Amendment No. 1 to Form 8-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P7mQJ6hnU0yTnPolB/N4P7iMqaV6L6ii/BVxUvXLNMul6HqfKtWwpEo4rGgsxw3d Bly9A04FopZNwfduuaIWLA== 0000891618-01-501220.txt : 20010618 0000891618-01-501220.hdr.sgml : 20010618 ACCESSION NUMBER: 0000891618-01-501220 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010615 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EBAY INC CENTRAL INDEX KEY: 0001065088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 770430924 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-24821 FILM NUMBER: 1661954 BUSINESS ADDRESS: STREET 1: 2125 HAMILTON AVENUE CITY: SAN JOSE STATE: CA ZIP: 95125 BUSINESS PHONE: 4085587400 MAIL ADDRESS: STREET 1: 2125 HAMILTON AVENUE CITY: SAN JOSE STATE: CA ZIP: 95125 8-K/A 1 f73318a1e8-ka.htm FORM 8-K/A Amendment No. 1 to Form 8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report: June 15 , 2001
Date of earliest event reported: May 18, 2001

eBay Inc.

(Exact name of registrant as specified in its charter)

Delaware 000-24821 77-0430924

(State or other jurisdiction
of incorporation) (Commission
File Number) (I.R.S. Employer
Identification No.)

2145 Hamilton Avenue
San Jose, CA 95125

(Address of principal executive offices)

(408) 558-7400

(Registrant’s telephone number, including area code)

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS

On May 18, 2001, eBay Inc. (“eBay”) completed its previously announced acquisition of iBazar S.A. (“iBazar”), a French-based corporation that introduced online person-to-person trading in France and currently has websites in Belgium, Brazil, France, Italy, the Netherlands, Portugal, Spain and Sweden. iBazar was acquired pursuant to a Contribution Agreement, dated February 21, 2001, by and among eBay, a wholly-owned Belgian subsidiary of eBay (“eBay Sub”) and seven shareholders of iBazar (collectively, the “Shareholders”). In exchange for the contribution of the Shareholders’ shares of iBazar to eBay Sub, eBay issued shares in eBay Sub exchangeable for 2,045,054 shares of eBay common stock. In addition, eBay purchased iBazar shares from other shareholders for approximately $2.3 million in cash.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Business Acquired

The audited financial statements for iBazar, S.A. for the years ended December 31, 1999 and 2000 are included as Exhibit 99.1 to this Current Report on Form 8-K/A.

(b) Unaudited Pro Forma Condensed Combined Financial Information

Unaudited Pro Forma Condensed Combined Financial Information for eBay Inc.

Introduction.

Unaudited Pro Forma Condensed Combined Balance Sheet at March 31, 2001.

Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2000.

Unaudited Pro Forma Condensed Combined Statement of Operations for the three months ended March 31, 2001.

Notes to Unaudited Pro Forma Condensed Combined Financial Information.

(c) Exhibits

The exhibits to this Current Report on Form 8-K/A are as follows:

*Exhibit 2.1 Contribution Agreement, dated February 21, 2001, by and among eBay Sub, eBay and the Shareholders.

*Exhibit 2.2 Form of Put Option Agreement by and between eBay and each of the Shareholders.

*Exhibit 2.3 Form of Call Option Agreement by and between eBay and each of the Shareholders.

*Exhibit 2.4 Registration Rights Agreement, dated May 18, 2001, by and among eBay and the Shareholders.

*Exhibit 2.5 Escrow Agreement, dated May 18, 2001, by and among eBay Sub, eBay, the Shareholders, GS Capital Partners III, L.P., as Shareholders’ Agent and State Street Bank and Trust Company of California, N.A., a national banking association, as the Escrow Agent.

Exhibit 23.1    Consent of Ernst & Young Audit.

Exhibit 99.1 Audited financial statements of iBazar S.A.

      Report of Independent Auditors.

      Consolidated Balance Sheets at December 31, 1999 and 2000.

      Consolidated Statements of Operations for the years ended December 31, 1999 and 2000.

      Consolidated Statements of Shareholders’ Equity for the years ended December 31, 1999 and 2000.

      Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 2000.

      Notes to the Consolidated Financial Statements.

___________________

*	- Previously Filed

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.

Dated: June 15, 2001 eBay Inc.

By: /s/ RAJIV DUTTA

Rajiv Dutta
Senior Vice President,
Chief Financial Officer

eBay Inc.
Unaudited Pro Forma Condensed Combined Financial Information

Introduction

On May 18, 2001, eBay Inc. (“eBay”) completed its acquisition of iBazar S.A. (“iBazar”) in a transaction accounted for as a purchase business combination. As consideration for the acquisition, eBay issued shares in a Belgian subsidiary (“eBay Sub”) exchangeable for 2,045,054 shares of eBay common stock valued at $120.4 million, paid $2.3 million in cash to certain shareholders and incurred acquisition-related costs of approximately $2.9 million. The total purchase price of approximately $125.6 million has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their estimated fair values.

The following unaudited pro forma condensed combined financial information gives effect to the acquisition by eBay of iBazar. The unaudited pro forma condensed combined balance sheet is based on the historical balance sheets of eBay and iBazar and has been prepared to reflect the acquisition as if it had been consummated on March 31, 2001. The unaudited pro forma condensed combined statements of operations combine the results of operations of eBay and iBazar for the year ended December 31, 2000 and the three months ended March 31, 2001, as if the acquisition had occurred on January 1, 2000. Prior to this acquisition, iBazar only had annual financial reporting requirements and did not prepare separate interim financial information as of or for the three month period ended March 31, 2001. Accordingly, the iBazar financial information included in the March 31, 2001 unaudited pro forma condensed combined balance sheet and the statement of operations for the three months ended March 31, 2001, is as of December 31, 2000 and for the three months then ended, respectively.

The historical consolidated financial statements of iBazar have been prepared in accordance with accounting principles generally accepted in France (“French GAAP”). For purposes of presenting the unaudited pro forma condensed combined financial information, financial information relating to iBazar has been adjusted to conform materially with accounting principles generally accepted in the United States (“U.S. GAAP”) as described in Note 1 to the unaudited pro forma condensed combined financial information.

The pro forma adjustments are based on preliminary estimates, available information and certain assumptions and may be revised as additional information becomes available. The unaudited pro forma condensed combined financial information is not intended to represent what eBay’s financial position or results of operations would actually have been if the acquisition had occurred on those dates or to project eBay’s financial position or results of operations for any future period. Since eBay and iBazar were not under common control or management for any period presented, the unaudited pro forma condensed combined financial results may not be comparable to, or indicative of, future performance.

This unaudited pro forma condensed combined financial information should be read in conjunction with the historical consolidated financial statements of eBay and iBazar. eBay’s historical consolidated financial statements can be found in the Company’s Annual Report on Form 10-K filed on March 28, 2001. iBazar’s historical consolidated financial statements can be found as Exhibit 99.1 to this Current Report on Form 8-K/A.

eBay Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
(U.S. Dollars In Thousands)

Historical Historical

eBay Inc. iBazar S.A.

