QUEPASA CORP (Form: 10KSB, Received: 03/31/2008 18:19:08)

BRC/ALIANZA

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-KSB

(Mark One)


þ		ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007


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

For the transition period from to

Commission File Number: 001-33105

QUEPASA CORPORATION

(Name of small business issuer in its charter)


NEVADA		86-0879433
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

7550 E. Redfield Rd.
Scottsdale, AZ 85260
(Address of principal executive offices)

(480) 348-2665
(Issuer’s telephone number)

Securities registered under Section 12(b) of the Exchange Act:


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock, $.001 par value per share		The NASDAQ Stock Market LLC

Securities registered under Section 12(g) of the Exchange Act: None.

Check whether the issuer is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. o

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. o

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

State issuer’s revenue for its most recent fiscal year: $219,466.

The aggregate market value of the voting and non-voting common equity held by non-affiliates at March 27, 2008, computed by reference to the last sale price of $2.66 per share on the NASDAQ Capital Market, was $33,604,474.

The number of shares outstanding of the issuer’s common stock as of March 27, 2008, was 12,633,261 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Quepasa Corporation’s definitive Proxy Statement relating to its 2008 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format Yes o No þ

Quepasa Corporation

FORM 10-KSB

For the fiscal year ended December 31, 2007

INDEX


		Page
PART I

Item 1.	Description of Business		3

Item 2.	Description of Properties		10

Item 3.	Legal Proceedings		10

Item 4.	Submission of Matters to a Vote of Securities Holders		10

PART II

Item 5.	Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities		11

Item 6.	Management’s Discussion and Analysis or Plan of Operation		11

Item 7.	Financial Statements		17

Item 8.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		18

Item 8A	Controls and Procedures		18

Item 8B	Other Information		19

PART III

Item 9.	Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act		21

Item 10.	Executive Compensation		21

Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		21

Item 12.	Certain Relationships and Related Transactions and Director Independence		21

Item 13.	Exhibits		21

Item 14.	Principal Accountant Fees and Services		21

Signatures			21

Exhibit 10.18
Exhibit 10.21
Exhibit 10.34
Exhibit 10.35
Exhibit 10.36
Exhibit 10.37
Exhibit 10.38
Exhibit 10.39
Exhibit 10.40
Exhibit 21.1
Exhibit 23.1
Exhibit 23.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I

Item 1. Description of Business

The Company

In 2007, Quepasa Corporation (the “Company”) transitioned from being a bilingual search engine into a bilingual portal and Hispanic social network. With the evolution of the site into a Hispanic portal and social network, the products and services provided to businesses transitioned to predominately display advertising. In December of 2007, the Company’s portal service was discontinued. The Company re-launched its Quepasa.com website on February 6, 2008, to be solely a Hispanic social network with content provided by the user community. The Quepasa.com website community provides users with access to an expansive, bilingual menu of resources that promote social interaction, information sharing, and other topics of importance to Hispanic users. We offer online marketing capabilities, which enable marketers to display their advertisements in different formats and in different locations on our website. We work with our advertisers to maximize the effectiveness of their campaigns by optimizing advertisement formats and placement on the website. We also use our targeting capabilities to help advertisers reach their desired audiences by placing contextually relevant advertisements on our pages.

We seek to create innovative and high quality Internet services for users and to provide efficient and effective marketing opportunities for businesses to reach these users. We focus on increasing our user base and enhancing the user experience on our website to broaden the value of our user base to advertisers and to increase the revenue from these advertisers. We believe that we can increase our user base by offering compelling Internet services and effectively integrating community, personalization, and content to create a powerful user experience. These user relationships and the social community enable us to leverage our offered forms of online advertising as well as premium services for users.

While many of our services are free to our users, we intend to generate revenue by providing marketing services and advertising opportunities to businesses and by establishing paying relationships with our users for premium services and products. All of our offerings are currently available in both English and Spanish.

Industry Overview

We believe that the Hispanic market, particularly among 18-34 year olds in the United States, is an attractive market niche for companies who strive to advertise their brands to that market segment.

Hispanic growth and concentration : According to the United States Census Bureau and published sources, the Hispanic population:

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totaled 44.3 million, or 14.8% of the total U.S. population, in 2006, an increase of approximately 25.9% from 35.2 million or 12.5% of the total U.S. population in 2000;

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is expected to grow to 102.6 million, or 24.4% of the total U.S. population, by 2050, an increase of 66.9 million, or 187.4%, between 2000 and 2050;

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is the fastest growing minority group at 3.4% in the U.S. by adding one in every two people to the US population between 2005 and 2006; and

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is relatively young according to the 2005 U.S. Census; the number of US Hispanics age 0-24 will rise 25% between 2000 and 2010 as compared to 5.3% for the general population of the same age group. As of 2006, it has a median age of 27.4, compared to 36.4 for the rest of the population.

In addition, 15 states have at least 500,000 Hispanic residents and in 22 states Hispanics are the largest minority, which makes Hispanics in the United States an attractive demographic group for advertisers, enabling marketers to deliver messages cost effectively to a highly targeted audience through geographic targeted ad serving.

Hispanic use of the Internet : According to eMarketer, in 2007, Hispanics represented 10% or 18.8 million users of all Internet users in the United States. This group is expected to grow to 11.4% by 2011. From 2001 to 2004, internet usage by Hispanics has increased by 32.9% which is a faster pace than the general population at 17.9%. eMarketer reports that more than 35% of online Hispanics were 24 years old or younger, which is a coveted demographic to reach by advertisers. Forrester Research reports that 54% of Hispanic “social networkers” are Spanish-preferring over English.

Increasing Hispanic purchasing power: The purchasing power of Hispanic households is rapidly increasing. A 2005 Selig Center study predicts that Hispanics’ collective buying power will hit $923 billion in 2008 and over $1 trillion by 2010. Captura Group and Idiom Technologies anticipates by 2050, the Hispanic population in the United States could represent a consumer marketplace of between $2.5 and $3.6 trillion. The U.S. Census Bureau reports that in 2005, 49.5% of all Hispanics own their home.

The MediaAudit reports online shopping has grown at a faster pace for Hispanics than the general population. Over 38% of Hispanics made at least one purchase online in 2004 as compared to 24.4% in 2001.

Market Opportunity

We are committed to providing a comprehensive set of Internet marketing solutions for advertisers. We believe there is ongoing growth in the online advertising market and an increasing shift in advertisers’ use of online media as audiences shift toward the Internet from traditional media:

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According to eMarketer, U.S. online spending in 2008 will reach $27.5 billion and by 2011 it will increase by 53% to $42.0 billion. The estimated online share of total U.S. media ad spending will grow from 9.3% in 2008 to 13.3% in 2011;

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eMarketer estimates that by the end of 2007, 38% of all U.S. Internet users or 72 million people, will have used social networking at least once a month. By 2011, half of all internet users, nearly 105 million people, will use social networking regularly. In 2008, U.S. Social Network Advertising Spending will continue to grow to an estimated $1.6 billion and by 2011 is estimated to increase 69% to $2.7 billion;

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ZenithOptimedia’s December 2007 report, predicts internet advertising to overtake global radio advertising spending in 2008, to attain double digit share of global advertising in 2009, and to overtake magazine advertising in 2011, with 11.5% of total advertising spending representing $60.9 billion dollars;

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According to PriceWaterhouseCoopers, Internet advertising and access spending in Latin America will increase from $6.0 billion in 2006 to $12.2 billion in 2011;

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GroupM predicts Latin American advertising spending to grow from $14.4 billion in 2006 to $19.3 billion in 2008; and

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ComScore reports that there are 53.6 million users in Latin America as of June 2007.

We are committed to capitalizing on this shift to Internet advertising and helping our advertisers create and execute Internet marketing strategies that both encourage our users to interact with our advertisers’ brands as well as provide valuable insights into their customer base.

Although businesses have many online advertising options, we believe that there are only limited opportunities available to effectively reach the rapidly growing Hispanic online population. We believe that the traditional advertising agency approach to Hispanic marketing is too slow and costly to effectively reach this population in light of rapidly evolving online marketing trends. We believe we are among the first technology companies to develop, deploy, and promote cost effective, performance-based online marketing solutions for the Spanish language market. We utilize our continuing research of the Hispanic marketplace and our understanding of our users and their interests to offer a suite of targeted marketing services for our advertisers to meet the full range of their needs from brand building, to consumer awareness, direct marketing, lead generation and commerce services.

In addition, we offer all of our services in both English and Spanish, which we believe provides great value to advertisers seeking to reach the Hispanic audience. According to published sources, approximately 90% of Hispanic adults in the United States speak Spanish at home. Moreover, Hispanics in the United States are expected to continue to speak Spanish because:

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Approximately two-thirds were born outside the U.S.;

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Hispanic immigration is continuing;

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Hispanics generally seek to preserve their cultural identity; and

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Hispanic population concentration encourages communication in Spanish.

