UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

(Mark One)

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

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

Commission file number 001-33647

MercadoLibre, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware (State or other jurisdiction of incorporation or organization)		98-0212790 (I.R.S. Employer Identification Number)

Tronador 4890, 8th Floor
Buenos Aires, C1430DNN, Argentina
(Address of registrant’s principal executive offices)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

44,131,376 shares of the issuer’s common stock, $0.001 par value, outstanding as of November 2, 2010.

 

 

MERCADOLIBRE, INC.
INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION
Item 1 — Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009			2
Condensed Consolidated Statements of Income for the three- and nine-month periods ended September 30, 2010 and 2009			3
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine-month periods ended September 30, 2010 and 2009			4
Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2010 and 2009			6
Notes to Condensed Consolidated Financial Statements			7
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			35
Item 3 — Qualitative and Quantitative Disclosures About Market Risk			51
Item 4 — Controls and Procedures			54
PART II. OTHER INFORMATION
Item 1 — Legal Proceedings			54
Item 1A — Risk Factors			55
Item 6 — Exhibits			56
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I.  FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

MercadoLibre, Inc.

Condensed Consolidated Balance Sheets
As of September 30, 2010 and December 31, 2009

		September 30,				December 31,
		2010				2009
		(Unaudited)				(Audited)
Assets
Current assets:
Cash and cash equivalents		$	44,451,900			$	49,803,402
Short-term investments			6,584,453				14,580,185
Accounts receivable, net			11,132,566				4,868,377
Funds receivable from customers			4,688,610				3,785,802
Prepaid expenses			681,923				547,138
Deferred tax assets			12,152,785				5,481,182
Other assets			5,742,932				3,068,930
Total current assets			85,435,169				82,135,016
Non-current assets:
Long-term investments			65,852,573				26,627,357
Property and equipment, net			19,062,411				5,948,276
Goodwill and intangible assets, net			64,790,278				64,338,564
Deferred tax assets			4,887,165				2,897,492
Other assets			705,056				667,944
Total non-current assets			155,297,483				100,479,633
Total assets		$	240,732,652			$	182,614,649
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$	14,689,150			$	11,599,634
Funds payable to customers			40,240,198				31,453,410
Payroll and social security payable			9,007,823				7,428,340
Taxes payable			9,927,619				6,797,516
Loans payable and other financial liabilities			30,905				3,213,992
Total current liabilities			73,895,695				60,492,892
Non-current liabilities:
Payroll and social security payable			2,629,779				1,355,006
Loans payable and other financial liabilities			280,228				—
Deferred tax liabilities			6,439,580				5,170,799
Other liabilities			1,327,673				1,402,715
Total non-current liabilities			10,677,260				7,928,520
Total liabilities		$	84,572,955			$	68,421,412
Commitments and contingencies (Note 8)
Shareholders’ equity:
Common stock, $0.001 par value, 110,000,000 shares authorized, 44,131,376 and 44,120,269 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively		$	44,131			$	44,120
Additional paid-in capital			120,366,356				120,257,998
Retained earnings			57,742,063				17,656,537
Accumulated other comprehensive loss			(21,992,853	)			(23,765,418	)
Total shareholders’ equity			156,159,697				114,193,237
Total liabilities and shareholders’ equity		$	240,732,652			$	182,614,649

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

MercadoLibre, Inc.

Condensed Consolidated Statements of Income
For the three- and nine-month periods ended September 30, 2010 and 2009

		Nine Months Ended September 30,								Three Months Ended September 30,
		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
Net revenues		$	154,399,483			$	123,823,576			$	55,951,378			$	50,599,276
Cost of net revenues			(32,755,531	)			(25,620,134	)			(11,450,919	)			(10,390,671	)
Gross profit			121,643,952				98,203,442				44,500,459				40,208,605
Operating expenses:
Product and technology development			(11,425,716	)			(9,016,061	)			(4,224,476	)			(3,295,436	)
Sales and marketing			(34,863,616	)			(31,342,260	)			(12,281,672	)			(11,048,799	)
General and administrative			(21,725,081	)			(19,683,004	)			(8,683,605	)			(6,882,020	)
Total operating expenses			(68,014,413	)			(60,041,325	)			(25,189,753	)			(21,226,255	)
Income from operations			53,629,539				38,162,117				19,310,706				18,982,350
Other income (expenses):
Interest income and other financial gains			3,073,427				2,112,180				1,361,899				580,343
Interest expense and other financial charges			(6,919,307	)			(9,718,003	)			(567,969	)			(3,873,230	)
Foreign currency gain / (loss)			7,275				(2,770,725	)			(354,219	)			(3,299,938	)
Net income before income / asset tax expense			49,790,934				27,785,569				19,750,417				12,389,525
Income / asset tax expense			(9,705,408	)			(5,862,346	)			(959,454	)			(2,537,257	)
Net income		$	40,085,526			$	21,923,223			$	18,790,963			$	9,852,268

		Nine Months Ended September 30, 2010								Three Months Ended September 30,
		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
Basic EPS
Basic net income per common share		$	0.91			$	0.50			$	0.43			$	0.22
Weighted average shares			44,121,539				44,079,171				44,129,762				44,088,936
Diluted EPS
Diluted net income per common share		$	0.91			$	0.50			$	0.43			$	0.22
Weighted average shares			44,144,678				44,130,078				44,151,367				44,138,031

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

MercadoLibre, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the nine-month periods ended September 30, 2010 and 2009 (unaudited)

