ostk-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-49799

OVERSTOCK.COM, INC.

(Exact name of registrant as specified in its charter)

Delaware

87-0634302

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

799 West Coliseum Way

Midvale

Utah

84047

(Address of principal executive offices)

(Zip Code)

(801) 947-3100

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

OSTK

NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

43,006,587 shares of the Registrant's common stock, par value $0.0001, outstanding on April 30, 2021.

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OVERSTOCK.COM, INC.

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended March 31, 2021


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Operations	7
	Consolidated Statements of Comprehensive Income (Loss)	8
	Consolidated Statements of Changes in Stockholders' Equity	9
	Consolidated Statements of Cash Flows	11
	Notes to Unaudited Consolidated Financial Statements	13

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	40

Signature		41

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Special Cautionary Note Regarding Forward-Looking Statements

This Report on Form 10-Q and the documents incorporated herein by reference, as well as other public documents and statements our officers and representatives may make from time to time, contain forward-looking statements within the meaning of the federal securities laws. These statements are therefore entitled to the protection of the safe harbor provisions of these laws. You can find many of these statements by looking for words such as "may," "would," "could," "should," "will," "expect," "anticipate," "predict," "project," "potential," "continue," "contemplate," "seek," "assume," "believe," "intend," "plan," "forecast," "goal," "estimate," or other similar expressions which identify these forward-looking statements.

These forward-looking statements involve risks and uncertainties and relate to future events or our future financial or operating performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and business, and on management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to assumptions, risks and uncertainties that are difficult to predict, and that actual results may be materially different from the results expressed or implied by any of our forward-looking statements.

Actual events or results may differ materially from those contemplated by our forward-looking statements for a variety of reasons, including among others:

•the impact that the novel coronavirus, or COVID-19, pandemic may have on our business and the industries in which we operate, including the impact that our business may experience at such time as the pandemic subsides;

•the impact that any litigation, claims, or regulatory matters could have on our business, financial condition, results of operations, and cash flows;

•any increases in the price of importing into the U.S. the types of merchandise we sell in our retail business or other supply chain challenges that limit our access to merchandise we sell in our retail business;

•any difficulties we may encounter as a result of our reliance on third-parties that we do not control for the performance of critical functions material to our business;

•any inability to convert new customers into repeat customers or maintain increased sales volumes, in particular at such time as the pandemic subsides;

•any downturn in the U.S. housing industry or other changes in U.S. and global economic conditions or U.S. consumer spending;

•any inability of Pelion to successfully manage the limited partnership;

•our exposure to cyber security risks, risks of data loss and other security breaches;

•any strategic transactions, restructurings or other changes we may make to our business;

•any challenges that result in the unavailability of our Website or reduced performance of our transaction systems;

•the possibility that we are unable to protect our proprietary technology and to obtain trademark protection for our marks;

•current claims of intellectual property infringement to which we are subject and additional infringement claims to which we may become subject in the future;

•the commercial, competitive, technical, operational, financial, regulatory, legal, reputational, marketing and other obstacles Pelion faces in trying to create economic success for the blockchain assets held within the Medici Ventures Fund it manages;

•as the company owns a direct minority interest in tZERO, the extensive regulatory regimes applicable to tZERO and the possibility that various tZERO subsidiaries or ventures do not receive the regulatory approval required to operate their anticipated businesses;

•any losses or issues we may encounter as a consequence of accepting or holding bitcoin or other cryptocurrencies;

•the adequacy of our liquidity and our ability to fund our capital requirements;

•our inability to attract and retain key personnel;

•the possibility that the cost of our current insurance policies may increase significantly or fail to adequately protect us as expected; and

•the other risks described in this report or in our other public filings.

In evaluating all forward-looking statements, you should specifically consider the risks outlined above and in this Report, especially under the headings "Special Cautionary Note Regarding Forward-Looking Statements," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These

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factors may cause our actual results to differ materially from those contemplated by any forward-looking statement. Although we believe that our expectations reflected in the forward-looking statements are reasonable, we cannot guarantee or offer any assurance of future results, levels of activity, performance or achievements or other future events. Our forward-looking statements contained in this report speak only as of the date of this report and, except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report or any changes in our expectations or any change in any events, conditions or circumstances on which any of our forward-looking statements are based.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)


Overstock.com, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data)
	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	534,776	$	495,425
Restricted cash	1,232		1,197

Accounts receivable, net of allowance for credit losses of $1,875 and $1,417 as of March 31, 2021 and December 31, 2020, respectively	38,518		22,867

Inventories	6,711		6,243
Prepaids and other current assets	23,019		22,879
Current assets held for sale	—		34,129
Total current assets	604,256		582,740
Property and equipment, net	110,804		113,767


