<PAGE>

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                               ----------------

                                   FORM 10-Q

(Mark One)

[X]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
   Act of 1934. For the quarterly period ended September 29, 2001.

                                      or

[_]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 0-16611

                              GLOBAL SPORTS, INC.
            (Exact name of registrant as specified in its charter)

               Delaware                              04-2958132
    (State or other jurisdiction of        (I.R.S. Employer Identification
    incorporation or organization)                     Number)

1075 First Avenue, King of Prussia, PA                  19406
    (Address of principal executive                  (Zip Code)
               offices)

                                 610-265-3229
                        (Registrant's telephone number,
                             including area code)

   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 [X] No [_]

   Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of October 29, 2001:

<TABLE>
     <S>                                                   <C>
      Common Stock, $.01 par value                           37,193,091(/1/)
     ------------------------------                        -------------------
         (Title of each class)                             (Number of Shares)
</TABLE>

(/1/Excludes)approximately 37,000 shares of the registrant's Common Stock
    which are issuable to former shareholders of Fogdog, Inc. in connection
    with the registrant's acquisition of Fogdog, but which, as of October 29,
    2001, had not yet been issued.

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

                                   FORM 10-Q
                   FOR THE QUARTER ENDED SEPTEMBER 29, 2001

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements:
    Condensed Consolidated Balance Sheets as of December 30, 2000 and
     September 29, 2001 (Unaudited)........................................   3
    Condensed Consolidated Statements of Operations for the three- and
     nine-month periods ended September 30, 2000 and September 29, 2001
     (Unaudited)...........................................................   4
    Condensed Consolidated Statements of Cash Flows for the nine-month
     periods ended September 30, 2000 and September 29, 2001 (Unaudited)...   5
    Notes to Unaudited Condensed Consolidated Financial Statements.........   6
Item 2. Management's Discussion and Analysis of Financial Condition and
 Results of Operations.....................................................  11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........  26
PART II--OTHER INFORMATION
Item 1. Legal Proceedings..................................................  27
Item 2. Changes in Securities and Use of Proceeds..........................  27
Item 3. Defaults Upon Senior Securities....................................  27
Item 4. Submission of Matters to a Vote of Security Holders................  27
Item 5. Other Information..................................................  27
Item 6. Exhibits and Reports on Form 8-K...................................  27
SIGNATURE..................................................................  29
</TABLE>

   For all years prior to 1999 our fiscal year ended on December 31. Effective
for fiscal 1999, we changed our fiscal year from the last day of December to
the Saturday nearest the last day of December. Accordingly, fiscal 1999 ended
on January 1, 2000 and fiscal 2000 ended on December 30, 2000. References to
fiscal 1999, fiscal 2000 and fiscal 2001 refer to the years ended January 1,
2000, December 30, 2000 and the year ending December 29, 2001.

   Although we refer to the retailers, media companies and professional sports
organizations for which we develop and operate e-commerce businesses as our
"partners," we do not act as an agent or legal representative for any of our
partners. We do not have the power or authority to legally bind any of our
partners. Similarly, our partners do not have the power or authority to
legally bind us. In addition, we do not have the types of liabilities for our
partners that a general partner of a partnership would have.

                                       2
<PAGE>

                         PART I--FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                     December 30, September 29,
                                                         2000         2001
                                                     ------------ -------------
<S>                                                  <C>          <C>
                       ASSETS
Current assets:
  Cash and cash equivalents.........................   $ 92,012     $ 92,244
  Short-term investments............................      1,789          829
  Accounts receivable, net of allowance of $287 and
   $83, respectively................................      4,440        4,804
  Inventory.........................................     19,202       17,580
  Prepaid expenses and other current assets.........      1,485        4,063
                                                       --------     --------
    Total current assets............................    118,928      119,520
Property and equipment, net.........................     26,424       27,205
Goodwill, net.......................................     14,363       13,838
Other assets, net...................................        458       12,301
                                                       --------     --------
    Total assets....................................   $160,173     $172,864
                                                       ========     ========
        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable, accrued expenses, and other.....   $ 36,486     $ 19,125
  Deferred revenue..................................      1,317        5,418
  Current portion--note payable.....................         35           38
  Current portion--capital lease obligations........        285          383
                                                       --------     --------
    Total current liabilities.......................     38,123       24,964
Note payable........................................      5,247        5,219
Capital lease obligations...........................        503          217
Commitments and contingencies
Stockholders' equity:
  Preferred stock, Series A, $0.01 par value,
   5,000,000 shares authorized; 800 and 400 shares
   issued as mandatorily redeemable preferred stock
   and outstanding as of December 30, 2000 and
   September 29, 2001, respectively.................         --           --
  Common stock, $0.01 par value, 90,000,000 shares
   authorized; 31,925,098 and 37,213,780 shares
   issued as of December 30, 2000 and September 29,
   2001, respectively; 31,925,098 and 37,212,570
   shares outstanding as of December 30, 2000 and
   September 29, 2001, respectively.................        319          372
  Additional paid in capital........................    217,124      274,090
  Accumulated deficit...............................   (101,143)    (131,998)
                                                       --------     --------
                                                        116,300      142,464
  Less: Treasury stock, at par......................         --           --
                                                       --------     --------
    Total stockholders' equity......................    116,300      142,464
                                                       --------     --------
    Total liabilities and stockholders' equity......   $160,173     $172,864
                                                       ========     ========
</TABLE>

   The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       3
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                              Three Months Ended           Nine Months Ended
                          --------------------------- ---------------------------
                          September 30, September 29, September 30, September 29,
                              2000          2001          2000          2001
                          ------------- ------------- ------------- -------------
<S>                       <C>           <C>           <C>           <C>
Net revenues............    $  9,014      $ 18,051      $ 22,483      $ 51,219
Cost of revenues........       6,286        11,900        15,742        34,746
                            --------      --------      --------      --------
    Gross profit........       2,728         6,151         6,741        16,473
                            --------      --------      --------      --------
Operating expenses:
  Sales and marketing...       8,625         7,364        27,937        21,598
  Product development...       1,920         2,259         5,422         6,713
  General and
   administrative.......       2,224         2,388         6,462         7,505
  Stock-based
   compensation.........         510         7,597         4,297         8,967
  Depreciation and
   amortization.........       2,135         1,792         5,467         4,962
                            --------      --------      --------      --------
    Total operating
     expenses...........      15,414        21,400        49,585        49,745
Other (income) expense:
  Other income..........          --          (100)           --          (400)
  Interest income, net..        (308)         (508)         (826)       (2,017)
                            --------      --------      --------      --------
    Total other (income)
     expense............        (308)         (608)         (826)       (2,417)
                            --------      --------      --------      --------
Loss from continuing
 operations.............     (12,378)      (14,641)      (42,018)      (30,855)
Discontinued operations:
  Loss on disposition of
   discontinued
   operations...........          --            --        (4,983)           --
                            --------      --------      --------      --------
Net loss................    $(12,378)     $(14,641)     $(47,001)     $(30,855)
                            ========      ========      ========      ========
Losses per share--basic
 and diluted:
  Loss from continuing
   operations...........    $  (0.57)     $  (0.42)     $  (2.06)     $  (0.94)
  Loss on disposition of
   discontinued
   operations...........          --            --         (0.24)           --
                            --------      --------      --------      --------
  Net loss..............    $  (0.57)     $  (0.42)     $  (2.30)     $  (0.94)
                            ========      ========      ========      ========
Weighted average shares
 outstanding--basic and
 diluted................      21,817        34,747        20,446        32,892
                            ========      ========      ========      ========
</TABLE>

   The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       4
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                         Nine Months Ended
                                                    ---------------------------
                                                    September 30, September 29,
                                                        2000          2001
                                                    ------------- -------------
<S>                                                 <C>           <C>
Cash Flows from Operating Activities:
 Net loss..........................................   $(47,001)     $(30,855)
  Deduct:
   Loss on disposition of discontinued operations..     (4,983)           --
                                                      --------      --------
 Loss from continuing operations...................    (42,018)      (30,855)
                                                      --------      --------
 Adjustments to reconcile loss from continuing
  operations to net cash used in operating
  activities:
   Depreciation and amortization...................      5,467         4,962
   Stock-based compensation........................      4,297         8,967
 Changes in operating assets and liabilities, net
  of discontinued operations:
   Accounts receivable, net........................     (4,881)         (364)
   Inventory.......................................     (4,226)        1,622
   Prepaid expenses and other current assets.......        800          (444)
   Accounts payable, accrued expenses, and other...     (4,062)      (17,361)
   Deferred revenue................................        307         4,101
                                                      --------      --------
   Net cash used in continuing operations..........    (44,316)      (29,372)
   Net cash provided by discontinued operations....        256            --
                                                      --------      --------
   Net cash used in operating activities...........    (44,060)      (29,372)
                                                      --------      --------
Cash Flows from Investing Activities:
 Acquisition of property and equipment, net........     (9,804)       (5,082)
 (Additions) reductions to goodwill and other
  assets, net......................................       (427)          299
 Proceeds from sale of discontinued operations.....     13,200            --
 (Purchases) sales of short-term investments.......       (799)          960
                                                      --------      --------
   Net cash provided by (used in) investing
    activities.....................................      2,170        (3,823)
                                                      --------      --------
Cash Flows from Financing Activities:
 Repayments of capital lease obligations...........        (71)         (188)
 Proceeds from (repayments of) mortgage note.......      5,300           (25)
 Purchases of treasury stock.......................         --            (4)
 Proceeds from the sale of common stock............     39,873        30,256
 Proceeds from exercises of common stock options
  and warrants.....................................        541         3,388
                                                      --------      --------
   Net cash provided by financing activities.......     45,643        33,427
                                                      --------      --------
Net increase in cash and cash equivalents..........      3,753           232
Cash and cash equivalents, beginning of period.....     27,345        92,012
                                                      --------      --------
Cash and cash equivalents, end of period...........   $ 31,098      $ 92,244
                                                      ========      ========
</TABLE>

   The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       5
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION

   Global Sports, Inc. ("Global" or the "Company"), a Delaware corporation,
develops and operates the electronic commerce ("e-commerce") businesses of
retailers, media companies, and professional sports organizations. The Company
currently derives virtually all of its revenues from the sale of goods through
its partners' Web sites, business to business group sales, 800-number sales,
outbound shipping charges, and Web site development and operating fees. Each
of the Company's partners owns the URL address of its Web site. Based upon the
terms of the agreements with its partners, the Company owns certain components
of the Web sites and the partners own other components.