Products and Services

Products and services for businesses:

In 2007, Quepasa moved away from being a bilingual search engine into a bilingual portal and Hispanic social network. With the evolution of the site into a Hispanic portal and social network, the products and services provided to businesses transitioned to predominately display advertising. In December of 2007, the portal service of Quepasa was discontinued. Quepasa re-launched the site on February 6, 2008, to be solely a Hispanic social network with content provided by the user community.

We offer online marketing capabilities which enable marketers to display their advertisements in different formats and in different locations on our website. We work with our advertisers to maximize the effectiveness of their campaigns by optimizing advertisement formats and placement on the website. We also use our targeting capabilities to help advertisers reach their desired audiences by placing contextually relevant advertisements on our pages.

For advertising services, we earn revenue as follows:

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Banner advertising, in which we earn revenue when an advertiser purchases advertising space within our website and “impressions” are delivered. An “impression” is delivered when an advertisement appears on our website pages viewed by users. We recognize such revenue ratably over the contract period.

•

Other types of display advertising earn revenue for Quepasa using various business models, such as, but not limited to, cost per click, flat fee, and cost per acquisition.

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We partner with offline properties and provide the online media component to their sponsorship packages. When the online sponsorship package is sold, Quepasa splits the revenue with the content provider.

•

We will continue to sell the opportunity for marketers to email our registered user base with a branded message.

•

We will also continue to sell the bulletin functionality to advertisers. Bulletins allow ads to be posted directly to a user’s profile.

Products and services for community members : Our offerings to users of our website include bilingual products and services that promote social interaction, information sharing, and other topics of high importance to Hispanic users, including blogs, chat, user created communities, email, bulletins, message boards, news, invites, photos, music and video. We offer services free of charge to provide them with the opportunity to discover, connect and interact with other users who share similar interests and ideas.

On February 7, 2007, the Company purchased certain assets of corazones.com. We acquired all existing registered users, the domains corazones.com and corazonesdemexico.com, the existing operating system including the interface, administrative and billing systems and the related logos and trademarks of the associated properties.

In 2008, Quepasa intends to re-launch corazones.com with a fresh design for enhanced user experience. The site is being re-developed to improve performance and enhance the user experience. We plan to add additional functionality such as enhanced search, animated messaging/winks, video chat, revised registration process, and email verification to the site.

The site will move away from a subscription based revenue model to a free adult dating site. Revenue will be generated from display advertising using the same model as Quepasa.com. In some cases, advertising on Corazones.com will be sold as a package with advertising on Quepasa.com.

We continue to invest in our technology infrastructure to improve the user experience. We are updating our hardware and upgrading our data center facilities to improve performance on both Quepasa.com and Corazones.com.

Sales and Marketing

We sell our marketing services to businesses through direct channels. Our direct advertising sales team focuses on selling our marketing services and solutions to leading advertising agencies and marketers in the United States, Mexico and Latin America.

We employ sales professionals in Miami, Florida and Mexico City, Mexico. Our sales representatives consult regularly with agencies and advertisers on design and placement of online advertising, and provide customers with measurements and analysis of advertising effectiveness as well as effective consumer insights that can be turned into marketing campaigns.

With respect to our users, our sales and marketing activities are focused on developing the Quepasa brand within the Hispanic community in order to gain a competitive advantage that will enable us to attract, retain, and more deeply engage users and advertisers. We believe that our ability to obtain and retain users is also related to our ability to provide a fully bilingual site.

Product Development

We continually seek to enhance and expand our existing offerings and develop new offerings to meet evolving user needs for technological innovation and a deeper, more integrated user experience. We perform research to address fundamental problems facing users, such as making their search for information on the Internet easier and more efficient, providing them tools to help solve their problems, finding new and better ways for them to connect and communicate with family and friends, and guiding them and their family and friends towards high-quality products, songs, movies, and other resources. We also help advertisers connect with customers most likely to be interested in their products, maximizing the advertisers’ marketing investments and providing a better overall user experience. Among our recently introduced products are the Quepasa Mobile Entertainment and Quepasa Market Intelligence services described above. We have developed internally, acquired or licensed the products and services we offer.

During 2007, we made a number of strategic changes to the Quepasa website including a redesign of our homepage and site navigation to better align our content delivery to user experience. In addition, we invested in new hardware and systems to provide increased scalability of our offerings to our expanding user base.

During 2007 and 2006, we incurred $995,888 and $525,847 in research and development costs, respectively.

In January 2008, we hired a Chief Technology Officer to lead the development and enhancement of our new products and services. In addition, the Chief Technology Officer will hire the requisite personnel to enhance the features and functionality of our website and related properties in order to meet the increasing demand for the offerings by our users and advertisers.

Intellectual Property

We create, own and maintain a wide array of intellectual property that we believe are valuable to the Company. Our intellectual property includes patents and patent applications related to our innovations, products and services; trademarks related to our brands, products and services; copyrights in software and creative content; trade secrets; and other intellectual property rights and licenses of various kinds. We seek to protect our intellectual property assets through patent, copyright, trade secret, trademark and other laws of the United States and other countries of the world, and through contractual provisions. We enter into confidentiality and invention assignment agreements with our employees and contractors, and non-disclosure agreements with third parties with whom we conduct business in order to limit access to, and disclosure of, our proprietary information.

We consider the Quepasa trademark and our related trademarks to be valuable to the Company and we have registered these trademarks in the United States and other countries throughout the world and aggressively seek to protect them. We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights, such as trademark, patent, copyright and trade secret rights to third parties.

In February 2007, we acquired the assets of Corazones.com, a leading bi-lingual online dating website designed for Hispanic users. As a result of the purchase, we acquired all the related logos and trademarks of the associated properties. Corazones.com offers features to our users that complement our social network suite of products and services.

Competition

The market for Internet products, services, advertising and commerce is very competitive, and we expect that competition will continue to intensify. We believe that the principal competitive factors in these markets are name recognition, distribution arrangements, functionality, performance, ease of use, the number of value-added services and features, and quality of support. Our primary competitors are other companies providing portal and online community services, especially to the Spanish-language Internet users, such as Yahoo!Español, America Online Latin America, and Terra.com.

In addition, a number of companies offering Internet products and services, including our direct competitors, recently began integrating multiple features within the products and services they offer to users. Integration of Internet products and services is occurring through the development of competing products and by acquisitions of or joint ventures and/or licensing arrangements with other Internet companies and our competitors.

Many large media companies have developed, or are developing, Internet navigation services to become “gateway” sites for web users. As these companies develop such portal or community sites, we could lose a substantial portion of our user traffic. Further, entities that sponsor or maintain high-traffic websites or that provide an initial point of entry for Internet viewers, such as the regional Bell companies or Internet service providers, such as Microsoft and America Online, currently offer and can be expected to consider further development, acquisition, or licensing of Internet search and navigation functions. These functions may be competitive with those that we offer.

Most of our existing competitors, as well as new competitors such as Spanish-language media companies, other portals, communities and Internet industry consolidators, have significantly greater financial, technical, and marketing resources. Many of our competitors offer Internet products and services that are superior and achieve greater market acceptance. There can be no assurance that we will be able to compete successfully against current or future competitors or that competition will not have a material adverse affect on our business.

Employees

As of March 15, 2008, we employed approximately 63 employees, 51 individuals in Sonora, Mexico and 12 in the United States none of whom are represented by a labor union. Our future success is substantially dependent on the performance of our senior management and key technical personnel, and our continuing ability to attract and retain highly qualified technical and managerial personnel.

Executive Officers of the Company


				Officer or
Name	Age		Position	Director Since
John C. Abbot		37	Chief Executive Officer		2007
Michael Matte		48	Chief Financial Officer		2007
Louis Bardov		44	Chief Technology Officer		2008

John C. Abbott has over 15 years of experience in strategic advisory and entrepreneurship. From 1992 to 2005, Mr. Abbott held several senior positions within JPMorgan Chase Bank, N.A. Since 2005, Mr. Abbott has been an advisor to Altos Hornos de Mexico, S.A.B. de C.V. In addition, over the past two years, Mr. Abbott has led investor groups and has participated in the executive committees of two start-up efforts in Brazil, namely Click Filmes (www.clickfilmes.com), Brazil’s first hotel video on demand business and Industria de Entretenimento, an entertainment business that owns the rights to the Pacha brand in Brazil, among others. Mr. Abbott received his A.B. in History from Stanford University and his MBA from Harvard Business School.

