Amazon Com Inc – ‘8-K’ for 6/9/99

On:  Thursday, 6/10/99   ·   For:  6/9/99   ·   Accession #:  891020-99-988   ·   File #:  0-22513

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                        30    107K 
 2: EX-2.1      Agreement and Plan of Merger                          73    304K 
 3: EX-23.1     Consent of Ernst & Young LLP                           1      8K 

8-K   —   Current Report
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

June 9, 1999
------------------------------------
Date of Report
 (Date of earliest event reported)

AMAZON.COM, INC.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

                                                                [Download Table]
                                                                         
          DELAWARE                   000-22513            91-1646860     
-----------------------------  ---------------------  -------------------
(State or Other Jurisdiction   (Commission File No.)     (IRS Employer   
      of Incorporation)                               Identification No.)

 1200 - 12TH AVENUE SOUTH, SUITE 1200, SEATTLE, WASHINGTON 98144
--------------------------------------------------------------------------------
(Address of principal executive offices, including Zip Code)

(206) 266-1000
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS                                    

      On June 9, 1999, pursuant to an Agreement and Plan of Merger, dated as
of April 25, 1999 (the "Merger Agreement"), by and among Amazon.com, Inc., a    
Delaware corporation ("Amazon.com"), ADC Acquisitions, Inc., a Delaware         
corporation and wholly owned subsidiary of Amazon.com ("ADC"), and Accept.com   
Financial Services Corporation, a California corporation ("Accept.com"), ADC was
merged with and into Accept.com, with Accept.com being the surviving corporation
(the "Merger").                                                                 

     Accept.com is an e-commerce company currently developing longer-range
solutions to simplify person-to-person and business-to-consumer transactions on 
the Internet. Accept.com was incorporated in the State of California in August  
1997 as "Emptor, Inc." and changed its name in April 1999 to "Accept.com        
Financial Services Corporation."                                                

 At the closing of the Merger, Amazon.com issued 877,657 shares of
Amazon.com common stock, par value $0.01 per share ("Amazon.com Common Stock"), 
and assumed all outstanding options of Accept.com pursuant to the formula set   
forth below. Such consideration was determined in arm's-length negotiations     
between Amazon.com and Accept.com.                                              

       Pursuant to the terms of the Merger Agreement, at the effective time of
the Merger, each outstanding share of Accept.com common stock, no par value     
("Accept.com Common Stock"), was converted into the right to receive that number
of shares of Amazon.com Common Stock determined by dividing (a) 948,831 by (b)  
the total number of shares of Accept.com capital stock outstanding immediately  
prior to the effective time of the Merger on a fully diluted basis, assuming the
exercise of all outstanding options and warrants to purchase shares of          
Accept.com Common Stock (the "Exchange Ratio").                                 

      In addition, each option to purchase shares of Accept.com Common Stock
outstanding at the effective time of the Merger was assumed by Amazon.com and   
will be treated as an option to purchase that number of shares of Amazon.com    
Common Stock equal to the product of the Exchange Ratio and the number of shares
of Accept.com Common Stock subject to such option.                              

  All shares of Amazon.com Common Stock issued at the closing of the
Merger have been registered under the Securities Act of 1933, as amended.       

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The Merger will be accounted for under the purchase method of   
accounting.                                                                     

     Pursuant to the Merger Agreement, the shareholders of Accept.com have
agreed to indemnify and hold Amazon.com harmless from losses that Amazon.com or 
its affiliates may suffer as a result of (1) any inaccuracy or misrepresentation
in, or breach of, any representation or warranty made by Accept.com or such     
shareholders in the Merger Agreement or related agreements; and (2) any failure 
by Accept.com or such shareholders to perform or comply, in whole or in part,   
with any covenant or agreement in the Merger Agreement or related agreements. A 
total of 142,268 shares of Amazon.com Common Stock issued in connection with the
Merger have been deposited with an escrow agent to secure these indemnification 
obligations.                                                                    

    The description of the Merger Agreement herein, which is filed as an
exhibit to this Form 8-K, does not purport to be complete and is qualified in   
its entirety by the provisions of the Merger Agreement.                         

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS     

(a)    Financial Statements of Business Acquired                

Accept.com Audited Financial Statements:          

      (i)    Report of Ernst & Young LLP, Independent Auditors

          (ii)   Accept.com (a development stage company) Consolidated
           Balance Sheets as of December 31, 1998 and 1997

          (iii)  Accept.com (a development stage company) Consolidated
                    Statements of Operations for the year ended December 31,
                      1998 and for the period from August 5, 1997 (inception) to
                  December 31, 1997 and cumulative period from August 5,
 1997 (inception) to December 31, 1998

          (iv)   Accept.com (a development stage company) Consolidated
                 Statement of Shareholders' Equity for the period from
           August 5, 1997 (inception) to December 31, 1998

          (v)    Accept.com (a development stage company) Consolidated
                    Statements of Cash Flows for the year ended December 31,
1998 and for the period             

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                    from August 5, 1997 (inception) to December 31, 1997 and
                cumulative period from August 5, 1997 (inception) to
December 31, 1998                   

          (vi)   Accept.com Notes to Consolidated Financial Statements

    Accept.com Condensed Consolidated Financial Statements
(unaudited):                                      

       (i)    Accept.com (a development stage company) Condensed
            Consolidated Balance Sheets as of March 31, 1999
(unaudited) and December 31, 1998   

       (ii)   Accept.com (a development stage company) Condensed
                     Consolidated Statements of Operations for the three month
                     periods ended March 31, 1999 and 1998 (unaudited) and for
                    the cumulative period from August 5, 1997 (inception) to
March 31, 1999 (unaudited)          

       (iii)  Accept.com (a development stage company) Condensed
                     Consolidated Statements of Cash Flows for the three month
                     periods ended March 31, 1999 and 1998 (unaudited) and for
                    the cumulative period from August 5, 1997 (inception) to
March 31, 1999 (unaudited)          

         (iv)   Accept.com Notes to Condensed Consolidated Financial
Statements                          

(b)    Pro Forma Financial Information                          

            Pro Forma Combined Condensed Consolidated Financial Statements
(unaudited):                                      

               (i)    Pro Forma Combined Condensed Consolidated Balance Sheet as
of March 31, 1999 (unaudited)       

           (ii)   Pro Forma Combined Condensed Consolidated Statement of
                      Operations for the three month period ended March 31, 1999
(unaudited)                         

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           (iii)  Pro Forma Combined Condensed Consolidated Statement of
           Operations for the year ended December 31, 1998
(unaudited)                         

