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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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87-0634302
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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799 West Coliseum Way, Midvale, UT
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84047
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(Address of principal executive offices)
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(Zip code)
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(801) 947-3100
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(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.0001 par value
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Nasdaq Global Market
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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Item 16.
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our estimates of our financial results for the quarter ending March 31, 2018;
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our strategies and plans for our e-commerce business and our Medici businesses, including our tZERO initiatives;
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our plans to increase our branding and marketing expenditures significantly;
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the possibility that we will pursue or attempt to pursue a strategic alternative that could change our business dramatically, including the possibility and potential effects of a sale of our e-commerce business, as well as the possibility that we will determine not to pursue any strategic alternative at all in the foreseeable future;
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our expectation that if we sell our e-commerce business for cash and retain some or all of the after-tax proceeds of the sale, we would return a significant portion of the after-tax proceeds to our stockholders within 12 months after any such sale, by means of a stock repurchase program, dividend, one or more issuer tender offers or other means to our stockholders;
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our discussion of the potential effects on our financial results of the new accounting standards that became effective for us January 1, 2018 relating to revenue recognition;
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our discussion of the effects on us of the recent Tax Cuts and Jobs Act, including the effects on our deferred tax assets;
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our expectations regarding the costs, benefits and risks of Medici Ventures' efforts to develop blockchain applications and tZERO's efforts to develop financial technology ("fintech") applications, including applications using blockchain technology, and including our expectations regarding the costs, benefits and risks of the operations of our majority-owned subsidiary tZERO;
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all statements regarding the plans of our majority-owned subsidiary tZERO or of our subsidiary Medici Ventures;
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our expectations regarding the costs, benefits and risks of tZERO's ownership of SpeedRoute and PRO Securities, each of which is a registered broker dealer;
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our expectations regarding the costs, benefits and risks of having less than wholly owned subsidiaries, including our indirect 80% owned subsidiary tZERO and our currently wholly owned subsidiary Medici Ventures, which has issued stock options to employees and consequently may not be wholly owned in the future;
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our discussion of the security token offering currently being conducted by our majority-owned subsidiary tZERO, including the possibility that the proceeds of the security token offering might be treated as income to us for federal income tax purposes, which would increase our income tax expense, and might be treated as a liability rather than equity for accounting purposes, which would reduce tZERO's net book value compared to equity treatment, and the possibility that the security token offering will not raise a significant amount of funds or might not be completed at all;
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our expectations regarding the costs, benefits and risks of our efforts and plans to advertise or offer financial product and services offerings on our website, including our plans to advertise discount stock brokerage trading services, and our expectations regarding the costs, benefits and risks of other additional businesses, innovations and projects that we or our subsidiaries may engage in, offer or advertise in the near future;
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our expectations regarding Medici Ventures' recent purchase of a 50% interest in DeSoto Inc., a newly-formed public benefit corporation formed for the purpose of carrying out our collaboration with economist Hernando de Soto;
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our discussion of our efforts to adapt to the changes that Google has made to its natural search engine algorithms and additional changes Google may make;
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our beliefs regarding our ability to attract and retain customers in a cost-efficient manner;
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the anticipated effectiveness of or potential improvements in our marketing;
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our future operating and financial results, including any projections of revenue, profits or losses, contribution, technology expense, general and administrative expense, cash flow, capital expenditures or other financial measures or amounts or non-GAAP financial measures or amounts or anticipated changes in any of them;
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our beliefs and expectations regarding the adequacy of our facilities, including leased and third-party operated warehouse facilities, as well as the possibility that we may add distribution centers or other distribution facilities to our distribution system or our expectations regarding the results of any such additions;
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our expectations that we can comply with the requirements of our term loan agreement and related agreements, and that we can repay all amounts outstanding under the loan agreement without significant adverse effects on our business;
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our future capital requirements and our ability to satisfy our capital needs;
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the adequacy of our liquidity and our ability, if any, to increase our liquidity or capital resources through traditional capital raising or tZERO's security token offering;
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any possibility that we may purchase tZERO Security Tokens from our majority-owned subsidiary tZERO;
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any possibility that tZERO may repay any or all of the amounts we have advanced to tZERO, or that we may accept tZERO Security Tokens to be issued by tZERO in satisfaction of any or all of such amounts;
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tZERO's plans, including without limitation its plans to develop its Token Trading System;
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our plans and expectations regarding the costs, benefits, and risks of attempting to develop technology applications including applications using or relating to blockchain technology and our plans to commercialize any of these potential applications;
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our ability to retire or refinance the debt we have or incur in the future;
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the competition we currently face and anticipate;
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the effects of current and future government regulation;
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our expectations for our international sales efforts and the anticipated results of our international operations;
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our efforts to provide multi-channel fulfillment services;
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our plans for further changes to our business;
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our beliefs regarding current or future litigation or regulatory actions;
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our beliefs and expectations regarding existing and future tax laws and related laws and the application of those laws to our business including the results of tax assessments we receive periodically;
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our beliefs regarding the adequacy of our insurance coverage;
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our beliefs regarding the adequacy and anticipated functionality of our infrastructure, including our backup facilities and beliefs regarding the adequacy of our disaster planning and our ability to recover from a disaster or other interruption of our ability to operate our Website;
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our beliefs regarding our cybersecurity efforts and measures and our efforts to prevent data breaches and the costs we will incur in our ongoing efforts to avoid interruptions to our product offerings and other business processes from cyber-attacks and from data breaches;
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our ability to maintain or improve upon customer service levels that we and our customers consider acceptable;
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our beliefs regarding the adequacy of our order processing systems and our fulfillment and distribution capabilities;
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our expectations regarding the costs and benefits of modifying our marketing efforts to deemphasize coupons;
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our belief that we and our partners will be able to maintain inventory levels at appropriate levels despite the seasonal nature of our business and the rapid changes we encounter in customer demand for various products;
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our expectations regarding our emphasis on home and garden product offerings;
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our belief that we can successfully offer and sell a constantly changing mix of products and services; and
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our other statements about the anticipated benefits and risks of our business and plans.
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any changes we may make to our business as a result of our current ongoing review of potential strategic alternatives, which could involve a sale of our e-commerce business, a sale of, or business combination involving, Overstock in its entirety, a management-led buyout, and/or additional equity or debt financings;
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the possibility that we may sell our e-commerce business for cash and retain some or all of the after-tax proceeds of the sale for use in our blockchain initiatives, which would result in our stockholders owning equity interests in a publicly-held corporation seeking to develop entirely new businesses and revenue streams, without the benefits of our current e-commerce business and the approximately $1.7 billion it generates in annual net revenues;
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the potentially substantial corporate level income tax expense we could incur if we were to sell our e-commerce business in a taxable transaction;
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the possibility that a sale of our e-commerce business would leave us without the revenues generated by the e-commerce business but with most if not all of the expenses of operating a publicly-held corporation regardless of the sale of the e-commerce business;
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the possibility that our well-publicized review of potential strategic alternatives may distract our management and other employees, may cause members of our management and/or other key employees to seek employment elsewhere, and may have adverse effects on our business and financial results;
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the technical, operational, financial, regulatory, legal, reputational, marketing and other obstacles we would face in trying to create a profitable business with significant revenues from our blockchain initiatives;
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the potential effects on our financial results of the new accounting standards that became effective on January 1, 2018, including new standards relating to revenue recognition, which could require us to present our revenues on a net rather than gross basis, which would not affect our future profits or losses, but would cause us to report substantially lower revenues in the future;
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the possibility that the recent Tax Cuts and Jobs Act will have adverse effects on us in addition to those we have already identified;
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the possibility that the proceeds of the security token offering currently being conducted by tZERO might be treated as income to us for federal income tax purposes;
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the possibility that the proceeds of the security token offering currently being conducted by our majority-owned subsidiary tZERO might be treated as a liability rather than equity for accounting purposes, which would reduce tZERO's net book value compared to equity treatment;
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the possibility that the security token offering currently being conducted by tZERO could result in claims against tZERO and/or us;
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the possibility that we will increase our sales and marketing activities substantially, which could have an adverse effect on our near-term financial results;
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the costs of, and any difficulties we may encounter with, the implementation of our growth strategies for our e-commerce business, including our plans to invest more heavily in sales and marketing activities, new distribution facilities, our technology platforms, our Club O rewards program and our private label strategy;
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the cost and availability of online and traditional advertising, and the results of our various brand building and marketing campaigns;
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difficulties we have encountered and continue to encounter with changes that Google has made to its natural search engine algorithms, which have periodically resulted in lower rankings of our products and may continue to do so, and future changes that Google and other search engine companies may make to their natural search engine algorithms, which may have similar effects on us;
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increasing competition, including competition from well-established competitors including Amazon.com, competition from competitors based in China or in other relatively low-cost jurisdictions, competition from well‑funded companies willing to incur substantial losses in order to build market share, and from others including competitors with business models that include delivery capabilities that we cannot currently match and may not be able to match in the foreseeable future;
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difficulties we may encounter in connection with our efforts to offer services to our customers outside of our retail e-commerce business, including the credit, insurance, discount brokerage trading services and automated investment advisory services we advertise;
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difficulties, including expense and any operational or regulatory issues we may encounter in connection with tZERO or its subsidiaries, including its two registered broker-dealers, SpeedRoute and PRO Securities;
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technical, operational, regulatory or other difficulties we may encounter with our Medici or tZERO blockchain and financial technology initiatives, including any difficulties we may have marketing any products or services tZERO may offer, whether due to lack of market size or acceptance or as a result of competition from any of the numerous competitors seeking to develop competing technologies or systems or as a result of patents that may be granted to other companies or persons, and losses we may continue to incur in connection with our Medici and tZERO blockchain and financial technology initiatives;
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the difficulties tZERO will face in attempting to market its DLR Software, and the possibility that we and/or tZERO have overestimated the demand for, and/or the size of the intended market for the DLR Software or may face regulatory issues relevant to the DLR Software;
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the difficulties tZERO will face in attempting to generate revenues from blockchain-based applications of any nature;
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Medici Ventures' current business model of providing the services of its developers at Medici Ventures' cost to companies in which Medici Ventures owns an interest;
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difficulties we may have with the assets or interests in other companies that we or our subsidiaries Medici Ventures or tZERO may have made or may make in the future, including any impairment we may recognize with respect to assets or businesses that we, Medici Ventures or tZERO have acquired or may acquire, including with respect to our interests in companies that are in startup or development stages;
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any liability or expense we may incur as a result of our interests in other companies, whether as a result of regulatory issues or otherwise;
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any downturn in the U.S. housing industry or other changes in U.S. and global economic conditions or U.S. consumer spending;
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the imposition of tariffs or occurrence of other factors that increase the price of importing into the U.S. the types of merchandise we sell in our e-commerce business;
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our failure to maintain our existing relationships with our fulfillment partners or build new relationships with fulfillment partners on acceptable terms;
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our failure to maintain optimal levels of product quality, quantity and assortment or to attract sufficient consumer interest in our product offerings;
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any claims we may face regarding the quality, safety or labelling of the products we offer;
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modifications we may make to our business model from time to time, including aspects relating to our product mix and the mix of direct/partner sourcing of the products we offer, and difficulties we may encounter as a result of our efforts to change various aspects of our business model frequently and rapidly;
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the mix of products purchased by our customers and changes to that mix;
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any claims we may face regarding cyber security issues or data breaches or difficulties we encounter regarding Internet or other infrastructure or communications impairment problems or the costs of preventing or responding to any such problems;
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any problems with or affecting our payment card processors, including cyber-attacks, Internet or other infrastructure or communications impairment or other events that could interrupt the normal operation of the payment card processors or any difficulties we may have maintaining compliance with the rules of the payment card processors;
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any substantial decrease in our liquidity, whether as a result of our repayment of our term loan, as a result of our business operations, or as a result of litigation or other claims against us, and the possibility that we will be unable to obtain financing or any other source of liquidity adequate to enable us to continue our operations;
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problems with or affecting the facility where substantially all of our computer and communications hardware is located or other problems that result in the unavailability of our Website or reduced performance of our transaction systems;
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the extent to which we may owe income or sales taxes or may be required to collect sales taxes or report sales or to modify our business model in order to avoid being required to collect sales taxes or report sales or avoid the application of other types of taxes, and any liabilities that may ultimately be imposed upon us for not having collected sales tax in jurisdictions in which we have not done so;
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the possibility that the United States Supreme Court may overturn the sales and use tax physical presence nexus requirement previously upheld by the Supreme Court in 1992 in Quill v. North Dakota;
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any losses or issues we may encounter as a consequence of accepting or holding bitcoin or other cryptocurrencies, whether as a result of regulatory, tax or other legal issues, technological issues, value fluctuations, lack of widespread adoption of bitcoin or other cryptocurrencies as an acceptable medium of exchange or otherwise;
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difficulties we may have in responding to technological changes;
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losses we may incur due to fraud or our inability to prevent or limit fraud;
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claims or other problems we may encounter as a result of the listing or sale on our Website of pirated, counterfeit or illegal items;
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difficulties we may have financing our operations or our expansion with either internally generated funds or external sources of financing;
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any failure by us to maintain compliance with the requirements of our current loan agreement or any future loan agreement or related agreements;
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any environmental liabilities we may incur relating to the real estate one of our wholly owned subsidiaries purchased for our corporate headquarters;
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any failure of any of our product or service offerings outside of our main shopping Website offerings to provide the benefits we expect from them;
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any difficulties we may encounter as a result of our reliance on numerous third parties that we do not control for the performance of critical functions material to our business;
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any difficulties we may encounter in connection with the rapid shift of e-commerce and online payments to mobile and multi-channel commerce and payments;
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our inability to increase market share or revenue in accordance with our plans;
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difficulties with the management of our growth and any periods in which we fail to grow in accordance with our plans;
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difficulties we may encounter in connection with our efforts to emphasize our home and garden product offerings and to brand ourselves as a home and garden shopping destination, including the risk that our sales of home and garden product offerings could decrease substantially as a result of a significant downturn in some or all of the U.S. housing market;
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fluctuations in our operating results;
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difficulties we may encounter in connection with our efforts to expand internationally, including claims we may face and liabilities we may incur in connection with those efforts;
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adverse results in legal proceedings, investigations or other claims;
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any difficulties we may have optimizing our warehouse operations;
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the risks of inventory management and seasonality, particularly with inventory subject to rapid price declines;
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any decrease in the rate of growth of e-commerce, particularly in home goods, and the occurrence of any event that would adversely affect e-commerce or discourage or prevent consumers from shopping online or via mobile apps;
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the possibility that we will suffer adverse consequences as a result of one or more of the related party transactions we have entered into or other related party transactions that we may enter into in the future; and
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the other risks described in this report or in our other public filings.