March 31, December 31, Pro Forma Pro Forma

2001 2000 Adjustments Combined

ASSETS

Current assets:

Cash and cash equivalents
$ 314,263 $ 10,541 $ (2,283 )(d) $ 322,521

Restricted cash
15,902 2,780 18,682

Short-term investments
273,838 8,847 282,685

Accounts receivable, net
75,494 3,531 79,025

Other current assets
59,840 6,488 66,328

Total current assets
739,337 32,187 (2,283 ) 769,241

Long-term investments
135,540 — 135,540

Restricted cash and investments
126,390 1,406 127,796

Property and equipment, net
133,279 4,401 137,680

Intangible and other assets, net
111,546 12,460 (8,254 )(b) 238,985

123, 233 (b)

Deferred tax assets
10,937 — (856 )(i) 10,081

$ 1,257,029 $ 50,454 $ 111,840 $ 1,419,323

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
$ 21,395 $ 6,410 $ 27,805

Accrued expenses and other current liabilities
69,657 5,218 $ 17,397 (c) 92,272

Deferred revenue and customer advances
12,081 1,355 13,436

Short-term debt
30,254 — 30,254

Income taxes payable
10,995 11,538 22,533

Total current liabilities
144,382 24,521 17,397 186,300

Long-term debt
11,339 — 11,339

Minority interests
43,319 — 43,319

Other liabilities
13,717 — 13,717

212,757 24,521 17,397 254,675

Stockholders’ equity:

Common Stock
269 2,199 (2,199 )(e) 271

2 (k)

Additional paid-in capital
960,790 27,420 (27,420 )(e) 1,081,164

120,374 (k)

Unearned stock-based compensation
(5,051 ) — — (5,051 )

Retained earnings (deficit)
95,423 (3,624 ) 3,624 (e) 95,423

Accumulated other comprehensive loss
(7,159 ) (62 ) 62 (e) (7,159 )

Total stockholders’ equity
1,044,272 25,933 94,443 1,164,648

$ 1,257,029 $ 50,454 $ 111,840 $ 1,419,323

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.

eBay Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
(U.S. Dollars In Thousands, Except Per Share Amounts)

Year Ended December 31, 2000

Historical Historical Pro Forma Pro Forma

eBay Inc. iBazar S.A. Adjustments Combined

Net revenues
$ 431,424 $ 3,028 $ 434,452

Cost of net revenues
95,453 6,654 102,107

Gross profit
335,971 (3,626 ) — 332,345

Operating expenses:

Sales and marketing
166,767 41,397 208,164

Product development
55,863 3,567 59,430

General and administrative
73,027 5,092 78,119

Payroll expense on employee stock options
2,337 — 2,337

Amortization of acquired intangible assets
1,433 1,492 $ (1,492 )(g) 24,961

23,528 (f)

Merger related costs
1,550 — 1,550

Total operating expenses
300,977 51,548 22,036 374,561

Income (loss) from operations
34,994 (55,174 ) (22,036 ) (42,216 )

Interest and other income (expense), net
46,337 (34,211 ) 12,126

Interest expense
(3,374 ) (488 ) (3,862 )

Income (loss) before income taxes and minority interests
77,957 (89,873 ) (22,036 ) (33,952 )

Provision for income taxes
(32,725 ) 25,258 272 (j) (7,195 )

Minority interests in consolidated companies
3,062 — 3,062

Net income (loss) from continuing operations
$ 48,294 $ (64,615 ) $ (21,764 ) $ (38,085 )

Net income per share:

Basic
$ 0.19 $ (0.15 )

Diluted
$ 0.17 $ (0.15 )

Weighted average shares:

Basic
251,776 2,045 (h) 253,821

Diluted
280,346 2,045 (h) 253,821

(28,570 )(h)

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.

eBay Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
(U.S. Dollars In Thousands, Except Per Share Amounts)

Three Months Ended

Historical Historical

eBay Inc. iBazar S.A.

March 31, December 31, Pro Forma Pro Forma

2001 2000 Adjustments Combined

Net revenues
$ 154,090 $ 2,070 $ 156,160

Cost of net revenues
27,002 2,692 29,694

Gross profit
127,088 (622 ) — 126,466

Operating expenses:

Sales and marketing
55,536 8,392 63,928

Product development
15,737 851 16,588

General and administrative
21,328 2,699 24,027

Payroll expense on employee stock options
427 — 427

Amortization of acquired intangible assets
3,355 443 $ (443 )(g) 9,237

5,882 (f)

Total operating expenses
96,383 12,385 5,439 114,207

Income (loss) from operations
30,705 (13,007 ) (5,439 ) 12,259

Interest and other income (expense), net
14,978 (32,102 ) (17,124 )

Interest expense
(712 ) (334 ) (1,046 )

Impairment of certain equity investments
(9,921 ) — (9,921 )

Income (loss) before income taxes and minority interests
35,050 (45,443 ) (5,439 ) (15,832 )

Provision for income taxes
(15,427 ) 12,658 68 (j) (2,701 )

Minority interests in consolidated companies
1,444 — 1,444

Net income (loss) from continuing operations
$ 21,067 $ (32,785 ) $ (5,371 ) $ (17,089 )

Net income per share:

Basic
$ 0.08 $ (0.06 )

Diluted
$ 0.08 $ (0.06 )

Weighted average shares:

Basic
264,279 2,045 (h) 266,324

Diluted
278,732 2,045 (h) 266,324

(14,453 )(h)

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.

eBay Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information

Note 1 — Pro Forma Adjustments and Assumptions

On May 18, 2001, eBay completed its acquisition of iBazar in a transaction accounted for as a purchase business combination. As consideration for the acquisition, eBay issued shares in eBay Sub exchangeable for 2,045,054 shares of eBay common stock valued at $120.4 million, paid $2.3 million in cash to certain shareholders and incurred acquisition-related costs of approximately $2.9 million. The shares issued in the acquisition have been valued in accordance with Emerging Issue Task Force Issue No. 99-12, Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination (“EITF 99-12”). In accordance with EITF 99-12, eBay has established that the first date on which the number of eBay shares and the amount of other consideration became fixed was May 18, 2001. EITF 99-12 precludes the use of any share prices subsequent to the consummation date of a transaction, and accordingly, eBay has valued the transaction using the average closing price of eBay’s shares for the five days prior to and including the closing date of May 18, 2001. The total purchase price of approximately $125.6 million has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their estimated fair values on the assumed acquisition date.

The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

(a) The results of iBazar, as presented under U.S. GAAP for pro forma presentation purposes, have been translated into U.S. dollars at the average rate of Euro 0.8687 to U.S.$1.00 for the three months ended December 31, 2000 and Euro 0.9234 to U.S.$1.00 for the year ended December 31, 2000. The iBazar balance sheet at December 31, 2000 has been translated into U.S. dollars at Euro 0.9390 to U.S.$1.00.

The loss for the year ended December 31, 2000, as reported by iBazar, was adjusted to exclude the effect of discontinued operations. The following analysis reconciles the net loss from continuing operations to the reported net loss:


		(in thousands)
Net loss from continuing operations		$	(64,615	)




Loss from discontinued operations			(177	)




Gain on disposal of discontinued operations (net of taxes of $36,604)			61,071

	Net loss	$	(3,721	)

Reclassifications have been made to the iBazar historical financial information presented under French GAAP to conform to eBay’s presentation under U.S. GAAP. The principal reclassification entries relate to the presentation of the statement of operations in functional areas compared to iBazar historical presentation based on natural account classifications.

A number of differences exist between U.S. and French GAAP. The principal differences are discussed and reconciled in the audited financial statements of iBazar that can be found at Exhibit 99.1 to this Current Report on Form 8-K/A.

eBay Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information

(b) To allocate the purchase price to the fair value of tangible and identifiable intangible assets acquired and liabilities assumed, and to goodwill.

These adjustments are for pro forma presentation purposes only. Actual fair values will be based on financial information as of May 18, 2001, the acquisition date. Assuming the transaction had occurred on March 31, 2001 (based on iBazar’s December 31, 2000 balance sheet) the purchase price allocation would have been as follows:


		(in thousands)
Net tangible assets		$	10,049




Identifiable intangible assets			2,140




Deferred tax liability			(856	)




Goodwill			114,240





	Aggregate purchase price	$	125,573

Tangible assets were valued at their respective carrying amounts as management believes that these amounts approximate their current fair values. The valuation of the identifiable intangible assets acquired was based on a preliminary valuation by an independent appraiser and consists of customer base, assembled workforce, developed technology and trade names. Identifiable intangible assets are amortized using estimated useful lives ranging from 2 to 5 years. eBay also identified certain assets as held for sale and valued these assets based on the expected sale proceeds adjusted for losses expected to be incurred during the holding period.

