative	$	13,972		$	9,424			48.3	%
Percentage of revenue		13.0	%		11.5	%

General and administrative expenses for the three-month period ended March 31, 2014 were $14.0 million, or 13.0% of revenue, compared with $9.4 million, or 11.5% of revenue, for the three-month period ended March 31, 2013. The increase in general and administrative expenses resulted primarily from additional costs associated with our public company compliance, our regulatory compliance, acquisition integration and related intellectual property audits, the expansion of our office facilities, and additional personnel costs, primarily non-cash share-based compensation.

Amortization of Acquired Intangible Assets

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
Amortization of acquired intangible assets	$	2,231		$	1,966			13.5	%
Percentage of revenue		2.1	%		2.4	%

Amortization of acquired intangible assets was $2.2 million for the three-month period ended March 31, 2014, an increase of $0.3 million from the three-month period ended March 31, 2013, and resulted from our amortization of the intangible assets acquired in our acquisition of Lemon in December 2013.

Other Income (Expense)

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
Interest expense	$	(87	)	$	(67	)		29.9	%
Interest income		60			20			200.0	%
Other		(11	)		(4	)		175.0	%
	$	(38	)	$	(51	)		-25.5	%

Other expense for the three-month period ended March 31, 2014 was less than $0.1 million compared with other income of $0.1 million for the three-month period ended March 31, 2013.

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Income Tax (Benefit) Expense

	For the Three Months Ended March 31,
	2014			2013			% Change
	(in thousands)
Income tax (benefit) expense	$	(3,548	)	$	150			-2465.3	%
Effective tax rate		40.9	%		-3.8	%

Income tax benefit for the three-month period ended March 31, 2014 was $3.5 million compared with an income tax expense of $0.2 million for the three-month period ended March 31, 2013. In the fourth quarter of 2013, in consideration of all available positive and negative evidence, including our historical operating results, current financial condition, and potential future taxable income, we released substantially all of our valuation allowance on our deferred tax assets.  As such, for the three-month period ended March 31, 2014, our effective tax rate approximated the U.S. federal statutory tax rate plus the impact of state taxes.

Liquidity and Capital Resources

As of March 31, 2014, we had $143.7 million in cash and cash equivalents, which consisted of cash, money market funds, and open commercial paper, and $47.5 million in marketable securities, which consisted of corporate bonds, municipal bonds, and certificates of deposit.  We classify our marketable securities as short-term regardless of contractual maturity based on our ability to liquidate such investments for use in current operations.  Additionally, we have an $85 million revolving line of credit, although we have made no draws on the line of credit to date.  As of March 31, 2014, we had no outstanding debt.  We believe that our existing cash and cash equivalents and marketable securities together with cash generated from operations will be sufficient to fund our operations for at least the next 12 months.

Operating Activities

For the three-month period ended March 31, 2014, operating activities generated $18.3 million in cash as a result of a net loss of $5.2 million, adjusted by non-cash items such as depreciation and amortization of $3.9 million, share-based compensation of $5.5 million, and a deferred income tax benefit of $3.6 million. An increase in deferred revenue related to the overall growth of our business provided operating cash of $17.2 million and we had a decrease in operating cash as a result of changes in other operating assets and liabilities of $0.2 million.

For the three-month period ended March 31, 2013, operating activities generated $12.8 million in cash as a result of a net loss of $4.1 million, adjusted by non-cash items such as depreciation and amortization of $3.1 million and share-based compensation of $2.7 million. An increase in deferred revenue related to the overall growth of our business provided operating cash of $12.5 million and we had a decrease in operating cash as a result of changes in other operating assets and liabilities of $1.4 million.

Investing Activities

For the three-month period ended March 31, 2014, we used $3.9 million of cash to acquire property and equipment and net proceeds from the sales and purchases of marketable securities provided $1.1 million of cash.

For the three-month period ended March 31, 2013, we used $1.3 million of cash to acquire property and equipment.

Financing Activities

For the three-month period ended March 31, 2014, our financing activities generated net cash of $4.3 million as a result of cash received from the exercise of stock options of $4.4 million, offset by $0.1 million paid for employee withholding tax related to net distributions of restricted stock units.

For the three-month period ended March 31, 2013, we used $0.4 million related to the payments of debt issuance costs associated with the refinancing of our credit agreement.

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Debt Obligations

Credit Agreement

On January 9, 2013, we refinanced our existing credit agreement and entered into a new credit agreement, or the Credit Agreement, with Bank of America, N.A. as administrative agent, swing line lender and issuer of letters of credit, Silicon Valley Bank as syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated as sole lead arranger and sole book manager, and the lenders from time to time party thereto. We refer to the Credit Agreement and related documents as the Senior Credit Facility.

The Senior Credit Facility provides for an $85.0 million revolving line of credit, which we can increase to $110.0 million subject to the conditions set forth in the Credit Agreement. The revolving line of credit also includes a letter of credit subfacility of $10.0 million and a swing line loan subfacility of $5.0 million. The Senior Credit Facility has a maturity date of January 9, 2018. As of March 31, 2014, we had no debt outstanding under our Senior Credit Facility.  For the three-month periods ended March 31, 2014 and 2013, we paid an unused commitment fee of less than $0.1 million, which is included in interest expense in the condensed consolidated statements of operations.

Borrowings under the Senior Credit Facility bear interest at a per annum rate equal to, at our option, either (a) a base rate equal to the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (iii) the eurodollar rate for base rate loans plus 1.00%, plus an applicable rate ranging from 0.50% to 1.25%, or (b) the eurodollar rate for eurodollar rate loans plus an applicable rate ranging from 1.50% to 2.25%. The initial applicable rate is 0.50% for base rate loans and 1.50% for eurodollar rate loans, subject to adjustment from time to time based upon our achievement of a specified consolidated leverage ratio.

In addition to paying interest on the outstanding principal under the Senior Credit Facility, we are also required to pay a commitment fee to the administrative agent at a rate per annum equal to the product of (a) an applicable rate ranging from 0.25% to 0.50% multiplied by (b) the actual daily amount by which the aggregate revolving commitments exceed the sum of (1) the outstanding amount of revolving borrowings, and (2) the outstanding amount of letter of credit obligations. The initial applicable rate is 0.25%, subject to adjustment from time to time based upon our achievement of a specified consolidated leverage ratio.

We also will pay a letter of credit fee to the administrative agent for the account of each lender in accordance with its applicable percentage of a letter of credit for each letter of credit, which fee will be equal to the applicable rate then in effect, multiplied by the daily maximum amount available to be drawn under the letter of credit. The initial applicable rate for the letter of credit is 1.50%, subject to adjustment from time to time based upon our achievement of a specified consolidated leverage ratio.

We have the right to prepay our borrowings under the Senior Credit Facility from time to time in whole or in part, without premium or penalty, subject to the procedures set forth in the Senior Credit Facility.

All of our obligations under the Senior Credit Facility are unconditionally and jointly and severally guaranteed by each of our existing and future, direct or indirect, domestic subsidiaries, subject to certain exceptions. In addition, all of our obligations under the Senior Credit Facility, and the guarantees of those obligations, are secured, subject to permitted liens and certain other exceptions, by a first-priority lien on our and our subsidiaries’ tangible and intangible personal property, including a pledge of all of the capital stock of our subsidiaries.

The Senior Credit Facility requires us to maintain certain financial covenants. In addition, the Senior Credit Facility requires us to maintain all material proprietary databases and software with a third-party escrow agent in accordance with an escrow agreement that we reaffirmed in connection with the Senior Credit Facility. The Senior Credit Facility also contains certain affirmative and negative covenants limiting, among other things, additional liens and indebtedness, investments and distributions, mergers and acquisitions, liquidations, dissolutions, sales of assets, prepayments and modification of debt instruments, transactions with affiliates, and other matters customarily restricted in such agreements. The Senior Credit Facility also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross defaults to other contractual agreements, events of bankruptcy and insolvency, and a change of control. As of March 31, 2014, we were in compliance with all covenants.

As of March 31, 2014, we had an outstanding letter of credit issued in connection with the revolving line of credit in our Senior Credit Facility in the total amount of $0.1 million.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financing activities, nor do we have any interest in entities referred to as variable interest entities.

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Contractual Obligations

There were no material changes in our commitments under contractual obligations to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Critical Accounting Policies

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that the assumptions and estimates associated with revenue recognition for payments and other fees, income taxes, and share-based compensation have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our primary market risk exposures or how those exposures are managed from the information disclosed in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.  For further discussion of quantitative and qualitative disclosures about market risk, reference is made to our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2014.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of our material legal proceedings, see Note 10 —“Contingencies” in the Notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk.  Before deciding to invest in our common stock, you should carefully consider each of the risk factors described in “Part I – Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and all information set forth in this Quarterly Report on Form 10-Q. Those risks and the risks described in this Quarterly Report on Form 10-Q, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, could materially harm our business, financial condition, operating results, cash flow, and prospects. If that occurs, the trading price of our common stock could decline, and you may lose all or part of your investment.

There have been no material changes to the Risk Factors described under “Part I – Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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Item 6. Exhibits.

10.11A**	Technology Services Agreement, dated as of January 16, 2014, by and between LifeLock, Inc. and CSIdentity Corporation
31.1	Certification of Principal Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

** Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LIFELOCK INC.
Date: May 2, 2014	By:	/s/ Todd Davis
	Name:	Todd Davis
	Title:	Chairman and Chief Executive Officer
		(Principal Executive Officer)
Date: May 2, 2014	By:	/s/ Chris Power
	Name:	Chris Power
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

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EX-10

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

EX-10.11(a)

Technology Services Agreement

This Technology Services Agreement (this “Agreement”) is entered into as of January 16, 2014, but to be effective as of January 1, 2014 (the “Effective Date”), by and between LifeLock, Inc., a Delaware corporation (“LifeLock”), having its principal place of business at 60 E. Rio Salado Parkway, Suite 400, Tempe, Arizona 85281, and CSIdentity Corporation d/b/a CSID, a Delaware corporation (“CSID”), having its principal place of business at 1501 South Mopac Expressway, Suite 200, Austin, Texas 78746. Hereinafter, LifeLock and CSID may be referred to individually as a “Party” or collectively, “Parties.”

Recitals

A.CSID provides identity-theft protection, credit monitoring, restoration and related services and platforms.

B.LifeLock provides consumer identity theft protection and other services.

C.CSID and LifeLock entered into that certain Reseller Agreement, dated December 7, 2007, as amended by that certain First Amendment to Reseller Agreement dated as of March 31, 2008, and subsequently amended and restated by the Amended and Restated Agreement dated as of November 12, 2008, which was further amended by a First Amendment, dated August 30, 2010, a Second Amendment, dated September 9, 2010, a Third Amendment, dated April 27, 2011 and a Fourth Amendment, dated August 19, 2011 (collectively, the “Original Agreement”).

D.Effective as of January 1, 2014, CSID and LifeLock desire to replace and supersede the terms of the Original Agreement, in its entirety including any amendments, statements of work (except for those certain statements of work that are in effect as of the Effective Date) or exhibits executed thereunder, all as more fully set forth herein.

E.Upon execution of this Agreement, the Parties agree that the Original Agreement shall terminate in its entirety on December 31, 2013 at 11:59 p.m. (Arizona time), and that LifeLock has fulfilled its payment obligations thereunder, other than for the amounts outstanding for services for the month of December, 2013.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1.Appointment of LifeLock as Reseller. CSID hereby appoints LifeLock as an independent, non‑exclusive reseller of CSID’s services (collectively, the “Services”) as set forth and described herein and as may be provided in the statements of work executed by the Parties from time to time, as the same may be amended, supplemented or updated by agreement of the Parties pursuant to this Agreement (each, a “SOW” or “Statement of Work”).  Customers of LifeLock or its Affiliates’ services shall be referred to herein as “Customers”.  Subject to LifeLock’s compliance with the terms hereof, CSID grants LifeLock the non-exclusive, non-transferable and non-sublicensable (expect as expressly provided in this Agreement) license to resell the Services using the Company’s Platform (as defined below) to the Customers.  LifeLock acknowledges and agrees that it shall not resell the Services on a stand-alone basis to any non-Affiliated commercial entity. Notwithstanding the foregoing, CSID agrees that LifeLock may offer the Services to its Customers, as LifeLock branded services or white-labeled services, in bundles or on a stand-alone basis, subject to the terms and conditions herein and in the applicable Statement of Work, which bundles or stand-alone LifeLock services may be resold by LifeLock’s Affiliates or its marketing or strategic partners to Customers.  LifeLock may set its own prices to its Customers without consent or notice to CSID.  As used herein, the term “Affiliates” or “Affiliated” means any entity directly or indirectly controlled by, controlling or under common control with a party, where “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an individual, corporation or other legal entity, whether through the ownership of voting securities, by contract or otherwise.  

2.Additional Obligations.

(a)Services.  LifeLock is responsible for the payment of all applicable Fees (as defined below) to CSID.  The Parties acknowledge and agree that CSID will be responsible for the delivery of the Services to LifeLock and that LifeLock will be responsible for the delivery of the Services to the Customers in accordance with this Agreement.  CSID shall permit access to the Services by Customers in a manner designated by LifeLock, and LifeLock covenants and agrees that such delivery method will comply with all applicable federal, state or local law, rule, regulation, ordinance or administrative or judicial pronouncement or decision (collectively, the “Applicable Laws”).  If, however, any data sources or third-party providers require a different delivery method for any of the Services that would require a material change to CSID’s Platform (as defined below), CSID agrees to provide prior written notice thereof to LifeLock and CSID may provide those Services through an alternative delivery method, provided that such alternative delivery method is approved by LifeLock in advance, which approval will be granted or withheld in LifeLock’s reasonable discretion.  As of the Effective Date, LifeLock approves of the current delivery method of the Services.  

(b)Support.  During the performance of Services hereunder, LifeLock shall provide first level of support for the Customers (e.g., initial response, problem identification and problem resolution) and shall provide Customers with relevant contact information for such support.  

(c)Customer Consent and Authorization. During the performance of Services hereunder, LifeLock shall include in its agreement or terms and conditions with its Customers language indicating that LifeLock is authorized to obtain this information on the Customer’s behalf, and pursuant to the Fair Credit Reporting Act, as then in effect, granting LifeLock’s third party data providers and licensors, including CSID and any of the national credit bureaus, the right to access credit files and exchange information with such third parties in order to provide the Services.  

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LifeLock will also include language in such Customer agreements (or terms and conditions) that the Customer is using the Services to protect against or prevent actual fraud, unauthorized transactions, claims or liabilities.    

(d)Non-exclusivity.  This Agreement is non-exclusive and shall not be deemed to be a requirements contract.  LifeLock shall be free without obligation to CSID to perform itself, or acquire from third parties, services similar or identical to the Services provided hereunder. For avoidance of doubt, nothing herein will prohibit LifeLock from using a variety of third-party providers in its provision of the Services to Customers.  CSID represents, warrants and covenants that [****] will be the sole third-party service provider to CSID for any credit or credit related Services delivered by CSID under this Agreement, unless LifeLock consents in writing to change such service provider in its sole discretion.  If, however, [****] (as the case may be) is unable or unwilling to provide such credit or credit related Services to CSID, then the Parties agree to take commercially reasonable efforts to identify a substitute provider for these services, provided that LifeLock shall have the right, in its sole discretion, to accept or reject any substitute service provider.  