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Quality customer experience with an emphasis on price, value, and a wide assortment of products delivered in a personalized format with the convenience of our mobile app, and with the benefits of our award-winning customer care;
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Proprietary technologies which we believe help us provide our customers with a quality shopping experience;
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Logistics capabilities tailored to the furniture and home goods category and developed over our many years of e-commerce experience;
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Long-term mutually beneficial relationships with our partners, which currently number approximately
4,100
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Our Club O Loyalty Program, which we believe increases customer engagement and retention.
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Worldstock Fair Trade, a store within our Website that offers handcrafted products made by artisans all over the world to help improve the lives of people in emerging economies;
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Supplier Oasis, a single integration point through which our partners can manage their products, inventory and sales channels, and also obtain multi-channel fulfillment services through our distribution network;
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Our international business where we offer products to customers outside the United States using third party logistics providers;
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Cars by Overstock, a portal within our Website where our customers can search millions of new, used and certified pre-owned cars from dealers and private parties – all in one place with convenient financing and warranty options;
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FinanceHub, a portal within our Website where our customers can shop for loans, credit cards, and insurance, and can now also access links to automated financial advisory services and discounted stock brokerage services; and
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Pet Adoptions, a free service and portal within our Website that leverages our technology to display pets available for adoption from shelters across the United States.
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Product Lines
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2017
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2016
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2015
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Home and garden(1)
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Furniture
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35
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%
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34
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%
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33
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%
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Home decor
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25
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%
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22
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%
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19
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%
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Other
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21
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%
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23
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%
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25
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%
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Total home and garden
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81
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%
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79
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%
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77
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%
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Jewelry, watches, clothing and accessories
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9
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%
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10
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%
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11
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%
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Electronics and computers
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2
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%
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3
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%
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3
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%
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Other
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8
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%
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8
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%
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9
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%
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Total
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100
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%
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100
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%
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100
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%
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price;
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product quality and assortment;
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shopping convenience;
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website organization and load speed;
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order processing and fulfillment;
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order delivery time;
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customer service;
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website functionality on mobile devices;
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brand recognition; and
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brand reputation.
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online discount general retailers;
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online private sale sites;
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online specialty retailers;
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liquidation e-tailers;
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traditional general merchandise and specialty retailers and liquidators, many of which have a significant online presence; and
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online retailers who are developing significant "brick and mortar" capabilities.
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Non-blockchain services - SpeedRoute and PRO Securities
. tZERO owns two registered broker-dealers, SpeedRoute, LLC ("SpeedRoute") and PRO Securities, L.L.C. ("PRO Securities"). SpeedRoute is an electronic, agency‑only Financial Industry Regulatory Authority, Inc. ("FINRA")-registered broker-dealer that provides connectivity for its customers to U.S. equity exchanges as well as off-exchange sources of liquidity such as dark pools. All of SpeedRoute's customers are registered broker-dealers. SpeedRoute does not hold, own or sell securities. PRO Securities is a FINRA-registered broker-dealer that owns and operates the PRO Securities alternative trading system (the "PRO Securities ATS"), which has filed a Form ATS with the Securities and Exchange Commission ("SEC") notifying the SEC of its activities as an alternative trading system, or ATS. An ATS is exempted from the definition of an "exchange" under Section 3(a)(1) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") if it complies with Regulation ATS, which includes, among other things, the requirement to register as a broker-dealer and file a Form ATS with the SEC to provide notice of the ATS's operations. Although Section 3(a)(1) provides the definition of an exchange, Exchange Act Rule 3b-16(a) provides a functional test to assess whether a trading system meets this definition—an entity or organization that (1) brings together the orders for securities of multiple buyers and sellers; and (2) uses established, non-discretionary methods (whether by providing a trading facility or by setting rules) under which such orders interact with each other, and the buyers and sellers entering such orders agree to the terms of the trade. A system that meets the criteria of Rule 3b-16(a), and is not excluded under Rule 3b-16(b), must register as a national securities exchange pursuant to Sections 5 and 6 of the Exchange Act or operate pursuant to an appropriate exemption. A frequently used exemption, which is relied upon by the PRO Securities ATS, is the exemption in Rule 3a1-1(a)(2) that exempts an ATS that complies with Regulation ATS. As a result, provided that it complies with the requirements of Regulation ATS, the PRO Securities ATS is not subject to the registration requirement of Section 5 of the Exchange Act. The PRO Securities ATS is a closed system available only to its broker dealer subscribers. PRO Securities does not accept orders from non-broker dealers, nor does it hold, own or sell securities.
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Non-blockchain services - Automated Investment Advisory Services.
tZERO recently purchased 65.8% of the membership units of ES Capital Advisors, LLC ("ES Capital"), a registered investment advisor under the Investment Advisers Act of 1940. tZERO now operates the ES Capital business under the name tZERO Advisors and offers automated investment advisory services through our website's FinanceHub.
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Non-blockchain services - StockCross Financial Services, Inc.
On January 31, 2018, tZERO purchased a 24% interest in StockCross Financial Services, Inc. ("StockCross"), an affiliate of Siebert Financial Corp. ("Siebert"), and an interest in Siebert, for $12 million. As of the date of this Report, tZERO holds approximately 5.1% of Siebert's outstanding common stock. tZERO believes that StockCross, a self-clearing brokerage firm, will be an important part of a network of financial firms that tZERO intends to assemble.
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Non-blockchain services - Agreement with Muriel Siebert & Co.
On December 31, 2017, tZERO, SpeedRoute and Muriel Siebert & Co. Inc. ("Muriel Siebert") entered into an agreement pursuant to which Muriel Siebert is now advertising discounted online trading of U.S. equity securities on Overstock's website.
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Non-blockchain services - Acquisition of Majority Interest in Verify Investor, LLC.
On February 12, 2018, tZERO purchased 81.0% of Verify Investor, LLC, an accredited investor verification company, for $12.0 million in cash.
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Non-blockchain services - Weeden Prime Services- Letter of Intent.
On February 6, 2018, tZERO entered into a Letter of Intent (the "WPS LOI") with Weeden Prime Services, LLC ("WPS"), a U.S. registered broker-dealer. The WPS LOI contemplates that tZERO will acquire 51% of the outstanding membership interests of WPS for $11.0
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Other Potential Acquisitions.
tZERO continues to identify, evaluate and pursue various opportunities for strategic acquisitions or purchases of interests to add to the services and expertise it offers its customers. tZERO's management exercises substantial discretion in identifying appropriate strategic transactions and negotiating the terms of such transactions. Management's determinations are based on numerous financial, strategic and operational assumptions, and there can be no assurance that such assumptions will prove to be true. Moreover, such strategic transactions may fail to produce the benefits expected at the time of tZERO's acquisitions or purchases of interests.
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|
Blockchain Services - Planned Token Trading System.
In connection with Overstock’s 2016 SEC-registered offering of Blockchain Voting Series A Preferred Stock (the “Series A Preferred”), tZERO developed a suite of software and technologies referred to as the tZERO Issuance and Trading Platform (the “Series A Software Platform”). The Series A Shares trade exclusively on the PRO Securities ATS, which utilizes the Series A Software Platform. tZERO currently intends to leverage its experience and expertise from developing and maintaining the Series A Software Platform to develop a trading platform that is capable of trading the tZERO Security Tokens and other tokens or coins that are determined to be securities for purposes of U.S. securities laws (the "Token Trading System"). tZERO currently does not anticipate that the Series A Software Platform will be deployed in connection with the tZERO Security Tokens in the same manner as it is currently deployed by the PRO Securities ATS. As of the date of this Report, tZERO remains in the preliminary stages of the development of such a securities Token Trading System. The Token Trading System may be developed as an additional functionality of the PRO Securities ATS, as a functionality of another U.S. alternative trading system or a U.S. exchange that tZERO operates or designates, as a functionality of a non-U.S. trading system or a non-U.S. exchange that tZERO may operate or designate, or any other format, wherever situated. The Token Trading System may never be developed, and, even if it is developed, may, for a variety of technological, legal and regulatory reasons, never become operational. See "Risk Factors—Risks Relating to Our tZERO Initiatives—tZERO has a limited operating history, which makes it hard to evaluate its ability to generate revenue through operations, and at the date of this filing, tZERO has not generated revenue from any commercially available blockchain-based application," "tZERO expects to develop a new trading platform for the tZERO Security Tokens it plans to issue in connection with its security token offering and for use by other companies that issue tokens treated as securities, but is only in the preliminary stages of development of the new trading platform," "Technology on which tZERO relies for its operations, including the technology underlying the Series A Software Platform tZERO created in 2016 for trading Overstock's Blockchain Voting Series A Preferred shares, may not function properly," and "Strategic purchases of interests and acquisitions tZERO may make may detract from the capital that tZERO could otherwise deploy to improve its business or to develop the Token Trading System."
|
•
|
Blockchain Services - Digital Locate Receipts ("DLR") software.
t
ZERO anticipates that its first commercially available blockchain-based product will be "digital locate receipt" software (the "DLR Software"). The DLR Software is currently in customer production testing, which is being conducted by StockCross, and tZERO has not yet entered into any commercial licenses with any licensees. The DLR Software is intended to help broker-dealer licensees with stock inventory to both load and manage their inventory in order to assist short sellers of public securities in establishing that they have located available shares in the U.S. public securities market prior to effecting short sales. The DLR Software is intended to enable licensees to create a blockchain-based record of the shares that the licensee has made available for "locates" using customizable DLR Software functionality and of the daily purchases of the right to "locate" specifically identified shares for purposes of compliance with regulatory requirements. The broker-dealer licensees of DLR Software are the parties responsible for ensuring that locates issued using the DLR Software comply with all applicable regulations, and the commercial viability of the DLR Software is dependent on the ability of broker-dealer licensees to establish locates using the DLR Software as an effective means of satisfying regulatory obligations in connection with effecting short sales. See "Risk
|
Executive Officers
|
|
Age
|
|
Position
|
Patrick M. Byrne
|
|
55
|
|
Chief Executive Officer and Director
|
Saum Noursalehi
|
|
38
|
|
President, Retail and Director
|
Jonathan E. Johnson III
|
|
52
|
|
President, Medici Ventures and Director
|
Amit Goyal
|
|
39
|
|
Senior Vice President, Software Engineering
|
Robert P. Hughes
|
|
58
|
|
Senior Vice President, Finance and Risk Management
|
Vidya R. Jwala
|
|
45
|
|
Senior Vice President, Demand Fulfillment
|
John Paul "J.P." Knab
|
|
38
|
|
Senior Vice President, Marketing
|
Carter P. Lee
|
|
48
|
|
Senior Vice President, Technology and People Care
|
Seth A. Moore
|
|
35
|
|
Senior Vice President, Strategy and Chief of Staff to the CEO
|
Brian L. Popelka
|
|
51
|
|
Senior Vice President, Customer and Partner Care
|
Vikram R. Raghavan
|
|
36
|
|
Senior Vice President, Product Development
|
•
|
Overstock changes ownership, merges with or acquires another entity or changes its name;
|
•
|
Overstock or Overstock's wholly-owned subsidiary O.Com Land fails to meet all federal, state and local municipality regulations relating to the operations of their respective businesses;
|
•
|
Overstock effectuates a material change in its or any of its affiliates' capital structure;
|
•
|
Overstock engages in any business activities substantially different from those in which it was engaged on November 6, 2017;
|
•
|
the decision making and control of Overstock and/or O.Com Land change in any material respect after November 6, 2017;
|
•
|
any diminution in Patrick Byrne's ownership of Overstock occurs;
|
•
|
any loss of management control of Overstock by Patrick Byrne occurs;
|
•
|
the manager of O.Com Land withdraws as such;
|
•
|
Overstock, or any of its affiliates, materially change its/their ownership and/or equity structure after November 6, 2017; and
|
•
|
O.Com Land defaults under any agreement in favor of another creditor that may materially affect O.Com Land's ability to perform its obligations under the PCL loan documents.
|
•
|
online retailers with or without discount departments, including Amazon.com, AliExpress (part of the Alibaba Group), eBay, and Rakuten.com (formerly Buy.com);
|
•
|
online specialty retailers such as Blue Nile, Bluefly, Houzz, Jet.com, Wayfair, Zappos.com, and Zulily;
|
•
|
private sale sites such as Groupon, Living Social and Rue La La;
|
•
|
furniture specialists including Ashley Furniture, Bob's Discount Furniture, Havertys, Raymour & Flanigan and Rooms To Go;
|
•
|
traditional general merchandise and specialty retailers and liquidators including Barnes and Noble, Bed, Bath & Beyond, Best Buy, Costco, Crate and Barrel, Ethan Allen, Gilt, Home Depot, HomeGoods, Hudson's Bay Company, IKEA, J.C. Penney Company, Kirkland's, Kohl's, Lands' End, Lowe's, Macy's, Nordstrom, Pier 1 Imports, Pottery Barn, Restoration Hardware, Ross Stores, Saks Fifth Avenue, Sears, T.J. Maxx, Target, Wal-Mart and Williams-Sonoma, all of which also have an online presence; and
|
•
|
liquidation e-tailers such as SmartBargains.
|
•
|
the need to develop new supplier and manufacturer relationships;
|
•
|
the need to comply with additional U.S. and foreign laws and regulations;
|
•
|
changes in international laws, regulatory requirements, taxes and tariffs;
|
•
|
our limited experience with different local cultures and standards;
|
•
|
geopolitical events, such as war and terrorist attacks;
|
•
|
the risk that the products we offer may not appeal to customers in international markets; and
|
•
|
the additional resources and management attention required for such expansion.
|
•
|
worldwide growth in the adoption and use of cryptocurrencies, cryptosecurities, and other blockchain technologies;
|
•
|
government and quasi-government regulation of cryptocurrencies, cryptosecurities, and other blockchain assets and their use, or restrictions on or regulation of access to and operation of blockchain networks or similar systems;
|
•
|
the maintenance and development of the open-source software protocol of cryptocurrency or cryptosecurities networks;
|
•
|
changes in consumer demographics and public tastes and preferences;
|
•
|
the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets including new means of using government-backed currencies or existing networks;
|
•
|
general economic conditions and the regulatory environment relating to cryptocurrencies and cryptosecurities; and
|
•
|
a decline in the popularity or acceptance of cryptocurrencies or other blockchain‑based tokens.