																						Accumulated
														Additional				(Accumulated				other
		Comprehensive				Common stock								paid-in				deficit) / Retained				comprehensive
		income				Shares				Amount				capital				Earnings				income / (loss)				Total
Balance as of December 31, 2008							44,070,367			$	44,071			$	119,807,007			$	(15,552,256	)		$	(10,874,841	)		$	93,423,981
Stock options exercised							28,807				29				22,501				—				—				22,530
Stock-based compensation — stock options							—				—				1,312				—				—				1,312
Stock-based compensation — restricted shares							—				—				52,706				—				—				52,706
Stock-based compensation LTRP							—				—				142,120				—				—				142,120
Restricted shares issued							10,655				10				171,089				—				—				171,099
LTRP shares issued							3,600				3				(3	)			—				—				—
Net income		$	21,923,223				—				—				—				21,923,223				—				21,923,223
Currency translation adjustment			2,595,788				—				—				—				—				2,595,788				2,595,788
Unrealized net gains on investments			77,193				—				—				—				—				77,193				77,193
Comprehensive income		$	24,596,204
Balance as of September 30, 2009							44,113,429			$	44,113			$	120,196,732			$	6,370,967			$	(8,201,860	)		$	118,409,952
Stock options exercised							6,224				6				5,818				—				—				5,824
Stock-based compensation — stock options							—				—				440				—				—				440
Stock-based compensation — restricted shares							—				—				21,676				—				—				21,676
Stock-based compensation — LTRP							—				—				33,333				—				—				33,333
Shares issued							616				1				(1	)			—				—				—
Net income		$	11,285,570				—				—				—				11,285,570				—				11,285,570
Currency translation adjustment			(15,510,353	)			—				—				—				—				(15,510,353	)			(15,510,353	)
Unrealized net losses on investments			(49,563	)			—				—				—				—				(49,563	)			(49,563	)
Realized net gains on investments			(3,642	)			—				—				—				—				(3,642	)			(3,642	)
Comprehensive income		$	20,318,216
Balance as of December 31, 2009							44,120,269			$	44,120			$	120,257,998			$	17,656,537			$	(23,765,418	)		$	114,193,237

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

MercadoLibre, Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the nine-month periods ended September 30, 2010 and 2009 (unaudited)

																		(Accumulated				Accumulated
														Additional				deficit) /				other
		Comprehensive				Common stock								paid-in				Retained				comprehensive
		income				Shares				Amount				capital				Earnings				income / (loss)				Total
Balance as of December 31, 2009							44,120,269			$	44,120			$	120,257,998			$	17,656,537			$	(23,765,418	)		$	114,193,237
Stock options exercised							7,126				7				18,192				—				—				18,199
Stock-based compensation — stock options							—				—				183				—				—				183
Stock-based compensation — restricted shares							—				—				37,696				—				—				37,696
Stock-based compensation LTRP							—				—				52,291				—				—				52,291
LTRP shares issued							3,981				4				(4	)			—				—				—
Net income		$	40,085,526				—				—				—				40,085,526				—				40,085,526
Currency translation adjustment			1,129,724				—				—				—				—				1,129,724				1,129,724
Unrealized net gain on investments			670,471				—				—				—				—				670,471				670,471
Realized net gains on investments			(27,630	)			—				—				—				—				(27,630	)			(27,630	)
Comprehensive income		$	41,858,091
Balance as of September 30, 2010							44,131,376			$	44,131			$	120,366,356			$	57,742,063			$	(21,992,853	)		$	156,159,697

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

MercadoLibre, Inc.

Condensed Consolidated Statements of Cash Flows
For the nine-month periods ended September 30, 2010 and 2009 (unaudited)

		Nine Months Ended September 30,
		2010				2009
		(Unaudited)
Cash flows from operations:
Net income		$	40,085,526			$	21,923,223
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			3,594,156				2,959,277
Interest expense			—				343,643
Accrued interest			(262,088	)			(17,293	)
Stock-based compensation expense — stock options			183				1,312
Stock-based compensation expense — restricted shares			37,696				52,706
LTRP accrued compensation			2,798,656				1,163,139
Deferred income taxes			(6,950,762	)			(1,200,197	)
Changes in assets and liabilities, excluding the effect of acquisitions:
Accounts receivable			(6,048,287	)			(1,537,363	)
Funds receivable from customers			(877,971	)			(221,236	)
Prepaid expenses			(113,329	)			(596,311	)
Other assets			(2,600,348	)			(3,078,233	)
Accounts payable and accrued expenses			7,856,387				104,349
Funds payable to customers			7,393,673				8,169,631
Other liabilities			(2,923,832	)			(1,102,948	)
Net cash provided by operating activities			41,989,660				26,963,699
Cash flows from investing activities:
Purchase of investments			(85,338,161	)			(45,960,414	)
Proceeds from sale and maturity of investments			51,145,297				48,348,006
Purchases of intangible assets			(12,788	)			(946,500	)
Purchases of property and equipment			(10,554,982	)			(2,949,823	)
Net cash used in investing activities			(44,760,634	)			(1,508,731	)
Cash flows from financing activities:
Decrease in short term debt			(2,898,702	)			(12,313,161	)
Stock options exercised			18,199				22,530
Net cash used in financing activities			(2,880,503	)			(12,290,631	)
Effect of exchange rate changes on cash and cash equivalents			299,975				2,694,057
Net (decrease) increase in cash and cash equivalents			(5,351,502	)			15,858,394
Cash and cash equivalents, beginning of the year			49,803,402				17,474,112
Cash and cash equivalents, end of the period		$	44,451,900			$	33,332,506
Supplemental cash flow information:
Cash paid for interest		$	5,765,634			$	8,895,023
Cash paid for income taxes		$	16,603,211			$	7,286,257

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

MercadoLibre, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

1.