(e)Subcontracting. CSID agrees that it shall not employ any agent or subcontractor in connection with the performance of any Services without the prior written consent of LifeLock, which may be withheld for any reason.  If LifeLock does consent, CSID shall provide LifeLock with written evidence (acceptable to LifeLock) of said agent's or subcontractor's compliance with the provisions of this Agreement prior to the disclosure of any Customer Information to any such agent or subcontractor in connection with or pursuant to this Agreement. CSID shall have formal written contracts with all subcontractors and shall ensure that all confidentiality, regulatory, and similar obligations of CSID are contractually undertaken by each subcontractor.

(f)New Platform Features and Functionality.  In the event that LifeLock or its Affiliates provides CSID any ideas or suggestions for the development of new features and functionality relating to CSID’s Platform that are not Services generally available for purchase or in development (as evidenced by a written record made prior to the time of disclosure of any ideas or suggestions by LifeLock), then the Parties may agree to have CSID undertake such new development work for LifeLock or its Affiliates associated with the proposed new features and functionality for the Platform pursuant to a mutually acceptable SOW detailing the costs, time frame and deliverables for such new features (the “New Features”).  In the event CSID develops and implements the New Features pursuant to a SOW, CSID will own all intellectual property rights with respect to the New Features to the Platform and the maintenance of the New Features will be covered by CSID’s Maintenance (as defined below) requirements under this Agreement, exclusive of any intellectual property owned by LifeLock or its Affiliates (as evidenced by a written record made prior to the effective date of the SOW).  The Parties agree that any New Features shall be available to LifeLock and its Affiliates [****] during the Term of this Agreement and for a period of not less than one (1) year after expiration or termination of this Agreement or the Wind-Down Period (defined below), whichever is longer, unless otherwise expressly agreed to in writing by the Parties.  LifeLock and its Affiliates’ use of the New Features will be governed by this Agreement, the applicable SOW and CSID’s exclusive ownership rights in the New Features with respect to its Platform.    

(g)De Minimus Use of Reports, Alerts and Scores. Subject to Applicable Laws and the terms of any third party agreements and licenses between CSID and its licensors and third party providers, CSID hereby grants to LifeLock and its Affiliates the worldwide, non-exclusive, irrevocable, royalty free right to use the digitized alerts and reports produced by the non-credit Services and also the digitized credit alerts, reports and scores (other than the credit alerts, reports and scores from [****]) (collectively, the “Outputs”) provided to LifeLock by CSID as part of LifeLock’s or its Affiliate’s services delivered to their respective Customers, and includes the right to make de minimus digitized copies of the Outputs and the right to reformat and analyze the Outputs and incorporate them into its network, databases, products and services in its sole discretion (but, in all cases, subject to Applicable Laws) in order to provide more efficient services to the Customers. The Outputs will only be copied and stored on servers located in the States of Arizona, California and/or Nevada. If LifeLock decides to copy and store the Outputs in any other state, LifeLock must notify CSID of the new state or location of the Outputs as soon as reasonably practicable (but LifeLock will not store the Outputs in New York without CSID’s consent), but with no less than thirty (30) days advance written notice. LifeLock or its Affiliates must retain possession of the Outputs at all times.  CSID acknowledges that LifeLock or such Affiliate shall have the right to use the Outputs to provide its services to the Customers during the Term, and the rights granted to LifeLock in this subsection are deemed a license, and not a sale.  Upon the expiration or termination of this Agreement, the Parties agree that CSID has no further obligation with regards to the Outputs and that LifeLock and its Affiliates shall be free in their sole and absolute discretion to use the Outputs, in whole or in part, separately or in combination with other records, information or data after the expiration or termination hereof, provided that such use of the Outputs by LifeLock is subject to compliance with Applicable Laws. If the use of Outputs as contemplated by this Section 2(g) is restricted in any way by any of CSID’s agreements with third party data licensors or data service providers, CSID shall use commercially best efforts to (a) negotiate with any such third party the rights in favor of LifeLock as described herein and (b) if such rights cannot be obtained, notify LifeLock of such restrictions in writing and provide such supporting documentation as required by LifeLock to determine the scope of any such limitations or restrictions prior to CSID making the affected Services available to LifeLock. In the event of a Transaction or Assignment (each defined in Section 13(c) below) to [****] or their respective Affiliates, CSID shall use good faith efforts to include the credit alerts, reports and scores from such entity to LifeLock as part of the “Outputs,” but, subject to CSID’s obligations herein, CSID cannot guarantee that such credit alerts, reports or scores will be included as part of the Outputs.  

(h)Non-solicit. During the Term of this Agreement and for two (2) years after the termination of this Agreement, CSID shall not knowingly and directly solicit business from, offer to or promote or market any of the Services to any enterprise customer of LifeLock or its Affiliates (but excluding, for purposes hereof, ID Analytics, Inc.) that has a binding, written agreement with LifeLock or any of its Affiliates (other than ID Analytics, Inc.).  

(i)Change in Laws.  Subject to the terms of this Agreement, notwithstanding anything to the contrary herein, CSID reserves the right to discontinue delivery of a particular Service, if based on the legal opinion of CSID’s outside counsel that CSID cannot provide the Service(s) as described in this Agreement without violating Applicable Law or the requirements of any contract with a data provider as described in Section 2(g) above.  CSID shall notify LifeLock in writing of any such discontinuance one-hundred and eighty (180) days in advance (or earlier if required by the Applicable Laws or the requirements of the applicable data provider), including CSID’s comprehensive analysis of why any such discontinuance is necessary to comply with Applicable Law or contract with the applicable data provider. In such notice, CSID shall offer to (i) substitute a like or similar service for the affected Service, if feasible and if approved by LifeLock in its reasonable discretion; or (ii) terminate delivery of any of the affected Services if any state or federal agency or any third party asserts that the use of the Services violates Applicable Laws or any data provider contract.  Under such circumstances, LifeLock agrees that CSID can terminate delivery of such affected Service(s), or substitute a like or similar service, as the case may be, provided that if any affected Service is no longer provided hereunder and is a component of the Monthly Minimum Fees (as defined

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below), then the Monthly Minimum Fees payable to CSID going forward shall be reduced by the percentage equal to the monthly amount of the affected Service paid to CSID over the monthly amount paid to CSID for the Services comprising the Monthly Minimum Fees.

3.Fees and Taxes.

(a)Fees and Taxes. LifeLock agrees to pay CSID the amounts based on the pricing schedule for the Services set forth on Exhibit B attached hereto, or such other amounts as agreed to by the Parties and described in a Statement of Work (the “Fees”).  Except to the extent amended expressly in writing by the Parties or for an amendment pursuant to Section 3(b) (Preferred Pricing) below, the Fees set forth in Exhibit B shall apply throughout the Term, notwithstanding any Transaction or Assignment (each defined in Section 13(c) (Assignment) below) of this Agreement to any third party. LifeLock agrees that the Fees are not commissions, royalties, or rent.  CSID will invoice LifeLock for the Fees set forth in Exhibit B on a monthly basis.  All invoices shall be due and payable in full within thirty (30) days from the receipt of the applicable invoice.  All payments made under this Agreement shall be made in cleared funds, free and clear of and without deduction for or on account of any taxes, levies, imports, duties, charges, fees, penalties, interest and withholdings of any nature now or hereafter imposed by any governmental, fiscal or other authority, except as required by Applicable Law. To the extent new products or services are added (e.g., credit reports, scores and/or monitoring) pursuant to a Statement of Work or this Agreement, CSID will bill and/or invoice LifeLock for such Services and the same shall be deemed “Fees” as contemplated hereby. The Monthly Minimum Fees will be prorated for the month the effective termination date occurs.  The Fees do not include any sales, use, Arizona Transaction Privilege (sales taxes) or any similar taxes or fees that may be assessed by any federal, state or local authority (“Sales Taxes”).  LifeLock agrees, for purposes of Sales Taxes with respect to LifeLock services provided to Customers (including the Services), that LifeLock is not the ultimate consumer and that CSID is providing the Services to LifeLock for purposes of resale in the normal course of business.  LifeLock agrees that, for purposes of Sales Taxes related to the sale of its services (including the Services), the seller to the Customer is solely responsible for reporting, collecting and remitting all Sales Taxes to the appropriate authorities.  LifeLock will provide CSID with a Resale certificate form, or exemption certificate if applicable, from any taxing jurisdiction requested by the CSID, including but not limited to, a Multijurisdictional resale certificate, an Arizona Resale Certificate, a Texas Sales Tax Resale Certificate, or an exemption certificate asserting a multi-state benefit.  LifeLock agrees that LifeLock, its Affiliates, marketing and strategic partners shall be solely responsible, as applicable, for collecting, reporting and remitting all Sales Taxes due in connection with the sales of the Services to Customers or third parties.LifeLock shall indemnify, defend, and hold harmless CSID for any and all such Sales Taxes and any damages incurred by CSID in connection with LifeLock’s failure to properly collect, report, and remit Sales Taxes to the appropriate government authorities on a timely basis. Both Parties agree, for tax purposes and any taxing jurisdiction, that the “ship to” address, electronic delivery or primary access address for all Services with respect to LifeLock and its Affiliates is LifeLock’s principal place of business as set forth above.

(b)Preferred Pricing. [****]

(c)Promotional Customer Fee.  LifeLock may, at its discretion, from time to time run promotional opportunities that may include the Services (collectively, the “Promotional Services”) for a specified period of time (the “Promotional Period”).  LifeLock agrees to provide CSID advance written notice of each such promotional opportunity and the applicable Promotional Services, including the relevant information regarding such promotion regarding pricing to the Customer and the duration of such Promotional Period for the Promotional Service(s).  If Customers subscribe to the Promotional Services during a Promotional Period at discounted fees (each, a “Promotional Customer”), LifeLock shall pay CSID the Fees as set forth on Exhibit B less any discount offered to such Promotional Customer (the “Promotional Customer Fee”), including such discounts whereby the Promotional Services are provided at no cost for a period of time (such Per Customer Fee to be deemed the “Promotional Per Customer Fee”); provided, however that such discount shall not be applied to [****], in the calculation of the Promotional Customer Fee or Promotional Per Customer Fee due to CSID.  For purposes of explanation, should LifeLock offer Promotional Services at a [****] discount, the discount to the Fees otherwise required to be paid by LifeLock to CSID for the Promotional Services under Exhibit B shall also be set at [****], for all services except any credit related Services and any call center related Services, which shall be paid at the rates as set forth in Exhibit B; and/or should LifeLock offer Promotional Services for two free months, then CSID shall also provide a two free-month period with respect to the Fees due from LifeLock to CSID, for all services except any credit related Services and any call center related Services which shall be paid at the rates as set forth in Exhibit B.  Notwithstanding the above, (i) if the discount to the Promotional Customer shall exceed [****] (on an annualized basis); or (ii) if any combination of discounted services with free services shall be aggregated, and to the extent such discount to the Promotional Customer exceeds [****] (on an annualized basis), then CSID shall have the right to “opt out” and not provide LifeLock with the discounted fees corresponding to the promotional program, provided that LifeLock may then elect to include the Promotional Services at the [****] discount at its own cost.

4.Trademark License.

(a)Limited License. Subject to the terms and conditions of this Agreement, each Party grants to the other a limited, non‑exclusive, royalty-free license to use such Party’s trademarks solely in connection with the relationship contemplated hereby, subject to the prior express written consent of the owner Party as described in (b) below and compliance with the trademark guidelines of the owner Party and the requirements of subsection (b) below.  Except as otherwise expressly set forth herein, all licenses granted hereby shall automatically terminate upon the termination or expiration of this Agreement.  Neither Party transfers, nor does the other Party obtain, any patent rights, copyright interest or other right, claim or interest, in the Services, information, consumer information database, systems, forms manuals or other proprietary information utilized or provided by the other Party, other than the limited licenses expressly granted herein.

(b)General Usage. For purposes of this Section 4, “trademarks” includes registered or unregistered trademarks, service marks or brand names of CSID and/or LifeLock.  Before either Party may use any trademarks of the other Party, such Party must obtain the owner Party’s prior review and express written approval (which may be by e-mail), in its discretion, as to the form, content and context of any intended use.  CSID or LifeLock, as the case may be, shall immediately cease use of any of such Party’s trademarks upon written request from the owner Party.  In all cases, both Parties must (i) use the trademarks at all times in a manner consistent with applicable trademark laws; (ii) give proper attribution to the owner Party as the trademark owner, (iii) give proper trademark notice each time the trademark is used (with ® used for registered trademarks, ™ for unregistered trademarks and SM used for unregistered service marks); (iv) not alter or obscure the appearance of the trademarks in any way; and (v) notify the owner Party immediately of any improper, infringing, confusing or unauthorized use of the trademarks by anybody.  Neither LifeLock nor CSID may use the trademarks to disparage the owner Party, its products or services, or otherwise use the trademarks in any manner which, in the owner Party’s judgment, may diminish or damage the owner Party’s goodwill in the trademarks. CSID agrees that it will not use, file, register or otherwise

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adopt any name, mark, wording, slogan or domain name for its products and services that may be confusingly similar with the registered trademarks of LifeLock or its Affiliates.

(c)Bidding. CSID agrees it shall not bid on (and shall negative match on all search engines for) the trademarks of LifeLock or its Affiliates in pay per click or similar search engine placement programs including, but not limited to: LifeLock, LifeLock.com, www.LifeLock.com, WalletLock, LifeLock Ultimate, Todd Davis or any combination of words that include LifeLock’s trademarks, service marks, trade dress, trade names, logos and other distinctive brand features (“LifeLock Marks”) used in or related to LifeLock’s business.

5.Maintenance.

(a)Service Level Agreement.  CSID agrees that all maintenance for the Platform (“Maintenance”) shall be provided in accordance with the Service Level Agreement set forth on Exhibit C.

(b)Compliance with Laws.  CSID hereby certifies to LifeLock that it will use any information provided to CSID by LifeLock in the course of providing the Maintenance in compliance with all Applicable Laws, including, by way of illustration, but not limitation, the Fair Credit Reporting Act and the Gramm-Leach-Bliley Act.  LifeLock hereby certifies to CSID that it will use any information provided to LifeLock by CSID in the course of providing LifeLock’s services to the Customers in compliance with all Applicable Laws.

6.Security, Warranty and Disclaimer.

(a)Security. CSID understands and agrees that any Customer Information (as defined in Section 7 below) is of the highest confidentiality, and shall be safeguarded by CSID using at least the same level of protection as CSID uses to safeguard its own most valuable and sensitive trade secret information, but in no event with less care than would be exercised by a commercially reasonable company under similar circumstances.  Without limiting the generality of the foregoing, CSID shall comply with the following security requirements at all times during this Agreement or during any period in which Customer Information remains in its possession or control:

(i) Remain fully compliant with all applicable standards of the Statement on Standards for Attestation Engagements No. 16 (“SSAE 16”), and at LifeLock’s request, provide a service organization control (SOC) 1 Type II report under SSAE 16 performed under Attestation Standards Section 101.  

(ii) Implement administrative, physical and technical safeguards that are no less rigorous than accepted industry practices including the International Organization for Standardization's standards: ISO/IEC 27001:2005 – Information Security Management Systems and shall ensure that all such safeguards, including the manner in which Personal Information (defined below) is collected, accessed, used, stored, processed, disposed of and disclosed, comply with applicable privacy laws, as well as the terms and conditions of this Agreement.