|
•
|
increases in the cost of advertising and changes in our sales and marketing expenditures;
|
•
|
expenses we incur in our Medici development efforts;
|
•
|
our inability to retain existing customers or encourage repeat purchases;
|
•
|
the extent to which our existing and future marketing campaigns are successful;
|
•
|
price competition, particularly in the costs of marketing as well as in product pricing;
|
•
|
the amount and timing of operating costs and capital expenditures;
|
•
|
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, transportation or distribution;
|
•
|
our inability to implement technology changes or integrate operations and technologies from acquisitions or other business combinations;
|
•
|
our efforts to offer new lines of products and services; and
|
•
|
our inability to attract users to our website.
|
•
|
authorizing "blank check" preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;
|
•
|
limiting the liability of, and providing indemnification to, our directors and officers;
|
•
|
limiting the ability of our stockholders to call and bring business before special meetings;
|
•
|
providing that our Board of Directors is classified into three classes of directors with staggered three-year terms;
|
•
|
only permitting the Board of Directors to fix the number of directors and to fill vacancies;
|
•
|
prohibiting cumulative voting in the election of directors;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors;
|
•
|
controlling the procedures for the conduct and scheduling of Board of Directors and stockholder meetings; and
|
•
|
designating a state court located in the State of Delaware as the sole and exclusive forum for specified matters.
|
•
|
We own approximately
236,000
square feet of office space in Midvale, Utah, which consists of our corporate headquarters, and which is primarily used for our direct and partner business segments, with a small amount of space used by our Medici business.
|
•
|
We lease approximately
12,000
square feet of additional office space in the United States for tZERO's main office.
|
•
|
We lease approximately
1.1 million
square feet in the United States for warehouse, fulfillment, customer service, and other operations.
|
•
|
We lease approximately
3,300
square feet in the United States for various data centers.
|
|
|
Common
Stock Price
|
||||
|
|
High
|
|
Low
|
||
Year Ended December 31, 2016
|
|
|
|
|
||
First Quarter
|
|
15.65
|
|
|
10.03
|
|
Second Quarter
|
|
17.93
|
|
|
13.79
|
|
Third Quarter
|
|
17.36
|
|
|
14.31
|
|
Fourth Quarter
|
|
19.70
|
|
|
13.05
|
|
Year Ended December 31, 2017
|
|
|
|
|
||
First Quarter
|
|
20.50
|
|
|
15.60
|
|
Second Quarter
|
|
18.15
|
|
|
13.75
|
|
Third Quarter
|
|
32.25
|
|
|
14.30
|
|
Fourth Quarter
|
|
82.70
|
|
|
27.58
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|||||||||
Outstanding—beginning of year
|
|
156
|
|
|
$
|
17.33
|
|
|
204
|
|
|
$
|
17.27
|
|
|
224
|
|
|
$
|
17.27
|
|
Exercised
|
|
(39
|
)
|
|
16.90
|
|
|
(42
|
)
|
|
17.08
|
|
|
(16
|
)
|
|
16.94
|
|
|||
Expired/Forfeited
|
|
(117
|
)
|
|
17.48
|
|
|
(6
|
)
|
|
17.08
|
|
|
(4
|
)
|
|
18.26
|
|
|||
Outstanding—end of year
|
|
—
|
|
|
$
|
—
|
|
|
156
|
|
|
$
|
17.33
|
|
|
204
|
|
|
$
|
17.27
|
|
Options exercisable at year-end
|
|
—
|
|
|
$
|
—
|
|
|
156
|
|
|
$
|
17.33
|
|
|
204
|
|
|
$
|
17.27
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
Units
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Units
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Units
|
|
Weighted
Average
Grant Date
Fair Value
|
|||||||||
Outstanding—beginning of year
|
|
560
|
|
|
$
|
17.46
|
|
|
349
|
|
|
$
|
24.80
|
|
|
578
|
|
|
$
|
16.70
|
|
Granted at fair value
|
|
310
|
|
|
17.75
|
|
|
541
|
|
|
14.52
|
|
|
239
|
|
|
24.60
|
|
|||
Vested
|
|
(212
|
)
|
|
19.58
|
|
|
(219
|
)
|
|
22.57
|
|
|
(377
|
)
|
|
12.34
|
|
|||
Forfeited
|
|
(118
|
)
|
|
16.21
|
|
|
(111
|
)
|
|
16.52
|
|
|
(91
|
)
|
|
24.35
|
|
|||
Outstanding—end of year
|
|
540
|
|
|
$
|
17.05
|
|
|
560
|
|
|
$
|
17.46
|
|
|
349
|
|
|
$
|
24.80
|
|
|
|
Year ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013 (1)
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct
|
|
$
|
83,052
|
|
|
$
|
101,578
|
|
|
$
|
137,783
|
|
|
$
|
147,460
|
|
|
$
|
156,032
|
|
Partner and other
|
|
1,661,704
|
|
|
1,698,385
|
|
|
1,520,055
|
|
|
1,349,643
|
|
|
1,148,185
|
|
|||||
Total net revenue
|
|
1,744,756
|
|
|
1,799,963
|
|
|
1,657,838
|
|
|
1,497,103
|
|
|
1,304,217
|
|
|||||
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct
|
|
80,585
|
|
|
96,271
|
|
|
128,077
|
|
|
129,253
|
|
|
136,282
|
|
|||||
Partner and other
|
|
1,323,620
|
|
|
1,372,343
|
|
|
1,225,107
|
|
|
1,088,791
|
|
|
920,275
|
|
|||||
Total cost of goods sold
|
|
1,404,205
|
|
|
1,468,614
|
|
|
1,353,184
|
|
|
1,218,044
|
|
|
1,056,557
|
|
|||||
Gross profit
|
|
340,551
|
|
|
331,349
|
|
|
304,654
|
|
|
279,059
|
|
|
247,660
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales and marketing
|
|
180,589
|
|
|
147,896
|
|
|
124,468
|
|
|
109,461
|
|
|
91,609
|
|
|||||
Technology
|
|
115,878
|
|
|
106,760
|
|
|
98,533
|
|
|
86,258
|
|
|
71,788
|
|
|||||
General and administrative
|
|
90,718
|
|
|
89,298
|
|
|
82,187
|
|
|
71,777
|
|
|
68,169
|
|
|||||
Litigation settlement
|
|
—
|
|
|
(19,520
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring (2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(360
|
)
|
|
(471
|
)
|
|||||
Total operating expenses
|
|
387,185
|
|
|
324,434
|
|
|
305,188
|
|
|
267,136
|
|
|
231,095
|
|
|||||
Operating income (loss)
|
|
(46,634
|
)
|
|
6,915
|
|
|
(534
|
)
|
|
11,923
|
|
|
16,565
|
|
|||||
Interest income
|
|
659
|
|
|
326
|
|
|
155
|
|
|
152
|
|
|
127
|
|
|||||
Interest expense
|
|
(2,937
|
)
|
|
(877
|
)
|
|
(140
|
)
|
|
(39
|
)
|
|
(113
|
)
|
|||||
Other income (expense), net
|
|
1,178
|
|
|
14,181
|
|
|
3,634
|
|
|
1,169
|
|
|
(235
|
)
|
|||||
Income (loss) before income taxes
|
|
(47,734
|
)
|
|
20,545
|
|
|
3,115
|
|
|
13,205
|
|
|
16,344
|
|
|||||
Provision (benefit) for income taxes
|
|
64,188
|
|
|
9,297
|
|
|
1,895
|
|
|
4,404
|
|
|
(68,034
|
)
|
|||||
Consolidated net income (loss)
|
|
$
|
(111,922
|
)
|
|
$
|
11,248
|
|
|
$
|
1,220
|
|
|
$
|
8,801
|
|
|
$
|
84,378
|
|
Less: Net loss attributable to noncontrolling interests
|
|
(2,044
|
)
|
|
(1,274
|
)
|
|
(1,226
|
)
|
|
(53
|
)
|
|
—
|
|
|||||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
|
$
|
(109,878
|
)
|
|
$
|
12,522
|
|
|
$
|
2,446
|
|
|
$
|
8,854
|
|
|
$
|
84,378
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to common shares—basic
|
|
$
|
(4.28
|
)
|
|
$
|
0.49
|
|
|
$
|
0.10
|
|
|
$
|
0.37
|
|
|
$
|
3.56
|
|
Weighted average common shares outstanding—basic
|
|
25,044
|
|
|
25,342
|
|
|
24,612
|
|
|
23,999
|
|
|
23,714
|
|
|||||
Net income (loss) per common share—diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to common shares—diluted
|
|
$
|
(4.28
|
)
|
|
$
|
0.49
|
|
|
$
|
0.10
|
|
|
$
|
0.36
|
|
|
$
|
3.47
|
|
Weighted average common shares outstanding—diluted
|
|
25,044
|
|
|
25,426
|
|
|
24,703
|
|
|
24,317
|
|
|
24,294
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013 (1)
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
203,215
|
|
|
$
|
183,098
|
|
|
$
|
170,262
|
|
|
$
|
181,641
|
|
|
$
|
148,665
|
|
Restricted cash
|
|
455
|
|
|
430
|
|
|
430
|
|
|
580
|
|
|
1,580
|
|
|||||
Working capital
|
|
50,534
|
|
|
(4,843
|
)
|
|
(10,308
|
)
|
|
15,260
|
|
|
25,425
|
|
|||||
Total assets
|
|
433,815
|
|
|
485,076
|
|
|
428,389
|
|
|
376,865
|
|
|
315,636
|
|
|||||
Total liabilities
|
|
261,692
|
|
|
312,116
|
|
|
279,028
|
|
|
247,645
|
|
|
196,876
|
|
|||||
Stockholders' equity
|
|
172,123
|
|
|
172,960
|
|
|
149,361
|
|
|
129,220
|
|
|
118,760
|
|
•
|
Quality customer experience with an emphasis on price, value, and a wide assortment of products delivered in a personalized format with the convenience of our mobile app, and with the benefits of our award-winning customer care;
|
•
|
Proprietary technologies which we believe help us provide our customers with a quality shopping experience;
|
•
|
Logistics capabilities tailored to the furniture and home goods category and developed over our many years of e-commerce experience;
|
•
|
Long-term mutually beneficial relationships with our partners, which currently number approximately
4,100
; and
|
•
|
Our Club O Loyalty Program, which we believe increases customer engagement and retention.
|
•
|
Worldstock Fair Trade, a store within our Website that offers handcrafted products made by artisans all over the world to help improve the lives of people in emerging economies;
|
•
|
Supplier Oasis, a single integration point through which our partners can manage their products, inventory and sales channels, and also obtain multi-channel fulfillment services through our distribution network;
|
•
|
Our international business where we offer products to customers outside the United States using third party logistics providers;
|
•
|
Cars by Overstock, a portal within our Website where our customers can search millions of new, used and certified pre-owned cars from dealers and private parties – all in one place with convenient financing and warranty options;
|
•
|
FinanceHub, a portal within our Website where our customers can shop for loans, credit cards, and insurance, and can now also access links to automated financial advisory services and discounted stock brokerage services; and
|
•
|
Pet Adoptions, a free service and portal within our Website that leverages our technology to display pets available for adoption from shelters across the United States.
|
•
|
revenue recognition;
|
•
|
accounting for income taxes; and
|
•
|
accounting for intangible assets other than goodwill in business combination.