Nature of Business

MercadoLibre Inc. (the “Company”) is an e-commerce enabler whose mission is to build the necessary online and technology tools to allow practically anyone to trade almost anything, helping to make inefficient markets more efficient in Latin America.

Traditional offline marketplaces can be inefficient because they (i) are fragmented and regional, (ii) offer a limited variety and breadth of goods, (iii) have high transaction costs, and (iv) provide buyers with less information upon which they can make decisions. The Company makes these inefficient marketplaces more efficient because (i) its community of users can easily and inexpensively communicate and complete transactions, (ii) its marketplace includes a very wide variety and selection of goods, and (iii) it brings buyers and sellers together for much lower fees than traditional intermediaries. The Company attracts buyers by offering selection, value, convenience and entertainment, and sellers by offering access to broad markets, efficient marketing and distribution costs, ability to maximize prices and opportunity to increase sales.

The Company pioneered online commerce in the region by developing a Web-based marketplace in which buyers and sellers are brought together to browse, buy and sell items such as computers, electronics, collectibles, automobiles, clothing and a host of practical and miscellaneous items. The Company’s trading platform is a fully automated, topically arranged, intuitive, and easy-to-use online service that is available 24 hours-a-day, seven days-a-week. The Company’s platform supports a fixed price format in which sellers and buyers trade items at a fixed price established by sellers, and an auction format in which sellers list items for sale and buyers bid on items of interest.

Providing more efficient and effective payment methods from buyers to sellers is essential to creating a faster, easier and safer online commerce experience. Traditional payment methods such as bank deposits and cash on delivery present various obstacles to the online commerce experience, including lengthy processing time, inconvenience and high costs. The Company addressed this opportunity through the introduction in 2004 of MercadoPago, an integrated online payments solution. MercadoPago was designed to facilitate transactions on the MercadoLibre Marketplace by providing an escrow mechanism that enables users to securely, easily and promptly send and receive payments online, and has experienced consistent growth since its launch.

In 2004, the Company introduced an online classifieds platform for motor vehicles, vessels and aircrafts. Buyers usually require a physical inspection of these items or specific types of interactions with the sellers before completing a transaction, and therefore an online classified advertisements service is better suited for purchase and sale of these types of items than the traditional online purchase and sale format. For these items, buyers can search by make, model, year and price, and sellers can list their phone numbers and receive prospective buyers’ e-mail addresses, in order to allow for instant and direct communication between sellers and potential buyers.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

1.

Nature of Business (Continued)

In November 2005, the Company acquired certain operations of DeRemate.com Inc., a regional competing online marketplace, including all of its operations in Brazil, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela and the majority of the shares of the capital stock of its subsidiaries (except for its Argentine and Chilean subsidiaries, which were operated under the control of one of previous stockholders of DeRemate), for an aggregate purchase price of $12.1 million, net of cash and cash equivalents acquired.

During 2006, the online classifieds platform was expanded to include the real estate category. Much in the same way as with motor vehicles, vessels and aircrafts, purchases of real estate, require physical inspection of the property and is therefore a business more suited to a classifieds model. For real estate listings, in addition to posting their contact information, individual owners or real estate agents can also upload pictures and videos of the property for sale and include maps of the property’s location and layout.

During 2006, the Company launched several initiatives to improve its platform and expand its reach. Particularly relevant were the launch of eShops, a new platform tailored to attract lower rotation items and increase the breadth of products offered, the introduction of user generated information guides for buyers that improve the shopping experience, and the expansion of the online classifieds model by adding the services category. In terms of geographic expansion, the Company launched sites in Costa Rica, the Dominican Republic, and Panama.

In August 2007, the Company successfully completed its initial public offering pursuant to which the Company sold 3,000,000 shares of common stock and certain selling shareholders sold 15,488,762 shares of common stock, resulting in net proceeds for the Company of approximately $49,573,239.

During 2007 the Company also launched a new and improved version of its MercadoPago payments platform in Chile and Colombia as well as in Argentina during 2008. The new MercadoPago, in addition to improving the ease of use and efficiency of payments for marketplace purchases, also allows for payments outside of the Company’s marketplaces. Users are able to transfer money to other users with MercadoPago accounts and to incorporate MercadoPago as a means of payments in their independent commerce websites. In this way MercadoPago 3.0 as it has been called is designed to meet the growing demand for Internet based payments systems in Latin America. In addition, in December 2009, the Company started processing off-MercadoLibre transactions with selected sites in Brazil as a Beta test using its new direct payments product, while maintaining the escrow product for on-MercadoLibre transactions. On March 30, 2010, the Company started processing off-MercadoLibre transactions through its new direct payments product to any site in Brazil which wants to adopt it. On July 16, 2010, the Company launched MercadoPago 3.0 in Brazil for all its marketplace transactions.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

1.

Nature of Business (Continued)

In January 2008, the Company acquired 100% of the issued and outstanding shares of capital stock of Classified Media Group, Inc., or CMG, and its subsidiaries. CMG and its subsidiaries operated an online classifieds platform primarily dedicated to the sale of automobiles at www.tucarro.com in Venezuela, Colombia and Puerto Rico and real estate at www.tuinmueble.com in Venezuela, Colombia, Panama, the United States, Costa Rica and the Canary Islands. The Company paid for the shares of CMG and its subsidiaries $19 million, subject to certain escrows and working capital adjustment clauses.