(iii) Implement administrative, physical and technical safeguards to protect Personal Information that, at a minimum, include: (i) limiting access of Personal Information to personnel of CSID authorized to have access to such information in accordance with the limited rights of use set forth in Section 7 (Intellectual Property Rights) (ii) securing business facilities, data centers, paper files, servers, back-up systems and computing equipment, including, but not limited to, all mobile devices and other equipment with information storage capability; (iii) implementing network, device application, database and platform security; (iv) securing information transmission, storage and disposal; (v) implementing authentication and access controls within media, applications, operating systems and equipment; (vi) encrypting Personal Information stored on any mobile media; (vii) encrypting Personal Information transmitted over public or wireless networks; (viii) strictly segregating Personal Information from information of CSID or its other customers so that Personal Information is not commingled with any other types of information; (ix) implementing appropriate personnel security and integrity procedures and practices, including, but not limited to, conducting background checks consistent with Applicable Law; and (x) providing appropriate privacy and information security training to CSID employees.

(iv) Maintain a written data breach investigation and response procedure to timely and accurately respond to any and all unauthorized access to or use of Personal Information which shall include notification to LifeLock within twenty-four (24) hours of any breach and initiation of immediate steps to remedy any breach and prevent any further unauthorized access at CSID’s expense and in accordance with applicable privacy rights, laws, regulations and standards.  CSID shall reimburse LifeLock for all costs paid and incurred by LifeLock in responding to, and mitigating damages caused by CSID, or resulting from any breach of Personal Information, including all costs of notices to consumers or agencies required under Applicable Law.

(v) If, in the course of its engagement by LifeLock, CSID has access to or will collect, access, use, store, process, dispose of or disclose credit, debit or other payment cardholder information, CSID shall at all times remain in compliance with the Payment Card Industry Data Security Standard ("PCI DSS") requirements, including providing a report on compliance (ROC) assessment (if applicable) to LifeLock demonstrating its compliance and remaining aware at all times of changes to the PCI DSS and promptly implementing all procedures and practices as may be necessary to remain in compliance with the PCI DSS, in each case, at CSID’s sole cost and expense

(vi) Conducting adequate training and awareness of CSID personnel on applicable policies, practices and procedures to ensure CSID’s strict compliance with its obligations under this Agreement and maintaining a disciplinary process to address any violations.

(vii) If any operational audit, or SOC report reveals an inadequacy or insufficiency of CSID’s security, confidentiality, privacy practices and standards, disaster recovery capabilities, fail-over planning or ineffectiveness of internal controls CSID will promptly develop and implement a corrective action plan reasonably satisfactory to LifeLock.  The cost of developing and implementing this plan will be CSID’s sole responsibility.

As used in this Agreement, “Personal Information” shall refer to any individual or collection of data elements that (i) can be used to identify or authenticate an individual, including, without limitation, names, addresses, telephone numbers, e-mail addresses, dates of birth, Social Security or other Government issued identification numbers and other unique identifiers; or (ii) are provided by Customers to LifeLock in the scope of its protection against identity fraud and/or theft including, without limitation, passwords or personal identification numbers (PIN), financial account numbers, credit report information, biometric or health data, answers to security questions and other personal identifiers.

(b)Limited Mutual Warranties.  Each Party hereto represents and warrants that (i) it has the full corporate right, power, and authority to enter into this Agreement and to perform its obligations hereunder; (ii) execution of this Agreement and performance of its obligations

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hereunder, do not and will not violate any written agreement to which it is a Party or by which it is bound; and (iii) it has the authority to grant the other Party all of the rights granted to the other Party in this Agreement.

(c)CSID Warranties. CSID further covenants, represents and warrants that (i) the delivery of the Services in accordance with the terms of this Agreement do not and will not give rise to or result in any violation, infringement or misappropriation of any patent, copyright, trade secret, or any violation of any other intellectual property or proprietary right, publicity, privacy, data protection, confidentiality, contractual or other rights of any third-party; (ii) the Services will be performed in accordance with Applicable Laws; and (iii) the Services will be delivered in a professional and workmanlike manner.  

(d)LifeLock Warranties. LifeLock covenants, represents and warrants that (i) LifeLock and its Affiliates will resell the Services to those Customers who have executed and/or accepted a subscription agreement or terms and conditions and been authenticated as required by Applicable Laws and (ii) with respect to the SSN Trace Services, such SSN Trace Services will be used to protect against or prevent actual fraud or any unauthorized transactions, claims or other liabilities and all credit related Services will be resold pursuant to Section 604(a)(2) of the Fair Credit Reporting Act. LifeLock further represents and warrants that the Services will not be used by LifeLock for any form of credit repair (and LifeLock will not knowingly sell the Services to any Customer for such use) nor will LifeLock use the term “credit repair” or any similar terms or verbiage in connection with the sale of the Services.  LifeLock is responsible for, and represents, warrants and covenants, that the Services will at all times be marketed, sold and used by LifeLock in compliance with this Agreement and all Applicable Laws, including by way of illustration but not limitation, the Fair Credit Reporting Act (FCRA), the Gramm-Leach-Bliley Act (GLBA) and the rules, regulations and pronouncements promulgated by the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB) or any similar federal or state agency.  

(e)DISCLAIMER.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY IMPLIED WARRANTIES OF ANY KIND TO THE OTHER PARTY, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR ACCURACY.  EXCEPT AS EXPRESSLY SET FORTH HEREIN AND SUBJECT TO THE TERMS OF THE SERVICE LEVEL AGREEMENT, IN NO EVENT DOES CSID WARRANT THAT THE SERVICES (OR THE INFORMATION THEREIN) WILL BE ERROR FREE OR WILL BE PROVIDED ON AN UNINTERRUPTED BASIS.

7.Intellectual Property Rights.  LifeLock and/or its Affiliates owns all worldwide right, title and interest in and to LifeLock’s services provided to Customers (subject, however, to the agreements with the applicable third party licensors and suppliers, if any), including all intellectual property and proprietary rights therein and derivative works therefrom (the “LifeLock Intellectual Property”). In addition, all member data relating to a Customer’s account, including Personal Information of Customers (as defined in Section 6, and collectively, the “Customer Information”), is and shall remain the property of LifeLock and/or its Affiliates.  CSID will have no rights to such information, except as expressly contemplated hereby, and LifeLock may use such Customer Information for its sole and exclusive use. Subject to Section 6(a), (c) and (e) (Security, Warranty and Disclaimer), CSID shall prevent unauthorized access or use of Customer Information. CSID owns all worldwide right, title and interest in and to the Services (subject, however, to the agreements with the applicable third party licensors and suppliers, if any) and retains exclusive ownership of the proprietary data, system and platform(s) used to perform and/or deliver the Services under this Agreement (collectively, the “Platform”), including all intellectual property and proprietary rights therein and any and all modifications, improvements, enhancements and derivative works therefrom (collectively, the “CSID Intellectual Property”), subject to the provisions of Section 2(g) above.   Nothing in this Agreement or otherwise will be deemed to grant from one Party to the other Party an ownership interest in the LifeLock Intellectual Property or the CSID Intellectual Property (as the case may be), in whole or in part, including, without limitation, any claim by, or ownership right of, LifeLock with respect to the New Features relating to the Platform. Except as expressly contemplated in this Agreement, each of LifeLock and CSID hereby represents and warrants that it will not otherwise, either directly or indirectly, itself or through any agent or third-party: (a) request, compile, store, maintain or use the CSID Intellectual Property or the LifeLock Intellectual Property (as the case may be), (b) copy or otherwise reproduce the CSID Intellectual Property or the LifeLock Intellectual Property (as the case may be), or (c) with respect to LifeLock, transfer or otherwise attempt to resell the Services.

8.Confidentiality.

(a)Confidential Information.  As used herein, “Confidential Information” means:  

(i) with respect to LifeLock,  (A) any information about LifeLock’s finances or its current or proposed business offerings, products, services, plans or strategies, (B) information about LifeLock’s partners or its Affiliates; (C) the Personal Information of LifeLock Customers as more fully defined in Section 6 above, and (D) any other information that is disclosed by LifeLock to CSID that should be considered confidential from its nature or the circumstances surrounding its disclosure, including information received by LifeLock from third parties under an obligation of confidentiality;

(ii) with respect to CSID, (A) technical specifications, methodologies, designs, proposals and information about CSID’s current or proposed products or services that are disclosed by CSID to LifeLock; (B) CSID financial information, any information about CSID’s finances or its current or proposed business offerings, products, services, plans or strategies; and (C) any other information that is disclosed by CSID to LifeLock that should be considered confidential from its nature or the circumstances surrounding its disclosure, including information received by CSID from third parties under an obligation of confidentiality; and

(iii) the specific terms and pricing set forth in this Agreement.

(b)Use and Disclosure Restrictions.  With respect to any Confidential Information either Party receives (“Receiving Party”) from the other Party (“Disclosing Party”), the Receiving Party shall:  (i) keep such information confidential; (ii) use the same degree of care for the Disclosing Party’s Confidential Information that it uses for its own Confidential Information, but in no event with less than reasonable care; (iii) not use the Confidential Information other than in connection with the performance of this Agreement; and (iv) not divulge the Confidential Information to Receiving Party’s employees, agents or service providers, unless such personnel have a need to know and have undertaken a written obligation to keep the Confidential Information secret consistent with the terms of this Agreement (“Authorized Personnel”).  Receiving Party agrees to use all reasonable steps to ensure that the Disclosing Party’s Confidential Information is not disclosed by Receiving Party’s Authorized Personnel in violation of this

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Section.

(c)Exclusions.  Confidential Information shall not include information that:  (i) is or becomes generally known or available to the public at large other than as a result of a breach by the Receiving Party of any obligation to the Disclosing Party; (ii) was known to the Receiving Party free of any obligation of confidence prior to disclosure by the Disclosing Party; (iii) is disclosed to the Receiving Party on a non-confidential basis by a third-party who did not owe an obligation of confidence to the Disclosing Party and does not reasonably appear to have obtained the information improperly or from an unauthorized source; or (iv) is developed by the Receiving Party independently of and without reference to any part of the Confidential Information.  Confidential Information shall not be deemed to be in the public domain or generally known or available to the public merely because any part of said information is embodied in general disclosures or because individual features, components or combinations thereof are now or become known to the public.  If the Freedom of Information Act, 5 U.S.C. 552 et seq. (“FOIA”), applies to CSID, CSID acknowledges that Confidential Information is entitled to be exempt from disclosure under FOIA.  CSID will promptly notify LifeLock of any requests for the disclosure of any Confidential Information, including requests under FOIA, and will assert to the government, orally and in writing, that Confidential Information is exempt from disclosure under FOIA.

(d)Permitted Disclosure. Confidential Information may be disclosed by the Receiving Party in response to a valid order by a court or other governmental body of the United States or any political subdivision thereof, as otherwise required by law or government regulation, or as necessary to establish the rights of either Party under this Agreement, provided that the Receiving Party must provide written notice to the Disclosing Party prior to such disclosure in order to provide the Disclosing Party with a reasonable opportunity to obtain a protective order or otherwise protect the confidentiality of such information;  the requirements and restrictions in the foregoing provisions shall not apply to Confidential Information disclosed in filings LifeLock is required to make with the Securities and Exchange Commission.  Further, each Party acknowledges that it may disclose its own Confidential Information to a third party in connection with due diligence in furtherance of an acquisition, merger, strategic transaction, financing, loan or other similar transaction with such third party.

(e)Protection of Personal Information. CSID acknowledges and agrees that, in the course of its engagement by LifeLock, CSID will or have access to Personal Information of LifeLock Customers and potential Customers.  In addition to the requirements of Section 8(b) above, CSID shall comply with the terms and conditions set forth in this Agreement in its collection, receipt, transmission, storage, disposal, use and disclosure of Personal Information and will be responsible for the unauthorized collection, receipt, transmission, access, storage, disposal, use and disclosure of Personal Information under its control or in its possession.  The Personal Information of LifeLock Customers is deemed to be Confidential Information of LifeLock and is not the Confidential Information of CSID.  Notwithstanding anything to the contrary herein, the Parties acknowledge that information collected, compiled or received by CSID from its third party service providers and data sources in connection with providing the Services to CSID’s other customers may include Personal Information identical or similar to the Personal Information as provided by LifeLock and use by CSID of such information when in response to CSID’s other customer’s use of the Services shall not be deemed a breach of this Section 8 (Confidentiality), provided that any Personal Information delivered as a response to a CSID customer from CSID’s third party providers and data sources originated from such CSID customer and not LifeLock or its Affiliates. In recognition of the foregoing, CSID agrees and covenants that it shall:

(i)keep and maintain all Personal Information in strict confidence, using such degree of care as is appropriate to avoid unauthorized access, use or disclosure;

(ii)use and disclose Personal Information solely and exclusively for the purposes for which the Personal Information, or access to it, is provided pursuant to the terms and conditions of this Agreement and to provide the Services, and not use, sell, rent, transfer, distribute, or otherwise disclose or make available Personal Information for CSID’s own purposes or for the benefit of anyone other than LifeLock, in each case, without LifeLock’s prior written consent; and

(iii)not, directly or indirectly, disclose Personal Information to any person other than its Authorized Personnel without express written consent from LifeLock, unless, and only to the extent required by Government Authorities or by applicable law, in which case CSID shall use best efforts to notify LifeLock before such disclosure or as soon thereafter as reasonably possible.

(f)Restriction on Disclosure for Assignment. CSID further agrees that in the case of an Assignment (as defined in Section 13(c)) with [****] (each a “Restricted Entity”), CSID will not allow the disclosure, access or use of any LifeLock Confidential Information (excluding any Personal Information of LifeLock’s Customers and LifeLock’s billing information and subscriber counts to the extent necessary to permit the Restricted Entity to provide the Services to LifeLock) and/or property belonging to or deployed by LifeLock, provided to CSID, by any employees or personnel of a Restricted Entity who were not employees or personnel of CSID prior to the Assignment and who had access to LifeLock’s Confidential Information prior to the Assignment.  As used in this Section 8 (Confidentiality), the limitation on disclosure of LifeLock’s Confidential Information to a Restricted Entity shall not include this Agreement and any amendments or supplements thereto.  LifeLock shall have the right to allow the disclosure, access or use of any LifeLock Confidential Information or property belonging to or deployed by LifeLock, provided to CSID, to employees or personnel of a Restricted Entity, in its sole discretion.  For the avoidance of doubt, the intent of this provision is to ensure that, without the prior written consent of LifeLock, no Confidential Information (as modified by this subsection (f)) of LifeLock shall be disclosed, accessed or used by any employees or personnel of a Restricted Entity who were not originally employees or personnel of CSID prior to the acquisition and who had not had access to LifeLock’s Confidential Information prior to the Assignment. After a Transaction with a Restricted Entity, if LifeLock elects to engage CSID to provide new services under a Statement of Work entered into after the effective date of such Transaction, any Confidential Information disclosed in connection with such Statement of Work shall not be subject to the restriction of disclosure to the Restricted Entity described in this Section 8(f).

(g)Return of Confidential Information.  At any time during the term of this Agreement, at the Disclosing Party’s written request or upon the termination or expiration of this Agreement for any reason, the Receiving Party shall promptly return to the Disclosing Party all copies, whether in written, electronic or other form or media, of the Disclosing Party’s Confidential Information in its possession or control, or, with Receiving Party’s consent, securely dispose of all such copies, and certify in writing that such Confidential Information has been returned or disposed of securely. Notwithstanding the foregoing, LifeLock shall not be required to return Confidential Information if such Confidential Information is necessary to permit LifeLock and its Affiliates to continue to deliver the Services to its Customers.

