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 ~~June 30, 2020~~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

~~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~~) (801) 947-3100

(Registrant's telephone number, including area code)

~~Not Applicable~~

~~(Former name or former address, if changed since last report)~~

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 ~~Yes~~ý☒ No o☐

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 ~~Yes~~ý☒ No o☐

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. ☐

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

~~40,332,985~~43,006,587 shares of the Registrant's common stock, par value $0.0001, outstanding on ~~July 31, 2020.~~

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 ~~June 30, 2020~~March 31, 2021

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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 ~~and~~operate, including the impact that our ~~subsidiaries and investee entities operate;~~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;

the possibility that we will be unable to generate sufficient cash flow from operations, raise any required additional capital or borrow additional funds, in the case of capital-raising or borrowing on acceptable terms, to successfully conduct our business or pursue our initiatives in a timely manner or at all;

•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 ~~strategic transactions, restructurings~~inability to convert new customers into repeat customers or ~~other changes we may make to our business;~~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, as a result~~spending;

•any inability of Pelion to successfully manage the ~~COVID-19 pandemic or otherwise;~~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 ~~we face~~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 ~~profitable business from our blockchain initiatives, including tZERO;~~

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

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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	0		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	0		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.

Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
June 30,
2020 December 31,
2019
Assets

Current assets:

Cash and cash equivalents $ 318,573
$ 112,266
Restricted cash 2,637
2,632
Marketable securities at fair value 2,122
10,308
Accounts receivable, net of allowance for credit losses of $1,534 and $2,474 at June 30, 2020 and December 31, 2019, respectively 47,765
24,728
Inventories 6,340
5,840
Prepaids and other current assets 22,769
21,589
Total current assets 400,206
177,363
Property and equipment, net 126,795
130,028
Intangible assets, net 9,919
11,756
Goodwill 27,120
27,120
Equity securities 50,542
42,043
Operating lease right-of-use assets 23,387
25,384
Other long-term assets, net 7,173
4,033
Total assets $ 645,142
$ 417,727
Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 131,101
$ 75,416
Accrued liabilities 144,110
88,197
Unearned revenue 89,705
41,821
Operating lease liabilities, current 4,785
6,603
Other current liabilities 4,332
3,962
Total current liabilities 374,033
215,999
Long-term debt, net 42,948
—
Operating lease liabilities, non-current 20,791
21,554
Other long-term liabilities 4,022
2,319
Total liabilities 441,794
239,872
Commitments and contingencies (Note 10)

Continued on the following page

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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	0		0
Series B, issued and outstanding - 357 and 357	0		0
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

Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
June 30,
2020 December 31,
2019
Stockholders' equity:

Preferred stock, $0.0001 par value, authorized shares - 5,000

Series A-1, issued and outstanding - 4,204 and 4,210 —
—
Series B, issued and outstanding - 357 and 357 —
—
Common stock, $0.0001 par value, authorized shares - 100,000

Issued shares - 43,885 and 42,790

Outstanding shares - 40,332 and 39,464 4
4
Additional paid-in capital 770,984
764,845
Accumulated deficit (560,480 ) (580,390 )
Accumulated other comprehensive loss (560 ) (568 )
Treasury stock at cost - 3,553 and 3,326 (70,537 ) (68,807 )
Equity attributable to stockholders of Overstock.com, Inc. 139,411
115,084
Equity attributable to noncontrolling interests 63,937
62,771
Total stockholders' equity 203,348
177,855
Total liabilities and stockholders' equity $ 645,142
$ 417,727

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

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Revenue, net

Retail $ 766,956
$ 367,475
$ 1,106,554
$ 730,100
Other 15,588
6,234
27,563
11,338
Total net revenue 782,544
373,709
1,134,117
741,438
Cost of goods sold

Retail 589,044
294,984
854,436
585,624
Other 13,618
4,826
23,959
8,791
Total cost of goods sold 602,662
299,810
878,395
594,415
Gross profit 179,882
73,899
255,722
147,023
Operating expenses

Sales and marketing 79,790
34,560
116,552
68,037
Technology 33,678
33,153
66,474
68,586
General and administrative 27,371
31,964
59,797
72,196
Total operating expenses 140,839
99,677
242,823
208,819
Operating income (loss) 39,043
(25,778 ) 12,899
(61,796 )
Interest income 614
630
886
1,033
Interest expense (588 ) (105 ) (788 ) (232 )
Other income (expense), net (4,171 ) (2,995 ) 2,512
(9,267 )
Income (loss) before income taxes 34,898
(28,248 ) 15,509
(70,262 )
Provision (benefit) for income taxes 517
(622 ) 693
256
Net income (loss) 34,381
(27,626 ) 14,816
(70,518 )
Less: Net loss attributable to noncontrolling interests (1,975 ) (2,945 ) (5,207 ) (6,593 )
Net income (loss) attributable to stockholders of Overstock.com, Inc. $ 36,356
$ (24,681 ) $ 20,023
$ (63,925 )
Net income (loss) per common share—basic:
��

Net income (loss) attributable to common shares—basic $ 0.85
$ (0.69 ) $ 0.48
$ (1.85 )
Weighted average common shares outstanding—basic 40,329
35,225
40,243
33,806
Net income (loss) per common share—diluted:

Net income (loss) attributable to common shares—diluted $ 0.84
$ (0.69 ) $ 0.47
$ (1.85 )
Weighted average common shares outstanding—diluted 40,590
35,225
40,440
33,806

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)

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Net income (loss) $ 34,381
$ (27,626 ) $ 14,816
$ (70,518 )
Other comprehensive income
Unrealized gain on cash flow hedges, net of expense for taxes of $0, $0, $0, and $0 4
4
8
8
Other comprehensive income 4
4
8
8
Comprehensive income (loss) 34,385
(27,622 ) 14,824
(70,510 )
Less: Comprehensive loss attributable to noncontrolling interests (1,975 ) (2,945 ) (5,207 ) (6,593 )
Comprehensive income (loss) attributable to stockholders of Overstock.com, Inc. $ 36,360
$ (24,677 ) $ 20,031
$ (63,917 )

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	0		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)		0
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	$	0	$	0

Additional paid-in capital
Balance at beginning of period	$	970,873	$	764,845
Stock-based compensation to employees and directors	2,771		3,268



Sale of treasury stock	2,726		0
Subsidiary equity award tender offer	(2,130)		0
Change in noncontrolling interest ownership	(22,625)		0
Other	0		(58)
Balance at end of period	$	951,615	$	768,055
Accumulated deficit
Balance at beginning of period	$	(525,233)	$	(580,390)

Net income (loss) attributable to stockholders of Overstock.com, Inc.	16,093		(16,333)

Balance at end of period	$	(509,140)	$	(596,723)
Accumulated other comprehensive loss
Balance at beginning of period	$	(553)	$	(568)
Net other comprehensive income	4		4
Balance at end of period	$	(549)	$	(564)

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

Overstock.com, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands)
Three months ended
June 30, Six months ended
June 30,

2020 2019 2020 2019
Equity attributable to stockholders of Overstock.com, Inc.

Shares of common stock issued
Balance at beginning of period 43,877
37,802
42,790
35,346
Common stock issued upon vesting of restricted stock 8
14
679
255
Common stock sold through ATM offering —
745
416
2,960
Balance at end of period 43,885
38,561
43,885
38,561
Shares of treasury stock
Balance at beginning of period 3,551
3,319
3,326
3,200
Common stock repurchased through business combination —
—
—
47
Tax withholding upon vesting of restricted stock 2
3
227
75
Balance at end of period 3,553
3,322
3,553
3,322
Total shares of common stock outstanding 40,332
35,239
40,332
35,239
Common stock $ 4
$ 3
$ 4
$ 3
Shares of Series A preferred stock issued and outstanding
Balance at beginning of period —
127
—
127
Exchange of shares to Series A-1 preferred stock —
(123 ) —
(123 )
Conversion of shares to Series B preferred stock —
(1 ) —
(1 )
Balance at end of period —
3
—
3
Shares of Series A-1 preferred stock issued and outstanding
Balance at beginning of period 4,210
—
4,210
—
Exchange of shares from Series A preferred stock —
123
—
123
Shares declared, not distributed (Note 12) (6 ) —
(6 ) —
Balance at end of period 4,204
123
4,204
123
Shares of Series B preferred stock issued and outstanding
Balance at beginning of period 357
355
357
355
Conversion of shares from Series A preferred stock —
1
—
1
Balance at end of period 357
356
357
356
Preferred stock $ —
$ —
$ —
$ —
Additional paid-in capital
Balance at beginning of period $ 768,055
$ 701,877
$ 764,845
$ 657,981
Stock-based compensation to employees and directors 2,465
5,171
5,733
9,156
Common stock sold through ATM offering, net —
12,198
—
52,112
Other 464
(236 ) 406
(239 )
Balance at end of period $ 770,984
$ 719,010
$ 770,984
$ 719,010

Continued on the following page

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Overstock.com, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in thousands)
	Three months ended March 31,
	2021		2020
Treasury stock
Balance at beginning of period	$	(71,399)	$	(68,807)

Tax withholding upon vesting of restricted stock	(7,292)		(1,686)
Sale of treasury stock	643		0
Balance at end of period	(78,048)		(70,493)
Total equity attributable to stockholders of Overstock.com, Inc.	$	363,882	$	100,279

Equity attributable to noncontrolling interests
Balance at beginning of period	$	62,634	$	62,771




Net loss attributable to noncontrolling interests	(201)		(3,232)
Change in noncontrolling interest ownership	22,625		0
Other	0		1,837
Total equity attributable to noncontrolling interests	$	85,058	$	61,376

Total stockholders' equity	$	448,940	$	161,655

Overstock.com, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands)
Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Accumulated deficit
Balance at beginning of period $ (596,723 ) $ (497,716 ) $ (580,390 ) $ (458,897 )
Net income (loss) attributable to stockholders of Overstock.com, Inc. 36,356
(24,681 ) 20,023
(63,925 )
Other (113 ) —
(113 ) 425
Balance at end of period $ (560,480 ) $ (522,397 ) $ (560,480 ) $ (522,397 )
Accumulated other comprehensive loss
Balance at beginning of period $ (564 ) $ (580 ) $ (568 ) $ (584 )
Net other comprehensive income 4
4
8
8
Balance at end of period $ (560 ) $ (576 ) $ (560 ) $ (576 )
Treasury stock
Balance at beginning of period $ (70,493 ) $ (68,753 ) $ (68,807 ) $ (66,757 )
Common stock repurchased through business combination —
—
—
(643 )
Tax withholding upon vesting of restricted stock (44 ) 7
(1,730 ) (1,346 )
Balance at end of period (70,537 ) (68,746 ) (70,537 ) (68,746 )
Total equity attributable to stockholders of Overstock.com, Inc. $ 139,411
$ 127,294
$ 139,411
$ 127,294

Equity attributable to noncontrolling interests
Balance at beginning of period $ 61,376
$ 74,731
$ 62,771
$ 78,960
Paid in capital for noncontrolling interest 5,000
—
5,000
—
Net loss attributable to noncontrolling interests (1,975 ) (2,945 ) (5,207 ) (6,593 )
Other (464 ) —
1,373
(581 )
Total equity attributable to noncontrolling interests $ 63,937
$ 71,786
$ 63,937
$ 71,786

Total stockholders' equity $ 203,348
$ 199,080
$ 203,348
$ 199,080

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc. Consolidated Statements of Cash Flows (Unaudited) (in thousands)
	Three months ended March 31,
	2021		2020
Cash flows from operating activities:
Consolidated net income (loss)	$	15,892	$	(19,565)
Loss from discontinued operations, net of income taxes	10,126		5,799
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	5,146		5,569


Non-cash operating lease cost	1,320		1,431
Stock-based compensation to employees and directors	2,305		2,681












Other non-cash adjustments	638		429
Changes in operating assets and liabilities:
Accounts receivable, net	(15,651)		(6,902)
Inventories	(468)		1,162
Prepaids and other current assets	447		1,566
Other long-term assets, net	(448)		457
Accounts payable	25,589		(1,708)
Accrued liabilities	6,693		(3,663)
Unearned revenue	24,143		12,903
Operating lease liabilities	(1,379)		(1,626)
Other long-term liabilities	(269)		(180)
Net cash provided by (used in) continuing operating activities	74,084		(1,647)
Net cash used in discontinued operating activities	(12,353)		(10,580)
Net cash provided by (used in) operating activities	61,731		(12,227)
Cash flows from investing activities:







Expenditures for property and equipment	(2,395)		(2,638)

Other investing activities, net	(367)		(99)
Net cash used in continuing investing activities	(2,762)		(2,737)
Net cash provided by (used in) discontinued investing activities	5,737		(3,262)
Net cash provided by (used in) investing activities	2,975		(5,999)

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

Overstock.com,��Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Six months ended
June 30,
2020 2019
Cash flows from operating activities:

Consolidated net income (loss) $ 14,816
$ (70,518 )
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 15,117
15,518
Non-cash operating lease cost 3,029
2,992
Stock-based compensation to employees and directors 5,733
9,156
Impairment of equity securities —
4,214
Losses on equity method securities 6,013
3,058
Gain on disposal of business (10,705 ) —
Other non-cash adjustments 1,960
1,360
Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net (24,652 ) 12,295
Inventories (500 ) 2,231
Prepaids and other current assets (3,178 ) 3,311
Other long-term assets, net 171
(547 )
Accounts payable 54,952
(31,722 )
Accrued liabilities 61,625
(5,317 )
Unearned revenue 48,109
(9,628 )
Operating lease liabilities (3,612 ) (2,340 )
Other long-term liabilities 1,565
85
Net cash provided by (used in) operating activities 170,443
(65,852 )
Cash flows from investing activities:

Purchase of equity securities (170 ) (2,500 )
Proceeds from sale of equity securities and marketable securities 6,306
7,082
Acquisitions of businesses, net of cash acquired —
4,886
Expenditures for property and equipment (9,399 ) (10,586 )
Deconsolidation of cash of Medici Land Governance, Inc. (4,056 ) —
Other investing activities, net (659 ) (1,997 )
Net cash used in investing activities (7,978 ) (3,115 )

Continued on the following page

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Overstock.com, Inc. Consolidated Statements of Cash Flows (Unaudited) (in thousands)
	Three months ended March 31,
	2021		2020
Cash flows from financing activities:



Payments on long-term debt	(551)		0
Proceeds from long-term debt	0		47,500






Proceeds from sale of common stock, net of offering costs	0		2,848
Payments of taxes withheld upon vesting of restricted stock	(7,292)		(1,686)
Other financing activities, net	(1)		(2,325)
Net cash provided by (used in) continuing financing activities	(7,844)		46,337
Net cash provided by discontinued financing activities	2,085		912
Net cash provided by (used in) financing activities	(5,759)		47,249
Net increase in cash, cash equivalents, and restricted cash	58,947		29,023
Cash, cash equivalents, and restricted cash, beginning of period, inclusive of cash balances classified as held for sale	519,181		114,898
Cash, cash equivalents, and restricted cash, end of period, inclusive of cash balances classified as held for sale	578,128		143,921
Less: Cash, cash equivalents, and restricted cash held for sale	42,120		15,440
Cash, cash equivalents, and restricted cash, end of period	$	536,008	$	128,481

Overstock.com, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Six months ended
June 30,
2020 2019
Cash flows from financing activities:

Payment on long-term debt (779 ) —
Proceeds from long-term debt 47,500
—
Proceeds from sale of common stock, net of offering costs 2,848
52,112
Payments of taxes withheld upon vesting of restricted stock (1,730 ) (1,346 )
Other financing activities, net (3,992 ) (1,006 )
Net cash provided by financing activities 43,847
49,760
Net increase (decrease) in cash, cash equivalents and restricted cash 206,312
(19,207 )
Cash, cash equivalents and restricted cash, beginning of period 114,898
142,814
Cash, cash equivalents and restricted cash, end of period $ 321,210
$ 123,607

Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest paid, net of amounts capitalized $ 588
$ 173
Income taxes paid (refunded), net 65
(469 )
Non-cash investing and financing activities:

Purchases of property and equipment included in accounts payable and accrued liabilities $ 1,053
$ 43
Recognition of right-of-use assets upon adoption of ASC 842 —
30,968
Deposit applied to business combination purchase price —
7,347
Equity method security applied to business combination purchase price —
3,800

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Notes to Unaudited Consolidated Financial Statements

1. DESCRIPTION OF BUSINESS

Overstock.com, Inc. is an online retailer and ~~advocate~~technology company. Its leading e-commerce website sells a broad range of ~~blockchain technology.~~new home products at low prices, including furniture, décor, area rugs, bedding and bath, home improvement, outdoor, and more. The online shopping site, which receives tens of millions of visits per month, also features a marketplace providing customers access to millions of products from third-party sellers. As used herein, "Overstock," "the Company," "we," "our" and similar terms include Overstock.com, Inc. and its majority-owned subsidiaries, unless the context indicates otherwise.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

Basis of Presentation

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been omitted in accordance with the rules and regulations of the SEC. These financial statements should be read in conjunction with our audited annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~ 2020. There have been no significant changes to our significant accounting policies disclosed in Note 2—Accounting Policies, included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended December 31, 2020, except as disclosed below.

The accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of results for the interim periods presented. The results of operations for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of the results to be expected for any future period or the full fiscal year, due to seasonality and other factors.

~~For~~On April 23, 2021, we entered into a Limited Partnership Agreement (the "Limited Partnership Agreement") with Medici Ventures, Inc. ("Medici Ventures"), Pelion MV GP, L.L.C. ("Pelion"), and Pelion, Inc., in connection with the closing (the "Medici Closing") of the Transaction Agreement dated January 25, 2021 between the Company, Medici Ventures, Pelion, and Pelion, Inc. (the "Transaction Agreement"). In connection with the execution of the Limited Partnership Agreement, Pelion acquired control over Medici Ventures and its blockchain assets. As a result of this transaction, we performed an assessment of control under the variable interest entity ("VIE") model and determined that effective as of the Medici Closing, we held a variable interest in both Medici Ventures and tZERO Group, Inc. ("tZERO") (collectively, the "Disposal Group"), both of which meet the definition of variable interest entities; however, we are not the primary beneficiary of either entity for purposes of ~~comparability, we reclassified other certain immaterial amounts~~consolidation. The Disposal Group met the criteria to be reported as held for sale and discontinued operations as of March 31, 2021. Therefore, the Disposal Group's assets and liabilities are reported as held for sale and the related operating results of the Disposal Group are reported as discontinued operations for all periods presented herein. The majority of the Disposal Group was previously included in the MVI and tZERO reportable segments, and the remainder was included in Other. Effective as of the first quarter of fiscal year 2021, the Company has one reportable segment: Retail. See Note 13—Business Segments for additional segment information.

Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only. Certain prior ~~periods presented~~period data, primarily related to discontinued operations, have been reclassified in the consolidated financial statements and accompanying notes to conform ~~with~~to the current period presentation. See Note 3—Discontinued Operations for further information.

Principles of consolidation

The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries and other subsidiaries over which we exercise control. All intercompany account balances and transactions have been eliminated in consolidation.

~~In February 2020, Medici Land Governance, Inc. ("MLG"), an indirect majority-owned subsidiary, consummated the sale~~Table of shares of its common stock to an unrelated third party. Upon completion of the transaction, our indirect ownership in MLG was reduced from 57% to 35% of MLG's issued and outstanding shares of common stock. As a result of our loss of a controlling financial interest in MLG under the voting interest model, we performed an assessment of control under the variable interest entity ("VIE") model and determined MLG does not meet the qualifications of a VIE for purposes of consolidation. Accordingly, we deconsolidated MLG's consolidated net assets and noncontrolling interest from our consolidated financial statements and results beginning on February 22, 2020, the date that control ceased. The amount of gain recognized on the deconsolidation was $10.7 million, which is included in our consolidated statements of operations in Other income (expense), net. The gain primarily relates to the remeasurement of our retained equity interest in MLG at fair value, which was determined based on the same price per share MLG provided for the sale of common stock to the third-party and price per share we received in settling a portion of our intercompany debt for additional shares in MLG. Post deconsolidation, MLG became one of our equity method investees for which we perform services. See Note 6—Equity Securities for additional information.Contents

Use of estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in our consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, receivables valuation, revenue recognition, Club O and gift card breakage, sales returns, vendor incentive discount offers, inventory valuation, depreciable lives and valuation of property and equipment, and internally-developed software, goodwill valuation, intangible asset valuation, equity securities valuation, income taxes, stock-based compensation, performance-based compensation, self-funded health insurance liabilities, and contingencies.

Our estimates involving, among other items, forecasted revenues, sales volume, pricing, cost and availability of inventory, consumer demand and spending habits, the continued operations of our supply chain and logistics network, and the overall impact of social distancing on our workforce are even more difficult to

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estimate as a result of uncertainties associated with the scope and duration of the global novel coronavirus ("COVID-19") pandemic and various actions taken by governmental authorities, private business and other third parties in response to the ~~global novel coronavirus ("COVID-19")~~ pandemic, the ultimate geographic spread of the virus, the ongoing economic effect of the pandemic and the post-pandemic economic recovery. Although these estimates are based on our best knowledge of current events and actions that we may undertake in the future, the variability of these factors depends on a number of conditions, including uncertainty associated with the COVID-19 pandemic, how long these conditions will persist, ongoing developments related to the production, approval and distribution of vaccines, what additional measures may be introduced or reintroduced by governments or private parties or what effect any such additional measures may have on our business and thus our accounting estimates may change from period to period. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.

~~Income taxes~~

Each reporting period we assess the recoverability of our deferred tax assets under ASC Topic 740. We assess the available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. We have limited carryback ability available under the tax law and do not have significant taxable temporary differences to recover our existing deferred tax assets; therefore we must rely on future taxable income, including tax planning strategies, to support their realizability. We have established a valuation allowance for our deferred tax assets not supported by carryback ability or taxable temporary differences, primarily due to our failure to demonstrate sustained profits. We have considered, among other things, the cumulative loss incurred over the three-year period ended June 30, 2020 as a significant piece of objective negative evidence. We intend to continue maintaining a valuation allowance on our net deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. The amount of the deferred tax asset considered realizable could be adjusted if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as long-term projections for growth. We will continue to monitor the need for a valuation allowance against our remaining deferred tax assets on a quarterly basis.

Recently adopted accounting standards

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments~~—~~Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ which revises how entities account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Topic 326 was subsequently amended by ASU 2019-04, ~~Codification Improvements to Topic 326, Financial Instruments~~—~~Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~ ~~and ASU 2019-11,~~ ~~Codification Improvements to Topic 326, Financial Instruments~~—~~Credit Losses~~. Under the guidance, the measurement of credit losses will be based on a current expected credit losses methodology. We adopted the changes under the new standard on January 1, 2020. We utilized a prospective transition approach for our debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of ASU 2016-13. The implementation of ASU 2016-13 did not have a material impact on our consolidated financial statements and disclosures. We will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.

~~Recently issued accounting standards~~

In December 2019, the FASB issued ASU 2019-12, Income Taxes ("Topic 740")—Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ~~For public entities,~~We adopted the changes under the new standard on January 1, 2021. The implementation of ASU 2019-12 ~~is required to be adopted for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the~~did not have a material impact ~~of the adoption of this ASU~~ on our consolidated financial statements and ~~related~~ disclosures.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ~~For public entities,~~We adopted the changes under the new standard on January 1, 2021. The implementation of ASU 2020-01 ~~is required to be adopted for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the~~did not have a material impact ~~of the adoption of this ASU~~ on our consolidated financial statements and ~~related~~ disclosures.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which amends and provides Codification improvements in order to either clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. We adopted the changes under the new standard on January 1, 2021. The implementation of ASU 2020-10 did not have a material impact on our consolidated financial statements and disclosures.

3. DISCONTINUED OPERATIONS

On January 25, 2021, we entered into the Transaction Agreement with Medici Ventures, Pelion, and Pelion, Inc., pursuant to which the parties agreed, among other things, that: (i) Medici Ventures would convert to a Delaware limited partnership (the "Partnership"), (ii) pursuant to the terms and subject to the conditions of a Limited Partnership Agreement which was entered into on the date of the Medici Closing, Pelion would become the sole general partner of the Partnership, and we (along with any other stockholders of Medici Ventures at the time of the Medici Closing), would become the limited partners of the Partnership, (iii) prior to the Medici Closing, Overstock would convert the outstanding intercompany debt owed to us by Medici Ventures into shares of common stock in Medici Ventures; and (iv) prior to the Medici Closing, Overstock would convert the outstanding intercompany debt owed to us by tZERO into shares of common stock in tZERO, in each case, on the terms and subject to the conditions set forth in the Transaction Agreement and the relevant definitive agreements to be entered into in connection therewith. Pursuant to the terms of the Limited Partnership Agreement, we and any other limited partners subsequently admitted to the Partnership agreed to make a capital commitment of $45 million to the Partnership in proportion to our equity interest in the Partnership in order to fund the Partnership's capital needs. The capital commitments

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may be called in one or more cash installments as specified by the general partner upon 10 business days' prior written notice. The term of the Partnership is 8 years. The debt conversion outlined in (iii) and (iv) above was completed during the quarter ended March 31, 2021, following which Medici Ventures and Overstock held approximately 42% and 41%, respectively, of tZERO's outstanding common stock. The Medici Closing occurred on April 23, 2021. On April 23, 2021, we also made a $25.0 million capital contribution in fulfillment of a capital call by the general partner.

~~3. FAIR VALUE MEASUREMENT~~

The Transaction Agreement represents a strategic shift for Overstock and a substantive change in the purpose and design of Medici Ventures and its interplay with Overstock’s overall business objectives. The Overstock board of directors has determined that it is in the best interest of Overstock and its shareholders to have the Overstock management team focus on Overstock’s core e-commerce home furnishings business and strategies. Accordingly, after six years of committed effort to advance blockchain technology, Overstock has determined that the Medici Ventures businesses will be better served under the management of Pelion, a professional asset manager with technology expertise with early stage companies. From and after the Medici Closing, Pelion now has sole authority and responsibility regarding investing decisions, appointing board members of the portfolio companies, and exercising all shareholder rights for assets Medici Ventures currently holds. As of March 31, 2021, Medici Ventures holds an 84% ownership in Bitt Inc. (“Bitt”), a 42% ownership in tZERO, and minority equity interests in several blockchain-based companies. Additionally, Overstock holds a 41% direct interest in tZERO as of March 31, 2021.

~~Our financial~~

On April 23, 2021, we entered into the Limited Partnership Agreement with Medici Ventures, Pelion, and Pelion, Inc., as part of the Medici Closing, pursuant to which Pelion became the sole general partner, holding a 1% equity interest in the Partnership, and Overstock became a limited partner, holding a 99% equity interest in the Partnership. As a result of this transaction, we performed an assessment of control under the VIE model and determined that upon closing of the transaction, we held a variable interest in both Medici Ventures and tZERO which meet the definition of variable interest entities; however, we are not the primary beneficiary of either entity for purposes of consolidation as we do not have the power (either explicit or implicit), through voting rights or similar rights, to direct the activities of the Partnership or tZERO that most significantly impact its economic performance. Upon closing, our retained equity interest in the Partnership and tZERO were recognized as equity method investments.

The Disposal Group met the criteria to be reported as held for sale and discontinued operations as of March 31, 2021. Accordingly, we have classified the assets and liabilities ~~are initially measured~~of the Disposal Group as held for sale in our consolidated balance sheets at the lower of carrying amount or fair value ~~which is defined as~~less cost to sell. We further classified the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:


•	~~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.~~

~~Our~~held for sale assets and liabilities ~~that are adjusted to fair value on~~as long-term in our consolidated balance sheets for the current period as a ~~recurring basis are cash equivalents, certain~~result of our expected retained equity ~~and marketable securities, and deferred compensation liabilities, which fair values are determined using quoted market prices from daily exchange traded markets on~~method investments in the ~~closing price as of~~underlying Disposal Group upon closing. Classification for the balance sheet date and are classified as Level 1. Our other financial instruments, including cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, finance obligations, and debt are carried at cost, which approximates their fair value. Certain assets, including long-lived assets, certain equity securities, goodwill, cryptocurrencies, and other intangible assets, are measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments using fair value measurements with unobservable inputs (level 3), apart from cryptocurrencies which use quoted prices from various digital currency exchanges with active markets, in certain circumstances (e.g., when there is evidence of impairment).

~~The following tables summarize our~~ assets and liabilities ~~measured at fair value~~in comparative periods retained their previous classification as current or long-term. No losses were recognized upon classification of the Disposal Group's assets and liabilities as held for sale. Depreciation and amortization ceased on assets classified as held for sale. The operating results of the Disposal Group are reported as discontinued operations, for all periods presented, as the disposition reflects a ~~recurring basis using the following levels~~strategic shift that has, or will have, a major effect on our operations and financial results.

Table of ~~inputs~~Contents

Results of discontinued operations were as ~~of June 30, 2020 and December 31, 2019, as indicated~~follows (in thousands):


	Three months ended March 31,
	2021		2020
Revenue, net	$	15,592	$	11,975
Cost of goods sold	12,391		10,341
Gross profit	3,201		1,634
Operating expenses
Sales and marketing	552		417
Technology	6,556		5,515
General and administrative	10,873		8,541
Total operating expenses	17,981		14,473
Operating loss from discontinued operations	(14,780)		(12,839)
Interest income, net	187		83
Other income, net	4,479		6,970
Loss from discontinued operations before income taxes	(10,114)		(5,786)
Provision for income taxes	12		13
Net loss from discontinued operations	$	(10,126)	$	(5,799)
Less: Net loss attributable to noncontrolling interests from discontinued operations	(201)		(3,232)
Net loss from discontinued operations attributable to stockholders of Overstock.com, Inc.	$	(9,925)	$	(2,567)

Fair Value Measurements at June 30, 2020:
Total Level 1 Level 2 Level 3
Assets:

Cash equivalents - Money market mutual funds $ 2,814
$ 2,814
$ —
$ —
Equity securities, at fair value 500
500
—
—
Marketable securities, at fair value 2,122
2,122
—
—
Trading securities held in a "rabbi trust" (1) 108
108
—
—
Total assets $ 5,544
$ 5,544
$ —
$ —
Liabilities:

Deferred compensation accrual "rabbi trust" (2) $ 112
$ 112
$ —
$ —
Total liabilities $ 112
$ 112
$ —
$ —

Fair Value Measurements at December 31, 2019:
Total Level 1 Level 2 Level 3
Assets:

Cash equivalents - Money market mutual funds $ 2,799
$ 2,799
$ —
$ —
Equity securities, at fair value 823
823
—
—
Marketable securities, at fair value 10,308
10,308
—
—
Trading securities held in a "rabbi trust" (1) 116
116
—
—
Total assets $ 14,046
$ 14,046
$ —
$ —
Liabilities:

Deferred compensation accrual "rabbi trust" (2) $ 116
$ 116
$ —
$ —
Total liabilities $ 116
$ 116
$ —
$ —

~~___________________________________________~~Assets and liabilities of discontinued operations were as follows (in thousands):

~~(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.~~


	March 31, 2021		December 31, 2020
Cash and cash equivalents	$	0	$	21,075
Restricted cash	0		1,484

Accounts receivable, net	0		7,258

Other current assets	0		4,312
Total current assets held for sale	$	0	$	34,129
Cash and cash equivalents	$	40,550	$	0
Restricted cash	1,570		0