In September 2008, the Company completed the acquisition of DeRemate.com de Argentina S.A., DeRemate.com Chile S.A., Interactivos y Digitales México S.A. de C.V. and Compañía de Negocios Interactiva de Colombia E.U. for an aggregate purchase price of $37.6 million. The Company also purchased certain URLs, domains, trademarks, databases and intellectual property rights related to those businesses for $2.4 million. The total purchase price was subject to certain set off rights and working capital adjustment clauses.

Until the second quarter of 2010, the Company had two reportable business segments: marketplace and payments. Since the third quarter of 2010, the Company has redefined its segment reporting eliminating the business segmentation between marketplace and payments segments because management has decided to cease charging to buyers as a separate fee for using the payments platform in Brazil and Argentina, and rather allow all buyers to pay either directly to sellers or through the Company’s platform without a special charge. For that reason, since the third quarter of 2010, the Company segment reporting is based on geographic areas, being this the new criteria used by management to evaluate the Company’s performance. The MercadoLibre segments include Brazil, Argentina, Mexico, Venezuela and other countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal and Uruguay). See Note 5 for more detail.

As of September 30, 2010, the Company, through its wholly-owned subsidiaries, operated online commerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Mexico, Panama, Peru, Portugal, Uruguay and Venezuela, and online payments solutions directed towards Argentina, Brazil, Mexico, Venezuela, Chile and Colombia. In addition, the Company operates a real estate classified platform that covers some areas of Florida, U.S.A.

2.

Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. These financial statements are stated in US dollars. All significant intercompany transactions and balances have been eliminated. Certain reclassifications have been made to prior year information to conform to current year presentation.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

2.

Summary of Significant Accounting Policies (Continued)

Basis of presentation (Continued)

Substantially all revenues and operating costs are generated in the Company’s foreign operations, amounting to approximately 99.5% and 99.3% of the consolidated totals during the nine-month periods ended September 30, 2010 and 2009, respectively. Long-lived assets located in the foreign operations totaled $79,955,185 and $67,523,246 as of September 30, 2010 and December 31, 2009, respectively (see Note 11 for more detail). Cash and cash equivalents as well as short and long-term investments, totaling $116,888,926 and $91,010,944 at September 30, 2010 and December 31, 2009, respectively, are mainly located in the United States of America.

These unaudited interim condensed financial statements reflect the Company’s consolidated financial position as of September 30, 2010 and December 31, 2009. These statements also show the Company’s consolidated statement of income for the three- and nine-month period ended September 30, 2010 and 2009, its consolidated statement of shareholders’ equity and its consolidated statement of cash flows for the nine-month period ended September 30, 2010 and 2009. These statements include all normal recurring adjustments that management believes are necessary to fairly state the Company’s financial position, operating results and cash flows.

Because all of the disclosures required by generally accepted accounting principles in the United States of America for annual consolidated financial statements are not included herein, these interim financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2009, contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 26, 2010. The condensed consolidated statements of income, shareholders’ equity and cash flows for the periods presented are not necessarily indicative of results expected for any future period.

Management has evaluated subsequent events through November 5, 2010 which is the date the financial statements were issued.

Foreign Currency Translation

All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Venezuela for the three- and nine-month periods ended September 30, 2010, as described below. Accordingly, these foreign subsidiaries translate assets and liabilities from their local currencies to U.S. dollars using year end exchange rates while income and expense accounts are translated at the average rates in effect during the year. The resulting translation adjustment is recorded as part of other comprehensive income (loss), a component of shareholders’ equity (deficit). Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings. Net foreign currency transaction losses are included in the consolidated statements of income under the caption “Foreign currency gain / (loss)” and amounted to $(354,219) and $(3,299,938) for the three-month periods ended September 30, 2010 and 2009, respectively.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

2.

Summary of Significant Accounting Policies (Continued)

Foreign Currency Translation (Continued)

For the nine-month periods ended September 30, 2010 and 2009, “Foreign currency gain / (loss)” amounted to $7,275 and $(2,770,725), respectively.

Until September 30, 2009, the Company translated its Venezuelan subsidiaries assets, liabilities, income and expense accounts at the official rate of 2.15 “Bolivares Fuertes” per US dollar.

Starting in the fourth quarter of 2009, as a result of the changes in facts and circumstances that affected the Company’s ability to convert currency for dividends remittances using the official exchange rate in Venezuela, the Venezuelan subsidiaries assets, liabilities, income and expense accounts were translated using the parallel exchange rate resulting in the recognition in that quarter of a currency translation adjustment of $16,977,276 recorded in other comprehensive income. The average exchange rate used for translating the fourth quarter results was 5.67 “Bolivares Fuertes” per US dollar and the year-end exchange rate used for translating assets and liabilities was 6.05 “Bolivares Fuertes” per US dollar.

As of the date of these interim condensed consolidated financial statements the Company did not buy US dollars at the official rate.

According to US GAAP, we have transitioned our Venezuelan operations to highly inflationary status as of January 1, 2010 considering the US dollar as the functional currency. See “Highly inflationary status in Venezuela” below.

Therefore, no translation effect was accounted for in other comprehensive income during the three- and nine-month period ended September 30, 2010 related to our Venezuelan operations.

Until May 13, 2010, the only way by which US dollars could be purchased outside the official currency market was using an indirect mechanism consisting in the purchase and sale of securities, including national public debt bonds (DPNs) denominated in Bolivares Fuertes and bonds issued by the government that were denominated in U.S. dollars. This mechanism for transactions in certain securities created an indirect “parallel” foreign currency exchange market in Venezuela that enabled entities to obtain foreign currency through financial brokers without going through Commission for the Administration of Foreign Exchange (“CADIVI”). Although the parallel exchange rate was higher, and accordingly less beneficial, than the official exchange rate, some entities have used the “parallel” market to exchange currency because, as it was already mentioned, CADIVI used not to approve in a timely manner the exchange of currency requested by such entities. Until May 13, 2010, our Venezuelan subsidiaries used this mechanism to buy US dollars and accordingly we used the parallel average exchange rate to re-measure those foreign currency transactions.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

2.