In accordance with EITF Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination, eBay has established plans to exit certain activities of iBazar and to involuntary terminate certain iBazar employees. In accordance with this exit plan, approximately $2 million has been accrued for the estimated costs associated with severance, contract terminations and financial advisory and legal fees and has been included in net tangible assets.

The excess of the purchase price over the value of the tangible and identifiable intangible assets acquired and liabilities assumed has been recorded as goodwill and is amortized over five years. The final valuation of tangible and intangible assets may result in depreciation and amortization amounts that are different from these preliminary estimates.

The Financial Accounting Standards Board issued an Exposure Draft on Business Combinations that, if adopted, will eliminate goodwill amortization but will require a periodic impairment assessment of goodwill. This proposed change in the accounting for goodwill has not been reflected in the accompanying pro forma condensed combined financial information.

(c) To record accrual for direct transaction costs, liabilities relating to exit and termination costs and to established an accrual for tax exposures in various jurisdictions. These estimates are preliminary and are subject to change. Actual amounts ultimately incurred could differ from estimated amounts. Any adjustments to these accruals will be reflected as an adjustment to the goodwill recorded at the time of the acquisition.

(d) To recognize the $2.3 million cash payment to certain selling shareholders.

(e) To eliminate iBazar’s pre acquisition historical invested capital.

eBay Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information

(f) To record amortization of identifiable intangible assets and goodwill resulting from the purchase business combination of iBazar as if the business combination had occurred on January 1, 2000.

(g) To eliminate the amortization of goodwill resulting from purchase business combinations completed by iBazar prior to the eBay acquisition.

(h) Basic and diluted loss per share is calculated by dividing the net loss for the period by the weighted average common shares outstanding for the period inclusive of the 2,045,045 shares issued as consideration in the iBazar acquisition. Diluted earnings per share excludes weighted average potential common shares subject to repurchase agreements and employees stock options of 28.6 million for the year ended December 31, 2000 and 14.5 million for the three months ended March 31, 2001, as their inclusion would have been anti-dilutive.

(i) To recognize deferred tax liabilities associated with the differences in the book and tax basis of the acquired identifiable intangible assets.

(j) To recognize tax benefits associated with tax-deductible amortization expense associated with certain identifiable intangible assets purchased in the acquisition of iBazar.

(k) To record the issuance of the shares for the acquisition of iBazar.

10.

INDEX TO EXHIBITS

*Exhibit 2.1     Contribution Agreement, dated February 21, 2001, by and among eBay Sub, eBay and the Shareholders.

*Exhibit 2.2 Form of Put Option Agreement by and between eBay and each of the Shareholders.

*Exhibit 2.3 Form of Call Option Agreement by and between eBay and each of the Shareholders.

*Exhibit 2.4 Registration Rights Agreement, dated May 18, 2001, by and among eBay and the Shareholders.

*Exhibit 2.5 Escrow Agreement, dated May 18, 2001 by and among eBay Sub, eBay, the Shareholders, GS Capital Partners III, L.P., as Shareholders’ Agent and State Street Bank and Trust Company of California, N.A., a national banking association, as the Escrow Agent.

Exhibit 23.1 Consent of Ernst & Young Audit.

Exhibit 99.1 Audited financial statements of iBazar S.A.

      Report of Independent Auditors.

      Consolidated Balance Sheets at December 31, 1999 and 2000.

      Consolidated Statements of Operations for the years ended December 31, 1999 and 2000.

      Consolidated Statements of Shareholders’ Equity for the years ended December 31, 1999 and 2000.

      Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 2000.

      Notes to the Consolidated Financial Statements.

____________

*	- Previously Filed

EX-23.1 2 f73318a1ex23-1.txt EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in (i) the Registration Statement on Form S-8, File No. 333-64179, (ii) the Registration Statement on Form S-8, File No. 333-87593, (iii) the Registration Statement on Form S-8, File No. 333-41944, (iv) the Registration Statement on Form S-8, File No. 333-58046, (v) the Registration Statement on Form S-3, File No. 333-46154, (vi) the Registration Statement on Form S-3, File No. 333-62054, and (vii) the Registration Statement on Form S-4, File No. 333-62050, in each case of eBay Inc., of our report dated June 11, 2001 with respect to the consolidated financial statements of iBazar S.A. at December 31, 2000 and 1999, and for the years then ended, which appear in exhibit 99.1 in this Form 8-K/A. Paris, France /s/ ERNST & YOUNG AUDIT June 11, 2001 Represented by EMMANUEL PICARD EX-99.1 3 f73318a1ex99-1.txt EXHIBIT 99.1 1 EXHIBIT 99.1 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of iBazar, S.A. We have audited the accompanying consolidated balance sheets of iBazar, S.A. as of December 31, 2000 and 1999, and the related consolidated statements of operations and cash flows for the years then ended, which have been prepared on the basis of accounting principles generally accepted in France. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of iBazar S.A. at December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in France which differ in certain respects from those generally accepted in the United States (see Note 9 to the financial statements). Paris, France /s/ ERNST & YOUNG AUDIT June 11, 2001 Represented by EMMANUEL PICARD 2 IBAZAR S.A. CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

See notes to the consolidated financial statements 2 3 IBAZAR, S.A. CONSOLIDATED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

See notes to the consolidated financial statements 3 4 IBAZAR, S.A. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

See notes to the consolidated financial statements 4 5 IBAZAR, S.A. CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS)