Accounts receivable, net	6,293		0


Property and equipment, net	8,670		8,783

Intangible assets, net	10,591		13,852
Goodwill	28,790		28,790
Equity securities	44,696		45,878
Operating lease right-of-use assets	7,716		7,226
Other long-term assets, net	4,486		1,626
Total long-term assets held for sale	$	153,362	$	106,155

Accounts payable and accrued liabilities	$	0	$	11,939


Other current liabilities	0		1,985
Total current liabilities held for sale	$	0	$	13,924

Accounts payable and accrued liabilities	$	9,704	$	0




Operating lease liabilities, non-current	8,607		7,099
Other long-term liabilities	723		586
Total long-term liabilities held for sale	$	19,034	$	7,685

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~~(2)~~	~~— Non-qualified deferred compensation in a rabbi trust is included in Accrued liabilities and Other long-term liabilities in the consolidated balance sheets.~~

4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):


	March 31, 2021		December 31, 2020

Computer hardware and software, including internal-use software and website development	$	214,084	$	213,124
Building	69,245		69,245
Furniture and equipment	11,876		12,165
Land	12,781		12,781
Leasehold improvements	2,712		3,049
Building machinery and equipment	9,793		9,793
Land improvements	7,010		7,010
	327,501		327,167
Less: accumulated depreciation	(216,697)		(213,400)
Total property and equipment, net	$	110,804	$	113,767

June 30,
2020 December 31, 2019

Computer hardware and software $ 230,950
$ 223,309
Building 69,245
69,266
Furniture and equipment 17,314
17,739
Land 12,781
12,781
Leasehold improvements 11,988
11,921
Building machinery and equipment 9,782
9,796
Land improvements 7,004
7,003
359,064
351,815
Less: accumulated depreciation (232,269 ) (221,787 )
Total property and equipment, net $ 126,795
$ 130,028

Capitalized costs associated with internal-use software and website development, both developed internally and acquired externally, and depreciation of costs for the same periods associated with internal-use software and website development consist of the following (in thousands):


	Three months ended March 31,
	2021		2020
Capitalized internal-use software and website development	$	1,705	$	1,938
Depreciation of internal-use software and website development	1,808		2,386

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Capitalized internal-use software and website development $ 4,658
$ 4,101
$ 7,590
$ 7,550
Depreciation of internal-use software and website development $ 3,577
$ 3,124
$ 6,923
$ 6,361

~~Property and equipment depreciation~~Depreciation expense is classified within the corresponding operating expense categories on our consolidated statements of operations as follows (in thousands):


	Three months ended March 31,
	2021		2020
Cost of goods sold	$	154	$	190
Technology	3,875		3,741

General and administrative	1,094		1,604
Total depreciation	$	5,123	$	5,535

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Cost of goods sold - retail $ 177
$ 171
$ 367
$ 346
Technology 4,768
4,892
9,539
10,067
General and administrative 1,685
1,277
3,370
2,501
Total depreciation $ 6,630
$ 6,340
$ 13,276
$ 12,914

5. BORROWINGS

~~5. INTANGIBLE ASSETS~~

~~Intangible assets, net consist of the following (in thousands):~~

June 30,
2020 December 31,
2019
Intangible assets subject to amortization, gross $ 30,267
$ 30,284
Less: accumulated amortization of intangible assets subject to amortization (20,348 ) (18,528 )
Total intangible assets, net $ 9,919
$ 11,756

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~~Amortization of intangible assets is classified within the corresponding operating expense categories in our consolidated statements of operations as follows (in thousands):~~

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Technology $ 846
$ 938
$ 1,693
$ 1,791
Sales and marketing 10
16
21
32
General and administrative 62
170
127
(659 )
Total amortization $ 918
$ 1,124
$ 1,841
$ 1,164

In connection with our 2018 acquisition of Mac Warehouse, we received the final valuation information and completed our determination and allocation of the purchase price during the quarter ended March 31, 2019 and recognized adjustments to the provisional values as of March 31, 2019, which among other items decreased the recognized Intangible assets and resulted in a reversal of previously recognized amortization expense of $1.4 million during the quarter ended March 31, 2019.

~~6. EQUITY SECURITIES~~

~~Equity securities under ASC 321~~

Certain of our equity securities lack readily determinable fair values and therefore the securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar equity securities of the same issuer. The carrying amount of our equity securities without readily determinable fair values was approximately $3.9 million and $3.9 million at June 30, 2020 and December 31, 2019, respectively. Cumulative downward adjustments for price changes and impairments for our equity securities without readily determinable fair values were $6.2 million, and the cumulative upward adjustments for price changes to equity investments were $958,000 as of June 30, 2020. The impairments and downward adjustments for the period related to equity securities without readily determinable fair values at June 30, 2020 and 2019 is as follows (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Impairments and downward adjustments of equity securities without readily determinable fair values $ —
$ —
$ —
$ (2,958 )

Certain of these equity securities and our marketable securities, which had a carrying value of $2.6 million at June 30, 2020 and $11.1 million at December 31, 2019, are carried at fair value based on Level 1 inputs. See Note 3—Fair Value Measurement. The portion of unrealized gains and losses for the period related to equity securities with readily determinable fair value still held at June 30, 2020 and 2019 is calculated as follows (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Net losses recognized during the period on equity securities and marketable securities $ (836 ) $ (500 ) $ (2,455 ) $ (1,118 )
Less: Net gains recognized during the period on equity securities and marketable securities sold 228
—
2,161
—
Unrealized losses during the reporting period on equity securities and marketable securities still held $ (1,064 ) $ (500 ) $ (4,616 ) $ (1,118 )

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~~Equity method securities under ASC 323~~

Our equity method securities include equity securities in which we can exercise significant influence, but not control, over these entities through either holding more than a 20% voting interest in the entity or through our representation on the entity's board of directors. The following table includes our equity method securities and ownership interest as of June 30, 2020:



	~~Ownership interest~~
~~Bitt Inc.~~	~~21%~~
~~Boston Security Token Exchange LLC~~	~~50%~~
~~Chainstone Labs, Inc.~~	~~29%~~
~~FinClusive Capital, Inc.~~	~~11%~~
~~GrainChain, Inc.~~	~~18%~~
~~Medici Land Governance, Inc.~~	~~35%~~
~~Minds, Inc.~~	~~24%~~
~~PeerNova, Inc.~~	~~11%~~
~~SettleMint NV~~	~~29%~~
~~Spera, Inc.~~	~~19%~~
~~VinX Network Ltd.~~	~~29%~~
~~Voatz, Inc.~~	~~20%~~

~~The carrying amount of our equity method securities was approximately $46.1 million and $37.3 million at June 30, 2020 and December 31, 2019, respectively.~~

~~The following table summarizes the net losses recognized on equity method securities included in Other income (expense), net in our consolidated statements of operations (in thousands):~~

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Net loss recognized on our proportionate share of the net losses of our equity method securities and amortization of the basis difference $ 3,545
$ 2,033
$ 6,013
$ 3,058
Impairments on equity method securities —
1,256
—
1,256
Net loss recognized during the period on equity method securities sold —
—
—
524

At June 30, 2020, we had a $5 million contractual off-balance sheet contingent obligation to provide additional funding in the future to Boston Security Token Exchange LLC ("BSTX") if and when, during the first 48 months after the establishment of the entity, the aggregate cash balance of BSTX's combined bank accounts fall below $2 million for any reason. Subsequent to June 30, 2020, the conditions to fund the obligation were triggered but we have not yet provided the additional funding as of our filing date.

For the three and six months ended June 30, 2020, we recognized $2.5 million and $4.1 million, respectively, of revenue in Other Revenue on our consolidated statements of operations for developer and other secondment services provided to certain of these entities that are accounted for under the equity method. For the three and six months ended June 30, 2019, we recognized $683,000 and $1.3 million, respectively, of revenue in Other Revenue on our consolidated statements of operations for developer and other secondment services provided to certain of these entities that are accounted for under the equity method.

We are party to notes receivable agreements with certain of these equity method entities. The carrying amount of these notes receivables, including accrued interest, was $5.2 million and $4.6 million at June 30, 2020 and December 31, 2019, respectively, which are included in Other long-term assets, net in the consolidated balance sheets.

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~~7. ACCRUED LIABILITIES~~

~~Accrued liabilities consist of the following (in thousands):~~

June 30,
2020 December 31,
2019

Accounts payable accruals $ 36,732
$ 15,692
Accrued compensation and other related costs 25,305
13,012
Accrued marketing expenses 21,062
13,063
Allowance for returns 18,657
11,107
Sales and other taxes payable 14,222
10,105
Accrued freight 11,706
5,954
Accrued loss contingencies 2,337
9,550
Other accrued expenses 14,089
9,714
Total accrued liabilities $ 144,110
$ 88,197

~~8. BORROWINGS~~

~~Loan Core Capital Funding Corporation LLC~~ loan agreements

In March 2020, we entered into two loan ~~agreements with Loan Core Capital Funding Corporation LLC.~~agreements. The loan agreements provide a $34.5 million Senior Note, carrying interest at an annual rate of 4.242%, and a $13.0 million Mezzanine Note, carrying interest at an annual rate of 5.002%. The loans carry a blended annual interest rate of 4.45%. The Senior Note is for a 10-year term (stated maturity date is March 6, 2030) and requires interest only payments, with the principal amount and any then unpaid interest due and payable at the end of the 10-year term. The Mezzanine Note has a stated 10-year term, though the agreement requires principal and interest payments monthly over approximately a 46-month payment period. Our debt issuance costs and debt discount are amortized using the straight-line basis which approximates the effective interest method.

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As of March 31, 2021, the total outstanding debt on these loans was $43.7 million, net of $575,000 in capitalized debt issuance costs, and the total amount of the current portion of these loans included in Other current liabilities on our consolidated balance sheets was $3.2 million.

Further, Overstock serves as a guarantor under the Senior Note (the "Senior Note Guaranty") and the Mezzanine Note (the "Mezzanine Note Guaranty"). Both loans include certain financial and non-financial covenants and are secured by our corporate headquarters and the related land and rank senior to stockholders. As of June 30, 2020, the total outstanding debt on these loans was $46.1 million, and the total amount of the current portion of these loans included in Other current liabilities on our consolidated balance sheets was $3.1 million. Our debt issuance costs and debt discount are amortized using the straight-line basis which approximates the effective interest method.

~~Further, the Company will serve as a guarantor under the Senior Note (the "Senior Note Guaranty") and the Mezzanine Note (the "Mezzanine Note Guaranty").~~ Overstock has agreed under the Senior Note Guaranty to, among other things, maintain, until all of the obligations guaranteed by Overstock under the Senior Note Guaranty have been paid in full, (i) a net worth in excess of $30 million and minimum liquid assets of $3 million for so long as the Mezzanine Note is outstanding, and (ii) a net worth in excess of $15 million and minimum liquid assets of $1 million from and after the date the Mezzanine Note has been paid in full. Overstock has also agreed under the Mezzanine Note Guaranty to, among other things, maintain a net worth in excess of $30 million and minimum liquid assets of $3 million until all obligations guaranteed by Overstock under the Mezzanine Note Guaranty have been paid in full.

We are in compliance with our debt covenants and ~~we are closely monitoring~~continue to monitor the most recent developments regarding the COVID-19 pandemic and potential impact to our ongoing compliance with our debt ~~covenants and ability to continue to meet our loan payment obligations as they become due.~~

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covenants.

~~9. LEASES~~

6. LEASES

We have operating leases for warehouses, office space, and data centers. Our leases have remaining lease terms of 1 year to 116 years, some of which may include options to extend the leases perpetually, and some of which may include options to terminate the leases within 1 year.

~~The following table provides a summary of leases by balance sheet location (in thousands):~~

June 30, 2020 December 31, 2019
Operating right-of-use assets $ 23,387
$ 25,384
Operating lease liabilities, current 4,785
6,603
Operating lease liabilities, non-current 20,791
21,554

The components of lease expenses were as follows (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Operating lease cost $ 1,936
$ 2,363
$ 4,068
$ 4,868
Short-term lease cost 8
28
19
62
Variable lease cost 471
442
888
972


	Three months ended March 31,
	2021		2020
Operating lease cost	$	2,141	$	1,758
Short-term lease cost	6		7
Variable lease cost	388		407

The following ~~tables provide~~table provides a summary of other information related to leases (in ~~thousands, apart from weighted-average lease term and weighted average discount rate)~~thousands):


	Three months ended March 31,
	2021		2020

Cash payments included in operating cash flows from lease arrangements	$	2,158	$	1,953

Derecognition of right-of-use assets due to reassessment of lease term	527		0

Six months ended
June 30,
2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases $ (4,658 ) $ (4,202 )
Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,767
$ 17,090
Weighted-average remaining lease term - operating leases 6.05 years
7.02 years
Weighted-average discount rate - operating leases 8 % 8 %

The following table provides supplemental balance sheet information related to leases:


	March 31, 2021		December 31, 2020
Weighted-average remaining lease term—operating leases	3.42 years		3.57 years
Weighted-average discount rate—operating leases	7	%	7	%

Maturity of lease liabilities under our non-cancellable operating leases as of ~~June 30, 2020,~~March 31, 2021, are as follows (in thousands):

~~10.~~7. COMMITMENTS AND CONTINGENCIES

Legal proceedings and contingencies

From time to time, we are involved in litigation concerning consumer protection, employment, intellectual property, claims under the securities laws, and other commercial matters related to the conduct and operation of our business and the sale of products on our Website. In connection with such litigation, we have been in the past and we may be in the future subject to significant damages. In some instances, other parties may have contractual indemnification obligations to us. However, such contractual obligations may prove unenforceable or non-collectible, and if we cannot enforce or collect on indemnification obligations, we may bear the full responsibility for damages, fees, and costs resulting from such litigation. We may also be subject to penalties and equitable remedies that could force us to alter important business practices. Such litigation could be costly and time consuming and could divert or distract our management and key personnel from our business operations. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters could materially affect our business, results of operations, financial position, or cash flows. The nature of the loss contingencies relating to claims that have been asserted against us are described below.

In September 2009, SpeedTrack, Inc. sued us along with 27 other defendants in the United States District Court in the Northern District of California, alleging that we infringed a patent covering search and categorization software. We believe that certain third-party vendors of products and services sold to us are contractually obligated to indemnify us, and we have tendered defense of the case to an indemnitor who accepted the defense. In April 2016, the court entered an order partially dismissing the claims against us. In May 2016, the plaintiff filed an amended complaint and we filed an answer. In March 2020, the court entered a judgment of non-infringement in our favor and against the plaintiff. In June 2020, the plaintiff filed an appeal to the United States District Court of Appeals for the Federal Circuit. We are currently waiting on a decision from the United States District Court of Appeals for the Federal Circuit. No estimate of the possible loss or range of loss can be made. We intend to vigorously defend this appeal.

~~In June 2013, William French ("French") and the State of Delaware ("Delaware") sued us, along with numerous other defendants,~~As previously disclosed, in the Superior Court of the State of Delaware for alleged violations of Delaware's unclaimed property laws. French and Delaware alleged that we knowingly refused to fulfill obligations under Delaware's Abandoned Property Law by failing to report and deliver unclaimed gift card funds to the State of Delaware, and knowingly made, used or caused to be made or used, false statements and records to conceal, avoid or decrease an obligation to pay or transmit money to Delaware in violation of the Delaware False Claims and Reporting Act. On June 28, 2019, the court entered a judgment against us in the amount of approximately $7.3 million (for certain unredeemed gift card balances, treble damages, and penalties) as a result of a jury verdict which was returned September 20, 2018. On October 23, 2019, the court entered an award of attorneys' fees and costs of $1.3 million and entered final judgment in the amount of $8.6 million. We filed an appeal in October 2019 which was decided in our favor in June 2020, at which time the Delaware Supreme Court reversed the judgment of the trial court in its entirety. Consequently, we reversed our estimated liability for these amounts that had been included in Accrued liabilities at December 31, 2019. The expense associated with these litigation charges was included in general and administrative expense in our consolidated statement of operations for the year ended December 31, 2018 and the subsequent reversal gain is included in the same as of June 30, 2020.