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

9.Term and Termination.

(a)Term.  This Agreement will begin on the Effective Date and shall expire on February 15, 2018 (the “Expiration Date”), unless terminated earlier by either Party in accordance with this Agreement (the “Initial Term”).  At the end of the Initial Term, this Agreement shall automatically renew for consecutive twelve (12) month periods thereafter (each such renewal period, a “Renewal Term”, and together with the Initial Term, the “Term”); provided, however, that LifeLock may elect not to renew this Agreement by providing CSID express written notice at least ninety (90) days prior to the date of expiration of the Initial Term (or a Renewal Term, as the case may be) and CSID may elect not to renew this Agreement by providing LifeLock express written notice at least one hundred and eighty (180) days prior to the date of expiration of the Initial Term (or a Renewal Term, as the case may be).

(b)Termination without Cause.  During any Renewal Term, either party may terminate this Agreement or any Statement(s) of Work, without cause, upon (i) in the case of CSID, one-hundred and eighty (180) days’ prior express written notice to LifeLock; or (ii) in the case of LifeLock, ninety (90) days’ prior express written notice to CSID.  

(c)Termination for Cause.  Either Party may terminate this Agreement or any Statement(s) of Work for cause upon written notice if the other Party fails to cure any material breach of this Agreement (other than a breach of the service level agreements described in Section 5(a) above) within thirty (30) days after receiving written notice of such breach; provided, however, that the period to cure a breach with respect to an undisputed payment shall be ten (10) business days. In addition, either party may terminate this Agreement upon written notice if (i) a receiver is appointed for the other party or its assets; (ii) the other party makes a general assignment for the benefit of its creditors; (iii) the other party commences or has commenced against it, proceedings under any bankruptcy, insolvency, or debtor’s relief law, which proceedings are not dismissed within sixty (60) days; or (iv) the other party is liquidated or dissolved, other than in a corporate reorganization in which the ongoing business of such liquidated or dissolved party shall be continued by substantially the same ownership and management as existed prior to such liquidation or dissolution.

(d)Wind-Down. In the event of termination or expiration of this Agreement (other than in connection with an uncured material breach of Sections 2(g) (De Minimus Use of Reports, Alerts and Scores), 4 (Trademark License) and 7 (Intellectual Property Rights) of this Agreement by LifeLock), LifeLock may elect by providing CSID written notice, at its sole discretion, and CSID agrees to provide, a wind-down period beginning upon the termination or expiration of this Agreement and terminating upon the earlier of (1) termination in accordance with Section 9(f) (Termination of Wind-down Period) below; or (2) a period of six (6) months from the date of termination or expiration of the Agreement (the "Wind-Down Period").

(e)Wind-Down Effect.During the Wind-Down Period, (1) each Party shall in all respects comply with the terms and conditions of this Agreement and all applicable SOW’s in effect at the time of termination or expiration of the Agreement; and (2) the terms and conditions of this Agreement shall remain in full force and effect, including the obligations of each Party as set forth herein; provided however, LifeLock will pay CSID based on the actual fees due for the Services calculated from the pricing described in Table 2 (Pricing Schedule) under Exhibit B (Pricing Schedule), in lieu of any monthly minimum payment requirement, and the covenants set forth in Section 3(b) shall cease and be of no further force and effect during the Wind-Down Period.

(f)Termination of the Wind-Down Period. The Wind-Down Period may be terminated by either Party in the event that the other Party materially fails to perform or observe any material term or provision of this Agreement or any SOW as stated in Section 9(e) (Wind-Down Effect) (including but not limited to breach of the Exhibits attached hereto), and does not cure such breach within fifteen (15) days following written notice of such breach from the non-breaching Party demanding correction of such breach. Upon termination of the Wind-Down Period, all SOW’s and any Exhibits then in effect shall immediately terminate and each Party agrees to comply with the terms and conditions contained therein with respect to termination procedures, if any, including but not limited to sending notice of such termination to Customers and bearing all costs associated therewith.

10.Mutual Indemnities.  

(a)Each Party (each, a “Indemnifying Party”) shall defend the other Party, its Affiliates, subsidiaries, and their respective directors, officers, employees (to the extent such employee is not the claimant), successors and assigns (each, a “Indemnified Party”)  from and against all third-party claims, suits, causes of action and demands (collectively, “Claims”) and will pay any damage, loss, costs (including reasonable attorneys’ fees and court costs) that may be suffered, sustained, incurred or asserted by any third party in connection with, arising from, or related to any of the following Claims:  (a)  any grossly negligent act or omission or willful misconduct of the Indemnifying Party in connection with the performance or non-performance of any obligation hereunder or the breach of any representation, warranty, covenant or agreement under this Agreement; and (b)(i) with respect to CSID, CSID’s infringement of patent, copyright or trademark of a third party arising from the Services to the extent attributable to LifeLock's (or its Customer’s) authorized use or access to the Services (provided that any such infringement is not based upon in whole or in part any combination of the Services with other products or systems offered or used by LifeLock not approved by CSID) and (ii) with respect to LifeLock, LifeLock’s infringement of a copyright or trademark of a third party arising from the any content or materials provided by LifeLock for incorporation or use in or with the Services (other than a Claim covered under subsection (i) above); and (c) any unauthorized use or disclosure of Personal Information in breach of this Agreement.  The foregoing obligations are conditioned on the Indemnified Party providing to the Indemnifying Party: (1) prompt written notice of the indemnification sought hereunder, (2) sole control of the defense, and (3) reasonable cooperation in the defense of such Claim.

(b)The Indemnified Party may participate at its sole cost and expense in the defense, compromise, or settlement of any Claim. The Indemnified Party shall not compromise or settle any Claim without the prior express written consent of the Indemnifying Party (which consent will not be unreasonably withheld, conditioned, or delayed). The Indemnifying Party will not settle any Claim without the consent of the Indemnified Party (which consent will not be unreasonably withheld, conditioned, or delayed) in the event:  (i) such settlement does not contain a release of the Indemnified Party from all liability in respect of such Claim; or (ii) such settlement would involve the payment by the Indemnified Party of any monetary amount for which the Indemnified Party would not be indemnified by the Indemnifying Party under this Section 10 (Mutual Indemnities).

11.Limitation of Liability.  EXCEPT FOR DAMAGES ARISING OUT OF A BREACH A PARTY’S CONFIDENTIALITY OBLIGATIONS UNDER SECTION 8 (CONFIDENTIALITY) OR A PARTY’S INDEMNIFICATION OBLIGATION UNDER SECTION 10 (MUTUAL INDEMNITIES), THE

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

TOTAL LIABILITY OF EITHER PARTY TO THE OTHER PARTY UNDER THIS AGREEMENT, FROM ALL CAUSES OF ACTION AND UNDER ALL THEORIES OF LIABILITY, WILL BE LIMITED TO [****].  EXCEPT FOR DAMAGES ARISING OUT OF A BREACH A PARTY’S CONFIDENTIALITY OBLIGATIONS UNDER SECTION 8 (CONFIDENTIALITY) OR A PARTY’S INDEMNIFICATION OBLIGATION UNDER SECTION 10 (MUTUAL INDEMNITIES), IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF USE, LOSS OF DATA OR LOSS OF GOODWILL, OR THE COSTS OF PROCURING SUBSTITUTE SERVICES, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE USE OR OPERATION OF THE SERVICES, WHETHER SUCH LIABILITY ARISES FROM ANY CLAIM BASED UPON BREACH OF CONTRACT, BREACH OF WARRANTY, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR OTHERWISE, AND WHETHER OR NOT A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT IS INTENDED TO LIMIT A PARTY’S LIABILITY FOR ANY INFRINGEMENT OR MISAPPROPRIATION OF THE OTHER PARTY’S INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTS.

12.Audit; Recording Keeping.

(a)CSID shall maintain complete and accurate records of its activities performed pursuant to this Agreement, including all transactions that trigger a payment to CSID, and CSID’s compliance with Applicable Laws.  CSID shall keep such records during the Term for such period as required under Applicable Law but in any event for a period no less than five (5) years.

(b)Upon at least thirty (30) days prior written notice by LifeLock, CSID will comply with the following assessments, audits, examinations and reviews of its compliance with this Agreement, as well as any Applicable Laws and industry standards.  Such assessments will be performed at LifeLock’s expense and during normal business hours at CSID’s premises and may be conducted by LifeLock or, upon LifeLock’s election, by a third party on LifeLock’s behalf. CSID shall use commercially reasonable efforts to cooperate with such assessments by providing access to knowledgeable personnel, physical premises, documentation, infrastructure and software.  LifeLock may conduct an assessment under each of the following:

(i) All controls in CSID’s physical and/or technical environment in relation to all Customer Information being handled and/or Services being provided to LifeLock pursuant to this Agreement;

(ii) As contemplated by Section 6 (Security, Warranty and Disclaimer), CSID’s latest PCI Compliance Report, WebTrust, Systrust, and SSAE No. 16 audit reports for Reporting on Controls at a Service Organization and any reports relating to its ISO/ICE 27001 certification;  

(iii) Financial records for the purpose of verifying the appropriate billing of Services, including service level credits. If such audit determines that LifeLock has overpaid CSID, then: (i) the amount of such overpayment shall immediately become due and payable by CSID to LifeLock; and (ii) if such amount is an overpayment of ten percent (10%) or more compared to the actual payments due CSID, then all costs of any audit under this sub-section will be paid by CSID, in addition to such overpayment amount (plus applicable interest).  All such payments shall be made by CSID within thirty (30) days after it is notified in writing of the error and, if applicable, the cost of the audit; and

(iv) Upon reasonable request, CSID shall provide LifeLock with the results of any audit by or on behalf of CSID that assesses the effectiveness of CSID’s information security program as relevant to the security and confidentiality of Personal Information shared during the course of this Agreement.

(c)In addition to the foregoing, CSID shall reasonably cooperate with any third party audit, including any regulatory investigation, of LifeLock or its Affiliates which requires access to (i) any personnel of CSID involved in performance of the Services, (ii) any part of CSID’s premises where the Services are being performed; (iii) the applications and systems used to perform the Services; and (iv) any data and records owned or maintained by CSID pursuant to this Agreement.

(d)LifeLock will, and will require its agents and representatives having access to Personal Information to, implement and maintain an appropriate security program, firewall and other measures to reasonably protect Personal Information from: (a) any threats or hazards to the security or integrity of such Personal Information, and (b) unauthorized access to or use of Personal Information.  LifeLock will promptly notify CSID in writing if it becomes aware of any disclosure, dissemination or use of any Personal Information by LifeLock or any of its enterprise Customers, representatives or agents in breach of this Agreement (a “Security Incident”).  

(e)From time to time, but no more than once yearly and during regular business hours, CSID shall have the right to audit (or have its independent auditor audit), at CSID’s expense, LifeLock’s compliance with the security requirements set forth in this Section 12 (Audit; Recording Keeping).  LifeLock shall use commercially reasonable efforts to cooperate with CSID and any CSID requests in conjunction with all such audits including, but not limited to requests to correct any deficiencies discovered during such audits within a period of time mutually agreed upon. The foregoing right in this Section 12(e) shall terminate automatically in the event of an Assignment to a Restricted Entity pursuant to Section 13(c) (Assignment) below.

13.General.

(a)Survival.  Upon termination or expiration of this Agreement, the provisions of Sections 2(e)-(h) (Additional Obligations),  Section 7 (Intellectual Property Rights), Section 8 (Confidentiality), Subsection 9(d)-(f) (Wind Down), Section 10 (Mutual Indemnities), Section 11 (Limitation of Liability), Section 12 (Audit; Recording Keeping) and Section 13 (General) shall survive.

(b)Governing Law, Venue and Attorneys’ Fees.  This Agreement will be governed by and construed in accordance with the laws of the State of Arizona excluding that body of laws pertaining to conflicts of law.  Both Parties hereby irrevocably consent to the exclusive venue and jurisdiction of the courts located in Maricopa County, Arizona, whether federal, state or local, with respect to any actions brought to enforce or interpret this Agreement.  The prevailing Party in any action (or alternative dispute resolution) shall be entitled to an award of its attorneys’ fees and costs (including any appeals therefrom).

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

(c)Assignment; Notice of Potential Transaction.  

(i)Assignment; Binding on Successors and Permitted Assigns. Neither Party may sell, transfer, assign or delegate, by operation of law or otherwise, this Agreement in whole or in part to any third party (each, an “Assignment”) without the other Party’s prior written consent. In addition to a direct Assignment of this Agreement or of any right or obligation hereunder, an “Assignment” by CSID shall be deemed to include any change of control of CSID, including but not limited to a Change of Control Transaction. A “Change of Control Transaction” shall mean: (A) the direct or indirect acquisition or purchase by any entity or person, for cash or other consideration, of more than fifty percent (50%) of the voting stock of CSID; (B) a merger of CSID with another party, whether or not CSID is the surviving entity (other than a merger for the sole purpose of forming a holding company of CSID, when the holders thereof, after the merger, own the voting securities of the holding company in the same proportion as did the holders of CSID voting securities before the merger); or (C) the sale or license of all or substantially all of CSID’s assets. The Parties acknowledge and agree that the formation of any parent or holding company of CSID and the consummation of a Change of Control Transaction by such parent or holding company will be deemed a Change of Control Transaction with respect to CSID.  Notwithstanding the foregoing, (1) LifeLock may make an Assignment of this Agreement in whole to any third party that acquires, is acquired by, merges with, or acquires or is the licensee of all or substantially all of the assets of  LifeLock; and (2) CSID may make an Assignment of this Agreement in whole to any third party (other than to Intersections Inc., Affinion Group or any Affiliate of either of them) that acquires CSID pursuant to a Change of Control Transaction; provided, however, subject to Section 8(f) (Restriction on Disclosure for Assignment), if CSID makes an Assignment of this Agreement pursuant to a Change of Control Transaction to a Restricted Entity, then, notwithstanding anything to the contrary contained herein, immediately upon such Assignment (x) the Identity Theft Minimum Payments in Exhibit B shall be deemed cancelled without penalty; (y) LifeLock will no longer have any Monthly Minimum Fees; and (z) LifeLock shall have no obligation to purchase the Services from such Restricted Entity pursuant to or under this Agreement. Except as otherwise provided above, any other attempted assignment or delegation without the other Party’s prior written approval shall be null and void.  This Agreement will bind and inure to the benefit of each Party’s permitted successors and permitted assigns.

(ii)Notice of Potential Transaction.  

(A)[****]

(B)[****]

(d)Nonexclusive Remedy.  Except as expressly set forth in this Agreement, the exercise by either Party of any of its remedies under this Agreement will be without prejudice to its other remedies under this Agreement or otherwise.

(e)Severability.  If for any reason a court of competent jurisdiction finds any provision of this Agreement invalid or unenforceable, that provision of the Agreement will be enforced to the maximum extent permissible and the other provisions of this Agreement will remain in full force and effect. If a court of competent jurisdiction finds any aspect of Section 13(c)(i) of this Agreement invalid or unenforceable, LifeLock agrees to provide a copy of such court order to CSID (or CSID’s permitted assign) and LifeLock may elect to terminate this Agreement by providing written notice to CSID (and/or CSID’s permitted assign) of LifeLock’s intent to terminate this Agreement, which written notice will trigger LifeLock’s rights under Section 9(d) (Wind-Down).  

(f)Waiver.  The failure by either Party to enforce any provision of this Agreement will not constitute a waiver of future enforcement of that or any other provision.

