Overstock.com 2014 Annual Report Download - page 30

Table of Contents
• the extent to which our existing and future marketing campaigns are successful;
• price competition that results in losses or lower profit margins;
• the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and infrastructure
including those relating to our construction of our new corporate headquarters;
• the amount and timing of our purchases of inventory;
• our inability to manage distribution operations or provide adequate levels of customer service;
• increases in the cost of fuel and transportation;
• our ability to successfully implement technology changes or to integrate operations and technologies from acquisitions or other business
combinations;
• our efforts to offer new lines of products and services; and
• our ability to attract users to our shopping and other sites.
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.
Sales by our significant stockholders could have an adverse effect on the market price of our stock.
Several of our stockholders own significant portions of our common stock. If one or more of our stockholders were to sell all or a portion of their
holdings of our common stock, the market price of our common stock could be negatively impacted. The effect of such sales, or of significant portions of our
stock being offered or made available for sale, could result in strong downward pressure on our stock price. Investors should be aware that they could
experience significant short-term volatility in our stock if any one or more of such stockholders were to decide to sell all or a portion of their holdings of our
common stock at once or within a short period of time. In addition, the transfer of ownership of a significant portion of our outstanding shares within a three-
year period could adversely affect our ability to use our net operating losses to offset future taxable net income.
We do not intend to pay dividends on our 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 common stock and do not intend to pay dividends on our 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.
Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control
of our company or changes in our management.
Our amended and restated certificate of incorporation and bylaws contain provisions that could discourage, delay or prevent a change in control of
our company or changes in our management that the stockholders of our company may deem advantageous. These provisions among other things:
• permit the board of directors to establish the number of directors;
• provide that only one-third of our board of directors is elected at each of our annual meetings of stockholders (and our amended and
restated certificate of incorporation prohibits cumulative voting in the election of directors);
• mean that directors may be removed by the affirmative vote of the holders of the outstanding shares of common stock only “for cause;”
• authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a
“poison pill”);
• eliminate the ability of our stockholders to call special meetings of stockholders;
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