Goodwill	6,160		6,160

Operating lease right-of-use assets	15,450		17,297
Other long-term assets, net	3,692		4,095
Long-term assets held for sale	153,362		106,155
Total assets	$	893,724	$	830,214
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	135,383	$	109,759
Accrued liabilities	130,093		123,646
Unearned revenue	96,308		72,165
Operating lease liabilities, current	4,837		5,152
Other current liabilities	3,372		2,935
Current liabilities held for sale	—		13,924
Total current liabilities	369,993		327,581
Long-term debt, net	40,505		41,334
Operating lease liabilities, non-current	11,572		13,206
Other long-term liabilities	3,680		4,082
Long-term liabilities held for sale	19,034		7,685
Total liabilities	444,784		393,888
Commitments and contingencies (Note 7)

Continued on the following page See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data)
	March 31, 2021		December 31, 2020
Stockholders' equity:
Preferred stock, $0.0001 par value, authorized shares - 5,000

Series A-1, issued and outstanding - 4,204 and 4,204	—		—
Series B, issued and outstanding - 357 and 357	—		—
Common stock, $0.0001 par value, authorized shares - 100,000
Issued shares - 46,589 and 46,331
Outstanding shares - 43,000 and 42,768	4		4
Additional paid-in capital	951,615		970,873
Accumulated deficit	(509,140)		(525,233)
Accumulated other comprehensive loss	(549)		(553)
Treasury stock at cost - 3,589 and 3,563	(78,048)		(71,399)
Equity attributable to stockholders of Overstock.com, Inc.	363,882		373,692
Equity attributable to noncontrolling interests	85,058		62,634
Total stockholders' equity	448,940		436,326
Total liabilities and stockholders' equity	$	893,724	$	830,214

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)


	Three months ended March 31,
	2021		2020

Net revenue	$	659,861	$	339,598
Cost of goods sold	506,337		265,392
Gross profit	153,524		74,206
Operating expenses
Sales and marketing	73,538		36,345
Technology	30,523		27,281
General and administrative	22,871		23,885

Total operating expenses	126,932		87,511
Operating income (loss)	26,592		(13,305)
Interest expense, net	(155)		(11)
Other expense, net	(226)		(287)
Income (loss) from continuing operations before income taxes	26,211		(13,603)
Provision for income taxes	193		163
Income (loss) from continuing operations	26,018		(13,766)
Loss from discontinued operations, net of tax	(10,126)		(5,799)
Consolidated net income (loss)	$	15,892	$	(19,565)
Less: Net loss attributable to noncontrolling interests—discontinued operations	(201)		(3,232)
Net income (loss) attributable to stockholders of Overstock.com, Inc.	$	16,093	$	(16,333)
Net income (loss) per share of common stock:
Net income (loss) attributable to common shares—basic
Continuing operations	$	0.57	$	(0.34)
Discontinued operations	(0.23)		(0.06)
Total	$	0.34	$	(0.40)
Net income (loss) attributable to common shares—diluted
Continuing operations	$	0.56	$	(0.34)
Discontinued operations	(0.23)		(0.06)
Total	$	0.33	$	(0.40)
Weighted average shares of common stock outstanding:
Basic	42,885		40,158
Diluted	43,320		40,158

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in thousands)


	Three months ended March 31,
	2021		2020
Consolidated net income (loss)	$	15,892	$	(19,565)
Other comprehensive income
Unrealized gain on cash flow hedges, net of expense for taxes of $0 and $0	4		4
Other comprehensive income	4		4
Comprehensive income (loss)	15,896		(19,561)
Less: Comprehensive loss attributable to noncontrolling interests—discontinued operations	(201)		(3,232)
Comprehensive income (loss) attributable to stockholders of Overstock.com, Inc.	$	16,097	$	(16,329)

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in thousands)
	Three months ended March 31,
	2021		2020
Equity attributable to stockholders of Overstock.com, Inc.
Shares of common stock issued
Balance at beginning of period	46,331		42,790
Common stock issued upon vesting of restricted stock	258		671



Common stock sold through offerings	—		416

Balance at end of period	46,589		43,877
Shares of treasury stock
Balance at beginning of period	3,563		3,326


Tax withholding upon vesting of restricted stock	73		225
Sale of treasury stock	(47)		—
Balance at end of period	3,589		3,551
Total shares of common stock outstanding	43,000		40,326




Common stock	$	4	$	4












Number of Series A-1 preferred shares issued and outstanding	4,204		4,210



Number of Series B preferred shares issued and outstanding	357		357

Preferred stock	$	—	$	—

Additional paid-in capital
Balance at beginning of period	$	970,873	$	764,845
Stock-based compensation to employees and directors	2,771

SEC Form 10-Q filed by Overstock.com, Inc.