8-K/A

UNITED STATES

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 (Date of earliest event reported): January 13, 2014

GROUPON, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 1-353335 (Commission File Number) 27-0903295 (I.R.S. Employer Identification No.)

600 West Chicago Avenue, Suite 400 Chicago, Illinois  (Address of principal executive offices) 60654 (Zip Code)

312-334-1579

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Amendment No. 1

On January 13, 2014, Groupon, Inc. (the "Company") and Groupon Esteban, Inc., a Delaware corporation and direct subsidiary of the Company ("Merger Sub"), completed its acquisition of Ideeli, Inc., a Delaware corporation ("Ideeli") pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated January 13, 2014. Under the terms and conditions of the Merger Agreement, Merger Sub was merged with and into Ideeli, the separate corporate existence of Merger Sub ceased and Ideeli continued as a wholly-owned subsidiary of the Company. This Amendment No. 1 is being filed to include the financial information required under Item 9.01.

Item 9.01    Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The unaudited condensed financial statements of Ideeli, Inc. as of November 2, 2013 and for the 39 weeks ended November 2, 2013 and October 27, 2012 are filed as Exhibit 99.1 to this Amendment No. 1 and are incorporated herein by reference.

The audited financial statements of Ideeli, Inc. as of and for the year ended February 2, 2013 are filed as Exhibit 99.2 to this Amendment No. 1 and are incorporated herein by reference.

(b) Pro forma financial information.

The unaudited pro forma condensed combined consolidated financial statements of Groupon, Inc. and Ideeli, Inc. as of and for the nine months ended September 30, 2013 and for the year ended December 31, 2012, are filed as Exhibit 99.3 to this Amendment No. 1 and are incorporated herein by reference.

(d) Exhibits.

Exhibit No.	Description
23.1	Consent of Deloitte & Touche LLP, Independent Auditors of Ideeli, Inc.
99.1	Unaudited condensed financial statements of Ideeli, Inc. as of November 2, 2013 and for the 39 weeks ended November 2, 2013 and October 27, 2012.
99.2	Audited financial statements of Ideeli, Inc. as of and for the year ended February 2, 2013.
99.3	Unaudited pro forma condensed combined consolidated financial statements of Groupon, Inc. and Ideeli, Inc. as of and for the nine months ended September 30, 2013 and for the year ended December 31, 2012.

SIGNATURES

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.

	GROUPON, INC.
Dated: March 26, 2014	By:	/s/ Jason E. Child
	Name:	Jason E. Child
	Title:	Chief Financial Officer

Exhibit Index

Exhibit No.	Description
23.1	Consent of Deloitte & Touche LLP, Independent Auditors of Ideeli, Inc.
99.1	Unaudited condensed financial statements of Ideeli, Inc. as of November 2, 2013 and for the 39 weeks ended November 2, 2013 and October 27, 2012.
99.2	Audited financial statements of Ideeli, Inc. as of and for the year ended February 2, 2013.
99.3	Unaudited pro forma condensed combined consolidated financial statements of Groupon, Inc. and Ideeli, Inc. as of and for the nine months ended September 30, 2013 and for the year ended December 31, 2012.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in Registration Statements No. 333-193165, 333-181854 and 333-177799 on Form S-8 of Groupon, Inc. of our report dated March 26, 2014, relating to the financial statements of Ideeli, Inc. as of and for the year ended February 2, 2013, which appear in the Current Report on Form 8-K/A of Groupon, Inc. dated March 26, 2014.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania

March 26, 2014

EX-99.1

Exhibit 99.1

Ideeli, Inc.

Unaudited Condensed Financial Statements

as of November 2, 2013 and for the 39 Weeks Ended

November 2, 2013 and October 27, 2012

1

IDEELI, INC.

CONDENSED BALANCE SHEET

(unaudited)

	November 2,
	2013
Assets
Current assets:
Cash and cash equivalents	$	4,106,878
Restricted cash	8,092,458
Accounts receivable, net	1,479,810
Inventories	10,256,557
Prepaid expenses and other current assets	1,278,620
Total current assets	25,214,323
Property, equipment and software, net	8,083,583
Total Assets	$	33,297,906
Liabilities and Equity
Current liabilities:
Accounts payable	$	1,506,192
Accrued supplier payables	3,923,756
Accrued expenses	8,947,863
Notes payable	2,000,000
Other current liabilities	406,698
Total current liabilities	16,784,509
Deferred rent	4,226,914
Total Liabilities	21,011,423
Convertible preferred stock, $.0001 par value, 51,445,186 shares authorized:
Series A - 7,189,801 shares designated, 7,120,250 issued and outstanding	3,774,899
(liquidation preference $4,606,802)
Series A-1 - 9,688,195 shares designated, 9,688,195 issued and outstanding	5,804,857
(liquidation preference $6,268,262)
Series B - 11,234,358 shares designated, 10,843,325 issued and outstanding	20,410,601
(liquidation preference $20,797,497)
Series C - 9,597,101 shares designated, 9,597,101 issued and outstanding	38,211,766
(liquidation preference $41,181,160)
Series D - 10,000,000 shares designated, 5,988,024 issued and outstanding	28,719,274
(liquidation preference $32,111,301 including cumulative dividends)
Series E-1 - 2,157,997 shares designated, 1,937,628 issued and outstanding	7,993,792
(liquidation preference $12,119,864)
Series E-2 - 758,924 shares designated, 487,330 issued and outstanding	2,010,505
(liquidation preference $4,064,330 )
Series E-3 - 818,810 shares designated, 545,724 issued and outstanding	2,251,416
(liquidation preference $7,395,929 )
Stockholders' Deficit
Common stock, $.0001 par value, 80,000,000 shares authorized,
10,035,325 shares issued	1,004
Additional paid-in capital	2,494,541
Treasury stock, 684,485 shares of common stock at cost	(1,050,000		)
Accumulated deficit	(98,336,172		)
Total Stockholders' Deficit	(96,890,627		)
Total Liabilities and Stockholders' Deficit	$	33,297,906

See Notes to unaudited Condensed Financial Statements.

2

IDEELI, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	39 Weeks Ended
	November 2, 2013			October 27, 2012
Revenue	$	69,170,800		$	84,323,746
Cost of revenue	54,376,999			65,359,640
Gross profit	14,793,801			18,964,106
Operating expenses:
Marketing	5,725,383			7,957,997
Selling, general and administrative	27,920,404			33,265,241
Total operating expenses	33,645,787			41,223,238
Loss from operations	(18,851,986		)	(22,259,132		)
Interest (expense) income, net	(40,935		)	11,977
Net loss	$	(18,892,921	)	$	(22,247,155	)

See Notes to unaudited Condensed Financial Statements.

3

IDEELI, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

	39 Weeks Ended
	November 2, 2013			October 27, 2012
Net cash used in operating activities	$	(18,507,999	)	$	(17,817,966	)
Investing activities
Purchases of property and equipment and capitalized software	(1,704,730		)	(4,950,129		)
Restricted cash	(8,092,458		)	197,752
Net cash used in investing activities	(9,797,188		)	(4,752,377		)
Financing activities
Proceeds from issuance of notes payable	6,397,542			—
Principal payments on notes payable	(4,397,542		)	—
Proceeds from issuance of convertible preferred stock, net of issuance costs	12,255,713			29,894,934
Proceeds from stock option exercises	2,705			14,983
Net cash provided by financing activities	14,258,418			29,909,917
Net (decrease) increase in cash and cash equivalents	(14,046,769		)	7,339,574
Cash and cash equivalents, beginning of period	18,153,647			12,962,381
Cash and cash equivalents, end of period	$	4,106,878		$	20,301,955
Supplemental disclosure of cash flow information
Interest paid	$	45,347		$	—

See Notes to unaudited Condensed Financial Statements.

