RISK FACTORS

         An investment in our common stock involves risks. You should consider carefully the risks described below together with all of the other information included in this prospectus in evaluating our company and our common stock. Any of the following risks, if realized, could have a material adverse effect on the value of our common stock. The risks described below and elsewhere in this prospectus are not the only ones that relate to our business, our capitalization or the Spin-Off. The risks described below are those we consider the most material. However, there may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that also could have material adverse effects on our business. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. If any of the events below were to occur, our business, prospects, financial condition, results of operations and/or cash flows could be materially adversely affected. This prospectus contains forward-looking statements that contain risks and uncertainties. Please refer to the section entitled "Cautionary Statements Concerning Forward-Looking Statements" on page 33 of this prospectus in connection with your consideration of the risk factors and other important factors that may affect future results described below.

         For purposes of these risk factors, unless the context otherwise indicates, we have assumed that the Spin-Off has occurred.

Factors Relating to Our Corporate History and Structure

         The consolidated financial information of our company included in this prospectus is not necessarily representative of our company's future financial position, future results of operations or future cash flows, nor does it reflect what our company's financial position, results of operations or cash flows would have been as a stand-alone publicly traded company during the periods presented.

        Because the historical consolidated financial information of our company included in this prospectus includes the results of the historical CommerceHub business, as conducted by Liberty prior to the Spin-Off, it is not representative of CH Parent's future financial position, future results of operations or future cash flows, nor does it reflect what CH Parent's financial position, results of operations or cash flows would have been as a stand-alone publicly traded company, pursuing independent strategies, during the periods presented.

Factors Relating to Our Business

         We are dependent upon consumers' continued willingness to use the internet and other currently available technology for commerce. A downturn in the e-commerce market, or failure of the e-commerce market to grow or to grow as rapidly as we expect, could adversely affect the demand for our e-commerce solutions.

        Our success depends upon the general public's continued willingness to use the internet, whether through a computer, smart phone, tablet or other internet-enabled device, as a means to purchase goods and conduct and research commercial transactions. The internet must continue to be accepted and widely used for selling merchandise for our existing customers and potential customers to be willing to subscribe to our solutions. As e-commerce continues to evolve, regulation by federal, state or foreign agencies may increase. Any regulation imposing greater fees for internet use or restricting information exchanged over the internet could result in a decline in the use of the internet, which could harm our business. If consumers became unwilling or less willing to use the internet or other current technology for commerce for any reason, or if we fail to adapt to technology changes or industry standards, our business could be materially adversely affected.

        In addition, if consumer utilization of e-commerce channels experiences a downturn, does not grow or grows more slowly than we expect, demand for our solutions would be adversely affected, our

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revenue would be negatively impacted and our ability to pursue our growth strategy would be compromised.

         Our business is substantially dependent upon the continued acceptance of software-as-a-service (SaaS) solutions as a viable option for providing information technology services. A rejection, reluctance or inability of the marketplace to utilize SaaS solutions could cause our revenue to decline and impair our ability to become profitable.

        We derive, and expect to continue to derive, a substantial amount of our revenue from the sale of our solutions and related revenue sources, which are delivered under a SaaS or SaaS-plus model. As a result, continued widespread use and acceptance of this business model is critical to our future growth and success. With the increasing concerns around cybersecurity and access to data, some companies are predisposed to maintaining control of their information technology systems and infrastructure, and there may be increased resistance from our customers to accessing software functionality that involves transmission of their sensitive data through a service provided by a third party. In addition, customers may seek to build and utilize in-house software and service solutions for their e-commerce programs where they believe they can do so more effectively or where they seek to reduce long-term dependence on third-party services for these programs. Existing and new market participants may also introduce new types of solutions and different approaches to enable organizations to address their needs. If the market for our SaaS solutions fails to grow or grows more slowly than we currently anticipate, demand for our solutions and our revenue, gross margin and other operating results could be negatively impacted.

         Consolidation or simplification of the e-commerce industry could diminish demand for our solutions.

        The e-commerce industry is currently a complex and fragmented industry, and our solutions are designed to help customers navigate these disparate online channels. Although the number and variety of online channels available to retailers and manufacturers have been increasing, at the same time the share of online sales made through a small number of larger channels, particularly Amazon, has also been increasing. If the trend toward consolidation around a few large online channels accelerates, the difficulties faced by retailers and manufacturers could decline. This may allow more companies to maintain these solutions in-house or through on-premises software solutions they manage. If our solutions become less important to retailers and manufacturers, this may reduce demand for our solutions and cause our sales and opportunities for growth to decline.

         Government and industry regulation of the internet is evolving and could directly restrict our business or indirectly affect our business by limiting the growth of e-commerce. Unfavorable changes in government regulation or our failure to comply with such regulations could cause our solutions to become less attractive, reduce the number of transactions processed through our platform, cause our revenue to decline and otherwise harm our business and operating results.

        As e-commerce evolves, federal, state and foreign agencies have adopted and could in the future adopt regulations covering issues that affect our business and e-commerce in general. Government regulations could limit the market for our products and services or impose burdensome requirements that render our business unprofitable. For example, although current U.S. Supreme Court decisions restrict the imposition of obligations to collect state and local sales taxes with respect to remote sales, an increasing number of states have considered or adopted laws that attempt to require out-of-state retailers to collect sales taxes on their behalf. In addition, legislation currently being considered by the U.S. Senate and the U.S. House of Representatives, called the Marketplace Fairness Act, would override the Supreme Court rulings and enable states to require that our online retailer customers collect sales tax from the states' residents. This is a rapidly evolving area and we cannot predict whether this or other similar legislation will ultimately be adopted or what form it might take if

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adopted. If the states or Congress are successful in these attempts to require our online retailer customers to collect state or local sales taxes on out-of-state purchases, this could cause e-commerce to decline, which would, in turn, hurt the business of our customers, and potentially make our solutions and services less attractive and cause the number of transactions processed through our platform, and ultimately our revenue, to decline. Similar issues exist outside of the United States, where the application of value-added tax or other indirect taxes on online retailers and companies like ours that facilitate e-commerce is uncertain and evolving.

        Although many regulations might not apply to our business directly, we expect that laws regulating the solicitation, collection or processing of personal and consumer information could affect our customers' (or our) ability to use and share data, potentially reducing demand for our solutions and services. Moreover, if future laws and regulations limit or overly burden our customers' ability to use and share consumer data or our ability to store, process and share data with our customers over the internet, demand for our solutions could decrease, our costs could increase, our profits may decline and our results of operations and financial condition could be harmed.