See notes to the consolidated financial statements 5 6 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 1. DESCRIPTION OF BUSINESS iBazar Group (the "Company" or the "Group") was incorporated on July 21, 1992 as a limited liability company called Telestore, and operated Minitel sites (French equivalent to the Internet; this type of activity is called "telematics"). In September 1999, the Company was transformed into a "societe anonyme" and was renamed "iBazar Group" and in June 2000 assumed the name "iBazar". During 2000, the strategy of the group changed considerably. The group, which until 2000 operated various Internet sites, focused in 2000 on the online auction business in order to emerge as one of the leading European providers of online trading services. The company sold its 49% stake in iBourse in February 2000 for 53 million euros. This sale was followed in May 2000 by the sale of the company CEIC SARL and the Francemail, Carte, and Chez assets to Liberty Surf, in exchange for 2.5 million Liberty Surf shares valued at approximately 105 million euros at the time of the transaction. The group continued the expansion of the iBazar sites outside of France, which began in the second half of 1999 with the creation of subsidiaries in Brazil, Spain and Italy. The group acquired Bam Ba AB in Sweden in February 2000, Opendeal S.A. in Belgium in March 2000 and Total Sites in Portugal in June 2000. The acquired companies, which operate local auction sites, enabled the group to start operating in these countries with a base of existing purchasers and buyers. In addition, iBazar created a subsidiary in the Netherlands in March 2000. 2. SUMMARY OF ACCOUNTING PRINCIPLES AND METHODS 2.1. GENERAL RULES OF ESTABLISHMENT AND PRESENTATION 2.1.1 BASIS OF PRESENTATION The consolidated accounts were prepared in accordance with accounting principles generally accepted in France, respecting the principles of conservatism, cut-off and going concern. At the close of 1999, the Company opted for the early application of the new rules applicable to consolidated accounts (Regulation no 99-02, approved by ruling of June 22, 1999). 2.1.2 ACCOUNTING VALUATION METHODS The method adopted for the valuation of the assets reported in the accounts is the historical cost method. The valuation methods used in 2000 are consistent with those used in the prior year. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in France requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 6 7 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 2.1.3 FOREIGN CURRENCY The Company's subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities of foreign subsidiaries are translated at exchange rates prevailing at the balance sheet dates, except for components of net equity, which are translated at historical cost. Revenues, costs and expenses are translated into euros using average exchange rates for the period. Gains and losses resulting from translation are reported in a separate shareholders' equity account. Realized gains and losses from foreign currency transactions are recognized as a component of net income as incurred. The Company did not use any hedging instruments to cover its currency risk. 2.1.4 PRESENTATION OF THE ACCOUNTS IN EUROS The financial statements as at December 31, 2000 were converted from French francs to euros on the basis of the official exchange rate at December 31, 1998, i.e. 6.55957 francs for 1 euro. The data translated into euro were rounded to the nearest euro. 2.1.5 COMPARABILITY OF THE ACCOUNTS iBazar S.A. changed its principal business activity starting from the second half of 1999 from telematics (Minitel-based) to an Internet-based activity (see description of business). The financial statements at December 31, 1999 and for the year then ended included both the telematics and the Internet activity, whereas in 2000, only the Internet activities remain. In order to provide a better comparison of the financial statement information, certain segment based information is included in paragraph 4. 2.2. CONSOLIDATION PERIMETER The consolidated financial statements as of December 31, 1999 and 2000 and for the years then ended include iBazar S.A. and its majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain balances have been reclassified to conform to the current period presentation. The companies under exclusive control were fully consolidated. 7 8 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) The following companies have been consolidated: - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- All the group's consolidated companies have a fiscal year end of December 31st. The companies with a negligible interest compared to the consolidated entity (Uplift Technology SARL in court ordered liquidation, and Cation SARL in amicable liquidation) or the companies which will probably be sold during 2001 (Oreka S.A.), were accounted for at historical value and a provision recorded where necessary in order to take into account their current values defined in accordance with group methods. As compared to 1999, the modifications in the consolidation perimeter were as follows: i) New companies: - - Sweden: Bam Ba AB (acquisition) and iBazar Sverige AB (creation) -- February, 2000; - - Belgium: Opendeal S.A. (acquisition) and iBazar Belgium S.A. (creation) -- March, 2000; - - The Netherlands: iBazar NL BV (creation), Hortensia BV (acquisition) and iBazar Pro NL BV (creation) -- March 2000; - - Portugal, Total Sites LDA (acquisition) and Inter Bazar LDA (creation) -- June 2000. The iBazar Sverige AB, iBazar Belgium S.A. and Inter Bazar LDA companies were created in connection with the acquisition of Bam Ba AB, Opendeal S.A. and Total Sites LDA, respectively. 8 9 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) ii) Divestitures: C.E.I.C. SARL (Ecila) was sold on July 31, 2000 to Liberty Surf Group S.A. The operations of C.E.I.C. from January 1, 2000 until the date of sale resulted in a loss of E190, which is included in the extraordinary income of the statement of operations for the year ended December 31, 2000. 2.3. REVENUES iBazar derived revenues in 2000 from a variety of sources including: advertising, success fees on auction activity and revenues and commission on group buying transactions. i) Advertising revenues and agent commission The Company recognizes advertising revenues over the term of the advertising agreement. Revenue from advertising obligations for future periods is deferred and recognized as the obligations are met. Advertising barter transactions are recognized at the market value for a similar transaction. The Company recognizes the same value simultaneously in income and expense (marketing expenses). The Company also operates as an agent as part of the agency agreement for the sale of advertising space on behalf of a related company (Oreka S.A.). ii) Auctions Revenues related to success fees are recognized at the time the transaction is successfully concluded, i.e. when the item for sale has received at least one bid above the reserve price and when the sale transaction has not been cancelled after 4 weeks. iii) Group buying Group buying transactions are based on the following two principles: - - principle of purchase-resale without margin and receipt of a commission by iBazar (commission agent status) - - principle of purchase-resale with a margin (and no commission). 2.4. ACQUISITION GOODWILL The acquisition goodwill represents the difference between the acquisition price for the consolidated companies and the group share in their net equity restated to reflect their actual value at the date of the investment. Goodwill is amortized on a straight-line basis over a 5 year period. 2.5. INTANGIBLES Intangible assets are comprised principally of software acquired by the Company, and Internet domain names. These assets are amortized on a straight-line basis over a period of three years. 9 10 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 2.6. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Property and equipment are depreciated using the straight-line method over estimated useful lives of the assets, as follows:

2.7. INVENTORY As of December 31, 2000, the inventory relating to the group buying activity consists of: - - Inventory relating to various unsold goods; - - Inventory relating to goods sold but returned by customers. These inventories are valued according to the first in, first out (FIFO) method. A provision was recorded corresponding to the "Goods returned" amounting to 50% of their value. 2.8. ACCOUNTS RECEIVABLE Accounts receivable are recorded at face value. A provision is recorded if the carrying amount of the receivable is below the recoverable amount, on the basis of the recovery difficulties identified (client filing for bankruptcy, judicial receivership, court ordered liquidation). Provisions are also recorded according to the following methodology: - - 50% of receivables excluding VAT when payment is more than 90 days overdue; - - 100% of receivables excluding VAT when payment is more than 120 days overdue. 2.9. CASH AND MARKETABLE SECURITIES The Company has bank accounts in foreign currencies, which are converted at the exchange rate in effect at year-end. Marketable securities are accounted for at the lower of acquisition cost or current value. Capital gains on disposals are calculated according to the first in, first out (FIFO) method. 2.10. RETIREMENT COMMITMENTS At December 31, 2000 the group's staff consisted principally of personnel employed by the Company iBazar S.A. In accordance with the provisions of French law, the Company respects its obligations to finance the pensions of personnel in France by paying contributions calculated on the basis of salaries to organizations, which manage pension programs. There is no other commitment linked to these distributions. French law also requires, where applicable, the payment of a lump sum retirement indemnity. This indemnity is computed on the basis of seniority and the level of remuneration at the time of retirement. The rights are only acquired by employees still present within the company at the age of retirement. The company's commitment in this respect at December 31, 2000 was not material, based on the short length of service of its employees. 2.11. MARKET VALUE OF OPERATING ASSETS AND LIABILITIES AND DEBT At December 31, 2000 the carrying values of assets and liabilities such as cash and marketable securities, receivables from customers and payables to suppliers, other receivables and other operating liabilities approximated their market values due to their short-term maturity. 10 11 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 2.12. DEFERRED TAX Due to the group's recent focus on the Internet activity and the absence of forecast figures, as a matter of conservatism, no deferred tax assets were recorded despite the existence of tax loss carryforwards, as the recoverability is not sufficiently reliable and accurately estimable. 3. NOTES TO THE FINANCIAL STATEMENTS 3.1 ACQUISITION GOODWILL The changes in the gross value of acquisition goodwill and the change in amortization consist of the following:

All acquisitions made by the Company have been accounted for under the purchase method of accounting. The results of operations of the acquired businesses are included in the consolidated financial statements from the dates of acquisition. The acquisition goodwill as of December 31, 2000 recorded for the subsidiaries acquired during 2000, relates to Opendeal S.A. in Belgium, Bam Ba AB in Sweden, Total Sites LDA in Portugal and Hortensia in the Netherlands.