In February 2018, the Division of Enforcement of the SEC informed tZERO and subsequently informed us that it is conducting an investigation and requested that we and tZERO voluntarily provide certain information and documents related to tZERO and the tZERO security token offering in connection with its investigation. In December 2018, we received a follow-up request from the SEC relating to its ~~investigation. As previously disclosed, on~~investigation relating to GSR Capital Ltd., a Cayman Islands exempted company ("GSR"). On October 7, 2019, we received a subpoena from the SEC requesting documents and other information related to the ~~digital dividend of our~~ Series A-1 preferred stock dividend to stockholders we announced ~~to stockholders~~ in June 2019 (the "Dividend") (discussed below in Note ~~12—~~9—Stockholders' Equity) and requesting ~~10b-5-1~~Rule 10b5-1 plans ~~of our~~entered into by certain officers and directors that were in effect during the period of January 1, 2018 through October 7, 2019. OnIn December 9, 2019, we received a subpoena from the SEC requesting documents related to the GSR transaction and the alternative trading system run by tZERO ATS, LLC. ~~On December 19, 2019, we~~We received aanother subpoena from the SEC in December 2019 requesting our insider trading policies as well as certain employment and consulting agreements. We have also previously received requests from the SEC regarding GSR and our communications with our former ~~chief executive officer~~Chief Executive Officer and ~~director,~~Director, Patrick Byrne, and the matters referenced in the December 2019 subpoenas. OnIn May ~~27,~~ 2020, we received a subpoena from the SEC requesting ~~further~~additional information related to the ATS. In January 2021, we received a subpoena from the SEC requesting information regarding our Retail guidance in 2019 and

~~registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934 (the "Exchange Act") and~~provide documents requested in the states in which it conducts securities business and is a member of FINRA and other SROs (as applicable). In addition, tZERO ATS, LLC owns and operates an alternative trading system registered with the SEC. Each of SpeedRoute and tZERO ATS, LLC is subject to regulation, examination, investigation, and disciplinary action by the SEC, FINRA, and state securities regulators, as well as other governmental authorities and SROs with which it is registered or licensed or of which it is a member. Moreover, as a result of tZERO's projects seeking to apply distributed ledger technologies to the capital markets, tZERO's subsidiaries have been, and remain involved in, ongoing oral and written communications with regulatory authorities. As previously disclosed, tZERO's broker-dealer subsidiaries are currently undergoing various examinations, inquiries, and/or investigations undertaken by various regulatory authorities, which may result in financial and other settlements or penalties. Any significant failure by tZERO's broker-dealer subsidiaries to satisfy regulatory authorities that they are in compliance with all applicable rules and regulations could have a material adverse effect on tZERO and on us.2021 subpoena.

tZERO's subsidiary, tZERO Crypto, Inc., is registered as or is applying to become a money transmitter (or its equivalent) in many states and is subject to extensive regulatory requirements applicable to money services businesses, including the requirements of the Financial Crimes Enforcement Network of the U.S. Department of the Treasury ("FinCEN"), anti-money laundering requirements, know-your-customer requirements, record-keeping, reporting and capital and bonding requirements, and inspection by state and federal regulatory agencies. Compliance with these requirements requires the dedication of significant resources and any material failure by tZERO Crypto, Inc. to remain in compliance with the applicable regulatory requirements could subject it to liability or limit the services it may offer.

On September 27, 2019, a purported securities class action lawsuit was filed against us and our former chief executive officer and former chief financial officer in the United States District Court of Utah, alleging violations under Section 10(b), Rule 10b-5, Section 20(a), Section 20(A) of the Exchange Act. On October 8, 2019, October 17, 2019, October 31, 2019, and November 20, 2019, four similar lawsuits were filed in the same court also naming the Company and the above referenced former executives as defendants, bringing similar claims under the Exchange Act, and seeking similar relief. These cases were consolidated into a single lawsuit in December 2019. The Court appointed The Mangrove Partners Master Fund Ltd. as lead plaintiff in January 2020. In March 2020, an amended consolidated complaint was filed against us, our ~~president of retail,~~President, our former ~~chief executive officer,~~Chief Executive Officer, and our former ~~chief financial officer.~~Chief Financial Officer. We filed a motion to dismiss and on September 28, 2020, the court granted our motion and entered judgment in our favor. The plaintiffs filed a motion to amend their complaint on October 23, 2020 and filed a notice of appeal on October 26, 2020. The United States District Court of Utah granted the plaintiffs' motion to amend their complaint on January 6, 2021 and the Tenth Circuit Court dismissed the plaintiffs' appeal on January 8, 2021. We filed a motion to dismiss on February 25, 2021 which has not yet been decided. No estimates of the possible losses or range of losses can be made at this time. We intend to vigorously defend this consolidated action.

On November 22, 2019, a shareholder derivative suit was filed against us and certain past and present directors and officers of the Company in the United States District Court for the District of Delaware, with allegations that include: (i) breach of fiduciary duties, (ii) unjust enrichment, (iii) insider selling and misappropriation of the Company's information, and (iv) contribution under Sections 10(b) and 21D of the Exchange Act. On December 17, 2019, a similar lawsuit was filed in the same court, naming the same defendants, bringing similar claims, and seeking similar relief. These cases were consolidated into a single lawsuit in January 2020. In March 2020, the court entered a stay on litigation, pending the outcome of the securities class action motion to dismiss. No estimates of the possible losses or range of losses can be made at this time. We intend to vigorously defend these actions.

On April 23, 2020, a putative class action lawsuit was filed against us in the Circuit Court of the County of St. Louis, State of Missouri, alleging that we over-collected taxes on products sold into the state of Missouri. We removed the case to United States District Court, Eastern District of Missouri on May 22, 2020, and on February 9, 2021, the case against us was dismissed. On March 1, 2021, a putative class action lawsuit was filed against us in the Circuit Court of the County of St. Louis, State of Missouri, alleging similar allegations to the April 23, 2020 putative class action that was dismissed, that we over-collected taxes on products sold into the state of Missouri. We filed a motion to dismiss on April 15, 2021 which has not yet been decided. No ~~estimate~~estimates of the possible ~~loss~~losses or range of ~~loss~~losses can be made at this time. We intend to vigorously defend this action.

We establish liabilities when a particular contingency is probable and estimable. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we have accrued ~~$2.3~~$1.6 million and ~~$9.6~~$1.8 million, respectively, which are included in Accrued liabilities in our consolidated balance sheets. It is reasonably possible that the actual losses may exceed our accrued liabilities.

Legal proceedings and contingencies - discontinued operations

tZERO's broker-dealer subsidiaries are subject to extensive regulatory requirements under federal and state laws and regulations and self-regulatory organization ("SRO") rules. Each of SpeedRoute LLC ("SpeedRoute"), tZERO Markets, LLC ("tZERO Markets") and tZERO ATS, LLC is registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934 ("Exchange Act") and in the states in which it conducts securities business and is a member of FINRA and other SROs (as applicable). In addition, tZERO ATS, LLC owns and operates an alternative trading system. Each of SpeedRoute, tZERO Markets and tZERO ATS, LLC is subject to regulation, examination, investigation, and disciplinary action by the SEC, FINRA, and state securities regulators, as well as other governmental authorities and SROs with which it is registered or licensed or of which it is a member. Moreover, as a result of tZERO's projects seeking to apply distributed ledger technologies to the capital markets, tZERO's subsidiaries have been, and remain involved in, ongoing oral and written communications with regulatory authorities. As previously disclosed, tZERO's broker-dealer subsidiaries are currently undergoing various examinations, inquiries, and/or investigations undertaken by various regulatory authorities, which may result in financial and other settlements or penalties.

During our normal course of business, we have made certain indemnities, commitments, and guarantees under which we may be required to make payments in relation to certain transactions. These indemnities include, but are not limited to, indemnities we entered into in favor of Loan Core Capital Funding Corporation LLC under our loan agreements, various lessors in connection with facility leases for certain claims arising from such facility or lease, the environmental indemnity we entered into in favor of the lenders under our prior loan agreements, customary indemnification arrangements in underwriting agreements and similar agreements, and indemnities to our directors and officers to the maximum extent permitted under the laws of the State of Delaware. The duration of these indemnities, commitments, and guarantees varies, and in certain cases, is indefinite. In addition, the majority of these indemnities, commitments, and guarantees do not provide for any limitation of the

maximum potential future payments we could be obligated to make. As such, we are unable to estimate with any reasonableness our potential exposure under these items. We have not recorded any liability for these indemnities, commitments, and guarantees in the accompanying consolidated balance sheets. We do, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is both probable and reasonably estimable.

~~12. STOCKHOLDERS' EQUITY~~

Each share of common stock has the right to 1 vote. The holders of common stock are also entitled to receive dividends declared by the Board of Directors out of funds legally available, subject to prior rights of holders of all classes of stock outstanding having priority rights as to dividends.

On May 19, 2020, we completed the distribution of our announced digital dividend (the "Dividend") payable in shares of our Series A-1 preferred stock. The Dividend was paid out at a ratio of 1:10, so that one share of Series A-1 preferred stock was issued for every ten shares of OSTK common stock, for every ten shares of Series A-1 preferred stock, and for every ten shares of Series B preferred stock held by all holders of such shares as of April 27, 2020, the record date for the Dividend. The number of shares of Series A-1 preferred stock declared as a stock dividend was ~~4,085~~4,085,445 as of ~~December~~March 31, ~~2019~~2020 and the number of shares distributed was ~~4,079~~4,079,030 on May 19, 2020.

Each share of our Series A preferred stock, Series A-1 preferred stock, and our Series B preferred stock (collectively, the "preferred shares"), except as required by law, are intended to have voting and dividend rights similar to those of 1 share of common stock. Preferred shares rank senior to common stock with respect to dividends. Holders of the preferred shares are entitled to an annual cash dividend of $0.16 per share, in preference to any dividend payment to the holders of the common stock, out of funds of the Company legally available for payment of dividends and subject to declaration by our Board of Directors. Holders of the preferred shares 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 to the holders of our preferred stock during ~~2018~~2019 and ~~2019.~~2020.

Neither the Series A-1 preferred stock nor Series B preferred stock is required to be converted into or exchanged for shares of our common stock or any other entity; however, at our sole discretion, we may convert the Series A-1 preferred stock into Series B preferred stock at any time on a 1-to-one basis. In 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-1 preferred stock and each share of Series B preferred stock being treated as though it were a share of our common 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

JonesTrading Sales Agreement

We entered into an Amended and Restated Capital on Demand^TMSales agreement dated June 26, 2020 with JonesTrading Institutional Services LLC ("JonesTrading") and D.A. Davidson & Co. ("D.A. Davidson"), under which we may conduct "at the market" ~~public offerings~~sales of our common stock. Under the sales agreement, JonesTrading and D.A. Davidson, acting as our agents, may offer our common stock in the market on a daily basis or otherwise as we request from time to time. We have no obligation to sell additional shares under the sales agreement, but we may do so from time to time. For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, we did not sell any shares of our common stock pursuant to the sales ~~agreement but have~~agreement. For the three months ended March 31, 2020, we received $2.8 million of proceeds that was included in Accounts receivable, net on our consolidated balance sheet at December 31, 2019 for the sale of an aggregate of 415,904 shares of our common stock under the prior iteration of the agreement that were executed in late December 2019. As of ~~June 30, 2020,~~March 31, 2021, we had $150.0 million available under our "at the market" sales program.

On April 1, 2020, tZERO issued 508,710 shares of tZERO common stock, representing approximately 0.5% of the issued and outstanding common stock of tZERO, to GSR Capital Ltd., a Cayman Islands exempted company ("GSR") in exchange for $5.0 million in consideration in full satisfaction of the Investment Agreement dated May 8, 2019. GSR's installment payments towards the Investment Agreement were included in Accrued liabilities on our consolidated balance sheet prior to the closing of the transaction.

10. STOCK-BASED AWARDS

~~13. STOCK-BASED AWARDS~~

We have equity incentive plans that provide for the grant to employees and board members of stock-based awards, including ~~stock options and~~ restricted stock. Employee accounting applies to awards granted by the Company ~~or subsidiary of the Company or subsidiary's shares only~~ to its own ~~employees, respectively.~~employees. Stock-based compensation expense is classified within the corresponding operating expense categories on our consolidated statements of operations as follows (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Cost of goods sold — retail $ 49
$ 54
$ 103
$ 101
Sales and marketing 309
533
697
974
Technology 447
1,670
1,362
2,897
General and administrative 1,660
2,914
3,571
5,184
Total stock-based compensation $ 2,465
$ 5,171
$ 5,733
$ 9,156

When an award is forfeited prior to the vesting date, we recognize an adjustment for the previously recognized expense in the period of the forfeiture.

Overstock restricted stock awards

The Overstock.com, Inc. Amended and Restated 2005 Equity Incentive Plan (the "Plan") provides for the grant of incentive stock options to employees and directors of the Company, ~~and non-qualified stock options to consultants,~~ as well as restricted stock units and other types of equity awards of the Company. These restricted stock awards generally vest over three years at 33.3% at the end of the first year, 33.3% at the end of the second year and ~~33.3%~~33.4% at the end of the third year, subject to the recipient's continuing service to us. In addition to our traditional equity awards, during the quarter ended March 31, 2019, we granted 502,765 restricted stock awards with a cumulative grant date fair value of $8.6 million which vested over a one-year period.

The cost of restricted stock units is determined using the fair value of our common stock on the date of the grant and compensation expense is either recognized on a straight-line basis over the vesting schedule or on an accelerated schedule when vesting of restricted stock awards exceeds a straight-line basis. The cumulative amount of compensation expense recognized at any point in time is at least equal to the portion of the grant date fair value of the award that is vested at that date.

The following table summarizes restricted stock award activity during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 (in thousands, except per share data):

Six months ended
June 30, 2020
Units Weighted
Average
Grant Date
Fair Value
Outstanding—beginning of year 1,051
$ 26.22
Granted at fair value 471
8.89
Vested (679 ) 23.83
Forfeited (101 ) 25.91
Outstanding—end of period 742
$ 17.45

~~Medici Ventures stock options~~


	Three months ended March 31, 2021
	Units	Weighted Average Grant Date Fair Value
Outstanding—beginning of year	639	$	17.98
Granted at fair value	297	87.92
Vested	(258)	25.57
Forfeited	(22)	28.90
Outstanding—end of period	656	$	46.32

The Medici Ventures, Inc. ("Medici Ventures") 2017 Stock Option Plan, as amended, provides for the grant of options to employees and directors of and consultants to Medici Ventures to acquire up to approximately 9% of the authorized shares of Medici Ventures' common stock. Medici Ventures authorized 1.5 million shares, 900,000 of which are issued and outstanding to Overstock, and 130,000 of which are subject to the 2017 Stock Option Plan. The remaining 470,000 are authorized but unissued. Options vested under this plan expire at the end of ten years. During the six months ended June 30, 2020, Medici Ventures granted 13,650 stock options with a cumulative grant date fair value of $282,000 which vest over a three-year period.