|
|
|
Year Ended
December 31, 2017 |
||||||
Change in the Estimate of Average Transit Times (Days)
|
|
Increase (Decrease)
Revenue |
|
Increase (Decrease)
Income Before Tax |
||||
2
|
|
$
|
(10,986
|
)
|
|
$
|
(1,164
|
)
|
1
|
|
$
|
(7,540
|
)
|
|
$
|
(796
|
)
|
As reported
|
|
As reported
|
|
|
As reported
|
|
||
(1)
|
|
$
|
5,918
|
|
|
$
|
635
|
|
(2)
|
|
$
|
10,874
|
|
|
$
|
1,160
|
|
Intangible Assets
|
Fair Value
|
|
Weighted Average Useful Life (years)
|
||
Technology and developed software
|
$
|
13,600
|
|
|
2.92
|
Customer relationships
|
1,900
|
|
|
—
|
|
Trade names
|
300
|
|
|
5.93
|
|
Other
|
200
|
|
|
|
|
Total acquired intangible assets as of the acquisition date
|
16,000
|
|
|
|
|
Less: accumulated amortization of acquired intangible assets
|
(9,228
|
)
|
|
|
|
Total acquired intangible assets, net
|
$
|
6,772
|
|
|
|
|
|
Year ended December 31
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
(as a percentage of total revenue)
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
Direct
|
|
4.8
|
%
|
|
5.6
|
%
|
|
8.3
|
%
|
Partner and other
|
|
95.2
|
|
|
94.4
|
|
|
91.7
|
|
Total net revenue
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of goods sold
|
|
|
|
|
|
|
|||
Direct
|
|
4.6
|
|
|
5.3
|
|
|
7.7
|
|
Partner and other
|
|
75.9
|
|
|
76.2
|
|
|
73.9
|
|
Total cost of goods sold
|
|
80.5
|
|
|
81.5
|
|
|
81.6
|
|
Gross profit
|
|
19.5
|
|
|
18.4
|
|
|
18.4
|
|
Operating expenses:
|
|
|
|
|
|
|
|||
Sales and marketing
|
|
10.4
|
|
|
8.2
|
|
|
7.5
|
|
Technology
|
|
6.6
|
|
|
5.9
|
|
|
5.9
|
|
General and administrative
|
|
5.2
|
|
|
5.0
|
|
|
5.0
|
|
Litigation settlement
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
Total operating expenses
|
|
22.2
|
|
|
18.0
|
|
|
18.4
|
|
Operating income
|
|
(2.7
|
)
|
|
0.4
|
|
|
—
|
|
Interest income
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest expense
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
Other income, net
|
|
0.1
|
|
|
0.8
|
|
|
0.2
|
|
Income before income taxes
|
|
(2.8
|
)
|
|
1.2
|
|
|
0.2
|
|
Provision for income taxes
|
|
3.7
|
|
|
0.5
|
|
|
0.1
|
|
Consolidated net income
|
|
(6.5
|
)%
|
|
0.7
|
%
|
|
0.1
|
%
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
|
$
|
83,052
|
|
|
$
|
101,578
|
|
|
$
|
(18,526
|
)
|
|
(18.2
|
)%
|
Partner and other
|
|
1,661,704
|
|
|
1,698,385
|
|
|
(36,681
|
)
|
|
(2.2
|
)%
|
|||
Total revenue, net
|
|
$
|
1,744,756
|
|
|
$
|
1,799,963
|
|
|
$
|
(55,207
|
)
|
|
(3.1
|
)%
|
|
|
Year ended December 31,
|
|
|
|
|
|||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
|
$
|
83,052
|
|
|
$
|
101,578
|
|
|
$
|
(18,526
|
)
|
|
(18.2
|
)%
|
Partner and other
|
|
1,661,704
|
|
|
1,698,385
|
|
|
(36,681
|
)
|
|
(2.2
|
)%
|
|||
Total net revenue
|
|
1,744,756
|
|
|
1,799,963
|
|
|
(55,207
|
)
|
|
(3.1
|
)%
|
|||
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
|
80,585
|
|
|
96,271
|
|
|
(15,686
|
)
|
|
(16.3
|
)%
|
|||
Partner and other
|
|
1,323,620
|
|
|
1,372,343
|
|
|
(48,723
|
)
|
|
(3.7
|
)%
|
|||
Total cost of goods sold
|
|
1,404,205
|
|
|
1,468,614
|
|
|
(64,409
|
)
|
|
(4.4
|
)%
|
|||
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
|
2,467
|
|
|
5,307
|
|
|
(2,840
|
)
|
|
(53.5
|
)%
|
|||
Partner and other
|
|
338,084
|
|
|
326,042
|
|
|
12,042
|
|
|
3.7
|
%
|
|||
Total gross profit
|
|
$
|
340,551
|
|
|
$
|
331,349
|
|
|
$
|
9,202
|
|
|
2.8
|
%
|
|
|
Q1 2017
|
|
Q2 2017
|
|
Q3 2017
|
|
Q4 2017
|
|
FY 2017
|
|||||
Direct
|
|
8.2
|
%
|
|
4.3
|
%
|
|
0.3
|
%
|
|
(2.3
|
)%
|
|
3.0
|
%
|
Partner and other
|
|
20.8
|
%
|
|
20.3
|
%
|
|
20.7
|
%
|
|
19.7
|
%
|
|
20.3
|
%
|
Combined
|
|
20.1
|
%
|
|
19.5
|
%
|
|
19.7
|
%
|
|
18.8
|
%
|
|
19.5
|
%
|
|
|
Q1 2016
|
|
Q2 2016
|
|
Q3 2016
|
|
Q4 2016
|
|
FY 2016
|
|||||
Direct
|
|
4.7
|
%
|
|
6.2
|
%
|
|
2.8
|
%
|
|
7.3
|
%
|
|
5.2
|
%
|
Partner and other
|
|
19.7
|
%
|
|
19.0
|
%
|
|
19.1
|
%
|
|
19.2
|
%
|
|
19.2
|
%
|
Combined
|
|
18.7
|
%
|
|
18.2
|
%
|
|
18.2
|
%
|
|
18.6
|
%
|
|
18.4
|
%
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
||||||||
Total revenue, net
|
|
$
|
1,744,756
|
|
|
100%
|
|
$
|
1,799,963
|
|
|
100%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
||
Product costs and other cost of goods sold
|
|
1,328,749
|
|
|
76.2%
|
|
1,391,736
|
|
|
77.3%
|
||
Fulfillment and related costs
|
|
75,456
|
|
|
4.3%
|
|
76,878
|
|
|
4.3%
|
||
Total cost of goods sold
|
|
1,404,205
|
|
|
80.5%
|
|
1,468,614
|
|
|
81.6%
|
||
Gross profit
|
|
$
|
340,551
|
|
|
19.5%
|
|
$
|
331,349
|
|
|
18.4%
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Sales and marketing expenses
|
|
$
|
180,589
|
|
|
$
|
147,896
|
|
|
$
|
32,693
|
|
|
22.1
|
%
|
Sales and marketing expenses as a percent of net revenues
|
|
10.4
|
%
|
|
8.2
|
%
|
|
|
|
|
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Technology expenses
|
|
$
|
115,878
|
|
|
$
|
106,760
|
|
|
$
|
9,118
|
|
|
8.5
|
%
|
Technology expenses as a percent of net revenues
|
|
6.6
|
%
|
|
5.9
|
%
|
|
|
|
|
|
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
General and administrative expenses
|
|
$
|
90,718
|
|
|
$
|
89,298
|
|
|
$
|
1,420
|
|
|
1.6
|
%
|
General and administrative expenses as a percent of net revenues
|
|
5.2
|
%
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
Year ended
December 31, |
||||||
|
|
2017
|
|
2016
|
||||
Cost of goods sold - direct
|
|
$
|
307
|
|
|
$
|
310
|
|
Technology
|
|
24,604
|
|
|
25,693
|
|
||
Sales and marketing
|
|
—
|
|
|
124
|
|
||
General and administrative
|
|
3,937
|
|
|
1,156
|
|
||
Total depreciation, including internal-use software and website development
|
|
$
|
28,848
|
|
|
$
|
27,283
|
|
|
|
Year ended
December 31, |
||||||
|
|
2017
|
|
2016
|
||||
Technology
|
|
$
|
3,620
|
|
|
$
|
2,904
|
|
Sales and marketing
|
|
83
|
|
|
1,008
|
|
||
General and administrative
|
|
296
|
|
|
56
|
|
||
Total amortization
|
|
$
|
3,999
|
|
|
$
|
3,968
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2017
|
|
$
|
432,435
|
|
|
$
|
432,024
|
|
|
$
|
424,007
|
|
|
$
|
456,290
|
|
2016
|
|
$
|
413,677
|
|
|
$
|
418,540
|
|
|
$
|
441,564
|
|
|
$
|
526,182
|
|
2015
|
|
$
|
398,344
|
|
|
$
|
388,013
|
|
|
$
|
391,211
|
|
|
$
|
480,270
|
|
|
|
Year ended December 31
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
|
|
(as a percentage of total revenue)
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
Direct
|
|
5.6
|
%
|
|
8.3
|
%
|
|
9.8
|
%
|
Partner and other
|
|
94.4
|
|
|
91.7
|
|
|
90.2
|
|
Total net revenue
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of goods sold
|
|
|
|
|
|
|
|||
Direct
|
|
5.3
|
|
|
7.7
|
|
|
8.6
|
|
Partner and other
|
|
76.2
|
|
|
73.9
|
|
|
72.7
|
|
Total cost of goods sold
|
|
81.5
|
|
|
81.6
|
|
|
81.3
|
|
Gross profit
|
|
18.4
|
|
|
18.4
|
|
|
18.7
|
|
Operating expenses:
|
|
|
|
|
|
|
|||
Sales and marketing
|
|
8.2
|
|
|
7.5
|
|
|
7.3
|
|
Technology
|
|
5.9
|
|
|
5.9
|
|
|
5.8
|
|
General and administrative
|
|
5.0
|
|
|
5.0
|
|
|
4.8
|
|
Litigation settlement
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
Total operating expenses
|
|
18.0
|
|
|
18.4
|
|
|
17.9
|
|
Operating income
|
|
0.4
|
|
|
—
|
|
|
0.8
|
|
Interest income
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
Other income, net
|
|
0.8
|
|
|
0.2
|
|
|
0.1
|
|
Income before income taxes
|
|
1.2
|
|
|
0.2
|
|
|
0.9
|
|
Provision for income taxes
|
|
0.5
|
|
|
0.1
|
|
|
0.3
|
|
Consolidated net income
|
|
0.7
|
%
|
|
0.1
|
%
|
|
0.6
|
%
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Direct
|
|
$
|
101,578
|
|
|
$
|
137,783
|
|
|
$
|
(36,205
|
)
|
|
(26.3
|
)%
|
Partner and other
|
|
1,698,385
|
|
|
1,520,055
|
|
|
178,330
|
|
|
11.7
|
%
|
|||
Total revenue, net
|
|
$
|
1,799,963
|
|
|
$
|
1,657,838
|
|
|
$
|
142,125
|
|
|
8.6
|
%
|
|
|
Q1 2016
|
|
Q2 2016
|
|
Q3 2016
|
|
Q4 2016
|
|
FY 2016
|
|||||
Direct
|
|
4.7
|
%
|
|
6.2
|
%
|
|
2.8
|
%
|
|
7.3
|
%
|
|
5.2
|
%
|
Partner and other
|
|
19.7
|
%
|
|
19.0
|
%
|
|
19.1
|
%
|
|
19.2
|
%
|
|
19.2
|
%
|
Combined
|
|
18.7
|
%
|
|
18.2
|
%
|
|
18.2
|
%
|
|
18.6
|
%
|
|
18.4
|
%
|
|
|
Q1 2015
|
|
Q2 2015
|
|
Q3 2015
|
|
Q4 2015
|
|
FY 2015
|
|||||
Direct
|
|
10.0
|
%
|
|
9.3
|
%
|
|
4.9
|
%
|
|
3.8
|
%
|
|
7.0
|
%
|
Partner and other
|
|
19.8
|
%
|
|
19.9
|
%
|
|
19.8
|
%
|
|
18.3
|
%
|
|
19.4
|
%
|
Combined
|
|
18.9
|
%
|
|
19.0
|
%
|
|
18.5
|
%
|
|
17.3
|
%
|
|
18.4
|
%
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
||||||||
Total revenue, net
|
|
$
|
1,799,963
|
|
|
100%
|
|
$
|
1,657,838
|
|
|
100%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
||
Product costs and other cost of goods sold
|
|
1,391,736
|
|
|
77.3%
|
|
1,279,766
|
|
|
77.2%
|
||
Fulfillment and related costs
|
|
76,878
|
|
|
4.3%
|
|
73,418
|
|
|
4.4%
|
||
Total cost of goods sold
|
|
1,468,614
|
|
|
81.6%
|
|
1,353,184
|
|
|
81.6%
|
||
Gross profit
|
|
$
|
331,349
|
|
|
18.4%
|
|
$
|
304,654
|
|
|
18.4%
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Sales and marketing expenses
|
|
$
|
147,896
|
|
|
$
|
124,468
|
|
|
$
|
23,428
|
|
|
18.8
|
%
|
Sales and marketing expenses as a percent of net revenues
|
|
8.2
|
%
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Technology expenses
|
|
$
|
106,760
|
|
|
$
|
98,533
|
|
|
$
|
8,227
|
|
|
8.3
|
%
|
Technology expenses as a percent of net revenues
|
|
5.9
|
%
|
|
5.9
|
%
|
|
|
|
|
|
|
|
|
Year ended
December 31, |
|
|
|
|
|||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
General and administrative expenses
|
|
$
|
89,298
|
|
|
$
|
82,187
|
|
|
$
|
7,111
|
|
|
8.7
|
%
|
General and administrative expenses as a percent of net revenues
|
|
5.0
|
%
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
Year ended
December 31, |
||||||
|
|
2016
|
|
2015
|
||||
Cost of goods sold - direct
|
|
$
|
310
|
|
|
$
|
283
|
|
Technology
|
|
25,693
|
|
|
22,126
|
|
||
Sales and marketing
|
|
124
|
|
|
—
|
|
||
General and administrative
|
|
1,156
|
|
|
1,107
|
|
||
Total depreciation, including internal-use software and website development
|
|
$
|
27,283
|
|
|
$
|
23,516
|
|
|
|
Year ended
December 31, |
||||||
|
|
2016
|
|
2015
|
||||
Technology
|
|
$
|
2,904
|
|
|
$
|
605
|
|
Sales and marketing
|
|
1,008
|
|
|
531
|
|
||
General and administrative
|
|
56
|
|
|
445
|
|
||
Total amortization
|
|
$
|
3,968
|
|
|
$
|
1,581
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2016
|
|
$
|
413,677
|
|
|
$
|
418,540
|
|
|
$
|
441,564
|
|
|
$
|
526,182
|
|
2015
|
|
$
|
398,344
|
|
|
$
|
388,013
|
|
|
$
|
391,211
|
|
|
$
|
480,270
|
|
2014
|
|
$
|
341,207
|
|
|
$
|
332,545
|
|
|
$
|
352,991
|
|
|
$
|
470,360
|
|
|
|
Year ended
December 31, |
||||||
|
|
2017
|
|
2016
|
||||
Cash provided by (used in):
|
|
|
|
|
|
|
||
Operating activities
|
|
$
|
(35,321
|
)
|
|
$
|
39,564
|
|
Investing activities
|
|
(17,960
|
)
|
|
(79,447
|
)
|
||
Financing activities
|
|
73,398
|
|
|
52,719
|
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
Contractual Obligations
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
PCL term loan payments
|
|
$
|
3,200
|
|
|
$
|
41,052
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
44,252
|
|
Operating leases
|
|
6,962
|
|
|
6,733
|
|
|
4,292
|
|
|
4,335
|
|
|
4,439
|
|
|
16,356
|
|
|
43,117
|
|
|||||||
Purchase obligations
|
|
5,487
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,487
|
|
|||||||
Technology services
|
|
1,369
|
|
|
1,901
|
|
|
1,584
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,854
|
|
|||||||
Total contractual cash obligations
|
|
$
|
17,018
|
|
|
$
|
49,686
|
|
|
$
|
5,876
|
|
|
$
|
4,335
|
|
|
$
|
4,439
|
|
|
$
|
16,356
