SOURCE: Quepasa Corporation

Quepasa Corporation

November 09, 2010 08:31 ET

Quepasa Corporation Reports Record Third Quarter Revenues

135% Sequential Revenue Growth Drives Record EBITDA of $1.4 Million

WEST PALM BEACH, FL--(Marketwire - November 9, 2010) - Quepasa Corporation (OTCBB: QPSA), creator and operator of Quepasa.com, an online social network targeting the Latino community, reported results for its third quarter ended September 30, 2010.

Q3 2010 Highlights

  • Record revenues of $2.7 million, up 135% over the previous quarter.

  • EBITDA totaled a record $1.4 million vs. EBITDA loss in the previous and year-ago quarters (see discussion about EBITDA, a non-GAAP term, below).

  • Quepasa.com added 5.2 million members, up 44% from 3.6 million added in the previous quarter, reaching a record 20.7 million total members, with unique visits exceeding 43 million.

  • Quepasa.com ranked as the fastest growing social network in Brazil on a percentage basis and the second fastest in the world.

  • Introduced Quepasa DSM advertising campaigns for Ultimate Fighting Championship, the world's leading mixed martial arts sports association, and for the Ley de Fomento al Primer Empleo in Mexico, a proposed law to create tax incentives for hiring young employees.

  • Launched 'SnapMeUp,' a popular social game developed by Viximo, which generated better-than-expected initial conversion rate and revenue per user.

  • Partnered with Hollywood Creations, Inc. to develop skill-based wagering games for Quepasa's Open Social Developer platform, building upon the success of Quepasa's popular casual, role-playing and social-based games.

Q3 2010 Financial Results

Revenues for the quarter totaled a record $2.7 million, an increase of 135% from $1.2 million in the previous quarter, and up several fold from $51,800 in the third quarter of 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 $168,000 or $(0.01) per basic and diluted share, compared to an operating loss of $1.7 million in the previous quarter and an operating loss of $2.7 million in the third quarter of 2009.

Net loss for the third quarter 2010 was $318,000 or $(0.02) per basic and diluted share. This was an improvement from a net loss of $1.9 million or $(0.15) per basic and diluted share in the previous quarter, and a net loss of $2.9 million or $(0.23) per basic and diluted share in the third quarter of 2009. Excluding stock based compensation, the company earned $0.07 per fully diluted share versus $(0.03) in the previous quarter and $(0.11) for the same period in 2009.

Cash and cash equivalents increased to $528,000 at September 30, 2010, from $517,000 at June 30, 2010, and decreased from $1.0 million at December 31, 2009.

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization, including amortization of non-cash stock based compensation) for the third quarter was $1.4 million or $0.11 per basic share and $0.08 per diluted share, improving from an EBITDA loss of $156,000 or $(0.01) per basic and diluted share in the previous quarter, and from an EBITDA loss of $1.1 million or $(0.09) per basic and diluted share in the third quarter of 2009 (see important discussion about the presentation of EBITDA, a non-GAAP term, below).

Management Commentary

"As the strong, viral-driven growth of Quespasa.com continued to reach record levels in the third quarter, adding on average more than 56,000 new members daily, 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."

"Our Quepasa DSM product continues to gain traction with advertisers and brands seeking to deliver their brand message across all social media properties, leveraging our user's use of viral widgets and sharing tools to spread the brand message," said Abbott. "We believe this offering will become increasingly attractive and effective for our DSM clients, as well as more fun and engaging for our members, as we continue to roll out our social gaming initiatives over the next several quarters.

"With October's member signups once again reaching new heights, we expect to end the year in a strong position as the clear social media leader in the Latin American community, generating increased revenue and cash flow."

About Quepasa Corporation

Quepasa Corporation (OTCBB: QPSA), owns Quepasa.com, one of the world's largest, trilingual, Latino social networks. Quepasa.com is an authentic Latino community that 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 Corp. 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.