~~tZERO equity awards~~

The tZERO Group, Inc. 2017 Equity Incentive Plan, as amended, provides for grants of equity awards to employees and directors of and consultants to tZERO to acquire up to 5% of the authorized shares of tZERO's common stock. During the six months ended June 30, 2020, tZERO granted 60,000 stock option awards with a cumulative grant date fair value of $46,000. In June 2020, tZERO completed the restructuring of its outstanding equity awards through the amendment and cancellation of each of its outstanding stock option awards in favor of the issuance of restricted stock unit awards, with each participant under its plan receiving one restricted stock unit for each stock option canceled. In addition to the original service-based vesting condition (generally three years), the restricted stock unit awards include an added performance-based vesting condition that a liquidity event must occur in order for the restricted stock unit awards to vest. The exchange was accounted for as a Type II modification with an incremental fair value of $6.9 million for the modified awards which will be expensed for the fully vested portion of the grant once the performance-based vesting condition becomes probable and the remaining fair value of the grant will be expensed on a straight-line basis over the remaining vesting period. As such, no incremental compensation cost was recognized on the modification date. The original grant date fair value of the stock option awards exchanged for restricted stock unit awards will continue to be expensed on a straight-line basis over their remaining vesting period. During the six months ended June 30, 2020, tZERO granted 10,541,016 restricted stock awards, including 7,851,016 restricted stock unit awards related to the exchange of stock option unit awards for restricted stock awards. The incremental restricted stock unit awards granted that were not part of the exchange totaled 2,690,000 and had a cumulative grant date fair value of $2.6 million which will be expensed for the fully vested portion of the grant once the performance-based vesting condition becomes probable and the remaining fair value of the grant will be expensed on a straight-line basis over the remaining vesting period.

~~14.~~11. REVENUE AND CONTRACT LIABILITY

~~Revenue Disaggregation~~

~~Disaggregation of revenue by major product line is included in Segment Information in Note 17—Business Segments.~~

The following table provides information about unearned revenue from contracts with customers, including significant changes in unearned revenue balances during the periods presented (in thousands):


	Amount
Unearned revenue at December 31, 2019	$	41,116
Increase due to deferral of revenue at period end	66,070
Decrease due to beginning contract liabilities recognized as revenue	(35,021)
Unearned revenue at December 31, 2020	72,165
Increase due to deferral of revenue at period end	80,146
Decrease due to beginning contract liabilities recognized as revenue	(56,003)
Unearned revenue at March 31, 2021	$	96,308

Our total unearned revenue related to outstanding Club O Reward dollars was ~~$8.0~~$9.1 million and ~~$6.7~~$8.6 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Breakage income related to Club O Reward dollars and gift cards ~~are~~is recognized ~~as a component of Retail~~in Net revenue in our consolidated statements of operations. Breakage included in revenue was $1.4 million and $905,000 for the three months ended March 31, 2021 and 2020. The timing of revenue recognition of these reward dollars is driven by actual customer activities, such as redemptions and expirations.

~~Breakage included in revenue was $1.3 million and $923,000 for the three months ended June 30, 2020 and 2019 and $2.2 million and $2.0 million for the six months ended June 30, 2020 and 2019.~~

Sales returns allowance

The following table provides additions to and deductions from the sales returns allowance (in thousands):, which is included in our Accrued liabilities balance in our consolidated balance sheets:

Amount
Allowance for returns at December 31, 2018 $ 15,261
Additions to the allowance 117,040
Deductions from the allowance (121,194 )
Allowance for returns at December 31, 2019 11,107
Additions to the allowance 92,510
Deductions from the allowance (84,960 )
Allowance for returns at June 30, 2020 $ 18,657

~~15. OTHER INCOME (EXPENSE), NET~~

~~Other income (expense), net consisted of the following (in thousands):~~

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Gain on deconsolidation of net assets of Medici Land Governance, Inc. $ —
$ —
$ 10,741
$ —
Impairment of equity securities —
(1,256 ) —
(4,214 )
Gain/(loss) on equity securities and marketable securities (836 ) 220
(2,455 ) (1,376 )
Equity method losses (3,545 ) (2,033 ) (6,013 ) (3,058 )
Other 210
74
239
(619 )
Total other income (expense), net $ (4,171 ) $ (2,995 ) $ 2,512
$ (9,267 )

12. NET INCOME (LOSS) PER SHARE

Our Series A preferred stock, Series A-1 preferred stock, and Series B preferred stock (collectively, the "preferred shares") are considered participating securities, and as a result, net income (loss) per share is calculated using the two-class method. Under this method, we give effect to preferred dividends and then allocate remaining net income (loss) attributable to our stockholders to both common shares and participating securities (based on the percentages outstanding) in determining net income (loss) per common share.

Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common shares (after allocating between common shares and participating securities) by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing net income (loss) attributable to common shares (after allocating between common shares and participating securities) by the weighted average number of common and potential common shares outstanding during the period (after allocating total dilutive shares between our common shares outstanding and our preferred shares outstanding). Potential common shares, comprising incremental common shares issuable upon the exercise of stock options, warrants, and restricted stock awards are included in the calculation of diluted net income (loss) per common share to the extent such shares are dilutive. Net income (loss) attributable to common shares is adjusted for options and restricted stock awards issued by our subsidiaries when the effect of our subsidiary's diluted earnings per share is dilutive.

The following table sets forth the computation of basic and diluted net income (loss) per common share for the periods indicated (in thousands, except per share data):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Net income (loss) attributable to stockholders of Overstock.com, Inc. $ 36,356
$ (24,681 ) $ 20,023
$ (63,925 )
Less: Preferred stock TZROP repurchase loss —
—
—
(425 )
Less: Preferred stock dividends - declared and accumulated 179
19
198
38
Undistributed income (loss) 36,177
(24,700 ) 19,825
(63,538 )
Less: Undistributed income (loss) allocated to participating securities 2,039
(333 ) 687
(892 )
Net income (loss) attributable to common shares $ 34,138
$ (24,367 ) $ 19,138
$ (62,646 )
Net income (loss) per common share—basic:

Net income (loss) attributable to common shares—basic $ 0.85
$ (0.69 ) $ 0.48
$ (1.85 )
Weighted average common shares outstanding—basic 40,329
35,225
40,243
33,806
Effect of dilutive securities:

Stock options and restricted stock awards 261
—
197
—
Weighted average common shares outstanding—diluted 40,590
35,225
40,440
33,806
Net income (loss) attributable to common shares—diluted $ 0.84
$ (0.69 ) $ 0.47
$ (1.85 )

The following shares were excluded from the calculation of diluted shares outstanding as their effect would have been anti-dilutive (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Stock options and restricted stock units 168
904
451
967

~~17. BUSINESS SEGMENTS~~

Segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. We determined our segments based on how we manage our business. We allocate corporate support costs (administrative functions such as finance, human resources, and legal) to our operating segments based on their estimated usage and based on how we manage our business. Our Medici business includes two reportable segments, tZERO and the unconsolidated financial information for Medici Ventures ("MVI"). MVI was identified as a reportable segment during 2019. We have recast prior period segment information to conform with current year presentation. MVI consists of the Medici business not associated with tZERO. We use income (loss) before income taxes as the measure to determine our reportable segments. ~~Other consists~~As a result of ~~MLG, which we deconsolidated MLG's consolidated net assets~~the transactions discussed in Note 3—Discontinued Operations, our tZERO and ~~noncontrolling interest from our consolidated financial statements beginning on February 22, 2020,~~MVI reportable segments became a part of the ~~date that control ceased, and our unallocated~~Disposal Group. Additionally, all corporate support ~~costs.~~

costs (administrative functions such as finance, human resources, and legal) are now only allocated to our remaining reportable segment, Retail and are reported to our Chief Executive Officer (the chief operating decision maker) as one reportable segment. Our sole reportable segment, Retail, ~~segment~~ primarily consists of amounts earned through e-commerce product sales through our Website ~~excluding intercompany transactions eliminated in consolidation.~~

~~Our tZERO~~and the results of that segment ~~primarily consists~~are shown on our consolidated statements of ~~amounts earned through securities transactions through our broker-dealers and costs incurred to execute our tZERO business initiatives, excluding intercompany transactions eliminated in consolidation.~~

Our MVI segment primarily consists of costs incurred to create or foster a set of products and solutions that leverage blockchain technology to generate efficiencies and increase security and control, excluding intercompany transactions eliminated in consolidation.

~~We do not allocate assets between our segments for our internal management purposes, and~~operations as ~~such, they are not presented here. There were no significant inter-segment sales or transfers during the three and six months ended June 30, 2020~~continuing operations.

~~The following table summarizes information about reportable segments and a reconciliation to consolidated net income (loss) (in thousands):~~

Three months ended June 30,
Retail tZERO MVI Other Total
2020
Net revenue $ 766,956
$ 12,737
$ 2,851
$ —
$ 782,544
Cost of goods sold 589,044
10,769
2,849
—
602,662
Gross profit 177,912
1,968
2
—
179,882
Operating expenses 124,991
11,216
2,543
2,089
140,839
Interest and other income (expense), net (1) (117 ) (1,268 ) (2,760 ) —
(4,145 )
Income (loss) before income taxes $ 52,804
$ (10,516 ) $ (5,301 ) $ (2,089 ) 34,898
Provision for income taxes 517
Net income (2) $ 34,381

2019
Net revenue $ 367,475
$ 5,551
$ 683
$ —
$ 373,709
Cost of goods sold 294,984
4,143
683
—
299,810
Gross profit 72,491
1,408
—
—
73,899
Operating expenses 81,596
11,743
2,903
3,435
99,677
Interest and other income (expense), net (1) 40
340
(2,847 ) (3 ) (2,470 )
Loss before income taxes $ (9,065 ) $ (9,995 ) $ (5,750 ) $ (3,438 ) (28,248 )
Benefit for income taxes (622 )
Net loss (2) $ (27,626 )

Six months ended June 30,
Retail tZERO MVI Other Total
2020
Net revenue $ 1,106,554
$ 22,976
$ 4,425
$ 162
$ 1,134,117
Cost of goods sold 854,436
19,536
4,423
—
878,395
Gross profit 252,118
3,440
2
162
255,722
Operating expenses 207,826
23,474
5,451
6,072
242,823
Interest and other income (expense), net (1) (416 ) (3,050 ) 6,073
3
2,610
Income (loss) before income taxes $ 43,876
$ (23,084 ) $ 624
$ (5,907 ) 15,509
Provision for income taxes 693
Net income (2) $ 14,816

2019
Net revenue $ 730,100
$ 10,047
$ 1,291
$ —
$ 741,438
Cost of goods sold 585,624
7,500
1,291
—
594,415
Gross profit 144,476
2,547
—
—
147,023
Operating expenses 166,929
27,297
7,157
7,436
208,819
Interest and other income (expense), net (1) 175
(623 ) (8,011 ) (7 ) (8,466 )
Loss before income taxes $ (22,278 ) $ (25,373 ) $ (15,168 ) $ (7,443 ) (70,262 )
Provision for income taxes 256
Net loss (2) $ (70,518 )

— Excludes intercompany transactions eliminated in consolidation, which consist primarily of service fees and interest. The net amounts of these intercompany transactions were $1.2 million and $491,000 for the three months ended June 30, 2020 and 2019, and $2.3 million and $907,000 for the six months ended June 30, 2020 and 2019.

~~— Net income (loss) presented for segment reporting purposes is before any adjustments attributable to noncontrolling interests.~~

Upon deconsolidation of MLG, we recognized our retained equity interest in MLG as an equity method security held by our MVI segment which resulted in a $10.7 million gain included in Interest and other income (expense), net in the table above for our MVI segment for the six months ended June 30, 2020. See Note 2—Summary of Significant Accounting Policies, ~~Principles of consolidation, for additional details on the gain recognized.~~

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ substantially all of our revenues were attributable to customers in the United States. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, substantially all our property and equipment were located in the United States.

~~18. BROKER DEALERS~~

~~tZERO wholly owns 2 broker-dealers, SpeedRoute and tZERO ATS, LLC, which were acquired in January 2016.~~

SpeedRoute is an electronic, agency-only, 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 alternate trading systems. All of SpeedRoute's customers are registered broker-dealers. SpeedRoute does not hold, own, or sell securities.

tZERO ATS, LLC is a FINRA-registered broker-dealer that owns and operates the tZERO ATS and is a wholly-owned subsidiary of tZERO. The tZERO ATS is a closed trading system available only to broker-dealer subscribers. The tZERO ATS does not accept orders from non-broker-dealers, nor does it hold, own or sell securities. The tZERO ATS currently supports the trading of two digital securities, the Series A-1 preferred stock and TZROP and, in the future, is expected to support digital securities from other issuers.

SpeedRoute and tZERO ATS, LLC are subject to the SEC's Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. The following table summarizes the net capital ratio (in thousands, apart from the net capital ratio):

June 30,
2020 December 31,
2019
SpeedRoute
Net capital $ 1,535
$ 850
Required net capital 364
145
Net capital, in excess of required $ 1,171
$ 705
Net capital ratio 3.55
2.56

tZERO ATS, LLC
Net capital $ 139
$ 110
Required net capital 5
5
Net capital, in excess of required $ 134
$ 105
Net capital ratio 0.14
0.27

~~SpeedRoute and tZERO ATS, LLC Securities did not have any securities owned or securities sold, not yet purchased at June 30, 2020 and December 31, 2019, respectively.~~

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information that we believe to be relevant to an understanding of our consolidated financial condition and results of operations. The statements in this section regarding industry outlook, our expectations regarding the performance of our business and any other non-historical statements are forward-looking statements. Our actual results may differ materially from those contained in or implied by any forward-looking statements contained herein. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Special Cautionary Note Regarding Forward Looking Statements" and in Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. You should read the following discussion together with our consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part II, Item 1A, "Risk Factors," and our consolidated financial statements and related notes included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part I, Item 1A, "Risk Factors," and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

We are an online retailer and ~~advocate of blockchain technology.~~technology company. As used herein, "Overstock", "Overstock.com", "O.co", "the Company", "we," "our" and similar terms include Overstock.com, Inc. and our majority-owned subsidiaries, unless the context indicates otherwise.

Our online retail business seeks to provide goods to furnish and accessorize ~~"dream homes"~~"Dream Homes for All", particularly for our target customers—consumers who seek smart value on quality, stylish merchandise at ~~bargain prices.~~competitive prices, and who want an easy shopping experience. We believe that the furniture and home ~~goods~~furnishings market, which is highly fragmented and has traditionally been served by brick and mortar stores, will continue transitioning to online sales, particularly as Millennial consumers (which we define as those ~~aged 21-37)~~born between 1981 - 1996), who are generally comfortable shopping online, start families and move into new homes. As a result of the COVID-19 pandemic and resulting state and local government mandates of home confinement and closure of many brick-and-mortar stores, we have seen strong trends to online sales as consumers migrate to online shopping. We regularly ~~change~~update our ~~home furnishings~~ product assortment to meet the evolving preferences of our customers and current trends. Our products include ~~among others,~~ furniture, ~~home~~ décor, ~~including~~area rugs, bedding and bath, home improvement, outdoor, and kitchen ~~items.~~and dining items, among others. We sell our products and services primarily through our Internet websites

located at www.overstock.com, www.o.co, www.overstock.ca, and ~~www.o.co~~www.overstockgovernment.com (referred to collectively as the "Website"). Nearly all our retail sales through our Website were from transactions in which we fulfilled orders through our network of manufacturers, distributors and other suppliers ("partners") selling on our Website. Our use of the term "partner" does not mean that we have formed any legal partnerships with any of our retail partners. We provide our partners with access to a large customer base and ~~convenient~~a proprietary technology platform and services for order fulfillment, customer service, returns handling, and other services. Our supply chain allows us to ship directly to our customers from our suppliers or from our warehouses. ~~Our retail sales also include sales of our own inventory shipped from our warehouses, including some customer returns of partner products.~~

Strategies for our ~~Retail~~ Business

Our ~~Retail~~ business initiatives enable our long-term focus on our three brand pillars, "Product Findability," "Smart Value," and "Easy Delivery and Support." ~~Initiatives~~Current initiatives for the ~~Retail~~ business include:

~~Improve Mobile Experience~~ - As more website visitors move to mobile, we are focusing on ensuring our mobile experience is fast, frictionless, and meets the unique needs of the mobile shopping journey. We believe an improved mobile experience improves product findability, conversion, search engine rankings, and organic traffic.