4

IDEELI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

1.    DESCRIPTION OF BUSINESS

Ideeli, Inc. (the "Company"), is a Delaware corporation founded in 2006. The Company is a members-only online shopping site operating in the United States. The Company commenced its operations in 2007 as ideeli.com. Members participate in limited-time online sales events featuring products from various brand partners across apparel, accessories, home, and beauty categories.

Subsequent to November 2, 2013, and as described in Note 9, Groupon, Inc. ("Groupon") acquired 100% of the equity interests of the Company on January 13, 2014.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information

The Company has prepared the accompanying condensed financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These condensed financial statements are unaudited and, in the Company's opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the Company's condensed balance sheets, statements of operations and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results to be expected for the full fiscal year ending February 1, 2014. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been omitted in accordance with the rules and regulations of the SEC. These condensed financial statements should be read in conjunction with the Company's audited financial statements and accompanying notes as of and for the year ended February 2, 2013.

Fiscal Year End

The Company follows a retail calendar for reporting in which each quarter consists of 13 weeks and the year-end is the closest Saturday to January 31. For fiscal years 2014 and 2013, the Company's 39-week interim periods ended on November 2, 2013 and October 27, 2012, respectively.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenue and expenses, and the related disclosures of contingent assets and liabilities in the condensed financial statements and accompanying notes. Estimates are utilized for, but not limited to, sales returns, inventory valuation, deferred tax asset valuation allowances and stock-based compensation. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with maturities of less than three months from the date of purchase to be cash equivalents. The Company's cash equivalents primarily include certificates of deposit and money market funds.

Accounts Receivable, Net

Accounts receivable primarily consist of amounts due and in transit from banks for credit card settlements and receivables from vendors and wholesalers. Credit card transactions are settled within several days after the sales transactions are processed.

Allowances for bad debts are provided based on loss histories and direct identification. The Company evaluates the adequacy of these reserves regularly based upon the most recent information available.

Inventories

Inventories, consisting of merchandise purchased for resale, are accounted for using the weighted-average method of accounting and are valued at the lower of cost or market value. All inventory consists of finished goods. The Company writes

5

IDEELI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

(unaudited)

down its inventory for estimated obsolescence and to the lower of cost or market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related inventory allowance represents a new cost basis.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization and primarily consist of infrastructure to host and maintain the Company's web-based sales platform as well as website development costs to expand the functionality of the website. Depreciation is computed utilizing the straight-line method based on the estimated useful lives of the assets, primarily from three to seven years. Leasehold improvements are amortized utilizing the straight-line method over the shorter of their estimated useful lives or the remaining lease term.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

Revenue Recognition

The Company recognizes revenue when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collection is reasonably assured. Revenue is recognized, net of a provision for estimated sales returns and any customer credits issued, when title passes to the customer upon shipment of the merchandise. Sales taxes collected, when applicable, are excluded from revenue. The sales returns provision is estimated based on the Company's historical returns experience and its return policy, whereby returns are accepted within 14-21 days after the date of sale.

The Company issues customer credits as sales incentives and to satisfy refund requests. Customer credits are recorded as liabilities in the accompanying condensed balance sheet and are derecognized when redeemed by customers in connection with sales transactions or upon expiration.

Deferred revenue includes quarterly and annual membership subscriptions. Proceeds from subscription revenue are deferred at the time of sale and are recognized as revenue on a ratable basis over the term of the underlying subscription. Subscription revenue recognized for the 39-week interim periods ended November 2, 2013 and October 27, 2012 was $690,709 and $1,009,807, respectively.

Deferred revenue also includes deferred shipping revenues. In the fourth quarter of fiscal year 2013, the Company instituted a program whereby its customers would pay $9.95 for shipping on their initial orders and receive free shipping for the next 30 days on any subsequent orders. Based on this shipping policy, the Company recognizes the shipping revenue ratably over the 30-day period. As of November 2, 2013, the amount recorded as deferred shipping revenue was $186,000.

Cost of Revenues

Cost of revenues includes the cost of merchandise sold and certain other costs such as inventory write-downs, shipping and handling costs, direct costs to fulfill customer orders, amortization of website development costs and costs of website maintenance.

Advertising Costs

The Company's advertising costs include search engine, display ads, and email advertising. All costs associated with advertising are expensed in the month that the advertising takes place. For the 39-week interim periods ended November 2, 2013

6

IDEELI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

(unaudited)

and October 27, 2012, advertising expenses amounted to $4,220,468 and $5,363,134, respectively, and are included within "Marketing" on the accompanying condensed statements of operations.

Website Development Costs

The Company capitalizes applicable website development costs incurred during the application and infrastructure development stage, and the Company expenses costs incurred during the planning and operating stages. The Company capitalized $1,491,608 and $1,675,117 of such costs for the 39-week interim periods ended November 2, 2013 and October 27, 2012, respectively.

Leases

The Company categorizes leases at their inception as either operating or capital leases and may receive renewal or expansion options, rent holidays, and leasehold improvement and other incentives on certain lease agreements. The Company recognizes lease costs on a straight-line basis, taking into account adjustments for free or escalating rental payments and deferred payment terms. Additionally, lease incentives are accounted for as a reduction of lease costs over the term of the agreement. Rent expense charged to operations differs from rent paid pursuant to certain of the Company’s leases mainly due to the effect of free-rent periods. The Company records rent expense associated with operating leases within "Selling, general and administrative" on the accompanying condensed statements of operations.

Income Taxes

The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, the Company believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry‑forward periods available for tax reporting purposes, the ability to carryback losses and other relevant factors. The Company allocates its valuation allowance to current and non-current deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. As of November 2, 2013, the Company has no uncertain tax positions.

Stock-Based Compensation

The Company measures stock-based compensation cost for employee awards based on the grant-date fair value of those awards. Expense is recognized on a straight-line basis over the service period during which awards are expected to vest, net of estimated forfeitures. The Company includes stock-based compensation expense within "Selling, general and administrative" on the accompanying condensed statements of operations.

Effective with the acquisition of the Company on January 13, 2014, as discussed in Note 9, all stock options were cancelled.

Fair Value of Financial Instruments

Cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses are reflected in the condensed financial statements at their cost, which approximates fair value due to their short-term nature.

7

IDEELI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

(unaudited)

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and accounts receivable. Receivables from third-party credit cards are processed by financial institutions, which are monitored for financial stability. Management believes that it is not exposed to any significant risks related to its cash accounts.

3.    ACCOUNTS RECEIVABLE

Accounts receivable, net of allowances, as of November 2, 2013 is comprised of the following:

	November 2,
	2013
Credit card receivables	$	1,185,430
Receivables from vendors	207,293
Wholesalers and other receivables	138,026
Total accounts receivable	1,530,749
Less: allowance for doubtful accounts	(50,939		)
Accounts receivable, net	$	1,479,810

4.    PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of November 2, 2013 is comprised of the following:

	November 2,
	2013
Website development	$	6,458,144
Computer equipment and software	4,229,365
Leasehold improvements	2,295,991
Furniture and fixtures	278,040
Studio equipment	242,939
Total property, equipment and software, gross	13,504,479
Less: accumulated depreciation and amortization	(5,420,896		)
Property, equipment and software, net	$	8,083,583

Depreciation and amortization expense for the 39-week interim periods ended November 2, 2013 and October 27, 2012 was $2,150,276 and $1,459,937, respectively.

