Overstock.com 2002 Annual Report Download - page 17

along with increased governmental or private enforcement, may increase the cost of growing our business. In addition, several states have proposed legislation
that would limit the uses of personal user information gathered online or require online services to establish privacy policies. The Federal Trade Commission
has adopted regulations regarding the collection and use of personal identifying information obtained from children under 13. Bills proposed in Congress
would extend online privacy protections to adults. Moreover, proposed legislation in this country and existing laws in foreign countries require companies to
establish procedures to notify users of privacy and security policies, obtain consent from users for collection and use of personal information, and/or provide
users with the ability to access, correct and delete personal information stored by us. We could become a party to a similar enforcement proceeding. These
data protection regulations and enforcement efforts may restrict our ability to collect demographic and personal information from users, which could be costly
or harm our marketing efforts.
Risks Relating to the Securities Markets and Ownership of Our Common Stock
Our stock price may be volatile and you may lose all or a part of your investment.
Our common stock has been publicly traded only since May 30, 2002. The market price of our common stock has been subject to significant fluctuations
since the date of our initial public offering. These fluctuations could continue. It is possible that in some future periods our results of operations may be below
the expectations of public market analysts and investors. If this occurs, our stock price may decline. Among the factors that could affect our stock price are as
follows:
changes in securities analysts' recommendations or estimates of our financial performance or publication of research reports by analysts;
changes in market valuations of similar companies;
announcements by us or our competitors of significant contracts, acquisitions, commercial relationships, joint ventures or capital commitments;
general market conditions;
actual or anticipated fluctuations in our operating results;
intellectual property or litigation developments; and
economic factors unrelated to our performance.
In addition, the stock markets have experienced significant price and trading volume fluctuations. These broad market fluctuations may adversely affect
the trading price of our common stock. In the past, following periods of volatility in the market price of a public company's securities, securities class action
litigation has often been instituted against that company. Such litigation could result in substantial cost and a diversion of management's attention and
resources.
We do not intend to pay dividends on our non-redeemable common stock, and you may lose the entire amount of your investment.
We have never declared or paid any cash dividends on our non-redeemable common stock and do not intend to pay dividends on our non-redeemable
common stock for the foreseeable future. We intend to invest our future earnings, if any, to fund our growth. Therefore, you will not receive any funds
without selling your shares. We cannot assure that you will receive a positive return on your investment when you sell your shares or that you will not lose the
entire amount of your investment.
Our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and the Delaware General Corporation Law contain anti-
takeover provisions which could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders.
Several provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws could discourage potential acquisition
proposals and could delay or prevent a change in control of our company even if that change in control would be beneficial to our stockholders. For example,
only one-third of our board of directors will be elected at each of our annual meetings of stockholders, which will make it more difficult for a potential
acquirer to change the management of our company, even after acquiring a majority of the shares of our common stock. These provisions, which cannot be
amended without the approval of two-thirds of our stockholders, could diminish the opportunities for a stockholder to participate in tender offers, including
tender offers at a price above the then current market value of our common stock. In addition, our board of directors, without further stockholder approval,
may issue preferred stock, with such terms as the board of directors may determine, that could have the effect of delaying or preventing a change in control of
our company. The issuance of preferred stock could also adversely affect the voting powers of the holders of common stock, including the loss of voting
control to others. We are also afforded the protections of Section 203 of the Delaware General Corporation Law, which could delay or prevent a change in
control of our company or could impede a merger, consolidation, takeover or other business combination involving our company or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of our company.
ITEM 2. PROPERTIES
We lease 22,000 square feet of office space for our corporate headquarters and customer service operations in Salt Lake City, Utah, and we lease a
354,255 square foot warehouse and distribution facility also in Salt Lake City, Utah. We believe these facilities will be sufficient for our needs for at least the
next twelve months.
ITEM 3. LEGAL PROCEEDINGS
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