Groupon announced the wide release of G-Pass, as part of Groupon Live, the joint venture between Groupon and Live Nation Entertainment for local events. The new feature lets users get ticketing, seating and barcode-scanning info on the voucher itself, so they don’t have to go to the will call line at events. G-Pass has been in beta since October 2011. It’s now rolling out at Ticketmaster venues in the U.S. and Canada that offer GrouponLive deals. “G-Pass is a massive benefit to both box offices and event-goers, dramatically increasing the value GrouponLive delivers to the market,” says Groupon VP and GrouponLive General Manager, Greg Rudin. “We’re proud to launch it with our partner, Ticketmaster, who brings the value of G-Pass to an industry-leading set of venue clients.” This isn’t the only news from Groupon this week, although it’s probably the more significant news. The other announcement was the launch of the Groupon Kidz Club, which can be used by parents to find kid-friendly deals and for kids to play games. The more interesting part, however, is the cast of characters Groupon came up with for the Kidz club. Meanwhile, Groupon has been facing angry shareholders, upset over Groupon’s recent revisions to the company’s earnings release. The lawsuits have begun, and Groupon’s stock has been suffering.

On Friday, Groupon announced that it had revised its earnings report, which was originally released in February. This has drawn all kinds of hell to the company in the few days since. Lawyers almost immediately began looking for complaints from shareholders. Now, one has officially been filed. PaidContent, which shares the following legal document reports that a man from Groupon’s hometown of Chicago has filed a suit. Groupon Class Action Take 1 The suit is class action, and claims to represent “all others similarly situated” – those that “purchased or otherwise acquired the common stock of Groupon between November 4, 2011 and March 30, 2012,” and “who acquired shares of Groupon commons stock pursuant or traceable to the company’s false and misleading Registration Statement and Prospectus issued in connection with its November 4, 2011 initial public offering.” The suit allegs that Groupon issued false and misleading statements regarding tis business practices and financial results, which it says were overstated in violation of GAAP. It says Groupon’s business was not growing to the extent represented and was not nearly as resistant to competition as suggested. That’s just a sample. You can read the document above for the whole thing. Meanwhile, the SEC is getting involved. It’s been reported that a preliminary probe has begun, though a formal investigation has yet to launch.

Starbucks is now using Google Offers and will run its first deal on Wednesday. The deal will be $5 for a $10 eGift card. “In less than a year, Google Offers has grown from one to 40 cities across the country, giving people super-savings with daily deals for locally loved businesses and well-known national brands like Starbucks,” a Google spokesperson tells WebProNews. If the half price deal isn’t good enough, there are other benefits to the Starbucks deal. “For every deal purchased, Google Offers will donate $3 to the Opportunity Finance Network (OFN) for the Create Jobs for USA Fund (up to $3 million),” explains Michael Haswell, Head of Business Development with Google Commerce. “Founded by Starbucks and OFN, the Create Jobs for USA Fund helps provide loans to community businesses in order to create and sustain jobs in America. So, when you buy this Google Offer, you’re also taking action to help Americans get back to work.” The offer will be sent to Google Offers users by email. Last month, Google Offers added 11 new partners, enabling it to receive offers from 8Moms, APDailyDeals, AT&T Interactive, Boston.com, DailyDeals.com, DoubleTakeDeals, Half Off Depot, Morgan’s Deals, Savored, Signpost, and Urban Dealight.