5.    CONVERTIBLE PREFERRED STOCK

In June 2013, the Company completed the sale of 2,970,682 shares of Series E-1, Series E-2, and Series E-3 preferred stock ("Series E Preferred") at a price of $4.17 per share that resulted in gross proceeds of $12.4 million. Issuance costs related to the sale of Series E Preferred were approximately $0.1 million. Holders of the Series E Preferred shares are entitled to participate, senior to the holders of the other preferred shares and common stock on an as-converted basis, in any dividends paid on the common stock. Such dividends shall be noncumulative and shall be payable only when, as, and if declared by the Board. Holders of Series E Preferred shares were also issued warrants to purchase 4,456,025 shares of common stock at an exercise price of $0.18 per share. Holders of the Series E-1, Series E-2, and Series E-3 preferred shares have a liquidation preference per share of $6.26, $8.34, and $13.55, respectively. The holders of the preferred stock have the right to convert the preferred stock, at any time, into common stock. The conversion price of each class of preferred stock is initially 1:1 and is subject to an adjustment to reduce dilution in the event that the Company issues additional equity securities at a purchase price less than the applicable conversion price.

8

IDEELI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

(unaudited)

Because the Company’s stockholder agreements do not specify whether the common stockholders receive the same form of consideration as the convertible preferred stockholders upon the occurrence of a merger, a transaction resulting in a transfer of more than 50% of the Company’s voting power, or the disposition of all or substantially all of the Company’s assets or intellectual property (collectively, "in-substance liquidation events"), all of the Company’s outstanding convertible preferred shares are presented outside of permanent equity in the accompanying balance sheet.

6.    DEBT

The Company was party to a loan and security agreement ("Loan Agreement") with Square 1 Bank (the "Bank") that was amended in April 2013 and was scheduled to mature in April 2014. The Loan Agreement provided up to $12.0 million of availability for borrowings and letters of credit. The Loan Agreement included (i) a revolving credit line, (ii) one or more term loans in an aggregate principal amount not exceeding $1,500,000, and (iii) an equipment term loan that allowed a minimum of $250,000 equipment financing per quarter if necessary. Beginning in April 2013, all letters of credit require cash collateral. All borrowings bear interest at the greater of 3.00% above the prime rate or 7.00%. Interest payments were payable monthly and principal payments were payable monthly for term loans and prior to maturity for borrowings under the revolving credit line. As of November 2, 2013, there were letters of credit totaling $8.1 million primarily to secure open lines of credit with suppliers for inventory purchases and security deposits on office leases. These letters of credit expire between January 13, 2014 and October 20, 2014. As of November 2, 2013, the Company had borrowings outstanding of $2.0 million. As of November 2, 2013, available borrowings, after letters of credit, were $1.9 million.

On January 13, 2014, the Company’s Loan Agreement with Square 1 Bank was terminated and all outstanding borrowings were repaid. However, all letters of credit outstanding prior to the acquisition remain outstanding with Square 1 Bank and continue to require cash collateral.

7.    COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company entered into two new leases for office space in New York, New York, in April and May of 2012. The terms of these leases are approximately 11 years, and the Company moved into the new locations in the third quarter of fiscal year 2013. Letters of credit were issued for security deposits of approximately $3.9 million, which is included in the $8.1 million of outstanding letters of credit described in Note 6.

Total rent expense for operating leases was $1,907,796 and $1,474,892 for the 39-week interim periods ended November 2, 2013 and February 2, 2013, respectively.

Legal Proceedings

The Company is party to various legal proceedings incident to the operation of its business. Management believes that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

8.    RELATED-PARTY TRANSACTIONS

During the 39-week interim periods ended November 2, 2013 and October 27, 2012 the Company paid $803,214 and $118,333, respectively, to a consulting services provider for which one of the Company's executives is a member of the board of directors. In addition, during the 39-week interim period ended October 27, 2012, the Company paid $57,071 to one of the Company's investors for consulting services.

9.    SUBSEQUENT EVENTS

On January 13, 2014, all of the equity interests of the Company were acquired by Groupon for an aggregate cash purchase price of approximately $43 million, subject to working capital adjustments.

9

IDEELI, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

(unaudited)

In addition, on January 13, 2014, the Company's Loan Agreement with Square 1 Bank was terminated and all outstanding borrowings were repaid. However, all letters of credit outstanding prior to the acquisition remain outstanding with Square 1 Bank and continue to require cash collateral.

Subsequent events have been evaluated through March 26, 2014, the date the financial statements were available to be issued.

10

EX-99.2

Exhibit 99.2

Ideeli, Inc.

Financial Statements as of and for the

Year Ended February 2, 2013, and

Independent Auditors’ Report

1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Ideeli, Inc.

We have audited the accompanying financial statements of Ideeli, Inc. (the "Company"), which comprise the balance sheet as of February 2, 2013, and the related statements of operations, stockholders' deficit, and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ideeli, Inc. as of February 2, 2013, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania

March 26, 2014

2

IDEELI, INC.

BALANCE SHEET

	February 2,
	2013
Assets
Current assets:
Cash and cash equivalents	$	18,153,647
Accounts receivable, net	1,285,981
Inventories	11,632,576
Prepaid expenses and other current assets	1,741,929
Total current assets	32,814,133
Property, equipment and software, net	8,529,129
Total Assets	$	41,343,262
Liabilities and Equity
Current liabilities:
Accounts payable	$	775,447
Accrued supplier payables	7,949,121
Accrued expenses	9,691,569
Deferred revenue	514,300
Total current liabilities	18,930,437
Deferred rent	3,806,517
Total Liabilities	22,736,954
Convertible preferred stock, $.0001 par value - 47,709,455 shares authorized:
Series A - 7,189,801 shares designated, 7,120,250 issued and outstanding	3,774,899
(liquidation preference $4,606,802)
Series A-1 - 9,688,195 shares designated, 9,688,195 issued and outstanding	5,804,857
(liquidation preference $6,268,262)
Series B - 11,234,358 shares designated, 10,843,325 issued and outstanding	20,410,601
(liquidation preference $20,797,497)
Series C - 9,597,101 shares designated, 9,597,101 issued and outstanding	38,211,766
(liquidation preference $41,181,160)
Series D - 10,000,000 shares designated, 5,988,024 issued and outstanding	28,719,274
(liquidation preference $30,986,301 including cumulative dividends)
Stockholders' Deficit
Common stock, $.0001 par value, 70,000,000 shares authorized,
10,019,763 shares issued	1,002
Additional paid-in capital	2,177,160
Treasury stock, 684,485 shares of common stock at cost	(1,050,000		)
Accumulated deficit	(79,443,251		)
Total Stockholders' Deficit	(78,315,089		)
Total Liabilities and Stockholders' Deficit	$	41,343,262

See Notes to Financial Statements.

3

IDEELI, INC.

STATEMENT OF OPERATIONS

	Year Ended
	February 2, 2013
Revenue	$	113,421,580
Cost of revenue	90,567,995
Gross profit	22,853,585
Operating expenses:
Marketing	10,223,865
Selling, general and administrative	44,395,573
Total operating expenses	54,619,438
Loss from operations	(31,765,853		)
Interest income, net	14,087
Net loss	$	(31,751,766	)

See Notes to Financial Statements.