        In addition, taxation of services provided over the internet or other charges imposed by government agencies or by private organizations for accessing the internet may also be imposed. Any regulation imposing greater fees for internet usage or the services we provide or restricting information exchanged over the internet could result in a decline in the use and viability of internet-based services, including ours, which could harm our business and operating results.

         Our business is dependent on our ability to maintain and scale our technical infrastructure. Failure to adequately manage our growth could adversely affect our customers' satisfaction with our solutions and have a negative impact on our business and operating results.

        As our customer base and the amount and types of information shared on our platform continue to grow, we must be able to increase our technical infrastructure, including network capacity and computing power, to satisfy the growing needs of our customers. If we fail to effectively scale and grow our technical infrastructure to accommodate these increased demands, our reputation could be negatively affected.

        We have experienced, and may continue to experience, significant growth in our business. Our growth has placed, and may continue to place, a significant strain on our managerial, administrative, operational, financial and other resources. We intend to expand our overall business, customer base, headcount and operations both domestically and internationally, with no assurance that our business or revenue will continue to grow.

        We have also experienced significant growth in the number of users, transactions and data that our infrastructure supports. We seek to maintain adequate excess capacity in our infrastructure to be sufficiently flexible and scalable to meet the needs of all of our customers. We also seek to maintain excess capacity to facilitate the rapid provision of new customer deployments and the expansion of existing customer deployments and to handle spikes in usage. However, the provision of new network infrastructure requires significant lead time. If we do not accurately predict our infrastructure capacity requirements, particularly during periods of increased traffic, or if customer traffic patterns significantly change, our customers could experience service outages that may subject us to financial penalties and financial liabilities and result in customer losses. If our cloud network infrastructure capacity fails to keep pace with increased sales and customer expansion, customers may experience delays as we seek to obtain additional capacity, which could harm our reputation and adversely affect our revenue growth.

        Our future success will depend, in part, upon the ability of our senior management to manage growth effectively. If we do not effectively manage our growth, the quality of our solutions and services may suffer, which could negatively affect our reputation and demand for our solutions, which in turn would negatively impact our business and operating results.

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         We use a limited number of data centers to deliver a significant portion of our services. Any disruption of service at these facilities could harm our business.

        We manage our services and serve our customers from a limited number of data center facilities. We engineer and architect the computer and storage systems upon which our platform runs, and own and operate our primary data center in Albany, New York.

        We also lease redundant (or back-up) data center colocation facilities in Albany, New York and greater Chicago, Illinois, and we do not control the physical operation of these back-up facilities. The owners of these back-up data facilities have no obligation to renew their lease agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, we may be required to locate alternative back-up facilities, and we may incur significant costs and temporary loss of high-availability or disaster recovery services in connection with doing so.

        Any interruptions of service, operational failures or security breaches, errors, defects, disruptions or other performance problems with our services could harm our reputation and may damage our customers' businesses. Interruptions in our services might reduce our revenue, subject us to potential liability and cause customers to terminate their subscriptions or harm our renewal rates.

        The data centers are vulnerable to damage or interruption from human error, intentional bad acts, earthquakes, hurricanes, floods, fires, war, terrorist attacks, labor strikes, health epidemics, power losses, hardware failures, systems failures, telecommunications failures, cyber attacks and similar events. The occurrence of a natural disaster or an act of terrorism, vandalism or other misconduct, a decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in the availability of our solutions or impair their functionality. Because we operate a multi-tenant SaaS environment shared by many large customers, such an event, if it occurred, would not be confined to a single customer or small number of customers, but instead would impact a significant portion of our customer base collectively. Our business, growth prospects and operating results would also be harmed if our customers and potential customers are not confident that our solutions are reliable.

         We plan to expand our use of third-party cloud-based offerings to deliver a portion of our services. Any disruption of service at these third-party providers could harm our business.

        We are moving portions of our service offerings away from traditional data centers to cloud-based offerings provided by third-party providers. These offerings have defined service boundaries in which they operate, and we have minimal, if any, ability to manage how those services are provided. The services and features provided by these third-party providers may not continue to be available to us on commercially reasonable terms, or at all. If we are unable to maintain the right to use these services or are unable to upgrade our arrangements with these providers to accommodate the scalability of our business, our customers could experience delays or be unable to access features within our solutions until we can obtain and integrate a functionally equivalent replacement technology. Any available alternatives could be more difficult or costly than currently available third party-offerings. In addition, integration of such alternatives into our platform could require significant work and substantial time and resources. Any delays or failures associated with integrating such alternatives into our platform could injure our reputation with customers and potential customers, which would result in an adverse effect on our business, results of operations and financial condition.

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         We rely in part on a pricing model under which transaction-based fees we receive from customers vary based on the volume of transactions that those customers process through our platform. Declines in the number of transactions that our customers process through our services, or the elimination of a large demand channel on which these transactions are conducted, could adversely affect our financial results.

        We rely on relationships with demand channels (which may include retailer internet websites, media-based shopping networks, on-line marketplaces, search engines and other platforms through which goods are sold to consumers) to generate revenue from sellers and, in many cases, the demand channels directly. A significant portion of our revenue is derived from e-commerce orders processed through our solution between a seller and a demand channel. Historical annual growth rates will vary from year to year based on individual demand channel trends, including the addition or attrition of individual demand channels. When a demand channel customer leaves our platform, this also results in the loss of revenue from other customers that have trading partner connections associated with that particular demand channel. Consequently, the loss of a large demand channel would adversely affect our revenue and growth.

        Service outages at our demand channel customers or other on-line channels on which our customers rely could prevent, or severely disrupt, the ability for consumers to make purchases on those demand channels. In such a scenario the order volume and associated transaction fee revenue we would have anticipated receiving from those demand channels would decrease significantly, or cease altogether.

        Some of our customers and the demand channels they utilize have experienced financial difficulties in the past. Insolvency, credit problems or other financial difficulties confronting our customers and the demand channels they utilize could expose us to financial risk. Additionally, if our customers reduce the volume or size of the e-commerce sales they process or generate through our platform, for example, as a result of declines in our customers' overall sales or greater reliance on fulfillment methods that do not utilize our services, our revenue, operating results, and financial condition could be adversely affected.

         We derive a portion of our revenue from retailers choosing drop-ship delivery as a way to expand the assortment of products they offer to consumers. If more retailers elect not to rely on drop-ship delivery as a means to expand their product assortments, demand for our solutions could decline, which in turn could cause our revenue and operating results to be negatively impacted.