(g)Notices. Any notice, request, designation or other communication required or permitted to be given hereunder shall be in writing and may be given by personal delivery regular mail, or overnight mail and shall be deemed sufficiently given if delivered or addressed to LifeLock or CSID at the respective addresses set forth herein.  Mailed notice shall be deemed given upon actual receipt at the address required, or three (3) business days following deposit in the mail, postage prepaid, whichever first occurs.  Overnight mail shall be deemed given on the following business day.  Personal delivery shall be deemed given on the day it is so delivered.  Either Party may, by notice to the other, specify a different address for notice purposes and copies of all notices or requests required or permitted to be given hereunder shall be concurrently transmitted to such Party or Parties at such address as LifeLock or CSID may from time to time designate by notice.

If to CSID:

CSIdentity Corporation

Attn:  President

1501 South Mopac Expressway, Suite 200

Austin, Texas  78746

With a copy to (which shall not be deemed notice):

CSIdentity Corporation

Attn:  General Counsel

1501 South Mopac Expressway, Suite 200

Austin, Texas  78746

If to LifeLock:

LifeLock, Inc.

Attn: Chief Product Officer

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

60 E. Rio Salado Parkway, Suite 400

Tempe, AZ 85281

With a copy to (which shall not be deemed notice):

LifeLock, Inc.

Attn: Chief Legal Officer

60 E. Rio Salado Parkway, Suite 400

Tempe, AZ 85281

(h)Force Majeure.  Neither Party will be responsible for any failure or delay in its performance under this Agreement (except for any payment obligation) due to causes beyond its reasonable control, including, but not limited to, labor disputes, strikes, lockouts, shortages of or inability to obtain labor, energy, raw materials or supplies, war, terrorism, riot, acts of God or governmental action (each, a “Force Majeure Event”).

(i)Relationship of the Parties.  This Agreement will not establish any relationship of partnership, joint venture, employment, franchise, or agency between the Parties.  Each party shall be responsible for the payment of all employee compensation, benefits and employment and other taxes pertaining to its employees and business, including, but not limited to, the Fair Labor Standards Act, Federal Insurance Contribution Act, the Social Security Act, the Federal Unemployment Tax Act, the provisions of the Internal Revenue Code, and all state and local taxes.  Neither Party will have the power to bind the other or incur obligations on the other’s behalf without the other’s prior express written consent.

(j)Equitable Remedies.  Each Party acknowledges and agrees that any breach of this Agreement with respect to the other Party’s intellectual property rights or Confidential Information will cause such other Party to incur irreparable harm and significant injury that would be difficult to ascertain and would not be compensable by damages alone.  Accordingly, each Party acknowledges and agrees that, in addition to any and all remedies that the non-breaching Party may have at law or otherwise with respect to such a breach, the non-breaching Party will have the right to seek specific performance; injunction or other appropriate equitable relief.

(k)Entire Agreement; No Third-party Beneficiaries.  Subject to Section 13(o) (Amended and Restated Agreement) below, this Agreement and the Exhibits hereto, constitutes the complete and exclusive understanding and agreement between the Parties regarding its subject matter and supersedes all prior or contemporaneous agreements or understandings, written or oral, relating to its subject matter.  Any waiver, modification or amendment of any provision of this Agreement will be effective only if in writing and signed by duly authorized representatives of both Parties.  Nothing in this Agreement is intended to confer upon any person other than CSID and LifeLock any rights or remedies hereunder.

(l)Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

(m)Incorporation of Recitals.  The Recitals set forth herein are hereby incorporated into this Agreement.

(n)IDA Trademark.  CSID agrees that it shall not use, adopt, file or otherwise register the mark “IDENTITY SCORE”, nor adopt any confusingly similar name, mark, wording, slogan or domain name for its products and services.

(o)Amended and Restated Agreement.  The Parties acknowledge and agree that the Original Agreement is amended and restated in its entirety and replaced with this Agreement, effective as of the Effective Date.  The Parties further agree that the Original Agreement is terminated as of December 31, 2013 at 11:59 p.m. (Arizona time), provided that the following Statements of Work and Change Orders executed under the Original Agreement shall survive the termination of the Original Agreement (and will be governed by the Original Agreement) until the completion of the work referred to therein:  SOW # 18 and Change Order #1 to SOW #17.

[Signature Page Follows]

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly-authorized representatives as of the date set forth above, but to be effective as of the Effective Date.

CSID: CSIdentity Corporation, a Delaware corporation By:/s/ Joe C. Ross Name:  Joe C. Ross Title:  President   LifeLock: LifeLock, Inc., a Delaware corporation By:/s/ Todd Davis Name:  Todd Davis Title:  CEO  

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Exhibit A

SERVICES

The following is a general summary description of each of the Services:

Court Records Alerts and Reports

Description: Creates initial baseline report of court records associated with an individual from existing criminal records data within the [****] of member fulfillment. After the initial report, checks for updates each month for alerts.

Update Frequency: [****]

Coverage: [****]

Data Keys: First name, last name, date of birth

Sex Offender Registry Alerts and Reports

Description: Creates initial baseline report of sex offenders in a zip code from existing sex offender data within the [****] of member fulfillment. After the initial report, checks for updates each month to alert on.

Update Frequency: [****]

Coverage: All fifty (50) states plus DC, Guam, PR and Indian Tribes

Data Keys: Zip

Public Records Alerts and Reports (SSN Trace)

Description: Creates initial baseline report of names and addresses associated with an SSN from existing credit header and other public record data within the [****] of member fulfillment. After the initial report, checks for updates each month for alerts.  

Update Frequency: [****] change/add/delete with [****] full update or name update

Coverage: All fifty (50) states

Data Keys: SSN

Pay Day Loan Alerts and Reports

Description: Creates initial baseline report of payday loans associated with an SSN from existing payday loan data within the [****] of member fulfillment. After the initial report, checks for updates each week and sends matches.

Update Frequency: [****]

Data Keys: First Name, Last Name, and SSN

Change of Address Alerts and Reports

Description: Creates initial baseline report of address change in [****] months associated with the move from address within the [****] of member fulfillment. After the initial report, checks for updates each week to alert on.

Update Frequency: [****]

Coverage: Only applies to addresses that receive USPS mail

Data Keys: First Name, Last Name, Address, City, State, Zip

Black Market Alerts and Reports

Description: Creates initial baseline report of records found associated with an individual within the [****] of member fulfillment. After the initial report, checks for updates daily for alerts.

Update Frequency: [****]

Coverage: Global

Data Keys: Subscriber Details including SSN, Driver's License Number, Phone Number, Email Address, Credit Card Number, Bank Account and Routing Number, Medical ID Number, and Passport Number

Minor Alerts and Reports

Description: Creates initial baseline report of black market and SSN Trace (credit header) records found associated with a minor less than18 years of age within the [****] of member fulfillment. After the initial report, checks for updates daily and monthly for alerts.

Update Frequency: [****] for black market. [****] for SSN Trace.

Coverage: Global for black market, and all 50 states for SSN Trace.  

Data Keys: SSN for SSN Trace.  For Black Market:  SSN, Driver’s License Number, Phone Number, Email Address, Credit Card Number, Bank Account and Routing Number, Medical ID Number and Passport Number.

Change of Address/Black Market Service Call

Description: Take warm transfer from LifeLock in timely manner [****] to support subscriber related questions.

Coverage: Questions relating to alerts and reports for Change of Address and/or Black Market.

Level 2 Service Call

Description: Take warm transfer from LifeLock in timely manner [****] to support subscriber related questions.

Coverage: Questions relating to enrollment or issues with enrollment, but does not include any restoration or dispute services.

WalletLock

Description: Take warm transfer notification of lost wallet from LifeLock in timely manner [****]. Assist subscriber to cancel and/or reissue all documents in the wallet that was lost or stolen within [****] of notification.

Coverage: Support includes, without limitation, credit cards, drivers licenses, debit/ATM cards, social security cards, insurance cards (health, auto, etc.), professional licenses, passports, visa and immigration documents, diplomas or certificates, checkbooks or military cards, etc.

Restoration

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Description: Take warm transfer notification of or ticket for restoration case from LifeLock in timely manner [****]. Contact subscriber within [****] day of notification. Assign specially certified agents to work with each subscriber who is a victim of identity theft on an individual basis until subscriber’s identity is restored to its original status prior to the identity theft event.

Coverage: Support includes, without limitation, providing various forms and tools, phone consultations and if requested, obtaining limited power of attorney to resolve the issues on the subscriber’s behalf.

L3 Credit Authentication

Description: Out of wallet questions generated to verify a subscriber by using information pulled from credit header file, credit report and other public information sources as generated by [****].

Update Frequency: Subscriber needs to only pass one time as part of registering for credit based Service. Subscriber is limited to 2 attempts online.

Manual Authentication

Description: Take warm transfer notification of authentication request from LifeLock in timely manner [****]. Pull subscriber’s credit report and review information from the credit report with the subscriber to ascertain that the subscriber is actually who they say they claim to be. Once manually authenticated, subscriber will be automatically enrolled in the credit Service. This process does not require that a credit report be pulled. If a subscriber is enrolled in a Service that receives a credit report, then the manual authentication uses the same report and LifeLock will not be billed twice for the credit report. However, if the subscriber is in a Service that is monitoring only and does not include a report, LifeLock will be billed for the credit report that is pulled for manual authentication.

Tri-bureau Credit Reports

Description: Provide credit report from each of the three major credit bureaus [****] as generated by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: As determined by LifeLock for each of its services. For recurring reports, reports must be generated on the recurring anniversary cycle.

Tri-bureau Credit Scores

Description: Provide credit score from each of the three major credit bureaus [****] as calculated by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: As determined by LifeLock for each of its services. For recurring scores, scores must be generated on the recurring [****] cycle.

Tri-bureau Credit Monitoring

Description: Provide monitoring of a subscriber’s credit file from each of the three major credit bureaus [****] as delivered by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: [****]

Coverage: New Accounts, Inquiries, Collection Accounts, Delinquencies, etc.

Single Bureau Credit Report

Description: Provide credit report from [****] as generated by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: As determined by LifeLock for each of its services. For recurring reports, reports must be generated on the recurring [****] cycle.

Single Bureau Credit Score

Description: Provide credit score from [****] as calculated by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: As determined by LifeLock for each of its services. For recurring scores, scores must be generated on the recurring [****] cycle.

Single Bureau Credit Monitoring

Description: Provide monitoring of a subscriber’s credit file from [****] as delivered by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: [****]

Coverage: New Accounts, Inquiries, Collection Accounts, Delinquencies, etc.

Score Tracker

Description: Provide credit score from [****] as calculated by [****] for consumer review as soon as subscriber is successfully authenticated.

Update Frequency: [****]. For recurring scores, scores must be generated on the recurring [****] cycle.

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Exhibit B

PRICING SCHEDULE

Identity Theft Minimum Payments. Subject to the terms and conditions hereof, LifeLock agrees to pay CSID a minimum monthly Fee (the “Monthly Minimum Fees”) in the amount, as further described in Table 1 (Monthly Minimum) below for each calendar year during the Initial Term of the Agreement for the following Services, purchased bundled (as described in Table 2) or separately:  (1) Court Records Alerts and Reports, (2) Sex Offender Registry Alerts and Reports, (3) Public Records Alerts and Reports (SSN Trace), (4) Pay Day Loan Alerts and Reports, (5) Change of Address Alerts and Reports, and (6) Black Market Alerts and Reports (collectively, the “Minimum Services”).  LifeLock also agrees to pay the Fees based on the pricing schedule for the Services set forth on Table 2 (Pricing Schedule) below, which may be amended, supplemented or updated from time to time by written agreement of both Parties (except as provided below regarding Pass Through Pricing).  CSID will invoice LifeLock for the Fees on a monthly basis during the Initial Term hereof (and the prorated required Monthly Minimum Fees for [****] will carry forward into calendar year [****] for the [****]).  LifeLock agrees to pay the full amount of the Fees for the Minimum Services evenif the actual use of the Minimum Services for the applicable month is less than such minimum amount.  However, if the actual usage of all Minimum Services rendered by CSID for LifeLock for the applicable month exceeds the Fees for the applicable month for the Minimum Services as set forth in Table 1, then LifeLock agrees to pay such actual amount (i.e., in excess of the monthly minimum requirement) upon receipt of an invoice therefor. Any credit or adjustment owed to LifeLock, including service level credits described in Exhibit C, shall be treated as a payment to CSID for the purposes of calculating whether the minimum has been met.  

TABLE 1: MINIMUM MONTHLY PAYMENT

Year	Monthly Minimum
2014	[****]
2015	[****]
2016	[****]
2017	[****]

TABLE 2: PRICING SCHEDULE

Services Description	[****] Volume Tiers	[****] Volume Tiers	[****] Pricing	[****] Volume Tiers	[****] Volume Tiers	[****]  Pricing
BUNDLE 1 SERVICES: Black Market Alerts and Reports; Address Change Alerts and Reports Service	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****]Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
	Tier 4	[****]	[****] Customer/Month
BUNDLE 2 SERVICES: Court Alerts and Reports; Sex Offender Alerts and Reports; Name and Addresses Report and Monitoring; Payday Loan Alerts and Reports	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
				Tier 4	[****]	[****] Customer/Month
Black Market Alerts and Reports	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
	Tier 4	[****]	[****] Customer/Month
Address Change Alerts and Reports Service	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
	Tier 4	[****]	[****] Customer/Month

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Court Alerts and Reports	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
				Tier 4	[****]	[****] Customer/Month
Sex Offender Alerts and Reports	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
				Tier 4	[****]	[****] Customer/Month
Name and Addresses Report and Monitoring	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
				Tier 4	[****]	[****] Customer/Month
Payday Loan Alerts and Reports	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
				Tier 4	[****]	[****] Customer/Month
Custom Rate* for [****] for  Black Market Alerts and Reports; Address Change Alerts and Reports Service	N/A	[****]	[****] Customer/Month	N/A	[****]	[****] Customer/Month
Minor Alerts and Reports	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
	Tier 3	[****]	[****] Customer/Month	Tier 3	[****]	[****] Customer/Month
	Tier 4	[****]	[****] Customer/Month	Tier 4	[****]	[****] Customer/Month
	Tier 5	[****]	[****] Customer/Month
WalletLock	N/A	[****]	[****] Per Incident	N/A	[****]	[****] Per Incident
Restoration	N/A	[****]	[****] Per Incident	N/A	[****]	[****] Per Incident
Change of Address/ Black Market Service Call	N/A	[****]	[****] Per Call	N/A	[****]	[****] Per Call
Level 2 Service call	N/A	[****]	[****] Per Minute	N/A	[****]	[****] Per Minute
Manual Authentication	N/A	[****]	[****] Per Authenticate	N/A	[****]	[****] Per Authenticate
L3 Credit Authentication	N/A	[****]	[****] Per Authentication	N/A	[****]	[****] Per Authentication
Tri-Bureau Credit Reports	Tier 1	[****]	[****] Per Report	Tier 1	[****]	[****] Per Report
	Tier 2	[****]	[****] Per Report	Tier 2	[****]	[****] Per Report
				Tier 3	[****]	[****] Per Report
				Tier 4	[****]	[****] Per Report
Tri-Bureau Monitoring	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month
				Tier 1	[****]	[****] Customer/Month

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Score Tracker	Tier 1	[****]	[****] Customer/Month	Tier 1	[****]	[****] Customer/Month
	Tier 2	[****]	[****] Customer/Month	Tier 2	[****]	[****] Customer/Month
				Tier 3	[****]	[****] Customer/Month
				Tier 4	[****]	[****] Customer/Month
Tri-Bureau Credit Score	Tier 1	[****]	[****] Per Score
	Tier 2	[****]	[****] Per Score
				Tier 1	[****]	[****] Per Score
Single Bureau Monitoring	N/A	[****]	[****]	N/A	[****]	[****]
Single Bureau Credit Score	N/A	[****]	[****]	N/A	[****]	[****]
Single Bureau Credit Report	N/A	[****]	[****]	N/A	[****]	[****]
Social Media Monitoring – Adult End User	N/A	[****]	[****]	N/A	[****]	[****]
Social Media Monitoring – Minor End User	N/A	[****]	[****]	N/A	[****]	[****]
*Custom Rate: CSID and LifeLock agree to the “Custom Rate” described here for [****], as reflected in the Original Agreement.  All other discount rates are subject to the terms of Section 3(c) (Promotional Customer Fee) of the Agreement.