On Friday, Groupon announced revisions to its Q4 and full-year 2011 earnings report, including a $14.3 million reduction in Q4 revenue. When Groupon first reported its earnings, it had reported a 194% increase at $506.5 million. With the revisions, operating expenses were increased, reducing the company’s operating income by $30 million and its net income by $22.6 million. On news of the revisions, Groupon stock dropped. At the time of this writing, its at 16.27 -2.11‎ (-11.48%‎). Groupon may even have some legal issues on its hands. At least, if there are any, they are being sought out. Shayndi Raice at The Wall Street Journal reports that lawyers began issuing releases, trying to get shareholders to contact them, right after Groupon made its announcement. Raice reports: Lawyers said this weekend that if it is discovered that Groupon knew about the refund spike or the material weakness in internal controls when they filed their registration papers and went public in November – without disclosing that to investors – the company may be liable for the losses investors suffered since the disclosure Friday. As a matter of fact, just as I was writing this, a release came through the wire from law firm Federman & Sherwood saying: The law firm of Federman & Sherwood, a nationwide law firm specializing in securities, derivative and merger litigation, has initiated an investigation into Groupon, Inc. (NASDAQ: GRPN) with respect to possible breaches of fiduciary duty by the company’s officers and directors, as well as violations of state law. More specifically, the company and its auditor found material weaknesses with the company’s reported revenue and earnings for the fourth quarter 2011, and therefore may have misstated earnings and revenue in its Annual Report. There is also speculation that the officers and directors of the company “rushed” the initial public offering. If you purchased Groupon, Inc. shares between the IPO date of November 4, 2011 and March 31, 2012, have information to assist in our investigation, or have any questions or concerns regarding this notice or preservation of your rights, please contact our firm. Groupon CFO Jason Child said in its announcement, “We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants.” Groupon did confirm its Q1 guidance from the original earnings report. This includes expectations for first Q1 evenue of $510 million to $550 million and income from operations of $15 million to $35 million.

Groupon announced some revisions to its recent earnings report today, including a $14.3 million reduction in Q4 revenue, which was originally reported as $506.5 million, up 194% year-over-year. Operating expenses were also increased, reducing operating income by $30 million, net income by $22.6 million and earnings per share by $0.04. “We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants,” said CFO Jason Child. The company still confirmed its Q1 guidance. Today’s release is below in its entirety: CHICAGO–(BUSINESS WIRE)–Groupon, Inc. (NASDAQ: GRPN) today announced a revision of its reported financial results for its fourth quarter and year ended December 31, 2011. Groupon also affirmed its guidance for the first quarter of 2012. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” The revisions resulted in a reduction to fourth quarter 2011 revenue of $14.3 million. The revisions also resulted in an increase to fourth quarter operating expenses that reduced operating income by $30.0 million, net income by $22.6 million, and earnings per share by $0.04. Financial results for prior periods, including as of and for the nine months ended September 30, 2011, were not affected by the revisions. There is no change to Groupon’s previously reported operating cash flow of $169.1 million for the fourth quarter 2011 and $290.5 million for the full year 2011. There is also no change to Groupon’s previously reported free cash flow, which is a non-GAAP financial measure that reflects cash flow from operations less purchases of property and equipment, of $155.1 million for the fourth quarter 2011 and $246.6 million for the full year 2011. The revisions are primarily related to an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates. The revisions have an impact on both revenue and cost of revenue. A more detailed explanation of the refund reserve is included in the Critical Accounting Policies and Estimates section of Groupon’s Annual Report on Form 10-K for the year ended December 31, 2011, filed today with the Securities and Exchange Commission (SEC). “We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants,” said Jason Child, Groupon CFO. Groupon affirmed its guidance contained in its February 8, 2012 press release regarding expectations for first quarter 2012 revenue of $510 million to $550 million and income from operations of $15 million to $35 million. This guidance includes approximately $35 million for stock-based compensation and acquisition-related expense, and it assumes no material business acquisitions or investments and no further revisions to stock-based compensation estimates. In conjunction with the completion of the audit of Groupon’s financial statements for the year ended December 31, 2011 by its independent auditor, Ernst & Young LLP, the Company included a statement of a material weakness in its internal controls over its financial statement close process in its Annual Report on Form 10-K for year ended December 31, 2011. The Company has been working for several months with another global accounting firm in preparation for reporting on the effectiveness of its internal controls by the end of 2012, as required following Groupon’s initial public offering last year. The Company continues to implement process improvement initiatives and augment its staffing, and is expanding the accounting firm’s engagement scope to address the underlying causes of the material weakness. Further discussion of the material weakness can be found in the Company’s Form 10-K, filed today with the SEC. Final financial results for Groupon’s year ended December 31, 2011 are included in its Form 10-K, filed today with the SEC. Revised financial results for Groupon’s fourth quarter ended December 31, 2011 are included in its amended Form 8-K, filed today with the SEC. Groupon to Webcast First Quarter Financial Results Conference Call on May 14, 2012 The Company also announced today that it intends to hold a conference call to discuss its first quarter 2012 financial results on Monday, May 14th, 2012, at 5:00 p.m. EDT. The webcast can be accessed live at http://investor.groupon.com. Extension of Lock-Up Period In connection with Company’s initial public offering, the underwriters and certain holders of Groupon common stock entered into agreements restricting the sale or transfer of shares of common stock during the 180-day period following the closing of the IPO. These agreements provide for an automatic extension in the event the Company announced that it will release earnings or other material news within the 16-day period following the originally-scheduled expiration of the agreements. These agreements were originally scheduled to expire on May 2, 2012. As a result of the Company’s scheduled release of its earnings on May 14, 2012, the lock-up agreements described above will be automatically extended through June 1, 2012. Non-GAAP Financial Measures This release includes the following financial measure defined as a non-GAAP financial measure by the SEC: free cash flow. Groupon believes free cash flow is an important indicator for its business because it measures the amount of cash the Company generates after spending on marketing, wages and benefits, capital expenditures and other items. Free cash flow also reflects changes in working capital. Free cash flow may be different from similar measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For a reconciliation of this non-GAAP financial measure to the nearest comparable U.S. GAAP measure, see “Reconciliation of Non-GAAP Financial Measure” included in this release. Note on Forward-Looking Statements The statements in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, our ability to continue to expand our business and continue revenue growth; our ability to manage the growth of our organization; responding to changes in the markets in which we compete for business; retaining existing merchant partners and adding new merchant partners; competing against smaller competitors and competitors with more financial resources than us; developing new product and service offerings that are appealing to customers; maintaining a strong brand; effectively dealing with challenges arising from our international operations; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K for the year ended December 31, 2011, copies of which may be obtained by visiting the Company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance. You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of March 30, 2012. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this earnings release to conform these statements to actual results or to changes in its expectations. Groupon encourages investors to use its investor relations website as a way of easily finding information about the Company. Groupon promptly makes available on this website, free of charge, the reports that the Company files or furnishes with the SEC, corporate governance information (including Groupon’s Code of Conduct), and select press releases and social media postings. Reconciliation of Non-GAAP Financial Measures Free Cash Flow The following is a reconciliation of free cash flow to the most comparable U.S. GAAP measure, “Net cash provided by operating activities,” for the years ended December 31, 2011, 2010, and 2009, and the three months ended December 31, 2011 and 2010: Three Months Ended December 31, Year Ended December 31, 2010 2011 2009 2010 2011 (in thousands) (unaudited) Net cash provided by operating activities $ 51,919 $ 169,077 $ 7,510 $ 86,885 $ 290,447 Purchases of property and equipment (8,589 ) (13,986 ) (290 ) (14,681 ) (43,811 ) Free cash flow $ 43,330 $ 155,091 $ 7,220 $ 72,204 $ 246,636  