4

IDEELI, INC.

STATEMENT OF STOCKHOLDERS' DEFICIT

	Common Stock			Treasury Stock
								Additional					Total
	Number of	Par		Number of	Par			Paid-in		Accumulated			Stockholders’
	Shares	Value		Shares	Value			Capital		Deficit			Deficit
Balance at January 31, 2012	10,007,705	$	1,000	684,485	$	(1,050,000	)	$	1,416,643	$	(47,691,485	)	$	(47,323,842	)
Exercise of stock options	12,058	2		—	—			18,881		—			18,883
Stock-based compensation	—	—		—	—			741,636		—			741,636
Net loss	—	—		—	—			—		(31,751,766		)	(31,751,766		)
Balance at February 2, 2013	10,019,763	$	1,002	684,485	$	(1,050,000	)	$	2,177,160	$	(79,443,251	)	$	(78,315,089	)

See Notes to Financial Statements.

5

IDEELI, INC.

STATEMENT OF CASH FLOWS

	Year Ended
	February 2, 2013
Operating activities
Net loss	$	(31,751,766	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	741,636
Depreciation and amortization	2,099,224
Change in assets and liabilities:
Accounts receivable	748,286
Inventories	1,420,572
Prepaid expenses and other current assets	(375,576		)
Accounts payable	(1,700,702		)
Accrued supplier payables	2,444,200
Accrued expenses	3,598,390
Deferred revenue	98,043
Deferred rent	3,764,816
Net cash used in operating activities	(18,912,877		)
Investing activities
Purchases of property and equipment and capitalized software	(6,007,426		)
Restricted cash	197,752
Net cash used in investing activities	(5,809,674		)
Financing activities
Issuance of convertible preferred stock, net of issuance costs paid	29,894,934
Proceeds from exercise of stock options	18,883
Net cash provided by financing activities	29,913,817
Net increase in cash and cash equivalents	5,191,266
Cash and cash equivalents, beginning of period	12,962,381
Cash and cash equivalents, end of period	$	18,153,647
Non-cash financing activities
Accrued convertible preferred stock issuance costs	$	1,175,660

See Notes to Financial Statements.

6

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS

1.    DESCRIPTION OF BUSINESS

Ideeli, Inc. (the "Company"), is a Delaware corporation founded in 2006. The Company is a members-only online shopping site operating in the United States. The Company commenced its operations in 2007 as ideeli.com. Members participate in limited-time online sales events featuring products from various brand partners across apparel, accessories, home, and beauty categories.

Subsequent to February 2, 2013, and as described in Note 11, Groupon, Inc. ("Groupon") acquired 100% of the equity interests of the Company on January 13, 2014.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements have been prepared in accordance with U.S generally accepted accounting principles ("U.S. GAAP") and are denominated in U.S. currency.

Fiscal Year End

The Company follows a retail calendar for reporting in which each quarter consists of 13 weeks and the year-end is the closest Saturday to January 31. Fiscal year 2013 started on February 1, 2012 and ended on February 2, 2013.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenue and expenses, and the related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. Estimates are utilized for, but not limited to, sales returns, inventory valuation, deferred tax asset valuation allowances and stock-based compensation. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with maturities of less than three months from the date of purchase to be cash equivalents. The Company's cash equivalents primarily include certificates of deposit and money market funds.

Accounts Receivable, Net

Accounts receivable primarily consist of amounts due and in transit from banks for credit card settlements and receivables from vendors and wholesalers. Credit card transactions are settled within several days after the sales transactions are processed.

Allowances for bad debts are provided based on loss histories and direct identification. The Company evaluates the adequacy of these reserves regularly based upon the most recent information available.

Inventories

Inventories, consisting of merchandise purchased for resale, are accounted for using the weighted-average method of accounting and are valued at the lower of cost or market value. All inventory consists of finished goods. The Company writes down its inventory for estimated obsolescence and to the lower of cost or market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related inventory allowance represents a new cost basis.

7

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization and primarily consist of infrastructure to host and maintain the Company’s web-based sales platform as well as website development costs to expand the functionality of the website. Depreciation is computed utilizing the straight-line method based on the estimated useful lives of the assets, primarily from three to seven years. Leasehold improvements are amortized utilizing the straight-line method over the shorter of their estimated useful lives or the remaining lease term.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

Revenue Recognition

The Company recognizes revenue when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collection is reasonably assured. Revenue is recognized, net of a provision for estimated sales returns and any customer credits issued, when title passes to the customer upon shipment of the merchandise. Sales taxes collected, when applicable, are excluded from revenue. The sales returns provision is estimated based on the Company’s historical returns experience and its return policy, whereby returns are accepted within 14-21 days after the date of sale.

The Company issues customer credits as sales incentives and to satisfy refund requests. Customer credits are recorded as liabilities in the accompanying balance sheet and are derecognized when redeemed by customers in connection with sales transactions or upon expiration.

Deferred revenue includes quarterly and annual membership subscriptions. Proceeds from subscription revenue are deferred at the time of sale and are recognized as revenue on a ratable basis over the term of the underlying subscription. Subscription revenue recognized for fiscal year 2013 was $1,270,658.

Deferred revenue also includes deferred shipping revenues. In the fourth quarter of fiscal year 2013, the Company instituted a program whereby its customers would pay $9.95 for shipping on their initial orders and receive free shipping for the next 30 days on any subsequent orders. Based on this shipping policy, the Company recognizes the shipping revenue ratably over the 30-day period. As of February 2, 2013, the amount recorded as deferred shipping revenue was $215,000.

Cost of Revenues

Cost of revenues includes the cost of merchandise sold and certain other costs such as inventory write-downs, shipping and handling costs, direct costs to fulfill customer orders, amortization of website development costs and costs of website maintenance.

Advertising Costs

The Company’s advertising costs include search engine, display ads, and email advertising. All costs associated with advertising are expensed in the month that the advertising takes place. For fiscal year 2013, advertising expenses of $6,912,351 is included within "Marketing" on the accompanying statement of operations.

Website Development Costs

The Company capitalizes applicable website development costs incurred during the application and infrastructure development stage, and the Company expenses costs incurred during the planning and operating stages. The Company capitalized

8

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

$2,131,727 of such costs for fiscal year 2013.

Leases

The Company categorizes leases at their inception as either operating or capital leases and may receive renewal or expansion options, rent holidays, and leasehold improvement and other incentives on certain lease agreements. The Company recognizes lease costs on a straight-line basis, taking into account adjustments for free or escalating rental payments and deferred payment terms. Additionally, lease incentives are accounted for as a reduction of lease costs over the term of the agreement. Rent expense charged to operations differs from rent paid pursuant to certain of the Company’s leases mainly due to the effect of free-rent periods. The Company records rent expense associated with operating leases within "Selling, general and administrative" on the accompanying statement of operations.

Income Taxes

The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rates that are applicable in a given year. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, the Company believes it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience, expectations of future taxable income and capital gains by taxing jurisdiction, the carry‑forward periods available for tax reporting purposes, the ability to carryback losses and other relevant factors. The Company allocates its valuation allowance to current and non-current deferred tax assets on a pro-rata basis. A change in the estimate of future taxable income may require an increase or decrease to the valuation allowance.

The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. As of February 2, 2013, the Company has no uncertain tax positions.

