SOURCE: Quepasa Corporation

Quepasa Corporation

February 08, 2011 12:35 ET

Quepasa Corporation Reports Full Year 2010 Results

Revenues of $6.1 Million and Positive EBITDA Highlight Beginning of Monetization Phase of User Base, Which Increased 255% in 2010

WEST PALM BEACH, FL--(Marketwire - February 8, 2011) - Quepasa Corporation (NYSE Amex: QPSA), creator and operator of Quepasa.com, an online social network and gaming platform for the Latino community, reported results for its fiscal year ended December 31, 2010.

2010 Highlights

--  Revenues of $6.1 million for the year, versus $536,000 in the previous
    year.
--  EBITDA totaled $26,000 in 2010 vs. EBITDA loss in the previous year
    (see discussion about EBITDA, a non-GAAP term, below).
--  Revenue and EBITDA improvement was attributed to the success of the
    company's Quepasa DSM advertising platform, an innovative new tool that
    allows advertisers to deliver their brand message through a viral
    contest engine. DSM contest participants compete for prizes by sharing
    their entries across the social web, thus enabling advertisers to drive
    deep engagement and reach the most popular social media sites in a
    single campaign.
--  Signed DSM and website development contracts throughout 2010 totaling
    $7.3 million, of which $5.7 million was recognized as GAAP revenue in
    2010, with the remainder of $1.6 million to be recognized in 2011.
--  Generated a total of 11.4 million engagements across six DSM campaigns
    initiated in 2010, and exceeded target engagement goals on all six of
    the campaigns.
--  Added 19.6 million Quepasa.com members, increasing 239% from 5.8
    million added in 2009 and reaching a record 27.2 million total members,
    with unique visits exceeding 46 million.
--  Partnered with Hollywood Creations and Titan Gaming to develop skill-
    based wagering games for Quepsasa.com, building upon the success of the
    site's popular casual, role-playing and social-based games.
--  Entered into Quepasa DSM reseller agreements with Sony Pictures
    Television Ad Sales in Latin America and Grupo Expansión (a division of
    Time) in Mexico. The company's reseller strategy is designed to
    accelerate Quepasa DSM time-to-market and increase potential scale in
    revenue by enabling major media partners to resell Quepasa DSM to
    advertisers as an innovative "social" solution in addition to their
    standard broadcast, cable and digital advertising products.
--  Signed a licensing agreement with PlaySpan, the global leader in
    monetization solutions for more than 1,000 online games, virtual
    worlds, and social networks. Quepasa and third-party developers who
    publish games to Quepasa.com will be able to leverage robust local
    payment options across Latin America via PlaySpan's UltimatePay
    product, including locally issued credit cards and pre-paid card
    solutions.
--  Raised $12.6 million primarily to fund expansion of Quepasa.com's
    gaming platform through continued development of company-owned gaming 
    IP and through acquisition.

2010 Financial Results

Revenues were $6.1 million for 2010, an increase of $5.5 million or 1030% compared to revenues of $536,000 in 2009. The increase in revenues was primarily due to the company's continued improvements in website monetization efforts. (See "Important Disclosures," below, regarding revenue sources.)

Operating loss was $6.1 million or $(0.46) per basic and diluted share, which included $5.9 million of non-cash stock option expense amortization, compared to an operating loss of $9.9 million in the previous year, an improvement of $3.9 million or 39%.

Net loss for 2010 on a GAAP basis was $6.7 million or $(0.51) per basic and diluted share. This was an improvement from a net loss of $10.6 million or $(0.83) per basic and diluted share in the previous year.

EBITDA for 2010 was $26,000 or $0.00 per basic and diluted share, an improvement from an EBITDA loss of $3.9 million or $(0.31) per basic and diluted share in 2009 (see important discussion about the presentation of EBITDA, a non-GAAP term, below).

Cash and equivalents totaled $13.5 million as of December 31, 2010, as compared to $1.0 million at the end of the previous year.

Management Commentary

"The strong, viral-driven growth of Quespasa.com continued to reach record levels during the year as we realized substantial progress in the monetization of our user base," said John C. Abbott, CEO of Quepasa. "This included generating significant revenue from our new distributed social media advertising solution, Quepasa DSM, as well as establishing a new relationship with PlaySpan at year-end that allows us to more easily monetize user gaming activity."