Michael D. Matte has over 16 years of experience operating as Chief Financial Officer. Mr. Matte was the Chief Financial Officer of Cyberguard Corporation from February 2001 to April 2006 and, from 1998 to 2001, he served as Chief Financial Officer for AmeriJet International. From 1992 to 1998, he served as Chief Financial Officer for InTime Systems International. Prior to serving as Chief Financial Officer for InTime Systems International, he was a Senior Audit Manager for PriceWaterhouseCoopers where he was employed from 1981 to 1992. Mr. Matte continues to serve on the Board of Directors of Iris International, a medical diagnostic company, and has served on its Board since January 2004. Mr. Matte is a Certified Public Accountant and has a B.S. in Accounting from Florida State University.

Louis Bardov has over 21 years experience in software development and technology management. Most recently, Mr. Bardov served as Senior Vice President of Software Development, Customer Care and Customer Retention at Match.com., having started as Match.com’s VP of Internet Development in 2001.

There is no family relationship among any such officers.

Risk Factors

This Annual Report on Form 10-KSB includes “forward-looking statements,” as that term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or incorporated in this Form 10-KSB could be deemed forward-looking statements, particularly statements about our plans, strategies and prospects under the headings “Management’s Discussion and Analysis or Plan of Operation” and “Description of Business.” Forward-looking statements are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans,” or “anticipates,” or by discussions of strategy, plans or intentions. All forward-looking statements in this Form 10-KSB are made based on our current expectations and estimates, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in forward-looking statements.

Among these factors are, as discussed more below, our current level of indebtedness and the restrictions in our subordinated promissory notes, which may make it difficult to obtain additional financing, our ongoing operating losses, the possibility of liability for information displayed or accessed via our website and for other commerce related activities, competition in the operation of our website and in the provision of our information retrieval services, the ability to protect our intellectual property rights, the ability to retain our executive officers and senior management, the ability to raise additional capital, changing laws, rules, and regulations, potential liability for breaches of security on the Internet, dependence on third party databases and computer systems, competition from traditional media companies, and new technologies that could block our ability to advertise. Additional factors that could affect our future results or events are described from time to time in our Securities and Exchange Commission reports. See in particular the description of risks and uncertainties that is set forth below and similar disclosures in subsequently filed reports. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.

You should carefully consider the risks and uncertainties described below and other information in this Form 10-KSB and subsequent reports filed with or furnished to the Securities and Exchange Commission before making any investment decision with respect to our securities. If any of the following risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Risks and Uncertainties

Our current level of indebtedness and the restrictions in our subordinated promissory notes may make it more difficult to obtain additional financing.

As disclosed in the Form 8-K filed on January 25, 2008, we are party to two subordinated promissory notes for the principal amounts of $5,000,000 and $2,000,000, respectively. These subordinated promissory notes impose certain restrictions that may affect, among other things, our ability to incur future debt, sell assets, create liens, make capital expenditures and investments, merge or consolidate, and otherwise, enter into certain transactions outside the ordinary course of business. Our ability to comply with these covenants and restrictions may be affected by events beyond our control. If we are unable to comply with the terms of our subordinated promissory notes, we may be required to obtain additional financing. If cash flow is insufficient or additional financing is unavailable because of our high levels of debt and the debt incurrence restrictions under our subordinated promissory notes, we could default on our subordinated promissory notes. In the event of a default, the debt holders may accelerate the maturity of our obligations.

We have incurred ongoing operating losses and cannot assure we will be profitable in the future.

For the years ended December 31, 2007 and 2006, we had revenue of $219,466 and $395,432, respectively, and incurred net losses of $13,358,499 and $13,606,031, respectively. We are currently not generating sufficient revenue to reach profitability nor can there be any assurance that we will generate sufficient revenue in the future to be profitable. Continued losses could cause us to limit our operations in order to preserve working capital.

We may face liability for information displayed on or accessible via our website, and for other content and commerce-related activities, which could reduce our net worth and working capital and increase our operating losses.

Because materials may be downloaded by the services that we operate or facilitate and the materials may be subsequently distributed to others, we could face claims for errors, defamation, negligence or copyright or trademark infringement based on the nature and content of such materials, which could adversely affect our financial condition. Even to the extent that claims made against us do not result in liability, we may incur substantial costs in investigating and defending such claims.

We may be subjected to claims for defamation, negligence, copyright or trademark infringement or based on other theories relating to the information we publish on our website. These types of claims have been brought, sometimes successfully, against marketing and media companies in the past. We may be subject to liability based on statements made and actions taken as a result of participation in our chat rooms or as a result of materials posted by members on bulletin boards on our website. Based on links we provide to third-party websites, we could also be subjected to claims based upon online content we do not control that is accessible from our website.

Although we carry general liability insurance, our insurance may not cover all potential claims to which we are exposed or may not be adequate to indemnify us for all liabilities that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage would reduce our net worth and working capital and increase our operating losses.

Competition in the operation of our website and in the provision of our information retrieval services could cause us to reduce our prices or increase our marketing costs.

Our websites, Quepasa.com and Corazones.com, compete with a number of other Spanish speaking websites, including websites offered by large multinational Internet companies such as Yahoo! Inc. Moreover, we compete with a number of companies that provide information retrieval services, most of which have operated retrieval services in the market for a longer period, are better known, have greater financial resources, have established marketing relationships with leading online services and advertisers, and have secured greater presence in distribution channels. The level of competition could cause us to reduce our prices or increase our marketing costs, either of which would reduce our profitability or increase our losses.

If we are unable to protect our intellectual property rights, we may be unable to compete with competitors developing similar technologies.

Our success and ability to compete are often dependent upon internally developed software technology that we are developing for our Quepasa.com and Corazones.com websites. While we rely on copyright, trade secret and trademark law to protect our technology, we believe that factors such as the technological and creative skills of our personnel, new product developments, frequent product enhancements and reliable product maintenance are more essential to establishing a technology leadership position. There can be no assurance that others will not develop technologies that are similar or superior to our technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology, making it more difficult for us to compete.

The loss of the services of our executive officers and senior management would disrupt our operations and interfere with our ability to compete.

We depend upon the continued contributions of our executive officers and senior management. We have employment agreements with these individuals, but do not carry key person life insurance on any of their lives. The loss of services of any of these individuals could disrupt our operations and interfere with our ability to compete with others.

If we need and are unable to raise additional capital, we may be unable to maintain our operations.

We may need to raise additional funds in the future through debt or equity financings in order to remain in business or to expand our operations. We are party to subordinated promissory notes that impose certain restrictions that may affect, among other things, our ability to incur future debt, sell assets, create liens, make capital expenditures and investments, merge or consolidate, and otherwise enter into certain transactions outside the ordinary course of business. If additional funds are raised through the issuance of equity securities, the percentage ownership of our then current stockholders will be reduced, and such equity securities may have rights, preferences or privileges senior to those of the holders of our common stock. There can be no assurance that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, we may be unable to maintain our operations.

Changing laws, rules and regulations and legal uncertainties could increase the regulation of our business and therefore increase our operating costs.

Unfavorable changes in existing, or the promulgation of new, laws, rules and regulations applicable to us and our businesses, including those relating to the Internet, online commerce, the regulation of adware and other downloadable applications, broadband and telephony services, consumer protection and privacy, including requirements for criminal background checks for subscribers to online dating services, and sales, use, value-added and other taxes, could decrease demand for products and services, increase costs and/or subject us to additional liabilities, which could adversely affect our business. There is, and will likely continue to be, an increasing number of laws and regulations pertaining to the Internet, online commerce, the neutrality of the Internet as a network, liability for information retrieved from or transmitted over the Internet, user privacy, taxation and the quality of products and services, all of which could increase our operating costs.

We also face risks due to a failure to enforce or legislate existing laws, rules, and regulations, particularly in the area of network neutrality, where governments might fail to protect the Internet’s basic neutrality as to the services and sites that users can access through the network. Such a failure could limit our ability to innovate and deliver new features and services, which could harm our business.

There are also legislative proposals pending before the United States Congress and various state legislative bodies regarding online privacy, data security and regulation of adware and other downloadable applications, and the continued growth and development of online commerce may continue to prompt calls for more stringent consumer protection laws, which may impose additional cost and burdens on us and online businesses generally.

In addition, the application of various domestic and international sales, use, value-added and other tax laws, rules and regulations to our historical and new products and services is subject to interpretation by the applicable taxing authorities. While we believe that we are generally compliant with these tax provisions, there can be no assurances that taxing authorities will not take a contrary position, or that such positions will not increase our tax liability and adversely affect our business, financial condition and results of operations.

We could face liability for breaches of security on the Internet.