        We derive, and expect to continue to derive, a substantial amount of our revenue from the sale of our solutions to enable retailers to increase product offerings through drop-ship solutions in which products ship directly from a manufacturer or distributor. While the market trend has been to increase the use of drop-ship solutions as a means to offer more products without assuming associated inventory risk, use of drop-ship delivery requires retailers to entrust order fulfillment and delivery of products to the network of third-party suppliers that ship on the retailer's behalf. If more retailers elect instead to expand their own warehouses and inventory to assume greater control over order fulfillment, rather than employing drop-shipping solutions, or if other methods of fulfillment emerge that are perceived as more effective than drop-shipping, demand for our solutions could decline, which would cause our revenue and other operating results to be negatively impacted.

         Our lengthy sales and implementation cycles make it difficult to predict our future revenue and cause variability in our operating results.

        Our sales cycle can vary substantially from customer to customer, depending on the size and complexity of the opportunity. A number of factors influence the length and variability of our sales and implementation cycles, including, for example:

•

the need to educate potential customers about the uses and benefits of our solutions;

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•

the commitment customers make in their agreements with us;



•

the discretionary nature of potential customers' purchasing and budget cycles and decisions;



•

the competitive nature of potential customers' evaluation and purchasing processes;



•

evolving e-commerce needs and functionality demands of potential customers;



•

announcements or planned introductions of new products by us or our competitors;



•

lengthy purchasing approval processes of potential customers; and



•

the complexity of the implementations and integrations with customer and third-party systems.

        In addition, with larger enterprise customers, we face greater costs, longer sales cycles and less predictability in completing some of our sales. The customer's decision to use our service may be an enterprise-wide decision and, if so, these types of sales would require us to provide greater levels of education regarding the use and benefits of our solutions.

        Lengthy sales and implementation cycles make it difficult to predict the quarter in which revenue from a new customer may first be recognized. Further, our potential customers frequently need to obtain approvals from multiple decision makers before making purchase decisions. Delays in our sales or implementation cycles could cause significant variability in our revenue and operating results for any particular period.

         If we are unable to retain our existing customers, our revenue and results of operations would be adversely affected.

        Our customers have no obligation to renew their subscriptions after their subscription period expires, and these subscriptions may not be renewed on the same or on more profitable terms. As a result, our ability to grow depends in part on subscription renewals and our ability to meet or exceed our customers' expectations. In addition, many of our contracts are non-exclusive and revenue is based on the volume of transactions the customer completes using our platform. It is possible that our customers could send fewer transactions through our platform at any time during the contract term, resulting in lower revenue to us. We may not be able to accurately predict future trends in customer renewals, and our customers' renewal rates may decline or fluctuate because of several factors, including the cost of our services, dissatisfaction with our services, the cost of services offered by our competitors and reductions in our customers' spending levels. If our customers do not renew their subscriptions, renew on less favorable terms, complete fewer transactions or fail to grow their business using our platform, or do not purchase additional offerings to complement their existing services, our revenue may grow more slowly than expected or decline, and our profitability and gross margins may be adversely affected.

         Our business and revenue may be impacted by the seasonality of our customers' businesses.

        The e-commerce marketplace is affected by the same seasonality as the traditional brick-and-mortar marketplace. Many of our customers typically realize a significant portion of their sales in the fourth quarter of each calendar year. Our customer base is diversified among different retail segments, including general merchandise, home improvement, office supplies, toys, electronics, furniture and perishables. As such, our revenue does not closely track seasonality trends for any one specific retail segment. Although the customers that we currently serve do not all experience the same seasonal variation and some customers may have seasonal peaks that occur in periods other than the fourth quarter, the seasonality of our customers' businesses may become more concentrated as we continue to expand our solutions to more customers. If our customer base changes to include more customers that experience more concentrated seasonal variation, our revenue may fluctuate significantly among quarters.

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         If we fail to develop our brand in a cost-effective manner, our business may suffer.

        We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our existing and future solutions and is an important element in attracting new customers. Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and on our ability to provide reliable and useful services at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business could suffer.

         We may not be able to compete successfully against current and future competitors.

        The market for e-commerce solutions, applications and services is very competitive. While no single competitor currently offers all of the solutions that we offer, we do have competitors with longer operating histories, larger customer bases and greater financial, technical, marketing and other resources than we have. Increased competition may result in reduced pricing for our solutions, longer sales cycles or a decrease in our market share, any of which could negatively affect our revenue and future operating results and our ability to grow our business.

        A number of competitive factors could cause us to lose potential sales or to sell our solutions at lower prices or at reduced margins, including, among others:

•

Current and potential customers may choose to develop applications, or continue using applications developed, in-house, rather than pay for our solutions;



•

Marketplaces and other demand channels, which typically offer software tools, often for free, that allow retailers and manufacturers to connect to them, may decide to compete more vigorously with us or make it easier for our customers to self-service their omni-channel strategy, rather than relying on our offerings to assist their efforts;



•

Competitors may adopt more aggressive pricing policies and offer more attractive sales terms, adapt more quickly to new technologies and changes in customer requirements, and devote greater resources to the promotion and sale of their products and services than we can;



•

Current and potential competitors may establish cooperative relationships among themselves or with third parties to enhance their products and expand their markets, and consolidation in our industry is likely to intensify;



•

New competitors or alliances among competitors may emerge and rapidly acquire significant market share;



•

Current and potential competitors may offer technology or services that address one or more e-commerce needs at a lower price point or with greater depth than our solutions and may be able to devote greater resources to those solutions than we can; and



•

Software vendors could bundle e-commerce solutions with other solutions or offer such products and services at a lower price as part of a larger product sale.

        In addition, if one or more of our competitors were to merge or partner with another of our competitors, this could adversely affect our ability to compete effectively. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic partners or other

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parties with whom we or our customers or prospects have relationships, thereby limiting our ability to promote our solutions. Disruptions in our business caused by these events could reduce our revenue.

        Competition in our industry may intensify as our competitors raise additional capital and enter into business combinations or alliances and as established companies in other market segments or geographic markets expand into our market segments or geographic markets. If we cannot compete successfully against our competitors, our business, results of operations and financial condition could be adversely affected.

         Our growth depends in part on the success of our strategic relationships with third parties.