"As we enter 2011, Quepasa DSM continues to gain traction with advertisers seeking to leverage consumers' rapid, widespread adoption of social media," said Abbott. "Quepasa DSM allows advertisers to reach multiple social media platforms in a single campaign, and leverage best-of-breed social media technologies to drive remarkable results -- especially as compared to traditional media options. With major reseller partnerships in place, we expect to attract new business by taking advantage of these partners' existing advertiser relationships and overall demand for social solutions.

"Our social gaming business also evolved rapidly in 2010, as we focused on tailoring our social gaming platform and offerings to our most important international markets. Our licensing agreement with PlaySpan gives our users and game developers access to a comprehensive portfolio of local payment options in our key markets. In addition to contributions from Hollywood Creations and Titan Gaming in 2010, we have also proactively sought out social gaming content that is culturally relevant to our user base. This resulted in our recent agreement to acquire Brazilian social game development studio, XtFt Games, which provides immediate access to a pipeline of relevant, localized titles. We believe we are now strongly positioned to capitalize on our rapid user growth and broader social gaming trends in the Latin marketplace in 2011."

Investor Update Call

The company will provide an audio investor update on Wednesday, February 9, 2011 at 4:30 p.m. Eastern time to provide further details about the company's 2010 results and outlook for 2011. Quepasa CEO John C. Abbott and CFO Mike Matte will host the presentation.

Date: Wednesday, February 9, 2011
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Dial-In Number: 1-877-941-8601
International: 1-480-629-9810
Conference ID#: 4410638

To access the simultaneous webcast, go to http://viavid.net/dce.aspx?sid=0000817F, or visit the Investors section on the company's website at www.quepasacorp.com.

Please call the telephone number or log into the webcast at least 5-10 minutes prior to the start time. You will be asked to register your name and organization. If you have any difficulty connecting with the call or webcast, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time on the same day and until February 16, 2011:

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin number: 4410638

About Quepasa Corporation

Quepasa Corporation (NYSE Amex: QPSA), owns Quepasa.com, the leading online social network and gaming platform for the Latino community. Quepasa.com provides fun, interactive, and easy to use social tools, and rich multimedia content in English, Spanish and Portuguese to embrace Latinos everywhere, and empower them to connect online, compete in contests and games and share their interests, ideas, and activities. Quepasa is headquartered in West Palm Beach, Florida with offices in Miami, Los Angeles, Scottsdale, and Hermosillo, Mexico. For more information about the company, go to www.quepasacorp.com, or join for free at www.Quepasa.com.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements, including leveraging robust local payment options, continuing to gain traction with advertisers, expectations regarding attracting new business and our belief that we are strongly positioned to capitalize on our rapid user growth. Forward-looking statements can also be identified by words such as "targets", "expects", "believes", "anticipates", "intends", "may", "will", "plan", "continue", "forecast", "remains", "would", "should", and similar expressions. Forward-looking statements are based on current expectations, are not guarantees of future performance and involve assumptions, risks, and uncertainties. Actual performance and results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include competitive factors, our continued support from our Mexican sponsors, finalizing the acquisition of XtFt, our failure to develop and integrate the new games, our members' usage of the games and the continued acceptance of our DSM. Further information on our risk factors is contained in our filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2010. Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Important Disclosures

Approximately 95% of the revenues for the year ended December 31, 2010 came from two companies of which a director of Quepasa is an officer or director.

Use of Non-GAAP Financial Information

EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP") and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of the company's liquidity. Quepasa Corporation defines EBITDA as earnings (or loss) before interest expense, income taxes, depreciation and amortization, including amortization of non-cash stock-based compensation. Other companies (including the company's competitors) may define EBITDA differently. Quepasa presents EBITDA because it believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in a similar industry. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Quepasa nor is it intended to be predictive of potential future results. Investors should not consider EBITDA in isolation or as a substitute for analysis of results as reported under GAAP. See "Reconciliation of GAAP Income (Loss) to EBITDA (Loss)" below for further information on this non-GAAP measure and reconciliation of GAAP Income (Loss) to EBITDA (Loss) for the periods indicated.