The E146 reduction during the year relates to the goodwill previously recorded for the company CEIC SARL, which was sold to Liberty Surf Group S.A. in 2000. 11 12 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 3.2 INTANGIBLE ASSETS The changes in the gross value of intangibles and the changes in depreciation consist of the following:

The intangible acquisitions, amounting to E556, consist principally of computer licenses and software, in France and in the subsidiaries. 3.3. PROPERTY AND EQUIPMENT The changes in the gross value of tangible fixed assets and depreciation consist of the following :

The 2000 acquisitions of fixed assets consist principally of computer equipment for the Internet activity. The disposals principally relate to the Chez.com, Francemail.com and Carte.fr assets, which were sold to Liberty Surf Group S.A. during the year. 12 13 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 3.4. LONG-TERM INVESTMENTS The group's long-term investments consist of the following:

The E1,831 increase in participating interests corresponds to the iBazar investment in the capital of Oreka S.A. in March 2000. Oreka S.A. incurred losses of E10,302 for the year ended December 31, 2000. The disposals of participating interests (E972) relate to the shares in iBourse S.A. and iBourse SARL, which were sold to Bipop-Carire Bank in February 2000. The other long-term investments correspond to various security deposits, in particular a E133 deposit on the rent of the premises for the registered office in Paris. 3.5 INVENTORY Inventory relates to the group buying activity in France and amounted to E59 at December 31, 2000. 3.6 TRADE ACCOUNTS RECEIVABLE Trade accounts receivable maturing in less than one year are as follows:

The significant increase in accounts receivable is due to the sharp growth in activity and group revenues between 1999 and 2000. A provision for doubtful accounts amounting to E2,205 at December 31, 2000 reduced the value of accounts receivable to E6,229. The allowance mostly relates to receivables recorded in connection with the sale of advertising space activity. 13 14 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 3.7. OTHER RECEIVABLES Other receivables amounted to E11,341 at December 31, 2000. Other receivables include restricted cash of E5,079, E3,441 in VAT deposits in relation to VAT collected, and E1,460 in deposits for advertising campaigns in Spain. This account also includes marketable securities and a E2,713 receivable relating to a VAT credit owed by the tax authorities. 3.8. CASH AND MARKETABLE SECURITIES Cash and marketable securities include:

Cash at banks is carried in French francs, in euros and in U.S. dollars. At December 31, 2000 the marketable securities were comprised of E63,929 of Liberty Surf shares, received in consideration for the sale of the company CEIC SARL and the Chez.com, Francemail.com and Carte.fr activities to Liberty Surf Group S.A. The transaction received in exchange for 2.5 million Liberty Surf shares, of which 1 million were resold before December 31, 2000. The remaining Liberty Surf shares were sold during the first quarter of 2001. The capital loss made was fully provided for at December 31, 2000 for E2,587. The other marketable securities representing 8.8 million euros arose principally from the disposals made during the year, including 3.0 million euros relating to a bank guarantee granted to Bipop-Carire Bank as part of the sale of iBourse S.A., and invested in marketable securities in an escrow account. The Liberty Surf shares held at December 31, 2000 have been subject to two provisions. The first provision of E49,742 was recorded to take into account the depreciation in the value of the shares between their acquisition date and December 31, 2000. It was calculated as follows: Number of shares x (acquisition price -- average rate at the close of the month of December). An additional provision was then recorded amounting to E2,587 in order to take into account the realized loss on the sale of the remaining shares in January 2001. 3.9. OTHER CURRENT ASSETS Other short-term assets are comprised of prepaid expenses. These prepaid expenses include advertising expenses and production costs. 14 15 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 3.10. SHAREHOLDERS' EQUITY At December 31, 2000, common stock amounted to E2,342 and 46,842,154 shares were outstanding. Common stock consist of two categories of shares: - - 40,228,403 "class A" shares; - - 6,613,751 "class B" shares. The "class B" shares are held by investors and entail the following rights, given that the rights are attached to the shares and not their holders and are thus passed on to successive share owners: i. in the event of amicable or court ordered dissolution or liquidation, the shareholders' equity remaining after reimbursement of the nominal value of the shares will be used firstly to reimburse the class B share premium within the limit of a maximum amount fixed at 36,81 French francs per class B share. The remaining balance, if any, is then shared equally between all shares irrespective of their category; ii. in addition to the rights attributed to them by law, and the regulations and by-laws of the Company, the shareholders with class B shares receive the following information : - on an annual basis, the corporate accounts, and, if applicable, the annual consolidated accounts, accompanied by statutory auditors' reports if they are available and an activity report, within ninety days after the balance sheet date, - the unaudited semi-annual accounts, and if applicable, consolidated accounts for the company, not audited, within ninety days after June 30th, - at the end of each month, an activity report on the company and a forecast report for the next six (6) months, if applicable, for the consolidated group, - the monthly operating accounts for the company as compared to budget, if applicable, for companies belonging to the consolidated group, - the monthly cash flow statements and, if applicable, the companies belonging to the consolidated group, - the company's forecast indebtedness for the next six (6) months, and if applicable, for the companies belonging to the consolidated group, - a monthly report detailing the principal financial elements and the company's cash position, as well as a quarterly report detailing the company's principal activities, - a copy of all filings with, and notification or announcement made to stock market authorities, - any information which they may reasonably wish to know, upon request. iii. no action will be taken by the Company concerning the matters listed below without having been pre-approved by a special meeting of class B shareholders having a simple majority in number of shares; - modifications to the by-laws, except for the issuance of marketable securities giving access, whether immediate or deferred, to a share in the Company's capital; - public offering of the Company's shares or shares from one of the Company's subsidiaries on a regulated stock market, in France or abroad; - authorization given to key personnel to hold stakes of more than 5% in the capital of other companies; - granting of all rights usually comprised under "registration rights". ***** 15 16 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) During the ordinary and extraordinary general meeting on February 7, 2000, the shareholders voted to convert the capital accounts into euros and to make the corresponding modification to article 6 of the by-laws. In this respect, it was decided to proceed with an increase in share capital by E530 (increasing the capital from E1,708 to E2,237) by withdrawing E530 from additional paid-in capital and raising the par value of each of the shares by 0.31 francs, from 1.00 franc to 1.31 francs. The par value of the shares was then converted into euro, at 0.20 euros. Lastly, the par value of the shares was divided into 4, reducing it from 0.20 euros to 0.05 euros. The shareholders were therefore granted four new shares for each old share. Simultaneously, the amount of E78, was withdrawn from additional paid-in capital, and was recorded in retained earnings, as an unavailable reserve account, in order to preserve, in accordance with legal provisions, the rights of the holders of the 1,654,533 warrants issued by the Company. Upon completion of these transactions, the iBazar capital amounted to E2,241, divided into 44,821,620 shares with a par value of 0.05 euros each, and the remaining additional paid-in capital balance amounted to E5,973. At the extraordinary general meeting on March 15, 2000, the shareholders acknowledged the waiver by GS Capital Partners III, L.P., GS Capital Partners III Offshore, L.P., Goldman Sachs & Co Verwaltungs GmbH and Stone Street Fund 1999, L.P. of the 1,205,405 share subscription warrants (known as "Warrants 2") attached to the shares with subscription warrants issued to them on November 10, 1999 upon exercise of the share subscription warrants issued to them at the general meeting held on September 23, 1999 (known as "Warrants 1"). During the extraordinary general meeting of March 15, 2000, the shareholders also decided to increase the share capital by E89 to increase it from E2,241 to E2,331, by issuing 1,792,115 new class B shares at a price of 11.16 euros each, i.e. a par value of 0.05 euro and a share premium of 11.11 euros and to reserve shares for subscription to Fineco Investimenti SGR Spa. Again at the extraordinary general meeting of March 15, 2000, following the acquisition of Opendeal S.A., the shareholders decided to increase the capital by E11 to increase it from E2,330 to E2,342, by issuing 228,419 new class A shares at a price of 11.16 euros each, i.e. a par value of 0.05 euro and a share premium of 11.11 euros. The subscription of the shares was reserved to E-Merge S.A. for 63,844 shares, David Van Tieghem for 74,447 shares, Jean-Marc Goemare for 74,447 shares and Jean-Michel Loots for 15,681 shares. At December 31, 2000 the iBazar capital amounted to E2,342, divided into 46,842,154 shares with a par value of 0.05 euro each. 77% of the share capital was held by the founder managers and their families. The remaining shares (23%) were held by financial investors. The capital structure was as follows at December 31, 2000:

16 17 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) Warrants and option activity between December 31, 1999 and December 31, 2000 was as follows:

* BCE = founder share subscription warrants ** number adjusted to take into account the division of the par value of the shares The BCE and stock options dated February 7, 2000 were issued at a price of 5.61 euros for 4 shares; each BCE and stock option giving the right to 4 additional shares. The BCE and stock options dated March 23 and May 10, 2000 were issued at the price of 11.16 euros per share. The BCE and stock options must be exercised within 5 years from the date of issuance. 3.11. PROVISIONS FOR LOSSES AND CONTINGENCIES The provisions for losses and contingencies are as follows:

The provision for disputes concerns disputes with commercial partners and former group employees. In the normal course of business, the Company is at times subject to pending and threatened legal actions and proceedings. Management believes that the outcome of such actions or proceedings is not expected to have a material adverse effect on the financial position of the Company. 17 18 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 3.12. TRADE ACCOUNTS PAYABLE Trade accounts payable due in less than one year are as follows:

The supplier accounts at December 31, 2000 consist principally of invoices relating to advertising and marketing costs incurred before year end . The sharp increase in these expenses is due to the growth in the activity during 2000, especially at sites abroad. 3.13. TAX AND SOCIAL LIABILITIES Tax and social liabilities due in less than one year are as follows:

The increase in social liabilities is due to the rise in average staff between 1999 and 2000. The tax liabilities include E12,290 in income tax due in France following the exceptional result made in 2000 and the VAT collected and due to the Public Treasury. 3.14 OTHER LIABILITIES Other liabilities amounted to E2,480 at December 31, 2000 and are due in less than one year. They include a current amount due to Oreka S.A. for advertising operations carried out by iBazar S.A. as part of its agency agreement with Oreka S.A. 3.15 REVENUES For the year ended December 31, 2000, revenues were as follows:

3.16 OTHER PURCHASES AND EXTERNAL CHARGES The amount of other purchases and external charges for the year ended December 31, 2000 relates principally to marketing costs and to fees linked to the different transactions for the year. The remainder consists of general overheads. Other purchases and external charges for the year ended December 31, 1999 consisted principally of marketing costs. 18 19 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 3.17. FINANCIAL INCOME

The provisions relate to the decline in the value of the Liberty Surf shares held at December 31, 2000 . Net charges on the sale of marketable securities relate to the capital loss on the Liberty Surf shares, which were sold prior to December 31, 2000. At December 31, 2000, the Company was not involved in any exchange risk hedging transactions. 3.18. EXTRAORDINARY ITEMS The extraordinary result for 2000 amounted to E155,153 and consists of the following elements: - - capital gain on the sale to Liberty Surf Group S.A. of the Chez.com, Carte.fr, and Francemail.com, assets and the shares in the company CEIC SARL, for E105,686; - - capital gain on the sale of the shares in iBourse to Bibop-Carire Bank, for E50,063. 4. SEGMENT INFORMATION The following is a summary of operations by segment for the year ended December 31, 1999:

The following is a summary of operations by segment for the year ended December 31, 2000:

Data comes from management information derived from the company's cost accounting plan. 19 20 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 5. HEADCOUNT The staff included 70 employees at December 31, 1999 and 251 employees at December 31, 2000. 6. COMMITMENTS AND CONTINGENCIES Seller's warranties: iBazar S.A. granted a E4,900 seller's warranty to Bipop-Carire Bank as part of the sale of iBourse. iBazar S.A. granted a E4,573 seller's warranty to Liberty Surf Group S.A. as part of the sale of CEIC SARL and the contribution of assets (Chez.com, Carte.fr and Francemail.com). Bank guarantees: iBazar S.A. has a bank guarantee of E3,000 given to Bipop-Carire Bank as part of the sale of iBourse S.A. This portion of the purchase price is being held in escrow in order to secure the company's obligations related to the sale of iBourse. Under the terms of the agreement, 1.5 million euros is expected be released from escrow in June 2001 and 1.5 million euros in December 2001. The other iBazar S.A. bank guarantees amount to E5,079 and can be broken down as follows: - - VAT guarantee: E3,441; - - guarantee for the financing of different advertising campaigns : E1,435; - - sundry including real estate (offices and parking places) : E203. iBazar S.A. and iBazar Belgium S.A. are jointly and severally committed within the framework of the share purchase agreement for the Opendeal S.A. shares dated March 16, 2000 iBazar S.A. jointly and severally guaranteeing the iBazar Belgium obligations arising from this agreement. Opendeal S.A. has a bank guarantee of E23.3, for the rent of its premises in Brussels. Inter Bazar LDA took out total bank guarantees of E270 in favour of Mrs. Joana Miranda and Mrs Pedro Valido and Tiago Costa for the purchase of the shares in the company Total Sites which they held. Interbazar LDA also has a bank guarantee of E8.6 in favour of Governo Civil de Lisboa for the Marketing operation ((Soldes du Millenaire)). iBazar Italia Spa has a bank guarantee of E34.9, expiring on November 30, 2006, for the rent of its premises in Milan. iBazar Com LTDA has bank guarantees for R$116,125, (equivalent to E63.4), for the rent of its offices in Rio de Janeiro and Sao Paulo, including E36.5 which expires on June 1, 2001, and E26.9, which expires on April 25, 2002. iBazar NL BV has a bank guarantee of E35.4 with an unlimited duration, for the rent of its premises in Amsterdam. iBazar NL BV also has two other bank guarantees for a total of E8.8 for vehicles on leasing agreements. 20 21 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) Operating leases: iBazar S.A.: The premises used for the iBazar S.A. registered office, 1/3 avenue de Flandre in Paris, which are leased through a 3 year tacitly renewable agreement, with an annual rent of E533 plus charges. 1 Smart car which is rented through a 36 month long-term rental agreement with an annual rent of E2, with the contract running from June, 1999 to May, 2002. iBazar Italia Spa: The iBazar Italia premises in Milan, which are subject to a 6 year lease until September 30, 2006 , with an annual rent of E139.2 plus charges. Inter Bazar LDA: Two Golf 1.9 TDI on 48 month long-term lease with a total annual rent of E23, with the contract running from July 2000 through July 2004. iBazar Belgium S.A.: The iBazar Belgium premises in Brussels, with a 9 year lease, running until August 31, 2009, with the possibility of termination every three years, with an annual rent of E46.5 plus charges. 2 vehicles with a 60 month long term lease contract with an annual rent of E10.2 . Computer equipment on long-term lease, expiring November 2001, with a total annual rent of E7.7 . iBazar NL BV: The iBazar NL premises in Amsterdam, which are subject to a 2 year lease, with an annual rent of E56.9 . 8 vehicles which are subject to a 48 month long term rental agreement with a total annual rent of E45.6 . iBazar Espana SL: One vehicle and office equipment which are subject to long term leases for annual amounts of E9.0 and E8.1, respectively. Rent expense was approximately E1,084 and E60 in 2000 and 1999, respectively. 7. RELATED PARTY TRANSACTIONS The following summarizes the significant related party transactions: (a) During 1999, the Company sold its shares of Telestore for 2.2 million euros to a company having a director who is also a director of the Company. (b) During 1999 and 2000, the Company paid approximately E536 and 2.5 million euros, respectively, for software license fees to a company having a director who is also a director of the Company. (c) In 2000, the Company generated revenues of E267 for advertising space sold under an agency agreement with a company having a director who is also a director of the Company. As of December 31, 2000, E629 is due by iBazar to this company for advertising operations carried out by iBazar as part of this agency agreement. 8. SUBSEQUENTS EVENTS On May 18, 2001, the Company was acquired by eBay Inc. pursuant to a Contribution Agreement, dated February 21, 2001 between eBay and the shareholders of the Company. Consideration from the sale of the Company amounted to approximately U.S.$ 2.3 million in cash and approximately 2,045,000 shares of eBay common stock. 21 22 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) 9. SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING POLICIES GENERALLY ACCEPTED IN THE UNITED STATES AND FRANCE The principal differences between French GAAP and U.S. GAAP as they relate to the Company are discussed in further detail below. Valuation of marketable securities and investment securities In accordance with French GAAP, the Company's policy is to value marketable securities, at the lower of cost or market value. Investment securities are stated at cost and an allowance is recorded when recoverable value, based upon management's analysis of the specific nature of each investment, appears to be less than carrying value. The carrying amount of publicly traded marketable securities is determined based on the average quotations for the month preceding the end of the period. Allowances can be subsequently reversed if the estimated recoverable value of the investment increases. Unrealized gains on marketable securities and investment securities are not recognized. Under U.S. GAAP (SFAS 115), marketable securities and investment securities are divided into three categories: trading, held-to-maturity and available-for-sale. For the trading category, to which all of the Company's investment securities and marketable securities belong, the investment carrying value is adjusted to its market value based on the closing share price at year end and the difference recorded in operating results. Equity method of accounting for certain investments Under French GAAP the company accounted for investments in iBourse and Oreka at cost and an allowance was recorded when the recoverable value of the investments was assessed by management as less than the carrying value. Although the Company's ownership in these entities exceeded 20%, the investments were accounted for under the cost basis, as these investments were considered temporary by management. Under U.S. GAAP, use of the equity method of accounting is required for investments if the investor has the ability to exercise significant influence over the operating and financial policies of the investee. The ability is presumed to exist for investments of 20% or more and, thus, adjustments to reflect equity method of accounting for the company's investments in iBourse and Oreka have been included in the U.S. GAAP reconciliation. Revenue recognition Barter Transactions Under French GAAP, barter transactions for advertising service exchanges is recognized on the basis of a valuation of the market price for a similar transaction. The company recognizes revenue with an equivalent amount recognized as an expense. Under U.S. GAAP, advertising barter transactions should be accounted for in accordance with Emerging Issues Task force (EITF) Issue No. 99-17. "Accounting for Advertising Barter Transactions" which requires that barter transactions be recognized at the fair value of the advertising surrendered when an entity has a historical practice of receiving cash or marketable securities for similar advertising transactions. A period not to exceed six months prior to the date of the barter transaction has been used to determine whether the Company has a historical practice of receiving cash or marketable securities for similar advertising. In addition, the recognition of revenue on barter advertising is limited by the dollar amount of the cash received for similar transactions during the same period and, thus, an adjustment has been recorded to reverse the revenues and costs recorded under barter transactions. 22 23 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) Reporting revenue gross as a principal or net as an agent Under French GAAP, the company recorded the costs incurred in connection with group buying transactions and the corresponding revenue on sales of the merchandise on a gross basis. Under U.S. GAAP, in July 2000, the EITF reached a consensus with respect to EITF Issue No 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent". EITF 99-19 addressed whether a company should report revenue based on the gross amount billed to a customer because it has earned revenue from the sale of the goods or services or the net amount retained (that is, the amount billed to the customer less the amount paid to a supplier) because it has earned a commission or fee. Accordingly, an adjustment has been recorded to reduce revenues and related costs to reflect only the net amount earned as a commission. Revenue recognized for certain customers Under French GAAP, the company recognized revenue for certain customers whose creditworthiness was unknown. Under U.S. GAAP, in order to recognize revenue, among other things, (i) there has to be persuasive evidence of an arrangement, (ii) occurrence of delivery, (iii) the fee is fixed and determinable, and (iv) collection is reasonably assured. As collection of certain receivables was not reasonably assured, such transactions have been reversed for U.S. GAAP purposes. Accrual for loss Contingencies Under French GAAP, the company accrued for certain claims and pending litigation. Under US GAAP, an estimated loss from a loss contingency shall be accrued if both (i) the information indicates that it is probable that a liability has been incurred at the date of the financial statements and (ii) that the loss can be reasonably estimated. Accordingly, an adjustment has been recorded to reverse the provision related to certain pending litigation for U.S. GAAP purposes. Deferred Income Taxes The Group does not recognize deferred tax assets, which relate primarily to tax losses available for carryforward, in its consolidated balance sheet. Under US GAAP (SFAS no. 109), all deferred tax assets are recorded initially and then reduced by a valuation allowance if it is more likely than not that the deferred tax assets will not be realized. Since substantially all of the Group's tax losses available for carryforward relate to entities which have a recent history of generating losses and it is more likely than not that those entities will not be able to utilize the losses, the application of SFAS no. 109 would not have any impact on net loss since deferred tax assets would be fully provided for. Stock-based compensation The Company granted several key employees options which vest based on the achievement of certain performance measures. Accounting for these options is not addressed by French GAAP and has no effect on the French GAAP statement of operations. In 2000, the Company accelerated the vesting of these options for certain employees. Under U.S. GAAP, the intrinsic value of the options measured at the date of acceleration is considered as compensation to employees. The effect of variable accounting and the acceleration is shown as compensation expense, resulting in an increase in net loss and an increase to additional paid-in capital. 23 24 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) Reconciliation of net income and comprehensive income to U.S. GAAP Under U.S. GAAP, SFAS 130, Reporting Comprehensive Income established standards for reporting and displaying comprehensive income and its components. Statement 130 requires the foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. Comprehensive income is reported by the Company as a component of shareholders' equity in U.S. GAAP financial statements. The following is a reconciliation of net loss as reported in the French GAAP consolidated statements of operations to net loss and comprehensive loss as reported under U.S. GAAP for the years ended December 31, 1999 and 2000:

Reconciliation of shareholders' equity to U.S. GAAP The following is a reconciliation of shareholders' equity as reported in the French GAAP consolidated balance sheet to shareholders' equity as reported in the U.S. GAAP consolidated balance sheet as of December 31, 1999 and 2000:

24 25 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) Discontinued operations The disposal of CEIC segment in 2000 and 1999 was considered a discontinued operation of iBazar for U.S. GAAP purposes. The income from continuing and discontinued operations under U.S. GAAP for the years ended December 31, 1999 and 2000 is as follows:

Statement of operations Certain differences between French GAAP and U.S. GAAP relating principally to revenue recognition and the reclassification of various expenses during 2000 impacted operating results. There were no significant differences during 1999. The effects of the 2000 differences between U.S. GAAP and French GAAP are as follows:

The balance sheet line items affected by these adjustments and reclassifications are as follows:

25 26 IBAZAR, S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except share data and when indicated) Condensed cash flow statement The following represents the summary of the statement of cash flows under U.S. GAAP. There were no significant differences during 1999.

26 -----END PRIVACY-ENHANCED MESSAGE-----


Delaware	000-24821	77-0430924

(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


	Introduction.

	Unaudited Pro Forma Condensed Combined Balance Sheet at March 31, 2001.

	Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2000.

	Unaudited Pro Forma Condensed Combined Statement of Operations for the three months ended March 31, 2001.

	Notes to Unaudited Pro Forma Condensed Combined Financial Information.


	*Exhibit 2.1		Contribution Agreement, dated February 21, 2001, by and among eBay Sub, eBay and the Shareholders.

	*Exhibit 2.2		Form of Put Option Agreement by and between eBay and each of the Shareholders.

	*Exhibit 2.3		Form of Call Option Agreement by and between eBay and each of the Shareholders.

	*Exhibit 2.4		Registration Rights Agreement, dated May 18, 2001, by and among eBay and the Shareholders.

	*Exhibit 2.5		Escrow Agreement, dated May 18, 2001, by and among eBay Sub, eBay, the Shareholders, GS Capital Partners III, L.P., as Shareholders’ Agent and State Street Bank and Trust Company of California, N.A., a national banking association, as the Escrow Agent.