Pass Through Pricing After [****]:  Notwithstanding anything to the contrary in this Agreement, if [****] increases the cost of supplying any [****] services to CSID at any point after [****], then CSID shall be permitted to pass through such price increase (with no mark up) to LifeLock with respect to the affected Service(s) by providing LifeLock written notice of such price increase, along with such other reasonably requested supporting documentation that LifeLock may request in connection with such price increase; provided, however, that such pass through price increase may be no more than [****] of the then existing price for such [****] Services. Notwithstanding the foregoing, in the event of any price increase, LifeLock may elect to terminate such Service(s) without penalty, and the applicable Monthly Minimum Fees shall be reduced for the remainder of the Term commensurately, based on the [****] paid by LifeLock for the applicable Service(s) in the [****] preceding the date LifeLock elects to terminate such Service(s).  

Rate Tiers:  The pricing above correlated to “Volume Tiers” are based on cumulative tiers, which means, for example, that if LifeLock has 4,500,000 [****] Customers in [****], then the first 3,999,999 Customers would be billed at [****] per month and the remaining 500,001 Customers would be billed at [****] per month.  All pricing is expressed in terms of U.S. Dollars.

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PHX 331127018v1

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Exhibit C

SERVICE LEVEL AGREEMENT

Terms and Definitions:

Availability means the availability of the Delivery Method calculated by reference to the following formula:

Availability =

Where:   = Maximum Uptime and = where the Delivery Method is not available during Scheduled Hours other than for Permitted Downtime.  The values for and are measured per calendar month.

Delivery Method means CSID’s proprietary Subscriber Management System (SMS) Platform.

Maintenance Windows means the hours during the day in which CSID shall perform Scheduled Maintenance that occurs during the lowest volume times, normally between 12:00 a.m. and 6:00 a.m. of LifeLock’s time zone.

Maximum Uptime means the aggregate number of hours in any calendar month for purposes of computing Delivery Method availability.

Permitted Downtime means the following: (i) inoperability or unavailability due to any Scheduled Maintenance; (ii) inoperability or unavailability due to any Force Majeure Event, as defined in the Agreement; or (iii) inoperability or unavailability due to, or caused by, LifeLock’s software, systems or environment or any other reason beyond the reasonable control of CSID.

Scheduled Hours means the hours during the days of the week where the Delivery Method will be available, which is 24 hours per day, 7 days per week, 365 days a year.

Scheduled Maintenance means maintenance of the Delivery Method so long as (i) such maintenance is performed by CSID during a Maintenance Window; or (ii) CSID has provided notice using e-mail to LifeLock not less than [****] before the commencement of such maintenance, which notice specifies the nature of such maintenance and the anticipated impact of such maintenance upon availability and performance of the Delivery Method, provided that Scheduled Maintenance during any day shall not exceed [****] per day and aggregated, during any month shall not exceed [****] per month, unless CSID obtains the pre-approval from LifeLock to exceed such hourly limit, which pre-approval may not be unreasonably withheld.

CSID will use reasonable commercial efforts to (i) perform Scheduled Maintenance during the lowest volume times for LifeLock’s use of the Maintenance Window (unless LifeLock requests that a specific maintenance occur during an alternate time) and (ii) provide advance notification of Scheduled Maintenance to LifeLock with as much notice as is reasonably possible having regard to the nature to the maintenance.

SLA Service Matrix

SLA Service

Standard Service Availability
(7x24x365)Yes

Service Availability Target: [****]

Hardware ReplacementYes

Network ConfigurationYes

Network MonitoringYes

Network MaintenanceYes

Network RedundancyYes

Firewall ConfigurationYes

Firewall MonitoringYes

Firewall MaintenanceYes

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Encrypted Data StorageYes

Power BackupYes

Physical SecurityYes

Fire Detection/SuppressionYes

System BackupYes

Server Patches/UpdatesYes

Maintenance WindowYes

Client NotificationYes

Operations Center Support
(7x24x365)Yes

Ops Support Escalation Response24hrs

Manual Level III (Authentication)24/7

CSIdentity Network Operations Center

The CSIdentity Network Operations Center (NOC) is available for Critical Issue escalations via phone 24 hours a day, 7 days a week, 365 days a year.

Once contacted, the NOC will create an Operations Support Ticket and investigate the issue.  If the Operations Analyst is unable to resolve the issue, the Analyst will escalate the issue according to CSID policies and procedures.

CSIdentity Network Operations Center contact information:

Phone:  1-877-274-5540
E-mail:  operations@csidentity.com
Ticket Site:  http://noc.csidentity.com

Escalation Issues: Incident Resolution

Severity 1 (Critical—defined as “system down”), with a target resolution within [****].  

For Critical Issues, LifeLock will contact the CSID Operations Center via phone at 1-877-274-5540.  The CSID Operations Center will create a new Operations Support Ticket and will respond within [****] to LifeLock and will update LifeLock [****] thereafter until the Critical Issue is resolved.  Critical issues include the following:

The Platform is not responding

Ongoing error responses from the Platform

Fatal Error responses from the Platform

The CSID Operations Analyst will create a new Operations Support Ticket, if not done so already.

Severity 2 (Major) target resolution within [****].

For Major issues, it is recommended LifeLock create a new Operations Support Ticket at http://noc.csidentity.com.  Once the ticket is created, a CSID Operations Analyst will evaluate and respond to the ticket within [****] and will update LifeLock approximately [****] until the Major Issue is resolved.  Major Issues include the following;

The Platform is producing high delays

The Platform is producing unanticipated results

Severity 3 (Minor) target resolution within [****].

For Minor issues or general questions, it is recommended that LifeLock create a new Operations Support Ticket at http://noc.csidentity.com.  Once the ticket is created a CSID Operations Analyst will evaluate and respond to the ticket within [****] and will update LifeLock periodically upon a mutually agreed upon interval.  Minor Issues include the following:

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

Individual Service is producing unexpected results for an individual subscriber

Individual queries are believed to be invalid or incorrect

For feature requests, modifications or upgrades, it is recommended that LifeLock contact your designated CSID Account Manager or create a new Operations Support Ticket at http://noc.csidentity.com.

Operations Support Ticket

CSID’s Operations Support Ticket system is available for enterprise level clients.  The use of this particular system is not intended for individual subscriber information.  To maximize the effectiveness and rapid resolution of enterprise level clients, tickets may only be opened if they relate to CSID operational support.

> To begin, visit http://noc.csidentity.com
> Click “Open New Ticket”

Service Level Credits

· Platform  Availability

o CSID’s Platform Availability to LifeLock shall be greater than or equal to [****] of time each month, as measured by CSID’s web-based monitoring service.  LifeLock shall be entitled to service level credits if the Platform fails to meet the Availability stated, in the amounts and payable as described below:

§ [****] to [****] = [****] credit to LifeLock at the end of the month

§ [****] to [****] = [****] credit to LifeLock at the end of the month

§ Less than [****] = [****] credit to LifeLock at the end of the month

§ In the event the CSID Platform is below [****] Availability for [****] or [****] during any rolling twelve (12) month period, LifeLock shall have the right to either (i) suspend such Service and, until LifeLock chooses to recommence the Service, [****], or (ii) pursue all remedies available to LifeLock, at law or equity, for CSID’s failure to comply with such service level commitments, subject to the terms and conditions of this Agreement and, further, CSID will be credited for any service level credits paid to LifeLock with respect to any damage award.

§ CSID will make a report available to LifeLock each month regarding platform Availability.

· Response Time for Service Degradations

o Except as noted below, queries from LifeLock for all CSID non-dependent SOA web service calls (the “Non-Dependent API Calls”) during a particular month shall be completed (measured from when the inquiry is received by CSID) in less than [****].

§ [****] to [****] = [****] credit to LifeLock at the end of the next month

§ [****] = [****] credit to LifeLock at the end of the next month

§ In the event the performance is below [****] for [****] or [****] during any rolling twelve (12) month period, LifeLock shall have the right to either (i) suspend such Service and, until LifeLock chooses to recommence the Service, [****], or (ii) pursue all remedies available to LifeLock, at law or equity, for CSID’s failure to comply with such service level commitments, subject to the terms and conditions of this Agreement and, further, CSID will be credited for any service level credits paid to LifeLock with respect to any damage award.

o The response time performance calculation shall be calculated based by dividing the number of transactions that were processed in greater than [****] by the total number of transactions processed within the month.

§ The following external, dependent to CSID API calls (the “Dependent API Calls”) are excluded from the above [****] response time SLA calculation, but shall be completed in less than [****] (using the same calculation and the same SLA credits for Non-Dependent API Calls noted above):

§ GetIDVerification

§ SubmitIDVerificationData

§ SOADeactivate

§ SOAReactivate

§ SOAUpdateProduct

o LifeLock may be entitled to a service level credit for failing to meet the Availability targets for either the Non-Dependent API Calls or the Dependent API Calls for a particular month; however, LifeLock may not recover service level credits under both of these calculations for the subject month except to the extent that response times fall below [****] for [****] in a twelve (12) month period.  Additional APIs developed after the Effective Date of this Agreement and the applicable Service Level Agreements for such new APIs will be mutually agreed upon by LifeLock and CSID in writing.

o CSID will deliver a report to LifeLock each month regarding the above response time web services metrics, including performance evaluations with respect to Non-Dependent API Calls (“SLA Report”).

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NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.  COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL TREATMENT REQUEST.

The foregoing service level remedies shall not be cumulative. The service level credits for Response Time for Service Degradations and Platform Availability may not be aggregated. For clarification, LifeLock will not be entitled to receive service level credits under the requirements of Incident Resolution, Service Degradation and Platform Availability for the identical Availability event that arises in a month.  CSID and LifeLock agree that the monetary payments provided for in this Exhibit C do not constitute a penalty but are a reasonable estimate of the damages suffered by LifeLock because the actual damages LifeLock would incur from CSID’s failure to comply with the service level commitments set forth in this Exhibit C are difficult to determine with any certainty. Except as specifically provided for herein or for the service level performance issues arising from grossly negligent, willful or intentional conduct, LifeLock acknowledges and agrees that service level credits received by LifeLock shall constitute LifeLock’s sole and exclusive remedy and CSID’s sole and exclusive obligation with respect to CSID’s failure to meet the applicable service levels. In order for LifeLock to receive any service level credit as described in this Exhibit C, LifeLock must provide notice to CSID of any Availability or related Services failure no later than thirty (30) days after LifeLock's receipt of the SLA Report setting forth such failure to meet the applicable service level or LifeLock will forfeit the right to receive service level credits.  All SLA service credits will be applied to the next succeeding month’s invoice.

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EX-31

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd Davis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LifeLock, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2014	/s/ Todd Davis
	Todd Davis
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-31

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chris Power, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LifeLock, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2014	/s/ Chris Power
	Chris Power
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of LifeLock, Inc. (the “Company”) for the quarterly period ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd Davis, Chief Executive Officer of the Company, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Todd Davis

Todd Davis

Chairman and Chief Executive Officer

(Principal Executive Officer)

Date: May 2, 2014

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of LifeLock, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-32

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of LifeLock, Inc. (the “Company”) for the quarterly period ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chris Power, Chief Financial Officer of the Company, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Chris Power

Chris Power

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: May 2, 2014

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of LifeLock, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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Computation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net Income Loss Per Common Share [Line Items]
Net loss	$ (5,169)	$ (4,117)
Denominator (basic and diluted):
Weighted average common shares outstanding	91,903,036	86,639,538
Net loss attributable per share to common stockholders:
Basic	$ (0.06)	$ (0.05)
Diluted	$ (0.06)	$ (0.05)

XML

Business Combinations - Additional Information (Detail) (Lemon Inc, USD $) In Thousands, unless otherwise specified	0 Months Ended
	Dec. 11, 2013	Mar. 31, 2014
Lemon Inc
Business Acquisition [Line Items]
Cash paid for acquisition	$ 42,369
Purchase price net of cash acquired	3,315
Net operating loss carryforwards		4,988
Reclassification of deferred tax assets, net - noncurrent to goodwill		$ 2,033

XML

Income Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013 Lemon Inc
Income Taxes [Line Items]
Income tax (benefit) expense	$ (3,548)	$ 150
Minimum ownership percentage			5.00%
Net operating loss carryforwards			$ 4,988

XML

Business Combinations

3 Months Ended

Mar. 31, 2014

Business Combinations

3. Business Combinations

Acquisition of Lemon

On December 11, 2013, we acquired Lemon, a mobile wallet innovator. In connection with this acquisition, we launched our new LifeLock mobile application. The aggregate purchase price consisted of approximately $42,369 of cash paid at the closing (net of cash acquired of $3,315).  We preliminarily allocated the total purchase consideration to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management, and, with respect to identifiable intangible assets, by management with the assistance of a valuation provided by a third-party valuation firm. We recorded the excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed as goodwill in our consumer segment.  

The allocation of the purchase price of the acquired assets and liabilities as of December 31, 2013 was based on provisional measurements of fair value as determined by management.  Subsequent to the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, we determined that approximately $4,988 of Lemon’s net operating loss carryforwards would expire as a result of limitations under Section 382 of the Internal Revenue Code.  As such, we reduced deferred tax assets, net – noncurrent by $2,033, increasing goodwill.  This adjustment has been reflected in the December 31, 2013 balances of deferred tax assets, net – noncurrent and goodwill in the accompanying condensed consolidated balance sheets.

We accounted for this acquisition using the acquisition method in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations. Accordingly, we allocated the purchase price of the acquired assets and liabilities based on their estimated fair values as of the acquisition date as summarized in the following table:

Net assets assumed	$	3,184
Deferred tax assets, net – noncurrent		9,896
Intangible assets acquired		3,880
Goodwill		28,724
Total purchase price consideration	$	45,684

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Summary of Components of Share-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	$ 5,475	$ 2,724
Cost of services
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	343	206
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	894	333
Technology and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	1,973	515
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total share-based compensation expense	$ 2,265	$ 1,670

XML

Summary of Amortized Cost and Estimated Fair Value of Marketable Securities by Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule Of Marketable Securities [Line Items]
Amortized Cost	$ 47,543	$ 48,717
Gross Unrealized Gains	1	3
Gross Unrealized Losses	(22)	(32)
Estimated Fair Value	47,522	48,688
Due in one year or less
Schedule Of Marketable Securities [Line Items]
Amortized Cost	47,543	47,398
Gross Unrealized Gains	1	3
Gross Unrealized Losses	(22)	(32)
Estimated Fair Value	47,522	47,369
Due after one year
Schedule Of Marketable Securities [Line Items]
Amortized Cost	0	1,319
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Estimated Fair Value	$ 0	$ 1,319

XML

Stockholders' Equity - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Class Of Stock [Line Items]
Unrecognized share based compensation	$ 86,732
Share based compensation recognizing period	3 years 2 months 12 days

XML

Warrants Purchase (Detail) (Common Stock)	3 Months Ended
	Mar. 31, 2014
Expiration Date October 3, 2014
Class Of Warrant Or Right [Line Items]
Expiration Date	Oct. 03, 2014
Number	2,334,044
Exercise Price	0.70
Expiration Date December 19, 2014
Class Of Warrant Or Right [Line Items]
Expiration Date	Dec. 19, 2014
Number	166,666
Exercise Price	4.50

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Significant Accounting Policies

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements.  The updated guidance defines discontinued operations as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and expands the disclosure requirements for discontinued operations and adds new disclosures for individually significant dispositions that do not qualify as discontinued operations.  ASU No. 2014-08 is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014.  ASU No. 2014-08 would be applied to any future applicable transaction.