From the sound of it, Google is getting ready to make a huge impact in the deals space. The company famously tried to purchase Groupon a couple years ago, and when Groupon turned the offer down, Google decided to simply create its own competitor. Eventually Google launched Google Offers. Now, Greg Sterling at Marketing Land reports that Google is testing a new loyalty program called Google Offers With Rewards, that users can sign up for with their credit cards and get…rewards. He names 12 businesses in the Bay area, who are participating in Google’s trial, and shows some screen caps. One example, from Sonoma Chicken Coop, allows the user to make two purchases at the venue and get an $8 cash reward. Sterling reports that to take advantage of the program, users would need to register a credit cards (Master Card is specifically being used in the trial, but it would be expanded to other cards, he says), and that there is an analytical element that would give merchants (and Google) more data about users, which could potentially be used in other kinds of Google ads down the line. Groupon launched its Groupon Rewards loyalty in September, which lets consumers get special deals when they go to local businesses multiple times. The same basic concept. The main difference is that Groupon doesn’t have all of the different means to get deals and offers in front of people the way Google does. Bing, Google’s main competitor in the search market, launched a punchcard loyalty program for its advertisers in September as well, along with its Deals hub. The full list of cities where Google currently offers Google Offers includes: Atlanta, Austin, Baltimore, Boston, Brooklyn, Charlotte, Chicago, Columbus, Dallas, Denver, Detroit, Fort Worth, Houston, Indianapolis, Kansas City, Long Beach, Los Angeles, Miami, Milwaukee, Minneapolis, NYC, Oakland/East Bay, Oaklahoma City, Omaha, Orlando, Philadelphia, Phoenix, Pittsburgh, Portland, Sacramento, Salt Lake City, San Antonio, San Diego, San Francisco, San Jose, Seattle, St. Louis, St. Paul, Tampa and Washington D.C. Google Offers has been expanding a lot. I’m sure even Cleveland Steamer will be able to take advantage one day.