All names and trademarks are the property of their respective owners.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements, including generating increased revenues and cash flow, the increasing attractiveness of the DSM campaigns, and the rollout of social games. 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, the failure to develop and integrate the games and our members' usage of the games. 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, 2009. 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 96% of the revenues for the nine months ended September 30, 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            For the Three
                                 Months Ended             Months Ended
                          ---------------------------  -------------------
                                                                  Per Basic
                                         Per     Per                  and
                         September 30,  Basic  Diluted   June 30,   Diluted
                             2010       Share   Share     2010       Share
                          -----------  ------  ------  -----------  ------
Net INCOME (LOSS)
 ALLOCABLE TO COMMON
 SHAREHOLDERS             $  (346,048) $(0.03) $(0.02) $(1,907,749) $(0.15)
                          -----------  ------  ------  -----------  ------
  Interest expense            150,560    0.01  $ 0.01      150,643    0.01
  Depreciation and
   amortization of
   property and equipment      62,310    0.00  $ 0.00       85,183    0.01
  Amortization of stock
   based compensation       1,580,590    0.12  $ 0.08    1,516,322    0.12
                          -----------  ------  ------  -----------  ------

EBITDA (loss)             $ 1,447,412  $ 0.11  $ 0.08  $  (155,601) $(0.01)
                          ===========  ======  ======  ===========  ======


WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING,
 BASIC                     12,982,326                   12,963,227
                          ===========                  ===========

WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING,
 DILUTED                   18,614,946                   12,963,227
                          ===========                  ===========



                             For the Three
                              Months Ended
                          -------------------
                                     Per Basic
                                         and
                         September 30, Diluted
                             2009       Share
                          -----------  ------
Net INCOME (LOSS)
 ALLOCABLE TO COMMON
 SHAREHOLDERS             $(2,966,143) $(0.23)
                          -----------  ------
  Interest expense            141,372    0.01
  Depreciation and
   amortization of
   property and equipment     130,527    0.01
  Amortization of stock
   based compensation       1,580,919    0.12
                          -----------  ------
EBITDA (loss)             $(1,113,325) $(0.09)
                          ===========  ======


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

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



                                 For the Nine             For the Nine
                                 Months Ended             Months Ended
                          ---------------------------  -------------------
                                                                  Per Basic
                                         Per    Per                  and
                         September 30,  Basic Diluted September 30, Diluted
                             2010       Share  Share     2009       Share
                          -----------  ------  ------  -----------  ------
Net INCOME (loss)
 ALLOCABLE TO COMMON
 SHAREHOLDERS             $(4,948,962) $(0.38) $(0.27) $(8,069,096) $(0.63)
                          -----------  ------  ------  -----------  ------
  Interest expense            450,762    0.03  $ 0.02      416,055    0.03
  Depreciation and
   amortization of
   property and equipment     255,153    0.02  $ 0.01      394,030    0.03
  Amortization of stock
   based compensation       4,704,692    0.36  $ 0.25    4,119,773    0.32
                          -----------  ------  ------  -----------  ------
EBITDA (loss)             $   461,645  $ 0.04  $ 0.02  $(3,139,238) $(0.25)
                          ===========  ======  ======  ===========  ======


WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING,
 BASIC                     12,951,513                   12,722,412
                          ===========                  ===========

WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING,
 DILUTED                   18,643,195                   12,722,412
                          ===========                  ===========






                  QUEPASA CORPORATION AND SUBSIDIARY
                 Condensed Consolidated Balance Sheets


                                              September 30,  December 31,
                                                  2010           2009
                                              -------------  -------------
                                               (Unaudited)
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                   $     527,854  $   1,028,267
  Accounts receivable, net of allowance of
   $5,000 and $37,000, respectively               1,819,803        310,781
  Other current assets                              220,210        190,513
                                              -------------  -------------
    Total current assets                          2,567,867      1,529,561

  Property and equipment, net                       312,896        422,548
  Notes receivable, including accrued
   interest of $356 and $0, respectively            467,023        250,000
  Other assets                                       41,243         48,282
                                              -------------  -------------
    Total assets                              $   3,389,029  $   2,250,391
                                              =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Accounts payable                            $      42,060  $     118,001
  Accrued expenses                                  237,358        180,288
  Accrued dividends                                 250,875        167,250
  Unearned grant income                              12,805         13,810
                                              -------------  -------------
    Total current liabilities                       543,098        479,349
                                              -------------  -------------

