**Exhibit 99.3**

 

**REPORT OF INDEPENDENT AUDITORS**

 

Board of Directors andStockholdersDigital River, Inc.

 

We haveaudited the consolidated financial statements of Digital River, Inc. andsubsidiaries as of December 31, 2002, and for the year then ended, and haveissued our report thereon dated January 28, 2003 (included elsewhere in thisForm 10-K). Our audit also included the financial statement schedule forthe year ended December 31, 2002 listed in Item 15(a) of thisForm 10-K. This schedule is the responsibility of the Company’smanagement. Our responsibility is to express an opinion based on our audit.

 

In ouropinion, the financial statement schedule referred to above, when considered inrelation to the basic consolidated financial statements taken as a whole,presents fairly in all material respects the information set forth therein.

 
| /s/  ERNST & YOUNG LLP |   |
|---------------------------------|--------|
|                            |
| Minneapolis,  Minnesota         |
| January 28,  2003               |

 

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**Digital River, Inc.**

**Schedule II**

**For Year Ended December 31, 2002**

 
| **2002**                                                     |   | **Balance at  Beginning of Year** |    | **Charges to  Costs and  Expenses** |   | **Deductions** |   | **Balance at End of  Year** |       |
|--------------------------------------------------------------|--------|-----------------------------------|---------|-------------------------------------|--------|----------------|--------|-----------------------------|------------|
| Allowance  for doubtful accounts and credit card chargebacks |   | $                                 | 839,000 |                                | $      | 3,395,000      |   | $                           | (2,488,000 | ) | $ | 1,746,000 |   |
| Litigation  settlement reserve                               |   | —                            |    | 2,300,000                           |   | (625,000       | )      | 1,675,000                   |       |
|                                                              |        |                                   |         |                                     |        |                |        |                             |            |  |  |  |  |

 
| **2001**                                                     |   | **Balance at  Beginning of Year** |    | **Charges to  Costs and  Expenses** |   | **Deductions** |   | **Balance at End of  Year** |       |
|--------------------------------------------------------------|--------|-----------------------------------|---------|-------------------------------------|--------|----------------|--------|-----------------------------|------------|
| Allowance  for doubtful accounts and credit card chargebacks |   | $                                 | 975,000 |                                | $      | 2,501,000      |   | $                           | (2,637,000 | ) | $ | 839,000 |   |
| Litigation  settlement reserve                               |   | —                            |    | —                              |   | —         |   | —                      |       |
|                                                              |        |                                   |         |                                     |        |                |        |                             |            |  |  |  |  |

 
| **2000**                                                     |   | **Balance at  Beginning of Year** |    | **Charges to  Costs and  Expenses** |   | **Deductions** |   | **Balance at End of  Year** |       |
|--------------------------------------------------------------|--------|-----------------------------------|---------|-------------------------------------|--------|----------------|--------|-----------------------------|------------|
| Allowance  for doubtful accounts and credit card chargebacks |   | $                                 | 593,000 |                                | $      | 2,334,000      |   | $                           | (1,952,000 | ) | $ | 975,000 |   |
| Litigation  settlement reserve                               |   | —                            |    | —                              |   | —         |   | —                      |       |
|                                                              |        |                                   |         |                                     |        |                |        |                             |            |  |  |  |  |

 

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