O, Overstock.com, O.com, O.co, Club O, Main Street Revolution, and Worldstock are registered trademarks of Overstock.com, Inc. Porch & DenO.biz and FinanceHubSpace Shift are also trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to in this Annual Report on Form 10-Kherein are the property of their respective owners.

We are considering a private security using blockchain technology and in December 2016, asrange of potential transactions, including a demonstrationsale of our technology, we issued publicly traded blockchain preferred sharesretail business and additional equity or debt financings. Our Board of Overstock.com, Inc.Directors continually discusses a variety of potential strategic and financial options and other changes to our business, but has not approved or made any determination to consummate any strategic transaction, and may not do so in the foreseeable future or at all. Our strategic initiatives are described in more detail below under “Strategic Initiatives.”

Our retail business constitutes the vast majority of our business and, through December 31, 2017, generatedgenerates nearly all of our net revenues. In our retail business, our goal is to provide goods to furnish and accessorize "dream homes" for our target customers—consumers who seek quality, stylish merchandise at bargain prices. At December 31, 2017,2018, we offered 2.84.9 million products (6.0(8.9 million SKUs), of which over 99% were in-line products (products in active production). At December 31, 2017, we were offering three private label brands - Porch & Den, Carson Carrington and OSleep - and had, including more than 1,00025,000 private label products available on our Website and intend to add additionaloffered under eleven private label brands, includingbrands. We believe that the furniture and home products brands, using our strength in home productsgoods market, which is highly fragmented and has traditionally been served by brick and mortar stores, will continue transitioning to help build our private label brands.online sales, particularly as Millennial consumers (which we define as those aged 20-36), who are generally comfortable shopping online, start families and move into new homes. We regularly change our product assortment to meet the evolving preferences of our customers and current trends. Our products include, among others, furniture, home décor including rugs, bedding and bath, home improvement, and kitchen items, and, to a lesser extent, jewelry and watches.items. We compete primarily based on:

We have organizedFor 2018, nearly all our retail business (sales of product offeredsales through the Shopping Section of our Website) into two principal segments – a "direct" business and a "partner" business. For 2017, approximately 95% of our net salesWebsite were from transactions in which we fulfilled orders fromthrough our network of approximately 4,000 third-party manufacturers, distributors and other suppliers ("partners") selling on our website, whoWebsite. Our use of the term "partner" does not mean that we generally direct to ship goods sold from their own warehouses, while we generally handle returns and customer service (our "partner" business). The remaining 5%have formed any legal partnerships with any of our net sales came from direct sales of our own inventory shipped from our warehouse, including some customer returns of partner products (our "direct" business).retail partners. We provide our partners with access to a large customer base and convenient services for order fulfillment, customer service, returns handling, and other services. Our team of customer service representatives assistssupply chain allows us to ship directly to our customers by telephone, instant online chat and e-mail. Wefrom our suppliers or from our warehouses. Our retail sales also derive revenue from other businesses advertising products or services on our Website. Ourinclude direct sales are primarily to customers located in the United States. During the years ended December 31, 2017, 2016 and 2015 no single customer accounted for more than 1% of our total net revenue.

We offer additional products or services that may complement our primary retail offerings, but are not significant to our retail revenues. These include:

To the extent possible we maintain manufacturer, distributor, and supplier relationships, and seek new manufacturer, distributor, and supplier relationships, and also use our working capital, to ensure a continuous allotment of product offerings for our customers. Generally, our manufacturers, distributors, or other suppliers regularly communicate to us the quantity of products that are held in reserve for us. Althoughus, but our contracts grant us actionable rights to such products, our contractsarrangements with them generally do not guarantee the availability of those products for a set duration. Our manufacturer, distributors,distributor, and supplier relationships are based on historical experience with manufacturers, distributors, and other suppliers and do not obligate or entitle us to receive merchandise on a long-term or short-term basis. Our manufacturer, distributor, and supplier relationships are generally non-exclusive and we retain the right to select and change our suppliers at our discretion. In our direct business, we purchase the products from manufacturers, distributors, or other suppliers using standard purchase orders. Generally, manufacturers, distributors, and suppliers do not control the terms under which products are sold through our Website.

We use a variety of methods to target our retail consumer audience, including online campaigns, such as advertising through keywords, product listing ads, display ads, search engines, affiliate marketing programs, social coupon websites, portals, banners, e-mail, direct mail, and viral and social media campaigns. We also do brand advertising through television, radio, print ads, and event sponsorships.

We are committed to providing superior customer service. We staff our customer service department with dedicated in-house and outsourced professionals who respond to phone, instant online chat, and e-mail inquiries on products, ordering, shipping status, returns, and other areas of customer inquiry.