|
|
|
$
|
97,710
|
|
|
|
Year ended
December 31, |
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total net revenue
|
|
$
|
1,744,756
|
|
|
$
|
1,799,963
|
|
|
$
|
1,657,838
|
|
Cost of goods sold
|
|
1,404,205
|
|
|
1,468,614
|
|
|
1,353,184
|
|
|||
Gross profit
|
|
340,551
|
|
|
331,349
|
|
|
304,654
|
|
|||
Less: Sales and marketing expense
|
|
180,589
|
|
|
147,896
|
|
|
124,468
|
|
|||
Plus: Club O Rewards and gift card breakage (included in Other income, net)
|
|
2,742
|
|
|
16,808
|
|
|
5,911
|
|
|||
Contribution
|
|
$
|
162,704
|
|
|
$
|
200,261
|
|
|
$
|
186,097
|
|
Contribution margin
|
|
9.3
|
%
|
|
11.1
|
%
|
|
11.2
|
%
|
|
Year ended, December 31
|
||||||||||||||||
|
Direct
|
Partner
|
Retail Total
(Direct and Partner)
|
|
Other
|
|
Consolidated
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|||||||||
Total net revenue
|
$
|
83,052
|
|
$
|
1,645,052
|
|
$
|
1,728,104
|
|
|
$
|
16,652
|
|
|
$
|
1,744,756
|
|
Cost of goods sold
|
80,585
|
|
1,311,973
|
|
1,392,558
|
|
|
11,647
|
|
|
1,404,205
|
|
|||||
Gross profit
|
$
|
2,467
|
|
$
|
333,079
|
|
$
|
335,546
|
|
|
$
|
5,005
|
|
|
$
|
340,551
|
|
Less: Sales and marketing expense
|
|
|
179,549
|
|
|
1,040
|
|
|
180,589
|
|
|||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net)
|
|
|
2,742
|
|
|
—
|
|
|
2,742
|
|
|||||||
Contribution
|
|
|
$
|
158,739
|
|
|
$
|
3,965
|
|
|
$
|
162,704
|
|
||||
Contribution margin
|
|
|
9.2
|
%
|
|
23.8
|
%
|
|
9.3
|
%
|
|||||||
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|||||||||
Total net revenue
|
$
|
101,578
|
|
$
|
1,683,204
|
|
$
|
1,784,782
|
|
|
$
|
15,181
|
|
|
$
|
1,799,963
|
|
Cost of goods sold
|
96,271
|
|
1,362,140
|
|
1,458,411
|
|
|
10,203
|
|
|
1,468,614
|
|
|||||
Gross profit
|
$
|
5,307
|
|
$
|
321,064
|
|
$
|
326,371
|
|
|
$
|
4,978
|
|
|
$
|
331,349
|
|
Less: Sales and marketing expense
|
|
|
147,368
|
|
|
528
|
|
|
147,896
|
|
|||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net)
|
|
|
16,808
|
|
|
—
|
|
|
16,808
|
|
|||||||
Contribution
|
|
|
$
|
195,811
|
|
|
$
|
4,450
|
|
|
$
|
200,261
|
|
||||
Contribution margin
|
|
|
11.0
|
%
|
|
29.3
|
%
|
|
11.1
|
%
|
|||||||
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
||||||||||
Total net revenue
|
$
|
137,783
|
|
$
|
1,518,125
|
|
$
|
1,655,908
|
|
|
$
|
1,930
|
|
|
$
|
1,657,838
|
|
Cost of goods sold
|
128,077
|
|
1,225,107
|
|
1,353,184
|
|
|
—
|
|
|
1,353,184
|
|
|||||
Gross profit
|
$
|
9,706
|
|
$
|
293,018
|
|
$
|
302,724
|
|
|
$
|
1,930
|
|
|
$
|
304,654
|
|
Less: Sales and marketing expense
|
|
|
124,218
|
|
|
250
|
|
|
124,468
|
|
|||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net)
|
|
|
5,911
|
|
|
—
|
|
|
5,911
|
|
|||||||
Contribution
|
|
|
$
|
184,417
|
|
|
$
|
1,680
|
|
|
$
|
186,097
|
|
||||
Contribution margin
|
|
|
11.1
|
%
|
|
87.0
|
%
|
|
11.2
|
%
|
|
|
Year ended
December 31, |
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
|
$
|
(35,321
|
)
|
|
$
|
39,564
|
|
|
$
|
54,516
|
|
Expenditures for fixed assets, including internal-use software and website development
|
|
(23,586
|
)
|
|
(72,281
|
)
|
|
(59,513
|
)
|
|||
Free cash flow
|
|
$
|
(58,907
|
)
|
|
$
|
(32,717
|
)
|
|
$
|
(4,997
|
)
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Statements of Changes in Stockholders' Equity
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
Schedule II Valuation and Qualifying Accounts
|
Exhibits
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
2.4
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
Exhibits
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
Form of Participating Affiliate Agreement (included in Exhibit 4.3)
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
Certificate of Designation for Blockchain Voting Series A Preferred Stock (see Exhibit 3.3)
|
|
|
|
4.8
|
|
Certificate of Designation for Voting Series B Preferred Stock (see Exhibit 3.4)
|
|
|
|
4.9
|
|
Form of Warrant issued to Passport Special Opportunities Master Fund, L.P. dated November 8, 2017 (included in Exhibit 10.22)
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
Form of Warrant issued to Quantum Partners LP dated November 8, 2017 (included in Exhibit 10.23)
|
|
|
|
4.12
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
Exhibits
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
*10.16(a)
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18(a)
|
|
|
|
|
|
10.19(a)
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
Exhibits
|
|
|
*10.24
|
|
|
|
|
|
*10.25
|
|
|
|
|
|
*21
|
|
|
|
|
|
*23
|
|
|
|
|
|
24
|
|
Powers of Attorney (see signature page)
|
|
|
|
*31.1
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
*32.1
|
|
|
|
|
|
*32.2
|
|
|
|
|
|
101
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2017 and 2016; (ii) Consolidated Statements of Income for the years ended December 31, 2017, 2016, and 2015; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016, and 2015; (iv) Consolidated Statements of Changes in Stockholder's Equity for the years ended December 31, 2017, 2016, and 2015; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015; and (vi) Notes to Consolidated Financial Statements
|
(a)
|
Management contract or compensatory plan or arrangement.
|
|
|
OVERSTOCK.COM, INC.
|
||
|
|
By:
|
|
/s/ PATRICK M. BYRNE
Patrick M. Byrne
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ PATRICK M. BYRNE
Patrick M. Byrne
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 15, 2018
|
/s/ ALLISON H. ABRAHAM
Allison H. Abraham |
|
Chairwoman of the Board
|
|
March 15, 2018
|
/s/ ROBERT P. HUGHES
Robert P. Hughes
|
|
Senior Vice President, Finance and Risk Management (Principal Financial Officer and Principal Accounting Officer)
|
|
March 15, 2018
|
/s/ SAUM NOURSALEHI
Saum Noursalehi
|
|
President, Retail and Director
|
|
March 15, 2018
|
/s/ JONATHAN E. JOHNSON III
Jonathan E. Johnson III
|
|
President, Medici Ventures and Director
|
|
March 15, 2018
|
/s/ BARCLAY F. CORBUS
Barclay F. Corbus
|
|
Director
|
|
March 15, 2018
|
/s/ KIRTHI KALYANAM
Kirthi Kalyanam
|
|
Director
|
|
March 15, 2018
|
/s/ JOSEPH J. TABACCO, JR.
Joseph J. Tabacco, Jr.
|
|
Director
|
|
March 15, 2018
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
203,215
|
|
|
$
|
183,098
|
|
Restricted cash
|
455
|
|
|
430
|
|
||
Accounts receivable, net
|
30,080
|
|
|
28,142
|
|
||
Inventories, net
|
13,703
|
|
|
18,937
|
|
||
Prepaid inventories, net
|
1,625
|
|
|
2,112
|
|
||
Prepaids and other current assets
|
16,119
|
|
|
11,654
|
|
||
Total current assets
|
265,197
|
|
|
244,373
|
|
||
Fixed assets, net
|
129,343
|
|
|
134,552
|
|
||
Precious metals
|
—
|
|
|
9,946
|
|
||
Deferred tax assets, net
|
—
|
|
|
56,266
|
|
||
Intangible assets, net
|
7,337
|
|
|
10,913
|
|
||
Goodwill
|
14,698
|
|
|
14,698
|
|
||
Other long-term assets, net
|
17,240
|
|
|
14,328
|
|
||
Total assets
|
$
|
433,815
|
|
|
$
|
485,076
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
85,406
|
|
|
$
|
106,337
|
|
Accrued liabilities
|
82,611
|
|
|
96,216
|
|
||
Deferred revenue
|
46,468
|
|
|
41,780
|
|
||
Finance obligations, current
|
—
|
|
|
3,256
|
|
||
Other current liabilities, net
|
178
|
|
|
1,627
|
|
||
Total current liabilities
|
214,663
|
|
|
249,216
|
|
||
Long-term debt, net
|
—
|
|
|
44,179
|
|
||
Long-term debt, net - related party
|
39,909
|
|
|
—
|
|
||
Finance obligations, non-current
|
—
|
|
|
11,831
|
|
||
Other long-term liabilities
|
7,120
|
|
|
6,890
|
|
||
Total liabilities
|
261,692
|
|
|
312,116
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
|
||
Preferred stock, $0.0001 par value, authorized shares - 5,000
|
|
|
|
|
|
||
Series A, issued and outstanding - 127 and 127
|
—
|
|
|
—
|
|
||
Series B, issued and outstanding - 555 and 569
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value
|
|
|
|
|
|
||
Authorized shares - 100,000
|
|
|
|
|
|
||
Issued shares - 30,632 and 27,895
|
|
|
|
|
|
||
Outstanding shares - 27,497 and 25,432
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
494,732
|
|
|
383,348
|
|
||
Accumulated deficit
|
(254,692
|
)
|
|
(153,898
|
)
|
||
Accumulated other comprehensive loss
|
(599
|
)
|
|
(1,540
|
)
|
||
Treasury stock:
|
|
|
|
|
|
||
Shares at cost - 3,135 and 2,463
|
(63,816
|
)
|
|
(52,587
|
)
|
||
Equity attributable to stockholders of Overstock.com, Inc.
|
175,628
|
|
|
175,326
|
|
||
Equity attributable to noncontrolling interests
|
(3,505
|
)
|
|
(2,366
|
)
|
||
Total stockholders' equity
|
172,123
|
|
|
172,960
|
|
||
Total liabilities and stockholders' equity
|
$
|
433,815
|
|
|
$
|
485,076
|
|
|
Year ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue, net
|
|
|
|
|
|
|
|
|
|||
Direct
|
$
|
83,052
|
|
|
$
|
101,578
|
|
|
$
|
137,783
|
|
Partner and other
|
1,661,704
|
|
|
1,698,385
|
|
|
1,520,055
|
|
|||
Total net revenue
|
1,744,756
|
|
|
1,799,963
|
|
|
1,657,838
|
|
|||
Cost of goods sold
|
|
|
|
|
|
|
|
|
|||
Direct(1)
|
80,585
|
|
|
96,271
|
|
|
128,077
|
|
|||
Partner and other
|
1,323,620
|
|
|
1,372,343
|
|
|
1,225,107
|
|
|||
Total cost of goods sold
|
1,404,205
|
|
|
1,468,614
|
|
|
1,353,184
|
|
|||
Gross profit
|
340,551
|
|
|
331,349
|
|
|
304,654
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Sales and marketing(1)
|
180,589
|
|
|
147,896
|
|
|
124,468
|
|
|||
Technology(1)
|
115,878
|
|
|
106,760
|
|
|
98,533
|
|
|||
General and administrative(1)
|
90,718
|
|
|
89,298
|
|
|
82,187
|
|
|||
Litigation settlement
|
—
|
|
|
(19,520
|
)
|
|
—
|
|
|||
Total operating expenses
|
387,185
|
|
|
324,434
|
|
|
305,188
|
|
|||
Operating income (loss)
|
(46,634
|
)
|
|
6,915
|
|
|
(534
|
)
|
|||
Interest income
|
659
|
|
|
326
|
|
|
155
|
|
|||
Interest expense
|
(2,937
|
)
|
|
(877
|
)
|
|
(140
|
)
|
|||
Other income, net
|
1,178
|
|
|
14,181
|
|
|
3,634
|
|
|||
Income (loss) before income taxes
|
(47,734
|
)
|
|
20,545
|
|
|
3,115
|
|
|||
Provision for income taxes
|
64,188
|
|
|
9,297
|
|
|
1,895
|
|
|||
Consolidated net income (loss)
|
$
|
(111,922
|
)
|
|
$
|
11,248
|
|
|
$
|
1,220
|
|
Less: Net loss attributable to noncontrolling interests
|
(2,044
|
)
|
|
(1,274
|
)
|
|
(1,226
|
)
|
|||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
$
|
(109,878
|
)
|
|
$
|
12,522
|
|
|
$
|
2,446
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to common shares—basic
|
$
|
(4.28
|
)
|
|
$
|
0.49
|
|
|
$
|
0.10
|
|
Weighted average common shares outstanding—basic
|
25,044
|
|
|
25,342
|
|
|
24,612
|
|
|||
Net income (loss) per common share—diluted:
|
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to common shares—diluted
|
$
|
(4.28
|
)
|
|
$
|
0.49
|
|
|
$
|
0.10
|
|
Weighted average common shares outstanding—diluted
|
25,044
|
|
|
25,426
|
|
|
24,703
|
|
|
Year ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Consolidated net income (loss)
|
$
|
(111,922
|
)
|
|
$
|
11,248
|
|
|
$
|
1,220
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain (loss) on cash flow hedges, net of benefit (expense) for taxes of $(689), $(211), and $513
|
941
|
|
|
(110
|
)
|
|
(809
|
)
|
|||
Other comprehensive income (loss)
|
941
|
|
|
(110
|
)
|
|
(809
|
)
|
|||
Comprehensive income (loss)
|
$
|
(110,981
|
)
|
|
$
|
11,138
|
|
|
$
|
411
|
|
Less: Comprehensive loss attributable to noncontrolling interests
|
(2,044
|
)
|
|
(1,274
|
)
|
|
(1,226
|
)
|
|||
Comprehensive income (loss) attributable to stockholders of Overstock.com, Inc.
|
$
|
(108,937
|
)
|
|
$
|
12,412
|
|
|
$
|
1,637
|
|
|
Year ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Equity attributable to stockholders of Overstock.com, Inc.