        We anticipate that we will continue to depend on our relationships with various third parties, including marketplaces and other technology providers, in order to grow our business. Identifying, negotiating and documenting relationships with third parties requires significant time and resources, as does integrating third-party content and technology with our solutions. If the third-party content or technology integrated with our solutions is not well received by our customers, our brand and reputation could be negatively affected. Our agreements with third-party business partners are typically non-exclusive and do not prohibit them from working with our competitors or from offering competing services. If and to the extent that any of these third parties compete with us, it could hurt our growth prospects.

        In addition, a significant portion of the transactions that our customers process through our platform is derived from merchandise sold on marketplaces with which we have strategic relationships. In many cases, these marketplaces, and the other channels with which our solutions are integrated, have no obligation to do business with us or to allow us or our customers access to their systems, and they may decide at any time and for any reason to significantly curtail or inhibit our ability to integrate our solutions with their channels. Additionally, these marketplaces may decide to make significant changes to their respective business models, policies, systems or plans, and those changes could impair or inhibit our customers' ability to use our solutions to sell their products on those channels, or may adversely affect the number of transactions that our customers can sell on those channels or reduce the desirability of selling on those channels. Further, these marketplaces could decide to compete with us. Any of these results could cause our customers to reevaluate the value of our products and services and potentially terminate their relationships with us, which could significantly reduce our revenue.

        If we are unsuccessful in establishing or maintaining our relationships with certain of these third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results would suffer. Even if we are successful, we cannot assure our stockholders that these relationships will result in improved operating results.

         The e-commerce market changes rapidly, and our inability to respond to changes in a timely manner could have a material adverse effect on our revenues and profitability.

        The e-commerce market can change rapidly in multiple ways through frequent new product and service introductions, frequent changes in rules, specifications and other requirements and evolving industry standards. Our ability to attract new customers and retain and increase revenue from existing customers is dependent on our ability to understand the changes that are affecting the e-commerce marketplace and to adapt our solutions at a rapid pace to address those changing market conditions. To achieve market acceptance for our solutions, we must effectively anticipate and offer solutions that meet changing customer demands and third-party requirements in a timely manner. Customers and the e-commerce channels that they utilize may require features and capabilities that our current solutions do not have. If we fail to develop solutions that satisfy customer preferences in a timely and cost-effective manner, our ability to renew our contracts with existing customers and our ability to create or increase demand for our solutions will be impaired.

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        We may experience difficulties with software development, industry standards, design or marketing that could delay or prevent our development, introduction or implementation of new solutions and enhancements. The introduction of new solutions by competitors, the emergence of new industry standards or the development of entirely new technologies to replace existing offerings could render our existing or future solutions obsolete.

        Additionally, as the e-commerce industry continues to evolve and becomes more fragmented, new demand channels and new technologies will emerge to offer consumers new ways to purchase products. We monitor these new demand channels and technologies and attempt to predict which channels are likely to be successful to select projects we anticipate will generate a positive return on our development investment. Our customers may expect us to support a broader array of demand channels than may be commercially feasible, especially emerging channels that are considered likely to be successful by popular opinion, the media, and other industry experts. We may therefore be compelled to invest heavily in development resources to enhance our offerings to support new channels that fail to attract consumer usage, take an unexpectedly long time to attract consumer usage, or are successful for our customers and consumers but are disproportionately costly for us to maintain and support. We may devote resources to advancements that are ultimately unsuccessful, at the expense of other projects that may be more successful, incurring significant opportunity cost to do so. Further, if we were to deploy significant resources to particular platforms that ultimately failed to attract market participants or materialize as anticipated, we may incur costs that we may never recover. If we fail to realize returns on such development initiatives, or if our customers require that we service technologies that are too costly to maintain, this could have an adverse effect on our business, results of operations and financial condition.

        If we are unable to successfully develop or acquire new capabilities and functionality, enhance our existing solutions to anticipate and meet customer preferences and rapidly evolving industry requirements or sell our solutions into new markets, our revenues and profitability would be adversely affected.

         We may experience service failures or interruptions due to defects in the hardware, software, infrastructure, third-party components or processes that comprise our existing or new solutions, any of which could adversely affect our business.

        Our solutions are complex and may contain undetected defects in the hardware, software, infrastructure, third-party components or processes that are part of such solutions. If these defects lead to service failures, we could experience delays or lost revenue, diversion of software engineering resources, material non-monetary concessions, negative media attention or increased service costs as a result of performance claims during the period required to correct the cause of any such defects. We cannot be certain that defects will not be found in new solutions or upgraded solutions, resulting in loss of, or delay in, market acceptance, which could have an adverse effect on our business, results of operations and financial condition.

        Our solutions are designed to automate various order fulfillment and product listing functions across multiple online channels for large volumes of our customers' sales, as well as to ensure that their sales comply with the policies of each channel, and sometimes to dynamically determine or communicate product pricing at any given moment. In the event that our solutions do not function properly, errors could occur, including that our customers might sell more inventory than they have in stock, make sales that violate channel policies or underprice or overprice their offerings. Overselling their inventory could force our customers to cancel orders at rates that violate channel policies. Underpricing could result in lost revenue or material losses to our customers and overpricing could result in lost sales. Any of these results or other errors could reduce demand for our solutions and hurt our business reputation.

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        Any defect in, or disruption to, our solutions or any error in execution could cause our customers to seek recourse against us for losses or cancel their contracts with us, discourage potential customers from joining our network and harm our reputation. Although most of our contracts with our customers limit our liability for these defects, disruptions or errors, we nonetheless could be subject to litigation for actual or alleged losses to our customers' businesses. Where a particular defect is replicated across multiple large customers (as may conceivably occur in the context of a multi-tenant SaaS hosting environment), individual contractual liability caps may be aggregated across multiple claimants to create a much larger exposure. Defending a lawsuit, regardless of its merit, could be costly and divert management's attention and could cause our business to suffer.

        The insurers under our existing liability insurance policies could deny coverage of claims resulting from an error or defect in our technology or a resulting disruption in our solutions, or our existing liability insurance might not be adequate to cover all of the damages and other costs of such a claim. Moreover, we cannot assure you that our current liability insurance coverage will continue to be available to us on acceptable terms or at all. The successful assertion against us of one or more large claims that exceeds our insurance coverage, or the occurrence of changes in our liability insurance policy, including an increase in premiums or imposition of large deductible or co-insurance requirements, could have an adverse effect on our business, financial condition and operating results.

         Cybersecurity incidents could harm our business and negatively impact our financial results.