Internet retail is intensely competitive and has relatively low barriers to entry. We believe that competition in this industry is based predominantly on:

We compete with other online retailers, traditional retailers, and liquidation "brokers" which may specifically adopt our methods and target our customers. We currently or potentially compete with a variety of companies that can be divided into several broad categories:

Many of our current and potential e-commerce competitors have greater brand recognition, longer operating histories, larger customer bases, and significantly greater financial, marketing, and other resources than we do. Further, any of them may enter into strategic or commercial relationships with larger, more established and well-financed companies, including exclusive distribution arrangements with our vendors or service suppliers that could deny us access to key products or needed services, or acquisitions of our suppliers or service providers, having the same effect. Many of them do or could devote greater resources to marketing and promotional campaigns and devote substantially more resources to their website and systems development than we do. Many have supply chain operations that decrease product shipping times to their customers, have options for in-store product pick-up, allow in-store returns, or offer other delivery and returns options that we do not have. New technologies, the continued enhancement of existing technologies, developments in related areas such as same-day product deliveries, and the development of proprietary delivery systems increase competitive pressures on us. Based on filings by public companies, we believe that many of our competitors, including Amazon, Groupon, Wayfair, and Zulily, have operated with more capital and have more financial flexibility to invest in growth than we have. Although we believe that our 2017 customer acquisition costs of approximately $50 were less than 70% of the "illustrative customer acquisition cost" of $73 Wayfair presented in its Q4 2017 earnings presentation, other competitors of ours may have lower customer acquisition costs than we do. We believe that our results from 2012 through 2016 demonstrate that we can operate our retail business at a profit, but we also believe that in the current intensely competitive battle for market share in the home goods e-commerce market, we need to build market share and

Our retail business is affected by seasonality because of the holiday season, which historically has resulted in higher sales volume during our fourth quarter, which ends December 31. We recognized 26.2%24.8%, 29.2%26.2%, and 29.0%29.2% of our annual revenue during the fourth quarter of 2018, 2017, and 2016, and 2015, respectively. While we had lower sales volume during Q4 2018, we anticipate the trend of higher sales volume during our fourth quarter to continue for the foreseeable future.

We regard our domain names and other intellectual property as critical to our success. Included in our intellectual property is some of the financial technology we have developed as part of our Medici initiatives. We rely on a combination of laws and contractual restrictions with our employees, customers, suppliers, affiliates, and others to establish and protect our proprietary rights, including the law pertaining to trade secrets. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our intellectual property or trade secrets without authorization. In addition, we cannot ensure that others will not independently develop similar intellectual property. Although we have registered and are pursuing the registration of our key trademarks in the United States and some other countries, some of our trade names may not be eligible to receive registered trademark protection. In addition, effective trademark protection may not be available or we may not seek protection in every country in which we market or sell our products and services, including in the United States. Additionally, our efforts to protect our trade secrets may not succeed.

In late 2014, we began working on initiatives to develop and advance blockchain technologies. We pursue these initiatives through our wholly-owned subsidiary, Medici Ventures and Medici Ventures'its majority-owned subsidiary tZERO. These initiatives remain in the start-up phase, and neither Medici Ventures nor tZERO has generated any significant revenues from any blockchain-based technology or application of blockchain technology. WeAs of December 31, 2018, we have spent a total of approximately $107$209.6 million over the last three years in our Medici business as ofsince its inception, with the end of February 28, 2018, with mostmajority of that being spent in our majority-owned subsidiary tZERO.