Groupon has been surrounded by controversy for various reasons for quite some time. Sometimes it’s a flub like the Super Bowl ad that some were offended by. Other times, it’s more directly related to Groupon’s business. This time, it’s an investigation by the UK’s Office of Fair Trading, which is generally likened to the Federal Trade Commission here in the US. The OFT announced today that Groupon is changing its practices with regards to the investigation, which was opened last July. The investigation is now closed. Here’s the official case description from the Office of Fair Trading: OFT opened this investigation following complaints it received in relation to Groupon’s trading practices. As part of its investigation, OFT also considered concerns that have been raised by the Advertising Standards Authority (‘ASA’), in light of complaints the ASA received. As a result of its investigation, OFT formed the view that there were specific examples of Groupon’s practices which appeared to be in breach of the CPRs, the UTCCRs and DSRs. In particular, OFT identified concerns with reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants. During the investigation Groupon engaged constructively with the OFT. They cooperated throughout. As required in this case under the Enterprise Act 2002, the OFT consulted with Groupon to ensure that those practices are not continued or repeated. Following this consultation, Groupon signed undertakings to comply with the law. The undertakings require that Groupon does not continue or repeat the conduct of concern in this case. Groupon has also agreed to provide the OFT with details of any consumer complaints relating to matters within the scope of the undertakings three, six and nine months following the provision of undertakings. This is so the OFT can monitor whether the undertakings are effective and Groupon is complying with them. Groupon has been warned that should evidence come to light that it is breaching any of the undertakings, OFT may consider applying to court for enforcement orders to ensure compliance with consumer protection legislation. OFT has now closed its investigation into this matter having secured these undertakings, subject to reviewing any consumer complaint information from Groupon in the following three to nine months. In December 2011, the ASA started to refer to OFT, complaints it received that were within the scope of OFT’s investigation. It will continue to refer such complaints to OFT over the next three months whilst Groupon improves its processes, after which, the ASA will resume investigating any complaints it receives. Groupon responded to the OFT on its own Lifestyle blog, saying: Frankly, we’re grateful that any time someone takes the time to give us feedback on how to better serve our customers. Many of their suggested changes were already underway, and the rest we will implement with haste. To the Groupon customers that experienced the negative side effects of our growth: we’re sorry. We believe that the only way to build a company that lasts is to provide the best customer experience in the world, and it pains us when we fall short. Our commitment is this: we are going to get this right. We won’t stop until we are known for having the best customer service in the UK. And we appreciate your help in getting there. If you see ways that we can improve, or if you feel we aren’t living up to our end of the bargain, please let us know . Groupon says it is making or has made improvements in the areas of: price/discount clarity, merchant capacity planning, deal “time remaining” clarity, errors in deal descriptions, substantiating marketing claims and the seven-day refund period. Groupon says it now checks and rechecks reference prices (which discounts are based on) and makes sure that what is says is being offered is actually being offered. It also shows the sources for all of these. With regards to merchant capacity planning, Groupon runs merchant businesses through a “capacity calculator” and consults with them to determine the appropriate limit, provides them with free online scheduling (with appointment booking), confirms with the merchants prior to promotion, and has now started an ongoing due diligence program with live and continuous checks based on customer/operational feedback throughout the various stages of the deal. Groupon is also making changes that let it run offers for many time periods, including a 72-hour offer, and is updating its FAQs to explain time-remaining clocks. The company says it is “beefing up” its quality control processes by doing credit checks on all merchants, fact-checking all offers before launching, confirming/agreeing to fine print of all offers with merchants, and emailing previews of offers to all merchants before being featured. Groupon says it has established an internal compliance database to track claims that merchants want them to make when offers are described, and that it will continue to populate this database and provide extracts to regulators for compliance reporting. Interestingly, the company says its fact-check team confirms that all health and beauty claims are backed by scientific evidence, and that it is working with the Advertising Standards Authority on that. Finally, Groupon has expanded its customer support so all callers can be answered, and says will continue to review customer support metrics to maintain “high levels of service”. No word on whether or not controversial deals, such as a recent Milwaukee deal for a Jeffrey Dahmer tour, will be minimized.