       (iv)   Notes to Pro Forma Combined Condensed Consolidated
Financial Statements (unaudited)    

(c)    Exhibits                                                 

            2.1        Agreement and Plan of Merger, dated as of April 25,
                          1999, by and among Amazon.com, Inc., ADC Acquisitions,
                      Inc. and Accept.com Financial Services Corporation

           23.1       Consent of Ernst & Young LLP, Independent Auditors

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Report of Ernst & Young LLP, Independent Auditors 

The Board of Directors and Shareholders                                         
Accept.com                                                                      

We have audited the accompanying consolidated balance sheets of Accept.com (a   
development stage company) as of December 31, 1998 and 1997, and the related    
consolidated statements of operations, shareholders' equity, and cash flows for 
the year ended December 31, 1998 and for the period from August 5, 1997         
(inception) to December 31, 1997 and cumulative from August 5, 1997             
(inception) to December 31, 1998. 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 generally accepted auditing          
standards. 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        
Accept.com at December 31, 1998 and 1997, and the consolidated results of its   
operations and its cash flows for the year ended December 31, 1998 and for the  
period from August 5, 1997 (inception) to December 31, 1997 and cumulative from 
August 5, 1997 (inception) to December 31, 1998, in conformity with generally   
accepted accounting principles.                                                 

                                                               ERNST & YOUNG LLP

San Jose, California                                                            
May 12, 1999                                                                    

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Accept.com
 (a development stage company)

 Consolidated Balance Sheets

                                                        [Enlarge/Download Table]

                                                                     DECEMBER 31,           
                                                           -------------------------------- 
                                                               1998                 1997    
                                                           -----------          ----------- 
                                                                                            

ASSETS                                                                                      
Current assets:                                                                             
  Cash and cash equivalents                                $ 4,253,057          $     2,286 
  Prepaid expenses and other                                    12,840                   -- 
                                                           -----------          ----------- 
Total current assets                                         4,265,897                2,286 

Furniture and equipment                                         44,212                2,846 
Accumulated depreciation                                         3,755                  474 
                                                           -----------          ----------- 
                                                                40,457                2,372 

Other assets                                                     4,000                   -- 
                                                           -----------          ----------- 
Total assets                                               $ 4,310,354          $     4,658 
                                                           ===========          =========== 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                        
Current liabilities:                                                                        
  Accounts payable                                         $    35,862          $        -- 
  Accrued vacation                                              22,204                   -- 
  Accrued expenses                                              60,895                  275 
                                                           -----------          ----------- 
Total current liabilities                                      118,961                  275 

Shareholders' equity:                                                                       
  Series A convertible preferred stock, no par value:                                       
    Authorized shares - 9,202,400                                                           
    Issued and outstanding shares - 8,852,789                                               
      (aggregate liquidation preference of $5,160,291 at                                    
      December 31, 1998)                                     5,139,870                   -- 
  Common stock, no par value:                                                               
    Authorized shares - 20,000,000 in 1998 and                                              
      10,000,000 in 1997                                                                    
    Issued and outstanding shares - 7,123,802 in 1998 and                                   
      800,000 in 1997                                           76,506                8,000 
  Shareholders' notes receivable                               (69,248)                  -- 
  Deficit accumulated during the development stage            (955,735)              (3,617)
                                                           -----------          ----------- 
Total shareholders' equity                                   4,191,393                4,383 
                                                           -----------          ----------- 
Total liabilities and shareholders' equity                 $ 4,310,354          $     4,658 
                                                           ===========          =========== 

 See accompanying notes.

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Accept.com
 (a development stage company)

 Consolidated Statements of Operations

                                                                [Download Table]

                                              PERIOD FROM   CUMULATIVE FROM
                                            AUGUST 5, 1997   AUGUST 5, 1997
                               YEAR ENDED   (INCEPTION) TO   (INCEPTION) TO
                              DECEMBER 31,   DECEMBER 31,     DECEMBER 31, 
                                  1998            1997           1998      
                              -----------   --------------  ---------------
                                                                           

Operating expenses:                                                        
  Research and development     $ 309,388        $      --     $ 309,388    
  Sales and marketing            152,263               --       152,263    
  General and administrative     517,334            3,617       520,951    
                               ---------        ---------     ---------    
Total operating expenses         978,985            3,617       982,602    
                               ---------        ---------     ---------    

Loss from operations            (978,985)          (3,617)     (982,602)   

Interest and other income         29,965               --        29,965    
Interest expense                  (3,098)              --        (3,098)   
                               ---------        ---------     ---------    
                                (952,118)          (3,617)     (955,735)   
                               ---------        ---------     ---------    

Net loss                       $(952,118)       $  (3,617)    $(955,735)   
                               =========        =========     =========    

 See accompanying notes.

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Accept.com
 (a development stage Company)

 Consolidated Statements of Shareholders' Equity

 Period from August 5, 1997 (inception) to December 31, 1998

                                                        [Enlarge/Download Table]


                                                                                                     DEFICIT                  
                                CONVERTIBLE PREFERRED                                              ACCUMULATED                
                                        STOCK                  COMMON STOCK         SHAREHOLDERS'    DURING         TOTAL     
                              -------------------------  -------------------------      NOTES      DEVELOPMENT   SHAREHOLDERS'
                                SHARES        AMOUNT       SHARES        AMOUNT      RECEIVABLE       STAGE         EQUITY    
                              -----------   -----------  -----------   -----------   -----------   -----------    ----------- 
                                                                                                                              

  Issuance of common stock                                                                                                    
    to founder at                                                                                                             
    inception in exchange                                                                                                     
    for cash and                                                                                                              
    services rendered                  --   $        --      800,000   $     8,000   $        --   $        --    $     8,000 
  Net loss                             --            --           --            --            --        (3,617)        (3,617)
                              -----------   -----------  -----------   -----------   -----------   -----------    ----------- 
Balance at December 31, 1997           --            --      800,000         8,000            --        (3,617)         4,383 
  Issuance of Series A                                                                                                        
    preferred stock in                                                                                                        
    October and November                                                                                                      
    1998 at $0.5829                                                                                                           
    per share,  net of                                                                                                        
    issuance costs             8,852,789      5,107,418          --            --       (12,439)           --       5,094,979 
  Issuance of warrants                                                                                                        
    for Series A                                                                                                              
    preferred stock in                                                                                                        
    October 1998 in                                                                                                           
    exchange for services                                                                                                     
    at $0.50 per share                 --        32,452           --            --            --            --         32,452 
  Issuance of common                                                                                                          
    stock in March,                                                                                                           
    August, and October                                                                                                       
    1998 at $0.01 and                                                                                                         
    $0.05 per share for                                                                                                       
    cash, services,                                                                                                           
    and shareholders'                                                                                                         
    notes receivable                   --            --    6,323,802        68,506       (56,809)           --         11,697 
  Net loss                             --            --           --            --            --      (952,118)      (952,118)
                              -----------   -----------  -----------   -----------   -----------   -----------    ----------- 
Balance at December 31, 1998    8,852,789   $ 5,139,870    7,123,802   $    76,506   $   (69,248)  $  (955,735)   $ 4,191,393 
                              ===========   ===========  ===========   ===========   ===========   ===========    =========== 

 See accompanying notes.