   The accompanying condensed consolidated financial statements of Global have
been prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with the instructions for Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements.

   The accompanying financial information is unaudited; however, in the
opinion of the Company's management, all adjustments (consisting solely of
normal recurring adjustments and accruals) necessary to present fairly the
financial position, results of operations and cash flows for the periods
reported have been included. The results of operations for the periods
reported are not necessarily indicative of those that may be expected for a
full year.

   This quarterly report should be read in conjunction with the financial
statements and notes thereto included in the Company's audited financial
statements presented in the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 30, 2001.

   Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those used in the current
period.

NOTE 2--ACCOUNTING POLICIES

   Change in Useful Life of Property and Equipment: During the three-month
period ended March 31, 2001, the Company increased its estimate of the useful
lives of its computer hardware and software from two years to four years. This
change had the effect of decreasing the loss from continuing operations for
the three- and nine-month periods ended September 29, 2001 by $1.4 million and
$4.3 million, or $0.04 and $0.13 per share, respectively.

   Other assets, net: Other assets, net consists primarily of deferred revenue
share charges. This asset will be amortized as the revenue share expense is
incurred.

   Shipping & Handling Costs: The Company defines shipping and handling costs
as only those costs incurred for a third-party shipper to transport products
to the customer and these costs are included in cost of revenues. In some
instances, shipping and handling costs exceed shipping revenues charged to the
customer, and are subsidized by the Company. Additionally, the Company
selectively offers promotional free shipping whereby it ships merchandise to
customers free of all shipping and handling charges. The cost of promotional
free shipping and subsidized shipping and handling was $606,000 and $2.1
million for the three- and nine-month periods ended September 30, 2000,
respectively, and $99,000 and $933,000 for the three- and nine-month periods
ended September 29, 2001, respectively, and was charged to sales and marketing
expense.

 New Accounting Pronouncements

   Business Combinations, Goodwill and Other Intangible Assets: In July 2001,
the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standard ("SFAS") No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires
business

                                       6
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

  NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. SFAS No. 142 changes the accounting
for goodwill from an amortization method to an impairment-only approach.

   Under an impairment-only approach, goodwill and certain intangibles will
not be amortized into results of operations, but instead would be reviewed for
impairment and written down and charged to results of operations only in the
periods in which the recorded value of goodwill and certain intangibles is
more than its fair value. SFAS No. 142 requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption.
Any impairment loss resulting from the transition impairment test would be
recorded as a cumulative effect of a change in accounting principle. The
Company is evaluating the impact of the adoption of these standards and has
not yet determined the effect of adoption on its financial position and
results of operations.

   Impairment or Disposal of Long-Lived Assets: In October 2001, the FASB
issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." This statement supercedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
and the accounting and reporting provisions of Accounting Principals Board
("APB") Opinion No. 30, "Reporting the Results of Operations--Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual,
and Infrequently Occurring Events and Transactions," for the disposal of a
segment of a business. SFAS No. 144 retains the requirement in APB No. 30 to
report separately discontinued operations, and extends that reporting to a
component of an entity that either has been disposed of or is classified as
held for sale. This statement is effective for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. The Company
is evaluating the impact of the adoption of this standard and has not yet
determined the effect of adoption on its financial position and results of
operations.

NOTE 3--EQUITY TRANSACTIONS

   On August 23, 2001, the Company issued to Interactive Technology Holdings,
LLC ("ITH") 3,000,000 shares of its common stock at a price of $10.00 per
share, for an aggregate purchase price of $30.0 million. At the same time, ITH
acquired 1,000,000 shares of the Company's common stock from Michael G. Rubin,
Chairman, President and Chief Executive Officer of the Company, at a price of
$10.00 per share, for an aggregate purchase price of $10.0 million.

   On July 20, 2001, a right to receive 1,600,000 shares of the Company's
common stock was exercised in lieu of future cash revenue share payments. On
the day immediately preceding the exercise of the right, the closing price of
a share of the Company's common stock was $9.00.

   During the three- and nine-month periods ended September 29, 2001, the
Company granted options and warrants to purchase 1,281,970 and 3,665,620
shares of the Company's common stock to employees, directors, partners,
consultants, and others, respectively. The range of exercise prices for all
options and warrants granted was from $1.00 to $17.15 for the three-month
period ended September 29, 2001, and from $0.01 to $17.15 for the nine-month
period ended September 29, 2001. As a result of the grant of these options and
warrants and the amortization of deferred compensation from prior grants, the
Company recorded stock-based compensation expense of $7.6 million and $9.0
million for the three- and nine-month periods ended September 29, 2001,
respectively, primarily as a result of non-employee grants. As of September
29, 2001, the Company had an aggregate of $1.8 million of deferred stock-based
compensation remaining to be amortized over the next four years.

   Options and warrants to purchase 519,824 and 622,337 shares of the
Company's common stock were exercised during the three- and nine-month periods
ended September 29, 2001, respectively. The range of exercise prices was from
$0.01 to $15.00 for the three- and nine-month periods ended September 29,
2001, respectively. These exercises resulted in cash proceeds to the Company
of $3.2 million and $3.4 million for the three- and nine-month periods ended
September 29, 2001, respectively.

                                       7
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

  NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


NOTE 4--STOCK-BASED COMPENSATION

   The following table shows the amounts of stock-based compensation, arising
primarily from issuances of stock options and warrants, that would have been
recorded under the following income statement categories had stock-based
compensation not been separately stated in the statements of operations:

<TABLE>
<CAPTION>
                                Three Months Ended           Nine Months Ended
                            --------------------------- ---------------------------
                            September 30, September 29, September 30, September 29,
                                2000          2001          2000          2001
                            ------------- ------------- ------------- -------------
                                  (in thousands)              (in thousands)
   <S>                      <C>           <C>           <C>           <C>
   Sales and marketing.....     $   1        $   90        $1,082        $  184
   Product development.....        --           386            --           386
   General and
    administrative.........       509         7,121         3,215         8,397
                                -----        ------        ------        ------
                                $ 510        $7,597        $4,297        $8,967
                                =====        ======        ======        ======
</TABLE>

NOTE 5--LOSSES PER SHARE

   Losses per share for all periods have been computed in accordance with SFAS
No. 128, "Earnings Per Share". Basic and diluted losses per share are computed
by dividing net loss by the weighted average number of shares of common stock
outstanding during the period. Outstanding common stock options and warrants
have been excluded from the calculation of diluted losses per share because
their effect would be antidilutive.

   The amounts used in calculating losses per share data are as follows:

<TABLE>
<CAPTION>
                                 Three Months Ended           Nine Months Ended
                             --------------------------- ---------------------------
                             September 30, September 29, September 30, September 29,
                                 2000          2001          2000          2001
                             ------------- ------------- ------------- -------------
                                   (in thousands)              (in thousands)
   <S>                       <C>           <C>           <C>           <C>
   Loss from continuing
    operations.............    $(12,378)     $(14,641)     $(42,018)     $(30,855)
   Loss on disposition of
    discontinued
    operations.............          --            --        (4,983)           --
                               --------      --------      --------      --------
   Net loss................    $(12,378)     $(14,641)     $(47,001)     $(30,855)
                               ========      ========      ========      ========
   Weighted average shares
    outstanding--basic and
    diluted................      21,817        34,747        20,446        32,892
                               ========      ========      ========      ========
   Outstanding common stock
    options having no
    dilutive effect........       3,102         5,623         3,102         5,623
                               ========      ========      ========      ========
   Outstanding common stock
    warrants having no
    dilutive effect........       3,709         8,073         3,709         8,073
                               ========      ========      ========      ========
</TABLE>

NOTE 6--CONCENTRATIONS OF CREDIT RISK

   As of September 29, 2001, the Company had $2.2 million included in accounts
receivable related to sales of one vendor's products through Web site and
other 800-number sales, which are due over a weighted average period of four
months.

   Cash equivalents potentially subject the Company to credit risk. As of
September 29, 2001 the Company had $86.3 million invested with three financial
institutions. The composition of these investments are regularly monitored by
management.


                                       8
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

  NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


NOTE 7--COMMITMENTS AND CONTINGENCIES

 Legal Proceedings

   The Company is involved in various routine litigation, including litigation
in which the Company is a plaintiff, incidental to its business. The Company
believes that the disposition of such routine litigation will not have a
material adverse effect on the financial position or results of operations of
the Company.

 Employment Agreements

   As of September 29, 2001, the Company had employment agreements with
several of its employees for an aggregate annual base salary $2.3 million plus
bonuses and increases in accordance with the terms of the agreements.
Remaining terms of such contracts range from two to three years.