~~Overhaul Discounting and Pricing Experience~~ - "Smart Value" is the central brand pillar of our value proposition. We believe clarifying our pricing and discounting experience allows customers to more confidently purchase at Overstock. Savvy shoppers expect a "smart deal," including saving through coupons, site sales, Club O rewards and financing. We have historically offered free shipping (over $45) but during the COVID-19 pandemic, in order to serve our customers during this challenging time, we are offering free shipping on everything to the continental U.S. We believe our net promoter score (NPS), repeat purchase rates and conversion will improve as we better optimize the mix of offers and clarify the pricing and discounting experience.

~~Real Time Performance and SKU Profitability~~ - We are improving our ability to address site, assortment and pricing issues more quickly by enhancing our real-time visibility into site, category, and marketing channel performance. We believe this initiative allows us to improve margin by more quickly resolving site issues for an improved customer experience.

~~Expand Partner Sponsored Marketing~~ - We are expanding the "Overstock Sponsored Product" program, a platform for our drop ship partners to promote their products to shoppers through a cost-per-click auction platform. In addition, we have implemented a marketing allowance program across our partner network. This marketing allowance program allows us to optimize the marketing promotion type, mix and on-sale assortment to better meet the needs of our target customer segments and adapt to seasonal relevance.

~~Our Medici Ventures Business~~•Improve Product Findability – Directly supporting our "Product Findability" pillar, by improving customer search and navigation by refining our taxonomy and attribute infrastructure with the goal of enhanced search relevancy and recommendations.

~~Our Medici~~•Grow Canada Market Share – Expanding geographical engagement to grow our Canadian customer base by providing a wholesale change in our Canadian "Smart Value" and "Easy Delivery and Support" customer shopping experience.

•Grow Government Market Share – Improving our Government website with more competitive market features and products that offer an intuitive procurement experience, and provide the flexibility to expand the platform to additional government customers.

•Improve Enterprise Platform – Improving our data strategy to connect high-quality, intuitive data with our business ~~initiatives include our wholly-owned subsidiary,~~users to enable faster insights. Additionally, embracing public cloud in order to promote greater resilience for the business in the event of unforeseen circumstances.

On April 23, 2021, we entered into a Limited Partnership Agreement (the "Limited Partnership Agreement") with Medici Ventures, Inc. ("Medici Ventures"), ~~which conducts~~Pelion MV GP, L.L.C. ("Pelion"), and Pelion, Inc., in connection with the ~~majority~~closing of the Transaction Agreement dated January 25, 2021 between the Company, Medici Ventures, Pelion, and Pelion, Inc. In connection with the execution of the Limited Partnership Agreement, Pelion acquired control over Medici Ventures and its ~~business through its majority-owned subsidiary~~blockchain assets. As a result of this transaction, we performed an assessment of control under the variable interest entity ("VIE") model and determined that upon closing of the transaction, we held a variable interest in both Medici Ventures and tZERO Group, Inc. ("tZERO")~~. Medici Ventures' strategy is~~ (collectively, the "Disposal Group") which meet the definition of variable interest entities; however, we are not the primary beneficiary of either entity for purposes of consolidation. The Disposal Group met the criteria to ~~create or foster a set~~be reported as held for sale and discontinued operations as of March 31, 2021. Therefore, the Disposal Group's assets and liabilities are reported as held for sale and the related operating results of the Disposal Group are reported as discontinued operations for all periods presented herein.

The entities that make up the Disposal Group are focused on developing and advancing blockchain businesses, products and ~~solutions that leverage blockchain~~services, and related technology, to generate efficiencies and increase security and control in six areas: 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 memberincluding financial applications. Many of the ~~network. Medici Ventures' team~~entities owned by the Disposal Group are in the early stage of ~~software engineers, developers~~development, do not yet have a stable customer base or backlog orders, and ~~other technologists work in blockchain~~have not yet generated any meaningful revenue. The businesses, products, and services that are being pursued or contemplated by the Disposal Group will require substantial additional funding, initially for technology development and deployment and enterprise level software development and deployment. Medici Ventures provides the services of some of its software engineers, developers, or other technologists to other 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 areas mentioned above. Medici Ventures takes an active interest in and holds seats on the boards of some of these companies. All the companies in which Medici Ventures holds strategic equity interests are startup businesses, businesses in the development stage, or businesses with a short operating history.

~~Strategies for our Medici Business~~

Medici Ventures' primary business focus continues to be accelerating adoption of blockchain technology to democratize capital, eliminate middlemen, and re-humanize commerce. Medici Ventures accomplishes this by doing the following:

~~Enable existing keiretsu companies to extend runway to profitability~~ ~~- The companies in Medici Ventures' keiretsu continue to release products into production. Medici Ventures supports its~~ ~~keiretsu~~ companies by offering a variety of services including development, design, public relations services, and assistance in raising capital from third parties to extend the companies' runway to profitability.

~~Educate the public and policy makers on blockchain technologies~~ - Medici Ventures works to increase general knowledge of blockchain technology, use cases, and corresponding value through speaking opportunities, article publication, policy maker outreach, and other public relations work.

~~Opportunistically approach future partnerships~~ - Medici Ventures continues to review and seek out strategic opportunities to take ownership interests in seed-stage and startup companies that effectively use blockchain technology. This includes looking for companies that can effectively use Medici Ventures' enterprise-level technology development and design talent.

tZERO is a financial technology company pursuing initiatives to develop and commercialize financial applications of blockchain technologies and democratize access to private capital markets. tZERO's primary focus is on the development and adoption of digital securities. tZERO focuses on developing the supply side of this marketplace by creating, marketing and licensing a suite of technologies (the "tZERO Technology Stack") that enables issuers to issue, and relevant regulated market participants to support the issuance, trading, clearance and settlement of, digital securities. Throughout this report we refer to "digital securities" which are conventional uncertificated securities where the issuer arranges for a digital "courtesy carbon copy" of the transfer agent's share registry to be viewable on the blockchain and may also be referred to as "digitally-enhanced securities".

~~tZERO also supports the demand for and adoption of such assets by developing the tZERO Technology Stack for use by regulated venues on which those digital securities can trade,~~regulatory compliance, as well as ~~investing~~for working capital, marketing and sales, and other substantial costs of developing new products and businesses in ~~subsidiaries and joint venture~~emerging areas of technology. We expect the entities ~~that own and operate such trading venues. These investments include~~owned by the ~~alternative trading system (the "tZERO ATS") run by its wholly-owned subsidiary, tZERO ATS, LLC, which provides a licensed venue for matching buy and sell orders~~Disposal Group will continue to its broker-dealer subscribers, including for the trading of digital securities, and its joint venture with BOX Digital Markets LLC ("BOX Digital"), intended to develop a U.S. national securities exchange facility with regulatory approvals enabling it to support trading in a type of digital security called a security token. Another wholly-owned subsidiary of tZERO, tZERO Markets, LLC ("tZERO Markets"), is in the process of seeking regulatory approvals from FINRA and the SEC and, subject to such approval, intends to offer a website and mobile application that allows retail customers to conduct self-directed trading of conventional and digital securities, along with other activities.incur significant losses as these businesses develop.

In addition, tZERO also maintains certain non-blockchain businesses, including the broker-dealer activities of its subsidiaries, tZERO ATS, LLC and SpeedRoute, LLC ("SpeedRoute"). tZERO's remaining businesses include tZERO Crypto, Inc., a cryptocurrency wallet and exchange services business, and Verify Investor, LLC, an accredited investor verification company.

~~Strategies for our tZERO Business~~

tZERO is a financial technology company pursuing initiatives to develop and commercialize the financial applications of blockchain technologies and democratize access to private capital markets. tZERO's primary initiatives currently consist of the following:

~~Promote trading~~ - tZERO ATS is focused on quoting for trading high-quality digital securities. tZERO ATS, LLC is working with prospective issuers spanning various industries, including real estate, technology, health care and sports, as they seek to structure and issue new digital securities using the tZERO Technology Stack, as well as to provide liquidity to existing investors. Additionally, tZERO is enhancing the tZERO Technology Stack to support third party issuance protocols in order to support securities which have been digitally enabled by other technology companies and is cultivating relationships with established investment banks to help prospective issuers raise capital, prior to tokenizing and trading on the tZERO ATS.

~~Enhance liquidity~~ - tZERO ATS is focused on enhancing liquidity. To achieve this, tZERO ATS, LLC is in discussions with several broker-dealers interested in subscribing to the tZERO ATS, which would enable their customers to trade digital securities traded on the ATS. tZERO also continues to develop new trading venues for digital securities such as BSTX as it seeks regulatory approval for a U.S. national exchange facility, as well as working to launch tZERO Markets (subject to regulatory approval) to support further investors who wish to access such trading venues.

~~Create a world class trading experience~~ - tZERO continues to seek opportunities to enhance the tZERO Technology Stack and improve investors' trading experience for all types of financial products. tZERO is working to allow digital securities to be traded via a mobile application. It is also developing further enhancements of tZERO Crypto's separate wallet and exchange services, such as ensuring it is accessible on a web platform. tZERO believes a world-class trading experience will be key to investors' adoption of digital securities and tZERO's products and services.

~~Advocacy~~ - tZERO operates businesses which are subject to complex and often uncertain legal environments and believes active engagement with regulatory authorities is necessary to realize the full potential of its business. tZERO continues, in partnership with other industry participants, to advocate regulatory reform with legislators and regulators in order to spur market innovation through the adoption of distributed ledger technology.

~~For additional information regarding the description of our businesses, see Item 7 of Part II, "Management's~~Unless otherwise specified, disclosures throughout Management's Discussion and Analysis of Financial ~~Condition and~~Conditions, Results of ~~Operations"~~Operations, and Liquidity and Capital Resources, reflect continuing operations only. See Note 3—Discontinued Operations in the Notes to Unaudited Consolidated Financial Statements included in Item 1, Part I, Financial Statements (Unaudited) of ~~our 2019 Annual~~this Quarterly Report on Form ~~10-K.~~10-Q for further information.

This executive commentary is intended to provide investors with a view of our business through the eyes of our management. As an executive commentary, it necessarily focuses on selected aspects of our business. This executive commentary is intended as a supplement to, but not a substitute for, the more detailed discussion of our business included elsewhere herein. Investors are cautioned to read our entire "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as our interim and audited financial statements, and the discussion of our business and risk factors and other information included elsewhere or incorporated in this report. This executive commentary includes forward-looking statements, and investors are cautioned to read "Special Cautionary Note Regarding Forward-Looking Statements."

Revenue increased ~~109%~~94.3% in ~~Q2 2020~~Q1 2021 compared to the same period in ~~2019.~~2020. This increase was primarily due to increased retail product sales resulting from a ~~120%~~66% increase in customer ~~orders.~~orders and a 17% increase in average order size driven by a continued product mix shift into core home furnishings categories. This increased ~~customer~~order activity was largely driven by new customer growth and strong repeat customer behavior, both influenced by our marketing efforts and a consumer ~~shift~~migration toward online ~~shopping related~~shopping. As noted below, this customer migration was significantly accelerated due to the COVID-19 ~~pandemic.~~pandemic, which caused our retail product sales to accelerate beginning in the second half of March 2020 and continuing through March 2021. While we have observed this recent acceleration of new customer acquisition and demand for our products and resulting sales, we cannot estimate the impact that the COVID-19 pandemic or its subsiding will have on our business in the future due to the unpredictable nature of the ultimate scope and duration of the pandemic.

Gross profit increased ~~143%~~106.9% in ~~Q2 2020~~Q1 2021 compared to the same period in ~~2019~~2020 primarily due to an increase in retail product sales and an increase in gross margin. Gross margin increased to ~~23.0% in Q2 2020,~~23.3% for the three months ended March 31, 2021, compared to ~~19.8%~~21.9% for the same period in ~~Q2 2019,~~2020, primarily due to ~~a benefit to cost of goods sold from~~continued mix into our ~~partner marketing allowance program, which was fully implemented at the beginning of the quarter~~core home furnishing categories and ~~allows us to advertise more strategically with our partners. Gross margin also benefited from~~ reduced promotional discounting ~~an increase in fees charged~~as we balanced spend to ~~partners due to unmet contractual service levels, and lower~~support new customer ~~service~~acquisition efforts, partially offset by elevated carrier costs due to ~~slower growth in our staffing relative to the increase in sales and customer contacts.~~COVID-19 surcharges.

Sales and marketing expenses as a percentage of revenue increased from ~~9.2%~~10.7% in ~~Q2 2019~~Q1 2020 to ~~10.2%~~11.1% in ~~Q2 2020~~Q1 2021, primarily due to increased spending ~~in text ads, product~~on paid listing ~~ads,~~advertisements and ~~display advertising channels. These changes in marketing spending supported~~keywords to support our customer acquisition ~~efforts, resulting~~strategy, partially offset by gained leverage in ~~a 205% increase in new customers compared to the second quarter of 2019.~~staff-related costs.

Technology expenses totaled ~~$33.7~~$30.5 million for the three months ended ~~June 30, 2020,~~March 31, 2021, a ~~$526,000~~$3.2 million increase compared to the three months ended ~~June 30, 2019.~~March 31, 2020, primarily due to staff-related costs to support strategic initiatives and increased cloud adoption.

General and administrative expenses decreased ~~$4.6~~$1.0 million for the three months ended ~~June 30, 2020~~March 31, 2021 compared to the three months ended ~~June 30, 2019,~~March 31, 2020, primarily ~~due to an $8.6~~driven by a $2.0 million ~~reversal of~~reduction in consulting expenses and a ~~legal settlement accrual due to a ruling~~reduction in ~~our favor in our gift card escheatment case in Delaware,~~staff-related costs, partially offset by a ~~$3.8~~$2.5 million ~~increase~~legal settlement realized in ~~staff-related costs including accrued bonus.~~2020.

Our consolidated cash and cash equivalents balance increased from ~~$112.3~~$495.4 million as of December 31, ~~2019,~~2020, to ~~$318.6~~$534.8 million as of June 30, 2020, an increase of $206.3 million, primarily as the result of cash flows from operating activities of $170.4 million, $47.5 million in proceeds from long-term debt, $6.3 million in proceeds from the sale of marketable securities, and $2.8 million in proceeds received in January from the sale of common stock executed in late December 2019 under our "at the market" sales agreement with JonesTrading, net of offering costs, partially offset by cash outflows of $4.1 million from the deconsolidation of MLG's net assets and $9.4 million in expenditures for property and equipment.March 31, 2021.

~~Additional commentary related to Medici Ventures~~

For the three months ended June 30, 2020, our loss before income taxes in our Medici Ventures business, excluding our loss in our tZERO business, was $5.3 million, and we expect to continue to incur significant losses in our Medici Ventures business during 2020 as Medici Ventures' business model of providing technical assistance to companies in which Medici Ventures owns an interest has not yet generated material revenues.

~~Additional commentary related to tZERO~~

For the three months ended June 30, 2020, our loss before income taxes in our tZERO business, excluding our loss in the non-tZERO portion of our Medici business, was $10.5 million, and we expect to continue to incur significant losses in our tZERO business during 2020 as tZERO does not yet have a stable customer base or backlog orders and has not yet generated any meaningful revenue from any commercially available applications of its blockchain initiatives.