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Accept.com
 (a development stage company)

 Consolidated Statements of Cash Flows

                                                        [Enlarge/Download Table]


                                                                         PERIOD FROM    CUMULATIVE FROM
                                                                        AUGUST 5, 1997   AUGUST 5, 1997
                                                           YEAR ENDED   (INCEPTION) TO   (INCEPTION) TO
                                                          DECEMBER 31,   DECEMBER 31,      DECEMBER 31,
                                                             1998           1997              1998     
                                                          ------------  --------------  ---------------
                                                                                                       
OPERATING ACTIVITIES                                                                                   
Net loss                                                  $  (952,118)   $    (3,617)      $  (955,735)
Adjustments to reconcile net loss to net cash used in                                                  
  operating activities:                                                                                
    Depreciation                                                3,281            474             3,755 
    Issuance of warrants for Series A preferred stock in                                               
      exchange for services                                    32,452             --            32,452 
    Changes in operating assets and liabilities:                                                       
      Prepaid expenses and other assets                       (16,840)            --           (16,840)
      Accounts payable                                         35,862             --            35,862 
      Accrued vacation                                         22,204             --            22,204 
      Accrued expenses                                         60,620            275            60,895 
                                                          -----------    -----------       ----------- 
Net cash used in operating activities                        (814,539)        (2,868)         (817,407)

INVESTING ACTIVITIES                                                                                   
Purchase of furniture and equipment                           (41,366)        (2,846)          (44,212)
                                                          -----------    -----------       ----------- 
Net cash used in investing activities                         (41,366)        (2,846)          (44,212)

FINANCING ACTIVITIES                                                                                   
Borrowings under bridge loans from related party              220,000             --           220,000 
Repayment of bridge loans from related party                 (220,000)            --          (220,000)
Net proceeds from issuance of preferred stock               5,094,979             --         5,094,979 
Proceeds from issuance of common stock                         11,697          8,000            19,697 
                                                          -----------    -----------       ----------- 
Net cash provided by financing activities                   5,106,676          8,000         5,114,676 
                                                          -----------    -----------       ----------- 

Net increase in cash and cash equivalents                   4,250,771          2,286         4,253,057 
Cash and cash equivalents at beginning of period                2,286             --                -- 
                                                          -----------    -----------       ----------- 
Cash and cash equivalents at end of period                $ 4,253,057    $     2,286       $ 4,253,057 
                                                          ===========    ===========       =========== 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                       
Cash paid for interest                                    $     3,097    $        --       $     3,097 

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS                                                        
Issuance of Series A preferred stock in                                                                
  exchange for consulting services                        $   129,589    $        --       $   129,589 
Issuance of common stock in exchange for computer                                                      
  equipment and services rendered                         $    13,381    $     4,000       $    17,381 
Issuance of common and preferred stock in exchange                                                     
  for notes receivable from shareholders                  $    69,248    $        --       $    69,248 
Issuance of warrants for Series A preferred                                                            
  stock in exchange for consulting services               $    32,452    $        --       $    32,452 


 See accompanying notes.

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements

 December 31, 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                  

Accept.com  (the  Company),  formerly  Emptor,  Inc.,  was formed August 5, 1997
(Inception)  to  provide  online  service  solutions  for  electronic  commerce.
Operating  activities  relate  primarily  to the design and  development  of the
Company's online service solutions and corporate infrastructure, and the Company
is therefore classified as a development stage company.                         

USE OF ESTIMATES                                                                

The  preparation  of  consolidated   financial  statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that affect the reported  amounts of assets and liabilities at
the date of the  financial  statements  and the reported  amounts of revenue and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.                                                                      

BASIS OF CONSOLIDATION                                                          

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiary.  Significant intercompany accounts and transactions
have been eliminated in consolidation.                                          

CASH AND CASH EQUIVALENTS                                                       

Cash equivalents consist of highly liquid investments in money market funds with
original  maturities  of three months or less at the time of  acquisition.  Cash
equivalents approximated fair value as of December 31, 1998 and 1997.           

FURNITURE AND EQUIPMENT                                                         

Furniture  and equipment are stated at cost,  net of  accumulated  depreciation.
Depreciation is provided on a straight-line basis over the estimated useful life
of the respective assets, generally three years.                                

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)      

STOCK-BASED COMPENSATION                                                        

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting  for Stock  Issued to  Employees"  (APB Opinion No. 25), and related
interpretations  in  accounting  for its  employee  stock  options  because,  as
discussed in Note 2, the alternative  fair value  accounting  provided for under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"  (FAS 123),  requires use of option valuation models that were not
developed for use in valuing  employee stock options.  Under APB Opinion No. 25,
when the exercise  price of the  Company's  employee  stock  options  equals the
market  price of the  underlying  stock on the date of  grant,  no  compensation
expense is recognized.                                                          

COMPREHENSIVE INCOME                                                            

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting Comprehensive Income" (FAS 130), in the year ended December 31, 1998.
FAS 130  establishes  standards for the  reporting and display of  comprehensive
income and its components in a full set of general purpose financial statements.
The  Company  does not have  comprehensive  income  items to report for the year
ended December 31, 1998.                                                        

RECENT PRONOUNCEMENTS                                                           

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  (FAS 133), which the Company will be required to adopt
for the year ending  December 31, 2000.  This statement  establishes a new model
for accounting  for  derivatives  and hedging  activities.  FAS 133  establishes
methods  of  accounting  for  derivative   financial   instruments  and  hedging
activities  related to those  instruments  as well as other hedging  activities.
Because the Company currently holds no derivative financial instruments and does
not currently engage in hedging  activities,  adoption of FAS 133 is expected to
have no  material  impact on the  Company's  financial  condition  or results of
operations.                                                                     

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)      

RECENT PRONOUNCEMENTS (CONTINUED)                                               

In March 1998, the American Institute of Certified Public Accountants issued SOP
98-1,  "Accounting for the Costs of Computer Software  Developed or Obtained for
Internal Use" (SOP 98-1).  SOP 98-1 requires  that entities  capitalize  certain
costs related to internal use software once certain  criteria have been met. The
Company is required to implement SOP 98-1 for the year ending December 31, 1999.
Adoption of SOP 98-1 is not expected to have a material  impact on the Company's
financial condition or results of operations.                                   