To the extent that our activities or the activities of third-party contractors involve the storage and transmission of information, such as credit card numbers, social security numbers or other personal information, security breaches could disrupt our business, damage our reputation and expose us to a risk of loss or litigation and possible liability. We could be liable for claims based on unauthorized purchases with credit card information, impersonation or other similar fraud claims. We could also be liable for claims relating to security breaches under recently-enacted or future data breach legislation. These claims could result in substantial costs and a diversion of our management’s attention and resources.

We are dependent on third party databases and computer systems.

We depend on the delivery of information over the Internet, a medium that depends on information contained primarily in electronic format, in databases and computer systems maintained by third parties and us. A disruption of third-party systems or our systems interacting with these third-party systems could prevent us from delivering services in a timely manner, which could have a material adverse affect on our business and results of operations.

We face competition from traditional media companies, and we may not be included in the advertising budgets of large advertisers, which could harm our operating results.

In addition to Internet companies, we face competition from companies that offer traditional media advertising opportunities. Most large advertisers have set advertising budgets, a portion of which is allocated to Internet advertising. We expect that large advertisers will continue to focus most of their advertising efforts on traditional media. If we fail to convince these companies to spend a portion of their advertising budgets with us, or if our existing advertisers reduce the amount they spend on our programs, our operating results would be harmed.

New technologies could block our ads, which would harm our business.

Technologies may be developed that can block the display of our ads. Most of our revenues are derived from fees paid to us by advertisers in connection with the display of ads on web pages. As a result, ad-blocking technology could, in the future, adversely affect our operating results.

Item 2. Description of Properties

Our headquarters are located in Scottsdale, Arizona and consists of approximately 15,931 square feet of office space. The lease expires in May 2009. Our data center is operated in Tempe, Arizona, and our technical operations are provided in leased offices located in Hermosillo, Mexico. We also lease office space in Mexico City, Mexico for our Mexican based sales personnel. We believe that our existing facilities are adequate to meet current requirements, and that suitable additional or substitute space will be available as needed to accommodate any further physical expansion of operations and for any additional sales offices.

Item 3. Legal Proceedings

From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. There are currently no such pending proceedings to which we are a party that our management believes will have a material adverse effect on the Company’s consolidated financial position or results of operations. However, future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods.

Item 4. Submission of Matters to a Vote of Security Holders

None

PART II


Item 5.		Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

Our common stock has been listed on the NASDAQ Capital Market (formerly the NASDAQ SmallCap Market) under the symbol “QPSA” since October 24, 2006. For the three years prior to that time, our common stock was listed on the Over-the-Counter Bulletin Board under the symbol “QPSA.” The following table sets forth the high and low sales prices of our common stock for each calendar quarter indicated:


	Stock Price
	High		Low
2007
First Quarter	$	9.40	$	5.65
Second Quarter	$	6.85	$	3.83
Third Quarter	$	6.09	$	3.87
Fourth Quarter	$	6.00	$	1.51


	Stock Price
	High		Low
2006
First Quarter	$	4.33	$	2.55
Second Quarter	$	8.55	$	4.08
Third Quarter	$	9.25	$	5.40
Fourth Quarter	$	12.45	$	7.30

As of March 27, 2008, we had approximately 633 holders of record of our common stock.

Dividend Policy

We have not paid any cash dividends on our common stock since our inception and we do not anticipate paying cash dividends in the foreseeable future. Any dividends that we may pay in the future will be at the discretion of our Board of Directors and will depend on our future earnings, any applicable regulatory considerations, our financial requirements and other similarly unpredictable factors. For the foreseeable future, we anticipate that we will retain any earnings that we may generate from our operations to finance our growth.

Item 6. Management’s Discussion and Analysis or Plan of Operation

You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included elsewhere in this Form 10-KSB . Management’s Discussion and Analysis or Plan of Operation contains statements that are forward-looking. These statements are based on current expectations and assumptions, which are subject to risk, uncertainties and other factors. Actual results may differ materially because of the factors discussed in the subsection titled “Risk Factors,” located in Part I, Item 1, of this Form 10-KSB .

Company Overview

In 2007, Quepasa transitioned from being a bilingual search engine into a bilingual portal and Hispanic social network. With the evolution of the site into a Hispanic portal and social network, the products and services provided to businesses transitioned to predominately display advertising. In December 2006, the portal service of Quepasa was discontinued. Quepasa re-launched the site on February 6, 2008, to be solely a Hispanic social network with content provided by the user community. Our community provides access to an expansive, bilingual menu of resources that promote social interaction, information sharing, and other topics of importance to Hispanic users. We offer online marketing capabilities which enable marketers to display their advertisements in different formats and in different locations on our website. We work with our advertisers to maximize the effectiveness of their campaigns by optimizing advertisement formats and placement on the website. We also use our targeting capabilities to help advertisers reach their desired audiences by placing contextually relevant advertisements on our pages.

We seek to create innovative and high quality Internet services for users and to provide efficient and effective marketing services for businesses to reach these users. We focus on increasing our user base and enhancing the user experience on our website to broaden the value of our user base to advertisers and to increase the revenue from these advertisers. We believe that we can increase our user base by offering compelling Internet services and effectively integrating community, personalization, and content to create a powerful user experience. These user relationships and the social community enable us to leverage our offered forms of online advertising as well as premium services for users.

Revenue sources

During 2007 and 2006, our revenue was primarily generated from three principal sources: revenue earned from “performance based” insertion of results from our directory and search engine based on proprietary technologies, revenue earned from the Google AdSense program and the sale of banner advertising on our website.

Performance-based Revenue . Performance-based revenue, or paid search results, is generated when an Internet user searches for a keyword and clicks on an advertiser’s listing on our website. Performance-based revenue is recognized in the period in which the “click-throughs” occur. “Click-throughs” are defined as the number of times a user clicks on an advertisement or search result. Performance-based revenue is recognized when there is evidence that the qualifying transactions have occurred at a set price.

Banner Advertising Revenue. Banner revenue is generated when an advertiser purchases a banner placement within our Quepasa.com website. We recognize revenue related to banner advertisements upon delivery.

Google AdSense Revenue. Google AdSense revenue is generated when a Quepasa.com user clicks on a Google advertiser through either the displayed advertisements associated with content or by utilizing the Google search feature. We recognize revenue from Google AdSense in the period it is reported by Google.

Summary

The majority of our revenues correlate to the number and activity level of users on our website. In 2007 we redesigned and enhanced our website to provide a more relevant and user friendly experience. We believe that enhancing the user experience leads to a more valuable experience to both our users and advertisers and provides additional opportunities to introduce users to our products and services. By providing a more robust community experience while providing continued new products and services, we seek to become an essential part of our users’ online experience. We believe this deeper engagement of new and existing users and our website, coupled with the growth of the Internet as an advertising medium will increase our revenues in 2008.

Operating Expenses

Our principal operating expenses for 2007 and 2006 consist of the following:

•

search services expenses;

•

product and content development expenses;

•

sales and marketing expenses;

•

general and administrative expenses; and

•

depreciation and amortization.

Search Services Expenses: Our search services expenses consist of payments made to our affiliates and partners that have either integrated our performance based search services into their sites or provided traffic to our directory listings. There are generally two economic structures of the affiliate and partner agreements: fixed payments based on a minimum amount of traffic delivered and variable payments based on the amount of searches or paid clicks associated with affiliate or partner traffic.

Product and Content Development Expenses: Product and content development expenses consist of personnel costs associated with the development, testing and upgrading of our website and systems, purchases of content and specific technology, particularly our search engine software and telecommunications access charges.

Sales and Marketing Expenses: Sales and marketing expenses consist primarily of salaries, commissions, and expenses of marketing and sales personnel, and other marketing-related expenses including our mass media-based branding and advertising.

General and Administrative Expenses: General and administrative expenses consist primarily of costs related to corporate personnel, occupancy costs, insurance, and professional fees, such as legal and accounting fees.

Depreciation and Amortization Expenses: Our depreciation and amortization expenses consist primarily of depreciation related to our property and equipment and amortization of jet rights. See Note 2 and Note 3 of the accompanying notes to the consolidated financial statements.

Other Income (Expense): Other income (expense) consists primarily of interest earned, net of interest expense. We have invested our cash in money market funds and interest bearing checking and saving accounts, including cash and cash equivalents, which are subject to minimal credit and market risk.

Results of Operations

2007 Compared to 2006

Our results of operations for the years ended December 31, 2007 and 2006 were characterized by expenses that significantly exceeded revenues during the periods. We reported a net loss of $13,358,499 for the year ended December 31, 2007, compared to a net loss of $13,606,031 for the year ended December 31, 2006.