 Advertising and Media Agreements

   As of September 29, 2001, the Company was contractually committed for the
purchase of future advertising totaling approximately $50,000 through the
fiscal year ending December 29, 2001. The expense related to these commitments
will be recognized in accordance with the Company's accounting policy related
to advertising.

 Revenue Share Payments

   As of September 29, 2001, the Company was contractually committed to
minimum cash revenue share payments of $375,000 per fiscal quarter through
July, 2011.

 Pending Acquisition

   On September 13, 2001, the Company entered into a definitive merger
agreement to acquire all of the outstanding shares of Ashford.com, Inc.
("Ashford"), an online luxury goods retailer. Under the terms of the
agreement, upon consummation of the merger, Ashford stockholders will receive
$0.125 and 0.0076 of a share of Global's common stock for each share of
Ashford common stock. Global expects to pay approximately $7.1 million in cash
and to issue approximately 430,000 shares of common stock in exchange for all
issued and outstanding shares of Ashford common stock. All outstanding options
to purchase shares of Ashford common stock will terminate immediately prior to
the effective time of the merger, and any outstanding warrants to purchase
Ashford common stock that do not by their terms terminate as a result of the
merger will be assumed by the Company and exchanged for warrants entitling the
holder to the merger consideration described above. The transaction, which
will be accounted for as a purchase, is expected to close in late 2001 or
early 2002.

NOTE 8--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 Noncash Investing and Financing Activities

   On July 20, 2001, a right to receive 1,600,000 shares of the Company's
common stock was exercised in lieu of future cash revenue share payments. The
Company has valued these deferred revenue share charges at $14.4 million and
has included them in prepaid expenses and other current assets and other
assets, net.

NOTE 9--RELATED PARTY TRANSACTIONS

   The Company has entered into strategic alliances to provide procurement and
fulfillment services for QVC, Inc., and a partner which may be considered an
affiliate of SOFTBANK America Inc. (or its related companies). The Company
recognized net revenues of $768,000 on sales to these related parties for the
three- and nine-month

                                       9
<PAGE>

                     GLOBAL SPORTS, INC. AND SUBSIDIARIES

  NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)

periods ended September 30, 2000, respectively, and $186,000 and $1.4 million
for the three- and nine-month periods ended September 29, 2001, respectively.
The terms of these sales are comparable to those given to other partners of
the Company, and the amount included in accounts receivable as a result of
these sales was $55,000 as of September 29, 2001.

NOTE 10--DISCONTINUED OPERATIONS

   On May 26, 2000, the Company completed the previously announced sale of its
Off-Price and Action Sports division. The Company received $13.2 million in
cash proceeds from the sale. This sale completed the disposition of the
Company's discontinued operations.

   Included in accounts payable, accrued expenses, and other as of September
29, 2001 was $804,000 related to certain remaining obligations of the
discontinued operations.

   Net sales of discontinued operations were $0 and $36.2 million for the
three- and nine-month periods ended September 30, 2000, respectively, and $0
for the three- and nine-month periods ended September 29, 2001.



                                      10
<PAGE>

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

Forward-Looking Statements

   All statements made in this Quarterly Report on Form 10-Q other than
statements of historical fact are forward-looking statements. The words
"anticipate", "believe", "estimate", "expect", "intend", "may", "plan",
"will", "would", "should", "guidance", "potential", "continue", "confident",
"prospects" and similar expressions typically are used to identify forward-
looking statements. Forward-looking statements are based on the then-current
expectations, beliefs, assumptions, estimates and forecasts about our business
and the industry and markets in which we operate. Those statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions which will be difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or implied by those
forward-looking statements. Factors which may affect our business, financial
condition and operating results include the effects of changes in the economy,
consumer spending, the stock market and the industries in which we operate,
changes affecting the Internet and e-commerce, our ability to maintain
relationships with strategic partners and suppliers, our ability to timely and
successfully develop, maintain and protect our technology and product and
service offerings and execute operationally, our ability to attract and retain
qualified personnel, and our ability to successfully integrate our
acquisitions of other businesses, including our proposed acquisition of
Ashford.com. More information about potential factors that could affect us are
described under the heading "Risk Factors." We expressly disclaim any intent
or obligation to update those forward-looking statements except as otherwise
specifically stated by us.

Overview

   We develop and operate e-commerce businesses for retailers, media
companies, and professional sports organizations. We enable our partners to
capitalize on their existing brands to exploit online commerce opportunities.
We customize the design of a partner's Web site with a broad range of
characteristics that includes a differentiated user interface, partner-
specific content pages, an extensive electronic catalog of product
descriptions and images, a searchable database and interactive communication
tools. We currently derive virtually all of our revenues from the sale of
goods through our partners' Web sites, business to business group sales, 800-
number sales, outbound shipping charges, and Web site development and
operating fees.

Recent Developments

   In August 2001, we announced our intention to expand our business to
include developing and operating e-commerce businesses beyond the sporting
goods merchandise category. Concurrent with that announcement, we announced
that we had entered into an e-commerce agreement with Kmart Corporation and
Bluelight.com LLC, a subsidiary of Kmart. Under that agreement, we manage
certain aspects of Kmart's overall e-commerce business, including fulfillment,
technology and customer service in exchange for a combination of fixed fees
and a guaranteed percentage of sales. Kmart selects the merchandise to be sold
on the site, owns a portion of the inventory and provides in-store marketing
of the e-commerce business at its retail outlets and other offline marketing
support, including newspaper circular advertising. In addition to our
agreement with Kmart and Bluelight.com, we intend to selectively pursue
additional opportunities outside of sporting goods, while continuing to grow
our existing sporting goods business.

   On September 13, 2001, we entered into a definitive merger agreement to
acquire all of the outstanding shares of Ashford.com, Inc., an online luxury
goods retailer. Under the terms of the agreement, upon consummation of the
merger, Ashford stockholders will receive $0.125 and 0.0076 of a share of our
common stock for each share of Ashford common stock. We expect to pay
approximately $7.1 million in cash and to issue approximately 430,000 shares
of common stock in exchange for all issued and outstanding shares of Ashford
common stock. All outstanding options to purchase shares of Ashford common
stock will terminate immediately prior to the effective time of the merger,
and any outstanding warrants to purchase Ashford common stock that do not by
their terms terminate as a result of the merger will be assumed by us and
exchanged for warrants entitling the holder to the merger consideration
described above. The transaction, which will be accounted for as a purchase,
is expected to close in late 2001 or early 2002.

                                      11
<PAGE>

Financial Presentation

   Our financial statements present:

  .  net revenues, which are derived from sales of goods through our
     partners' Web sites, business to business group sales, 800-number sales,
     and related outbound shipping charges, net of allowances for returns and
     discounts. Net revenues are also derived from fees earned in connection
     with marketing and Web site development and operation.

  .  cost of revenues, which include the cost of products sold and inbound
     freight related to these products, as well as outbound shipping and
     handling costs, other than those related to promotional free shipping
     and subsidized shipping and handling which are included in sales and
     marketing expense.

  .  sales and marketing expenses, which include advertising and promotional
     expenses, including promotional free shipping and subsidized shipping
     and handling costs, distribution facility expenses, customer service
     costs, merchandising costs and payroll and related expenses. These
     expenses also include partner revenue shares, which are payments made to
     our partners in exchange for the use of their brands, the promotion of
     our partners' URLs and Web sites in their marketing and communication
     materials, the implementation of programs to provide incentives to our
     partners' in-store customers to shop online and other programs and
     services provided to the customers of our partners' Web sites.

  .  product development expenses, which consist primarily of expenses
     associated with planning, maintaining and operating our partners' Web
     sites and payroll and related expenses for engineering, production,
     creative and management information systems.

  .  general and administrative expenses, which consist primarily of payroll
     and related expenses associated with executive, finance, human
     resources, legal and administrative personnel, as well as occupancy
     costs for our headquarters.

  .  stock-based compensation expense, which consists of the amortization of
     deferred compensation expense for options granted to employees and
     certain non-employees and the value of the options or warrants granted
     to certain partners and investors.

  .  depreciation and amortization expenses, which relate primarily to the
     depreciation of our corporate headquarters, the depreciation and
     amortization of the capitalized costs for our technology, hardware and
     software, and the depreciation of improvements, furniture and fixtures
     at our corporate headquarters and our fulfillment center.

  .  other income, which consists primarily of income earned pursuant to the
     terms of an early lease termination agreement.

  .  interest income, net, which consists primarily of interest income earned
     on cash, cash equivalents and short-term investments, net of interest
     expense paid primarily in connection with the mortgage on our corporate
     headquarters and interest expense on capital leases.

Results of Operations

 Comparison of the three- and nine-month periods ended September 29, 2001 and
 September 30, 2000

   Net Revenues. Net revenues from continuing operations increased $9.1
million from $9.0 million for the three-month period ended September 30, 2000
to $18.1 million for the three-month period ended September 29, 2001. This
increase was primarily attributable to a $5.5 million increase in sales due to
the net addition of new Web sites and 800-number sales during the last quarter
of fiscal 2000 and in the first three quarters of fiscal 2001, a $2.6 million
increase in sales from Web sites operated in both periods, and a $1.0 million
increase in fixed and variable service fee revenue. Net revenues from
continuing operations increased $28.7 million from $22.5 million for the nine-
month period ended September 30, 2000 to $51.2 million for the nine-month
period ended September 29, 2001. This increase was primarily attributable to a
$16.7 million increase in sales due to the net addition of new Web sites and
800-number sales during the last quarter of fiscal 2000 and in the first three
quarters of fiscal 2001, an $11.0 million increase in sales from Web sites
operated in both periods, and a $1.0 million increase in fixed and variable
service fee revenue.