In April 1998, the Accounting  Standards  Executive  Committee  issued SOP 98-5,
"Reporting on the Costs of Start-up Activities" (SOP 98-5).  Start-up activities
are defined broadly as those one-time activities related to the opening of a new
facility,  introducing  a new product or service,  conducting  business in a new
territory,  conducting  business with a new class customer,  commencing some new
operation,  or  organizing  a new  entity.  SOP 98-5  requires  that the cost of
start-up  activities  be expensed as  incurred.  SOP 98-5 is  effective  for the
Company beginning in fiscal 1999. Adoption of SOP 98-5 is not expected to have a
material impact on the Company's financial condition or results of operations.  

2. SHAREHOLDERS' EQUITY                                                         

CONVERTIBLE PREFERRED STOCK                                                     

The Company is  authorized to issue up to 9,202,400  shares of preferred  stock,
issuable in series, with the rights and preferences of each designated series to
be  determined  by the  Board of  Directors.  To date,  such  shares  have  been
designated  as Series A  convertible  preferred  stock (the  Series A  preferred
stock).  Holders of Series A  preferred  stock have voting  rights  equal to the
common shares issuable upon conversion of the Series A preferred stock.         

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

2. SHAREHOLDERS' EQUITY (CONTINUED)                                             

CONVERTIBLE PREFERRED STOCK (CONTINUED)                                         

Each  share of Series A  preferred  stock is  convertible,  at the option of the
holder,  into one share of common  stock,  subject  to certain  adjustments  for
dilutive issuance.  Outstanding shares of Series A preferred stock automatically
convert  into common  stock upon either the  closing of an  underwritten  public
offering  of  the  Company's  common  stock  with  gross  proceeds  of at  least
$20,000,000  and a per  share  price of at least  $4.00 or the  election  of the
holders of more than 50% of outstanding Series A preferred stock.               

Holders of Series A preferred stock are entitled to  noncumulative  dividends of
8% per annum per outstanding share. Dividends will be paid only when declared by
the Board of Directors out of legally  available  funds.  No dividends have been
declared as of December 31, 1998.                                               

Holders of Series A preferred stock are entitled to receive,  upon a liquidating
event,  an amount per share equal to the  issuance  price plus all  declared but
unpaid  dividends.  The remaining assets and funds, if any, shall be distributed
among the  holders of the  Series A  preferred  stock and common  stock pro rata
based on the number of shares of common stock held by each (assuming  conversion
of all such Series A preferred stock). If any assets remain after the holders of
Series A preferred  stock have  received an aggregate of $0.5829 per share,  the
remaining assets will be distributed to the holders of the common stock pro rata
based on the number of shares of common stock held by each.                     

WARRANTS                                                                        

At December 31, 1998,  warrants to purchase 170,800 shares of Series A preferred
stock were  outstanding  at an exercise  price of $0.50 per share.  The warrants
were issued in exchange  primarily  for  consulting  services.  The warrants are
exercisable  immediately  upon  issuance and expire  October 28, 2003.  The fair
value of the warrant at the date of grant was $32,452,  as determined  using the
Black-Scholes  option pricing  model.  Such amount has been included in research
and development expense for the year ended December 31, 1998.                   

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

2. SHAREHOLDERS' EQUITY (CONTINUED)                                             

COMMON STOCK                                                                    

The Company is authorized to issue up to 20,000,000 shares of common stock as of
December 31, 1998.  At December 31, 1998, a total of 7,123,802  shares of common
stock were issued and outstanding. Each share of common stock is entitled to one
vote.  The holders of common stock are also entitled to receive  dividends  from
legally available funds when and if declared by the Board of Directors,  subject
to the prior rights of holders of Series A preferred stock.                     

The  Company  issues  common  stock under restricted stock purchase  agreements.
Common stock issued under restricted  stock purchase  agreements are immediately
exercisable  and  subject  to  repurchase by the Company. Such shares  generally
vest and the repurchase  right lapses  ratably over a four-year  period from the
date of grant. As of December 31, 1998,  there were 4,338,639  shares subject to
repurchase.                                                                     

STOCK OPTION PLAN                                                               

In July 1998, the Board of Directors adopted the 1998 Stock Plan (the 1998 Plan)
for issuance of common stock to eligible  participants.  The 1998 Plan  provides
for the granting of incentive stock options and  nonstatutory  stock options for
shares of common stock.  Incentive stock options and nonstatutory  stock options
may be  granted  under the 1998 Plan at prices not less than 100% and 85% of the
fair value, respectively,  at the date of grant, or at prices not less than 110%
for individuals owning more than 10% of the combined voting power of all classes
of stock at the date of grant. Options generally expire after ten years. Options
under the 1998 Plan  generally vest over a period of four years from the date of
grant.                                                                          

Upon  consummation  of a  consolidation  or merger of the Company  with  another
corporation in which,  immediately following such transaction,  the shareholders
of the Company hold 50% or less of the voting equity securities of the surviving
corporation  following the transaction,  the vesting of all outstanding  options
shall  accelerate by 25%. Any  outstanding  options not assumed by the surviving
corporation shall become immediately vested.                                    

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

2. SHAREHOLDERS' EQUITY (CONTINUED)                                             

STOCK OPTION PLAN (CONTINUED)                                                   

Pro forma  information  regarding net loss and net loss per share is required by
FAS 123 and has been determined as if the Company had accounted for its employee
stock  options  under the fair value  method  provided  for in FAS 123. The fair
value of options was estimated at the date of grant using a minimum value option
pricing  model with the  following  weighted  average  assumptions  for  options
granted  during the year ended  December 31, 1998: a risk-free  interest rate of
6.0%, an expected life of four years, and no dividends.                         

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized  to expense  ratably  over the vesting  period of the options.  The
effects  of  applying  FAS 123 for pro forma  disclosures  are not  likely to be
representative of the effects on reported net loss for future years.            

The option  valuation models were developed for use in estimating the fair value
of traded options which have no vesting restrictions and are fully transferable.
In addition,  option  valuation  models  require the input of highly  subjective
assumptions,   including  the  expected  stock  price  volatility.  Because  the
Company's employee stock options have  characteristics  significantly  different
from  those of traded  options  and  because  changes  in the  subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.  The compensation  cost
for the year ended  December  31,  1998 and for the period  from  August 5, 1997
(inception) to December 31, 1997 and cumulative from August 5, 1997  (inception)
to December 31, 1998 calculated under the minimum value method was not material.
As a result, pro forma information regarding net loss is not presented.         

