Overstock.com 2009 Annual Report Download - page 23

Table of Contents
stock, subject us to investigations and penalties, and adversely impact our business and financial condition.
We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to
satisfy new reporting requirements.
As a public reporting company, we are required to comply with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC,
including expanded disclosures and accelerated reporting requirements and more complex accounting rules. Compliance with these and other new
requirements may increase our costs and require additional management time and resources. We may need to implement additional finance and accounting
systems, procedures and controls to satisfy our reporting requirements. If our internal control over financial reporting is determined to be ineffective, such
failure could cause investors to lose confidence in our reported financial information, negatively affect the market price of our common stock, subject us to
regulatory investigations and penalties, and adversely impact our business and financial condition.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could
significantly affect our financial results.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide
range of matters that are relevant to our business, including but not limited to, revenue recognition, sales returns allowance, impairment of long-lived assets
and warehouse closing costs, inventories, income taxes, unclaimed property laws and litigation, are highly complex and involve many subjective assumptions,
estimates and judgments by our management. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by
our management could significantly change our reported or expected financial performance.
Our cash, cash equivalents and short-term investments are subject to a risk of loss based upon the solvency of the financial institutions in which they
are maintained.
We maintain the majority of our cash, cash equivalents and short-term investments in accounts with major financial institutions within the United States,
in the form of demand deposits, money market accounts, time deposits, U.S. Treasury Bills and other short-term investments. Our deposits in these
institutions may generally exceed the amounts of insurance provided, or deposits may not at all be covered by insurance. If any of these institutions becomes
insolvent, it could substantially harm our financial condition and we may lose some, or all, of such deposits.
If we fail to accurately forecast our expenses and revenues, our business, operating results and financial condition may suffer and the price of our
securities may decline.
Our limited operating history and the rapidly evolving nature of our industry make forecasting operating results difficult. Since 2005, we have completed
several large, complex and expensive infrastructure upgrades in order to increase our ability to handle larger volumes of sales and to develop or increase our
ability to perform a variety of analytical procedures relating to our business, and we are continuing the work to upgrade and further expand these and other
components of our infrastructure. We have experienced difficulties with the implementation of various aspects of the upgrades of our infrastructure, and have
incurred increased expenses as a result of these difficulties. As a result of these expenditures, our ability to reduce spending if our revenues are lower than we
project is limited. Therefore, any significant shortfall in the revenues for which we have built and are continuing to build our infrastructure would likely harm
our business, prospects, operating results and financial condition and cause our results of operation to fall below the expectations of public market analysts
and investors.
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