Summary of Significant Accounting Policies (Continued)

Foreign Currency Translation (Continued)

However, on May 14th, 2010, the Venezuelan government enacted reforms to its exchange regulations and close-down such parallel market by declaring that foreign-currency-denominated securities issued by Venezuelan entities were included in the definition of foreign currency, thus making the Venezuelan Central Bank (BCV) the only institution that could legally authorize the purchase or sale of foreign currency bonds, thereby excluding non-authorized brokers from the foreign exchange market.

Trading of foreign currencies was re-opened as a regulated market on June 9, 2010 with the Venezuelan Central Bank as the only institution through which foreign currency-denominated transactions can be brokered. Under the new system, known as the Foreign Currency Securities Transactions System (SITME), entities domiciled in Venezuela can buy U.S. dollar—denominated securities only through banks authorized by the BCV to import goods, services or capital inputs. Additionally, the SITME imposes volume restrictions on an entity’s trading activity, limiting such activity to a maximum equivalent of $50,000 per day, not to exceed $350,000 in a calendar month. This limitation is non-cumulative, meaning that an entity cannot carry over unused volume from one month to the next.

As a consequence of this new system, commencing on June 9, 2010, we have transitioned from the parallel exchange rate to the SITME rate and started re-measuring foreign currency transactions using the SITME rate published by BCV, which was 5.27 “Bolivares Fuertes” per U.S. dollar as of June 9, 2010.

For the period beginning on May 14, 2010 and ending on June 8, 2010 (during which there was no open foreign currency markets) we applied US GAAP guidelines, which state that if exchangeability between two currencies is temporarily lacking at the transaction date or balance sheet date, the first subsequent rate at which exchanges could be made shall be used.

Accordingly, the June 9, 2010 exchange rate published by the Venezuelan Central Bank has been used to re-measure transactions during the abovementioned period.

The net investment in the Venezuelan subsidiaries, before intercompany eliminations, amounts to $13,708,259 as of September 30, 2010.

The Company has assessed the new regulations and has concluded that, as currently formulated, there has not been a material impact on the normal running of its business in Venezuela.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

2.

Summary of Significant Accounting Policies (Continued)

Highly inflationary status in Venezuela

During May 2009, the International Practices Task Force discussed the highly inflationary status of the Venezuelan economy. Historically, the Task Force has used the Consumer Price Index (CPI) when considering the inflationary status of the Venezuelan economy.

The CPI has existed since 1984. However, the CPI covers only the cities of Caracas and Maracaibo. Commencing on January 1, 2008, the National Consumer Price Index (NCPI) has been developed to cover the entire country of Venezuela. Since inflation data is not available to compute a cumulative three year inflation rate for the entire country solely based on the NCPI, the Company uses a blended rate using the NCPI and CPI to calculate Venezuelan inflation rate.

The cumulative three year inflation rate as of December 31, 2009 was calculated using the CPI information for periods before January 1, 2008 and NCPI information for the periods after January 1, 2008. The blended CPI/NCPI three-year inflation index (23 months of NCPI and 13 months of CPI) as of November 30, 2009 exceeded 100%. According to US GAAP, calendar year-end companies should apply highly inflationary accounting as from January 1, 2010. Therefore, the Company has transitioned its Venezuelan operations to highly inflationary status as of January 1, 2010 considering the US dollar as the functional currency.

Taxes on revenues

The Company’s subsidiaries in Brazil, Argentina, Venezuela and Colombia are subject to certain taxes on revenues which are classified as cost of revenues. Taxes on revenues totaled $3,893,210 and $3,171,840 for the three-month periods ended September 30, 2010 and 2009, respectively. Taxes on revenues totaled $10,518,144 and $7,413,281 for the nine-month periods ended September 30, 2010 and 2009, respectively.

Income Tax

From fiscal year 2008 to fiscal year 2018, the Company’s Argentine subsidiary is a beneficiary of a software development law. Part of the benefits obtained from being a beneficiary of the aforementioned law is a relief of 60% of total income tax determined in each year, during these 10 years. Aggregate tax benefit totaled $1,250,042 and $761,319 for the three-month periods ended September 30, 2010 and 2009, respectively. Aggregate tax benefit totaled $3,220,530 and $2,151,110 for the nine-month periods ended September 30, 2010 and 2009, respectively. Aggregate per share effect of the Argentine tax holiday amounts to $0.03 and $0.02 for the three-month periods ended September 30, 2010 and 2009, respectively. Aggregate per share effect of the Argentine tax holiday amounts to $0.07 and $0.05 for the nine-month periods ended September 30, 2010 and 2009, respectively. If the Company had not been granted the Argentine tax holiday, the Company would have pursued an alternative tax planning strategy and, therefore, the impact of not having this particular benefit would not necessarily be the abovementioned dollar and per share effect.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

2.

Summary of Significant Accounting Policies (Continued)

Income Tax

As of September 30, 2010 and December 31, 2009, MercadoLibre, Inc has included in the non-current deferred tax assets line the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $4,378,303 and $2,879,999, respectively. Those foreign tax credits will be used to offset the future domestic income tax payable.