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

2. SHAREHOLDERS' EQUITY (CONTINUED)                                             

STOCK OPTION PLAN (CONTINUED)                                                   

Activity under 1998 Plan was as follows:                                        

                                                        [Enlarge/Download Table]

                                                     OPTIONS OUTSTANDING             
                                           ------------------------------------------
                                                                            WEIGHTED 
                                SHARES      NUMBER                          AVERAGE  
                              AVAILABLE       OF              PRICE PER     EXERCISE 
                              FOR GRANT     SHARES              SHARE        PRICE   
                              ----------   ----------         --------      -------- 
                                                                                     
  Authorized                   1,554,956           --         $     --      $     -- 
  Granted                       (465,800)     465,800         $   0.05      $   0.05 
                              ----------   ----------         --------      -------- 
Balance at December 31, 1998   1,089,156      465,800         $   0.05      $   0.05 
                              ==========   ==========         ========      ======== 

The weighted average  contractual life of options outstanding as of December 31,
1998 was  approximately  9.8  years.  There were no  options  exercisable  as of
December 31, 1998 and 1997. The weighted  average fair value of options  granted
during the year ended December 31, 1998 was $0.01.                              

3. COMMITMENTS                                                                  

The Company leases its office  facility under a  noncancelable  operating  lease
that expires in 1999. Future minimum payments under this noncancelable operating
lease total $182,838 in 1999.                                                   

Rent expense under noncancelable operating leases was approximately $32,000, $0,
and $32,000 for the year ended December 31, 1998, the period from August 5, 1997
(inception) to December 31, 1997, and cumulative from August 5, 1997 (inception)
to December 31, 1998, respectively.                                             

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

4. INCOME TAXES                                                                 

The expected income tax benefit  derived by applying the federal  statutory rate
to the net loss  incurred  for the year ended  December  31, 1998 and the period
from  August  5,  1997  (inception)  to  December  31,  1998  was  offset  by  a
corresponding increase in the deferred tax asset valuation allowance.           

As of December 31, 1998,  the Company had federal and state net  operating  loss
carryforwards   each  of   approximately   $900,000.   The  net  operating  loss
carryforwards will expire at various dates beginning in 2005, if not utilized.  

Utilization  of  the  net  operating  loss  carryforwards  may be  subject  to a
substantial annual limitation due to the ownership change  limitations  provided
by the Internal Revenue Code of 1986, as amended,  and similar state provisions.
The  annual  limitation  may  result in the  expiration  of net  operating  loss
carryforwards before utilization.                                               

As  of  December  31,  1998,   the  Company  had  net  deferred  tax  assets  of
approximately  $350,000 relating primarily to net operating loss  carryforwards.
Realization  of deferred tax assets is dependent upon future  earnings,  if any,
the timing and amount of which are uncertain.  Accordingly, the net deferred tax
assets have been fully offset by a valuation allowance.  The valuation allowance
for  deferred tax assets  increased by $350,000  during 1998 and the period from
August 5, 1997 (inception) to December 31, 1998.                                

5. RELATED PARTY TRANSACTIONS                                                   

In August  1998 the Company  received  bridge  loans  totaling  $220,000  from a
related party, payable upon demand and with interest compounded at 6% per annum.
In September  and October 1998, in exchange for  cancelation  of the loans,  the
Company issued 377,423 shares of Series A preferred  stock to the related party.
Such shares issued were  transferred to the investors of the related party,  who
are also current investors of the Company. This same related party also provided
the Company with certain consulting  services in exchange for shares of Series A
preferred stock in the amount of $129,589.                                      

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Accept.com
 (a development stage company)

Notes to Consolidated Financial Statements (continued)

6. YEAR 2000 (UNAUDITED)                                                        

The  Company  is aware of the issues  associated  with the  programming  code in
existing computer systems as the year 2000 approaches.  The year 2000 problem is
pervasive and complex as virtually every computer  operation will be affected in
some way by the rollover of the two-digit year value to 00. The issue is whether
computer  systems will properly  recognize  date-sensitive  information when the
year changes to 2000.  Systems that do not properly  recognize such  information
could generate erroneous data or cause a system to fail.                        

Based on assessments to date,  management  does not anticipate  that the Company
will incur  significant  operating  expenses or be required to invest heavily in
computer system  improvements to be year 2000  compliant.  However,  significant
uncertainty  exists  concerning the potential costs and effects  associated with
any year 2000 compliance. Year 2000 compliance problems of either the Company or
its vendors  could have a material  adverse  effect on the  Company's  business,
results of operations, and financial condition.                                 

7. SUBSEQUENT EVENTS                                                            

In April 1999,  the Company  entered into an  Agreement  and Plan of Merger (the
Merger Agreement) with another company (acquiring  company).  Under the terms of
the Merger Agreement,  the acquiring company will acquire all of the outstanding
shares  of  the  Company's  stock  and  assume all outstanding stock options  in
exchange  for  approximately  949,000  shares of the acquiring company's  common
stock valued at approximately $189 million.                                     

In April 1999,  the Board of Directors  approved an  amendment to the  Company's
1998 Stock Option Plan to cancel the  provision for  acceleration  of vesting of
outstanding  options  upon  consummation  of a  consolidation  or  merger of the
Company with another Company.                                                   

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Accept.com  
(a development stage company) 

Condensed Consolidated Balance Sheets 
(in thousands)

                                                        [Enlarge/Download Table]

                                                           March 31, 1999  December 31, 1998
                                                           --------------  -----------------
                                                             (unaudited)                    
                                                                                            
ASSETS                                                                                      
Current assets:                                                                             
      Cash and cash equivalents                                 $3,168           $4,253     
      Prepaid expenses and other                                    31               13     
                                                                ------           ------     
           Total current assets                                  3,199            4,266     

Furniture and equipment, net                                       352               40     
Other assets                                                        61                4     
                                                                ------           ------     
           Total assets                                         $3,612           $4,310     
                                                                ======           ======     

LIABILITIES AND SHAREHOLDERS' EQUITY                                                        
Current liabilities:                                                                        
      Accounts payable                                          $   91           $   36     
      Accrued vacation                                              20               22     
      Accrued expenses                                             177               61     
                                                                ------           ------     
           Total current liabilities                               288              119     

Shareholders' equity:                                                                       
      Series A convertible preferred stock,                                                 
        no par value                                             5,244            5,140     
      Common stock, no par value                                    86               76     
      Shareholders' notes receivable                               (56)             (69)    
      Deficit accumulated during the development stage          (1,950)            (956)    
                                                                ------           ------     
           Total shareholders' equity                            3,324            4,191     
                                                                ------           ------     
               Total liabilities and shareholders' equity       $3,612           $4,310     
                                                                ======           ======     

See Notes to Condensed Consolidated Financial Statements. 