                                      12
<PAGE>

   Cost of Revenues. We incurred cost of revenues from continuing operations
of $11.9 million and $34.7 million for the three- and nine-month periods ended
September 29, 2001 and $6.3 million and $15.7 million for the three-and nine-
month periods ended September 30, 2000, respectively. As a percentage of net
revenues, cost of revenues from continuing operations was 65.9% and 67.8% for
the three- and nine-month periods ended September 29, 2001, and 69.7% and
70.0% for the three- and nine-month periods ended September 30, 2000,
respectively.

   Gross Profit. We had gross profit from continuing operations of $6.2
million and $16.5 million for the three- and nine-month periods ended
September 29, 2001, and $2.7 million and $6.7 million for the three- and nine-
month periods ended September 30, 2000, respectively. As a percentage of net
revenues, gross profit from continuing operations was 34.1% and 32.2% for the
three- and nine-month periods ended September 29, 2001, and 30.3% and 30.0%
for the three- and nine-month periods ended September 30, 2000, respectively.

   Sales and Marketing Expenses. Sales and marketing expenses from continuing
operations decreased $1.2 million from $8.6 million for the three-month period
ended September 30, 2000 to $7.4 million for the three-month period ended
September 29, 2001. This decrease was primarily due to a $1.1 million decrease
in third-party warehouse and fulfillment services costs, a $507,000 decrease
in subsidized shipping and handling costs, a $378,000 decrease in professional
fees and a $345,000 decrease in advertising costs, offset, in part, by a $1.2
million increase in personnel and occupancy costs associated with our
fulfillment operations. Sales and marketing expenses from continuing
operations decreased $6.3 million from $27.9 million for the nine-month period
ended September 30, 2000 to $21.6 million for the nine-month period ended
September 29, 2001. This decrease was primarily due to a $7.1 million decrease
in advertising costs and a $3.7 million decrease in third-party warehouse and
fulfillment services costs, offset, in part, by a $4.3 million increase in
personnel and occupancy costs associated with our fulfillment operations and a
$1.0 million increase in personnel costs associated with our merchandising and
customer service departments.

   Product Development Expenses. Product development expenses from continuing
operations increased $339,000 from $1.9 million for the three-month period
ended September 30, 2000 to $2.3 million for the three-month period ended
September 29, 2001. This increase was primarily due to a $385,000 increase in
personnel costs and a $162,000 increase in equipment and software maintenance
costs associated with the increased number of Web sites that we operated and
maintained, offset, in part, by a $254,000 decrease in costs associated with
our use of professional consultants. Product development expenses from
continuing operations increased $1.3 million from $5.4 million for the nine-
month period ended September 30, 2000 to $6.7 million for the nine-month
period ended September 29, 2001. This increase was primarily due to a $1.2
million increase in personnel costs, and a $702,000 increase in equipment and
software maintenance costs associated with the increased number of Web sites
that we operated and maintained, offset, in part, by an $822,000 decrease in
costs associated with our use of professional consultants.

   General and Administrative Expenses. General and administrative expenses
from continuing operations increased $164,000 from $2.2 million for the three-
month period ended September 30, 2000 to $2.4 million for the three-month
period ended September 29, 2001. This increase was primarily due to a $269,000
increase in insurance related expenses and other administrative costs to
support our e-commerce business and an $86,000 increase in credit card
chargeback activity due principally to increased sales volume, offset, in
part, by a $193,000 decrease in personnel costs. General and administrative
expenses from continuing operations increased $1.0 million from $6.5 million
for the nine-month period ended September 30, 2000 to $7.5 million for the
nine-month period ended September 29, 2001. This increase was primarily due to
a $678,000 increase in insurance related expenses and other administrative
costs to support our e-commerce business and a $431,000 increase in credit
card chargeback activity due principally to increased sales volume, offset, in
part, by a $152,000 decrease in professional fees.

   Stock-Based Compensation Expense. Stock-based compensation expense from
continuing operations increased $ 7.1 million from $510,000 for the three-
month period ended September 30, 2000 to $7.6 million for the three-month
period ended September 29, 2001. Stock-based compensation expense from
continuing operations increased $4.7 million from $ 4.3 million for the nine-
month period ended September 30, 2000 to

                                      13
<PAGE>

$9.0 million for the nine-month period ended September 29, 2001. These
increases were the result of higher charges associated with the issuance of
warrants and stock options to our partners, consultants, employees and others.
As of September 29, 2001, we had an aggregate of $1.8 million of deferred
stock-based compensation remaining to be amortized.

   Depreciation and Amortization Expenses. Depreciation and amortization
expense decreased $343,000 from $2.1 million for the three-month period ended
September 30, 2000 to $1.8 million for the three-month period ended September
29, 2001. This decrease was due to a $1.4 million decrease in depreciation
expense related to the change in our estimate of the useful lives of our
computer hardware and software from two years to four years, offset, in part,
by an $805,000 increase in depreciation expense related to our corporate
headquarters, our fulfillment center and the assets purchased to build, manage
and operate our e-commerce business and a $178,000 increase in amortization of
goodwill associated with the Fogdog acquisition. Depreciation and amortization
expense decreased $505,000 from $5.5 million for the nine-month period ended
September 30, 2000 to $5.0 million for the nine-month period ended September
29, 2001. This decrease was due to a $4.3 million decrease in depreciation
expense related to the change in our estimate of the useful lives of our
computer hardware and software from two years to four years, offset, in part,
by a $3.4 million increase in depreciation expense related to our corporate
headquarters, our fulfillment center and the assets purchased to build, manage
and operate our e-commerce business and a $529,000 increase in amortization of
goodwill associated with the Fogdog acquisition.

   Other income. We had other income of $100,000 and $400,000 for the three-
and nine-month periods ended September 29, 2001, and $0 for the three- and
nine-month periods ended September 30, 2000, respectively. These increases
related to fees earned pursuant to the terms of an early lease termination
agreement.

   Interest income, net. We had interest income of $508,000, net of interest
expense of $140,000, and interest income of $308,000, net of interest expense
of $87,000, for the three-month periods ended September 29, 2001 and September
30, 2000, respectively. We had interest income of $2.0 million, net of
interest expense of $470,000, and interest income of $826,000, net of interest
expense of $177,000, for the nine-month periods ended September 29, 2001 and
September 30, 2000, respectively. The increases in interest income, net of
interest expense, for the three- and nine-month periods ended September 29,
2001 compared to the comparable periods in fiscal 2000 were due to higher
average balances of cash and cash equivalents and short-term investments
during the three- and nine-month periods ended September 29, 2001.

   Income Taxes. Since the sales of our discontinued operations, we have not
generated taxable income. Net operating losses generated have been carried
back to offset income taxes paid in prior years. The remaining net operating
losses will be carried forward. Any otherwise recognizable deferred tax assets
have been offset by a valuation allowance for the net operating loss
carryforwards.

Liquidity and Capital Resources

   On August 23, 2001, we issued to ITH 3,000,000 shares of our common stock
at a price of $10.00 per share, for an aggregate purchase price of $30.0
million. At the same time, ITH acquired 1,000,000 shares of our common stock
from Michael G. Rubin, our Chairman, President and Chief Executive Officer, at
a price of $10.00 per share, for an aggregate purchase price of $10.0 million.

   On July 20, 2001, a right to receive 1,600,000 shares of our common stock
was exercised in lieu of future cash revenue share payments. On the day
immediately preceding the exercise of the right, the closing price of a share
of our common stock was $9.00.

   We raised an aggregate of $146.3 million in gross proceeds through equity
financings in fiscal 1999 and fiscal 2000, as well as $5.3 million in gross
proceeds through a mortgage financing in fiscal 2000, to finance our e-
commerce business. We received an aggregate of $23.5 million in proceeds from
the sales of our discontinued operations in fiscal 1999 and fiscal 2000, as
well as $35.7 million in net cash from the acquisition of Fogdog in fiscal
2000.

                                      14
<PAGE>

   We have incurred substantial costs to develop our e-commerce business and
to recruit, train and compensate personnel for our creative, engineering,
marketing, merchandising, customer service, management information systems and
administrative departments. We invested in the required technology, equipment
and personnel to make our customer service center and Kentucky distribution
center fully operational. As of September 29, 2001, we had cash and cash
equivalents of $92.2 million, working capital of $94.6 million, and an
accumulated deficit of $132.0 million.

   We used $29.4 million in net cash for operating activities of continuing
operations during the nine-month period ended September 29, 2001 and $44.3
million in net cash for operating activities of continuing operations during
the nine-month period ended September 30, 2000. Net cash used for operating
activities of continuing operations during the nine-month period ended
September 29, 2001 was primarily the result of net losses from continuing
operations and changes in accounts receivable, prepaid expenses and other
current assets, and accounts payable, accrued expenses and other liabilities,
offset, in part, by changes in inventory, deferred revenue, stock-based
compensation and depreciation and amortization. Net cash used for operating
activities of continuing operations during the nine-month period ended
September 30, 2000 was primarily the result of net losses from continuing
operations and changes in accounts receivable, inventory, and accounts
payable, accrued expenses and other liabilities, partially offset by changes
in prepaid expenses and other current assets, deferred revenue, stock-based
compensation, and depreciation and amortization.

   Our investing activities during the nine-month period ended September 29,
2001 consisted primarily of purchases of property and equipment. We made
capital expenditures of $5.1 million during the nine-month period ended
September 29, 2001. Also, during the nine-month period ended September 29,
2001, we received $960,000 in cash proceeds from sales of short-term
investments. During the nine-month period ended September 30, 2000, our
investing activities consisted primarily of purchases of property and
equipment of $9.8 million. In addition, we received $13.2 million in cash
proceeds from the sale of our Off-Price and Action Sports division.

