Overstock.com 2015 Annual Report Download - page 29
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are unable to maintain compliance with all of them, we will be in default, the consequences of which could materially harm our business. Further, to the
extent that we incur additional indebtedness, we may be subject to additional requirements. The degree to which we are ultimately leveraged could
materially and adversely affect our ability to obtain additional financing for working capital, acquisitions or other purposes and could make us more
vulnerable to industry downturns and competitive pressures. Our ability to meet our debt service obligations will be dependent upon our future performance,
which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.
In May 2015 our Board authorized a stock repurchase program under which we may repurchase shares of our outstanding common stock for up to
$25 million at any time through December 31, 2017. Any such repurchases would reduce our liquidity and could increase our vulnerability to industry
downturns and competitive pressures. A material decrease in our liquidity could have a material adverse effect on our business.
Our ability to generate cash flow from operations to make interest and principal payments on our debt obligations will depend on our future
performance, which will be affected by a range of economic, competitive and business factors. We cannot control many of these factors, including general
economic conditions and the health of the Internet retail industry. If our operations do not generate sufficient cash flow from operations to satisfy our debt
service obligations and all of our other obligations, we may need to borrow additional funds to make these payments or undertake alternative financing
plans, such as refinancing or restructuring our debt, or reducing or delaying capital investments and other expenses. Additional funds or alternative financing
may not be available to us on favorable terms, or at all. Our inability to generate sufficient cash flow from operations or obtain additional funds or alternative
financing on acceptable terms could have a material adverse effect on our business.
We are required to comply with a variety of reporting, accounting and other rules and regulations. Compliance with existing requirements is
expensive. We will have to ensure that the reporting, accounting, records maintenance and other systems in place at the fintech company and broker dealers
we recently acquired are compliant and adequate. These and future 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 could have a material adverse
effect on our business.
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, estimating valuation allowances and accrued
liabilities (including allowances for returns, credit card chargebacks, doubtful accounts and obsolete and damaged inventory), internal use software and
website development (acquired and developed internally), accounting for income taxes, valuation of long-lived and intangible assets and goodwill, stock-
based compensation and loss contingencies, 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, and could have a material adverse effect on our business.
Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, is subject to significant variation due to several factors,
including variability in accurately predicting our pre-tax and taxable income and loss and the
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