Overstock has ~~responded effectively~~continued to respond to the challenges and opportunities created by the COVID-19 pandemic. ~~In our Retail business, customer demand increased significantly in the second quarter, particularly in our key home furnishings categories.~~ We have seen a substantial year-over-year increase in our website traffic, ~~and~~ number of new customers, and customer demand, particularly in our ~~Retail gross sales grew more than 100% year over year in Q2.~~key home furnishings categories. Our online-only platform and partner network with thousands of fulfillment centers ~~has~~have enabled us to meet this increase in ~~demand without significant operational disruptions.~~demand. Our three warehouses have remained operational based on our sustained implementation of sound safety measures, including staggered shifts and social distancing. We ~~also are hiring~~have hired in key areas throughout the Company to support our current and expected growth. ~~We have faced~~There are continued challenges ~~from~~created by the ~~sharply~~ increased volume throughout ~~our customer service channels~~the supply chain in factory production capacity, inbound freight delays, as well as carrier delivery constraints and ~~capacity issues~~fulfillment performance from ~~shipping carriers and~~ some suppliers, including out-of-stock positions on some of our top performing products. We also have faced challenges at tZERO and its subsidiaries, as market volatility has delayed capital raises by potential issuers. Most of our Medici Ventures blockchain companies have seen little disruption, and several are working on solutions to problems arising from the global pandemic.suppliers. We have evaluated and implemented a phased re-entry plan for our ~~offices while~~offices; most of our corporate employees continue to work from home without incident. We cannot predict how the COVID-19 pandemic or the ongoing development and rollout of vaccinations will unfold in the coming months. Nevertheless, the challenges arising from the pandemic have not adversely affected our liquidity, revenues, or capacity to service our debt, nor have these conditions ~~forced~~required us to reduce our capital expenditures.

The following table reflects our net ~~revenues~~revenue, cost of goods sold, and gross profit for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):

The ~~109%~~94.3% increase in ~~total~~ net revenue for the three months ended ~~June 30, 2020,~~March 31, 2021, as compared to the same period in ~~2019,~~2020, was primarily due to increased retail product sales resulting from a ~~120%~~66% increase in customer ~~orders.~~orders and a 17% increase in average order size driven by a continued product mix shift into core home furnishings categories. This increased ~~customer~~order activity was largely driven by new customer growth and strong repeat customer behavior, both influenced by our marketing efforts and a consumer ~~shift~~migration toward online ~~shopping related to the COVID-19 pandemic.~~shopping. While we have observed this recent acceleration of new customer acquisition and demand for our products and resulting sales, we cannot estimate the impact that the COVID-19 pandemic or its subsiding will have on our business in the future due to the unpredictable nature of the ultimate scope and duration of the pandemic.

The 53% increase in total net revenue for the six months ended June 30, 2020, as compared to the same period in 2019, was primarily due to increased retail product sales that resulted from a 58% increase in customer orders, largely due to a surge in consumer online shopping in response to COVID-19.

~~The increase in our Other net revenue for the three and six months ended June 30, 2020 as compared to the same period in 2019 was primarily due to an increase in SpeedRoute trading volume.~~

International net revenues were less than 3%2% of total net revenues for each of the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020.

Change in estimate of average transit times (days)

Our ~~retail~~ revenue related to merchandise sales is recognized upon delivery to our customers. As we ship high volumes of packages through multiple carriers, it is not practical for us to track the actual delivery date of each shipment. Therefore, we use estimates to determine which shipments are delivered and, therefore, recognized as revenue at the end of the period. Our delivery date estimates are based on average shipping transit times. We review and update our estimates on a quarterly basis based on our actual transit time experience. However, actual shipping times may differ from our estimates, which can be further impacted by uncertainty, volatility, and any disruption to our carriers caused by the COVID-19 pandemic.

The following table shows the effect that hypothetical changes in the estimate of average shipping transit times would have had on the reported amount of revenue and income before income taxes for the three months ended ~~June 30, 2020~~March 31, 2021 (in thousands):

Income Before Income Taxes

Our overall gross margins fluctuate based on changes in supplier cost ~~and /~~ and/or sales price, including competitive pricing; inventory management decisions; sales coupons and promotions; product mix of sales; and operational and fulfillment costs.

~~The following table reflects our net revenues, cost of goods sold and gross profit for the three and six months ended June 30, 2020 and 2019 (in thousands):~~

Three months ended
June 30, Six months ended
June 30,
2020 2019 $ Change % Change 2020 2019 $ Change % Change
Revenue, net

Retail $ 766,956
$ 367,475
$ 399,481
108.7 % $ 1,106,554
$ 730,100
$ 376,454
51.6 %
Other 15,588
6,234
9,354
150.0 % 27,563
11,338
16,225
143.1 %
Total net revenue 782,544

373,709
408,835
109.4 % 1,134,117
741,438
392,679
53.0 %
Cost of goods sold

Retail 589,044
294,984
294,060
99.7 % 854,436
585,624
268,812
45.9 %
Other 13,618
4,826
8,792
182.2 % 23,959
8,791
15,168
172.5 %
Total cost of goods sold 602,662
299,810
302,852
101.0 % 878,395
594,415
283,980
47.8 %
Gross Profit

Retail 177,912
72,491
105,421
145.4 % 252,118
144,476
107,642
74.5 %
Other 1,970
1,408
562
39.9 % 3,604
2,547
1,057
41.5 %
Total gross profit $ 179,882
$ 73,899
$ 105,983
143.4 % $ 255,722
$ 147,023
$ 108,699
73.9 %

~~Gross margins for the past six quarterly periods and fiscal year ending 2019 were:~~

Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 Q1 2020 Q2 2020
Retail 19.9 % 19.7 % 20.0 % 20.7 % 20.1 % 21.9 % 23.2 %
Other 22.3 % 22.6 % 20.6 % 19.1 % 21.0 % 13.6 % 12.6 %
Combined 19.9 % 19.8 % 20.0 % 20.6 % 20.1 % 21.6 % 23.0 %

Gross profit for the three months ended June 30, 2020 increased 143% compared to the same period in 2019, primarily due to an increase in retail product sales and an increase in gross margin. Gross margin increased to 23.0% for the three months ended June 30, 2020, compared to 19.8% for the same period in 2019. This increase in gross margin was primarily due to a benefit to cost of goods sold from our partner marketing allowance program, which was fully implemented at the beginning of the quarter

and allows us to advertise more strategically with our partners. Gross margin also benefited from reduced promotional discounting, an increase in fees charged to partners due to unmet contractual service levels, and lower customer service costs due to slower growth in our staffing relative to the increase in sales.

The 74% increase in gross profit for the six months ended June 30, 2020, as compared to the same period in 2019, was primarily due to an increase in retail product sales and an increase in gross margin. Gross margin increased to 22.5% for the six months ended June 30, 2020, compared to 19.8% for the same period in 2019. The increase in gross margin was primarily due to a benefit to cost of goods sold from our partner marketing allowance program, which was fully implemented at the beginning of the second quarter, and lower promotional discounting. In addition, we had a decrease in customer service costs and an increase in volume through our Overstock Sponsored Product platform.

The decrease in our Other gross margin for the three and six months ended June 30, 2020 as compared to the same period in 2019 was primarily due to an increase in SpeedRoute trading volume for transactions with lower margins.

Fulfillment costs include all warehousing costs, including fixed overhead and variable handling costs (excluding packaging costs), as well as merchant processing fees associated with customer payments made by credit ~~card~~cards and other payment methods and other variable fees, and customer service costs, all of which we include as costs in calculating gross margin. We believe that some companies in our industry, including some of our competitors, account for fulfillment costs within operating expenses, and therefore exclude fulfillment costs from gross margin. As a result, our gross margin may not be directly comparable to others in our industry.

The following table has been included to provide investors additional information regarding our classification of fulfillment costs, gross profit and margin, thus enabling investors to better compare our gross margin with others in our industry (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
Total revenue, net $ 782,544
100% $ 373,709
100% $ 1,134,117
100% $ 741,438
100%
Cost of goods sold

Product costs and other cost of goods sold 575,783
74% 283,502
76% 835,729
74% 560,719
76%
Fulfillment and related costs 26,879
3% 16,308
4% 42,666
4% 33,696
5%
Total cost of goods sold 602,662
77% 299,810
80% 878,395
77% 594,415
80%
Gross profit $ 179,882
23% $ 73,899
20% $ 255,722
23% $ 147,023
20%

Fulfillment costs as a percentage of sales may vary due to several factors, such as our ability to manage costs at our warehouses, significant changes in the number of units received and fulfilled, the extent to which we use third-party fulfillment services and warehouses, and our ability to effectively manage customer service costs and ~~credit card~~merchant fees. Fulfillment and related costs decreased slightly as a percentage of revenue during the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 as compared to the same period in ~~2019.~~2020.

~~See "Gross profit" above~~Gross margins for ~~additional discussion.~~the past five quarterly periods and fiscal year ending 2020 were:

Gross profit for the three months ended March 31, 2021 increased 106.9% compared to the same period in 2020, primarily due to an increase in retail product sales and an increase in gross margin. Retail gross margin increased to 23.3% for the three months ended March 31, 2021, compared to 21.9% for the same period in 2020, primarily due to continued mix into our core home furnishing categories and reduced promotional discounting as we balanced spend to support new customer acquisition efforts, partially offset by elevated carrier costs due to COVID-19 surcharges.

Sales and marketing expenses

We use a variety of methods to target our consumer audience, including online campaigns, such as advertising through text ads, product listing ads, display ads, native ads, affiliate marketing programs, e-mail, direct mail, video ads, and social media campaigns. We also do brand advertising through television, radio, print ads, and event sponsorships.

Costs associated with our discounted shipping and other promotions, such as coupons, are not included in sales and marketing expense. Rather, they are accounted for as a reduction in revenue as they reduce the amount of consideration we

expect to receive in exchange for goods or services and therefore affect net revenues and gross margin. We consider discounted shipping and other promotions, such as our ~~policies~~policy for free shipping on orders, ~~(historically we have offered free shipping on orders over $45 and currently offer free shipping on everything to the continental U.S. during the COVID-19 pandemic),~~ as an effective marketing ~~tool, and intend to continue to offer them as we deem appropriate as part~~tool.

The following table reflects our sales and marketing expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):

The 9540 basis point increase in sales and marketing expenses as a percent of net revenues for the three months ended ~~June 30, 2020,~~March 31, 2021, as compared to the same period in ~~2019,~~2020, was primarily due to increased spending ~~in text ads, product~~on paid listing ~~ads,~~advertisements and ~~display advertising channels. These changes in marketing spending supported~~keywords to support our customer acquisition ~~efforts, resulting~~strategy, partially offset by gained leverage in ~~a 205% increase in new customers compared to the second quarter of 2019.~~staff-related costs.

The 110 basis point increase in sales and marketing expenses for the six months ended June 30, 2020, as compared to the same period in 2019, was primarily due to an increase in spending in text ads, product listing ads, and display advertising channels.

We seek to deploy our capital resources efficiently in technology, including web services, customer support solutions, website search, expansion of new and existing product categories, and in technology to enhance the customer experience, including using machine learning, improve our process efficiency, modernize and expand our systems, and support and expand our logistics infrastructure. We expect to continue to incur technology expenses to support these initiatives and these expenditures may continue to be material.

The frequency and variety of cyberattacks on our Website, our corporate systems, and on third parties we use to support our technology continues to increase. The impact of such attacks, their costs, and the costs we incur to protect ourselves against future attacks have not been ~~material.~~material to date. However, we consider the risk introduced by cyberattacks to be serious and will continue to incur costs related to efforts to protect ourselves against them.

The following table reflects our technology expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 $ Change % Change 2020 2019 $ Change % Change
Technology expenses $ 33,678
$ 33,153
$ 525
1.6 % $ 66,474
$ 68,586
$ (2,112 ) (3.1 )%
Technology expenses as a percent of net revenues 4.3 % 8.9 %

5.9 % 9.3 %

~~Technology costs increased 2% or $526,000~~The $3.2 million increase in technology expenses for the three months ended ~~June 30, 2020,~~March 31, 2021, as compared to the same period in ~~2019.~~2020, was primarily due to staff-related costs to support strategic initiatives and increased cloud adoption.

~~Technology costs decreased 3% or $2.1 million for the six months ended June 30, 2020, as compared to the same period in 2019.~~

General and administrative expenses

The following table reflects our general and administrative expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):

Three months ended
June 30, Six months ended
June 30,
2020 2019 $ Change % Change 2020 2019 $ Change % Change
General and administrative expenses $ 27,371
$ 31,964
$ (4,593 ) (14.4 )% $ 59,797
$ 72,196
$ (12,399 ) (17.2 )%
General and administrative expenses as a percent of net revenues 3.5 % 8.6 %

5.3 % 9.7 %

The ~~$4.6~~$1.0 million decrease in general ~~and~~& administrative ~~expenses~~expense for the three months ended ~~June 30, 2020,~~March 31, 2021, as compared to the same period in ~~2019,~~2020, was primarily ~~due to an $8.6 million reversal of a legal settlement accrual due to a ruling in our favor in our gift card escheatment case in Delaware, partially offset~~driven by a ~~$3.8~~$2.0 million ~~increase in staff-related costs including accrued bonus.~~

The $12.4 million decrease in general and administrative expenses for the six months ended June 30, 2020, as compared to the same period in 2019, was primarily due to an $8.6 million reversal of a legal settlement accrual, a $3.3 million decreasereduction in consulting expenses and a ~~$3.3 million savings~~reduction in ~~discretionary spending due to adjustments related to the COVID-19 pandemic,~~staff-related costs, partially offset by a ~~$1.9 million increase in staff-related costs.~~

~~Other income (expense), net~~

Other income (expense), net for the three months ended June 30, 2020 was $(4.2) million as compared to $(3.0) million for the three months ended June 30, 2019. The $1.2 million increase in other income (expense), net for the three months ended June 30, 2020, as compared to the same period in 2019, was primarily due to a $1.4 million increase in non-cash losses on equity holdings and other assets.

~~Other income (expense), net for the six months ended June 30, 2020 was~~ $2.5 million ~~as compared to $(9.3) million for the six months ended June 30, 2019. The $11.8 million improvement~~legal settlement realized in other income (expense), net for the six months ended June 30, 2020, as compared to the same period in 2019, was primarily due to a $10.7 million gain recognized on the deconsolidation of the Medici Land Governance business.2020.

Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, for relevant interim periods. We update our estimate of the annual effective tax rate each quarter and make cumulative adjustments if our estimated annual effective tax rate changes.

Our quarterly tax provision and our quarterly estimate of our annual effective tax rate are subject to significant variations due to several factors ~~including~~including: variability in predicting our pre-tax and taxable income ~~and~~as well as the mix of jurisdictions to which those items relate, relative changes in expenses or losses for which tax benefits are limited or not recognized, how we do business, fluctuations in our stock price, economic outlook, political climate, and other conditions such as the COVID-19 pandemic. In addition, changes in laws, regulations, and administrative ~~practices.~~practices will impact our rate. Our effective tax rate can be volatile based on the amount of pre-tax income. For example, the impact of discrete items on our effective tax rate is greater when pre-tax income is lower.

Our ~~expense/(benefit)~~provision for income taxes for the three months ended ~~June 30,~~March 31, 2021 and 2020 was $193,000 and ~~2019 was $517,000 and $(622,000), respectively. Our expense for income taxes for the six months ended June 30, 2020 and 2019 was $693,000 and $256,000,~~$163,000, respectively. The effective tax rate for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 was 0.7% and ~~2019 was 4.5% and (0.4)~~(1.4)%, respectively. Our low effective tax rate is primarily attributable to the valuation allowance we maintain on our net deferred tax assets related to our U.S. operations.