        Our business involves the collection and use of confidential and otherwise sensitive information of our customers and their trading partners, including, for example, customer shipping information and purchasing habits. The collection and use of this information sometimes requires our access to our customers' information systems, as well as to systems operated by our third-party technology providers. We serve as a conduit for transmitting information between our customers and their trading partners, as well as the third-party platforms they use for e-commerce transactions. In addition, given our critical role as a service provider to the retail industry, we believe that we are an attractive target for such attacks. If third parties seek to gain unauthorized access to our system as a means to access systems operated by our customers or our third-party providers, this would impair our customers' trust in our security practices.

        We cannot assure you that our efforts to prevent unauthorized access to or use of information we process or control will always be successful. Our security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers, employee error or misconduct, malfeasance or otherwise, and may result in one or more third parties obtaining unauthorized access to our customers' data or our data, including our intellectual property and other confidential or other sensitive information, or our IT systems. Additionally, we may be subject to social engineering or other tactics that attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers' data or our data or IT systems. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Malicious parties may also conduct attacks designed to temporarily deny customers access to our services or our customers' websites.

        If our information security efforts are compromised, or if we fail to detect and appropriately respond to a data security breach, we could be subject to legal claims, including shareholder derivative suits, class actions or other direct claims by customers or other injured parties and governmental action. A data security breach may also adversely affect our reputation, increase our insurance costs or result in loss of coverage, and we may need to incur other significant costs to protect against information security breaches in the future, each of which could adversely impact our financial condition, results of operations and growth prospects. In addition, because of the critical nature of data security, any

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perceived breach of our security measures or harm to our reputation could cause existing or potential customers not to use our solutions.

        In addition, our customers' or our partners' online and other sales may be significantly impacted by cybersecurity incidents. For example, our customers or partners may experience "denial-of-service" type attacks that could make all or portions of such customers' or partners' websites unavailable for periods of time. Because a significant portion of our revenue is derived from transactions effected on (or through) our customers' and partners' websites, operational disruptions such as these could cause our revenue to decline.

         As our customers continue to scrutinize and refine their own data security practices, the security and confidentiality obligations they seek to impose on their SaaS and e-commerce providers are becoming increasingly onerous. Failure to meet expectations may hurt our business.

        Many of our customers and potential customers are prominent merchants and retailers that process large volumes of sensitive consumer and business data. As such, they are increasingly targeted for cybersecurity attacks. As highly publicized cybersecurity incidents within the retail and consumer goods sector are occurring with greater frequency, our customers and potential customers are increasingly seeking to shift these risks by pursuing more onerous contractual terms in their agreements. This may include requests for contractual commitments to burdensome security procedures, reporting, notification and audit rights, additional warranties, guarantees and other contractual assurances, indemnification provisions, specialized remedies and liability limitation exclusions. Our customers may also seek to require our adherence to customer-specific operational protocols and procedures that may compromise our ability to operate our business efficiently or that may be unworkable. Such obligations require that we continue to enhance our security programs and incur increased compliance costs to provide current and potential customers with protections they now expect. Such requirements also make it more difficult to obtain new customers as we experience longer sales cycles to negotiate mutually acceptable terms and increase the cost and complexity of our compliance procedures. If we are unsuccessful in our attempts to negotiate acceptable outcomes or meet expectations in this area, this could also lead to customer erosion or impede our ability to grow our sales and attract new customers.

         Our business is subject to a variety of U.S. and foreign laws and regulations that are continuously evolving, including those related to privacy, data security and data protection due to our collection, processing and use of personal information and other user data.

        We are or may become subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including laws and regulations regarding privacy, data protection, data security, data retention, consumer protection, advertising, electronic commerce, intellectual property, manufacturing, anti-bribery and anti-corruption, and economic or other trade prohibitions or sanctions. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws.

        In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data, the scope of which is changing, subject to differing interpretations, and is inconsistent among different jurisdictions. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, and data protection. However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure to comply with our privacy or

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security policies or privacy-related legal obligations by us or third-party service providers, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our brand and operating results.

         We are subject to disparate and complex regulatory and contractual restrictions regarding our rights to use data that we process or produce through our systems. If we fail to fully understand or comply with these restrictions, we may be subject to liability and increased compliance costs, which may harm our business and negatively impact our financial results.

        We are subject to complex and differing regulatory and contractual restrictions governing our use of data that we process or produce through our systems. This includes contractual provisions with our customers, our vendors and other third parties we work with, as well as our privacy policy and other internal policies and applicable privacy and data security legislation to which we are subject. We rely on data we process and information derived from it to provide services to customers, develop new offerings and, where appropriate and permissible, to report on industry trends and elsewhere in our marketing efforts. Although we monitor these restrictions and have procedures in place to maintain compliance with these requirements, there can be no assurance that our compliance efforts will always be effective to ensure compliance, and third parties may seek to assert claims that our use of such data in a particular manner is unauthorized.

        Future litigation may be necessary to defend ourselves or to determine the scope, enforceability and validity of such restrictions or to establish our proprietary rights. Claimants may have substantially greater resources than we do and may be able to sustain the costs of complex litigation to a greater degree and for longer periods of time than we could. Regardless of whether such claims have any merit, these claims are time-consuming and costly to evaluate and defend and could:

•

hurt our reputation;



•

adversely affect our relationships with our current or future customers;



•

cause delays or stoppages in providing our services or developing new services;



•

divert management's attention and resources;



•

require technology changes to our software or business practices that would cause us to incur substantial costs;



•

subject us to significant liabilities; and



•

require us to cease some or all of our activities.

        In addition to liability for monetary damages against us, which may be unlimited by contract or regulation and which may include attorneys' fees or governmental fines, we may be prohibited from operating portions of our business or operating in jurisdictions that are dependent on obtaining such data use rights unless we obtain licenses from, and pay royalties to, the holders of such rights, which may not be available on commercially favorable terms, or at all. If we are required to make substantial payments or undertake any such other actions as a result of misappropriation claims against us or any obligation to indemnify our customers or other third parties for such claims, such payments or costs could have a material adverse effect upon our business and financial results.

         We could incur substantial costs in protecting our intellectual property from infringement, and any failure to protect our intellectual property could impair our business.

        We regard the protection of our intellectual property, which includes trade secrets, copyrights, trademarks and domain names, as critical to our success. We strive to protect our intellectual property

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rights by relying on federal, state and common law rights, as well as contractual restrictions. We enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.