                    QUEPASA CORPORATION AND SUBSIDIARY
        Reconciliation of GAAP Net Income (Loss) to EBITDA (Loss)

                              For the Three Months Ended
                        -------------------------------------
                        December 31,  Per Basic   Per Diluted
                            2010        Share        Share
                        -----------  -----------  -----------
 Net INCOME (LOSS)
  ALLOCABLE TO COMMON
  SHAREHOLDERS          $(1,817,375) $     (0.14) $     (0.14)
                        -----------  -----------  -----------
  Interest expense          151,505         0.01  $      0.01
  Depreciation and
   amortization of
   property and
   equipment                 64,626         0.00  $      0.00
  Amortization of stock
   based compensation     1,160,276         0.09  $      0.09
                        -----------  -----------  -----------
 EBITDA (loss)          $  (440,968) $     (0.03) $     (0.03)
                        ===========  ===========  ===========


 WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  BASIC                  12,982,326
                        ===========

 WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  DILUTED                12,982,326
                        ===========

                          For the Three Months      For the Three Months
                                  Ended                     Ended
                        ------------------------  ------------------------
                                      Per Basic                 Per Basic
                       September 30, and Diluted  December 31, and Diluted
                            2010        Share        2009         Share
                        -----------  -----------  -----------  -----------
 Net INCOME (LOSS)
  ALLOCABLE TO COMMON
  SHAREHOLDERS          $  (346,048) $     (0.03) $(2,617,911) $     (0.21)
                        -----------  -----------  -----------  -----------
  Interest expense          150,560         0.01      151,501         0.01
  Depreciation and
   amortization of
   property and
   equipment                 62,310         0.00      118,947         0.01
  Amortization of stock
   based compensation     1,580,590         0.12    1,506,663         0.12
                        -----------  -----------  -----------  -----------
 EBITDA (loss)          $ 1,447,412  $      0.11  $  (840,800) $     (0.07)
                        ===========  ===========  ===========  ===========


 WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  BASIC                  12,982,326                12,729,261
                        ===========               ===========

 WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  DILUTED                18,614,946                12,729,261
                        ===========               ===========




                             For the Year Ended        For the Year Ended
                         ---------------------------  --------------------
                                                                     Per
                                                                    Basic
                                       Per     Per                   and
                         December 31, Basic   Diluted December 31,  Diluted
                             2010     Share   Share       2009      Share
                         -----------  ------  ------  ------------  ------

                         -----------  ------  ------  ------------  ------
 Net INCOME (LOSS)
  ALLOCABLE TO COMMON
  SHAREHOLDERS           $(6,762,150) $(0.52) $(0.35) $(10,687,007) $(0.84)
                         -----------  ------  ------  ------------  ------
  Interest expense           603,609    0.05  $ 0.03       603,607    0.05
  Depreciation and
   amortization of
   property and
   equipment                 319,779    0.02  $ 0.02       512,977    0.04
  Amortization of stock
   based compensation      5,864,969    0.45  $ 0.30     5,626,436    0.44
                         -----------  ------  ------  ------------  ------
 EBITDA (loss)           $    26,207  $ 0.00  $ 0.00  $ (3,943,987) $(0.31)
                         ===========  ======  ======  ============  ======


 WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  BASIC                   13,117,845                    12,725,894
                         ===========                  ============

 WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  DILUTED                 19,559,264                    12,725,894
                         ===========                  ============





                    QUEPASA CORPORATION AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets

                                                December 31,  December 31,
                                                    2010          2009
                                                ------------  ------------
ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                      $ 13,546,572  $  1,028,267
 Accounts receivable, net of allowance of
  $16,000 and $37,000, at December 31, 2010 and
  2009, respectively                               1,361,024       310,781
 Notes receivable - current portion, including
  accrued interest of $3,633 and $0, at
  December 31, 2010 and 2009, respectively           314,221             -
 Restricted cash                                     275,000             -
 Other current assets                                113,841       190,513
                                                ------------  ------------
   Total current assets                           15,610,658     1,529,561

 Property and equipment, net                         645,728       422,548
 Notes receivable, long-term portion                 156,079       250,000
 Other assets                                         40,324        48,282
                                                ------------  ------------
   Total assets                                 $ 16,452,789  $  2,250,391
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
 Accounts payable                               $    286,990  $    118,001
 Accrued expenses                                    414,249       180,288
 Accrued dividends                                   278,750       167,250
 Unearned grant income                                12,364        13,810
                                                ------------  ------------
   Total current liabilities                         992,353       479,349
                                                ------------  ------------

 Notes payable, net of unamortized discount of
  $1,643,241 and $1,929,885, at December 31,
  2010 and 2009, respectively                      6,272,545     5,673,702
                                                ------------  ------------
   Total liabilities                               7,264,898     6,153,051
                                                ------------  ------------