Medici Ventures' strategy is to develop and advance the concepts of "Government as a Service" and a "Technology Stack for Civilization" by creating or fostering a set of products and solutions that leverage blockchain technology to generate efficiencies and increase security and control in six areas of civilizational necessity: identity management, property rights and management, central banking and currencies, capital markets, supply chains and commerce, and voting systems. A blockchain is a cryptographically secured, distributed infrastructure, or network, which may be accessed and, in some cases, maintained by each member of the network. Medici Ventures' strategy is to develop and advance blockchain technology to broaden access to capital, financial markets and other applications, and allow individuals to connect directly without intermediaries. Medici Ventures has a team of approximately 3037 software engineers, developers and other technologists approximately half of whomwho work in blockchain development and deployment and approximately half of whom work in enterprise level software development and deployment. Medici Ventures utilizes those software engineers, developers and other technologists in tZERO's projects. Medici Ventures has also purchased relatively small strategic interests in blockchain-related businesses, particularly in businesses where Medici Ventures believes it can strategically deployprovides the services of its software engineers, developers, or other technologists to support those businessesother blockchain companies. Medici Ventures also owns strategic minority equity interests in several blockchain-related companies, each of which focuses on at least one of the Government as appropriate.a Service areas mentioned above. Medici Ventures takes an active interest in and holds seats on the boards of some of these companies. These companies include PeerNova, Bitt, IdentityMind, Factom, SettleMint, Ripio, Spera, Symbiont, Voatz and Bitsy,technology companies whose focuses include commercial blockchain applications capital markets applications, digital currency,for identity and social media, property and land, money and banking, applications, compliance, personal identity, voting,capital markets, supply chain, and property and land applications. Mostvoting. All of thesethe companies in which Medici Ventures holds strategic equity interests are small, both in dollar terms andstartup businesses, businesses in the percentage interests that Medici Ventures owns, but Medici Ventures takes an active role in the companies to the extent its resources permit it and the respective companies desire to have Medici Ventures do so.development stage, or businesses with a short operating history. The majority of Medici Ventures' primary business is its approximately 80% interest in tZERO, which, as described below, is a financial technology company pursuing potential financial applications for blockchain technologies. See "tZERO" below and "Risk Factors—Risks Relating to Our Medici Business." Medici recently acquired a 50% interest in DeSoto Inc., which is a public benefit corporation formed to carry out our collaboration with economist Hernando de

Soto. DeSoto intends to build systems using blockchain, social media, artificial intelligence, and mobile apps to help develop more effective records of ownership in developing countries. DeSoto does not currently have a specific plan to generate revenues or profits, and does not expect to generate revenues or profits in the foreseeable future. See "Risk Factors—Risks Relating to Our Company - Our 50% subsidiary DeSoto, Inc. is a public benefit corporation."

Medici Ventures' majority-owned subsidiary tZERO is a financial technology company pursuing potential financial applications of blockchain technologies as well as non-blockchain businesses. tZERO has a team of approximately 50 software engineers, developers and other technologists who focus on developing and exploring opportunities for novel applications of blockchain technology. As a result of its early stage of development, tZERO has not yet generated revenue from any commercially available blockchain-based applications. tZERO is currently involved in, among other things, the following:

tZERO is no longer pursueoffering automated investment advisory services through tZERO Advisors or electronic discount trading through Muriel Siebert & Co., Inc. (Member: FINRA & SIPC) under the developmentFinanceHub tab on our Website. On January 18, 2019, tZERO sold its entire equity interest in StockCross Financial Services, Inc. to StockCross Financial Services, Inc. and Muriel Siebert & Co., Inc. for an amount equal to our original purchase price.

In March 2019, we disclosed that we had executed a Memorandum of an alternative trading system. Although the parties are no longer pursuing the developmentUnderstanding regarding a potential equity investment of an alternative trading system,up to $100 million in tZERO to be co-led by GSR Capital and RenGenMakara Capital, subject to due diligence, negotiation of binding contracts and regulatory approval. We are in continuing discussions regarding the process of re-evaluating a potential JV project, including with respect to consultancy services that the Company and RenGen may decide to provide by means of the JV project. tZERO expects that the re-envisioned JV project, if implemented, will be implemented by the Company and RenGen.

We believe that a decision regardingnumber of organizations are or may be working to develop trading systems utilizing distributed ledger or blockchain technologies or other novel technologies that may be competitive with tZERO's technology, including its patented technology. Although it is difficult to obtain reliable information about blockchain activities by companies that may be our competitors, they may include companies such as SharesPost, OpenFinance Network, Templum Inc., Coinbase, KoreConX, Blocktrade AG, Smart Valor, the foregoing transactions,Nasdaq Stock Market, Intercontinental Exchange, Circle, Ideanomics, CrowdEngine, Securitize, Harbor, Polymath, and there can be no assurance asother entities that are operating trading venues offshore or otherwise structured in an effort to whether or not we will elect to pursue either or both possibilities. If we participate in the security token offering, we will do so at the $10 per tZERO Security Token offering price and will be entitled to the same rights pursuant to our tZERO Security Tokens as third party holders.avoid aspects of U.S. regulation.

To date,the extent that tZERO has focused on developingattempts to market its non-blockchainDLR Software, tZERO would be competing with virtually all of the largest broker dealers in the U.S., all of which have substantially greater resources than tZERO or Overstock, and blockchain businessessome of which may generate substantial revenues and exploring opportunities for novel applicationsprofits from the existing firmly entrenched system.

SpeedRoute and Pro Securities compete with a large number of blockchain technology. As a resultbroker dealers, many of its early stage of development,which are substantially larger and have substantially greater financial resources than SpeedRoute, Pro Securities, tZERO has not yet generated revenue from any commercially available blockchain-based applications. or Overstock.