        We have sought protection for some of our technologies and currently have registered trademarks in the CommerceHub name and several of our product names. We also have copyright protection with respect to our software code and protect trade secrets through non-disclosure agreements and employee confidentiality training. Effective intellectual property protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and the costs of defending our rights. We may be required to protect our intellectual property in an increasing number of domestic and foreign jurisdictions, a process that is expensive and may not be successful or which we may not pursue in every location. We may, over time, increase our investment in protecting our intellectual property through additional means, including patent and other filings which could be expensive and time-consuming.

        Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Monitoring unauthorized use of our intellectual property is difficult and costly, and our efforts to protect our proprietary rights may not be adequate to prevent misappropriation of our intellectual property. Further, we may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Such litigation could be costly, time-consuming and distracting to management, result in a diversion of resources, the impairment or loss of portions of our intellectual property and have a material adverse effect on our business, operating results and financial condition. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. These steps may be inadequate to protect our intellectual property. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our solutions and use information that we regard as proprietary to create products and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our licensed solutions may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the extent we expand our international activities, our exposure to unauthorized copying and use of our solutions and proprietary information may increase.

        There can be no assurance that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar technology. If we fail to meaningfully protect our intellectual property, then our business, brand, operating results and financial condition could be materially harmed.

         We have expanded, and may expand in the future, by acquiring or investing in other companies, which may divert our management's attention, result in dilution to our stockholders and consume significant resources.

        Our business strategy has included, and may include in the future, acquiring complementary services, solutions, technologies or businesses. For example, in January 2015, we acquired Mercent Corporation ( Mercent ) in order to expand our demand channel offerings and capabilities. We also have

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entered into, and may enter into in the future, relationships with other businesses to expand our service offerings, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing or investments in other companies. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to conditions or approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close.

        Current or future acquisitions, investments or new business relationships may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, the company's software is not easily adapted to work with ours or we have difficulty retaining the customers or partners of any acquired business due to changes in management or otherwise. Acquisitions may also disrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our business. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown liabilities. Any acquisition or investment may require us to use significant amounts of cash, issue potentially dilutive equity securities or incur indebtedness (which could be on terms unfavorable to us or that we could be unable to repay). In addition, acquisitions involve numerous risks, any of which could harm our business, including:

•

difficulties in integrating the operations, technologies, services and personnel of acquired businesses, especially if those businesses operate outside of our core competency of providing e-commerce SaaS and SaaS-plus solutions;



•

cultural challenges associated with integrating employees from acquired businesses into our organization;



•

ineffectiveness or incompatibility of acquired technologies or services;



•

failure to successfully further develop the acquired technology in order to recoup our investment;



•

potential loss of key employees of acquired businesses;



•

inability to maintain the key business relationships and the reputations of acquired businesses;



•

diversion of management's attention from other business concerns;



•

litigation for activities of acquired businesses, including claims from terminated employees, customers, former stockholders or other third parties;



•

in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;



•

costs necessary to establish and maintain effective internal controls or other procedures and policies for acquired businesses;



•

increased fixed costs; and



•

adverse tax consequences, substantial depreciation or deferred compensation charges.

        Any of these risks could harm our business and operating results.

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         Our long-term success depends, in part, on our ability to expand the sales of our e-commerce solutions to customers located outside of the United States, and thus our business is susceptible to risks associated with international sales and operations.

        Outside of the United States, we currently maintain offices and have sales personnel in the United Kingdom, and service customers in Canada. As part of our long-term strategy we intend to continue to expand our international operations. Any international expansion efforts that we may undertake may not be successful. In addition, conducting international operations in new markets will require considerable management attention and resources, is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, taxation systems, alternative dispute systems, regulatory systems and commercial infrastructures, and will subject us to additional risks that we have not generally faced in the United States, including risks associated with:

•

disparate government regulations from multiple nations relating to e-commerce and other services, electronic devices and competition, and restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs), nationalization and restrictions on foreign ownership;



•

limited fulfillment and technology infrastructure;



•

lower levels of consumer spending and fewer opportunities for growth compared to the U.S.;



•

localization of our solutions, including translation into foreign languages and adaptation for regulatory requirements and local practices;



•

lack of familiarity, and the burdens of complying, with applicable foreign laws and legal practices;



•

unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;



•

differing technology standards;



•

longer accounts receivable payment cycles and difficulties in collecting accounts receivable;



•

difficulties in managing and staffing international operations and differing employer/employee relationships, including recruiting and retaining employees in foreign countries;



•

fluctuations in exchange rates that may increase the volatility of our foreign based revenue;



•

compliance with the laws of numerous foreign taxing jurisdictions in which we conduct business, potential double taxation of our international earnings and potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems or due to changes in applicable U.S. and foreign tax laws, and restrictions on the repatriation of earnings;



•

increased costs to establish and maintain effective controls at foreign locations; the greater potential for corruption and bribery and compliance with anti-bribery and anti-corruption laws;



•

uncertain political and economic climates;



•

reduced or varied protection for intellectual property rights in some countries; and



•

overall higher costs of doing business internationally

        These factors may cause our international costs of doing business to exceed our comparable domestic costs. Any negative impact from our international business efforts could negatively impact our business, results of operations and financial condition as a whole. Further, there is no guarantee that the financial performance of our operations in international markets will be similar to our historical operations in the United States and Canada. A variety of factors, including different pricing models and

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costs related to building out additional operational infrastructure in international markets, could result in lower gross margins, operating margins, or cash flow.

         The loss of key personnel, including our Chief Executive Officer, or an inability to attract and retain highly skilled personnel may adversely affect our business and limit our ability to implement our business plan successfully.

        Our future success is dependent, in large part, upon our ability to attract and retain highly qualified managerial, technical and sales personnel. We face intense competition for qualified individuals from numerous technology and e-commerce companies, which may be able to offer more competitive compensation packages. Our headquarters have been located in Albany, New York since 1997 and, although we have been successful in attracting and retaining high-quality managerial, technical and sales personnel, the pool of available local talent with the specialized skills required for our business is smaller than in larger cities, and we may struggle to find adequate replacements if any of our key personnel were to leave. Although we also have operations Seattle, Washington, the competition for talent in Seattle is intense due to the increasing number of other technology and e-commerce companies with a large or growing presence in Seattle, and we cannot be certain we can attract, assimilate or retain such personnel in the future in such a competitive environment.

        The replacement of any key employee likely would involve significant time and costs, and the loss of any key employee may significantly delay or prevent the achievement of our business objectives. Our inability to attract and retain such personnel could have an adverse effect on our business, results of operations and financial condition.