Revenues

We generated $219,466 of revenue in 2007, a decrease of $175,966, or 44%, from $395,432 of revenue generated in 2006. The decrease in revenue was primarily the result of a shift away from a performance-based type revenue model to a revenue model geared more towards banner advertising Secondly, in September 2007, we launched a new beta version of our website, which experienced technical difficulties and performance issues that adversely affected the amount of traffic visiting our website. As a result, revenues decreased by 54% in the fourth quarter of 2007 compared to the third quarter of 2007. In October 2007, a new senior management team was put into place and immediately began to address the performance issues with the website. In February 2008, the first of many website enhancements was launched. We are hopeful that website traffic will increase in the second and third quarters of 2008. We believe there will be a direct correlation between traffic and our ability to increase revenue.

Operating Costs and Expenses

Operating costs and expenses totaled $14,210,331 and $14,196,527 for the years ended December 31, 2007 and 2006, respectively, an increase of less than 1% in 2007. While the total change was not significant, changes in the categories of cost was important. Non cash stock based compensation expense was $2,314,344 for the year ended December 31, 2007 versus $9,450,587 for the year ended December 31, 2006. The decrease of $7,136,243 in stock based compensation expense consists of a decrease of $8,055,560 due to warrants issued in 2006 for strategic initiatives offset by increases in 2007 of $919,317 for employee stock options and common stock issued to the Board of Directors for compensation. Non stock based expenditures were $11,895,987 for the year ended December 31, 2007 versus $4,745,940 for the year end December 31, 2006, an increase of $7,150,047 or 151%. The increase is primarily the result of increased spending for technical consultants, salaries, accounting and legal fees, outside recruiting fees, advertising, and depreciation. The changes in the categories of costs are important because during 2007 significantly more cash-based expenses were incurred. Although we believe these cash-based expenses are important, beneficial, and necessary to execute our business, they adversely affect our liquidity.

Search Services: We did not incur any search services expenses during 2007, which corresponds to the shift from a performance based revenue model to a banner advertising revenue model in late 2006. Expenses for search services decreased by $210,832, or 100%, from the prior year.

Sales and Marketing: Sales and marketing expenses for the year ended December 31, 2007 increased by $599,028, or 107%, to $1,160,514 from $561,486 for the prior year. The increase of $599,028 in 2007 was primarily attributed to an increase in salaries of $316,392, an increase in advertising costs of $237,820, and an increase in stock based compensation expense for sales and marketing personnel of $48,486. In late 2006, as part of the change in revenue models to focus more on banner advertising and content ad placements, we began adding sales and marketing personnel and increased our advertising efforts to drive traffic to our website. Late in the second quarter of 2007, we discontinued the bulk of our advertising investments once we identified the technical difficulties with the website and the drop in traffic as previously discussed. In November 2007, we closed our sales office in New York and significantly reduced our sales personnel. As our website is redesigned and enhancements are added in 2008, we expect to add sales and marketing personnel and expand our reach to advertisers and users.

Product and Content Development: Product and content development expenses for the year ended December 31, 2007 increased by $3,527,809, or 283%, to $4,773,965 from $1,246,156 for the prior year. This increase of $3,527,809 in 2007 was attributed to increases in consulting costs of $1,847,828, salaries for new and existing employees of $946,307, website management and development costs of $344,294 incurred by Quepasa.com de Mexico, stock based compensation costs for product development and technology personnel of $198,957, and fees for content on our website of $190,423. These increases were primarily the result of efforts to redesign and re-launch our website in 2007, which was released in September 2007. In November 2007, management discontinued the bulk of technical consulting arrangements, reduced headcount, and re-concentrated our redesign and development efforts with our Quepasa.com de Mexico personnel. We expect to incur significantly reduced levels of technical consulting and product development costs in 2008.

General and Administrative: General and administrative expenses for the year ended December 31, 2007 decreased $4,219,793, or 35%, to $7,829,217 from $12,049,010 for the prior year. The decrease of $4,219,793 in 2007 was primarily attributed to a decrease in non-cash stock based compensation expense for general and administration personnel of $7,383,691 offset by an increase of $3,163,893 in overall administrative expenses.

The decrease of $7,383,691 in stock based compensation expense consists of a decrease of $8,055,560 due to warrants issued in 2006 for strategic initiatives offset by increases in 2007 of $444,768 for employee stock options and $227,101 for common stock issued to the board of directors for compensation in 2007.

The increase of $3,163,898 in general and administrative expenses for 2007 compared to the prior year is primarily attributed to increases in the following areas:

•

An increase of $1,294,210 for outside professional fees, primarily for accounting and legal services. As a result of the restatements disclosed in 2007, we incurred an additional $721,027 for accounting services, $108,186 for filing and reporting requirements, and $386,082 in legal services. Lastly, we spent $78,915 for consulting services related to due diligence for potential acquisition targets and human resources.

•

An increase of $1,264,584 for salaries and employee related overhead expenses. As a result of the increased number of employees and the website re-design efforts in 2007, we incurred $443,903 in additional costs for travel expenses, $430,576 in additional outside recruiting fees, $390,105 in additional general and administration salaries and related payroll expenses.

•

An increase of $605,104 for Corporate overhead expenses related to an expansion of the Arizona corporate headquarters in 2007.

Depreciation and Amortization: Depreciation and amortization expense for the year ended December 31, 2007 increased $317,592, or 246%, to $446,635 from $129,043 for the prior year. This increase is attributable to an additional $216,847 for depreciation associated with capital expenditures in late 2006 and 2007 and $100,745 in amortization expense related to corporate jet rights received as part the MATT Inc. equity finance agreement in October 2006.

We have purchased and expect to continue purchasing the capital equipment needed to sustain and build our infrastructure as our user growth and product requirements expand. As a result, we expect depreciation and amortization expense to increase in 2008 as we invest in additional capital equipment to support our growth.

Other Income (Expense) . Other income (expense) consists primarily of interest income and other income items, partially offset by interest expense. Other income for the year ended December 31, 2007 increased $437,302 to $632,366 from $195,064 for the year ended December 31, 2006. The increase in income is primarily attributed to additional interest earned on cash and investments of $235,080 due to higher average cash and investment balances during 2007 versus 2006 and a gain of $169,682 realized in 2007 due to the forfeiture of prepaid advertising funds received in prior years.

Liquidity and Capital Resources

As of and for each of the years ended December 31, 2007 and 2006:


	2007			2006
Cash and cash equivalents	$	3,673,281		$	14,093,811

Percentage of total assets		62	%		88	%


	2007			2006
Net cash used in operating activities	$	(10,153,236	)	$	(3,983,769	)
Net cash used in investing activities	$	(817,812	)	$	(489,065	)
Net cash provided by financing activities	$	546,150		$	17,117,548

We invest excess cash predominately in liquid marketable securities to support our growing infrastructure needs for operational expansion.

We have substantial capital resource requirements and have generated significant losses since inception. At December 31, 2007, we had $3,673,281 in cash and cash equivalents compared to $14,093,811 at December 31, 2006, resulting in a net decrease in cash and cash equivalents of 10,420,530 for 2007.

The decrease in cash for 2007 was due to substantial increases in operating costs less stock based compensation expenses, depreciation, and amortization and a reduction in revenues for 2007. Cash based operating expenses totaled $11,449,352 for 2007, a burn rate of about $954,000 per month, compared to revenues of $219,466, a rate of about $18,000 per month, resulting in a net cash burn rate of about $936,000 per month. The net cash burn rate peaked in the third quarter of 2007 at $1,058,000 per month.

In October 2007, a new senior management team was put into place. Along with addressing the website performance issues, the management team focused their attention on reducing costs while maintaining the efforts to improve the performance of our websites. In November 2007, the management team terminated the majority of the consulting arrangements, closed the sales office in New York, and significantly reduced the headcount at the corporate headquarters in Scottsdale. Based on the reductions initiated in November 2007, the net cash burn rate for the fourth quarter dropped to $723,000 per month. We expect a net cash burn rate of approximately $450,000 per month in the first quarter of 2008.

During 2007, we obtained proceeds of $921,150 from the exercise of common stock options and warrants less $375,000 paid to Mexicans & Americans Thinking Together Foundation, Inc. (the “Organization”), in connection with a private placement in October 2006. During 2006, we obtained proceeds of $17,112,448 from equity financing agreements and the exercise of common stock options and warrants less $69,293 paid to the Organization.

In January 2008, we received $6,982,500 in financing through the issuance of subordinated promissory notes (see Note 10 — Subsequent Events of the Consolidated Financial Statements). As a result of the financing and the reduction of net cash burn rate, we believe that our current cash balances are sufficient to finance our current level of operations through the next twelve months.