See "Risk Factors—Factors-Additional Risks Relating to Our tZERO Initiatives."

AIf we sell our retail business, the sale ofmay not require approval by our e-commercestockholders under Delaware law. If we enter into an agreement to sell our retail business for cash would be subject to the approvaland determine that no vote of our stockholders in accordance with Delaware law. Subjectis required, we do not expect to approval of the stockholders, ifsubmit it to a vote. If we sell our e-commerceretail business, for cash, we maycurrently expect to retain someall or substantially all of the after-tax proceeds of the sale for use in our blockchain initiatives. Although we currently expect to return a significant portion of the after-tax proceeds to our stockholders within 12 months following the closing of any such sale, by means of a

From time to time, we receive claims and become subject to regulatory investigations or other governmental actions, consumer protection, employment, intellectual property, and other commercial litigation related to the conduct of our business. We also prosecute lawsuits to enforce our legal rights. SuchRegulatory investigations and other governmental actions as well as any litigation ismay be costly and time consuming and can divert our management and key personnel from our business operations. The uncertainty of litigation increases these risks. In connection withRegulatory investigations and other governmental actions as well as any such litigation we may be subject toresult in significant damages, associated costs, or equitable remedies relating to the operation of our business and the sale of products on our Website.business. Any such litigationmatters may materially harm our business, prospects, results of operations, financial condition, or cash flows.

These matters and other types of claims could result in legal expenses, fines, adverse judgments or settlements and increase the cost of doing business. They could also require us to change our business practices in expensive and significant

Additional litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Any litigation, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could materially harm our business.

We are subject to a wide variety of laws, rules and regulations, some of which apply or may apply to us as a result of our retail business, some of which apply or may apply to us as a result of our Medici business, and others of which apply to us for other reasons, such as our status as a publicly held company or the places in which we sell certain types or amounts of products. Our mainretail business is subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet, e-commerce, and other services.services we offer. Existing and future laws and regulations may result in increasing expense and may impede our growth. TheseApplicable and potentially applicable regulations and laws may coverinclude regulations and laws regarding taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile communications, electronic device certification, electronic waste, energy consumption, environmental regulation, electronic contracts and other communications, competition, consumer protection, employment, import and export matters, information reporting requirements, access to our services and facilities, the design and operation of websites, health and sanitation standards, the characteristics and quality of products and services. New state tax regulations in states where we do not now collect stateservices, product labeling and local taxes may subject us to the obligation to collect and remit state and local taxes, or subject us to additional state and local sales and income taxes, or to requirements intended to assist states with their tax collection efforts. New legislation or regulations, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business or the application of existing laws and regulations to the Internet and commercial online services could result in significant additional taxes on our business. These taxes or tax collection obligations could have an adverse effect on us. Further, there is a possibility that we may be subject to significant fines or other payments for any past failures to comply with these requirements. In addition, it is not clear how existing laws governing issues such as property ownership, libel, and personal privacy apply to the Internet, e-commerce and digital content. Laws and regulations may diminish the demand for our products and services and increase our cost of doing business. Certain of our services are subject to federal and state consumer protection laws, including laws protecting the privacy of consumer information and regulations prohibiting unfair and deceptive trade practices. In particular, under federal and state financial

Our efforts to expand our salesretail business outside of the U.S. expose us to foreign and additional U.S. and foreign laws and regulations, including but not limited to, laws and regulations relating to taxation, business licensing or certification requirements, advertising practices, online services, the use of cryptocurrency, the importation of specified or proscribed items, importation quotas, consumer protection, intellectual property rights, consumer and data protection, privacy, encryption, restrictions on pricing or discounts, and the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties.

Our interest in Bitt Inc.Medici and tZERO businesses are subject to general business regulations and laws, including some of those described above, but are also may expose usaffected by a number of other laws and regulations, including but not limited to, additional laws and regulations relating to money transmitters and money services businesses. businesses, including the requirements of the Financial Crimes Enforcement Network of the U.S. Department of the Treasury ("FinCEN"), cryptocurrencies, public benefit corporations, provisions of various securities laws and other laws and regulations governing broker dealers, alternative trading systems and national securities exchanges, anti-money laundering requirements, know-your-customer requirements, record-keeping, reporting and capital and bonding requirements, and a variety of other matters. Blockchain and distributed ledger platforms are recent technological innovations, and the regulation of securities tokens and other digital assets is developing. In the U.S., the businesses that we are working to develop are or may be subject to a wide variety of complex statutes and rules, most of which were implemented prior to the development of these technologies, and it is sometimes unclear whether or how various statutes or regulations apply.

See Item 1A—"Risk Factors—Additional Risks Relating to Our ownership interest in Bitt Inc. may expose usMedici Business" and "Additional Risks Relating to additional risks.Our tZERO Initiatives."

