Overstock.com 2005 Annual Report Download - page 31

• our inability to replace the loss of significant customers.
Our operating results may fluctuate depending on the season, and such fluctuations may affect the market price of our
securities.
We have experienced and expect to continue to experience fluctuations in our operating results because of seasonal fluctuations
in traditional retail patterns. Sales in the retail and wholesale industry tend to be significantly higher in the fourth calendar quarter of
each year than in the preceding three quarters due primarily to increased shopping activity during the holiday season. However, there
can be no assurance that our sales in the fourth quarter will exceed those of the preceding quarters or, if the fourth quarter sales do
exceed those of the preceding quarters, that we will be able to manage the increased sales effectively. Further, we generally increase
our inventories substantially in anticipation of holiday season shopping activity, which has a negative effect on our cash flow.
Securities analysts and investors may inaccurately estimate the effects of seasonality on our results of operations in one or more future
quarters and, consequently, our operating results may fall below expectations, causing the market price of our securities to decline.
We do not intend to pay dividends on our non-redeemable common stock, and you may lose the entire amount of your
investment in our common stock.
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.
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