Stock-Based Compensation

The Company measures stock-based compensation cost for employee awards based on the grant-date fair value of those awards. Expense is recognized on a straight-line basis over the service period during which awards are expected to vest, net of estimated forfeitures. The Company includes stock-based compensation expense within "Selling, general and administrative" on the accompanying statement of operations.

Effective with the acquisition of the Company on January 13, 2014, as discussed in Note 11, all stock options were cancelled.

Fair Value of Financial Instruments

Cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses are reflected in the financial statements at their cost, which approximates fair value due to their short-term nature.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and accounts receivable. Receivables from third-party credit cards are processed by financial institutions, which are monitored for financial stability. Management believes that it is not exposed to any significant risks related to its cash accounts.

9

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

3.    ACCOUNTS RECEIVABLE

Accounts receivable, net of allowances, as of February 2, 2013 is comprised of the following:

	February 2,
	2013
Credit card receivables	$	576,458
Receivables from vendors	354,967
Wholesalers and other receivables	405,704
Total accounts receivable	1,337,129
Less: allowance for doubtful accounts	(51,148		)
Accounts receivable, net	$	1,285,981

4.    PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of February 2, 2013 is comprised of the following:

	February 2,
	2013
Website development	$	4,966,536
Computer equipment and software	4,111,664
Leasehold improvements	2,201,280
Furniture and fixtures	278,040
Studio equipment	242,939
Total property, equipment and software, gross	11,800,459
Less: accumulated depreciation and amortization	(3,271,330		)
Property, equipment and software, net	$	8,529,129

Depreciation and amortization expense for fiscal year 2013 was $2,099,224.

5.    STOCKHOLDERS' EQUITY

Convertible Preferred Stock

Preferred stock issued and outstanding as of February 2, 2013 is comprised of the following:

		Shares Issued	Original
Class of Preferred Stock	Date Issued	and Outstanding	Issue Price
Series A Preferred	11/16/2007	7,120,250 shares	$0.647 per share
Series A-1 Preferred	1/15/2009	9,688,195 shares	$0.647 per share
Series B Preferred	11/30/2009	10,843,325 shares	$1.918 per share
Series C Preferred	4/27/2011	9,597,101 shares	$4.291 per share
Series D Preferred	6/7/2012	5,988,024 shares	$5.010 per share

10

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

The table below summarizes convertible preferred stock activity for fiscal year 2013:

	Series A, B, C, and D Convertible Preferred Stock
	Number of
	Shares	Amount
Balance at January 31, 2012	37,248,871	$	68,202,123
Issuance of Series D convertible preferred stock (net of stock issuance costs of $1,280,726)	5,988,024	28,719,274
Balance at February 2, 2013	43,236,895	$	96,921,397

The holders of the Series D preferred stock are entitled to participate, pari passu with the holders of Series C preferred stock and senior to the holders of the other series of preferred stock and common stock, on an as-converted basis in any dividends paid on common stock. In addition, the holders of the Series D preferred stock are entitled to an annual 5% cumulative dividend payable upon a liquidation, acquisition, or asset transfer. Cumulative dividends in arrears on the Series D preferred stock as of February 2, 2013 totaled $986,301 ($0.16 per share). The holders of the Series C preferred stock are entitled to participate, pari passu with the holders of Series D preferred stock and senior to the holders of the other series of preferred stock and common stock, on an as-converted basis in any dividends paid on common stock. The holders of the Series B preferred stock are entitled to receive, senior to the Series A and Series A-1 preferred stock, 8% noncumulative dividends when, as, and if declared by the board of directors (the "Board"). The holders of the Series A preferred stock and Series A-1 preferred stock are entitled to receive, senior to the common stock, 8% noncumulative dividends when, as, and if declared by the Board.

In the event of any liquidation, dissolution, or winding up of the Company, or upon the occurrence of a merger, a transaction resulting in a transfer of more than 50% of the Company’s voting power, or the disposition of all or substantially all of the Company’s assets or intellectual property (collectively, "in-substance liquidation events"), the holders of the Series D preferred stock will be entitled to receive, senior to the holders of the other series of preferred stock and common stock, a per-share amount equal to the original purchase price plus any declared but unpaid dividends (the "Series D Liquidation Preference"). After the payment of the Series D Liquidation Preference to the holders of the Series D preferred stock, the holders of the Series C preferred stock will be entitled to receive, senior to the holders of Series A preferred stock, Series A-1 preferred stock, Series B preferred stock, and common stock, a per-share amount equal to the original purchase price plus any declared but unpaid dividends (the "Series C Liquidation Preference"). After the payment of the Series C Liquidation Preference to the holders of the Series C preferred stock, the holders of the Series B preferred stock and Series A-1 preferred stock will be entitled to receive, senior to the holders of Series A preferred stock and common stock, a per-share amount equal to the applicable original purchase price plus any declared but unpaid dividends (the "Series B and Series A-1 Liquidation Preference"). After the payment of the Series B and Series A-1 Liquidation Preference to the holders of the Series B preferred stock and Series A-1 preferred stock, the holders of the Series A preferred stock will be entitled to receive, senior to the holders of common stock, a per-share amount equal to the original purchase price plus any declared but unpaid dividends (the "Series A Liquidation Preference"). After the payment of the Series A Liquidation Preference, any remaining assets will be distributed among the holders of the common stock and the Series C preferred stock pro rata on an as-converted to common stock basis. Because the Company's stockholder agreements do not specify whether the common stockholders receive the same form of consideration as the convertible preferred stockholders upon the occurrence of an in-substance liquidation event, the convertible preferred shares are presented outside of permanent equity in the accompanying balance sheet.

The holders of the preferred stock have the right to convert the preferred stock, at any time, into common stock. The conversion price of each class of preferred stock is initially 1:1 and is subject to an adjustment to reduce dilution in the event that the Company issues additional equity securities at a purchase price less than the applicable conversion price. The conversion price is also subject to proportional adjustment for stock splits, stock dividends, recapitalizations, and similar equity restructurings. Upon the closing of a firmly underwritten public offering with gross proceeds to the Company of not less than $55 million, all shares of preferred stock will be automatically converted into common stock at the then-applicable conversion price.

The preferred stock votes together with the common stock on an as-converted basis and not as a separate class except as specifically provided in the Company’s amended and restated certificate of incorporation or otherwise required by law.

11

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Warrants

As of February 2, 2013, the Company had outstanding warrants to acquire 391,033 shares of Series B preferred stock for an exercise price of $1.918 per share and 16,026 shares of common stock for an exercise price of $1.56 per share. These warrants were issued in prior period financing transactions. Exercise of the Series B preferred stock warrants is contingent on the Company achieving a minimum revenue threshold in the Japanese market. The Company has no operations in Japan and the warrants had a fair value of zero as of and for the year ended February 2, 2013.

6.    STOCK AWARDS

In November 2007, the Board and stockholders approved the Ideeli, Inc. 2007 Equity Incentive Plan (the "Plan"), under which incentive stock options, nonqualified stock options, restricted stock awards, restricted stock unit awards, and stock appreciation rights may be issued to the Company’s employees, directors, and consultants. The number of shares that have been authorized to be issued or used under the Plan totals 6,008,451. The stock issuable under the Plan will be shares authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market.

Under the terms of the Plan, a 10% stockholder will not be granted an incentive stock option unless the exercise price of such option is at least 110% of the fair market value of the common stock on the date of grant and the option is not exercisable after the expiration of five years from the date of grant. Subject to the provisions regarding 10% stockholders, no option will be exercisable after the expiration of 10 years from the date of its grant, and the exercise price of each option will not be less than 100% of the fair market value of the common stock subject to the option on the date the option is granted.