   As of September 29, 2001, we had commitments of approximately $50,000 for
advertising and promotion programs, as well as $375,000 per fiscal quarter for
revenue share payments. In connection with the planned acquisition of
Ashford.com, we anticipate that approximately $7.1 million in cash will be
payable in exchange for outstanding shares of Ashford.com common stock. We
also expect to incur acquisition related expenses of approximately $1.4
million.

   To date, we have financed our e-commerce operations primarily from the sale
of equity securities. We expect that our current cash and the collection of
accounts receivable will be sufficient to meet our anticipated cash needs for
the foreseeable future. In addition, we expect that we will realize income
from our continuing operations, excluding non-cash charges for stock-based
compensation and depreciation and amortization, in the fourth quarter of
fiscal 2001 and for fiscal year 2002. However, in order to internally fund our
anticipated operating expenses and realize income from continuing operations,
including non-cash charges, our revenues must increase significantly. If cash
flows are insufficient to fund these expenses, we may in the future need to
raise additional funds in future periods through public or private financings
or other arrangements to fund our operations until we achieve profitability.
Failure to raise future capital when needed could seriously harm our business
and operating results. If additional funds are raised through the issuance of
equity securities, the percentage ownership of our stockholders would be
reduced. Furthermore, these equity securities might have rights, preferences
or privileges senior to our common stock.

Seasonality

   We expect to experience seasonal fluctuations in our revenues. These
seasonal patterns will cause quarterly fluctuations in our operating results.
In particular, we expect that the fourth fiscal quarter will account for a
disproportionate percentage of our total annual sales. We believe that results
of operations for a quarterly period may not be indicative of the results for
any other quarter or for the full year.

                                      15
<PAGE>

Risk Factors

   Any investment in shares of our common stock involves a high degree of
risk. You should carefully consider the following information about these
risks, together with the other information contained in this Quarterly Report
on Form 10-Q and our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 30, 2001. If any of the following risks occur,
our business could be materially harmed. In these circumstances, the market
price of our common stock could decline, and you may lose all or part of the
money you paid to buy our common stock.

 Our future success cannot be predicted based upon our limited e-commerce
 operating history.

   Although we commenced operations in 1987, we did not initiate our e-
commerce business until the first quarter of 1999 and did not begin operating
our e-commerce business until the fourth quarter of 1999. Prior to the fourth
quarter of 1999, when we launched the e-commerce businesses we operate for our
partners, 100% of our revenues had been generated by our discontinued
operations. The sale of the discontinued operations was completed in May 2000.
Accordingly, 100% of our revenues are currently generated through our e-
commerce business. Based on our limited experience with our e-commerce
business, it is difficult to predict whether we will be successful. Thus, our
chances of financial and operational success should be evaluated in light of
the risks, uncertainties, expenses, delays and difficulties associated with
operating a business in a relatively new and unproven market, many of which
may be beyond our control. Our failure to address these issues could have a
material adverse effect on our business, results of operations and financial
condition.

 We expect increases in our operating expenses and continuing losses.

   We incurred substantial losses in fiscal 1999, fiscal 2000 and during the
first nine months of fiscal 2001, and as of September 29, 2001, we had an
accumulated deficit of $132.0 million. We have not achieved profitability from
our continuing operations. We may not obtain enough customer traffic or a high
enough volume of purchases from our partners e-commerce businesses to generate
sufficient revenues to achieve profitability. We could continue to incur
operating and net losses. There can be no assurances that we will be able to
achieve profitability from our continuing operations.

   We will continue to incur significant operating expenses and capital
expenditures as we:

  .  enhance our distribution and order fulfillment capabilities;

  .  further improve our order processing systems and capabilities;

  .  develop enhanced technologies and features to improve our partners' e-
     commerce businesses;

  .  enhance our customer service capabilities to better serve our customers'
     needs;

  .  increase our general and administrative functions to support our growing
     operations; and

  .  continue our sales and marketing activities.

   Because we will incur many of these expenses before we receive any revenues
from our efforts, our losses will be greater than the losses we would incur if
we developed our business more slowly. In addition, we may find that these
efforts are more expensive than we currently anticipate, which would further
increase our losses. Also, the timing of these expenses may contribute to
fluctuations in our quarterly operating results.

   Prior to the recent expansion of our relationship with Bluelight.com, our
business had been limited to the sporting goods industry. Through the proposed
acquisition of Ashford, we intend to expand our operations into the luxury
goods industry. We may not be able to successfully expand our operations into
new industries.

   Until recently, our business had been limited to the sporting goods
industry. Through the recent expansion of our relationship with Bluelight.com,
we have begun to expand our operations into other industries, including
electronics and home products. Through the proposed acquisition of
Ashford.com, Inc., we intend to further expand our business into the luxury
goods industry. In order to successfully expand our business into these
industries, we must develop and maintain relationships with manufacturers in
these industries and hire and retain skilled personnel to help manage these
areas of our business. Our failure to successfully expand our business into
these industries could adversely affect our business, results of operations
and financial condition.

                                      16
<PAGE>

   Our success is tied to the success of the retail industry and our partners
for which we operate e-commerce businesses.

   Our future success is substantially dependent upon the success of the
retail industry and our partners for which we operate e-commerce businesses.
From time to time, the retail industry has experienced downturns. Any downturn
in the retail industry could adversely affect our business. In addition, if
our partners were to have financial difficulties or seek protection from their
creditors, or if we are unable to replace our partners or obtain new partners,
it could adversely affect our business, financial condition and results of
operations.

   We enter into contracts with our partners. If we do not maintain good
working relationships with our partners or perform as required under these
agreements it could adversely affect our business.

   The contracts with our partners establish new and complex relationships
between us and our partners. 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 new and complex relationships. If we do
not maintain a good working relationship with our partners or perform as
required under these agreements, our partners could seek to terminate the
agreements prior to the end of the term or they could decide not to renew the
contracts at the end of the term. This could adversely affect our business,
financial condition and results of operations. Moreover, our partners could
decide not to renew these contracts for reasons not related to our
performance.

   Our operating results are difficult to predict. If we fail to meet the
expectations of public market analysts and investors, the market price of our
common stock may decline significantly.

   Our annual and quarterly operating results may fluctuate significantly in
the future due to a variety of factors, many of which are outside of our
control. Because our operating results may be volatile and difficult to
predict, quarter-to-quarter comparisons of our operating results may not be a
good indication of our future performance. In some future quarter our
operating results may fall below the expectations of securities analysts and
investors. In this event, the trading price of our common stock may decline
significantly.

   Factors that may harm our business or cause our operating results to
fluctuate include the following:

  .  our inability to retain existing partners or to obtain new partners;

  .  our inability to obtain new customers at a reasonable cost, retain
     existing customers or encourage repeat purchases;

  .  decreases in the number of visitors to the e-commerce businesses
     operated by us or the inability to convert these visitors into
     customers;

  .  our failure to offer an appealing mix of products, including sporting
     goods, apparel and footwear;

  .  our inability to adequately maintain, upgrade and develop our partners'
     Web sites, the systems used to process customers' orders and payments or
     our computer network;

  .  the ability of our competitors to offer new or superior e-commerce
     businesses, services or products;

  .  price competition that results in lower profit margins or losses;

  .  our inability to obtain specific products and brands or unwillingness of
     vendors to sell their products to us;

  .  unanticipated fluctuations in the amount of consumer spending on various
     products that we sell, which tend to be discretionary spending items;

  .  increases in the cost of advertising;

  .  increases in the amount and timing of operating costs and capital
     expenditures relating to expansion of our operations;

  .  unexpected increases in shipping costs or delivery times, particularly
     during the holiday season;

  .  technical difficulties, system security breaches, system downtime or
     Internet slowdowns;

  .  seasonality;

                                      17
<PAGE>

  .  our inability to manage inventory levels or control inventory theft;

  .  our inability to manage distribution operations or provide adequate
     levels of customer service;

  .  an increase in the level of our product returns;

  .  government regulations related to use of the Internet for commerce; and

  .  unfavorable economic conditions specific to the Internet, e-commerce or
     the industries in which we operate.

   Seasonal fluctuations in sales could cause wide fluctuations in our
quarterly results.

   We expect to experience seasonal fluctuations in our revenues. These
seasonal patterns will cause quarterly fluctuations in our operating results.
In particular, we expect that our fourth fiscal quarter will account for a
disproportionate percentage of our total annual revenues. In anticipation of
increased sales activity during our fourth fiscal quarter, we may hire a
significant number of temporary employees to bolster our permanent staff and
significantly increase our inventory levels. For this reason, if our revenues
were below seasonal expectations during the fourth fiscal quarter, our annual
operating results could be below the expectations of securities analysts and
investors.

   Due to the limited operating history of our e-commerce business, it is
difficult to predict the seasonal pattern of our sales and the impact of this
seasonality on our business and financial results. In the future, our seasonal
sales patterns may become more pronounced, may strain our personnel, product
distribution and shipment activities and may cause a shortfall in revenues as
compared to expenses in a given period.

   We have been unable to fund our e-commerce operations with the cash
generated from our business. If we do not generate cash sufficient to fund our
operations, we may in the future need additional financing to continue our
growth or our growth may be limited.