|
|
|
|
|
|
|
|
|
|||
Number of common shares issued
|
|
|
|
|
|
||||||
Balance at beginning of year
|
27,895
|
|
|
27,634
|
|
|
27,241
|
|
|||
Common stock issued upon vesting of restricted stock
|
212
|
|
|
219
|
|
|
377
|
|
|||
Exercise of stock options
|
39
|
|
|
42
|
|
|
16
|
|
|||
Exercise of stock warrants
|
2,472
|
|
|
—
|
|
|
—
|
|
|||
Other
|
14
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
30,632
|
|
|
27,895
|
|
|
27,634
|
|
|||
Number of treasury stock shares
|
|
|
|
|
|
||||||
Balance at beginning of year
|
2,463
|
|
|
2,400
|
|
|
3,204
|
|
|||
Issuance of treasury stock
|
—
|
|
|
—
|
|
|
(908
|
)
|
|||
Purchases of treasury stock
|
672
|
|
|
63
|
|
|
104
|
|
|||
Balance at end of year
|
3,135
|
|
|
2,463
|
|
|
2,400
|
|
|||
Total number of outstanding shares
|
27,497
|
|
|
25,432
|
|
|
25,234
|
|
|||
Common stock
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Number of Series A preferred shares issued and outstanding
|
|
|
|
|
|
||||||
Balance at beginning of year
|
127
|
|
|
—
|
|
|
—
|
|
|||
Rights offering
|
—
|
|
|
127
|
|
|
—
|
|
|||
Balance at end of year
|
127
|
|
|
127
|
|
|
—
|
|
|||
Number of Series B preferred shares issued and outstanding
|
|
|
|
|
|
||||||
Balance at beginning of year
|
569
|
|
|
—
|
|
|
—
|
|
|||
Rights offering
|
—
|
|
|
569
|
|
|
—
|
|
|||
Other
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
555
|
|
|
569
|
|
|
—
|
|
|||
Preferred stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
||||
Balance at beginning of year
|
$
|
383,348
|
|
|
$
|
370,047
|
|
|
$
|
366,252
|
|
Stock-based compensation to employees and directors
|
4,077
|
|
|
4,891
|
|
|
3,526
|
|
|||
Exercise of stock options
|
664
|
|
|
819
|
|
|
269
|
|
|||
Exercise of stock warrants
|
100,000
|
|
|
—
|
|
|
—
|
|
|||
Issuance of stock warrants
|
6,462
|
|
|
—
|
|
|
—
|
|
|||
Rights offering
|
—
|
|
|
7,591
|
|
|
—
|
|
|||
Other
|
181
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
$
|
494,732
|
|
|
$
|
383,348
|
|
|
$
|
370,047
|
|
Accumulated deficit
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(153,898
|
)
|
|
$
|
(166,420
|
)
|
|
$
|
(153,864
|
)
|
Cumulative effect of change in accounting principle
|
9,374
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
(109,878
|
)
|
|
12,522
|
|
|
2,446
|
|
|||
Deficiency in cost of treasury stock issued
|
—
|
|
|
—
|
|
|
(15,002
|
)
|
|||
Declaration of preferred dividends
|
(109
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
(181
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
$
|
(254,692
|
)
|
|
$
|
(153,898
|
)
|
|
$
|
(166,420
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(1,540
|
)
|
|
$
|
(1,430
|
)
|
|
$
|
(621
|
)
|
Net other comprehensive income (loss)
|
941
|
|
|
(110
|
)
|
|
(809
|
)
|
|||
Balance at end of year
|
$
|
(599
|
)
|
|
$
|
(1,540
|
)
|
|
$
|
(1,430
|
)
|
Treasury stock
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(52,587
|
)
|
|
$
|
(51,747
|
)
|
|
$
|
(82,531
|
)
|
Issuance of treasury stock
|
—
|
|
|
—
|
|
|
33,151
|
|
|||
Purchases of treasury stock
|
(11,229
|
)
|
|
(840
|
)
|
|
(2,367
|
)
|
|||
Balance at end of year
|
(63,816
|
)
|
|
(52,587
|
)
|
|
(51,747
|
)
|
|||
Total equity attributable to stockholders of Overstock.com, Inc.
|
$
|
175,628
|
|
|
$
|
175,326
|
|
|
$
|
150,453
|
|
|
|
|
|
|
|
||||||
Equity attributable to noncontrolling interests
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(2,366
|
)
|
|
$
|
(1,092
|
)
|
|
$
|
(18
|
)
|
Net loss attributable to noncontrolling interests
|
(2,044
|
)
|
|
(1,274
|
)
|
|
(1,226
|
)
|
|||
Paid-in capital attributable to noncontrolling interests
|
905
|
|
|
—
|
|
|
152
|
|
|||
Total equity attributable to noncontrolling interests
|
$
|
(3,505
|
)
|
|
$
|
(2,366
|
)
|
|
$
|
(1,092
|
)
|
|
|
|
|
|
|
||||||
Total stockholders' equity
|
$
|
172,123
|
|
|
$
|
172,960
|
|
|
$
|
149,361
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Consolidated net income (loss)
|
$
|
(111,922
|
)
|
|
$
|
11,248
|
|
|
$
|
1,220
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation of fixed assets
|
28,848
|
|
|
27,283
|
|
|
23,516
|
|
|||
Amortization of intangible assets
|
3,999
|
|
|
3,968
|
|
|
1,581
|
|
|||
Stock-based compensation to employees and directors
|
4,077
|
|
|
4,891
|
|
|
3,526
|
|
|||
Deferred income taxes, net
|
65,199
|
|
|
7,719
|
|
|
1,483
|
|
|||
(Gain) loss on investment in precious metals
|
(1,971
|
)
|
|
(201
|
)
|
|
1,183
|
|
|||
Gain on sale of cryptocurrencies
|
(1,995
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment of cost method investments
|
5,487
|
|
|
2,850
|
|
|
—
|
|
|||
Ineffective portion of loss on cash flow hedge
|
—
|
|
|
—
|
|
|
124
|
|
|||
Early extinguishment costs of long term debts
|
2,464
|
|
|
—
|
|
|
—
|
|
|||
Termination costs of cryptobond financing
|
—
|
|
|
—
|
|
|
850
|
|
|||
Other
|
876
|
|
|
356
|
|
|
182
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|||
Restricted cash
|
(100
|
)
|
|
—
|
|
|
—
|
|
|||
Accounts receivable, net
|
(1,938
|
)
|
|
(10,006
|
)
|
|
3,463
|
|
|||
Inventories, net
|
5,234
|
|
|
1,105
|
|
|
6,166
|
|
|||
Prepaid inventories, net
|
487
|
|
|
(801
|
)
|
|
1,903
|
|
|||
Prepaids and other current assets
|
(3,286
|
)
|
|
2,389
|
|
|
(1,338
|
)
|
|||
Other long-term assets, net
|
(2,307
|
)
|
|
(786
|
)
|
|
66
|
|
|||
Accounts payable
|
(20,995
|
)
|
|
(18,823
|
)
|
|
10,482
|
|
|||
Accrued liabilities
|
(12,311
|
)
|
|
16,936
|
|
|
(4,153
|
)
|
|||
Deferred revenue
|
4,688
|
|
|
(9,164
|
)
|
|
2,493
|
|
|||
Other long-term liabilities
|
145
|
|
|
600
|
|
|
1,769
|
|
|||
Net cash provided by (used in) operating activities
|
(35,321
|
)
|
|
39,564
|
|
|
54,516
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from sale of precious metals
|
11,917
|
|
|
1,610
|
|
|
—
|
|
|||
Investment in precious metals
|
—
|
|
|
(1,633
|
)
|
|
—
|
|
|||
Equity method investments
|
(3,000
|
)
|
|
—
|
|
|
(152
|
)
|
|||
Disbursements for note receivable
|
(750
|
)
|
|
(3,668
|
)
|
|
(5,000
|
)
|
|||
Cost method investments
|
(2,188
|
)
|
|
(4,750
|
)
|
|
(7,000
|
)
|
|||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
1,248
|
|
|
(10,601
|
)
|
|||
Expenditures for fixed assets, including internal-use software and website development
|
(23,586
|
)
|
|
(72,281
|
)
|
|
(59,513
|
)
|
|||
Other
|
(353
|
)
|
|
27
|
|
|
(165
|
)
|
|||
Net cash used in investing activities
|
(17,960
|
)
|
|
(79,447
|
)
|
|
(82,431
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Payments on capital lease obligations
|
(83
|
)
|
|
—
|
|
|
(362
|
)
|
|||
Paydown on direct financing arrangement
|
—
|
|
|
(54
|
)
|
|
(308
|
)
|
|||
Payments on finance obligations
|
(15,316
|
)
|
|
(1,906
|
)
|
|
(104
|
)
|
|||
Payments on interest swap
|
(1,535
|
)
|
|
(563
|
)
|
|
(57
|
)
|
|||
Proceeds from finance obligations
|
—
|
|
|
11,399
|
|
|
5,698
|
|
|||
Proceeds from short-term debt
|
—
|
|
|
—
|
|
|
5,500
|
|
|||
Payments on short-term debt
|
—
|
|
|
—
|
|
|
(750
|
)
|
|||
Payments on long-term debt
|
(45,766
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from long-term debt
|
40,000
|
|
|
36,273
|
|
|
9,488
|
|
|||
Payments of preferred dividends
|
(109
|
)
|
|
—
|
|
|
—
|
|
|||
Change in restricted cash
|
75
|
|
|
—
|
|
|
150
|
|
|||
Proceeds from issuance of stock warrants
|
6,462
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
664
|
|
|
819
|
|
|
269
|
|
|||
Proceeds from rights offering, net of offering costs
|
—
|
|
|
7,591
|
|
|
—
|
|
|||
Proceeds from exercise of stock warrants
|
100,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from security token offering
|
905
|
|
|
—
|
|
|
—
|
|
|||
Purchase of treasury stock
|
(11,229
|
)
|
|
(840
|
)
|
|
(2,367
|
)
|
|||
Payment of debt issuance costs
|
(670
|
)
|
|
—
|
|
|
(621
|
)
|
|||
Net cash provided by financing activities
|
73,398
|
|
|
52,719
|
|
|
16,536
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
20,117
|
|
|
12,836
|
|
|
(11,379
|
)
|
|||
Cash and cash equivalents, beginning of year
|
183,098
|
|
|
170,262
|
|
|
181,641
|
|
|||
Cash and cash equivalents, end of year
|
$
|
203,215
|
|
|
$
|
183,098
|
|
|
$
|
170,262
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|||
Cash paid during the period:
|
|
|
|
|
|
|
|
|
|||
Interest paid
|
$
|
2,940
|
|
|
$
|
1,269
|
|
|
$
|
224
|
|
Taxes paid
|
487
|
|
|
1,338
|
|
|
273
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|||
Fixed assets, including internal-use software and website development, costs financed through accounts payable and accrued liabilities
|
$
|
989
|
|
|
$
|
2,219
|
|
|
$
|
6,290
|
|
Equipment acquired under capital lease obligations
|
1,421
|
|
|
—
|
|
|
362
|
|
|||
Capitalized interest cost
|
—
|
|
|
105
|
|
|
157
|
|
|||
Acquisition of businesses through stock issuance
|
—
|
|
|
—
|
|
|
18,149
|
|
|||
Change in value of cash flow hedge
|
(1,738
|
)
|
|
(659
|
)
|
|
1,265
|
|
|||
Note receivable converted to cost method investment
|
1,368
|
|
|
2,850
|
|
|
—
|
|
•
|
Level 1
—Quoted prices for identical instruments in active markets;
|
•
|
Level 2
—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3
—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
(1)
|
— Trading securities held in a rabbi trust are included in Prepaids and other current assets and Other long-term assets, net in the consolidated balance sheets.
|
(2)
|
— Derivative financial instruments were included in Other current liabilities, net and Other long-term liabilities in the consolidated balance sheets.
|
(3)
|
— Non-qualified deferred compensation in a rabbi trust is included in Accrued liabilities and Other long-term liabilities in the consolidated balance sheets.
|
|
Life
(years)
|
Building
|
40
|
Land improvements
|
20
|
Building machinery and equipment
|
15-20
|
Furniture and equipment
|
5-7
|
Computer hardware
|
3-4
|
Computer software
|
2-4
|
|
Year ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of goods sold - direct
|
$
|
307
|
|
|
$
|
310
|
|
|
$
|
283
|
|
Technology
|
24,604
|
|
|
25,693
|
|
|
22,126
|
|
|||
Sales and marketing
|
—
|
|
|
124
|
|
|
—
|
|
|||
General and administrative
|
3,937
|
|
|
1,156
|
|
|
1,107
|
|
|||
Total depreciation, including internal-use software and website development
|
$
|
28,848
|
|
|
$
|
27,283
|
|
|
$
|
23,516
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Acquired intangible assets
|
$
|
16,000
|
|
|
$
|
16,000
|
|
Intangible assets, other (1)
|
1,779
|
|
|
1,356
|
|
||
|
17,779
|
|
|
17,356
|
|
||
Less: accumulated amortization of intangible assets
|
(10,442
|
)
|
|
(6,443
|
)
|
||
Total intangible assets, net
|
$
|
7,337
|
|
|
$
|
10,913
|
|
|
Year ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Technology
|
$
|
3,620
|
|
|
$
|
2,904
|
|
|
$
|
605
|
|
Sales and marketing
|
83
|
|
|
1,008
|
|
|
531
|
|
|||
General and administrative
|
296
|
|
|
56
|
|
|
445
|
|
|||
Total amortization
|
$
|
3,999
|
|
|
$
|
3,968
|
|
|
$
|
1,581
|
|
|
Year ended
December 31, |
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Total revenue, net
|
$
|
1,744,756
|
|
|
100%
|
|
$
|
1,799,963
|
|
|
100%
|
|
$
|
1,657,838
|
|
|
100%
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Product costs and other cost of goods sold
|
1,328,749
|
|
|
76%
|
|
1,391,736
|
|
|
77%
|
|
1,279,766
|
|
|
77%
|
|||
Fulfillment and related costs
|
75,456
|
|
|
4%
|
|
76,878
|
|
|
4%
|
|
73,418
|
|
|
4%
|
|||
Total cost of goods sold
|
1,404,205
|
|
|
80%
|
|
1,468,614
|
|
|
82%
|
|
1,353,184
|
|
|
82%
|
|||
Gross profit
|
$
|
340,551
|
|
|
20%
|
|
$
|
331,349
|
|
|
18%
|
|
$
|
304,654
|
|
|
18%
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
$
|
(109,878
|
)
|
|
$
|
12,522
|
|
|
$
|
2,446
|
|
Less: Preferred stock dividends - declared and accumulated
|
216
|
|
|
—
|
|
|
—
|
|
|||
Undistributed income (loss)
|
(110,094
|
)
|
|
12,522
|
|
|
2,446
|
|
|||
Less: Undistributed loss allocated to participating securities
|
(2,960
|
)
|
|
—
|
|
|
—
|
|
|||
Net income (loss) attributable to common shares
|
$
|
(107,134
|
)
|
|
$
|
12,522
|
|
|
$
|
2,446
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to common shares—basic
|
$
|
(4.28
|
)
|
|
$
|
0.49
|
|
|
$
|
0.10
|
|
Weighted average common shares outstanding—basic
|
25,044
|
|
|
25,342
|
|
|
24,612
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|||
Stock options and restricted stock awards
|
—
|
|
|
84
|
|
|
91
|
|
|||
Weighted average common shares outstanding—diluted
