Overstock.com 2004 Annual Report Download - page 16

Government Regulation
All of our services are subject to federal and state consumer protection laws including laws protecting the privacy of consumer non-public information
and regulations prohibiting unfair and deceptive trade practices. In particular, under federal and state financial privacy laws and regulations, we must provide
notice to consumers of our policies on sharing non-public information with third parties, must provide advance notice of any changes to our policies and, with
limited exceptions, must give consumers the right to prevent sharing of their non-public personal information with unaffiliated third parties. Furthermore, the
growth and demand for online commerce could result in more stringent consumer protection laws that impose additional compliance burdens on online
companies. These consumer protection laws could result in substantial compliance costs and could interfere with the conduct of our business.
In January 2005, we received an inquiry from the Federal Trade Commission ("FTC") regarding our shipping policies and systems and other matters. We
are cooperating fully with the FTC's inquiry. We are currently unable to determine the potential outcome of this inquiry.
In many states, there is currently great uncertainty whether or how existing laws governing issues such as property ownership, sales and other taxes, libel
and personal privacy apply to the Internet and commercial online services. These issues may take years to resolve. In addition, new state tax regulations may
subject us to additional state sales and income taxes. New legislation or regulation, the application of laws and regulations from jurisdictions whose laws do
not currently apply to our business or the application of existing laws and regulations to the Internet and commercial online services could result in significant
additional taxes on our business. These taxes could have an adverse effect on our cash flows and results of operations. Furthermore, there is a possibility that
we may be subject to significant fines or other payments for any past failures to comply with these requirements.
Employees
As of December 31, 2004, we had 426 full-time employees, including 48 in customer service and fraud prevention, 131 in order fulfillment, 49 in
information technology and Website production, 36 in marketing, 113 in merchandising and auctions, 29 in accounting and finance, and 20 in our executive
and administrative department. We have never had a work stoppage, and none of our employees are represented by a labor union. We consider our employee
relationships to be positive.
Risk Factors
Any investment in our securities involves a high degree of risk. Investors should consider carefully the risks and uncertainties described below, and all
other information in this Form 10-K and in any reports we file with the SEC after we file this Form 10-K, before deciding whether to purchase or hold our
securities. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also become important factors that may
harm our business. The occurrence of any of the following risks could harm our business. The trading price of our securities could decline due to any of these
risks and uncertainties, and investors may lose part or all of their investment.
Risks Relating to Overstock
We have a history of significant losses. If we do not achieve profitability, our financial condition and our stock price could suffer.
We have a history of losses and we may continue to incur operating and net losses for the foreseeable future. We incurred net losses attributable to
common shares of $12.1 million and $5.2 million for the years ended December 31, 2003 and 2004, respectively. As of December 31, 2003, and 2004, our
accumulated deficit was $67.8 million and $73.0 million, respectively. We will need to
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