   Because we have not generated sufficient cash from operations to date, we
have funded our e-commerce operations primarily from the sale of equity
securities. Cash from revenues must increase significantly for us to fund
anticipated operating expenses internally. If our cash flows are insufficient
to fund these expenses, we may in the future need to fund our growth through
additional debt or equity financings or reduce costs. Further, we may not be
able to obtain financing on satisfactory terms. Our inability to finance our
growth, either internally or externally, may limit our growth potential and
our ability to execute our business strategy. If we issue securities to raise
capital, our existing stockholders may experience additional dilution or the
new securities may have rights senior to those of our common stock.

   We must develop and maintain relationships with key brand manufacturers to
obtain a sufficient assortment and quantity of quality merchandise on
acceptable commercial terms. If we are unable to do so, it could adversely
affect our business, results of operations and financial condition.

   We primarily purchase the products we offer directly from the manufacturers
of the products. If we are unable to develop and maintain relationships with
these manufacturers, we may be unable to obtain or continue to carry a
sufficient assortment and quantity of quality merchandise on acceptable
commercial terms and our business could be adversely impacted. We do not have
written contracts with most of our manufacturers. Manufacturers could stop
selling products to us and may ask us to remove their products or logos from
our partners' Web sites. In some circumstances, our partners purchase products
directly from manufacturers for sale on their Web sites. If we or our partners
are unable to obtain products directly from manufacturers, especially popular
brand manufacturers, we may not be able to obtain the same or comparable
merchandise in a timely manner or on acceptable commercial terms. For example,
we currently are not authorized to offer some popular brands of sporting
goods, such as Nike, although we are authorized to sell the remaining Nike
inventory held by Fogdog, Inc. on the fogdog.com Web site. There can be no
assurance that we will be able to offer these brands in the future or that we
will continue to be able to offer brands we currently offer. If we are unable
to offer a sufficient assortment and quantity of quality products at
acceptable prices, we may lose sales and market share.

                                      18
<PAGE>

   Capacity constraints or system failures could materially and adversely
affect our business, results of operations and financial condition.

   Any system failure, including network, software or hardware failure, that
causes interruption of the availability of our partners' Web sites could
result in decreased usage of these Web sites. If these failures are sustained
or repeated, they could reduce the attractiveness of our partners' Web sites
to customers, vendors and advertisers. Our operations are subject to damage or
interruption from:

  .  fire, flood, earthquake or other natural disasters;

  .  power losses, interruptions or brown-outs;

  .  Internet, telecommunications or data network failures;

  .  physical and electronic break-ins or security breaches;

  .  computer viruses; and

  .  other similar events.

   We launched our first partners' e-commerce businesses in the fourth quarter
of fiscal 1999. The limited time during which we have been operating these
businesses, as well as the inherent unpredictability of the events described
above, makes it difficult to predict whether the occurrence of any of these
events is likely. If any of these events do occur, they could result in
interruptions, delays or cessations in service to users of our partners' Web
sites, which could have a material adverse effect on our business, results of
operations and financial condition.

   In addition, we maintain our computers on which we operate our partners'
Web sites at the facility of a third-party hosting company. We cannot control
the maintenance and operation of this facility, which is also susceptible to
similar disasters and problems. Our insurance policies may not adequately
compensate us for any losses that we may incur. Any system failure that causes
an interruption in our service or a decrease in responsiveness could harm our
relationships with our customers and result in reduced revenues.

   We may be unable to protect our proprietary technology or keep up with that
of our competitors.

   Our success depends to a significant degree upon the protection of our
software and other proprietary intellectual property rights. We may be unable
to deter misappropriation of our proprietary information, detect unauthorized
use and take appropriate steps to enforce our intellectual property rights. In
addition, our competitors could, without violating our proprietary rights,
develop technologies that are as good as or better than our technology.

   Our failure to protect our software and other proprietary intellectual
property rights or to develop technologies that are as good as our
competitors' could put us at a disadvantage to our competitors. In addition,
the failure of our partners to protect their intellectual property rights,
including their domain names, could impair our operations. These failures
could have a material adverse effect on our business, results of operations
and financial condition.

   If we do not respond to rapid technological changes, our services could
become obsolete and we could lose customers.

   We may face material delays in introducing new services, products and
enhancements. If this happens, our customers may forgo the use of our
partners' e-commerce businesses and use those of our competitors. To remain
competitive, we must continue to enhance and improve the functionality and
features of our partners' e-commerce businesses. The Internet and the online
commerce industry are rapidly changing. If competitors introduce new products
and services using new technologies or if new industry standards and practices
emerge, our partners' existing Web sites and our proprietary technology and
systems may become obsolete.

                                      19
<PAGE>

   Developing our partners' e-commerce businesses and other proprietary
technology entails significant technical and business risks. We may use new
technologies ineffectively or we may fail to adapt our partners' Web sites,
our order processing systems and our computer network to meet customer
requirements or emerging industry standards.

   We may be subject to intellectual property claims or competition or trade
practices claims that could be costly and could disrupt our business.

   Third parties may assert that our business or technologies infringe their
intellectual property rights. From time to time, we may receive notices from
third parties questioning our right to present specific images or logos on our
partners' Web sites, or stating that we have infringed their trademarks or
copyrights. We may in the future receive claims that we are engaging in unfair
competition or other illegal trade practices. We may be unsuccessful in
defending against these claims, which could result in substantial damages,
fines or other penalties. The resolution of a claim could also require us to
change how we do business, redesign our partners' Web sites and other systems
or enter into burdensome royalty or licensing agreements. These license or
royalty agreements, if required, may not be available on acceptable terms, if
at all, in the event of a successful claim of infringement. Our insurance
coverage may not be adequate to cover every claim that third parties could
assert against us. Even unsuccessful claims could result in significant legal
fees and other expenses, diversion of management's time and disruptions in our
business. Any of these claims could also harm our reputation.

   We rely on our developing relationships with online services, search
engines, directories and other Web sites and e-commerce businesses to drive
traffic to the e-commerce businesses we operate. If we are unable to develop
or maintain these relationships, our business, financial condition and results
of operations could be adversely affected.

   We have relationships with online services, search engines, directories and
other Web sites and e-commerce businesses to provide content, advertising
banners and other links that link to our partners' Web sites. We expect to
rely on these relationships as significant sources of traffic to our partners'
Web sites and to generate new customers. If we are unable to develop
satisfactory relationships on acceptable terms, our ability to attract new
customers could be harmed. Further, many of the parties with which we may have
online advertising arrangements could provide advertising services for other
marketers of goods. As a result, these parties may be reluctant to enter into
or maintain relationships with us. Failure to achieve sufficient traffic or
generate sufficient revenue from purchases originating from third- parties may
result in termination of these types of relationships. Without these
relationships, we may not be able to sufficiently increase our market share
and our business, financial condition and results of operations could be
adversely affected.

   Our success is dependent upon our executive officers and other key
personnel.

   Our success depends to a significant degree upon the contribution of our
executive officers and other key personnel, particularly Michael G. Rubin,
Chairman, President and Chief Executive Officer. We have employment agreements
with some of our executive officers and key personnel. We cannot be sure,
however, that we will be able to retain or attract executive, managerial and
other key personnel. We have obtained key person life insurance for Mr. Rubin
in the amount of $9.0 million. We have not obtained key person life insurance
for any of our other executive officers or key personnel.

   We may be unable to hire and retain the skilled personnel necessary to
develop our business.

   We intend to continue to hire a number of skilled personnel. Competition
for these individuals is intense, and we may not be able to attract,
assimilate or retain highly qualified personnel in the future. Our failure to
attract and retain the highly trained personnel that are integral to our
business may limit our growth rate, which would harm our business.

                                      20
<PAGE>

   We may not be able to compete successfully against current and future
competitors, which could harm our margins and our business.

   The e-commerce market is rapidly evolving and extremely competitive.
Increased competition could result in price reductions, reduced gross margins
and loss of market share, any of which could seriously harm our business,
financial condition and results of operations. We compete with a variety of
companies, including:

  .  e-commerce businesses of specialty retailers and catalogs such as
     Footlocker.com and REI.com;

  .  e-commerce businesses of traditional general merchandise retailers such
     as Target.com and WalMart.com;

  .  e-commerce businesses of specialty manufacturers such as adidas.com and
     Nike.com; and

  .  e-commerce businesses that are associated with full-line sporting goods
     stores such as Shopsports.com.

   In addition, we compete with companies that may be able to provide
solutions to companies that wish to establish e-commerce businesses,
including:

  .  third party providers, such as Amazon.com and USA Networks; and

  .  third-party fulfillment and customer services providers, such as
     Fingerhut, Keystone Internet Services and ClientLogic.

   Finally, we compete with traditional channels of distribution for our
specialty goods, including full-line retailers, specialty retailers, general
merchandise retailers, catalogs and manufacturers' direct stores.

   If we experience problems in our fulfillment, warehouse and distribution
operations, we could lose customers.

   Although we operate our own fulfillment center, we rely upon multiple third
parties for the shipment of our products. We also rely upon certain vendors to
ship products directly to our customers. As a result, we are subject to the
risks associated with the ability of these vendors to successfully and timely
fulfill and ship customer orders and to successfully handle our inventory
delivery services to meet our shipping needs. The failure of these vendors to
provide these services, or the termination or interruption of these services,
could adversely affect our business, results of operations and financial
condition.

   Sporting goods and apparel are subject to changing consumer preferences. If
we fail to anticipate these changes, we could experience lower sales, higher
inventory markdowns and lower margins.

