GSI Commerce (GSIC)

We enter into contracts with our partners. We derived 61.3% of our revenue in fiscal 2005 from five partners e-commerce businesses. If we do not maintain good working relationships with our partners, particularly our large partners, or perform as required under these agreements, it could adversely affect our business.

The contracts with our partners establish complex relationships between our partners and us. We spend a significant amount of time and effort to maintain our relationships with our partners and address the issues that from time to time may arise from these complex relationships. For fiscal 2005, sales to customers through one of our partner’s e-commerce businesses accounted for 25.6% of our revenue, sales through another one of our partner’s e-commerce businesses accounted for 12.8% of our revenue. For fiscal 2005, sales through our top five partners’ e-commerce businesses accounted for 61.3% of our revenue or 45.0% of our gross profit. For fiscal

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2004, sales to customers through one of our partner’s e-commerce businesses accounted for 26.5% of our revenue, sales to customers through another one of our partner’s e-commerce businesses accounted for 13.1% of our revenue. For fiscal 2004, sales through our top five partners’ e-commerce businesses accounted for 62.3% of our revenue or 46.3% of our gross profit. Our partners could decide not to renew their agreements at the end of their respective terms. Additionally, if we do not perform as required under these agreements, our partners could seek to terminate their agreements prior to the end of their respective terms or seek damages from us. Loss of our existing partners, particularly our major partners, could adversely affect our business, financial condition and results of operations.