During the three-month period ended September 30, 2010, the Company reduced its Brazilian valuation allowance for a total amount of $4,634,587 as a consequence of the Company’s tax planning strategies implemented to more efficiently use its accumulated tax loss carryforward credits from acquired companies.

Use of estimates

The preparation of condensed 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to accounting for allowance for doubtful accounts, depreciation, amortization, impairment and useful lives of long-lived assets, compensation cost related to cash and share-based compensation and restricted shares, recognition of current and deferred income taxes and contingencies. Actual results could differ from those estimates.

Comprehensive Income

Comprehensive income is comprised of two components, net income and other comprehensive income (loss), and defined as all other changes in equity of the Company that result from transactions other than with shareholders. Other comprehensive income (loss) includes the cumulative translation adjustment relating to the translation of the financial statements of the Company’s foreign subsidiaries and unrealized gains on investments classified as available-for-sale securities. Total comprehensive income for the three-month periods ended September 30, 2010 and 2009 amounted to $22,447,005 and $11,889,818, respectively and for the nine month periods ended September 30, 2010 and 2009 amounted to $41,858,091 and $24,596,204 respectively.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

2.

Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements

Accounting for stock-based compensation

On April 16, 2010, the FASB issued an amendment to the accounting of stock-based compensation related to the effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Primarily Trades. The amendment clarifies that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades must not be considered to contain a market, performance, or service condition. Therefore, an entity should not classify such an award as a liability if it otherwise qualifies for classification in equity. The new accounting guidance is effective for interim and annual periods beginning on or after December 15, 2010, and will be applied prospectively. Management estimates that the implementation of the new accounting guidance will not have significant effect on the company’s financial statements.

Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses

On July 21, 2010, the FASB issued ASU 2010-20, which amends ASC 310 by requiring more robust and disaggregated disclosures about the credit quality of an entity’s financing receivables and its allowance for credit losses. The objective of enhancing these disclosures is to improve financial statement users’ understanding of (1) the nature of an entity’s credit risk associated with its financing receivables and (2) the entity’s assessment of that risk in estimating its allowance for credit losses as well as changes in the allowance and the reasons for those changes. The new and amended disclosures that relate to information as of the end of a reporting period will be effective for the first interim or annual reporting periods ending on or after December 15, 2010. The disclosures that include information for activity that occurs during a reporting period will be effective for the first interim or annual periods beginning after December 15, 2010. Those disclosures include (1) the activity in the allowance for credit losses for each period and (2) disclosures about modifications of financing receivables. Management estimates that there will be no significant effect on the company’s financial statements.

3.

Net income per share

Basic earnings per share for the Company’s common stock is computed by dividing net income available to common shareholders attributable to common stock for the period by the weighted average number of common shares outstanding during the period.

The Company’s restricted shares granted to its outside directors were participating securities. Accordingly, net income available to common stockholders for the nine-month periods ended September 30, 2010 and 2009 and the three-month period ended September 30, 2009, was allocated between unvested restricted shares and common stock under the “two class method” for purposes of computing basic and diluted earnings per share.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

3.

Net income per share (Continued)

Diluted earnings per share for the Company’s common stock assume the exercise of outstanding stock options and vesting restricted shares, additional shares and shares granted under the 2008 Long Term Retention Plan under the Company’s stock based employee compensation plans.

The following table shows how net income available to common shareholders is allocated using the two-class method, for the three-month periods ended September 30, 2010 and 2009:

		Three Months Ended September 30,
		2010								2009
		Basic				Diluted				Basic				Diluted
Net income		$	18,790,963			$	18,790,963			$	9,852,268			$	9,852,268
Net income available to common shareholders attributable to unvested restricted shares			—				—			$	1,866			$	1,866
Net income available to common shareholders attributable to common stock		$	18,790,963			$	18,790,963			$	9,850,402			$	9,850,402

The following table shows how net income available to common shareholders is allocated using the two-class method, for the nine-month periods ended September 30, 2010 and 2009:

		Nine Months Ended September 30,
		2010								2009
		Basic				Diluted				Basic				Diluted
Net income		$	40,085,526			$	40,085,526			$	21,923,223			$	21,923,223
Net income available to common shareholders attributable to unvested restricted shares			4,474				4,474			$	1,703			$	1,703
Net income available to common shareholders attributable to common stock		$	40,081,052			$	40,081,052			$	21,921,520			$	21,921,520

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

3.

Net income per share (Continued)

Net income per share of common stock is as follows for the three-month periods ended September 30, 2010 and 2009:

		Three Months Ended September 30,
		2010								2009
		Basic				Diluted				Basic				Diluted
Net income available to common shareholders per common share		$	0.43			$	0.43			$	0.22			$	0.22
Numerator:
Net income available to common shareholders		$	18,790,963			$	18,790,963			$	9,850,402			$	9,850,402
Denominator:
Weighted average of common stock outstanding for Basic earnings per share			44,129,762				44,129,762				44,088,936				44,088,936
Adjustment for stock options			—				12,949				—				34,813
Adjustment for shares granted under LTRP			—				8,656				—				7,814
Adjustment for Additional Shares			—				—				—				6,468
Adjusted weighted average of common stock outstanding for Diluted earnings per share			44,129,762				44,151,367				44,088,936				44,138,031

Net income per share of common stock is as follows for the nine-month periods ended September 30, 2010 and 2009:

		Nine Months Ended September 30,
		2010								2009
		Basic				Diluted				Basic				Diluted
Net income available to common shareholders per common share		$	0.91			$	0.91			$	0.50			$	0.50
Numerator:
Net income available to common shareholders		$	40,081,052			$	40,081,052			$	21,921,520			$	21,921,520
Denominator:
Weighted average of common stock outstanding for Basic earnings per share			44,121,539				44,121,539				44,079,171				44,079,171
Adjustment for stock options			—				14,821				—				45,891
Adjustment for shares granted under LTRP			—				8,318				—				4,113
Adjustment for Additional Shares			—				—				—				903
Adjusted weighted average of common stock outstanding for Diluted earnings per share			44,121,539				44,144,678				44,079,171				44,130,078

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

3.