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Accept.com
(a development stage company) 

Condensed Consolidated Statements of Operations 
(in thousands)
(unaudited) 

                                                        [Enlarge/Download Table]

                                                                          Cumulative from  
                                                                           August 5, 1997  
                                 Three Months Ended  Three Months Ended    (Inception) to  
                                   March 31, 1999      March 31, 1998      March 31, 1999  
                                 ------------------  ------------------  ------------------
                                                                                           
Operating expenses:                                                                        
     Research and development         $   300                $ -              $   610      
     Sales and marketing                  398                  -                  550      
     General and administrative           325                   7                 846      
                                      -------                ----             -------      
Total operating expenses                1,023                   7               2,006      
                                      -------                ----             -------      

Loss from operations                   (1,023)                 (7)             (2,006)     

Interest and other income                  29                  -                   59      
Interest expense                           -                   -                   (3)     
                                      -------                ----             -------      
                                           29                  -                   56      
                                      -------                ----             -------      

Net loss                              $  (994)               $ (7)            $(1,950)     
                                      =======                ====             =======      

See Notes to Condensed Consolidated Financial Statements. 

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Accept.com
(a development stage company) 

Condensed Consolidated Statements of Cash Flows 
(in thousands)
(unaudited) 

                                                        [Enlarge/Download Table]

                                                                                            Cumulative From
                                                                Three           Three        August 5, 1997
                                                             Months Ended    Months Ended    (Inception) to
                                                           March 31, 1999   March 31, 1998   March 31, 1999
                                                           ------------------------------------------------
                                                                                                           
OPERATING ACTIVITIES                                                                                       
Net loss                                                     $  (994)            $ (7)          $ (1,950)  
Adjustments to reconcile net loss to net cash used in                                                      
     operating activities:                                                                                 
     Depreciation                                                 10                -                 14   
     Issuance of warrants for Series A preferred stock in                                                  
        exchange for services                                      -                -                 32   
     Changes in operating assets and liabilities:                                                          
        Prepaid expenses and other assets                        (18)               -                (35)  
        Accounts payable                                          55                7                 91   
        Accrued vacation                                          (2)               -                 20   
        Accrued expenses                                         116                -                177   
                                                           ------------------------------------------------
Net cash used in operating activities                           (833)               -             (1,651)  

INVESTING ACTIVITIES                                                                                       
Purchase of furniture and equipment                             (322)               -               (366)  
Other                                                            (57)               -                (57)  
                                                           ------------------------------------------------
Net cash used in investing activities                           (379)               -               (423)  

FINANCING ACTIVITIES                                                                                       
Borrowings under bridge loans from related party                   -                -                220   
Repayment of bridge loans from related party                       -                -               (220)  
Net proceeds from issuance of preferred stock                    104                -              5,199   
Proceeds from issuance of common stock                            23                -                 43   
                                                           ------------------------------------------------
Net cash provided by financing activities                        127                -              5,242   
                                                           ------------------------------------------------

Net increase in cash and cash equivalents                     (1,085)               -              3,168   
Cash and cash equivalents at beginning of period               4,253                2                  -   
                                                           ------------------------------------------------
Cash and cash equivalents at end of period                   $ 3,168             $  2           $  3,168   
                                                           ================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                           
Cash paid for interest                                       $     -             $  -           $      3   

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS                                                            
Issuance of Series A preferred stock in                                                                    
     exchange for consulting services                        $     -             $  -           $    130   
Issuance of common stock in exchange for computer                                                          
     equipment and services rendered                         $     1             $  -           $     18   
Issuance of common and preferred stock in exchange                                                         
     for notes receivable from shareholders                  $     -             $  -           $     56   
Issuance of warrants for Series A preferred                                                                
     stock in exchange for consulting services               $     -             $  -           $     32   

See Notes to Condensed Consolidated Financial Statements. 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION                                                           

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted         
accounting principles for complete financial statements. In the opinion of      
management, all adjustments (consisting only of normal recurring accruals),     
considered necessary for a fair presentation have been included. Operating      
results for the three month period ended March 31, 1999 are not necessarily     
indicative of the results that may be expected for the year ending December 31, 
1999. For further information, refer to the consolidated financial statements   
for the year ended December 31, 1998 and for the period from August 5, 1997     
(inception) to December 31, 1997 and cumulative period from August 5, 1997      
(inception) to December 31, 1998, and notes thereto included herein.            

SUBSEQUENT EVENT                                                                

On April 25, 1999, Amazon.com, Inc. ("Amazon.com"), ADC Acquisitions, Inc., a   
wholly owned subsidiary of Amazon.com, and Accept.com Financial Services        
Corporation (Accept.com) entered into a definitive Agreement and Plan of Merger 
(the "Merger Agreement"). Pursuant to the Merger Agreement, and subject to the  
terms and conditions thereof, Amazon.com will acquire all of the capital stock  
and assume all outstanding options of Accept.com. The Merger will be accounted  
for under the purchase method of accounting.                                    

Amazon.com will issue Amazon.com common stock, par value $.01 per share,        
totaling approximately $189 million.                                            

RECLASSIFICATION ADJUSTMENTS                                                    

Certain amounts for Accept.com have been reclassified to conform to             
our financial statement presentation.                                           

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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        

The following unaudited pro forma combined condensed consolidated financial     
statements give effect to previously reported acquisitions, which include       
Exchange.com and Alexa Internet, and the Accept.com Merger as reported herein.  
The Amazon.com pro forma column represents the combined balances and results of 
operations for Amazon.com, Exchange.com, and Alexa Internet to reflect the      
impact of previously reported acquisitions as reported on the Current Report on 
Form 8-K filed on May 12, 1999.                                                 

The Accept.com Merger will be accounted for under the purchase method of        
accounting in accordance with APB Opinion No. 16. Under the purchase method of  
accounting, the purchase price is allocated to the assets acquired and          
liabilities assumed based on their estimated fair values. The estimated fair    
values contained herein are preliminary in nature, and may not be indicative of 
the final purchase price allocation, which will be based on an assessment of    
fair value to be performed by an independent appraiser. Any amounts that may be 
allocable to in process research and development would be recorded as one time  
charges that would reduce the goodwill reflected in the pro forma combined      
condensed consolidated balance sheet and reduce the amount of amortization of   
goodwill reflected in the pro forma combined condensed consolidated statements  
of operations. Such preliminary estimates of the fair values of the assets and  
liabilities of Accept.com have been combined with the Amazon.com pro forma      
column in the unaudited pro forma combined condensed consolidated financial     
statements.                                                                     

The unaudited pro forma combined condensed consolidated balance sheet has been  
prepared to reflect the previously reported acquisitions and the Accept.com     
Merger as if they occurred on March 31, 1999. The unaudited pro forma combined  
condensed consolidated statements of operations reflect the combined results of 
operations of Amazon.com, the previously reported acquisitions and Accept.com   
for the year ended December 31, 1998 and the three months ended March 31, 1999  
as if the acquisitions occurred on January 1, 1998.                             