|
25,044
|
|
|
25,426
|
|
|
24,703
|
|
|||
Net income (loss) attributable to common shares—diluted
|
$
|
(4.28
|
)
|
|
$
|
0.49
|
|
|
$
|
0.10
|
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Stock options and restricted stock units
|
226
|
|
|
466
|
|
|
323
|
|
Common shares issuable under stock warrant
|
78
|
|
|
—
|
|
|
—
|
|
Purchase Price
|
Fair Value
|
||
Cash paid, net of cash acquired
|
$
|
9,353
|
|
Common stock issued
|
18,149
|
|
|
|
$
|
27,502
|
|
Allocation
|
|
||
Goodwill
|
$
|
11,914
|
|
Intangibles
|
16,000
|
|
|
Accounts receivable and other assets
|
2,565
|
|
|
Other liabilities assumed
|
(2,977
|
)
|
|
|
$
|
27,502
|
|
Intangible Assets
|
Fair Value
|
|
Weighted Average Useful Life (years)
|
||
Technology and developed software
|
$
|
13,600
|
|
|
2.92
|
Customer relationships
|
1,900
|
|
|
—
|
|
Trade names
|
300
|
|
|
5.93
|
|
Other
|
200
|
|
|
|
|
Total acquired intangible assets as of the acquisition date
|
16,000
|
|
|
|
|
Less: accumulated amortization of acquired intangible assets
|
(9,228
|
)
|
|
|
|
Total acquired intangible assets, net
|
$
|
6,772
|
|
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Freight rebates receivable
|
|
$
|
8,527
|
|
|
$
|
7,106
|
|
Credit card receivables
|
|
8,480
|
|
|
10,243
|
|
||
Accounts receivable, trade
|
|
8,317
|
|
|
9,054
|
|
||
Other receivables
|
|
6,009
|
|
|
3,738
|
|
||
|
|
31,333
|
|
|
30,141
|
|
||
Less: allowance for doubtful accounts
|
|
(1,253
|
)
|
|
(1,999
|
)
|
||
Accounts receivable, net
|
|
$
|
30,080
|
|
|
$
|
28,142
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Product inventories, net
|
|
$
|
8,844
|
|
|
$
|
11,732
|
|
Inventory in-transit
|
|
4,859
|
|
|
7,205
|
|
||
Total inventories, net
|
|
$
|
13,703
|
|
|
$
|
18,937
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Prepaid other
|
|
$
|
7,705
|
|
|
$
|
4,189
|
|
Prepaid maintenance
|
|
7,427
|
|
|
6,622
|
|
||
Prepaid advertising
|
|
987
|
|
|
843
|
|
||
Total prepaids and other current assets
|
|
$
|
16,119
|
|
|
$
|
11,654
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Computer hardware and software, including internal-use software and website development
|
|
$
|
196,501
|
|
|
$
|
196,923
|
|
Building
|
|
69,169
|
|
|
67,892
|
|
||
Furniture and equipment
|
|
14,455
|
|
|
15,931
|
|
||
Land
|
|
12,781
|
|
|
12,781
|
|
||
Building machinery and equipment
|
|
8,356
|
|
|
7,915
|
|
||
Leasehold improvements
|
|
7,752
|
|
|
7,062
|
|
||
Land improvements
|
|
6,764
|
|
|
6,356
|
|
||
|
|
315,778
|
|
|
314,860
|
|
||
Less: accumulated depreciation
|
|
(186,435
|
)
|
|
(180,308
|
)
|
||
Total fixed assets, net
|
|
$
|
129,343
|
|
|
$
|
134,552
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Cost and equity method investments, net
|
|
$
|
13,023
|
|
|
$
|
11,750
|
|
Other long-term assets
|
|
2,787
|
|
|
1,303
|
|
||
Prepaid expenses, long-term portion
|
|
1,430
|
|
|
1,275
|
|
||
Total other long-term assets, net
|
|
$
|
17,240
|
|
|
$
|
14,328
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Accrued marketing expenses
|
|
$
|
25,959
|
|
|
$
|
26,358
|
|
Allowance for returns
|
|
17,391
|
|
|
18,176
|
|
||
Accounts payable accruals
|
|
16,614
|
|
|
17,229
|
|
||
Accrued compensation and other related costs
|
|
10,716
|
|
|
8,903
|
|
||
Other accrued expenses
|
|
6,283
|
|
|
6,315
|
|
||
Accrued freight
|
|
5,040
|
|
|
10,062
|
|
||
Accrued loss contingencies
|
|
608
|
|
|
9,173
|
|
||
Total accrued liabilities
|
|
$
|
82,611
|
|
|
$
|
96,216
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Payments owed or received prior to product delivery
|
|
$
|
24,632
|
|
|
$
|
22,943
|
|
Club O membership fees and reward points
|
|
11,761
|
|
|
8,958
|
|
||
Unredeemed gift cards
|
|
4,955
|
|
|
4,304
|
|
||
In store credits
|
|
4,489
|
|
|
4,391
|
|
||
Other
|
|
631
|
|
|
1,184
|
|
||
Total deferred revenue
|
|
$
|
46,468
|
|
|
$
|
41,780
|
|
Payments due by period:
|
|
|
||
2018
|
|
$
|
6,962
|
|
2019
|
|
6,733
|
|
|
2020
|
|
4,292
|
|
|
2021
|
|
4,335
|
|
|
2022
|
|
4,439
|
|
|
Thereafter
|
|
16,356
|
|
|
|
|
$
|
43,117
|
|
|
Years ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Overstock restricted stock awards
|
$
|
4,056
|
|
|
$
|
4,891
|
|
|
$
|
3,526
|
|
Medici Ventures stock options
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total stock-based compensation expense
|
$
|
4,077
|
|
|
$
|
4,891
|
|
|
$
|
3,526
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|||||||||
Outstanding—beginning of year
|
156
|
|
|
$
|
17.33
|
|
|
204
|
|
|
$
|
17.27
|
|
|
224
|
|
|
$
|
17.27
|
|
Exercised
|
(39
|
)
|
|
16.90
|
|
|
(42
|
)
|
|
17.08
|
|
|
(16
|
)
|
|
16.94
|
|
|||
Expired/Forfeited
|
(117
|
)
|
|
17.48
|
|
|
(6
|
)
|
|
17.08
|
|
|
(4
|
)
|
|
18.26
|
|
|||
Outstanding—end of year
|
—
|
|
|
$
|
—
|
|
|
156
|
|
|
$
|
17.33
|
|
|
204
|
|
|
$
|
17.27
|
|
Options exercisable at year-end
|
—
|
|
|
$
|
—
|
|
|
156
|
|
|
$
|
17.33
|
|
|
204
|
|
|
$
|
17.27
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|||||||||
Outstanding—beginning of year
|
560
|
|
|
$
|
17.46
|
|
|
349
|
|
|
$
|
24.80
|
|
|
578
|
|
|
$
|
16.70
|
|
Granted at fair value
|
310
|
|
|
17.75
|
|
|
541
|
|
|
14.52
|
|
|
239
|
|
|
24.60
|
|
|||
Vested
|
(212
|
)
|
|
19.58
|
|
|
(219
|
)
|
|
22.57
|
|
|
(377
|
)
|
|
12.34
|
|
|||
Forfeited
|
(118
|
)
|
|
16.21
|
|
|
(111
|
)
|
|
16.52
|
|
|
(91
|
)
|
|
24.35
|
|
|||
Outstanding—end of year
|
540
|
|
|
$
|
17.05
|
|
|
560
|
|
|
$
|
17.46
|
|
|
349
|
|
|
$
|
24.80
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gain on sale of cryptocurrencies
|
|
$
|
4,816
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Club O Rewards and gift card breakage
|
|
2,742
|
|
|
16,808
|
|
|
5,911
|
|
|||
Gain (loss) on investment in precious metals
|
|
1,971
|
|
|
201
|
|
|
(1,183
|
)
|
|||
Ineffective portion loss of cash flow hedge
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|||
Other
|
|
(400
|
)
|
|
22
|
|
|
(970
|
)
|
|||
Early extinguishment costs of long term debts
|
|
(2,464
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on impairment of cost method investments
|
|
(5,487
|
)
|
|
(2,850
|
)
|
|
—
|
|
|||
Total other income, net
|
|
$
|
1,178
|
|
|
$
|
14,181
|
|
|
$
|
3,634
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
|
$
|
(48,039
|
)
|
|
$
|
20,974
|
|
|
$
|
3,358
|
|
Foreign
|
|
305
|
|
|
(429
|
)
|
|
(243
|
)
|
|||
Total income (loss) before income taxes
|
|
$
|
(47,734
|
)
|
|
$
|
20,545
|
|
|
$
|
3,115
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
365
|
|
|
$
|
280
|
|
|
$
|
75
|
|
State
|
|
280
|
|
|
1,264
|
|
|
293
|
|
|||
Foreign
|
|
57
|
|
|
34
|
|
|
44
|
|
|||
Total current
|
|
702
|
|
|
1,578
|
|
|
412
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
56,350
|
|
|
7,311
|
|
|
1,808
|
|
|||
State
|
|
7,146
|
|
|
410
|
|
|
(324
|
)
|
|||
Foreign
|
|
(10
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Total deferred
|
|
63,486
|
|
|
7,719
|
|
|
1,483
|
|
|||
Total provision for income taxes
|
|
$
|
64,188
|
|
|
$
|
9,297
|
|
|
$
|
1,895
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
U.S. federal income tax provision (benefit) at statutory rate
|
|
$
|
(16,707
|
)
|
|
$
|
7,191
|
|
|
$
|
1,091
|
|
State income tax expense, net of federal benefit
|
|
(2,480
|
)
|
|
1,232
|
|
|
(134
|
)
|
|||
Research and development credit
|
|
(1,696
|
)
|
|
(1,078
|
)
|
|
(955
|
)
|
|||
Stock based compensation expense
|
|
164
|
|
|
674
|
|
|
(32
|
)
|
|||
Lobbying expenses
|
|
197
|
|
|
179
|
|
|
243
|
|
|||
Other
|
|
384
|
|
|
(69
|
)
|
|
(150
|
)
|
|||
Tax Cuts and Jobs Act
|
|
25,287
|
|
|
—
|
|
|
—
|
|
|||
Change in valuation allowance
|
|
59,039
|
|
|
1,168
|
|
|
1,832
|
|
|||
Total provision for income taxes
|
|
$
|
64,188
|
|
|
$
|
9,297
|
|
|
$
|
1,895
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
29,350
|
|
|
$
|
36,486
|
|
Research and development tax credits
|
|
12,653
|
|
|
9,832
|
|
||
Accrued expenses
|
|
12,308
|
|
|
13,548
|
|
||
Fixed and intangible assets
|
|
8,068
|
|
|
1,678
|
|
||
Reserves and other
|
|
1,480
|
|
|
2,893
|
|
||
AMT and other tax credits
|
|
220
|
|
|
1,827
|
|
||
Gross deferred tax assets
|
|
64,079
|
|
|
66,264
|
|
||
Valuation allowance
|
|
(63,278
|
)
|
|
(4,239
|
)
|
||
Total deferred tax assets
|
|
801
|
|
|
62,025
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Prepaid expenses
|
|
(788
|
)
|
|
(1,408
|
)
|
||
Goodwill
|
|
(261
|
)
|
|
—
|
|
||
Fixed assets
|
|
—
|
|
|
(4,351
|
)
|
||
Total deferred tax liabilities
|
|
(1,049
|
)
|
|
(5,759
|
)
|
||
Total deferred tax assets (liabilities), net
|
|
$
|
(248
|
)
|
|
$
|
56,266
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning balance
|
|
$
|
7,333
|
|
|
$
|
4,753
|
|
|
$
|
4,128
|
|
Additions for tax positions related to the current year
|
|
881
|
|
|
1,112
|
|
|
751
|
|
|||
Additions (reductions) for tax positions taken in prior years
|
|
230
|
|
|
1,468
|
|
|
(126
|
)
|
|||
Reduction for tax positions settled by utilizing tax attributes
|
|
(1,480
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
|
$
|
6,964
|
|
|
$
|
7,333
|
|
|
$
|
4,753
|
|
|
Year ended
December 31, |
||||||||||||||||||
|
Direct
|
|
Partner
|
|
Retail Total
|
|
Other
|
|
Total
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue, net
|
$
|
83,052
|
|
|
$
|
1,645,052
|
|
|
$
|
1,728,104
|
|
|
$
|
16,652
|
|
|
$
|
1,744,756
|
|
Cost of goods sold
|
80,585
|
|
|
1,311,973
|
|
|
1,392,558
|
|
|
11,647
|
|
|
1,404,205
|
|
|||||
Gross profit
|
$
|
2,467
|
|
|
$
|
333,079
|
|
|
$
|
335,546
|
|
|
$
|
5,005
|
|
|
$
|
340,551
|
|
Operating expenses
|
|
|
|
|
365,648
|
|
|
21,537
|
|
|
387,185
|
|
|||||||
Interest and other income (expense), net (1)
|
|
|
|
|
|
|
4,680
|
|
|
(5,780
|
)
|
|
(1,100
|
)
|
|||||
Pre-tax loss
|
|
|
|
|
(25,422
|
)
|
|
(22,312
|
)
|
|
(47,734
|
)
|
|||||||
Provision (benefit) for income taxes
|
|
|
|
|
|
|
66,128
|
|
|
(1,940
|
)
|
|
64,188
|
|
|||||
Net loss (2) (3) (4)
|
|
|
|
|
|
|
$
|
(91,550
|
)
|
|
$
|
(20,372
|
)
|
|
$
|
(111,922
|
)
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue, net
|
$
|
101,578
|
|
|
$
|
1,683,204
|
|
|
$
|
1,784,782
|
|
|
$
|
15,181
|
|
|
$
|
1,799,963
|
|
Cost of goods sold
|
96,271
|
|
|
1,362,140
|
|
|
1,458,411
|
|
|
10,203
|
|
|
1,468,614
|
|
|||||
Gross profit
|
$
|
5,307
|
|
|
$
|
321,064
|
|
|
$
|
326,371
|
|
|
$
|
4,978
|
|
|
$
|
331,349
|
|
Operating expenses
|
|
|
|
|
307,669
|
|
|
16,765
|
|
|
324,434
|
|
|||||||
Interest and other income, net (1)
|
|
|
|
|
|
|
13,630
|
|
|
—
|
|
|
13,630
|
|
|||||
Pre-tax income (loss)
|
|
|
|
|
32,332
|
|
|
(11,787
|
)
|
|
20,545
|
|
|||||||
Provision (benefit) for income taxes
|
|
|
|
|
|
|
13,797
|
|
|
(4,500
|
)
|
|
9,297
|
|
|||||
Net income (loss) (2) (3) (4)
|
|
|
|
|
|
|
$
|
18,535
|
|
|
$
|
(7,287
|
)
|
|
$
|
11,248
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue, net
|
$
|
137,783
|
|
|
$
|
1,518,125
|
|
|
$
|
1,655,908
|
|
|
$
|
1,930
|
|
|
$
|
1,657,838
|
|
Cost of goods sold
|
128,077
|
|
|
1,225,107
|
|
|
1,353,184
|
|
|
—
|
|
|
1,353,184
|
|
|||||
Gross profit
|
$
|
9,706
|
|
|
$
|
293,018
|
|
|
$
|
302,724
|
|
|
$
|
1,930
|
|
|
$
|
304,654
|
|
Operating expenses
|
|
|
|
|
296,281
|
|
|
8,907
|
|
|
305,188
|
|
|||||||
Interest and other income, net (1)
|
|
|
|
|
|
|
3,649
|
|
|
—
|
|
|
3,649
|
|
|||||
Pre-tax income (loss)
|
|
|
|
|
10,092
|
|
|
(6,977
|
)
|
|
3,115
|
|
|||||||
Provision (benefit) for income taxes
|
|
|
|
|
|
|
3,448
|
|
|
(1,553
|
)
|
|
1,895
|
|
|||||
Net income (loss) (2) (3) (4)
|
|
|
|
|
|
|
$
|
6,644
|
|
|
$
|
(5,424
|
)
|
|
$
|
1,220
|
|
(1)
|
— The above amounts exclude intercompany transactions eliminated in consolidation, which consist primarily of service fees and interest. The net amounts of these intercompany transactions were
$2.0 million
,
$594,000
, and
$158,000
for the
years ended December 31, 2017
,
2016
and
2015
, respectively.
|
(2)
|
— Net income (loss) presented for segment reporting purposes is before any adjustments attributable to noncontrolling interests.
|
(3)
|
— The above amounts include Retail depreciation and amortization expense of
$27.8 million
,
$26.9 million
and
$23.6 million
for the
years ended December 31, 2017
,
2016
and
2015
, respectively.
|
(4)
|
— The above amounts include Other depreciation and amortization expense of
$5.0 million
,
$4.4 million
and
$1.5 million
for the
years ended December 31, 2017
,
2016
and
2015
, respectively.