         Conditions in the global economy, the markets we serve and the financial markets may adversely affect our business, results of operations and financial condition.

        Our business is sensitive to general economic conditions. Since 2008 the effects of the global financial crisis have adversely impacted the global economy. Slower global economic growth, the credit market crisis and European debt crisis, uncertainty relating to the Euro, high levels of unemployment globally, reduced levels of capital expenditures, changes in government fiscal and monetary policies, government deficit reduction and budget negotiation dynamics, sequestration, other austerity measures and other challenges affecting the global economy adversely affect us and our customers, including having the effect of:

•

reducing demand for our products and services and limiting the financing available to our customers, resulting in longer sales cycles and slower adoption of new technologies;



•

increasing the difficulty in collecting accounts receivable;



•

increasing price competition in the markets we serve;



•

increasing the risk that we could be required to record charges relating to restructuring costs or the impairment of assets; and



•

increasing the risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations which, in addition to increasing the risks identified above, could result in preference actions against us.

        Improvement in the global economy remains uneven and uncertain. If slower growth in the global economy or in any of the markets we serve continues for a significant period, if there is significant deterioration in the global economy or such markets or if improvements in the global economy do not benefit the markets we serve, our business, results of operations and financial condition could be adversely affected.

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Factors Relating to the Spin-Off

         The Spin-Off could result in a significant tax liability to Liberty and its stockholders.

        It is a condition to the Spin-Off that Liberty receive the opinion of Baker Botts, in form and substance reasonably acceptable to Liberty, to the effect that, for U.S. federal income tax purposes, the Spin-Off will qualify as a tax-free transaction to Liberty and its stockholders under Section 355 of the Code (except with respect to the receipt of cash in lieu of fractional shares).

        The opinion of Baker Botts will be based on the law in effect as of the date of the Spin-Off and will rely upon certain assumptions, as well as statements, representations and certain undertakings made by officers of Liberty and CH Parent and John C. Malone. These assumptions, statements, representations and undertakings are expected to relate to, among other things, Liberty's business reasons for engaging in the Spin-Off, the conduct of certain business activities by Liberty and CH Parent, and the plans and intentions of Liberty and CH Parent to continue conducting those business activities and not to materially modify their ownership or capital structure following the Spin-Off. If any of those statements, representations or assumptions is incorrect or untrue in any material respect or any of those undertakings is not complied with, or if the facts upon which the opinion is based are materially different from the facts that prevail at the time of the Spin-Off, the conclusions reached in such opinion could be adversely affected.

        Liberty does not intend to seek a ruling from the IRS as to the U.S. federal income tax treatment of the Spin-Off. The opinion of Baker Botts will not be binding on the IRS or a court, and there can be no assurance that the IRS will not challenge the conclusions reached in the opinion or that a court would not sustain such a challenge.

        Even if the Spin-Off otherwise qualifies under Section 355 of the Code, the Spin-Off would result in a significant U.S. federal income tax liability to Liberty (but not to Liberty stockholders) under Section 355(e) of the Code if one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of Liberty or in the stock of CH Parent (excluding, for this purpose, the acquisition of CH Parent common stock by Liberty stockholders in the Spin-Off) as part of a plan or series of related transactions that includes the Spin-Off. Any acquisition of the stock of Liberty or CH Parent (or any predecessor or successor corporation) within two years before or after the Spin-Off would be presumed to be part of a plan that includes the Spin-Off, although the parties may be able to rebut that presumption under certain circumstances. The process for determining whether an acquisition is part of a plan under these rules is complex, inherently factual in nature and subject to a comprehensive analysis of the facts and circumstances of the particular case. Notwithstanding the opinion of Baker Botts described above, Liberty or CH Parent might inadvertently cause or permit a prohibited change in ownership of Liberty or CH Parent, thereby triggering tax liability to Liberty, which could have a material adverse effect.

        If, for any reason, it is subsequently determined that the Spin-Off does not qualify for tax-free treatment (except with respect to the receipt of cash in lieu of fractional shares of our common stock), Liberty and/or its stockholders could incur significant tax liabilities determined in the manner described in "Material U.S. Federal Income Tax Consequences of the Spin-Off." As described further under "Certain Relationships and Related Party Transactions—Relationships between CH Parent and Liberty and/or Liberty Media—Tax Sharing Agreement," in certain circumstances, CH Parent will be required to indemnify Liberty, its subsidiaries, and certain related persons for taxes and losses resulting from the Spin-Off.

        For a more complete discussion of the opinion of Baker Botts and the material U.S. federal income tax consequences of the Spin-Off to Liberty and its stockholders, please see "Material U.S. Federal Income Tax Consequences of the Spin-Off."

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         We may have a significant indemnity obligation to Liberty, which is not limited in amount or subject to any cap, if the Spin-Off is treated as a taxable transaction.

        Pursuant to the tax sharing agreement that we will enter into with Liberty in connection with the Spin-Off (the tax sharing agreement ), we will be required to indemnify Liberty, its subsidiaries and certain related persons for taxes and losses resulting from the failure of the Spin-Off to qualify as a tax-free transaction under Section 355 of the Code to the extent that such taxes and losses (i) result primarily from, individually or in the aggregate, the breach of certain covenants made by our company (applicable to actions or failures to act by CH Parent and its subsidiaries following the completion of the Spin-Off) or (ii) result from the application of Section 355(e) of the Code to the Spin-Off as a result of the treatment of the Spin-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of CH Parent (or any predecessor or successor corporation).

        Our indemnification obligations to Liberty, its subsidiaries and certain related persons will not be limited in amount or subject to any cap. If we are required to indemnify Liberty, its subsidiaries or such related persons under the circumstances set forth in the tax sharing agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position.

        For a more detailed discussion of the terms of the tax sharing agreement, please see "Certain Relationships and Related Party Transactions—Relationships between CH Parent and Liberty and/or Liberty Media—Tax Sharing Agreement."

         We may determine to forgo certain transactions in order to avoid the risk of incurring significant tax-related liabilities.