   Our success depends, in part, upon our ability to anticipate and respond to
trends in sporting goods merchandise and consumers' participation in sports.
Consumers' tastes in apparel and sporting goods equipment are subject to
frequent and significant changes, due in part to manufacturers' efforts to
incorporate advanced technologies into some types of sporting goods. In
addition, the level of consumer interest in a given sport can fluctuate
dramatically. If we fail to identify and respond to changes in sporting goods
merchandising and recreational sports participation, our sales could suffer
and we could be required to mark down unsold inventory. This would depress our
profit margins. In addition, any failure to keep pace with changes in
consumers' recreational sports habits could result in lost opportunities which
could have an adverse effect on our business, results of operations and
financial condition.

   High merchandise returns could adversely affect our business, financial
condition and results of operations.

   Our policy for allowing our customers to return products is generally
consistent with the policies of each of our partners for which we operate e-
commerce businesses. If merchandise returns are significant, our business,
financial condition and results of operations could be adversely affected.

   We may be subject to product liability claims that could be costly and
time-consuming.

   We sell products manufactured by third parties, some of which may be
defective. If any product that we sell were to cause physical injury or injury
to property, the injured party or parties could bring claims against us

                                      21
<PAGE>

as the retailer of the product. Our insurance coverage may not be adequate to
cover every claim that could be asserted. Similarly, we could be subject to
claims that users of our partners' Web sites were harmed due to their reliance
on our product information, product selection guides, advice or instructions.
If a successful claim were brought against us in excess of our insurance
coverage, it could adversely affect our business. Even unsuccessful claims
could result in the expenditure of funds and management time and could have a
negative impact on our business.

   We may be liable if third parties misappropriate our customers' personal
information.

   If third parties are able to penetrate our network security or otherwise
misappropriate our customers' personal information or credit card information
or if we give third parties improper access to our customers' personal
information or credit card information, we could be subject to liability. This
liability could include claims for unauthorized purchases with credit card
information, impersonation or other similar fraud claims. They could also
include claims for other misuses of personal information, including
unauthorized marketing purposes. These claims could result in litigation.
Liability for misappropriation of this information could adversely affect our
business. In addition, the Federal Trade Commission and state agencies have
been investigating various Internet companies regarding their use of personal
information. We could incur additional expenses if new regulations regarding
the use of personal information are introduced or if government agencies
investigate our privacy practices.

   We are controlled by certain principal stockholders.

   As of October 29, 2001, Michael G. Rubin, our Chairman, President and Chief
Executive Officer, beneficially owned 19.0%, funds affiliated with SOFTBANK
America Inc., or SOFTBANK, beneficially owned 23.3% and Interactive Technology
Holdings, LLC, or ITH, a joint venture company formed by Comcast Corporation
and QVC, Inc., beneficially owned 24.2% of our outstanding common stock.
Should they decide to act together, Mr. Rubin, SOFTBANK and ITH would be in a
position to exercise control over most matters requiring stockholder approval,
including the election or removal of directors, approval of significant
corporate transactions and the ability generally to direct our affairs.
Furthermore, the stock purchase agreements pursuant to which SOFTBANK and ITH
acquired their shares of our common stock provide that SOFTBANK and ITH each
have the right to designate up to two members of our board of directors. This
concentration of ownership and SOFTBANK's and ITH's right to designate members
to our board of directors may have the effect of delaying or preventing a
change in control of us, including transactions in which stockholders might
otherwise receive a premium over current market prices for their shares.

   From time to time, we may acquire or invest in other companies. There are
risks associated with potential acquisitions and investments. As a result, we
may not achieve the expected benefits of potential acquisitions.

   If we are presented with appropriate opportunities, we may make investments
in complementary companies, products or technologies or we may purchase other
companies. On September 13, 2001, we entered into a definitive merger
agreement to acquire all of the outstanding shares of Ashford.com, Inc., an
online luxury goods retailer. We may not realize the anticipated benefits of
the acquisition of Ashford or any other investment or acquisition. We may not
be able to successfully assimilate the additional personnel, operations,
acquired technology and products into our business. Any acquisition, including
the acquisition of Ashford, may further strain our existing financial and
managerial controls and reporting systems and procedures. In addition, key
personnel of an acquired company may decide not to work for us. These
difficulties could disrupt our ongoing business, distract our management and
employees or increase our expenses. Further, the physical expansion in
facilities that would occur as a result of the acquisition of Ashford and any
other acquisition may result in disruptions that seriously impair our
business. Finally, we will be issuing equity securities as part of the
purchase price for the shares of Ashford and we may have to incur debt or
issue additional equity securities to pay for other acquisitions or
investments, the issuance of which could be dilutive to our stockholders.

                                      22
<PAGE>

   We may expand our business internationally, causing our business to become
increasingly susceptible to numerous international business risks and
challenges that could affect our profitability.

   We believe that the current globalization of the economy requires
businesses to consider pursuing international expansion. In the future, we may
expand into international markets. International sales are subject to inherent
risks and challenges that could adversely affect our profitability, including:

  .  the need to develop new supplier and manufacturer relationships,
     particularly because major manufacturers may require that our
     international operations deal with local distributors;

  .  unexpected changes in international regulatory requirements and tariffs;

  .  difficulties in staffing and managing foreign operations;

  .  longer payment cycles from credit card companies;

  .  greater difficulty in accounts receivable collection;

  .  potential adverse tax consequences;

  .  price controls or other restrictions on foreign currency; and

  .  difficulties in obtaining export and import licenses.

   To the extent we generate international sales in the future, any negative
impact on our international business could negatively impact our business,
operating results and financial condition as a whole. In particular, gains and
losses on the conversion of foreign payments into United States dollars may
contribute to fluctuations in our results of operations and fluctuating
exchange rates could cause reduced gross revenues and/or gross margins from
non-dollar-denominated international sales.

   Our success is tied to the continued growth in the use of the Internet and
the adequacy of the Internet infrastructure.

   Our future success is substantially dependent upon continued growth in the
use of the Internet. The number of users and advertisers on the Internet may
not increase and commerce over the Internet may not become more accepted and
widespread for a number of reasons, including:

  .  actual or perceived lack of security of information or privacy
     protection;

  .  lack of access and ease of use;

  .  congestion of traffic on the Internet;

  .  inconsistent quality of service and lack of availability of cost-
     effective, high-speed service;

  .  possible disruptions, computer viruses or other damage to the Internet
     servers or to users' computers;

  .  excessive governmental regulation;

  .  uncertainty regarding intellectual property ownership; and

  .  lack of high-speed modems and other communications equipment.

   Published reports have also indicated that growth in the use of the
Internet has resulted in users experiencing delays, transmission errors and
other difficulties. As currently configured, the Internet may not support an
increase in the number or requirements of users. In addition, there have been
outages and delays on the Internet as a result of damage to the current
infrastructure. The amount of traffic on our partners' Web sites could be
materially affected if there are outages or delays in the future. The use of
the Internet may also decline if there are delays in the development or
adoption of modifications by third parties that are required to support
increased levels of activity on the Internet. If any of the foregoing occurs,
or if the Internet does not become a viable commercial medium, our business,
results of operations and financial condition could be materially adversely
affected. In addition, we may be required to spend significant capital to
adapt our operations to any new or emerging technologies relating to the
Internet.

                                      23
<PAGE>

   The technology of the Internet is changing rapidly and could render the Web
sites which we operate obsolete.

   The technology of the Internet and e-commerce is evolving rapidly for many
reasons, including:

  .  customers frequently changing their requirements and preferences;

  .  competitors frequently introducing new products and services; and

  .  industry associations and others creating new industry standards and
     practices.

   These changes could render the Web sites that we operate obsolete. Our
ability to attract customers could be seriously impaired if we do not
accomplish the following tasks:

  .  continually enhance and improve our partners' Web sites;

  .  identify, select and obtain leading technologies useful in our business;
     and

  .  respond to technological advances and emerging industry standards in a
     cost-effective and timely manner.

   Customers may be unwilling to use the Internet to purchase goods.

   Our long-term future depends heavily upon the general public's willingness
to use the Internet as a means to purchase goods. The failure of the Internet
to develop into an effective commercial tool would seriously damage our future
operations. E-commerce is a relatively new concept, and large numbers of
customers may not begin or continue to use the Internet to purchase goods. The
demand for and acceptance of products sold over the Internet are highly
uncertain, and most e-commerce businesses have a short track record. If
consumers are unwilling to use the Internet to conduct business, our business
may not develop profitably. The Internet may not succeed as a medium of
commerce because of delays in developing elements of the needed Internet
infrastructure, such as a reliable network, high-speed modems, high-speed
communication lines and other enabling technologies.

   The security risks of e-commerce may discourage customers from purchasing
goods from us.

   In order for the e-commerce market to develop successfully, we and other
market participants must be able to transmit confidential information securely
over public networks. Third parties may have the technology or know-how to
breach the security of customer transaction data. Any breach could cause
customers to lose confidence in the security of our partners' Web sites and
choose not to purchase from those Web sites. If someone is able to circumvent
our security measures, he or she could destroy or steal valuable information
or disrupt the operation of our partners' Web sites. Concerns about the
security and privacy of transactions over the Internet could inhibit the
growth of the Internet and e-commerce. Our security measures may not
effectively prohibit others from obtaining improper access to the information
on our partners' Web sites. Any security breach could expose us to risks of
loss, litigation and liability and could seriously disrupt our operations.

   Credit card fraud could adversely affect our business.

   We do not carry insurance against the risk of credit card fraud, so the
failure to adequately control fraudulent credit card transactions could
increase our general and administrative expenses. We have put in place
technology to help us detect the fraudulent use of credit card information. To
date, we have not suffered material losses related to credit card fraud.
However, we may in the future suffer losses as a result of orders placed with
fraudulent credit card data even though the associated financial institution
approved payment of the orders. Under current credit card practices, we are
liable for fraudulent credit card transactions because we do not obtain a
cardholder's signature.