Net income per share (Continued)

The calculation of diluted net income per share excludes all anti-dilutive shares. During the three- and nine-month periods ended September 30, 2010 and 2009, there were no anti-dilutive shares.

4.

Business Combinations, Goodwill and Intangible Assets

Business Combinations

On September 5, 2008, the Company completed, through one of its subsidiaries, Hammer.com, LLC, the acquisition of all of the issued and outstanding shares of capital stock of DeRemate.com de Argentina S.A., a company organized under the laws of Argentina (“DR Argentina”), DeRemate.com Chile S.A., a company organized under the laws of Chile (“DR Chile”), Interactivos y Digitales México S.A. de C.V., a company organized under the laws of Mexico (“ID Mexico”) and Compañía de Negocios Interactiva de Colombia E.U., a company organized under the laws of Colombia (“CNI Colombia” and together with DR Argentina, DR Chile, and ID Mexico, the “Acquired Entities”). Also, on September 5, 2008, the Company entered into an asset purchase agreement to acquire certain URLs, domain names, trademarks, databases and intellectual property rights that are used or useful in connection with the online platforms of the Acquired Entities. The Acquired Entities operate online trading platforms in Argentina (www.deremate.com.ar), Chile (www.deremate.cl), Mexico (www.dereto.com.mx) and Colombia (www.dereto.com.co)

The aggregate purchase price paid by the Company to the Sellers for the shares of capital stock of the Acquired Entities and the related assets was $40,000,000. The Company paid the Sellers $22,000,000 in cash. In addition, on September 5, 2008, the Company issued to the Sellers ten (10) unsecured promissory notes having an aggregate principal amount of $18,000,000, $8,000,000 of which are subject to set-off rights in favor of the Company for working capital adjustments and liabilities relating to the assumption of certain contracts by the Company, $4,000,000 of which are subject to set-off rights in favor of the Company for indemnification obligations of the Sellers and the remaining $6,000,000 are not subject to set-off rights. Each of the promissory notes have a one-year term, bear interest at 3.17875% plus 1.5% for the first four months, 2.0% for the second four months and 2.5% for the third four months and can be prepaid by the Company without penalty. Pursuant to the terms of each promissory note, until the principal amount plus interest is repaid, the Company may not incur indebtedness in excess of $55,000,000 in the aggregate.

On February 12, 2009, the Company agreed to modify the maturity conditions of the promissory note as follows: (i) $3,000,000 on June 5, 2009 (ii) $9,000,000 on September 5, 2009 (iii) $3,000,000 on December 5, 2009 and (iv) $3,000,000 on March 5, 2010. The promissory notes bear interest at 3.17875% plus 1.5% for the first four months, 2.0% for the second four months and 2.5% for the remaining period up to its maturity. In addition, on that date the Company finished the purchase price allocation period and the Company agreed with the Sellers a working capital adjustment for $480,912 to be paid by the Sellers to the Company.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

4.

Business Combinations, Goodwill and Intangible Assets (Continued)

Business Combinations (Continued)

On June 3, 2009, the Company paid to the Sellers $3,113,203 including principal plus accrued interest.

On August 31, 2009, the Company paid to the Sellers $9,470,222 including principal plus accrued interest.

On December 4, 2009, the Company paid to the Sellers $3,018,893 including principal plus accrued interest, net of certain working capital adjustments.

On March 4, 2010, the Company paid the final amount to the Sellers $3,242,395 including principal plus accrued interest.

As of September 30, 2010, the Company has paid all the promissory notes related to DeRemate acquisition.

Goodwill and Intangible Assets

The composition of goodwill and intangible assets is as follows:

		September 30,				December 31,
		2010				2009
Indefinite lived assets
- Goodwill		$	60,449,360			$	59,822,746
- Trademarks			2,505,798				2,415,874
Amortizable intangible assets
- Licenses and others			2,583,648				2,227,315
- Non-compete agreement			1,227,150				1,218,393
- Customer list			1,599,427				1,593,861
Total intangible assets		$	68,365,383			$	67,278,189
Accumulated amortization			(3,575,105	)			(2,939,625	)
		$	64,790,278			$	64,338,564

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

4.

Business Combinations, Goodwill and Intangible Assets (Continued)

Goodwill

The changes in the carrying amount of goodwill for the nine-month period ended September 30, 2010 and the year ended December 31, 2009, are as follows:

		Nine Months Ended September 30, 2010
		Brazil				Argentina				Chile				Mexico				Venezuela				Colombia				Other Countries				Total
Balance, beginning of year		$	12,565,062			$	24,446,463			$	6,734,405			$	4,770,560			$	4,846,030			$	5,100,939			$	1,359,287			$	59,822,746
- Effect of exchange rates changes			348,576				(987,736	)			326,521				215,438				—				692,466				31,349				626,614
Balance, end of the period		$	12,913,638			$	23,458,727			$	7,060,926			$	4,985,998			$	4,846,030			$	5,793,405			$	1,390,636			$	60,449,360