The Company records compensation for employee awards based on the fair value of options on the date of grant. The Company determined the grant date fair value of options issued to employees during fiscal year 2013 using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions:

	Year Ended
	February 2, 2013
Dividend yield	- %
Expected volatility	80.00%
Risk-free interest rate	0.78% – 1.82%
Expected term	8.05 years

Expected volatility for fiscal year 2013 was calculated using the historical volatility of the stocks of publicly traded retail and e-commerce companies. The expected terms of the options represents the period of time the options are expected to be outstanding. The risk-free interest rate is based on U.S. Treasury yields for securities with terms approximating the estimated expected life of the options. The assumptions used in the Black-Scholes-Merton option-pricing model are highly subjective and can materially affect the resulting valuation. The weighted-average fair value of options granted for fiscal year 2013 was approximately $0.25 per option.

The Company recognized stock-based compensation expense of $741,636 for fiscal year 2013 related to stock awards issued under the Plan.

As of February 2, 2013 there was $703,123 of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the Plan that are expected to be recognized over a remaining weighted-average period of 48 months. The weighted-average contractual term of stock options outstanding as of February 2, 2013 is 8.0 years.

12

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

The table below summarizes stock option activity for fiscal year 2013:

	Outstanding				Exercisable
			Weighted			Weighted
			Average			Average
			Exercise			Exercise
	Shares		Price		Shares	Price
Outstanding at January 31, 2012	4,979,186		$	1.16	2,069,009	$	0.73
Granted	3,064,884		0.40
Exercised	(12,058	)	1.57
Forfeited	(2,784,114	)	1.17
Outstanding at February 2, 2013	5,247,898		$	0.71	3,178,983	$	0.63

7.    INCOME TAXES

The deferred income tax assets and liabilities consisted of the following components as of February 2, 2013:

	February 2,
	2013
Deferred tax assets:
Net operating loss carryforwards	$	27,717,286
Customer credits	535,530
Inventories	959,564
Accrued bonuses and severance	268,746
Deferred rent	435,980
Equity compensation and other	246,701
Total deferred tax assets	30,163,807
Less valuation allowances	(30,109,308		)
Deferred tax assets, net of valuation allowance	54,499
Deferred tax liabilities:
Property and equipment	(54,499		)
Total deferred tax liabilities	(54,499		)
Net deferred tax asset (liability)	$	—

The realization of deferred tax assets is dependent upon a variety of factors, including the generation of future taxable income, the reversal of deferred tax liabilities, and tax planning strategies. Based upon the Company’s historical operating losses and the uncertainty of future taxable income, management has provided a full valuation allowance against its net deferred tax assets as of February 2, 2013.

13

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

The items accounting for differences between the income tax provision or benefit computed at the federal statutory rate and the provision for income taxes for fiscal year 2013 were as follows:

	Year Ended February 2, 2013
U.S. federal income tax (benefit) provision at statutory rate	(11,113,118	)
State income taxes, net of federal benefits	(1,440,243	)
Change in valuation allowances	11,755,119
Non-deductible stock-based compensation expense	162,460
Non-deductible or non-taxable items	635,782
Provision for income taxes	—

As of February 2, 2013, the Company had federal and state net operating loss carryforwards available of approximately $69,514,193 and $40,095,428, respectively, to offset future federal and state taxable income. If not utilized, net operating losses will expire through 2033 in various amounts.

Under the Tax Reform Act of 1986, the utilization of a corporation’s net operating loss carryforwards is limited following a change in ownership of greater than 50% within a three-year period. Due to the Company’s equity transactions, the Company’s net operating loss carryforwards may be subject to an annual limitation generally determined by multiplying the market value of the Company before ownership change by the federal long-term tax exempt rate then in effect.

The Company is subject to taxation in the United States and state jurisdictions. The Company is currently under IRS audit for the 2010 tax year. It is likely that the examination phase of this audit will conclude in the next 12 months. The tax years 2011 to 2013 remain open to examination by the taxing jurisdictions in which the Company is subject to tax.

8.    DEBT

The Company was party to a loan and security agreement ("Loan Agreement") with Square 1 Bank (the "Bank") that was amended in April 2013 and was scheduled to mature in April 2014. The Loan Agreement provided up to $12.0 million of availability for borrowings and letters of credit. The Loan Agreement included (i) a revolving credit line, (ii) one or more term loans in an aggregate principal amount not exceeding $1,500,000, and (iii) an equipment term loan that allowed a minimum of $250,000 equipment financing per quarter if necessary. Beginning in April 2013, all letters of credit require cash collateral. All borrowings bear interest at the greater of 3.00% above the prime rate or 7.00%. Interest payments were payable monthly and principal payments were payable monthly for term loans and prior to maturity for borrowings under the revolving credit line. As of February 2, 2013, there were letters of credit totaling $9.1 million primarily to secure open lines of credit with suppliers for inventory purchases and security deposits on office leases. These letters of credit expire between March 28, 2013 and January 13, 2014. As of February 2, 2013, the Company did not have any borrowings outstanding. As of February 2, 2013, available borrowings, after letters of credit, were $2.9 million.

On January 13, 2014, the Company’s Loan Agreement with Square 1 Bank was terminated and all outstanding borrowings were repaid. However, all letters of credit outstanding prior to the acquisition remain outstanding with Square 1 Bank and continue to require cash collateral.

9.    COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company entered into two new leases for office space in New York, New York, in April and May of 2012. The terms of these leases are approximately 11 years, and the Company moved into the new locations in the third quarter of fiscal year 2013. Letters of credit were issued for security deposits of approximately $3.9 million, which is included in the $9.1 million of outstanding letters of credit described in Note 8.

14

IDEELI, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Total rent expense for operating leases was $2,136,904 for fiscal year 2013. As of February 2, 2013, minimum rental commitments under all noncancelable operating leases are as follows:

	Amount
2014	$	2,219,255
2015	2,626,247
2016	2,619,850
2017	2,613,292
2018	2,606,567
Thereafter	13,530,639
	$	26,215,850

Legal Proceedings

The Company is party to various legal proceedings incident to the operation of its business. Management believes that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

10.    RELATED-PARTY TRANSACTIONS

During fiscal year 2013, the Company paid $565,998 to a consulting services provider for which one of the Company’s executives is a member of the board of directors. In addition, the Company paid $57,071 to one of the Company’s investors for consulting services.

11.    SUBSEQUENT EVENTS

In June 2013, the Company issued 2,970,682 shares of Series E-1, Series E-2, and Series E-3 preferred stock ("Series E Preferred") at a price of $4.17 per share that resulted in gross proceeds of $12.4 million. Issuance costs related to the sale of Series E Preferred were approximately $0.1 million. Holders of the Series E Preferred shares are entitled to participate, senior to the holders of the other preferred shares and common stock on an as-converted basis, in any dividends paid on the common stock. Such dividends are noncumulative and are payable only when, as, and if declared by the Board. Holders of Series E Preferred shares were also issued warrants to purchase 4,456,025 shares of common stock at an exercise price of $0.18 per share. Holders of the Series E-1, Series E-2, and Series E-3 preferred shares have a liquidation preference per share of $6.26, $8.34, and $13.55, respectively.

