Overstock.com 2003 Annual Report Download - page 60

Year Ending
December 31,
2004 $ 85
2005 42
2006 23
2007 20
2008 7
Thereafter —
Total minimum lease payments 177
Less: amount representing interest (16)
Present value of capital lease obligations 161
Less: current portion (75)
Capital lease obligations, non-current $ 86
11. COMMITMENTS AND CONTINGENCIES
The Company leases 33 square feet of office space and 354 square feet for its warehouse facility in Salt Lake City, Utah. The Company also has lease
obligations under non-cancelable operating leases for computer equipment. Minimum future payments under these leases are as follows:
Year Ending
December 31,
2004 $ 1,575
2005 1,327
2006 781
2007 65
Thereafter —
$ 3,748
Rental expense for operating leases totaled $1,180, $1,639 and $1,955 for the years ended December 31, 2001, 2002 and 2003, respectively.
The Company is involved in various legal matters arising in the normal course of business. In the opinion of management, the Company's liability, if any,
arising from regulatory matters and legal proceedings related to these matters is not expected to have a material adverse impact on the Company's financial
position, results of operations and cash flows. The outcomes of legal matters in which the Company is presently involved are not probable and reasonably
estimable.
F-17
12. REDEEMABLE SECURITIES
In March 2002, the Company sold approximately 959 shares of mandatorily redeemable convertible preferred stock ("preferred stock") for approximately
$6,582, net of issuance costs. The preferred stock automatically converted to common stock on a 1:1 basis in connection with the initial public offering. As
the fair value of the common stock to be received upon conversion was greater than the conversion price of the preferred stock at the date the preferred stock
was issued, a beneficial conversion feature resulted in the amount of $6,607, which was calculated in accordance with Emerging Issues Task Force No. 98-5
Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios. This beneficial conversion feature
was reflected as a deemed dividend in the statement of operations during the year ended December 31, 2002.
Redeemable common stock relates to warrants and securities that are subject to rescission. Sales of 858 shares of the common stock and the issuance of
185 warrants to certain individuals did not fully comply with certain requirements under applicable State Blue Sky Laws. The offer and sale of these securities
were not made pursuant to a registration statement and the Securities Act of 1933, nor were the offer and sale registered or qualified under any state security
laws. Although the Company believed at the time that such offers, sales and conversion were exempt from such registration or qualification, they may not
have been exempt in several states. As a result, purchasers of our common stock in some states have the right under federal or state securities laws to rescind
their purchases for an amount equal to the purchase price paid for the shares, plus interest from the date of purchase until the rescission offer expires, at the
annual rate mandated by the state in which such shares were purchased. These interest rates range from 8% to 10% per annum. The rescission rights lapse on
various dates through September 2006.
At December 31, 2002 and 2003, the Company has classified $4,363 and $2,978, respectively, related to the rescission rights outside of shareholders'
equity, because the redemption features are not within the control of the Company. However, management does not anticipate that holders of the redeemable
common stock will exercise their rescission rights. Interest attributable to these securities is recorded as a deemed dividend and reflected as a deduction from
net loss to arrive at net loss attributable to common shares in the Statements of Operations.
13. STOCKHOLDERS' EQUITY
Reverse stock split