Overstock.com 2004 Annual Report Download - page 20

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, and we expect to add additional key personnel in the 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.
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. Our
failure to retain and attract the necessary technical, managerial, editorial, merchandising, marketing and customer service personnel could harm our revenues,
business, prospects, financial condition and results of operations.
We may be unable to manage expansion into new business areas which could harm our business operations and reputation.
Our long-term strategic plan involves expansion of our operations to offer additional types of products and services. We cannot assure you that our
efforts to expand our business in this manner will succeed. Because we were unable to generate significant traffic for our former B2B site, in the third quarter
of 2004, we merged the B2B site into our main website, and opened our "Club O Gold" bulk purchase program. Our failure to succeed in this market or other
markets or other product or service offerings may harm our business, prospects, financial condition and results of operation. We cannot assure you that we
will be able to expand our operations in a cost-effective or timely manner or that our efforts to expand will be successful. Furthermore, any new business or
Website we launch that is not favorably received by consumers could damage our reputation or the Overstock.com brand. We may expand the number of
categories of products we carry on our Websites, and these and any other expansions of our operations would also require significant additional expenses and
development and would strain our management, financial and operational resources. The lack of market acceptance of such efforts or our inability to generate
satisfactory revenues from such expanded services or products to offset their cost could harm our business, prospects, financial condition and results of
operations.
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