		Year Ended December 31, 2009
		Brazil				Argentina				Chile				Mexico				Venezuela				Colombia				Other Countries				Total
Balance, beginning of year		$	9,361,697			$	26,903,145			$	5,365,727			$	4,517,690			$	13,636,502			$	4,647,681			$	1,220,332			$	65,652,774
- Effect of exchange rates changes			3,203,365				(2,456,682	)			1,368,678				252,870				(8,790,472	)			453,258				138,955				(5,830,028	)
Balance, end of the year		$	12,565,062			$	24,446,463			$	6,734,405			$	4,770,560			$	4,846,030			$	5,100,939			$	1,359,287			$	59,822,746

Amortizable intangible assets

Amortizable intangible assets are comprised of customer lists and user base, trademarks and trade names, non-compete agreements, acquired software licenses and other acquired intangible assets including developed technologies. Aggregate amortization expense for intangible assets totaled $236,637 and $148,602 for the three-month periods ended September 30, 2010 and 2009, respectively. Aggregate amortization expense for intangible assets totaled $616,984 and $428,080 for the nine-month periods ended September 30, 2010 and 2009, respectively.

Expected future intangible asset amortization from acquisitions completed as of September 30, 2010 is as follows:

For year ended 12/31/2010 (remaining three months)		$	241,148
For year ended 12/31/2011			741,909
For year ended 12/31/2012			676,260
For year ended 12/31/2013			175,803
		$	1,835,120

5.

Segments

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed, the criteria used by management to evaluate the Company’s performance, the availability of separate financial information, and overall materiality considerations.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

5.

Segments (Continued)

Until the second quarter of 2010, the Company had two reportable business segments: marketplace and payments. The payments segment included charges for the use of the payments platform that allowed buyers to use credit cards for payments, and a financial charge when payments in installments were chosen. Since the third quarter of 2010, the Company has redefined its segment reporting eliminating the business segmentation between marketplace and payments segments because management has decided to cease charging to buyers as a separate fee for using the payments platform in Brazil and Argentina, and rather allow all buyers to pay either directly to sellers or through the Company’s platform without a special charge. As a result, most of the revenue that used to derive from our payments segment is no longer billed to buyers, and so management ceased the monitoring of the payment platform activity as a separate segment. Consequently, segment reporting has been redefined by considering geography as the main basis of segment breakdown to reflect the new evaluation of the Company’s performance defined by the management. MercadoPago continues charging a specific fee to its users when their payments are not related to a Mercadolibre marketplace transactions and a financing charge when the installment-payment option is chosen by marketplace and non-marketplace users. The MercadoLibre segments include Brazil, Argentina, Mexico, Venezuela and other countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal and Uruguay).

Direct contribution consists of net revenues from external customers less direct costs. Direct costs include specific costs of net revenues, sales and marketing expenses, and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, allowances for doubtful accounts, headcount compensation, third party fees. All corporate related cost have been excluded from the Company’s direct contribution.

Expenses over which segment managers do not currently have discretionary control, such as certain technology and general and administrative costs, are monitored by management through shared cost centers and are not evaluated in the measurement of segment performance.

MercadoLibre, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

5.

Segments (Continued)

The following tables summarize the financial performance of the Company’s reporting segments:

		Three Months Ended September 30, 2010
		Brazil				Argentina				Mexico				Venezuela				Other Countries				Total
Net revenues		$	31,077,653			$	10,802,682			$	4,722,635			$	5,762,290			$	3,586,118			$	55,951,378
Direct costs			(19,235,066	)			(5,353,452	)			(2,914,273	)			(2,653,357	)			(2,230,064	)			(32,386,212	)
Direct contribution			11,842,587				5,449,230				1,808,362				3,108,933				1,356,054				23,565,166
Operating expenses and indirect costs of net revenues																							(4,254,460	)
Income from operations																							19,310,706
Other income (expenses):
Interest income and other financial gains																							1,361,899
Interest expense and other financial results																							(567,969	)
Foreign currency losses																							(354,219	)
Net income before income / asset tax expense																						$	19,750,417

		Three Months Ended September 30, 2009
		Brazil				Argentina				Mexico				Venezuela				Other Countries				Total
Net revenues		$	27,206,864			$	7,512,544			$	4,119,973			$	8,833,848			$	2,926,047			$	50,599,276
Direct costs			(13,420,722	)			(3,209,448	)			(2,510,417	)			(4,169,920	)			(1,574,540	)			(24,885,047	)
Direct contribution			13,786,142				4,303,096				1,609,556				4,663,928				1,351,507				25,714,229
Operating expenses and indirect costs of net revenues																							(6,731,879	)
Income from operations																							18,982,350
Other income (expenses):
Interest income and other financial gains																							580,343
Interest expense and other financial results																							(3,873,230	)
Foreign currency losses																							(3,299,938	)
Net income before income / asset tax expense																						$	12,389,525

		Nine Months Ended September 30, 2010
		Brazil				Argentina				Mexico				Venezuela				Other Countries				Total
Net revenues		$	88,210,536			$	28,609,190			$	13,861,921			$	13,705,926			$	10,011,910			$	154,399,483
Direct costs			(50,090,123	)			(13,985,689	)			(8,544,912	)			(6,759,831	)			(5,694,502	)			(85,075,057	)
Direct contribution			38,120,413				14,623,501				5,317,009				6,946,095				4,317,408				69,324,426
Operating expenses and indirect costs of net revenues																							(15,694,887	)
Income from operations																							53,629,539
Other income (expenses):
Interest income and other financial gains																							3,073,427
Interest expense and other financial results																							(6,919,307	)
Foreign currency gains																							7,275
Net income before income / asset tax expense																						$	49,790,934