Overstock.com 2015 Annual Report Download - page 35
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From time to time we receive claims of and become subject to consumer protection, employment, intellectual property and other commercial
litigation related to the conduct and operation of our business and the sale of products on our Website. In connection with such litigation, we may be subject
to significant damages or equitable remedies. In addition, we have in the past been and in the future may be, involved in substantial litigation in which we
are the plaintiff, including litigation regarding the constitutionality of certain state tax laws. Any of such litigation, whether as plaintiff or defendant, could
be costly and time consuming and could divert management and key personnel from our regular business operations. We do not currently believe that any of
our outstanding litigation will have a material adverse effect on our business, prospects, financial condition or results of operations. However, due to the
uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of these matters could have a material adverse
effect on our business.
The market price of our common stock historically has been subject to significant fluctuations. These fluctuations could continue. It is possible that
in future periods our results of operations may be below the expectations of public market analysts and investors. If this occurs, the market price of our
securities may decline substantially. Any of the foregoing could have a material adverse effect on our business and particularly on our ability to raise capital.
Our future revenues and operating results have varied in the past and may continue to vary significantly from quarter to quarter due to a number of
factors, many of which are outside our control, and any of which could harm our business. As a result, we believe that quarterly comparisons of our operating
results are not necessarily meaningful and that you should not rely on the results of one quarter as an indication of our future performance. In addition to the
other risk factors described in this report, additional factors that have caused and/or could cause our quarterly operating results to fluctuate and in turn affect
the market price of our securities include:
• increases in the cost of advertising and changes in our sales and marketing expenditures;
• our inability to retain existing customers or encourage repeat purchases;
• 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.
Any of the foregoing could have a material adverse effect on our business.
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. Any of the foregoing
could have a material adverse effect on our business.
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