At December 31, 2017,2018, we had approximately 1,8002,060 full-time employees. We seasonally increase our workforce during our fourth quarter to handle increased workload in both our warehouse and customer service operations. We have never had a work stoppage and none of our employees are represented by a labor union. We consider our employee relationships to be good. Competition for qualified personnel in our industry is intense, particularly for software engineers and other technical staff.

The following persons were executive officers of Overstock as of March 8, 2018:13, 2019:

None of our officers has an employment agreement or any specific term of office.

OurWe make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and otheramendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through the Investor Relations section of our main website, www.overstock.com, as soon as reasonably practicable after

Broker-dealers are subject to extensive regulatory requirements under federal and state laws and regulations and self-regulatory organization (“SRO”) rules. PRO Securities and SpeedRoute are registered with the SEC as broker‑dealers under the Exchange Act and in the states in which they conduct securities business and are members, and subject to the rules, of FINRA. In addition, PRO Securities owns and operates the PRO Securities ATS, which has filed a Form ATS with the SEC notifying the SEC of its activities as an alternative trading system. PRO Securities and SpeedRoute are subject to regulation, examination,

Effective January 2019, tZERO purchased the project contemplated by the MOU, and to receive a 17% ownershipremaining 67% interest in DeSoto,Bitsy, Inc. for $8 million, bringing our total equity interest in Bitsy, Inc. to 100%. Bitsy, Inc., 50% of the common stock of which is to bea U.S.-based company founded and partially owned by Medici Ventures. Dr. Byrne is expected to serve as Co-chairman and Chief Executive Officer of DeSoto. In addition, we are party to a software licensing agreement with SiteHelix Inc., an entity majority-owned by our President, Retail and Board member Saum Noursalehi, pursuant to which we have made payments to SiteHelix totaling approximately $31,000 during the two years ended December 31, 2017. In February 2018, we also purchased the assets of Rental Roost and Houserie, companies in which our Senior Vice President Vikram Raghavan is a shareholder, for a combined purchase price of $600,000, and in January 2018, Medici Ventures purchased an interest in Bitsy, Inc., a startup company founded and one-third owned by Medici Ventures' former chief operating officer and general counsel, and current president of tZERO, Steve Hopkins. In September 2018, Bitsy announced that it had begun a limited beta launch of a digital wallet service intended to create a bridge between traditional fiat currencies and cryptocurrencies. Various aspects of the business that Bitsy is engaging in are heavily regulated. Virtually every state in the U.S. regulates money transmitters and money services businesses. In some states the licensing requirements and regulations expressly cover companies engaged in digital currency activities; in other states it is not clear whether or how the existing laws and regulations apply to digital currency activities. These licenses and registrations subject companies to various anti-money laundering, know-your-customer, record-keeping, reporting and capital and bonding requirements, limitations on the investment of customer funds, and inspection by state and federal regulatory agencies. Bitsy has registered with FinCEN and intends to obtain all licenses it is required to obtain. Under U.S. federal law, it is a crime for $1 million. a person, entity or business that is required to be registered with FinCEN or licensed in any state to fail to do so. Further, under U.S. federal law, anyone who owns all or part of an unlicensed money transmitting business may be subject to civil and criminal penalties.

Our Series A Preferred can trade only on a registered alternative trading system (the "PRO Securities ATS") operated by our indirect majority-owned subsidiarythe PRO Securities LLC ("PRO Securities")ATS utilizing technology known as the tZERO Issuance and Trading Platform (the "tZERO Platform").Platform. Trades of the Series A Preferred settle on the trade date. The Series A Preferred is not and will not be listed on any securities exchange or any other market of any kind. The Series A Preferred is extraordinarily illiquid. Only approximately ten trades in the Series A Preferred have taken place since we issued the Series A Preferred in December 2016. Shares of Series A Preferred can be held only in an online brokerage account with Keystone Capital Corporation ("Keystone") and cannot be held in any other account or manner, and onlymanner. Only certain persons and types of entities may purchase Series A Preferred. As a result of these and other matters, the market for the Series A Preferred is likely to remain extraordinarily illiquid and it may be impossible to sell any shares of the Series A Preferred.

Not applicable.

The principal U.S. trading market for our common stock is the Nasdaq Global Market. Our common stock is traded on the Nasdaq Global Market under the symbol "OSTK." The following table sets forth, for the periods indicated, the high and low sale prices per share for our common stock as reported by Nasdaq.

The stock performance graph is included in Part III, Item 12.