Cash flow changes

Cash used in operating activities is driven by our net loss, adjusted for non-cash items. Non-cash adjustments include depreciation and amortization, warrants issued for strategic initiatives, including an executive acquisition and other stock-based compensation expense. Net cash used in operations was $10,153,236 in 2007 compared to $3,983,769 in 2006. In 2007, net cash used by operations consisted of a net loss of $13,358,499 offset by non-cash expenses of $446,635 in depreciation and amortization, $2,314,344 related to the issuance of common stock options and warrants for compensation, and $462,813 due to changes in operating assets and liabilities. In 2006, net cash used by operations consisted of a net loss of $13,606,031 offset by non-cash expenses of $129,043 in depreciation and amortization, $7,387,979 related to the issuance of warrants for strategic initiatives, and $2,049,206 related to the issuance of common stock options and warrants for compensation.

Net cash used in investing activities is primarily attributable to capital expenditures. Our capital expenditures were $842,787 in 2007 compared to capital expenditures of $521,227 in 2006. The increase in 2007 was a result of our purchase of computer equipment and furniture to support our expanding operations.

Net cash provided by financing activities is driven by the exercise of warrants and stock options and our financing activities related to private placements. In 2007, we received proceeds from the exercise of common stock and warrants of $921,150 compared to $7,477,384 in 2006. In 2007, we paid $375,000, compared to $69,293 in 2006, to the Organization, in connection with a private placement in October 2006. In 2006, our cash proceeds from private placements were $9,635,064, net of related costs of raising capital.

Financing

In July 2006, we received net cash proceeds of $2,870,000 from a warrant exercise related to the first series of warrants issued in March 2006.

In October 2006, we completed a private offering of 1,000,000 shares of our common stock and warrants to purchase 2,000,000 shares of our common stock to a single accredited investor, Mexicans & Americans Trading Together, Inc. (the “MATT Inc.”). The net cash proceeds from this private offering were $10,000,000 less the costs of raising capital of $364,936.

On November 20, 2006, in connection with the MATT Inc. financing transaction discussed above, we entered into a Corporate Sponsorship and Management Services Agreement (the “CSMSA”) with MATT Inc. and the Organization. The CSMSA provides that we will develop, operate and host the Organization’s website and provide to it all the services necessary to conduct such operations. During the first three years of the term of the CSMSA, the Organization will reimburse us for its costs and expenses in providing these services, not to exceed $500,000 per annum. The CSMSA further provides that we will pay the Organization’s operating costs through October 2016 (including certain special event costs commencing in year four), up to a cap of $1.2 million per annum minus our costs and expenses for providing the services described above. We paid $375,000 to the Organization during 2007 and $69,293 to the Organization during 2006. In addition, during the fourth quarter of 2007, we recorded a liability in the amount of $7,250,562 to recognize future obligations to the Organization under the terms of the CSMA, partially offset by $55,248 due from the Organization to reimburse us for our costs and expenses incurred maintaining the Organization’s website. See Note 4 and Note 6 of the accompanying notes to the consolidated financial statements.

During 2007 and 2006, we received $921,150 and $4,607,384, respectively, from the exercise of stock options and warrants.

Capital expenditures

Capital expenditures have generally been comprised of purchases of computer hardware, software, server equipment, furniture and fixtures. Capital expenditures were $842,787 in 2007, compared to $521,227 in 2006. We have budgeted additional capital expenditures of approximately $500,000 for 2008 and are currently negotiating alternative financing arrangements as we continue to invest in the expansion of our product and services offerings.

Critical Accounting Policies, Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.

Stock-Based Compensation Expense

See Note 1 — “Stock Based Compensation” and Note 6 — “1998 Stock Option Plan” in the consolidated financial statements for additional information.

Recent Accounting Pronouncements

See Note 1 to our consolidated financial statements included in this report for discussion of recent accounting pronouncements.

Item 7. Financial Statements

Table of Contents


	Page

Report of Independent Registered Public Accounting Firm		F-1

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Financial Statements

Consolidated Balance Sheet		F-3

Consolidated Statements of Operations and Comprehensive Loss		F-4

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)		F-5

Consolidated Statements of Cash Flows		F-6

Notes to Consolidated Financial Statements		F-8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee, Board of Directors,
and Stockholders of Quepasa Corporation
and Subsidiaries

We have audited the accompanying consolidated balance sheet of Quepasa Corporation and Subsidiaries (the “Company”) as of December 31, 2007, and the related consolidated statements of operations, stockholders’ equity (deficit) and comprehensive (loss), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Quepasa Corporation and Subsidiaries as of December 31, 2007, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Berenfeld Spritzer Shechter & Sheer, LLP
Certified Public Accountants
Fort Lauderdale, Florida
March 31, 2008

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Stockholders
Quepasa Corporation and Subsidiaries

We have audited the accompanying consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows of Quepasa Corporation and Subsidiaries (the “Company”) for the year ended December 31, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Quepasa Corporation and Subsidiaries for the year ended December 31, 2006, (as restated), in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment,” on January 1, 2006.

As discussed in Note 8b to the consolidated financial statements, certain errors resulting in understatement of previously recognized stock-based compensation expense during 2006, were discovered by management of the Company during October 2007. Accordingly, the 2006 consolidated financial statements have been restated to correct the errors.

As discussed in Note 9b to the consolidated financial statements, there is substantial doubt about the Company’s ability to continue as a going concern as of October 29, 2007.

/s/ Perelson Weiner LLP
New York, New York
April 17, 2007, except for Notes 8b and 9b to which the date is October 29, 2007

F-2

QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet


	December 31, 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,673,281
Accounts receivable — trade, net of allowance $15,000		38,306
Other current assets		146,876

Total current assets		3,858,463
Property and equipment — net		1,023,041
Jet rights — net		885,712
Other assets		133,692

Total assets	$	5,900,908

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	887,598
Accrued expenses		306,130
Unearned grant income		65,917
Current portion of long-term debt		1,668,808

Total current liabilities		2,928,453
Long-term debt		5,526,506

Total liabilities		8,454,959

COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.001 par value; authorized — 5,000,000 shares; issued and outstanding — none		—
Common stock, $0.001 par value; authorized — 50,000,000 shares; issued and outstanding — 12,284,511 shares		12,285
Additional paid-in capital		138,880,462
Accumulated deficit		(141,452,663	)
Accumulated other comprehensive income		5,865

Total stockholders’ equity (deficit)		(2,554,051	)

Total liabilities and stockholders’ equity (deficit)	$	5,900,908

See accompanying notes to the consolidated financial statements.

F-3

QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss


	For the Years Ended December 31,
				2006
	2007			As Restated
REVENUES	$	219,466		$	395,432

OPERATING COSTS AND EXPENSES:
Search services		—			210,832
Sales and marketing		1,160,514			561,486
Product and content development		4,773,965			1,246,156
General and administrative		7,829,217			12,049,010
Depreciation and amortization		446,635			129,043

		14,210,331			14,196,527

LOSS FROM OPERATIONS		(13,990,865	)		(13,801,095	)

OTHER INCOME (EXPENSE):
Interest income		430,205			195,125
Interest expense		(741	)		(1,871	)
Gain / (loss) on disposal of property and equipment		4,638			(6,926	)
Other income		198,264			8,736

TOTAL OTHER INCOME		632,366			195,064

LOSS BEFORE INCOME TAXES		(13,358,499	)		(13,606,031	)
Income taxes		—			—

NET LOSS		(13,358,499	)		(13,606,031	)


Foreign currency translation adjustment		4,368			7,208

TOTAL COMPREHENSIVE LOSS	$	(13,354,131	)	$	(13,598,823	)


NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(1.09	)	$	(1.50	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED		12,233,573			9,063,947

See accompanying notes to the consolidated financial statements.

F-4

QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Years Ended December 31, 2007 and 2006 as restated


															Accumulated
									Additional						Other			Total
	Preferred Stock				Common Stock				Paid-in			Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Income (loss)			Equity
Balance—December 31, 2005		—	$	—		7,832,021	$	7,832	$	115,773,796		$	(114,488,133	)	$	(5,711	)	$	1,287,784
Issuance of stock options for compensation		—		—		—		—		1,381,625			—			—			1,381,625
Issuance of warrants for compensation		—		—		—		—		667,581			—			—			667,581
Issuance of warrants for strategic initiatives		—		—		—		—		7,387,979			—			—			7,387,979
Issuance of stock options for professional services		—		—		—		—		13,402			—			—			13,402
Exercise of stock options		—		—		908,500		909		1,332,441			—			—			1,333,350
Exercise of warrants		—		—		1,965,340		1,965		6,142,069			—			—			6,144,034
Issuance of common stock		—		—		1,000,000		1,000		10,572,216			—			—			10,573,216
Foreign currency translation adjustment		—		—		—		—		—			—			7,208			7,208
Net loss		—		—		—		—		—			(13,606,031	)		—			(13,606,031	)

Balance—December 31, 2006, as restated		—		—		11,705,861		11,706		143,271,109			(128,094,164	)		1,497			15,190,148

Issuance of stock options for compensation		—		—		—		—		2,087,243			—			—			2,087,243
Issuance of common stock to directors for compensation		—		—		41,250		42		227,059			—			—			227,101
Exercise of stock options		—		—		531,000		531		891,819			—			—			892,350
Exercise of warrants		—		—		6,400		6		28,794			—			—			28,800
Commitment for Corporate Sponsership and Management Services Agreement		—		—		—		—		(7,625,562	)		—			—			(7,625,562	)
Foreign currency translation adjustment		—		—		—		—		—			—			4,368			4,368
Net loss		—		—		—		—		—			(13,358,499	)		—			(13,358,499	)

Balance—December 31, 2007		—	$	—		12,284,511	$	12,285	$	138,880,462		$	(141,452,663	)	$	5,865		$	(2,554,051	)

See accompanying notes to the consolidated financial statements.