                                      24
<PAGE>

   If one or more states successfully assert that we should collect sales or
other taxes on the sale of our merchandise, our business could be harmed.

   We do not currently collect sales or other similar taxes for physical
shipments of goods into states other than Kentucky and Pennsylvania. One or
more local, state or foreign jurisdictions may seek to impose sales tax
collection obligations on us and other out-of-state companies that engage in
online commerce. Our business could be adversely affected if one or more
states or any foreign country successfully asserts that we should collect
sales or other taxes on the sale of our merchandise.

   Existing or future government regulation could harm our business.

   We are subject to the same federal, state and local laws as other companies
conducting business on the Internet. Today there are relatively few laws
specifically directed towards conducting business on the Internet. However,
due to the increasing popularity and use of the Internet, many laws and
regulations relating to the Internet are being debated at the state and
federal levels. These laws and regulations could cover issues such as user
privacy, freedom of expression, pricing, fraud, quality of products and
services, taxation, advertising, intellectual property rights and information
security. Applicability to the Internet of existing laws governing issues such
as property ownership, copyrights and other intellectual property issues,
taxation, libel, obscenity and personal privacy could also harm our business.
For example, United States and foreign laws regulate our ability to use
customer information and to develop, buy and sell mailing lists. The vast
majority of these laws were adopted prior to the advent of the Internet, and
do not contemplate or address the unique issues raised thereby. Those laws
that do reference the Internet, such as the Digital Millennium Copyright Act,
are only beginning to be interpreted by the courts and their applicability and
reach are therefore uncertain. These current and future laws and regulations
could adversely affect our future business, results of operation and financial
condition.

   Laws or regulations relating to user information and online privacy may
adversely affect the growth of our Internet business or our marketing efforts.

   We are subject to increasing regulation at the federal and state levels
relating to online privacy and the use of personal user information. Several
states have proposed legislation that would limit the uses of personal user
information gathered online or require online services to establish privacy
policies. The Federal Trade Commission has adopted regulations regarding the
collection and use of personal identifying information obtained from children
under 13. In addition, bills pending in Congress would extend online privacy
protections to adults. Laws and regulations of this kind may include
requirements that we establish procedures to disclose and notify users of
privacy and security policies, obtain consent from users for collection and
use of information, or provide users with the ability to access, correct and
delete personal information stored by us. Even in the absence of those
regulations, the Federal Trade Commission has settled several proceedings
resulting in consent decrees in which Internet companies have been required to
establish programs regarding the manner in which personal information is
collected from users and provided to third parties. We could become a party to
a similar enforcement proceeding. These regulatory and enforcement efforts
could also harm our ability to collect demographic and personal information
from users, which could be costly or adversely affect our marketing efforts.

   We have never paid dividends on our common stock and do not anticipate
paying dividends in the foreseeable future.

   We have never paid cash dividends on our common stock and do not anticipate
that any cash dividends will be declared or paid in the foreseeable future.

   It may be difficult for a third party to acquire us and this could depress
our stock price.

   Pursuant to our amended and restated certificate of incorporation, we have
authorized a class of 5,000,000 shares of preferred stock, which our board of
directors may issue with terms, rights, preferences and designations as the
board may determine and without any vote of the stockholders, unless otherwise
required by law. Issuing

                                      25
<PAGE>

the preferred stock, depending upon the terms, rights, preferences and
designations set by our board, may delay, deter or prevent a change in control
of us. Issuing additional shares of common stock could result in dilution of
the voting power of the current holders of our common stock. In addition,
"anti-takeover" provisions of Delaware law may restrict the ability of the
stockholders to approve a merger or business combination or obtain control of
us.

   There are limitations on the liabilities of our directors.

   Pursuant to our amended and restated certificate of incorporation and under
Delaware law, our directors are not liable to us or our stockholders for
monetary damages for breach of fiduciary duty, except for liability for breach
of a director's duty of loyalty, acts or omissions by a director not in good
faith or which involve intentional misconduct or a knowing violation of law,
for dividend payments or stock repurchases that are unlawful under Delaware
law or any transaction in which a director has derived an improper personal
benefit. In addition, we have entered into indemnification agreements with
each of our directors. These agreements, among other things, require us to
indemnify each director for certain expenses including attorneys' fees,
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by us or in our right, arising out
of the person's services as one of our directors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   There have been no significant changes in market risk for the quarter ended
September 29, 2001. See the information set forth in Item 7A of the Company's
Annual Report on Form 10-K for the fiscal year ended December 30, 2000 filed
with the Securities and Exchange Commission on March 30, 2001.

                                      26
<PAGE>

                          PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

   We are involved in various routine litigation incidental to our current and
discontinued businesses. We believe that the disposition of these matters will
not have a material adverse effect on our financial position or results of
operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

   On July 20, 2001, a right to receive 1,600,000 shares of the Company's
common stock was exercised in lieu of future cash revenue share payments. On
the day immediately preceding the exercise of the right, the closing price of
a share of the Company's common stock was $9.00.

   On July 20, 2001, the Company issued to ITH a five-year warrant to purchase
an aggregate of 300,000 shares of the Company's common stock at an exercise
price of $6.00 per share in consideration for certain corporate development
services performed by ITH on behalf of the Company.

   On August 23, 2001, the Company issued to ITH 3,000,000 shares of its
common stock at a price of $10.00 per share, for an aggregate purchase price
of $30.0 million. At the same time, ITH acquired 1,000,000 shares of the
Company's common stock from Michael G. Rubin, Chairman, President and Chief
Executive Officer of the Company, at a price of $10.00 per share, for an
aggregate purchase price of $10.0 million.

   From July 6, 2001 through August 17, 2001, in connection with the execution
of agreements to operate the e-commerce businesses of certain partners, the
Company issued to those partners five-year warrants to purchase up to an
aggregate of 476,620 shares of the Company's common stock at a weighted
average exercise price of $12.74 per share.

   No underwriter was involved in any of the above sales of securities. All of
the above securities were issued in reliance upon the exemption set forth in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
on the basis that they were issued under circumstances not involving a public
offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

   None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   None.

ITEM 5. OTHER INFORMATION

   None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   (a) Exhibits

<TABLE>
 <C>         <S>
    2.1(/1/) Agreement and Plan of Merger and Reorganization, dated as of
             September 13, 2001, among Global Sports, Inc., a Delaware
             corporation, Ruby Acquisition Corp., a Delaware corporation, and
             Ashford.com, Inc., a Delaware corporation.

    2.2(/1/) Form of Voting Agreement, dated as of September 13, 2001, entered
             into between Global Sports, Inc., a Delaware corporation, and
             certain stockholders of Ashford.com, Inc., a Delaware corporation.
</TABLE>

                                      27
<PAGE>


<TABLE>
 <C>          <S>
     4.1      Form of Investor Warrant.

     4.2      Form of Partner Warrant.

    10.1(/2/) Stock Purchase Agreement, dated as of July 20, 2001, by and among
              Global Sports, Inc., Michael G. Rubin and Interactive Technology
              Holdings, LLC.

    10.2+     License and E-Commerce Agreement, dated July 6, 2001, by and
              among Global Sports Interactive, Inc., The Sports Authority, Inc.
              and The Sports Authority Michigan, Inc.

    10.3+     E-Commerce Agreement, dated as of August 10, 2001, by and between
              Global Sports Interactive, Inc., Bluelight.com LLC and Kmart
              Corporation.

    99.1(/2/) Letter Agreement, dated as of July 20, 2001, among Global Sports,
              Inc., Interactive Technology Holdings, LLC, SOFTBANK Capital
              Partners LP and SOFTBANK Capital Advisors Fund LP.
</TABLE>
--------
  (/1/Incorporated)by reference to the Company's Current Report on Form 8-K
      dated September 13, 2001.
  (/2/Incorporated)by reference to the Company's Current Report on Form 8-K
      dated July 13, 2001.
  +  Confidential treatment has been requested as to certain portions of this
     exhibit. The omitted portions have been separately filed with the
     Securities and Exchange Commission.

   (b) Reports on Form 8-K

   The Company completed the acquisition of Fogdog, Inc. on December 28, 2000.
On July 24, 2001, the Company filed a Current Report on Form 8-K to include
the consent of PricewaterhouseCoopers LLP ("PWC"), Fogdog's accountants, to
the incorporation by reference into certain of the Company's registration
statements of PWC's report dated January 31, 2000 on the financial statements
of Fogdog contained in the Company's Current Report on Form 8-K filed on
January 12, 2001.

   The Company filed a Current Report on Form 8-K on August 27, 2001 reporting
that the Company completed the sale of 3,000,000 shares of its common stock to
Interactive Technology Holdings, LLC ("ITH") at a purchase price of $10.00 per
share for an aggregate purchase price of $30,000,000 and that Michael G.
Rubin, Chairman of the Board, President and Chief Executive Officer of the
Company, sold 1,000,000 shares of the Company's common stock to ITH at a
purchase price of $10.00 per share for an aggregate purchase price of
$10,000,000.

   The Company filed a Current Report on Form 8-K on September 18, 2001
reporting that the Company entered into a merger agreement to acquire all of
the outstanding shares of Ashford.com, Inc.

                                      28
<PAGE>

                                   SIGNATURE

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.

                                          Global Sports, Inc.

                                                 /s/ Jordan M. Copland
                                          By: _________________________________
                                                    Jordan M. Copland
                                               Executive Vice President &
                                                 Chief Financial Officer
Date: November 9, 2001

                                       29