Overstock.com 2015 Annual Report Download - page 24

harm our business. Similarly, administrative agencies may apply more rigorous enforcement efforts or take aggressive positions respecting the laws they
administer, especially if the laws permit the imposition of monetary penalties and fines which either the state or the administrative agency may use to balance
their budgets or otherwise fund operations. The occurrence of any of the foregoing could have a material adverse effect on our business.

We are subject to regulation at the federal, state and international levels, including regulation relating to privacy, security, retention, transfer and use
of personal user information and telemarketing laws. Increasing regulation, along with increased governmental or private enforcement, may increase the cost
of our business. Compliance with existing and new privacy and security laws may be difficult and costly and may further restrict our ability to collect
demographic and personal information from users, which could harm our marketing efforts, and could require us to implement new and potentially costly
processes, procedures and/or protective measures. The expansion of these and other laws, both in terms of their number and their applicability to the Internet
could also harm our business. Many laws, adopted prior to the advent of the Internet, do not contemplate or address the unique issues raised thereby.
Consequently, courts or regulators may apply these laws to Internet commerce in ways that may present difficult or impossible compliance challenges. Laws
that do reference the Internet generally remain subject to interpretation by the courts and their applicability and reach are therefore not always clear.
Moreover, Internet advances and innovations may result in new questions about the applicability and reach of these laws. Additionally, laws governing the
permissible contents of products may adversely affect us, and we are subject to federal and state consumer laws, including those governing advertising,
product labeling, product content requirements and product safety. The laws may cause us to incur losses for any non-compliant items in our inventory, or
which we may previously have sold. We may be subject to claims related to personal injury, death, environmental or property damage. We have in the past
and may from time to time be required to participate in product recalls. We may incur expense in connection with any of the foregoing or other matters or
actions which may not be covered, in whole, in part or at all, by any liability insurance we may carry. These current and future laws and regulations could
have a material adverse effect on our business.

We and our Chief Executive Officer, Dr. Patrick M. Byrne, have from time to time made public statements regarding our or his beliefs about matters
of public interest, including statements regarding naked short selling and regulatory capture. Some of those public statements have been critical of the
Securities and Exchange Commission and other regulatory agencies. These public statements may have consequences for us, whether as a result of increased
regulatory scrutiny or otherwise. Additionally, other officers may make public statements that could have adverse consequences and these statements could
have a material adverse effect on our business.


Economic conditions may adversely affect our financial performance. In the United States, weakness in the housing market, changes in interest rates,
changes in fuel and other energy costs, inflation or deflation or expectations of either inflation or deflation, actual or anticipated levels of unemployment,
unavailability or limitations of consumer credit, higher consumer debt levels or efforts by consumers to reduce debt levels, higher tax rates and other changes
in tax laws, overall economic slowdown, changes in consumer desires affecting demand for the products and services we sell and other economic factors
could adversely affect consumer demand for the products and services we sell. Any of these factors may change the mix of products we sell to a mix with a
lower average gross margin and/or result in slower inventory turnover and/or greater markdowns on inventory. Higher interest rates, transportation costs,
inflation, higher costs of labor, insurance and healthcare, foreign exchange rates fluctuations, higher tax rates and other changes in tax laws, changes in other
laws and regulations and other economic factors in the United States may increase our cost of sales and operating, may increase our selling, general and
administrative expenses, and may otherwise adversely affect our operations and operating results. These factors may affect not only our operations, but also
the operations of suppliers from whom we purchase goods, which may also result in increases in the cost to us of the goods and services we sell. The
occurrence of any of the foregoing could have a material adverse effect on our business.
Over the last few years the percentage of our sales from home and garden products has increased substantially. We believe that our sales of home and
garden products are affected by the strength of the U.S. housing industry, and that downturns in the U.S. housing industry could have a material adverse effect
on our business.
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