F-5

QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows


	For the Years Ended
	December 31,
				2006
	2007			As Restated
Operating activities:
Net loss	$	(13,358,499	)	$	(13,606,031	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		446,635			129,043
Issuance of warrants for strategic initiatives		—			7,387,979
Issuance of stock options and warrants for compensation		2,087,243			2,049,206
Issuance of common stock to directors for compensation		227,101			—
Issuance of common stock and stock options for professional services		—			13,402
Loss / (Gain) on disposal of property and equipment		(4,638	)		6,926
Grant income		(29,063	)		(8,201	)
Bad debt expense		15,172			—
Change in assets and liabilities:
Accounts receivable — trade		20,877			(22,170	)
Other current assets and other assets		51,764			(341,694	)
Accounts payable and accrued expenses		390,172			615,634
Deferred revenue		—			(207,863	)

Net cash used in operating activities		(10,153,236	)		(3,983,769	)

Investing activities:
Disposal of property and equipment		24,975			32,162
Purchase of property and equipment		(842,787	)		(521,227	)

Net cash used in investing activities		(817,812	)		(489,065	)

Financing activities:
Proceeds from exercise of stock options and warrants		921,150			7,477,384
Net proceeds from the issuance of common stock		—			9,565,771
Grant proceeds		—			103,181
Payments on long-term debt		(375,000	)		(28,788	)

Net cash provided by financing activities		546,150			17,117,548

Cash and cash equivalents prior to effect of foreign currency exchange rate on cash		(10,424,898	)		12,644,714
Effect of foreign currency exchange rate on cash		4,368			7,208

Net increase (decrease) in cash and cash equivalents		(10,420,530	)		12,651,922
Cash and cash equivalents at beginning of year		14,093,811			1,441,889

Cash and cash equivalents at end of year	$	3,673,281		$	14,093,811


Supplemental disclosures of cash flow information:
Cash paid for interest	$	741		$	1,871

Cash paid for income taxes	$	—		$	—

See accompanying notes to the consolidated financial statements.

F-6

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

During the year ended December 31, 2007, the Company had the following transactions:

•

The Company recorded a long-term liability in the amount of $7,195,314 payable to an Organization, in connection with the financing transaction to raise capital. See Note 4.

During the year ended December 31, 2006, the Company had the following transactions:

•

The Company received jet rights with a fair value of $1,007,445 in connection with a financing transaction. See Common Stock section of Note 6.

See accompanying notes to the consolidated financial statements.

F-7

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For The Years Ended December 31, 2007 and 2006

Note 1—Description of Business and Summary of Significant Accounting Policies

The Company was incorporated in 1997. In 2007, the Company transitioned from being a bilingual search engine into a Hispanic social network. With the evolution of the Company’s Quepasa.com website into a Hispanic portal and social network, the products and services provided to businesses transitioned to predominately display advertising. The Company re-launched its Quepasa.com website on February 6, 2008, to be solely a Hispanic social network with content provided by the user community. The Quepasa.com community provides users with access to an expansive, bilingual menu of resources that promote social interaction, information sharing, and other topics of importance to Hispanic users. We offer online marketing capabilities which enable marketers to display their advertisements in different formats and in different locations on our website. We work with our advertisers to maximize the effectiveness of their campaigns by optimizing advertisement formats and placement on the website. The Quepasa.com web site is operated and managed by the Company’s majority owned Mexico-based subsidiary, Quepasa.com de Mexico.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Quepasa.com de Mexico. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

Certain prior year amounts in the consolidated statements of operations and comprehensive loss and consolidated statements of cash flows have been reclassified to conform to the current year’s presentation.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash and cash equivalents. The Company continually monitors its positions with, and the credit quality of, the financial institutions it invests with. Periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits. As of December 31, 2007, domestic bank balances exceeded federally insured limits by approximately $3,580,507.

Accounts Receivable — Trade

The Company extends credit on a non-collateralized basis primarily to customers who are located in the United States. The Company performs periodic credit evaluations of its customers’ financial condition as part of its decision to provide credit terms. The Company maintains an allowance for potential credit losses based on historical experience and other information available to management. At December 31, 2007 the Company established an allowance of $15,000.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. The cost of improvements that extend the life of property and equipment are capitalized. All ordinary repair and maintenance costs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows:


Software	2 years

Computer equipment		3 to 4 years

Vehicles		4 to 5 years

Office furniture and equipment		5 to 10 years

Other equipment		3 to 13 years

F-8

Jet Rights

Jet rights are stated at the original fair value less accumulated amortization. Amortization is provided using the straight-line method over the ten year term of the rights. See Common Stock section in Note 6 and Note 3.

Unearned Grant Income

Unearned grant income represents the unamortized portion of a cash grant received from the Mexican government for approved capital expenditures. The grant is being recognized into other income on the accompanying statements of operations on a straight-line basis over the useful lives of the purchased assets.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is the local currency. The financial statements of these subsidiaries are translated to United States dollars using period-end rates of exchange for assets and liabilities and average quarterly rates of exchange for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Net gains and losses resulting from foreign exchange transactions are included in other income (expense).

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “ Revenue Recognition ,” and Emerging Issues Task Force Issue 00-21, “ Revenue Arrangements with Multiple Deliverables. ” In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred, and collectability of the resulting receivable is reasonably assured.

Income Taxes

The Company uses the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “ Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 ” (“FIN 48”), which clarifies the accounting for uncertainty in income tax positions. This Interpretation requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained upon audit, based on the technical merits of the position. The provisions of FIN 48 are effective for the Company on January 1, 2007, with the cumulative effect of the change in accounting principle, if any, recorded as an adjustment to opening accumulated deficit. The adoption of FIN 48 did not have a material effect on the Company’s consolidated financial position, cash flows, and results of operations.

Advertising Costs

Based on the provisions of Statement of Position 93-7, (“SOP 93-7”), the Company expenses advertising costs as incurred. Advertising expense for the years ended December 31, 2007 and 2006 was $504,620 and $266,800, respectively.

Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in stockholders’ equity during a period from non-owner sources. Comprehensive income (loss) for the Company consists of foreign currency translation adjustments which are added to net loss to compute total comprehensive loss.

Loss per Share

Loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is determined in the same manner as basic earnings per share, except that the number of shares is increased to include potentially dilutive securities using the treasury stock method. Since the Company incurred a net loss in all periods presented, all potentially dilutive securities were excluded from the computation of diluted loss per share since the effect of including them is anti-dilutive.

F-9

The following table summarizes the number of diluted securities outstanding for each of the periods presented, but not included in the calculation of diluted loss per share:


	December 31,
	2007		2006
Stock options		4,520,825		2,358,075
Warrants		4,432,500		4,438,900

Total		8,953,325		6,796,975

Long-Lived Assets

In accordance with FASB No. 144, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of,” the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. For assets which are held and used in operations, the asset is deemed to be impaired if its carrying value exceeds its estimated undiscounted future cash flows. If such assets are considered to be impaired, the impairment loss recognized is the amount by which the carrying value exceeds the fair value of the asset or estimated discounted future cash flows attributable to the asset. No asset impairment occurred during the years ended December 31, 2007 and 2006.

Fair Value of Financial Instruments

The carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of December 31, 2007 because of the relatively short maturity of these instruments.

Product and Content Development Costs

Product and content development costs, including costs incurred in the classification and organization of listings within the Company’s website, are charged to expense as incurred.

Software Development Costs

Software development costs incurred in the application development stage of a project are capitalized in property and equipment. Software development costs incurred in the preliminary project and post implementation stages of an internal use software project are expensed as incurred. To date, the Company has not capitalized any software development costs.

