Brands Initiative’s Impact on Gross Margin • Core dropshipping business had a gross margin ~80% in 2014. • Brands Initiative / ex-Mercent business had 30% - 50% gross margins in 2015 (our best estimate) due to managed services clients. • We do not see any fundamental changes in the dropshipping business now vs. 2014 when dropshipping business had ~80% gross margin. Caro-Kann Capital LLC 54