Each quarter we assess the recoverability of our deferred tax assets under ASC Topic 740. We assess the available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. We have no carryback ability and do not have significant taxable temporary differences to recover our existing deferred tax assets, therefore we must rely on future taxable income, including tax planning strategies, to support their realizability. We have established a valuation allowance for our deferred tax assets not supported by taxable temporary differences, primarily due to uncertainty regarding our future taxable income. We have considered, among other things, the cumulative loss incurred over the three-year period ended March 31, 2021, as a significant piece of objective negative evidence. However, we have seen a reduction in our cumulative loss year over year as we generated income in the last four quarters. We utilized significant deferred tax assets in the form of federal net operating losses in the last four quarters, resulting in an overall reduction in the amount of valuation allowance recorded against our net deferred tax assets.

We have also considered the magnitude and duration of past losses and the magnitude and duration of current profitability as well as changes in the factors that drove losses in the past and those currently driving profitability. As a result of the COVID-19 pandemic and resulting state and local government mandates of home confinement and closure of many brick-and-mortar stores, we have seen strong trends to online sales as consumers migrate to online shopping. We saw our Retail product sales accelerate beginning in the second half of March 2020 and continuing through March 2021, returning the Retail segment to profitability after generating substantial operating losses for the years ended December 31, 2019, 2018 and 2017. The effects of the COVID-19 pandemic on our business make estimates of future income more challenging due to the unpredictable nature of the ultimate scope and duration of the pandemic. We continue to monitor, evaluate, and manage our operating plans and forecasts in light of the most recent developments driven by the COVID-19 pandemic.

We intend to continue maintaining a valuation allowance on our net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The amount of the deferred tax asset considered realizable could be adjusted if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to our more recent operating results, utilization of net operating losses, and subjective evidence such as long-term projections for growth. To the extent that we remain profitable for the foreseeable future, the full or partial release of the valuation allowance could occur in the near term. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve. We will continue to monitor the need for a valuation allowance against our remaining deferred tax assets on a quarterly basis.

We are subject to taxation in the United States and several state and foreign jurisdictions. Tax years beginning in ~~2015~~2016 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used.

We believe that our cash and cash equivalents currently on hand and expected cash flows from future operations will be sufficient to continue operations for at least the next twelve months. During the period of uncertainty and volatility related to the COVID-19 pandemic, we have presumed for forecasting purposes that our recent revenue growth rates experienced during the second half of March 2020 and through July 2020 ~~will not continue at these levels for the foreseeable future as we believe these growth rates are~~ ~~driven~~ ~~in large part by the COVID-19 pandemic and resulting state and local government mandates of home confinement and closure of many brick-and-mortar stores.~~ We continue to monitor, evaluate, and manage our operating plans, forecasts, and liquidity in light of the most recent developments driven by the COVID-19 pandemic. We proactively seek opportunities to improve the efficiency of our operations and have in the past and may in the future take steps to realize internal cost savings, including aligning our staffing needs based on our current and expected future levels of operations and process streamlining. However, we may raise additional capital and/or obtain additional debt financing to be able to fully pursue some or all of our strategies, including plans for our retail business while also funding our Medici initiatives, beyond the next twelve months. See "Strategies for our Retail Business", "Strategies for our Medici Business", and "Strategies for our tZERO Business" above.

The recent COVID-19 pandemic has caused disruption in the capital markets. It could make financing, including sales under our "at the market" public offering program with JonesTrading, more difficult and/or expensive and we may not be able to obtain such financing on terms acceptable to us or at all. If we raise additional funds through the issuance of equity or debt outside of our "at the market" public offerings of common stock, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our stockholders may experience dilution.

Current sources of liquidity



	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	3026

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4537

Item 4.		Controls and Procedures	4638

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings	4739

Item 1A.		Risk Factors	4739

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	5039

Item 3.		Defaults Upon Senior Securities	5039

Item 4.		Mine Safety Disclosures	5039

Item 5.		Other Information	5039

Item 6.		Exhibits	5140

Signature			5241


Payments due by period	Amount		Payments due by period	Amount
2020 (Remainder)	$	3,522
2021	6,214
2021 (Remainder)			2021 (Remainder)	$	4,407
2022	6,087		2022	5,675
2023	5,152		2023	4,641
2024	3,965		2024	2,776
2025			2025	668
Thereafter	7,651		Thereafter	336
Total lease payments	32,591		Total lease payments	18,503
Less interest	7,015		Less interest	2,094
Present value of lease liabilities	$	25,576	Present value of lease liabilities	$	16,409


	Amount
Allowance for returns at December 31, 2019	$	11,106
Additions to the allowance	204,810
Deductions from the allowance	(196,726)
Allowance for returns at December 31, 2020	19,190
Additions to the allowance	58,106
Deductions from the allowance	(54,737)
Allowance for returns at March 31, 2021	$	22,559

Overstock.com, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data)

	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	318,573	$	112,266
Restricted cash	2,637		2,632
Marketable securities at fair value	2,122		10,308
Accounts receivable, net of allowance for credit losses of $1,534 and $2,474 at June 30, 2020 and December 31, 2019, respectively	47,765		24,728
Inventories	6,340		5,840
Prepaids and other current assets	22,769		21,589
Total current assets	400,206		177,363
Property and equipment, net	126,795		130,028
Intangible assets, net	9,919		11,756
Goodwill	27,120		27,120
Equity securities	50,542		42,043
Operating lease right-of-use assets	23,387		25,384
Other long-term assets, net	7,173		4,033
Total assets	$	645,142	$	417,727
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	131,101	$	75,416
Accrued liabilities	144,110		88,197
Unearned revenue	89,705		41,821
Operating lease liabilities, current	4,785		6,603
Other current liabilities	4,332		3,962
Total current liabilities	374,033		215,999
Long-term debt, net	42,948		—
Operating lease liabilities, non-current	20,791		21,554
Other long-term liabilities	4,022		2,319
Total liabilities	441,794		239,872
Commitments and contingencies (Note 10)

Continued on the following page



	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Revenue, net
Retail	$	766,956		$	367,475		$	1,106,554		$	730,100
Other	15,588			6,234			27,563			11,338
Total net revenue	782,544			373,709			1,134,117			741,438
Cost of goods sold
Retail	589,044			294,984			854,436			585,624
Other	13,618			4,826			23,959			8,791
Total cost of goods sold	602,662			299,810			878,395			594,415
Gross profit	179,882			73,899			255,722			147,023
Operating expenses
Sales and marketing	79,790			34,560			116,552			68,037
Technology	33,678			33,153			66,474			68,586
General and administrative	27,371			31,964			59,797			72,196
Total operating expenses	140,839			99,677			242,823			208,819
Operating income (loss)	39,043			(25,778		)	12,899			(61,796		)
Interest income	614			630			886			1,033
Interest expense	(588		)	(105		)	(788		)	(232		)
Other income (expense), net	(4,171		)	(2,995		)	2,512			(9,267		)
Income (loss) before income taxes	34,898			(28,248		)	15,509			(70,262		)
Provision (benefit) for income taxes	517			(622		)	693			256
Net income (loss)	34,381			(27,626		)	14,816			(70,518		)
Less: Net loss attributable to noncontrolling interests	(1,975		)	(2,945		)	(5,207		)	(6,593		)
Net income (loss) attributable to stockholders of Overstock.com, Inc.	$	36,356		$	(24,681	)	$	20,023		$	(63,925	)
Net income (loss) per common share—basic:				��
Net income (loss) attributable to common shares—basic	$	0.85		$	(0.69	)	$	0.48		$	(1.85	)
Weighted average common shares outstanding—basic	40,329			35,225			40,243			33,806
Net income (loss) per common share—diluted:
Net income (loss) attributable to common shares—diluted	$	0.84		$	(0.69	)	$	0.47		$	(1.85	)
Weighted average common shares outstanding—diluted	40,590			35,225			40,440			33,806



	Fair Value Measurements at June 30, 2020:
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents - Money market mutual funds	$	2,814	$	2,814	$	—	$	—
Equity securities, at fair value	500		500		—		—
Marketable securities, at fair value	2,122		2,122		—		—
Trading securities held in a "rabbi trust" (1)	108		108		—		—
Total assets	$	5,544	$	5,544	$	—	$	—
Liabilities:
Deferred compensation accrual "rabbi trust" (2)	$	112	$	112	$	—	$	—
Total liabilities	$	112	$	112	$	—	$	—



	June 30, 2020			December 31, 2019
	June 30, 2020			December 31, 2019
Computer hardware and software	$	230,950		$	223,309
Building	69,245			69,266
Furniture and equipment	17,314			17,739
Land	12,781			12,781
Leasehold improvements	11,988			11,921
Building machinery and equipment	9,782			9,796
Land improvements	7,004			7,003
	359,064			351,815
Less: accumulated depreciation	(232,269		)	(221,787		)
Total property and equipment, net	$	126,795		$	130,028



	June 30, 2020			December 31, 2019
Intangible assets subject to amortization, gross	$	30,267		$	30,284
Less: accumulated amortization of intangible assets subject to amortization	(20,348		)	(18,528		)
Total intangible assets, net	$	9,919		$	11,756



	June 30, 2020		December 31, 2019

Accounts payable accruals	$	36,732	$	15,692
Accrued compensation and other related costs	25,305		13,012
Accrued marketing expenses	21,062		13,063
Allowance for returns	18,657		11,107
Sales and other taxes payable	14,222		10,105
Accrued freight	11,706		5,954
Accrued loss contingencies	2,337		9,550
Other accrued expenses	14,089		9,714
Total accrued liabilities	$	144,110	$	88,197



	June 30, 2020		December 31, 2019
Operating right-of-use assets	$	23,387	$	25,384
Operating lease liabilities, current	4,785		6,603
Operating lease liabilities, non-current	20,791		21,554



	Six months ended June 30, 2020
	Units		Weighted Average Grant Date Fair Value
Outstanding—beginning of year	1,051		$	26.22
Granted at fair value	471		8.89
Vested	(679	)	23.83
Forfeited	(101	)	25.91
Outstanding—end of period	742		$	17.45



	Amount
Unearned revenue at December 31, 2018	$	50,578
Increase due to deferral of revenue at period end	36,622
Decrease due to beginning contract liabilities recognized as revenue	(45,379		)
Unearned revenue at December 31, 2019	41,821
Increase due to deferral of revenue at period end	80,287
Decrease due to beginning contract liabilities recognized as revenue	(32,403		)
Unearned revenue at June 30, 2020	$	89,705



	Amount
Allowance for returns at December 31, 2018	$	15,261
Additions to the allowance	117,040
Deductions from the allowance	(121,194		)
Allowance for returns at December 31, 2019	11,107
Additions to the allowance	92,510
Deductions from the allowance	(84,960		)
Allowance for returns at June 30, 2020	$	18,657



	Three months ended June 30,
	Retail			tZERO			MVI			Other			Total
2020
Net revenue	$	766,956		$	12,737		$	2,851		$	—		$	782,544
Cost of goods sold	589,044			10,769			2,849			—			602,662
Gross profit	177,912			1,968			2			—			179,882
Operating expenses	124,991			11,216			2,543			2,089			140,839
Interest and other income (expense), net (1)	(117		)	(1,268		)	(2,760		)	—			(4,145		)
Income (loss) before income taxes	$	52,804		$	(10,516	)	$	(5,301	)	$	(2,089	)	34,898
Provision for income taxes													517
Net income (2)													$	34,381

2019
Net revenue	$	367,475		$	5,551		$	683		$	—		$	373,709
Cost of goods sold	294,984			4,143			683			—			299,810
Gross profit	72,491			1,408			—			—			73,899
Operating expenses	81,596			11,743			2,903			3,435			99,677
Interest and other income (expense), net (1)	40			340			(2,847		)	(3		)	(2,470		)
Loss before income taxes	$	(9,065	)	$	(9,995	)	$	(5,750	)	$	(3,438	)	(28,248		)
Benefit for income taxes													(622		)
Net loss (2)													$	(27,626	)



	Six months ended June 30,
	Retail			tZERO			MVI			Other			Total
2020
Net revenue	$	1,106,554		$	22,976		$	4,425		$	162		$	1,134,117
Cost of goods sold	854,436			19,536			4,423			—			878,395
Gross profit	252,118			3,440			2			162			255,722
Operating expenses	207,826			23,474			5,451			6,072			242,823
Interest and other income (expense), net (1)	(416		)	(3,050		)	6,073			3			2,610
Income (loss) before income taxes	$	43,876		$	(23,084	)	$	624		$	(5,907	)	15,509
Provision for income taxes													693
Net income (2)													$	14,816

2019
Net revenue	$	730,100		$	10,047		$	1,291		$	—		$	741,438
Cost of goods sold	585,624			7,500			1,291			—			594,415
Gross profit	144,476			2,547			—			—			147,023
Operating expenses	166,929			27,297			7,157			7,436			208,819
Interest and other income (expense), net (1)	175			(623		)	(8,011		)	(7		)	(8,466		)
Loss before income taxes	$	(22,278	)	$	(25,373	)	$	(15,168	)	$	(7,443	)	(70,262		)
Provision for income taxes													256
Net loss (2)													$	(70,518	)



	June 30, 2020		December 31, 2019
SpeedRoute
Net capital	$	1,535	$	850
Required net capital	364		145
Net capital, in excess of required	$	1,171	$	705
Net capital ratio	3.55		2.56

tZERO ATS, LLC
Net capital	$	139	$	110
Required net capital	5		5
Net capital, in excess of required	$	134	$	105
Net capital ratio	0.14		0.27


	Three months ended June 30, 2020							Three months ended March 31, 2021
Change in the Estimate of Average Transit Times (Days)	Increase (Decrease) Revenue			Increase (Decrease) Income Before Income Taxes			Change in the Estimate of Average Transit Times (Days)	Increase (Decrease) Revenue		Increase (Decrease) Income Before Income Taxes
2	$	(17,302	)	$	(3,654	)	2	$	(19,118)	$	(3,692)
1	$	(8,044	)	$	(1,690	)	1	$	(9,278)	$	(1,780)
As reported	As reported			As reported			As reported	As reported		As reported
-1	$	7,362		$	1,516		-1	$	20,034	$	3,951
-2	$	21,678		$	4,667		-2	$	32,380	$	6,373



	Q1 2019		Q2 2019		Q3 2019		Q4 2019		FY 2019		Q1 2020		Q2 2020
Retail	19.9	%	19.7	%	20.0	%	20.7	%	20.1	%	21.9	%	23.2	%
Other	22.3	%	22.6	%	20.6	%	19.1	%	21.0	%	13.6	%	12.6	%
Combined	19.9	%	19.8	%	20.0	%	20.6	%	20.1	%	21.6	%	23.0	%


	Q1 2020		Q2 2020		Q3 2020		Q4 2020		FY 2020		Q1 2021
Gross margin	21.9	%	23.2	%	23.5	%	22.5	%	22.9	%	23.3	%


Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years

Operating leases (1)	$	32,591	$	6,692	$	12,039	$	7,312	$	6,548	Operating leases (1)	$	18,503	$	5,818	$	9,594	$	2,818	$	273
Loan agreements (2)	62,490		5,264		10,528		5,149		41,549		Loan agreements (2)	58,542		5,264��		9,871		2,968		40,439
Technology services (3)	1,932		1,315		617		—		—

Total contractual cash obligations	$	97,013	$	13,271	$	23,184	$	12,461	$	48,097	Total contractual cash obligations	$	77,045	$	11,082	$	19,465	$	5,786	$	40,712


~~(2)~~	— Represents future interest and principal payments on the financing agreements with Loan Core Capital Funding Corporation LLC. For information regarding our financing agreements, see Note 8—Borrowings, in the Notes to Unaudited Consolidated Financial Statements included in Item 1, Part I, Financial Statements (Unaudited) of this Quarterly Report on Form 10-Q.


~~(2)~~	~~— Represents the future payments for enforceable and legally binding long-term contractual agreements for technology services and finance leases for equipment included in such service agreements.~~



Date:	~~August~~May 6, ~~2020~~2021	OVERSTOCK.COM, INC.

		/s/ ADRIANNE B. LEE
		Adrianne B. Lee
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)