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Fair Value of Financial Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014		Dec. 31, 2013
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total assets measured at fair value	$ 94,692		$ 94,709
Commercial paper
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	45,134	[1]	45,110	[1]
Money market funds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	2,036	[1]	911	[1]
Fair Value, Inputs, Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total assets measured at fair value	2,036		911
Fair Value, Inputs, Level 1 | Commercial paper
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[1]		[1]
Fair Value, Inputs, Level 1 | Money market funds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	2,036	[1]	911	[1]
Fair Value, Inputs, Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total assets measured at fair value	92,656		93,798
Fair Value, Inputs, Level 2 | Commercial paper
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	45,134	[1]	45,110	[1]
Fair Value, Inputs, Level 2 | Money market funds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[1]		[1]
Fair Value, Inputs, Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total assets measured at fair value
Fair Value, Inputs, Level 3 | Commercial paper
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[1]		[1]
Fair Value, Inputs, Level 3 | Money market funds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[1]		[1]
Corporate bonds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	34,228	[2]	37,371	[2]
Corporate bonds | Fair Value, Inputs, Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[2]		[2]
Corporate bonds | Fair Value, Inputs, Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	34,228	[2]	37,371	[2]
Corporate bonds | Fair Value, Inputs, Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[2]		[2]
Municipal bonds
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	12,796	[2]	10,819	[2]
Municipal bonds | Fair Value, Inputs, Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[2]		[2]
Municipal bonds | Fair Value, Inputs, Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	12,796	[2]	10,819	[2]
Municipal bonds | Fair Value, Inputs, Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[2]		[2]
Certificates of deposit
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	498	[2]	498	[2]
Certificates of deposit | Fair Value, Inputs, Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[2]		[2]
Certificates of deposit | Fair Value, Inputs, Level 2
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value	498	[2]	498	[2]
Certificates of deposit | Fair Value, Inputs, Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets measured at fair value		[2]		[2]

[1] Classified in cash and cash equivalents

[2] Classified in marketable securities

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 143,702	$ 123,911
Marketable securities	47,522	48,688
Trade and other receivables, net	10,601	10,906
Deferred tax assets, net	16,668	13,117
Prepaid expenses and other current assets	9,777	6,961
Total current assets	228,270	203,583
Property and equipment, net	18,064	16,504
Goodwill	158,152	158,152
Intangible assets, net	44,982	47,213
Deferred tax assets, net – noncurrent	35,986	35,986
Other noncurrent assets	1,561	1,812
Total assets	487,015	463,250
Current liabilities:
Accounts payable	4,493	2,422
Accrued expenses and other liabilities	34,067	34,926
Deferred revenue	136,319	119,106
Total current liabilities	174,879	156,454
Other noncurrent liabilities	5,411	4,640
Total liabilities	180,290	161,094
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 300,000,000 authorized at March 31, 2014 and December 31, 2013; 92,326,684 and 91,441,771 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively	92	91
Preferred stock, $0.001 par value, 10,000,000 shares authorized and no shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively
Additional paid-in capital	479,365	469,636
Accumulated other comprehensive loss	(10)	(18)
Accumulated deficit	(172,722)	(167,553)
Total stockholders’ equity	306,725	302,156
Total liabilities and stockholders’ equity	$ 487,015	$ 463,250

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Operating activities
Net loss	$ (5,169)	$ (4,117)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	3,861	3,071
Share-based compensation	5,475	2,724
Provision for doubtful accounts	272	43
Accretion of marketable securities	(366)
Deferred income tax benefit	(3,551)
Other	7	4
Change in operating assets and liabilities:
Trade and other receivables	(305)	(239)
Prepaid expenses and other current assets	(2,816)	(2,720)
Other non-current assets	251	313
Accounts payable	2,776	225
Accrued expenses and other liabilities	(835)	1,048
Deferred revenue	17,213	12,477
Other non-current liabilities	771	(34)
Net cash provided by operating activities	18,316	12,795
Investing activities
Acquisition of property and equipment	(3,927)	(1,285)
Purchase of marketable securities	(5,797)
Sale and maturities of marketable securities	6,921
Net cash used in investing activities	(2,803)	(1,285)
Proceeds from:
Stock based compensation plans	4,432	36
Payments for:
Employee tax withholdings related to restricted stock units	(154)
Debt issuance costs		(440)
Net cash provided by (used in) financing activities	4,278	(404)
Net increase in cash and cash equivalents	19,791	11,106
Cash and cash equivalents at beginning of period	123,911	134,197
Cash and cash equivalents at end of period	$ 143,702	$ 145,303

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Segment Reporting - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2014 Segment
Segment Reporting Information [Line Items]
Number of reportable segments	2

XML

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2014

Basic and Diluted Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014			2013
Net loss	$	(5,169	)	$	(4,117	)
Denominator (basic and diluted):
Weighted average common shares outstanding		91,903,036			86,639,538
Net loss attributable per share to common stockholders:
Basic	$	(0.06	)	$	(0.05	)
Diluted	$	(0.06	)	$	(0.05	)

Stock Options, Restricted Stock Units and Awards, Common Equivalent Shares from Stock Warrants, and Shares Purchased Under our Employee Stock Purchase Plan, or Espp Excluded from Computation of Diluted Net Loss Per Share

For the three-month periods ended March 31, 2014 and 2013, potentially dilutive securities are not included in the calculation of diluted loss per share as their impact would be anti-dilutive. The following weighted-average number of outstanding stock options, restricted stock units and restricted stock awards, common equivalent shares from stock warrants, and shares purchased under our Employee Stock Purchase Plan, or ESPP, were excluded from the computation of diluted net loss per share for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014		2013
Stock options outstanding		4,475,301		5,562,516
Restricted stock units and restricted stock awards		217,010		49,484
Common equivalent shares from stock warrants		2,378,641		2,322,597
Shares purchased under ESPP		25,105		5,783
		7,096,057		7,940,380

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Financial Information of Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Revenue
External customers	$ 107,586	$ 82,095
Intersegment revenue
Loss from operations	(8,679)	(3,916)
Goodwill	158,152		158,152
Total assets	487,015		463,250
Eliminations
Revenue
External customers
Intersegment revenue	(1,514)	(1,237)
Loss from operations
Goodwill
Total assets	(515)		(481)
Consumer | Operating Segment
Revenue
External customers	100,995	75,094
Intersegment revenue
Loss from operations	(4,523)	(633)
Goodwill	98,615		98,615
Total assets	376,457		349,394
Enterprise | Operating Segment
Revenue
External customers	6,591	7,001
Intersegment revenue	1,514	1,237
Loss from operations	(4,156)	(3,283)
Goodwill	59,537		59,537
Total assets	$ 111,073		$ 114,337

XML

Description of Business and Basis of Presentation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2014
Basis Of Presentation And Organization [Line Items]
Acquisition date of ID Analytics Inc	Mar. 14, 2012

XML

Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2014

Description of Business and Basis of Presentation

1. Description of Business and Basis of Presentation

We provide proactive identity theft protection services to our consumer subscribers, whom we refer to as our members, on an annual or monthly subscription basis. We also provide fraud and risk solutions to our enterprise customers.

We were incorporated in Delaware on April 12, 2005 and are headquartered in Tempe, Arizona. On March 14, 2012, we acquired ID Analytics, Inc. and its wholly-owned subsidiary IDA, Inc., collectively, ID Analytics, each of which is incorporated in Delaware.  On December 11, 2013, we acquired Lemon, Inc., or Lemon, which is incorporated in Delaware.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

The condensed consolidated balance sheet as of December 31, 2013 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the result of operations to be anticipated for the entire year ending December 31, 2014 or any future period.

Basis of Consolidation

The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. We eliminate all intercompany balances and transactions, including intercompany profits, and unrealized gains and losses in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider in forming a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	300,000,000	300,000,000
Common stock shares issued	92,326,684	91,441,771
Common stock shares outstanding	92,326,684	91,441,771
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock shares issued
Preferred stock shares outstanding

XML

Description of Business and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2014

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

The condensed consolidated balance sheet as of December 31, 2013 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the result of operations to be anticipated for the entire year ending December 31, 2014 or any future period.

Basis of Consolidation

Basis of Consolidation

The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. We eliminate all intercompany balances and transactions, including intercompany profits, and unrealized gains and losses in consolidation.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider in forming a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities.

Significant Accounting Policies

Significant Accounting Policies

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements.  The updated guidance defines discontinued operations as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and expands the disclosure requirements for discontinued operations and adds new disclosures for individually significant dispositions that do not qualify as discontinued operations.  ASU No. 2014-08 is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014.  ASU No. 2014-08 would be applied to any future applicable transaction.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 25, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	LOCK
Entity Registrant Name	LifeLock, Inc.
Entity Central Index Key	0001383871
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		92,300,000

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Business Combinations (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of Purchase Price of Acquired Assets and Liabilities Based on Estimated Fair Values

We accounted for this acquisition using the acquisition method in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations. Accordingly, we allocated the purchase price of the acquired assets and liabilities based on their estimated fair values as of the acquisition date as summarized in the following table:

Net assets assumed	$	3,184
Deferred tax assets, net – noncurrent		9,896
Intangible assets acquired		3,880
Goodwill		28,724
Total purchase price consideration	$	45,684

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenue:
Consumer revenue	$ 100,995	$ 75,094
Enterprise revenue	6,591	7,001
Total revenue	107,586	82,095
Cost of services	30,067	23,804
Gross profit	77,519	58,291
Costs and expenses:
Sales and marketing	56,847	41,793
Technology and development	13,148	9,024
General and administrative	13,972	9,424
Amortization of acquired intangible assets	2,231	1,966
Total costs and expenses	86,198	62,207
Loss from operations	(8,679)	(3,916)
Other income (expense):
Interest expense	(87)	(67)
Interest income	60	20
Other	(11)	(4)
Total other expense	(38)	(51)
Loss before provision for income taxes	(8,717)	(3,967)
Income tax (benefit) expense	(3,548)	150
Net loss	$ (5,169)	$ (4,117)
Net loss attributable per share to common stockholders:
Basic	$ (0.06)	$ (0.05)
Diluted	$ (0.06)	$ (0.05)
Weighted-average common shares outstanding:
Basic	91,903	86,640
Diluted	91,903	86,640

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Fair Value Measurements

3 Months Ended

Mar. 31, 2014

Fair Value Measurements

6. Fair Value Measurements

As of March 31, 2014 and December 31, 2013, the fair value of our financial assets was as follows:

	Level 1		Level 2		Level 3		Total
March 31, 2014
Assets:
Commercial paper (1)	$	-	$	45,134	$	-	$	45,134
Money market funds (1)		2,036		-		-		2,036
Corporate bonds (2)		-		34,228		-		34,228
Municipal bonds (2)		-		12,796		-		12,796
Certificates of deposit (2)		-		498		-		498
Total assets measured at fair value	$	2,036	$	92,656	$	-	$	94,692
December 31, 2013
Assets:
Commercial paper (1)	$	-	$	45,110	$	-	$	45,110
Money market funds (1)		911		-		-		911
Corporate bonds (2)		-		37,371		-		37,371
Municipal bonds (2)		-		10,819		-		10,819
Certificates of deposit (2)		-		498		-		498
Total assets measured at fair value	$	911	$	93,798	$	-	$	94,709

(1) Classified in cash and cash equivalents

(2) Classified in marketable securities

The fair values of our cash equivalents and available-for-sale securities included in the Level 1 and Level 2 categories are obtained from an independent pricing service, which uses a model driven valuation technique using observable market data or inputs corroborated by observable market data.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity

5. Stockholders’ Equity

Share-Based Compensation

We issue stock-based awards to our employees in the form of stock options, restricted stock units, and restricted stock. We also have an employee stock purchase plan. The following table summarizes the components of share-based compensation expense included in our condensed consolidated statement of operations for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014		2013
	(in thousands)
Cost of services	$	343	$	206
Sales and marketing		894		333
Technology and development		1,973		515
General and administrative		2,265		1,670
Total share-based compensation	$	5,475	$	2,724

Unrecognized share-based compensation expenses totaled $86,732 as of March 31, 2014, which we expect to recognize over a weighted-average time period of 3.2 years.

Stock Warrants

As of March 31, 2014, we had the following warrants to purchase common stock outstanding:

Expiration Date	Shares		Exercise Price
October 3, 2014		2,334,044		0.70
December 19, 2014		166,666		4.50

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2014

Financial Information of Segments

Financial information about our segments during the three-month period ended March 31, 2014 and as of March 31, 2014 was as follows:

	Consumer			Enterprise			Eliminations			Total
Revenue
External customers	$	100,995		$	6,591		$	-		$	107,586
Intersegment revenue		-			1,514			(1,514	)		-
Loss from operations		(4,523	)		(4,156	)		-			(8,679	)
Goodwill		98,615			59,537			-			158,152
Total assets		376,457			111,073			(515	)		487,015

Financial information about our segments during the three-month period ended March 31, 2013 and as of December 31, 2013 was as follows:

	Consumer			Enterprise			Eliminations			Total
Revenue
External customers	$	75,094		$	7,001		$	-		$	82,095
Intersegment revenue		-			1,237			(1,237	)		-
Loss from operations		(633	)		(3,283	)		-			(3,916	)
Goodwill		98,615			59,537			-			158,152
Total assets		349,394			114,337			(481	)		463,250

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Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2014

Summary of Marketable Securities Designated as Available-for-Sale

The following is summary of marketable securities designated as available-for-sale as of March 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Corporate bonds	$	34,247	$	-	$	(19	)	$	34,228
Municipal bonds		12,798		1		(3	)		12,796
Certificates of deposit		498		-		-			498
Total marketable securities	$	47,543	$	1	$	(22	)	$	47,522

The following is summary of marketable securities designated as available-as-sale as of December 31, 2013:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Corporate bonds	$	37,399	$	1	$	(29	)	$	37,371
Municipal bonds		10,820		2		(3	)		10,819
Certificates of deposit		498		-		-			498
Total marketable securities	$	48,717	$	3	$	(32	)	$	48,688

Summary of Amortized Cost and Estimated Fair Value of Marketable Securities by Maturity

The following is a summary of amortized cost and estimated fair value of marketable securities as of March 31, 2014, by maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Due in one year or less	$	47,543	$	1	$	(22	)	$	47,522
Due after one year		-		-		-			-
Total marketable securities	$	47,543	$	1	$	(22	)	$	47,522

The following is a summary of amortized cost and estimated fair value of marketable securities as of December 31, 2013, by maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Due in one year or less	$	47,398	$	3	$	(32	)	$	47,369
Due after one year		1,319		-		-			1,319
Total marketable securities	$	48,717	$	3	$	(32	)	$	48,688

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes

Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate.  Based on an estimated annual effective tax rate and discrete items, the estimated income tax (benefit) expense from operations for the three-month periods ended March 31, 2014 and 2013 was approximately $(3,548) and $150, respectively.  The determination of the interim period income tax provision utilizes the effective tax rate method, which requires us to estimate certain annualized components of the calculation of the income tax provision, including the annual effective tax rate by entity and jurisdiction.