The unaudited pro forma combined condensed consolidated financial statements are
presented for illustrative purposes only and are not necessarily indicative of  
the combined condensed consolidated financial position or results of operations 
in future periods or the results that actually would have been realized had     
Amazon.com, the previously reported acquisitions, and Accept.com been a combined
company during the specified periods. The unaudited pro forma combined condensed
consolidated financial statements, including the notes thereto, are qualified in
their entirety by reference to, and should be read in conjunction with, the     
historical consolidated financial statements of Amazon.com included in its: (a) 
Annual Report on Form 10-K for the year ended December 31, 1998; (b) Quarterly  
Report on Form 10-Q for the quarter ended March 31, 1999; and (c) Current       
Reports on Form 8-K filed on August 27, 1998, October 26, 1998, May 12, 1999 and
May 19, 1999.                                                                   

 PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                              ACCEPT.COM               
                                                   AMAZON.COM                  PRO FORMA     PRO FORMA 
                                                   PRO FORMA     ACCEPT.COM   ADJUSTMENTS     BALANCES 
                                                  ---------------------------------------------------- 
                                                                                                       
ASSETS                                                                                                 
Current assets:                                                                                        
     Cash                                         $    9,460       $3,168      $      -     $   12,628 
     Marketable securities                         1,439,556            -             -      1,439,556 
     Inventories                                      45,236            -             -         45,236 
     Prepaid expenses and other                       38,502           31             -         38,533 
                                                  ---------------------------------------------------- 
        Total current assets                       1,532,754        3,199             -      1,535,953 

Fixed assets, net                                     61,797          352             -         62,149 
Goodwill and other, net                              565,530           61       186,096 c      751,687 
Deferred charges                                      39,912            -                       39,912 
                                                  ---------------------------------------------------- 
        Total assets                              $2,199,993       $3,612      $186,096     $2,389,701 
                                                  ==================================================== 

LIABILITIES AND STOCKHOLDERS' EQUITY                                                                   
Current liabilities:                                                                                   
     Accounts payable                             $  133,365       $   91        $    -     $  133,456 
     Accrued advertising                              16,294            -             -         16,294 
     Other liabilities and accrued expenses           47,756          197         1,100 a       49,053 
     Current portion of long-term debt and                                                             
       capital lease obligation                        7,621            -             -          7,621 
                                                  ---------------------------------------------------- 
        Total current liabilities                    205,036          288         1,100        206,424 

Long-term debt and capital lease obligation        1,534,165            -             -      1,534,165 

Redeemable preferred stock                                 -            -             -              - 

Stockholders' equity:                                                                                  
     Convertible preferred stock                           -        5,244        (5,244)b              
     Common stock                                      1,633           86           (86)b              
                                                                                      8 a        1,641 
     Additional paid-in capital                      701,724            -       188,312 a      890,036 
     Deferred compensation and other                 (14,448)           -             -        (14,448)
     Accumulated other comprehensive income           (4,390)           -             -         (4,390)
     Accumulated deficit and other stockholder's                                                       
       equity                                       (223,727)      (2,006)        2,006 b     (223,727)
                                                  ---------------------------------------------------- 
        Total stockholders' equity                   460,792        3,324       184,996        649,112 
                                                  ---------------------------------------------------- 
            Total liabilities and stockholders'                                                        
             equity                               $2,199,993      $ 3,612      $186,096     $2,389,701 
                                                  ==================================================== 

See Notes to Pro Forma Combined Condensed Consolidated
Financial Statements. 

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PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
THREE MONTHS ENDED MARCH 31, 1999 
(IN THOUSANDS, EXCEPT PER SHARE DATA) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                              ACCEPT.COM              
                                                 AMAZON.COM                   PRO FORMA     PRO FORMA 
                                                 PRO FORMA      ACCEPT.COM    ADJUSTMENTS    BALANCES 
                                                 ---------------------------------------------------- 
                                                                                                      
Net sales                                         $294,198       $     -       $      -      $294,198 
Cost of sales                                      228,923             -              -       228,923 
                                                  --------------------------------------------------- 
Gross profit                                        65,275             -              -        65,275 

Operating expenses:                                                                                   
     Marketing and sales                            61,914           398              -        62,312 
     Product development                            24,291           300              -        24,591 
     General and administrative                     12,160           325              -        12,485 
     Merger and acquisition related costs,                                                            
       including amortization of goodwill and                                                         
       other purchased intangibles                  57,732             -         15,508 c      73,240 
                                                  --------------------------------------------------- 
          Total operating expenses                 156,097         1,023         15,508       172,628 

Loss from operations                               (90,822)       (1,023)       (15,508)     (107,353)

Interest income                                     10,979            29              -        11,008 
Interest expense                                   (16,724)            -              -       (16,724)
                                                 ---------------------------------------------------- 
     Net interest expense                           (5,745)           29              -        (5,716)

Net loss                                          $(96,567)      $  (994)      $(15,508)    $(113,069)
                                                  =================================================== 
Basic and diluted loss per share                  $  (0.61)                                 $   (0.71)
                                                  =========                                 ========= 

Shares used in computation of basic                                                                   
     and diluted loss per share                    159,020                          878       159,898 
                                                  =========                      ========== ========= 

            See Notes to Pro Forma Combined Condensed Consolidated Financial Statements.              