Disclosure relating to our equity compensation plans will be incorporatedExcept as set forth herein, the information required by reference intothis Item is included in Part III, Item 12, fromor incorporated therein by reference to our Proxy Statementdefinitive proxy statement for the 20182019 annual meeting of stockholders.

    

As of March 8, 2018,13, 2019, there were 118120 holders of record of our common stock. Many of our shares of common stock are held by brokers and other institutions on behalf of the beneficial owners.

We have never declared or paid any cash dividends on our common stock. We currently intend to retain any earnings for future growth and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay dividends on our common stock will be at the discretion of our Board of Directors and will depend on our results of operations, financial conditions, contractual and legal restrictions and other factors the Board of Directors deems relevant.

InAt December 2016,31, 2018 we issued a total of 695,898had 481,259 shares of our preferred stock (the "Preferred Stock"), of which 681,259 shares remained outstanding at December 31, 2017. outstanding. The Preferred Stock ranks senior to our common stock with respect to dividends. Holders of the Preferred Stock are entitled to an annual cash dividend of $0.16 per share (1.0% of the subscription price), in preference to any dividend payment to the holders of the common stock, out of funds legally available for payment of dividends and subject to declaration by our Board of Directors. Holders of the Preferred Stock are also entitled to participate in any cash dividends we pay to the holders of the common stock and are also entitled to participate in non-cash dividends we pay to holders of the common stock, subject to potentially different treatment if we effect a stock dividend, stock split or combination of the common stock. There are no arrearages in cumulative preferred dividends. We declared and paid a cash dividend of $0.16 per share on our preferred stock during 2017.

None.

In December 2016, we issued 695,898 shares of our preferred stock, consisting of 126,565 shares of our Blockchain Voting Series A Preferred Stock (the "Series A Preferred") and 569,333 shares of our Voting Series B Preferred Stock (the "Series B Preferred" and together with the Series A Preferred, the "Preferred Stock")., in a public offering registered under the Securities Act of 1933, as amended. As of December 31, 2018, the 481,259 shares of Preferred Stock that remained outstanding constituted approximately 1.5% of the total number of shares of the Preferred Stock and the common stock, taken together. Neither the Series A Preferred Stock nor the Series B Preferred Stock is registered under the Securities Exchange Act of 1934,

Holders of the Preferred Stock do not have any right to convert or exchange such shares for shares of our common stock or any other security, however, at our sole discretion, we may convert the Series A Preferred shares into Series B Preferred shares at any time on a one-to-one basis. Until the third anniversary of the Original Issuance Date, we may redeem, at our discretion, either or both the Series A and Series B Preferred shares for an amount equal to the highest of the following: (1) the subscription price plus any accrued but unpaid dividends, (2) 105% of the average trading price of our common stock during a five-trading-day period and (3) 105% of the average trading price of the series of preferred shares during the same five-day-trading period. Except as required by law, the Preferred Stock vote with the common stock on all matters. Holders of the Preferred Stock have one vote for each share held. As of December 31, 2017, the 681,259 shares of Preferred Stock constituted approximately 2.4% of the total number of shares of the Preferred Stock and the common stock, taken together. The Preferred Stock ranks senior to the common stock with respect to dividends. Holders of the Preferred Stock will beare entitled to an annual cash dividend equal to 1.0% of the subscription price for the Preferred Stock, rounded to the nearest $0.01, in preference to any dividend payment to the holders of the common stock, out of funds legally available for payment of dividends and subject to declaration by our Board of Directors. Holders of the Preferred Stock are also entitled to participate in any cash dividends we pay to the holders of the common stock and are also entitled to participate in non-cash dividends we pay to holders of the common stock, subject to different treatment if we effect a stock dividend, stock split or combination of the common stock. TheIn the event of any liquidation, any amount available for distribution to stockholders after payment of all liabilities will be distributed proportionately, with each share of Series A Preferred Stock ranks onand each share of Series B Preferred being treated as though it were a parity with theshare of our common stock with respect to rights upon the liquidation, winding up or dissolution of the Company.stock. If we are party to any merger or consolidation in which our common stock is changed into or exchanged for stock or other securities of any other person (or the Company) or cash or any other property (or a right to receive the foregoing), we will use all commercially reasonable efforts to cause each outstanding share of the Preferred Stock to be treated as if such share were an additional outstanding share of common stock in connection with any such transaction.

    

Our Board of Directors adopted the 2005 Equity Incentive Plan, and itwhich was most recently amended and restated and re-approved by the stockholders on May 3, 20129, 2017 (as so amended and restated, the "Plan"). Under the Plan, the Board of Directors may issue incentive stock options to our employees and directors and non-qualified stock options to consultants, as well as restricted stock units and other types of equity awards of the Company.