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2017
|
|
June 30,
2017
|
|
September 30,
2017
|
|
December 31,
2017 |
||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
||||||||
Revenue, net
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
22,828
|
|
|
$
|
22,099
|
|
|
$
|
19,645
|
|
|
$
|
18,480
|
|
Partner and other
|
|
409,607
|
|
|
409,925
|
|
|
404,362
|
|
|
437,810
|
|
||||
Total net revenue
|
|
432,435
|
|
|
432,024
|
|
|
424,007
|
|
|
456,290
|
|
||||
Cost of goods sold
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
20,963
|
|
|
21,147
|
|
|
19,577
|
|
|
18,898
|
|
||||
Partner and other
|
|
324,565
|
|
|
326,706
|
|
|
320,755
|
|
|
351,594
|
|
||||
Total cost of goods sold
|
|
345,528
|
|
|
347,853
|
|
|
340,332
|
|
|
370,492
|
|
||||
Gross profit
|
|
86,907
|
|
|
84,171
|
|
|
83,675
|
|
|
85,798
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
37,618
|
|
|
43,297
|
|
|
45,153
|
|
|
54,521
|
|
||||
Technology
|
|
28,992
|
|
|
28,244
|
|
|
28,746
|
|
|
29,896
|
|
||||
General and administrative
|
|
22,610
|
|
|
22,361
|
|
|
21,651
|
|
|
24,096
|
|
||||
Total operating expenses
|
|
89,220
|
|
|
93,902
|
|
|
95,550
|
|
|
108,513
|
|
||||
Operating loss
|
|
(2,313
|
)
|
|
(9,731
|
)
|
|
(11,875
|
)
|
|
(22,715
|
)
|
||||
Interest income
|
|
125
|
|
|
136
|
|
|
189
|
|
|
209
|
|
||||
Interest expense
|
|
(710
|
)
|
|
(716
|
)
|
|
(713
|
)
|
|
(798
|
)
|
||||
Other income (expense), net
|
|
(3,724
|
)
|
|
593
|
|
|
5,882
|
|
|
(1,573
|
)
|
||||
Net loss before income taxes
|
|
(6,622
|
)
|
|
(9,718
|
)
|
|
(6,517
|
)
|
|
(24,877
|
)
|
||||
Provision (benefit) for income taxes
|
|
(340
|
)
|
|
(1,975
|
)
|
|
(5,412
|
)
|
|
71,915
|
|
||||
Consolidated net loss
|
|
(6,282
|
)
|
|
(7,743
|
)
|
|
(1,105
|
)
|
|
(96,792
|
)
|
||||
Less: Net loss attributable to noncontrolling interests
|
|
(379
|
)
|
|
(244
|
)
|
|
(319
|
)
|
|
(1,102
|
)
|
||||
Net loss attributable to stockholders of Overstock.com, Inc.
|
|
$
|
(5,903
|
)
|
|
$
|
(7,499
|
)
|
|
$
|
(786
|
)
|
|
$
|
(95,690
|
)
|
Net loss per common share—basic:
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to common shares—basic
|
|
$
|
(0.23
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(3.72
|
)
|
Weighted average common shares outstanding—basic
|
|
25,290
|
|
|
24,996
|
|
|
25,003
|
|
|
25,103
|
|
||||
Net loss per common share—diluted:
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to common shares—diluted
|
|
$
|
(0.23
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(3.72
|
)
|
Weighted average common shares outstanding—diluted
|
|
25,290
|
|
|
24,996
|
|
|
25,003
|
|
|
25,103
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2016 |
|
June 30,
2016 |
|
September 30,
2016 |
|
December 31,
2016 |
||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
||||||||
Revenue, net
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
26,651
|
|
|
$
|
24,630
|
|
|
$
|
24,620
|
|
|
$
|
25,677
|
|
Partner and other
|
|
387,026
|
|
|
393,910
|
|
|
416,944
|
|
|
500,505
|
|
||||
Total net revenue
|
|
413,677
|
|
|
418,540
|
|
|
441,564
|
|
|
526,182
|
|
||||
Cost of goods sold
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
25,406
|
|
|
23,098
|
|
|
23,955
|
|
|
23,812
|
|
||||
Partner and other
|
|
310,964
|
|
|
319,120
|
|
|
337,893
|
|
|
404,366
|
|
||||
Total cost of goods sold
|
|
336,370
|
|
|
342,218
|
|
|
361,848
|
|
|
428,178
|
|
||||
Gross profit
|
|
77,307
|
|
|
76,322
|
|
|
79,716
|
|
|
98,004
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
|
31,456
|
|
|
33,353
|
|
|
34,707
|
|
|
48,380
|
|
||||
Technology
|
|
25,710
|
|
|
25,800
|
|
|
26,739
|
|
|
28,511
|
|
||||
General and administrative
|
|
21,848
|
|
|
22,678
|
|
|
23,317
|
|
|
21,455
|
|
||||
Litigation settlement
|
|
(19,520
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total operating expenses
|
|
59,494
|
|
|
81,831
|
|
|
84,763
|
|
|
98,346
|
|
||||
Operating income (loss)
|
|
17,813
|
|
|
(5,509
|
)
|
|
(5,047
|
)
|
|
(342
|
)
|
||||
Interest income
|
|
91
|
|
|
64
|
|
|
73
|
|
|
98
|
|
||||
Interest expense
|
|
(2
|
)
|
|
(5
|
)
|
|
(212
|
)
|
|
(658
|
)
|
||||
Other income, net
|
|
4,156
|
|
|
3,992
|
|
|
1,251
|
|
|
4,782
|
|
||||
Net income (loss) before income taxes
|
|
22,058
|
|
|
(1,458
|
)
|
|
(3,935
|
)
|
|
3,880
|
|
||||
Provision (benefit) for income taxes
|
|
8,964
|
|
|
(243
|
)
|
|
(543
|
)
|
|
1,119
|
|
||||
Consolidated net income (loss)
|
|
13,094
|
|
|
(1,215
|
)
|
|
(3,392
|
)
|
|
2,761
|
|
||||
Less: Net loss attributable to noncontrolling interests
|
|
(335
|
)
|
|
(311
|
)
|
|
(294
|
)
|
|
(334
|
)
|
||||
Net income (loss) attributable to stockholders of Overstock.com, Inc.
|
|
$
|
13,429
|
|
|
$
|
(904
|
)
|
|
$
|
(3,098
|
)
|
|
$
|
3,095
|
|
Net income (loss) per common share—basic:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share—basic
|
|
$
|
0.53
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.12
|
|
Weighted average common shares outstanding—basic
|
|
25,280
|
|
|
25,341
|
|
|
25,356
|
|
|
25,391
|
|
||||
Net income (loss) per common share—diluted:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share—diluted
|
|
$
|
0.53
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.12
|
|
Weighted average common shares outstanding—diluted
|
|
25,290
|
|
|
25,341
|
|
|
25,356
|
|
|
25,540
|
|
|
|
Balance at
Beginning of
Year
|
|
Charged to
Expense
|
|
Deductions
|
|
Balance at
End of Year
|
||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Deferred tax valuation allowance
|
|
$
|
4,239
|
|
|
$
|
59,039
|
|
|
$
|
—
|
|
|
$
|
63,278
|
|
Allowance for sales returns
|
|
18,176
|
|
|
169,398
|
|
|
170,183
|
|
|
17,391
|
|
||||
Allowance for doubtful accounts
|
|
1,999
|
|
|
309
|
|
|
1,055
|
|
|
1,253
|
|
||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Deferred tax valuation allowance
|
|
$
|
3,071
|
|
|
$
|
1,168
|
|
|
$
|
—
|
|
|
$
|
4,239
|
|
Allowance for sales returns
|
|
17,896
|
|
|
163,693
|
|
|
163,413
|
|
|
18,176
|
|
||||
Allowance for doubtful accounts
|
|
465
|
|
|
1,608
|
|
|
74
|
|
|
1,999
|
|
||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Deferred tax valuation allowance
|
|
$
|
1,000
|
|
|
$
|
2,071
|
|
(1)
|
$
|
—
|
|
|
$
|
3,071
|
|
Allowance for sales returns
|
|
15,531
|
|
|
142,887
|
|
|
140,522
|
|
|
17,896
|
|
||||
Allowance for doubtful accounts
|
|
511
|
|
|
217
|
|
|
263
|
|
|
465
|
|
(1)
|
The amount charged to expense for the year ended December 31, 2015 includes a foreign deferred tax valuation allowance recognized as part of an acquisition as described in Note 3—Acquisitions, Goodwill and Acquired Intangible Assets. The allowance was included as an adjustment to goodwill.
|
1.
|
DeSoto, Inc.
The parties will form a company called “DeSoto, Inc.” (for now) with the following contributions and ownership:
|
Ownership
|
|
Contribution
|
||
Medici
|
50
|
%
|
|
Payment to Hernando of $6 million cash on or before January 8, 2018 for Intellectual Property as described below. In addition, Medici will contribute $8 million cash contributed to DeSoto, Inc. ($4 million immediately and $4 million in three months) to fund the operating activities of DeSoto, Inc.
|
Hernando
|
33
|
%
|
|
Intellectual Property regarding the methodologies needed for locating and collecting disconnected ledgers worldwide and extracting from them the information that will include them in the global information and legal network. As consideration for such Intellectual Property, Hernando will receive $20 million cash as follows: $6 million from Overstock on or before January 8, 2018 and $14 million from Patrick on or before March 31, 2018. Hernando will serve as Chairman of DeSoto, Inc., a Director of Medici and will help advance the international understanding of our mission.
|
Patrick
|
17
|
%
|
|
Reputation as leader in global blockchain community. Service as Co-Chairman and CEO of DeSoto, Inc. and a Director of Medici. Payment to Hernando of $14 million cash on or before March 31, 2018 for Intellectual Property as described above.
|
2.
|
Additional Terms
|
a.
|
Additional Funding
.
DeSoto, Inc. will use commercially reasonable efforts to raise additional funding for its work as soon as it is reasonably practical to do so. Fund raising activities may include an Initial Coin Offering and or other activities depending on market conditions.
|
b.
|
Compensation for Hernando’s Employment
. DeSoto, Inc. will pay Hernando $500,000/year for his services: $200,000/year for his role as Chairman and $300,000/year for his services abroad globally promoting DeSoto products.
|
c.
|
Medici Stock Options
. Medici will grant each Hernando and Patrick stock options to purchase 2,500 Medici stock pursuant to the Medici Ventures 2017 Employee Stock Option Plan for service as Directors on the Medici board of directors.
|
3.
|
Hernando’s goals in Joining the group
|
/s/ HERNANDO DE SOTO
|
|
/s/ PATRICK M. BYRNE
|
|
Hernando de Soto
|
|
Patrick M. Byrne
|
|
|
|
|
|
/s/ PATRICK M. BYRNE
|
|
/s/ JONATHAN E. JOHNSON III
|
|
Patrick M. Byrne, Overstock
|
|
Jonathan E. Johnson III, Medici
|
|
Name
|
Jurisdiction of Formation
|
|
Trade Names
|
Overstock.com Services, Inc.
|
Utah
|
|
Overstock.com Services
|
Market Partner Holdings, Inc.
|
Utah
|
|
|
Market Partner Operations, Inc.
|
Utah
|
|
|
Market Partner SR, Inc.
|
Utah
|
|
|
Market Partner WM, Inc.
|
Utah
|
|
|
Market Partner BC, Inc.
|
Utah
|
|
|
Market Partner EB, Inc.
|
Utah
|
|
|
Market Partner NE, Inc.
|
Utah
|
|
|
Supplier Oasis Fulfillment Services, Inc.
|
Utah
|
|
SOFS
|
Overstock Ireland Limited
|
Ireland
|
|
O.co Ireland.ie
|
O Agency Group, Inc.
|
Utah
|
|
Overstock.com Insurance
|
O.com Land, LLC
|
Utah
|
|
|
O.com Ventures, Inc.
|
Utah
|
|
|
T0.com, Inc.
|
Utah
|
|
|
T0 Technologies LLC
|
Utah
|
|
|
Pro Securities, LLC
|
California
|
|
|
SpeedRoute LLC
|
New York
|
|
|
Revolution 4 LLC
|
Utah
|
|
|
Data IFX S.A.S.
|
Columbia
|
|
|
DeSoto, Inc.
|
Delaware
|
|
|
De Soto Property Registry, Inc.
|
Delaware
|
|
|
Overstock.com Cars, Inc.
|
Utah
|
|
|
O.com Gift Cards, Inc.
|
Utah
|
|
|
Medici Ventures, Inc.
|
Delaware
|
|
|
Overstock Europe Limited
|
United Kingdom
|
|
|
O.co HK Limited (HK)
|
Hong Kong
|
|
|
O.co Shanghai Trading Company Limited (CN)
|
China
|
|
|
Date:
|
March 15, 2018
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
Date:
|
March 15, 2018
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
|
(principal financial officer)
|
Date:
|
March 15, 2018
|
/s/ PATRICK M. BYRNE
|
|
|
Patrick M. Byrne
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
Date:
|
March 15, 2018
|
/s/ ROBERT P. HUGHES
|
|
|
Robert P. Hughes
|
|
|
Senior Vice President, Finance and Risk Management
|
|
|
(principal financial officer)
|