In the fourth quarter of 2013, in connection with the acquisition of Lemon and the preliminary purchase price allocation, we analyzed Lemon’s prior ownership changes, including the change which arose as a result of our acquisition of Lemon. As a result of the preliminary analysis, we estimated that none of Lemon’s net operating loss carryforwards would expire as a result of limitations under Section 382 of the Internal Revenue Code. Subsequent to the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, we received responses from certain former shareholders who had held a 5% or greater ownership interest in Lemon prior to the acquisition and determined that due to the ownership changes of those former shareholders, approximately $4,988 of Lemon’s net operating loss carryforwards will expire solely as a result of the Section 382 limitations. As such, we retrospectively adjusted our preliminary purchase price allocation to reflect this information.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2014

Net Loss Per Share

7. Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014			2013
Net loss	$	(5,169	)	$	(4,117	)
Denominator (basic and diluted):
Weighted average common shares outstanding		91,903,036			86,639,538
Net loss attributable per share to common stockholders:
Basic	$	(0.06	)	$	(0.05	)
Diluted	$	(0.06	)	$	(0.05	)

For the three-month periods ended March 31, 2014 and 2013, potentially dilutive securities are not included in the calculation of diluted loss per share as their impact would be anti-dilutive. The following weighted-average number of outstanding stock options, restricted stock units and restricted stock awards, common equivalent shares from stock warrants, and shares purchased under our Employee Stock Purchase Plan, or ESPP, were excluded from the computation of diluted net loss per share for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014		2013
Stock options outstanding		4,475,301		5,562,516
Restricted stock units and restricted stock awards		217,010		49,484
Common equivalent shares from stock warrants		2,378,641		2,322,597
Shares purchased under ESPP		25,105		5,783
		7,096,057		7,940,380

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Segment Reporting

3 Months Ended

Mar. 31, 2014

Segment Reporting

8. Segment Reporting

Following our acquisition of ID Analytics in the first quarter of 2012, we began operating our business and reviewing and assessing our operating performance using two reportable segments: our consumer segment and our enterprise segment. In our consumer segment, we offer proactive identity theft protection services to our members on an annual or monthly subscription basis. In our enterprise segment, we offer fraud and risk solutions to our enterprise customers.

Financial information about our segments during the three-month period ended March 31, 2014 and as of March 31, 2014 was as follows:

	Consumer			Enterprise			Eliminations			Total
Revenue
External customers	$	100,995		$	6,591		$	-		$	107,586
Intersegment revenue		-			1,514			(1,514	)		-
Loss from operations		(4,523	)		(4,156	)		-			(8,679	)
Goodwill		98,615			59,537			-			158,152
Total assets		376,457			111,073			(515	)		487,015

Financial information about our segments during the three-month period ended March 31, 2013 and as of December 31, 2013 was as follows:

	Consumer			Enterprise			Eliminations			Total
Revenue
External customers	$	75,094		$	7,001		$	-		$	82,095
Intersegment revenue		-			1,237			(1,237	)		-
Loss from operations		(633	)		(3,283	)		-			(3,916	)
Goodwill		98,615			59,537			-			158,152
Total assets		349,394			114,337			(481	)		463,250

We allocated goodwill between our segments by estimating the expected synergies to each segment.

We derive all of our revenue from sales in the United States, and substantially all of our long-lived assets are located in the United States.

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Contingencies

3 Months Ended

Mar. 31, 2014

Contingencies

10. Contingencies

As part of our consumer services, we offer 24x7x365 member service support. If a member’s identity has been compromised, our member service team and remediation specialists will assist the member until the issue has been resolved. This includes our $1 million service guarantee, which is backed by an identity theft insurance policy, under which we will spend up to $1 million to cover certain third-party costs and expenses incurred in connection with the remediation, such as legal and investigatory fees. This insurance also covers certain out-of-pocket expenses, such as loss of income, replacement of fraudulent withdrawals, and costs associated with child and elderly care, travel, and replacement of documents. While we have reimbursed members for claims under this guarantee, the amounts in aggregate for the three-month periods ended March 31, 2014 and 2013 were not material.

In September 2012, Denise Richardson filed a complaint against our company and Todd Davis. Ms. Richardson claims that she was improperly classified as an independent contractor instead of an employee and that we breached the terms of an alleged employment agreement. Ms. Richardson claims she is entitled to equitable relief, compensatory damages, liquidated damages, statutory penalties, punitive damages, interest, costs, and attorneys’ fees. On March 31, 2014, our motion to dismiss was granted in part and denied in part with the court dismissing nine of the ten counts that were subject to the motion to dismiss, including the single count against Mr. Davis.  On April 23, 2014, Ms. Richardson filed an amended complaint against our company and Mr. Davis again claiming that she was improperly classified as an independent contractor instead of an employee and that we breached the terms of an alleged employment agreement. Ms. Richardson claims she is entitled to equitable relief, compensatory damages, liquidated damages, statutory penalties, punitive damages, interest, costs, and attorneys’ fees.  We have until May 14, 2014 to respond to the most recently filed complaint.

On March 3, 2014, Dawn B. Bien, representing herself and seeking to represent a class of persons who acquired our securities from February 26, 2013 to February 19, 2014, inclusive, or the Class Period, filed a complaint in United States District Court for the District of Arizona against us, Todd Davis, and Chris Power.  We refer to this complaint as the Bien Complaint.  The Bien Complaint alleges that we and Messrs. Davis and Power, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act,  disseminated materially false or misleading information, or failed to disclose material facts during the Class Period in connection with our business and our operational and compliance policies, including our and Mr. Davis’s compliance with the  Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief entered into in March 2010 with the Federal Trade Commission, or the FTC Order, wherein we settled allegations by the Federal Trade Commission challenging certain of our advertising and marketing.  The Bien Complaint also contends that as a result of alleged violations of governmental laws, regulations, and the FTC Order, our financial statements were materially false and misleading at all relevant times.  The Bien Complaint seeks certification as a class action, compensatory damages, and attorneys’ fees and costs. On March 10, 2014, Joseph F. Scesny, representing himself and seeking to represent a class of persons who acquired our securities from February 26, 2013 to February 19, 2014, inclusive, filed a complaint in United States District Court for the District of Arizona against us, Todd Davis, and Chris Power.  We refer to this complaint as the Scesny Complaint. The Scesny Complaint is substantially similar to the Bien Complaint and seeks substantially similar relief. We anticipate that the Bien Complaint and Scesny Complaint will be consolidated into one action and that the court will select a lead plaintiff as provided by the federal securities laws governing purported class action cases.

On March 13, 2014, we received a request from the Federal Trade Commission, or the FTC, for documents and information related to our compliance with the FTC Order.   Prior to our receipt of the FTC’s request, we met with FTC Staff on January 17, 2014, at our request, to discuss issues regarding allegations that have been asserted in a whistleblower claim against us relating to our compliance with the FTC Order.  We are cooperating with the FTC in regards to its request and are currently in the process of providing the documents and information requested by the FTC.

On March 20, 2014, Michael D. Peters filed a complaint in United States District Court for the District of Arizona against our company, Kim Jones, and Cristy Schaan.  Mr. Jones is not affiliated with us.  Ms. Schaan is our Chief Information Security Officer.  In his complaint, Mr. Peters alleges that we violated the whistleblower protection provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, by terminating Mr. Peters’ employment as a result of alleged disclosures that he made to us, and that Ms. Schaan defamed Mr. Peters.  Mr. Peters seeks from us two times his back pay, two times the value of certain stock options and bonus, moving expenses, damages for emotional harm and anxiety, damages for harm to reputation, litigation costs including attorneys’ fees, and interest, and seeks from Ms. Schaan actual damages, punitive damages, and interest.  On April 21, 2014, we filed an answer, affirmative defenses, and counterclaims, answering Mr. Peters’ claim under the Sarbanes-Oxley Act and asserting counterclaims against Mr. Peters for fraud, negligent misrepresentation, breach of contract, and unjust enrichment, based on our allegations that we were induced to hire Mr. Peters by his false statements and misrepresentations regarding his employment history and seeking to recover actual and consequential damages, punitive damages, attorneys’ fees, and the $15 signing bonus paid to Mr. Peters.  Mr. Peters’ response to the counterclaim is due on May 15, 2014.  On April 21, 2014, we also filed a motion to dismiss Mr. Peters’ claim under the Dodd-Frank Act.  Mr. Peters’ response to that motion to dismiss is due on May 15, 2014.  On April 25, 2014, Ms. Schaan filed a motion to dismiss Mr. Peters’ claim against her.  Mr. Peters’ response to that motion to dismiss is due on May 19, 2014.

We are subject to other legal proceedings and claims that have arisen in the ordinary course of business. Although there can be no assurance as to the ultimate disposition of these matters and the proceedings disclosed above, we believe, based upon the information available at this time, that a material adverse outcome related to the matters is neither probable nor estimable.

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Number of Outstanding Stock Options, Restricted Stock Units and Awards, Common Equivalent Shares from Stock Warrants, and Shares Purchased Under our Espp Excluded from Computation of Diluted Net Loss Per Share (Detail)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Stock options outstanding	4,475,301	5,562,516
Restricted stock units and restricted stock awards	217,010	49,484
Common equivalent shares from stock warrants	2,378,641	2,322,597
Shares purchased under ESPP	25,105	5,783
Antidilutive securities excluded from computation of earnings per share, amount, total	7,096,057	7,940,380

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value of Financial Assets and Liabilities

As of March 31, 2014 and December 31, 2013, the fair value of our financial assets was as follows:

	Level 1		Level 2		Level 3		Total
March 31, 2014
Assets:
Commercial paper (1)	$	-	$	45,134	$	-	$	45,134
Money market funds (1)		2,036		-		-		2,036
Corporate bonds (2)		-		34,228		-		34,228
Municipal bonds (2)		-		12,796		-		12,796
Certificates of deposit (2)		-		498		-		498
Total assets measured at fair value	$	2,036	$	92,656	$	-	$	94,692
December 31, 2013
Assets:
Commercial paper (1)	$	-	$	45,110	$	-	$	45,110
Money market funds (1)		911		-		-		911
Corporate bonds (2)		-		37,371		-		37,371
Municipal bonds (2)		-		10,819		-		10,819
Certificates of deposit (2)		-		498		-		498
Total assets measured at fair value	$	911	$	93,798	$	-	$	94,709

(1) Classified in cash and cash equivalents

(2) Classified in marketable securities

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Schedule of Purchase Price of Acquired Assets and Liabilities Based on Estimated Fair Values (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill	$ 158,152	$ 158,152
Lemon Inc
Business Acquisition [Line Items]
Net assets assumed	3,184
Deferred tax assets, net – noncurrent	9,896
Intangible assets acquired	3,880
Goodwill	28,724
Total purchase price consideration	$ 45,684

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Condensed Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net loss	$ (5,169)	$ (4,117)
Other comprehensive gain, net of tax:
Unrealized gain on marketable securities	8
Comprehensive loss	$ (5,161)	$ (4,117)

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Marketable Securities

3 Months Ended

Mar. 31, 2014

Marketable Securities

4. Marketable Securities

The following is summary of marketable securities designated as available-for-sale as of March 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Corporate bonds	$	34,247	$	-	$	(19	)	$	34,228
Municipal bonds		12,798		1		(3	)		12,796
Certificates of deposit		498		-		-			498
Total marketable securities	$	47,543	$	1	$	(22	)	$	47,522

All marketable securities are classified as current regardless of contractual maturity dates because we consider such investments to represent cash available for current operations.

As of March 31, 2014, we did not consider any of our marketable securities to be other-than-temporarily impaired. When evaluating our investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer, our ability and intent to hold the security and whether it is more likely than not that we will be required to sell the investment before recovery of its cost basis.

The following is a summary of amortized cost and estimated fair value of marketable securities as of March 31, 2014, by maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Due in one year or less	$	47,543	$	1	$	(22	)	$	47,522
Due after one year		-		-		-			-
Total marketable securities	$	47,543	$	1	$	(22	)	$	47,522

The following is summary of marketable securities designated as available-as-sale as of December 31, 2013:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Corporate bonds	$	37,399	$	1	$	(29	)	$	37,371
Municipal bonds		10,820		2		(3	)		10,819
Certificates of deposit		498		-		-			498
Total marketable securities	$	48,717	$	3	$	(32	)	$	48,688

The following is a summary of amortized cost and estimated fair value of marketable securities as of December 31, 2013, by maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
Due in one year or less	$	47,398	$	3	$	(32	)	$	47,369
Due after one year		1,319		-		-			1,319
Total marketable securities	$	48,717	$	3	$	(32	)	$	48,688

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Summary of Marketable Securities Designated as Available-for-Sale (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule Of Marketable Securities [Line Items]
Amortized Cost	$ 47,543	$ 48,717
Gross Unrealized Gains	1	3
Gross Unrealized Losses	(22)	(32)
Estimated Fair Value	47,522	48,688
Corporate bonds
Schedule Of Marketable Securities [Line Items]
Amortized Cost	34,247	37,399
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(19)	(29)
Estimated Fair Value	34,228	37,371
Municipal bonds
Schedule Of Marketable Securities [Line Items]
Amortized Cost	12,798	10,820
Gross Unrealized Gains	1	2
Gross Unrealized Losses	(3)	(3)
Estimated Fair Value	12,796	10,819
Certificates of deposit
Schedule Of Marketable Securities [Line Items]
Amortized Cost	498	498
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Estimated Fair Value	$ 498	$ 498

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Contingencies - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2014
Contingencies [Line Items]
Value of the service guarantee	$ 1,000,000
Loss contingency signing bonus paid	$ 15,000
United States District Court
Contingencies [Line Items]
Complaint filed date	March 20, 2014
Name of defendant	LifeLock, Inc, Kim Jones, and Cristy Schaan
Name of plaintiff	Mr. Michael D. Peters
Independent Contractor Misclassifcation | Pending Litigation
Contingencies [Line Items]
Complaint filed date	September 2012
Name of defendant	LifeLock, Inc and Todd Davis
Name of plaintiff	Ms. Denise Richardson

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2014

Summary of Components of Share-Based Compensation Expense

We issue stock-based awards to our employees in the form of stock options, restricted stock units, and restricted stock. We also have an employee stock purchase plan. The following table summarizes the components of share-based compensation expense included in our condensed consolidated statement of operations for the three-month periods ended March 31:

	For the Three Months Ended March 31,
	2014		2013
	(in thousands)
Cost of services	$	343	$	206
Sales and marketing		894		333
Technology and development		1,973		515
General and administrative		2,265		1,670
Total share-based compensation	$	5,475	$	2,724

Warrant Purchase

As of March 31, 2014, we had the following warrants to purchase common stock outstanding:

Expiration Date	Shares		Exercise Price
October 3, 2014		2,334,044		0.70
December 19, 2014		166,666		4.50