  Notes payable, net of unamortized discount
   of $1,715,494 and $1,929,885, respectively     6,122,243      5,673,702
                                              -------------  -------------
    Total liabilities                             6,665,341      6,153,051
                                              -------------  -------------

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock, $.001 par value;
   authorized - 5,000,000 shares; 25,000
   shares issued and outstanding at
   September 30, 2010 and December 31, 2009              25             25
  Common stock, $.001 par value; authorized -
   50,000,000 shares; 13,238,669 shares
   issued and outstanding at September 30,
   2010 and 12,743,111 shares issued and
   outstanding at December 31, 2009                  13,239         12,743
  Additional paid-in capital                    161,000,693    155,425,366
  Accumulated deficit                          (164,283,701)  (159,334,739)
  Accumulated other comprehensive income
   (loss)                                            (6,568)        (6,055)
                                              -------------  -------------
    Total stockholders' equity (deficit)         (3,276,312)    (3,902,660)
                                              -------------  -------------
    Total liabilities and stockholders'
     equity (deficit)                         $   3,389,029  $   2,250,391
                                              =============  =============






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


                          For the Three Months      For the Nine Months
                                  Ended                     Ended
                        ------------------------  ------------------------
                              September 30,             September 30,
                        ------------------------  ------------------------
                            2010         2009         2010         2009
                        -----------  -----------  -----------  -----------

REVENUES                $ 2,721,760  $    51,827  $ 4,199,846  $   197,018
                        -----------  -----------  -----------  -----------
OPERATING COSTS AND
 EXPENSES:
  Sales and marketing       221,311      111,774      602,205      355,111
  Product development
   and content              844,466      718,533    2,458,318    2,174,999
  General and
   administrative         1,761,810    1,796,930    5,300,328    4,762,634
  Depreciation and
   amortization              62,310      130,527      255,153      394,030
                        -----------  -----------  -----------  -----------
TOTAL OPERATING COSTS
 AND EXPENSES             2,889,897    2,757,764    8,616,004    7,686,774
                        -----------  -----------  -----------  -----------
LOSS FROM OPERATIONS       (168,137)  (2,705,937)  (4,416,158)  (7,489,756)
                        -----------  -----------  -----------  -----------
OTHER INCOME
 (EXPENSE):
  Interest income               940       10,128        1,342       36,051
  Interest expense         (151,500)    (151,500)    (452,104)    (452,106)
  Loss on settlement
   of receivable                  -     (100,000)           -     (100,000)
  Other income                  524        9,041        1,583       20,340
                        -----------  -----------  -----------  -----------
TOTAL OTHER INCOME
 (EXPENSE)                 (150,036)    (232,331)    (449,179)    (495,715)
                        -----------  -----------  -----------  -----------
LOSS BEFORE INCOME
 TAXES                     (318,173)  (2,938,268)  (4,865,337)  (7,985,471)
  Income taxes                    -            -            -            -
                        -----------  -----------  -----------  -----------

NET LOSS                $  (318,173) $(2,938,268) $(4,865,337) $(7,985,471)
                        ===========  ===========  ===========  ===========
  Preferred stock
   dividends                (27,875)     (27,875)     (83,625)     (83,625)
                        -----------  -----------  -----------  -----------
NET LOSS ALLOCABLE TO
 COMMON SHAREHOLDERS    $  (346,048) $(2,966,143) $(4,948,962) $(8,069,096)
                        ===========  ===========  ===========  ===========

NET LOSS PER COMMON
 SHARE ALLOCABLE TO
 COMMON SHAREHOLDERS
  BASIC AND DILUTED     $     (0.03) $     (0.23) $     (0.38) $     (0.63)
                        ===========  ===========  ===========  ===========

WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING:
  BASIC AND DILUTED      12,982,326   12,729,261   12,951,513   12,722,412
                        ===========  ===========  ===========  ===========

NET LOSS                $  (318,173) $(2,938,268) $(4,865,337) $(7,985,471)
  Foreign currency
   translation
   adjustment                  (924)        (509)        (513)      (7,099)
                        -----------  -----------  -----------  -----------
  COMPREHENSIVE LOSS    $  (319,097) $(2,938,777) $(4,865,850) $(7,992,570)
                        ===========  ===========  ===========  ===========

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