Google announced Google Play today. This is Google’s new app/music/video/book store, which is replacing Android Market, Google Music and the Google eBookstore. Google kicked off a big sale to celebrate the launch, called 7 Days to Play, in which Googl eis offering a different album, book, video rental and Android app at a special price each day for the next week. Google Director of Digital Content Jamie Rosenberg writes on the Google Blog: In the U.S., today’s titles include the collection of top 40 hits Now That’s What I Call Music 41, the popular game Where’s My Water, the novel Extremely Loud and Incredibly Close and the movie Puncture for just 25 cents each. In addition, you’ll find great collections of hip-hop, rock and country albums for $3.99 all week, detective novels from $2.99, some of our editorial team’s favorite movies from 99 cents, and our favorite apps from 49 cents. Google’s already sending around an email campaign for the sale: More on Google Play: Updating Android Market To Google Play Google Play On iOS Devices … Kind Of Google Play Badges Available For Android Developers Google Play Incites Mixed Twitter Reaction

At a marketing event this past week, Facebook talked about a new “Offers” offering for brands. Offers let businesses and organizations share discounts with customers by posting offers to their Facebook Pages. Facebook describes them as coupons you don’t have to pay anything to create. When a customer claims an offer, they’ll get an email to show at the physical location for the brand to get a discount. Facebook has a help center with guidelines for using Facebook Offers (hat tip to AllFacebook). Under the “best practices” section, Facebook says it encourages businesses to experiment with offers to find out what customers respond to best, but suggests the following to have a better chance of success: Make discounts substantial. Discounts should be at least 20% off regular prices. Additionally, offering things for free performs better than discounts even if the percentage off is the same implied value of the free item. Keep it simple. Describe your terms and conditions as simply as possible, and don’t require customers to perform unusual activities. Use an engaging image. Photos of people using your product typically perform better than photos of your product by itself. Photos of your product perform better than your business’s logo. Keep language natural and direct. Make sure your headline leads with the value of the offer instead of marketing slogans. Avoid using unconventional capitalization or punctuation. Set a reasonable expiry date. Give people at least a few days to see and claim an offer. Take advantage of word-of-mouth promotion by allowing time for your offer to spread by word of mouth in people’s News Feeds. Promote your offer. Run sponsored stories and pin your offer to the top of your Page so new visitors notice it. We recommend sharing an existing offer instead of creating the same offer twice so it’s easier to track how many people are claiming it. Train your staff. Make sure your employees know the terms of your offer and how to help people redeem it. Some people will print out the offer while others might show the offer on their phones. For now, Offers are only available to Facebook’s managed advertising clients. If this applies to you, you can go to your Page, and click “Offer” from the sharing tool at the top of you timeline.

As previously reported, Groupon acquired Hyperpublic,which could help it compete with Google and Foursquare. The company has also acquired Kima Labs, creators of Barcode Hero. The following message appears on the Barcode Hero site (via TechCrunch): We’re excited to let you know that Kima Labs, the team behind Barcode Hero, has been acquired by Groupon. We’re looking forward to jumping in and focusing our efforts there, but in order to do that, we’ll be shutting down Barcode Hero. The Barcode Hero iPhone app and web site will be unavailable after Monday, February 20. Your Barcode Hero data will be available for you to download now through March 16. See below for details. Thanks for using Barcode Hero—whether you were a loyal scanner or just trying it out. It was amazing to see those of you who scanned thousands of items in your first week, and the variety of items you scanned, from DVDs to gadgets to hot sauce. We had fun creating the app, and we hope you had fun using it. Thanks also to our investors, advisers, friends and family, who have supported us over the last two years. We couldn’t have done this without you. Yours, Blake, Jason, and Andrew The Barcode Hero Team Check out what else Groupon has been up to on our Groupon page.