Overstock.com 2003 Annual Report Download - page 12

difficulties developing our B2B operations;
the extent to which our existing and future marketing agreements are successful;
price competition that results in lower profit margins or losses;
the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and infrastructure;
the amount and timing of our purchases of inventory;
our inability to manage distribution operations or provide adequate levels of customer service;
our ability to successfully integrate operations and technologies from acquisitions or other business combinations;
entering into new lines of products; and
our inability to replace the loss of a significant customer.
If we fail to accurately forecast our expenses and revenues, our business, operating results and financial condition may suffer and the price of our
stock may decline.
Our limited operating history and the rapidly evolving nature of our industry make forecasting operating results difficult. We may not be able to quickly
reduce spending if our revenues are lower than we project. Therefore, any significant shortfall in revenues would likely harm our business, operating results
and financial condition and cause our results of operation to fall below the expectations of public market analysts and investors. If this occurs, the price of our
common stock may decline.
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We have grown quickly and if we fail to manage our growth, our business will suffer.
We have rapidly and significantly expanded our operations, and anticipate that further significant expansion will be required to address potential growth
in our customer base and market opportunities. This expansion has placed, and is expected to continue to place, a significant strain on our management,
operational and financial resources. Some of our officers have no prior senior management experience at public companies. Our new employees include a
number of key managerial, technical and operations personnel who have not yet been fully integrated into our operations, and we expect to add additional key
personnel in the near future. To manage the expected growth of our operations and personnel, we will be required to improve existing and implement new
transaction-processing, operational and financial systems, procedures and controls, and to expand, train and manage our already growing employee base. If we
are unable to manage growth effectively, our business, prospects, financial condition and results of operations will be harmed.
In order to obtain future revenue growth and achieve and sustain profitability we will have to attract customers on cost-effective terms.
Our success depends on our ability to attract customers on cost-effective terms. We have relationships with online services, search engines, directories
and other Websites and e-commerce businesses to provide content, advertising banners and other links that direct customers to our Websites. We rely on these
relationships as significant sources of traffic to our Websites and to generate new customers. If we are unable to develop or maintain these relationships on
acceptable terms, our ability to attract new customers and our financial condition could be harmed. In addition, certain of our online marketing agreements
may require us to pay upfront fees and make other payments prior to the realization of the sales, if any, associated with those payments. Accordingly, if these
agreements or similar agreements that we may enter into in the future fail to produce the sales that we anticipate, our results of operations will be adversely
affected. We cannot assure you that we will be able to increase our revenues, if at all, in a cost-effective manner. We have also begun national television and
radio branding and advertising campaigns. Such campaigns are expensive and may not result in the cost effective acquisition of customers.
Further, many of the parties with which we may have online-advertising arrangements could provide advertising services for other online or traditional
retailers and merchandise liquidators. As a result, these parties may be reluctant to enter into or maintain relationships with us. Failure to achieve sufficient
traffic or generate sufficient revenue from purchases originating from third parties may result in termination of these relationships by these third parties.
Without these relationships, our revenues, business, prospects, financial condition and results of operations could suffer.
The loss of key personnel or any inability to attract and retain additional personnel could affect our ability to successfully grow our business.
Our performance is substantially dependent on the continued services and on the performance of our senior management and other key personnel,
particularly Patrick M. Byrne, our President and Chairman of the Board. Our performance also depends on our ability to retain and motivate other officers and
key employees. The loss of the services of any of our executive officers or other key employees for any unforeseen reason, including without limitation,
illness or call to military service, could harm our business, prospects, financial condition and results of operations. We do not have employment agreements
with any of our key personnel and we do not maintain "key person" life insurance policies. Our future success also depends on our ability to identify, attract,
hire, train, retain and motivate other highly-skilled technical, managerial, editorial, merchandising, marketing and customer service personnel. Competition
for such personnel is intense, and we cannot assure you that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel. During
2003 individuals serving as our president and chief financial officer, our chief operating officer and our chief
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