Options granted under the Plan generally expire at the end of ten years and vest in accordance with a vesting schedule determined by our Board of Directors, usually over four years from the grant date. We didhave not grant anygranted compensatory stock options duringsince 2008, and no stock options are outstanding under the years ended December 31, 2017, 2016 and 2015.Plan. At December 31, 2017,2018, no options were outstanding under the Plan, and 2.0 million shares of stock remained available for future grants under the Plan.

Restricted stock units granted in 2018, 2017, 2016 and 20152016 vest over three years at 33.3% at the end of each of the first, second and third year. Each restricted stock unit represents the right to one share of common stock upon vesting. During the years endedThe following is a summary of restricted stock unit activity (amounts in thousands, except per share data):

At December 31, 2017, 2016 and 2015, we recorded2018, 1.8 million shares of stock based compensation expense related to restricted stock units of $4.1 million, $4.9 million and $3.5 million, respectively.remained available for future grants under the Plan.

The selected consolidated financial data presented below should be read in conjunction with the consolidated financial statements of Overstock.com, Inc. and related footnotes included elsewhere in this Annual Report on Form 10-K and the discussion under Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations." The selected consolidated financial data has been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The historical financial and operating information may not be indicative of our future performance. The following discussion and analysis also should be read in conjunction with the disclosures in Item 1. “Business”"Business" under “Our"Our Retail Business,” “Medici,”Business" and “Potential Strategic Initiatives,”"Our Medici Business," as well as the risk factors described in Item 1A. “Risk"Risk Factors.”"

The following discussion and analysis contains forward-looking statementstatements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under "Special Cautionary Note Regarding Forward-Looking Statements." Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report on Form 10-K, including those set forth above under "Special Cautionary Note Regarding Forward-Looking Statements" or in Item 1A under the heading "Risk Factors" or elsewhere in this Annual Report on Form 10-K. In addition, our future results may be significantly different from our historical results. The following discussion and analysis also should be read in conjunction with the disclosures in Item 1. “Business”"Business" under “Our"Our Retail Business,” “Medici,”Business" and “Potential Strategic Initiatives,”"Our Medici Business," as well as the risk factors described in Item 1A. “Risk"Risk Factors.”"

We are an online retailer and advancer of blockchain technology. Through our online retail business, we offer a broad range of price-competitive products, including furniture, home decor, bedding and bath, and housewares, jewelry and watches,

We have engaged Guggenheim Securities, LLC to help us identify and evaluate certain strategic initiatives. We are considering a range of potential transactions, including a sale of our e-commerceretail business and additional equity or debt financings. Our Board of Directors continually discusses a variety of potential strategic and financial options and other changes to our business, but has not approved or made any determination to undertakeconsummate any strategic transaction, and may choose not to do so in the foreseeable future or at all. See Item 1 of Part I, "Business—Potential Strategic Initiatives," and Item 1A, "Risk Factors—Risks Relating to Our Current Review of Strategic Initiatives."

Our retail business, constitutes the vast majority of our business and, through December 31, 2017,2018, generated nearly all of our net revenues. In our retail business, our goal is to provide goods to furnish and accessorize "dream homes" for our target customers—consumers who seek quality, stylish merchandise at bargain prices. At December 31, 2017,2018, we offered 2.84.9 million products (6.0(8.9 million SKUs), of which over 99% were in-line products (products in active production). At December 31, 2017, we were offering three private label brands - Porch & Den, Carson Carrington and OSleep - and had, including more than 1,00025,000 private label products available on our Website and intend to add additionaloffered under eleven private label brands, includingbrands. We believe that the furniture and home products brands, using our strength in home productsgoods market, which is highly fragmented and has traditionally been served by brick and mortar stores, will continue transitioning to help build our private label brands.online sales, particularly as Millennial consumers (defined as those aged 20-36), who are generally comfortable shopping online, start families and move into new homes. We regularly change our product assortment to meet the evolving preferences of our customers and current trends. Our products include, among others, furniture, home décor including rugs, bedding and bath, home improvement, and kitchen items, and, to a lesser extent, jewelry and watches.items. We compete primarily based on:

We have organizedFor 2018, nearly all our retail business (sales of product offeredsales through the Shopping Section of our Website) into two principal segments – a "direct" business and a "partner" business. For 2017, approximately 95% of our net salesWebsite were from transactions in which we fulfilled orders fromthrough our network of approximately 4,000 third-party manufacturers, distributors and other suppliers ("partners") selling on our website, whoWebsite. Our use of the term "partner" does not mean that we generally direct to ship goods sold from their own warehouses, while we generally handle returns and customer service (our "partner" business). The remaining 5%have formed any legal partnerships with any of our net sales came from direct sales of our own inventory shipped from our warehouse, including some customer returns of partner products (our "direct" business).retail partners. We provide our partners with access to a large customer base and convenient services for order fulfillment, customer service, returns handling, and other services. Our team of customer service representatives assistssupply chain allows us to ship directly to our customers by telephone, instant online chat and e-mail. Wefrom our suppliers or from our warehouses. Our retail sales also derive revenue from other businesses advertising products or services on our Website. Ourincludes direct sales are primarily to customers located in the United States. During the years ended December 31, 2017, 2016 and 2015 no single customer accounted for more than 1% of our total net revenue.