STOCKHOLDERS' EQUITY (DEFICIT):
 Preferred stock, $.001 par value; authorized -
  5,000,000 shares; 25,000 shares
  issued and outstanding at December 31, 2010
  and December 31, 2009                                   25            25
 Common stock, $.001 par value; authorized -
  50,000,000 shares; 15,287,280
  shares issued and outstanding at December 31,
  2010 and 12,743,111 shares issued and
  outstanding at December 31, 2009                    15,287        12,743
 Additional paid-in capital                      175,276,319   155,425,366
 Accumulated deficit                            (166,096,889) (159,334,739)
 Accumulated other comprehensive income (loss)        (6,851)       (6,055)
                                                ------------  ------------
   Total stockholders' equity (deficit)            9,187,891    (3,902,660)
                                                ------------  ------------
   Total liabilities and stockholders' equity
    (deficit)                                   $ 16,452,789  $  2,250,391
                                                ============  ============




                    QUEPASA CORPORATION AND SUBSIDIARIES
                    Condensed Consolidated Statements of
                 Operations and Comprehensive Income (Loss)

                      For the Three Months Ended    For the Years Ended
                       ------------------------  -------------------------
                             December 31,              December 31,
                       ------------------------  -------------------------
                           2010         2009         2010         2009
                       -----------  -----------  -----------  ------------

 REVENUES              $ 1,854,295  $   338,958  $ 6,054,141  $    535,976
                       -----------  -----------  -----------  ------------
 OPERATING COSTS AND
  EXPENSES:
  Sales and marketing      289,775      100,316      891,980       455,427
  Product development
   and content           1,966,284      917,123    4,774,694     3,147,023
  General and
   administrative        1,177,034    1,643,496    6,123,083     6,351,229
  Depreciation and
   amortization             64,626      118,947      319,779       512,977
                       -----------  -----------  -----------  ------------
 TOTAL OPERATING COSTS
  AND EXPENSES           3,497,719    2,779,882   12,109,536    10,466,656
                       -----------  -----------  -----------  ------------
  LOSS FROM OPERATIONS  (1,643,424)  (2,440,924)  (6,055,395)   (9,930,680)
                       -----------  -----------  -----------  ------------
 OTHER INCOME
  (EXPENSE):
  Interest income            4,887        2,300        6,229        38,351
  Interest expense        (151,505)    (151,501)    (603,609)     (603,607)
  Gain (Loss) on
   disposal, net                 -         (650)           -          (650)
  Loss on settlement
   of receivable                 -            -            -      (100,000)
  Other income                 524          739        2,125        21,079
                       -----------  -----------  -----------  ------------
 TOTAL OTHER INCOME
  (EXPENSE)               (146,094)    (149,112)    (595,255)     (644,827)
                       -----------  -----------  -----------  ------------
 LOSS BEFORE INCOME
  TAXES                 (1,789,518)  (2,590,036)  (6,650,650)  (10,575,507)
  Income taxes                   -            -            -             -
                       -----------  -----------  -----------  ------------
 NET LOSS              $(1,789,518) $(2,590,036) $(6,650,650) $(10,575,507)
                       ===========  ===========  ===========  ============
  Preferred stock
   dividends               (27,875)     (27,875)    (111,500)     (111,500)
                       -----------  -----------  -----------  ------------
 NET LOSS ALLOCABLE TO
  COMMON SHAREHOLDERS  $(1,817,393) $(2,617,911) $(6,762,150) $(10,687,007)
                       ===========  ===========  ===========  ============

 NET LOSS PER COMMON
  SHARE ALLOCABLE TO
  COMMON SHAREHOLDERS
  BASIC AND DILUTED    $     (0.13) $     (0.21) $     (0.52) $      (0.84)
                       ===========  ===========  ===========  ============

 WEIGHTED AVERAGE
  NUMBER OF SHARES
  OUTSTANDING:
  BASIC AND DILUTED     13,609,609   12,736,186   13,117,845    12,725,894
                       ===========  ===========  ===========  ============

 NET LOSS              $(1,789,518) $(2,590,036) $(6,650,650) $(10,575,507)
   Foreign currency
    translation
    adjustment              (1,207)         944         (796)       (6,155)
                       -----------  -----------  -----------  ------------
   COMPREHENSIVE LOSS  $(1,790,725) $(2,589,092) $(6,651,446) $(10,581,662)
                       ===========  ===========  ===========  ============

Contact Information

  • Company Contact:
    Mike Matte
    Chief Financial Officer
    Quepasa Corporation
    Tel (561) 650-8075

    Investor Relations Contact:
    Liolios Group
    Scott Liolios or Ron Both
    Tel (949) 574-3860
    Email Contact