On January 13, 2014, all of the equity interests of the Company were acquired by Groupon for an aggregate cash purchase price of approximately $43 million, subject to working capital adjustments.

In addition, on January 13, 2014, the Company’s Loan Agreement with Square 1 Bank was terminated and all outstanding borrowings were repaid. However, all letters of credit outstanding prior to the acquisition remain outstanding with Square 1 Bank and continue to require cash collateral.

Subsequent events have been evaluated through March 26, 2014, the date the financial statements were available to be issued.

15

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

On January 13, 2014, Groupon, Inc., ("Groupon" or the "Company") through its direct subsidiary Groupon Esteban, Inc., completed the acquisition of all the outstanding equity interests of Ideeli, Inc., for $42.7 million in cash.

The following unaudited pro forma condensed combined consolidated financial statements have been derived by the application of pro forma adjustments to the Company's historical consolidated financial statements. The unaudited pro forma condensed combined balance sheet as of September 30, 2013 for Groupon, Inc. and Ideeli, Inc. is presented as if the acquisition had occurred on September 30, 2013. The unaudited pro forma condensed combined statement of operations of Groupon, Inc. and Ideeli, Inc. for the nine months ended September 30, 2013 and for the year ended December 31, 2012 are presented as if the acquisition had occurred on January 1, 2012. The unaudited pro forma condensed combined consolidated financial statements are being provided for illustrative purposes only and do not purport to represent what our results of operations or financial position would have been if the transaction had occurred on the dates indicated and are not intended to project our results of operations or financial position for any future period. Any of the factors underlying these estimates and assumptions may change or prove to be materially different and the estimates and assumptions may not be representative of facts existing upon finalization of the acquisition.

The acquisition has been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition price presented in the accompanying unaudited pro forma condensed combined consolidated financial statements has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The unaudited pro forma condensed combined consolidated financial statements contained herein do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies, or any revenue, tax, or other synergies that may result from the acquisition.

The unaudited pro forma adjustments are based on estimates, available information and certain assumptions that the Company believes are reasonable. The unaudited pro forma adjustments and primary assumptions are described in the accompanying notes. The unaudited pro forma condensed combined consolidated financial statements and the related notes should be read in conjunction with the financial statements and the accompanying notes of Ideeli, Inc. included in Exhibit 99.1 and 99.2 of this Current Report on Form 8-K/A for the year ended February 2, 2013 and for the 39 weeks ended November 2, 2013 and October 27, 2012, respectively, and the historical consolidated financial statements and accompanying notes of Groupon, Inc. included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013.

1

GROUPON, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED

BALANCE SHEET

As of September 30, 2013

(in thousands)

	Groupon, Inc. Historical (unaudited)			Ideeli, Inc.(1) Historical (unaudited)			Pro Forma Adjustments (2)						Notes	Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents	$	1,139,857		$	4,107		$	—		$	(42,740	)	a	$	1,101,224
Restricted Cash	—			8,092			(8,092		)				b	—
Accounts receivable, net	86,233			1,480			—			—				87,713
Deferred income taxes	30,692			—			—			435			c	31,127
Inventories	—			10,257			(10,257		)				b
Prepaid expenses and other current assets	136,543			1,279			18,349			—			b	156,171
Total current assets	1,393,325			25,215			—			(42,305		)		1,376,235
Property, equipment and software, net	126,881			8,083			(3,433		)	3,600			d	135,131
Goodwill	218,224			—			—			3,678			e	221,902
Intangible assets, net	33,182			—			—			17,890			f	51,072
Investments	104,130			—			—			—				104,130
Deferred income taxes, non-current	29,476			—			—			5,083			c	34,559
Other non-current assets	45,322			—			—			—				45,322
Total Assets	$	1,950,540		$	33,298		$	(3,433	)	$	(12,054	)		$	1,968,351
Liabilities and Equity
Current liabilities:
Accounts payable	$	33,684		$	1,506		$	—		$	—			$	35,190
Accrued merchant and supplier payables	591,476			3,924			—			—				595,400
Accrued expenses	211,718			8,948			(1,200		)	450			g, h	219,916
Deferred income taxes, current	52,216			—			—			—				52,216
Notes payable	—			2,000			(2,000		)	—			g	—
Other current liabilities	126,764			407			—			—				127,171
Total current liabilities	1,015,858			16,785			(3,200		)	450				1,029,893
Deferred income taxes, non-current	20,356			—			—			—				20,356
Other non-current liabilities	105,529			4,226			—			—				109,755
Total Liabilities	1,141,743			21,011			(3,200		)	450				1,160,004
Convertible preferred stock	—			109,177			(109,177		)	—			i	—
Stockholders' Equity
Class A common stock	66			—			—			—				66
Class B common stock	—			—			—			—				—
Common stock	—			1			(1		)	—			i	—
Additional paid-in capital	1,563,815			2,495			(2,495		)	—			i	1,563,815
Treasury stock, at cost	(9,014		)	(1,050		)	1,050			—			i	(9,014		)
Accumulated deficit	(767,623		)	(98,336		)	98,336			(450		)	h, i	(768,073		)
Accumulated other comprehensive income	23,579			—			—			—				23,579
Total Groupon, Inc. Stockholders' Equity	810,823			(96,890		)	96,890			(450		)		810,373
Noncontrolling interests	(2,026		)	—			—			—				(2,026		)
Total Equity	808,797			(96,890		)	96,890			(450		)		808,347
Total Liabilities and Equity	$	1,950,540		$	33,298		$	(15,487	)	$	—			$	1,968,351

The accompanying notes are an integral part of, and should be read together with, this unaudited pro forma condensed combined consolidated balance sheet.

(1) Ideeli, Inc. financial information is as of November 2, 2013.

(2) See Note 2 in the accompanying notes for discussion of pro forma adjustments.

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GROUPON, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED

STATEMENT OF OPERATIONS

For the nine months ended September 30, 2013

(in thousands, except share and per share amounts)

	Groupon, Inc. Historical (unaudited)			Ideeli, Inc.(1) Historical (unaudited)			Pro Forma Adjustments (2)						Notes	Pro Forma Combined
Revenue:
Third party and other	$	1,252,966		$	—		$	—		$	—			$	1,252,966
Direct	552,242			69,171			—			—				621,413
Total revenue	1,805,208			69,171			—			—				1,874,379
Cost of revenue:
Third party and other	179,524			—			—			—				179,524
Direct	502,359			54,377			1,559			—			j	558,295
Total cost of revenue	681,883			54,377			1,559			—				737,819
Gross profit	1,123,325			14,794			(1,559		)	—				1,136,560
Operating expenses:
Marketing	158,319			5,725			—			—				164,044
Selling, general and administrative	904,880			27,921			(2,933		)	4,583			j, k	934,451
Acquisition-related benefit, net	(2,276		)	—			—			—				(2,276		)
Total operating expenses	1,060,923			33,646			(2,933		)	4,583				1,096,219
Income (loss) from operations	62,402			(18,852		)	1,374			(4,583		)		40,341
Loss on equity method investments	(58		)	—			—			—				(58		)
Other expense, net	(9,772		)	(41		)	—			—				(9,813		)
Income (loss) before provision for income taxes	52,572			(18,893		)	1,374			(4,583		)		30,470
Provision for income taxes	62,657			—			—			—				62,657
Net (loss) income	(10,085		)	(18,893		)	1,374			(4,583		)		(32,187		)
Net income attributable to noncontrolling interests	(4,061		)	—			—			—				(4,061		)
Net (loss) income attributable to Groupon, Inc.	$	(14,146	)	$	(18,893	)	$	1,374		$	(4,583	)		$	(36,248	)
Net loss per share
Basic	$(0.02)													$(0.05)
Diluted	$(0.02)													$(0.05)
Weighted average number of shares outstanding
Basic	662,531,567													662,531,567
Diluted	662,531,567													662,531,567

The accompanying notes are an integral part of, and should be read together with, this unaudited pro forma condensed combined consolidated statement of operations.