We offer additional products or services that may complement our primary retail offerings, but are not significant to our retail partnerrevenues. These include:

Both direct and partnerOur Retail revenues are seasonal, with revenues historically being the highest in the fourth quarter, which ends December 31, reflecting higher consumer holiday spending. WeWhile we had lower sales volume during Q4 2018, we anticipate this willthe trend of higher sales volume during our fourth quarter to continue for the foreseeable future. To the extent possible we maintain supplier relationships, and seek new supplier relationships for both our direct and partnerretail businesses, and also use our working capital, to ensure a continuous allotment of product offerings for our customers. Because some (less than 1%) of our product offerings are closeout merchandise, some of our suppliers cannot supply products to us on a continuous basis.

Our Medici business initiatives seek to develop and advance the concepts of "Government as a Service" and a "Technology Stack for Civilization" by creating or fostering a set of products and solutions that leverage the security, transparency and immutability of cryptographically protected, distributed ledgers, such as blockchains,blockchain technology to generate efficiencies and are focused on solving important problems, including financial transaction issues, particularlyincrease security and control in the areasix areas of securities settlement.civilizational necessity: identity management, property rights and management, central banking and currencies, capital markets, supply chains and commerce, and voting systems. Our wholly-owned subsidiary, Medici Ventures, conducts a majority of its primary business through its majority-owned subsidiary tZERO, which includes a financial technology company and two related registered broker dealers.pursuing potential financial applications of blockchain technologies as well as non-blockchain businesses. Medici Ventures also holds minority equity interests in several technology companies, whoseeach of which focuses include commercialon at least one of the Government as a Service areas mentioned above.

tZERO is a financial technology company pursuing potential financial applications of blockchain applications,technologies as well as non-blockchain businesses. tZERO’s primary focus at present is on its recent launch of a facility for the trading of digital currency solutions,securities tokens and on its joint venture with BOX Digital Markets LLC ("BOX Digital") intended to develop a U.S. national securities exchange (the "Exchange") with regulatory approvals that would enable the Exchange to trade digital securities.

The businesses, products, and services that tZERO is pursuing or contemplating will require substantial additional funding, initially for technology development and regulatory compliance, identity, voting,as well as for working capital, marketing and land.sales, and other substantial costs of developing new products and businesses in emerging areas of technology. These costs have been and are expected to continue to be material, both to tZERO and to Overstock.

As described further in Item 15 of Part IV, "Financial Statements"—Note 21. Business Segments, contained in the "Notes to Consolidated Financial Statements" of this Annual Report on Form 10-K, we determined our segments based on how

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The Securities and Exchange Commission ("SEC") has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies, estimates and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Item 15 of Part IV, "Financial Statements"—Note 2. Accounting Policies. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates. Our critical accounting policies are as follows:

 

The Financial Accounting Standards Board (FASB), which sets accounting standards for U.S. public companies, has issued new standards relatingShipping and handling is considered a fulfillment activity, as it takes place prior to the customer obtaining control of the merchandise, and fees charged to customers are included in net revenue recognition, which became effective on January 1, 2018,upon completion of our performance obligation. We present revenue net of sales tax, discounts, and which will apply to our interim financial statements for the quarter ending March 31, 2018. We areexpected refunds.

Our merchandise sales contracts include terms that could cause variability in the processtransaction price for items such as discounts, credits, or sales returns. 

Our Other revenue occurs primarily through our broker dealer subsidiaries in our tZERO segment. We recognize revenue for our broker dealer subsidiaries based on the gross amount of analyzing the new standards and their applicationconsideration that we expect to our processes, accounting, financial reporting presentation, disclosures, and controls. Under previous FASB standards, we recognized revenue from the majority of these salesreceive on securities transactions (commission revenue) on a grosstrade date basis. We have not reached a definite conclusion, but we believe we will continue to recognize revenue from the majority of our retail business on a gross basis. If our adoption of the new standards requires us to recognize these revenues on a net basis, our future revenue will be substantially less than it was under the previous standards despite having no impact on gross profits. This could have a material adverse effect on the market price of our common stock.