	Exhibit 23.1		Consent of Ernst & Young Audit.

	Exhibit 99.1		Audited financial statements of iBazar S.A.

			Report of Independent Auditors.

			Consolidated Balance Sheets at December 31, 1999 and 2000.

			Consolidated Statements of Operations for the years ended December 31, 1999 and 2000.

			Consolidated Statements of Shareholders’ Equity for the years ended December 31, 1999 and 2000.

			Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 2000.

			Notes to the Consolidated Financial Statements.


Dated: June 15, 2001	eBay Inc.

	By:	/s/ RAJIV DUTTA

		Rajiv Dutta Senior Vice President, Chief Financial Officer


				Historical			Historical
				eBay Inc.			iBazar S.A.
				March 31,			December 31,			Pro Forma			Pro Forma
				2001			2000			Adjustments			Combined

ASSETS




Current assets:




		Cash and cash equivalents		$	314,263		$	10,541		$	(2,283	)(d)	$	322,521




		Restricted cash			15,902			2,780						18,682




		Short-term investments			273,838			8,847						282,685




		Accounts receivable, net			75,494			3,531						79,025




		Other current assets			59,840			6,488						66,328

			Total current assets		739,337			32,187			(2,283	)		769,241




Long-term investments					135,540			—						135,540




Restricted cash and investments					126,390			1,406						127,796




Property and equipment, net					133,279			4,401						137,680




Intangible and other assets, net					111,546			12,460			(8,254	)(b)		238,985




											123, 233	(b)




Deferred tax assets					10,937			—			(856	)(i)		10,081

				$	1,257,029		$	50,454		$	111,840		$	1,419,323

LIABILITIES AND STOCKHOLDERS’ EQUITY




Current liabilities:




		Accounts payable		$	21,395		$	6,410					$	27,805




		Accrued expenses and other current liabilities			69,657			5,218		$	17,397	(c)		92,272




		Deferred revenue and customer advances			12,081			1,355						13,436




		Short-term debt			30,254			—						30,254




		Income taxes payable			10,995			11,538						22,533

			Total current liabilities		144,382			24,521			17,397			186,300




Long-term debt					11,339			—						11,339




Minority interests					43,319			—						43,319




Other liabilities					13,717			—						13,717

					212,757			24,521			17,397			254,675

Stockholders’ equity:




	Common Stock				269			2,199			(2,199	)(e)		271




											2	(k)




	Additional paid-in capital				960,790			27,420			(27,420	)(e)		1,081,164




											120,374	(k)




	Unearned stock-based compensation				(5,051	)		—			—			(5,051	)




	Retained earnings (deficit)				95,423			(3,624	)		3,624	(e)		95,423




	Accumulated other comprehensive loss				(7,159	)		(62	)		62	(e)		(7,159	)

			Total stockholders’ equity		1,044,272			25,933			94,443			1,164,648

				$	1,257,029		$	50,454		$	111,840		$	1,419,323


				Year Ended December 31, 2000

				Historical			Historical			Pro Forma			Pro Forma
				eBay Inc.			iBazar S.A.			Adjustments			Combined

Net revenues				$	431,424		$	3,028					$	434,452




Cost of net revenues					95,453			6,654						102,107

			Gross profit		335,971			(3,626	)		—			332,345

Operating expenses:




		Sales and marketing			166,767			41,397						208,164




		Product development			55,863			3,567						59,430




		General and administrative			73,027			5,092						78,119




		Payroll expense on employee stock options			2,337			—						2,337




		Amortization of acquired intangible assets			1,433			1,492		$	(1,492	)(g)		24,961




											23,528	(f)




		Merger related costs			1,550			—						1,550

			Total operating expenses		300,977			51,548			22,036			374,561

Income (loss) from operations					34,994			(55,174	)		(22,036	)		(42,216	)




Interest and other income (expense), net					46,337			(34,211	)					12,126




Interest expense					(3,374	)		(488	)					(3,862	)

Income (loss) before income taxes and minority interests					77,957			(89,873	)		(22,036	)		(33,952	)




Provision for income taxes					(32,725	)		25,258			272	(j)		(7,195	)




Minority interests in consolidated companies					3,062			—						3,062

Net income (loss) from continuing operations				$	48,294		$	(64,615	)	$	(21,764	)	$	(38,085	)

Net income per share:




		Basic		$	0.19								$	(0.15	)

		Diluted		$	0.17								$	(0.15	)

Weighted average shares:




	Basic				251,776						2,045	(h)		253,821

	Diluted				280,346						2,045	(h)		253,821

											(28,570	)(h)


					Three Months Ended

					Historical			Historical
					eBay Inc.			iBazar S.A.
					March 31,			December 31,			Pro Forma			Pro Forma
					2001			2000			Adjustments			Combined

Net revenues					$	154,090		$	2,070					$	156,160




Cost of net revenues						27,002			2,692						29,694

			Gross profit			127,088			(622	)		—			126,466

Operating expenses:




	Sales and marketing					55,536			8,392						63,928




	Product development					15,737			851						16,588




	General and administrative					21,328			2,699						24,027




	Payroll expense on employee stock options					427			—						427




	Amortization of acquired intangible assets					3,355			443		$	(443	)(g)		9,237




												5,882	(f)

				Total operating expenses		96,383			12,385			5,439			114,207

Income (loss) from operations						30,705			(13,007	)		(5,439	)		12,259




Interest and other income (expense), net						14,978			(32,102	)					(17,124	)




Interest expense						(712	)		(334	)					(1,046	)




Impairment of certain equity investments						(9,921	)		—						(9,921	)

Income (loss) before income taxes and minority interests						35,050			(45,443	)		(5,439	)		(15,832	)




Provision for income taxes						(15,427	)		12,658			68	(j)		(2,701	)




Minority interests in consolidated companies						1,444			—						1,444

Net income (loss) from continuing operations					$	21,067		$	(32,785	)	$	(5,371	)	$	(17,089	)

Net income per share:




		Basic			$	0.08								$	(0.06	)

		Diluted			$	0.08								$	(0.06	)

Weighted average shares:




		Basic				264,279						2,045	(h)		266,324

		Diluted				278,732						2,045	(h)		266,324

												(14,453	)(h)

(c)	To record accrual for direct transaction costs, liabilities relating to exit and termination costs and to established an accrual for tax exposures in various jurisdictions. These estimates are preliminary and are subject to change. Actual amounts ultimately incurred could differ from estimated amounts. Any adjustments to these accruals will be reflected as an adjustment to the goodwill recorded at the time of the acquisition.

(d)	To recognize the $2.3 million cash payment to certain selling shareholders.

(e)	To eliminate iBazar’s pre acquisition historical invested capital.

(f)	To record amortization of identifiable intangible assets and goodwill resulting from the purchase business combination of iBazar as if the business combination had occurred on January 1, 2000.

(g)	To eliminate the amortization of goodwill resulting from purchase business combinations completed by iBazar prior to the eBay acquisition.

(h)	Basic and diluted loss per share is calculated by dividing the net loss for the period by the weighted average common shares outstanding for the period inclusive of the 2,045,045 shares issued as consideration in the iBazar acquisition. Diluted earnings per share excludes weighted average potential common shares subject to repurchase agreements and employees stock options of 28.6 million for the year ended December 31, 2000 and 14.5 million for the three months ended March 31, 2001, as their inclusion would have been anti-dilutive.

(i)	To recognize deferred tax liabilities associated with the differences in the book and tax basis of the acquired identifiable intangible assets.

(j)	To recognize tax benefits associated with tax-deductible amortization expense associated with certain identifiable intangible assets purchased in the acquisition of iBazar.

(k)	To record the issuance of the shares for the acquisition of iBazar.