(1) Ideeli, Inc. financial information is for the 39 weeks ended November 2, 2013.

(2) See Note 2 in the accompanying notes for discussion of pro forma adjustments.

3

GROUPON, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED

STATEMENT OF OPERATIONS

For the year ended December 31, 2012

(in thousands, except share and per share amounts)

	Groupon, Inc. Historical			Ideeli, Inc.(1)  Historical			Pro Forma Adjustments (2)						Notes	Pro Forma Combined
Revenue:
Third party and other	$	1,879,729		$	—		$	—		$	—			$	1,879,729
Direct	454,743			113,422			—			—				568,165
Total revenue	2,334,472			113,422			—			—				2,447,894
Cost of revenue:
Third party and other	297,739			—			—			—				297,739
Direct	421,201			90,568			2,657			—			j	514,426
Total cost of revenue	718,940			90,568			2,657			—				812,165
Gross profit	1,615,532			22,854			(2,657		)	—				1,635,729
Operating expenses:
Marketing	336,854			10,224			—			—				347,078
Selling, general and administrative	1,179,080			44,396			(3,826		)	6,110			j, k	1,225,760
Acquisition-related benefit, net	897			—			—			—				897
Total operating expenses	1,516,831			54,620			(3,826		)	6,110				1,573,735
Income (loss) from operations	98,701			(31,766		)	1,169			(6,110		)		61,994
Loss on equity method investments	(9,925		)	—			—			—				(9,925		)
Other income, net	6,166			14			—			—				6,180
Income (loss) before provision for income taxes	94,942			(31,752		)	1,169			(6,110		)		58,249
Provision for income taxes	145,973			—			—			—				145,973
Net (loss) income	(51,031		)	(31,752		)	1,169			(6,110		)		(87,724		)
Net income attributable to noncontrolling interests	(3,742		)	—			—			—				(3,742		)
Net (loss) income attributable to Groupon, Inc.	(54,773		)	(31,752		)	1,169			(6,110		)		(91,466		)
Adjustment of redeemable noncontrolling interests to redemption value	(12,604		)	—			—			—				(12,604		)
Net (loss) income attributable to common stockholders	$	(67,377	)	$	(31,752	)	$	1,169		$	(6,110	)		$	(104,070	)
Net loss per share
Basic	$(0.10)													$(0.16)
Diluted	$(0.10)													$(0.16)
Weighted average number of shares outstanding
Basic	650,214,119													650,214,119
Diluted	650,214,119													650,214,119

The accompanying notes are an integral part of, and should be read together with, this unaudited pro forma condensed combined consolidated statement of operations.

(1) Ideeli, Inc. financial information is for the year ended February 2, 2013.

(2) See Note 2 in the accompanying notes for discussion of pro forma adjustments.

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NOTES TOUNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

1. PRELIMINARY ESTIMATED ACQUISITION PRICE ALLOCATION

    The preliminary acquisition price allocation for Ideeli, Inc. is based on estimates, assumptions, and valuations which have not yet been finalized. Accordingly, the pro forma adjustments to allocate the acquisition consideration will remain preliminary until Groupon management determines the fair values of assets acquired, net of liabilities assumed. The final amounts allocated to assets acquired and liabilities assumed could differ materially from the amounts presented in the unaudited pro forma condensed combined consolidated financial statements. The preliminary amounts allocated to the net assets acquired and liabilities assumed are based on Groupon management's current best estimates. The fair values of net tangible assets acquired are expected to approximate their net carrying amounts.

The following table summarizes the preliminary allocation of the aggregate cash acquisition price of $42.7 million:

Preliminary Acquisition Price Allocation (in thousands)
Cash and cash equivalents	$	4,107
Accounts receivable, net	1,480
Deferred income taxes	435
Prepaid expenses and other current assets	19,628
Property, equipment and software, net	8,250
Goodwill	3,678
Intangible assets:
Subscriber relationships	5,490
Brand relationships	7,900
Trade name	4,500
Deferred income taxes, non-current	5,083
Total assets acquired	60,551
Accounts payable	1,506
Accrued supplier payables	3,924
Accrued expenses	7,748
Other current liabilities	407
Other non-current liabilities	4,226
Total liabilities assumed	17,811
Total Acquisition Price	$	42,740

2. PRO FORMA ADJUSTMENTS TO UNAUDITED CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

The final acquisition price allocation may result in different allocations for tangible and intangible assets than presented in the unaudited pro forma condensed combined consolidated financial statements and these notes, and those differences may be material.

Balance Sheet

a. Adjustment to reflect the cash paid for acquisition consideration.

b. Adjustment to reclassify Ideeli, Inc.'s $8.1 million of restricted cash and $10.3 million of inventories as of September 30, 2013 to prepaid expenses and other current assets to conform to Groupon's presentation.

c. Adjustment to record the estimated preliminary net deferred tax asset increase of $5.5 million related to the acquisition.

5

NOTES TOUNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

d. Adjustment to record the preliminary fair value estimate of Ideeli, Inc.'s website in connection with the acquisition and to reverse the net book value of the existing capitalized website development costs.

e. Adjustment to record preliminary goodwill created as a result of the acquisition of approximately $3.7 million.

f. Adjustment to record the preliminary fair value estimates of intangible assets resulting from the acquisition. Preliminary fair values for the intangible assets were determined based on the income and cost approaches. The intangible assets acquired were trade name, brand relationships and subscriber relationships and are expected to be amortized on a straight-line basis over the following useful lives:

Identifiable Intangible Assets	Useful Life
Trade name	5 years
Brand relationships	5 years
Subscriber relationships	3 years

g. Adjustment to eliminate the $2.0 million note payable and $1.2 million of Ideeli, Inc.'s accrued transaction costs that were settled with a portion of the acquisition consideration.

h. Adjustment to record $0.5 million of transaction costs for this acquisition that were incurred by Groupon after September 30, 2013.

i. Adjustment to eliminate Ideeli, Inc.'s historical convertible preferred stock and stockholder's deficit (common stock, additional paid-in capital, treasury stock, and accumulated deficit).

Statement of Operations

j. Adjustment to reclassify Ideeli, Inc.'s $1.6 million and $2.7 million of credit card processing fees for the nine months ended September 30, 2013 and the year ended December 31, 2012, respectively, from selling, general, and administrative expense to cost of revenue to conform to Groupon's presentation.

k. Adjustment to eliminate $1.3 million and $1.1 million of historical amortization expense recorded for Ideeli, Inc.'s pre-existing capitalized website development costs and to record $4.6 million and $6.1 million of amortization expense for the website asset and other intangible assets expected to be recognized upon Groupon's acquisition of Ideeli, Inc. for the nine months ended September 30, 2013 and for the year ended December 31, 2012, respectively. The other intangible assets acquired include trade name, brand relationships and subscriber relationships. These intangible assets are expected to be amortized on a straight-line basis over the useful life of the underlying assets which range from 3 to 5 years.

6