        Under the tax sharing agreement, we will covenant not to take any action, or fail to take any action, following the Spin-Off, which action or failure to act is inconsistent with the Spin-Off qualifying for tax-free treatment under Section 355 of the Code. Further, the tax sharing agreement will require that we generally indemnify Liberty for any taxes or losses incurred by Liberty (or its subsidiaries) resulting from breaches of such covenants or resulting from the application of Section 355(e) of the Code to the Spin-Off as a result of the treatment of the Spin-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of our company (or any predecessor or successor corporation). Generally, under Section 355(e) of the Code, an acquisition of the stock of our company will be presumed to be part of a plan (or series of related transactions) with the Spin-Off if such acquisition occurs within two years before or after the Spin-Off (or relates to an acquisition during the two-year period prior the Spin-Off of the Liberty Ventures common stock with respect to which our stock was distributed). This presumption, however, may be rebutted based upon an analysis of the facts and circumstances related to the acquisition and the Spin-Off, including a weighing of certain plan and non-plan factors set forth in Treasury regulations promulgated under Section 355(e) of the Code. Further, these Treasury regulations establish certain safe harbors under which an acquisition will not be considered to be part of a plan (or series of related transactions) with the Spin-Off for purposes of Section 355(e) of the Code. The application of such safe harbors generally depends on factors such as the timing, form, and relative size of the acquisition, as well as, in some cases, the identity of the parties involved in the acquisition. After taking such safe harbors, facts and circumstances, and the tax sharing agreement's restrictions on our actions into account, we might determine to forgo certain transactions that might otherwise be advantageous if such transactions would be inconsistent with the Spin-Off's qualification under Section 355 of the Code, including as a result of the application of Section 355(e) of the Code to the Spin-Off.

        In particular, we might determine to continue to operate certain of our business operations for the foreseeable future even if a sale or discontinuance of such business might otherwise be advantageous.

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Moreover, in light of the requirements of Section 355(e) of the Code, we might determine to forgo certain transactions, including share repurchases, stock issuances, certain asset dispositions and other strategic transactions, for some period of time following the Spin-Off. In addition, our indemnity obligation under the tax sharing agreement might discourage, delay or prevent our entering into a change of control transaction for some period of time following the Spin-Off.

         We may incur material costs as a result of our separation from Liberty.

        We will incur costs and expenses not previously incurred as a result of our separation from Liberty. These increased costs and expenses may arise from various sources, including financial reporting, costs associated with complying with the federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration and human resources-related functions. Although Liberty Media will continue to provide certain of these services for us under the services agreement, we cannot assure you that the services agreement will continue or that these costs will not be material to our business.

         Prior to the Spin-Off, we will not have been an independent public company and we may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent public company.

        Prior to the Spin-Off, our business was operated by Liberty as part of its broader corporate organization, rather than as an independent company. Liberty's senior management oversaw the strategic direction of our businesses and Liberty (directly and through its services agreement with Liberty Media) performed various corporate functions for us, including, but not limited to:

•

selected human resources related functions;



•

tax administration;



•

selected legal functions (including compliance with the Sarbanes-Oxley Act of 2002), as well as external reporting; and



•

treasury administration, investor relations and internal audit functions.

        Following the Spin-Off, neither Liberty nor Liberty Media will have any obligation to provide these functions to us other than those services that will be provided by Liberty Media pursuant to the services agreement between us and Liberty Media. If, once our services agreement terminates, we do not have in place our own systems and business functions, we do not have agreements with other providers of these services or we are not able to make these changes cost effectively, we may not be able to operate our business effectively and our profitability may decline. If Liberty Media does not continue to perform the services to be provided to us under the services agreement, we may not be able to operate our business effectively after the Spin-Off.

         We may not realize the potential benefits from the Spin-Off in the near term or at all.

        In this prospectus, we have described anticipated strategic and financial benefits we expect to realize as a result of our separation from Liberty. See "The Spin-Off—Reasons for the Spin-Off." In particular, we believe that the Spin-Off will better position us to take advantage of business opportunities, strategic alliances and other acquisitions through CH Parent's enhanced acquisition currency, as well as provide our management team with greater flexibility and independence in making commercial decisions that benefit our company. We also expect the Spin-Off to enable CH Parent to provide its employees with more attractive equity incentive awards. However, no assurance can be given that the market will react favorably to the Spin-Off or that the current discount applied by the market to the Liberty Ventures common stock will not be applied to CH Parent's common stock, thereby causing CH Parent's equity to not be as attractive to its employees and any potential acquisition counterparties. In addition, no assurance can be given that any investment, acquisition or other strategic opportunities will become available following the Spin-Off on terms that CH Parent finds

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favorable or at all. Given the added costs associated with the completion of the Spin-Off, including the separate accounting, legal and other compliance costs of being a separate public company, our failure to realize the anticipated benefits of the Spin-Off in the near term or at all could adversely affect our company.

         Our inter-company agreements are being negotiated while we are a subsidiary of Liberty.

        We are entering into a number of inter-company agreements covering matters such as tax sharing and our responsibility for certain liabilities previously undertaken by Liberty for our business. In addition, we are entering into a services agreement with Liberty Media pursuant to which Liberty Media will provide to us certain management, administrative, financial, treasury, accounting, tax, legal and other services, for which we will reimburse them on a fixed-fee basis. The terms of these inter-company agreements (specifically the reorganization and tax sharing agreements) are being established while we are a subsidiary of Liberty and, therefore, may not be the result of arms'-length negotiations. Although we believe that the negotiations with Liberty Media regarding the services agreement will be at arms'-length, the persons negotiating on behalf of Liberty Media also serve as officers of Liberty, as described above. We believe that the terms of these inter-company agreements are commercially reasonable and fair to all parties under the circumstances; however, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements after the Spin-Off. See "Certain Relationships and Related Party Transactions."

         Liberty's board of directors may abandon the Spin-Off at any time, and its board of directors may determine to amend the terms of any agreement we enter into relating to the Spin-Off.

        No assurance can be given that the Spin-Off will occur, or if it occurs that it will occur on the terms described in this prospectus. In addition to the conditions to the Spin-Off described herein (certain of which may be waived by the Liberty board of directors in its sole discretion), the Liberty board of directors may abandon the Spin-Off at any time prior to the distribution date for any reason or for no reason. In addition, the agreements to be entered into by CH Parent with Liberty in connection with the Spin-Off (including the reorganization agreement and the tax sharing agreement) may be amended or modified prior to the distribution date in the sole discretion of Liberty. If any condition to the Spin-Off is waived or if any material amendments or modifications are made to the terms of the Spin-Off or to any of our ancillary agreements prior to the Spin-Off, Liberty intends to promptly issue a press release and file a Current Report on Form 8-K informing the market of the substance of such waiver, amendment or modification.