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PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
YEAR ENDED DECEMBER 31, 1998
 (IN THOUSANDS, EXCEPT PER SHARE DATA)
 (UNAUDITED)

                                                        [Enlarge/Download Table]

                                                                          ACCEPT.COM               
                                             AMAZON.COM                   PRO FORMA      PRO FORMA 
                                             PRO FORMA     ACCEPT.COM     ADJUSTMENTS     BALANCES 
                                            ------------------------------------------------------ 
                                                                                                   
Net sales                                    $ 610,368       $   -         $      -      $ 610,368 
Cost of sales                                  476,160           -                -        476,160 
                                            ------------------------------------------------------ 
Gross profit                                   134,208           -                -        134,208 

Operating expenses:                                                                                
     Marketing and sales                       135,296         152                -        135,448 
     Product development                        48,630         309                -         48,939 
     General and administrative                 17,064         517                -         17,581 
     Merger and acquisition related costs,                                                         
       including amortization of goodwill                                                          
       and other purchased intangibles         184,486           -           62,032c       246,518 
                                            ------------------------------------------------------ 
          Total operating expenses             385,476         978           62,032        448,486 

Loss from operations                          (251,268)       (978)         (62,032)      (314,278)

Interest income                                 14,164          30                -         14,194 
Interest expense                               (26,641)         (4)               -        (26,645)
                                            ------------------------------------------------------ 
     Net interest expense                      (12,477)         26                -        (12,451)

Net loss                                     $(263,745)      $(952)        $(62,032)     $(326,729)
                                            ====================================================== 
Basic and diluted loss per share             $   (1.75)                                  $   (2.16)
                                             =========                                   ========= 
Shares used in computation of basic                                                                
     and diluted loss per share                150,295                          878        151,173 
                                            ==========                      ==========  ========== 

See Notes to Pro Forma Combined Condensed Consolidated Financial Statements.

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NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED) 

BASIS OF PRESENTATION                                                           

The pro forma combined condensed consolidated financial statements reflect the  
issuance of Amazon.com common stock, par value $.01 per share ("Amazon.com      
Common Stock"), and the issuance of Amazon.com replacement options for all      
outstanding shares of Accept.com. The Accept.com Merger will be accounted for   
under the purchase method of accounting in accordance with APB Opinion No. 16.  

Amazon.com Pro Forma                                                            

The combined balances and results of operations as of and for the three month   
period ended March 31, 1999, and for the period ended December 31, 1999, for    
Amazon.com and previously reported acquisitions, which include Exchange.com and 
Alexa Internet, are combined in the Amazon.com pro forma column to reflect the  
impact of the previously reported acquisitions, as reported on the Current      
Report on Form 8-K filed on May 12, 1999.  The unaudited pro forma combined     
condensed consolidated balance sheet has been prepared to reflect the           
previously reported acquisitions and the Accept.com Merger as if they occurred  
on March 31, 1999.  The unaudited pro forma combined condensed consolidated     
statements of operations reflect the combined results of operations of          
Amazon.com, the previously reported acquisitions and Accept.com for the year    
ended December 31, 1998 and the three months ended March 31, 1999 as if the     
acquisitions occurred on January 1, 1998.                                       

Accept.com                                                                      

Subject to the satisfaction of all conditions precedent, the purchase price for 
Accept.com is approximately $189 million and will be comprised of 877,657 shares
of Amazon.com Common Stock and replacement options, including approximately $1.1
million of acquisition costs.                                                   

Substantially all of the approximate $189 million purchase price will be        
allocated to goodwill and other purchased intangibles. Preliminary estimates of 
the fair value of assets and liabilities of Accept.com have been combined with  
the Amazon.com proforma column in the unaudited pro forma combined condensed    
consolidated financial statements.                                              

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PRO FORMA ADJUSTMENTS FOR ACCEPT.COM                                            

    (a)  To reflect the issuance of Amazon.com Common Stock and the assumption
          of all outstanding options, having an aggregate value of approximately
     $189 million, including approximately $1.1 million of transaction
costs, to consummate the Accept.com Merger Agreement.       

(b)  To eliminate the historical stockholders' equity of Accept.com.  

 (c)  To record the excess of the purchase price over the estimated fair
   value of assets and liabilities acquired in connection with the
          Accept.com Merger Agreement and the related amortization. The purchase
          price allocation is based on management's preliminary estimates of the
      fair values of the tangible assets and intangible assets. The book
    value of tangible assets acquired and liabilities are assumed to
         approximate fair value. The estimated useful life of the goodwill and
     other purchased intangible assets averages approximately 3 years.

PRO FORMA LOSS PER COMMON SHARE                                                 

   Basic pro forma earnings per share is computed using the weighted average
number of Amazon.com common shares outstanding during the period, excluding     
Amazon.com Common Stock subject to repurchase, plus shares of Amazon.com Common 
Stock issued in connection with the previously reported acquisitions and the    
Accept.com Merger. Diluted pro forma earnings per share is computed using the   
weighted average number of common and common equivalent shares outstanding      
during the period plus shares of Amazon.com Common Stock and common equivalent  
shares assumed as part of the acquisition. Common equivalent shares consist of  
the incremental common shares issuable upon the exercise of stock options and   
warrants (using the treasury stock method). Common equivalent shares are        
excluded from the computation as their effect is antidilutive. Shares, options  
and warrants issued in connection with the Mergers are assumed outstanding at   
the beginning of the period.                                                    

CONFORMING AND RECLASSIFICATION ADJUSTMENTS                                     

There were no material adjustments required to conform the accounting 
policies of Accept.com. Certain amounts for Accept.com have been reclassified to
conform to Amazon.com's financial statement presentation. There have been no    
significant intercompany transactions.                                          

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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.                                           

                        AMAZON.COM, INC.
                    (Registrant)

Dated:  June 9, 1999                        By: /s/ Kelyn J. Brannon            
                                             -------------------------------
                              Kelyn J. Brannon
                                           Vice President of Finance and
                                      Chief Accounting Officer

8-K
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 EXHIBIT INDEX

                                                                [Download Table]

Exhibit Number                         Description                          
--------------                         -----------                          
                                                                            
     2.1           Agreement and Plan of Merger, dated as of April 25, 1999,
                   by and among Amazon.com, Inc., ADC Acquisitions, Inc. and
                   Accept.com Financial Services Corporation                

    23.1           Consent of Ernst & Young LLP, Independent Auditors       

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		10/28/03		14
		12/31/00		12					10-K405
		12/31/99		13		27			10-K,  10-K/A,  ARS
Filed on:		6/10/99
For Period End:		6/9/99		1		29
		5/19/99		24					8-K,  S-3
		5/12/99		6		27			8-K
		4/25/99		2		30
		3/31/99		4		27			10-Q
		12/31/98		3		27			10-K,  ARS
		10/26/98		24					8-K/A
		8/27/98		24					8-K
		3/31/98		4		22			10-Q
		1/1/98		24		27
		12/31/97		3		23			10-K405,  ARS
		8/5/97		3		23
									List all Filings