Stock-Based Compensation

As permitted under Statement of Financial Accounting Standards (“SFAS”) No. 123, “ Accounting for Stock-Based Compensation ” (“SFAS 123”), as amended, until December 31, 2005, the Company accounted for its stock option plans under the recognition and measurement provisions of APB Opinion No. 25, “ Accounting for Stock Issued to Employees ” (“APB 25”), and related interpretations. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123 (revised 2004), “ Share-Based Payment ” (“SFAS 123(R)”), using the modified-prospective transition method. Since all share-based payments made prior to January 1, 2006 were fully vested, compensation cost recognized during the year ended December 31, 2007 and 2006 represents the compensation cost for all share-based payments granted subsequent to January 1, 2006 based upon the grant-date fair value using the Black-Scholes option pricing model.

The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is based on historical volatility of the Company’s common stock. The Company has elected to use the simplified method described in Staff Accounting Bulletin 107, “ Share-Based Payment ,” to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite service period of the award.

The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

Significant Customers

During 2007, two customers comprised 19% and 17% of total revenues. During 2006, three customers comprised 15%, 12%, and 11% of total revenues.

F-10

Two customers comprised 43% and 28% of total accounts receivable as of December 31, 2007. One customer comprised 62% of accounts receivable as of December 31, 2006.

Leases

In accordance with SFAS No. 13, the Company performs a review of newly acquired leases to determine whether a lease should be treated as a capital or operating lease. Capital lease assets are capitalized and depreciated over the term of the initial lease. A liability equal to the present value of the aggregated lease payments is recorded utilizing the stated lease interest rate. If an interest rate is not stated, the Company will determine an estimated cost of capital and utilize that rate to calculate the present value. If the lease has an increasing rate over time and/or is an operating lease, all leasehold incentives, rent holidays, or other incentives will be considered in determining if a deferred rent liability is required. Leasehold incentives are capitalized and depreciated over the initial term of the lease.

Recent Accounting Pronouncements

In September 2006, FASB issued SFAS No. 157, “ Fair Value Measurements ” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. SFAS 157 is effective for fiscal years beginning after November 15, 2007. However, on February 12, 2008, the FASB issued FSP FAS 157-2 which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This FSP partially defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. Effective for 2008, we will adopt SFAS 157 except as it applies to those nonfinancial assets and nonfinancial liabilities as noted in FSP FAS 157-2. The partial adoption of SFAS 157 is not expected to have a material impact on our consolidated financial position, cash flows, or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (SFAS 159), which is effective for fiscal years beginning after November 15, 2007. SFAS 159 permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. The Company is currently evaluating the potential impact, if any, that SFAS 159 will have on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007) “ Business Combinations” (“FASB No. 141 (R)”). FASB No. 141(R) retains the fundamental requirements of the original pronouncement requiring that the purchase method be used for all business combinations. FASB No. 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the business combination, establishes the acquisition date as the date that the acquirer achieves control and requires the acquirer to recognize the assets acquired, liabilities assumed and any non-controlling interest at their fair values as of the acquisition date. FASB 141(R) also requires that acquisition-related costs be recognized separately from the acquisition. FASB 141(R) is effective for the Company for fiscal 2010. The Company is currently assessing the impact of FASB 141(R) on its consolidated financial position and results of operations.

In December 2007, the FASB issued Statement No. 160, “ Non-controlling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“FASB No. 160”). The objective of FASB No. 160 is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. FASB No. 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations. FASB No. 160 amends ARB 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain of ARB 51’s consolidation procedures for consistency with the requirements of FASB No. 141(R).

F-11

FASB No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of FASB No. 160 is the same as that of the related Statement 141(R). FASB No. 160 will be effective for the Company’s fiscal 2010. FASB No. 160 shall be applied prospectively as of the beginning of the fiscal year in which FASB No. 160 is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented.

Note 2—Property and Equipment

Property and equipment consist of the following at December 31, 2007:


Software	$	489,449
Computer equipment		1,390,059
Vehicles		20,697
Office furniture and equipment		214,526
Other equipment		10,821

		2,125,552
Less accumulated depreciation		(1,102,511	)

Property and equipment—net	$	1,023,041

Depreciation expense is $345,890 and $108,055 in 2007 and 2006, respectively.

Note 3—Jet Rights

In October 2006, as part of a financing transaction to raise capital, MATT Inc. has agreed to provide the Company with the use of a corporate jet for up to 25 hours per year through October 2016. The Company has recognized the fair value of the jet rights of $1,007,445 as an asset and an increase to additional paid-in capital. See Common Stock section in Note 6.

Jet rights consist of the following at December 31, 2007:


Jet rights at original fair value	$	1,007,445
Less: accumulated amortization		(121,733	)

Jet rights, net	$	885,712

Amortization expense is $100,745 and $20,988 in 2007 and 2006, respectively.

On January 25, 2008, under the provisions of a Note Purchase Agreement between the Company and MATT Inc., the Company’s rights to the use of a corporate jet for up to 25 hours per year through October 2016 were terminated. See Note 10 — Subsequent events.

Note 4—Long-term Debt

Corporate Sponsorship and Management Services Agreement

On November 20, 2006, in connection with a financing transaction, the Company entered into the CSMSA with MATT Inc. and the Organization. The CSMSA provides that the Company will develop, operate and host the Organization’s website and provide to it all the services necessary to conduct such operations. During the first three years of the term of the CSMSA, the Organization will reimburse the Company for its costs and expenses in providing these services, not to exceed $500,000 per annum. The CSMSA further provides that the Company will pay the Organization’s operating costs through October 2016 (including certain special event costs commencing in year four), up to a cap of $1,200,000 per annum minus the Company’s costs and expenses for providing the services described above. The Organization’s obligations to pay any costs and expenses due to the Company are guaranteed by MATT Inc. See Common Stock section in Note 6.

F-12

The Company has established a reasonable estimate of the long-term debt based on the present value calculation of the expected payout of $1,200,000 per year, or $300,000 per quarter, through October 2016, discounted at a 12% annual rate, which is based on available borrowing rates. The following table summarizes the long-term debt calculation as of December 31, 2007 by year:


	Present Value of
Year Ending December 31:	Expected Payments
Unpaid 2007 Obligations	$	520,225
2008		1,148,583
2009		1,020,502
2010		906,702
2011		805,593
2012		715,759
2013		635,943
2014		565,027
2015		502,019
2016		374,961

Total Debt		7,195,314
Less: Current Portion of Debt		(1,668,808	)

Total Long-term Debt	$	5,526,506

Note 5—Commitments and Contingencies

Operating Leases

The Company leases its facilities under three non-cancelable operating leases which expire in 2008 and 2009. Rent expense is $409,327 and $179,852 in 2007 and 2006, respectively.

Future minimum lease payments under these leases as of December 31, 2007 are as follows:


Year Ending December 31:
2008	$	382,214
2009		132,498

Total	$	514,712

Litigation

Employment Contracts

The Company has entered into employment agreements with certain executives. The contractual obligations related to these agreements amounts to $330,000 per year until employment is terminated.

Note 6—Stockholders’ Equity

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock, $0.001 par value. Each share of preferred stock will be issued in a series and shall have the voting rights and preferences determined at the time of issuance by the Board of Directors. As of December 31, 2007, the Company has no preferred stock outstanding.

Common Stock

In October 2006, the Company entered into a series of transactions with MATT Inc., which culminated in the issuance of 1,000,000 shares of common stock to MATT Inc. for proceeds of $10,000,000 pursuant to a private placement of the Company’s equity securities, net of a finder’s fee of $300,000 paid to a related party, legal fees of $64,936 and net cash payments of 69,293 to the organization discussed below. In connection with this transaction, MATT Inc. received two warrants to purchase the Company’s common stock. Both warrants expire in October 2016. See Warrants section in Note 6.

F-13

In addition, the Company has agreed to develop, operate, and host a website for the Organization, which was formed and controlled by MATT Inc., and provide it with all necessary support services to operate the website through October 2016. The Organization will reimburse the Company for the cost and expenses it incurs to provide these services during the first three years of the arrangement up to a maximum of $500,000 per annum. The Company will fund the Organization’s operating costs for the ten year term of the arrangement (including certain special event costs commencing in year four) up to a maximum of $1,200,000 per annum. For the years ended December 31, 2007 and 2006, respectively, the Company made net cash payments of $375,000 and $69,293 to fund the operating costs of the Organization. In December 2007, the Company recorded a liability in the amount of $7,250,562 to recognize our future obligations to the Organization under the terms of the CSMA, partially offset by $55,248 due from the Organization to reimburse the Company for costs and expenses incurred maintaining the Organization’s website. See Note 4.

MATT Inc. has agreed to provide the Company with the use of a corporate jet for up to 25 hours per year through October 2016. The Company has recognized the fair value of the jet rights of $1,007,445 as an asset and an increase to additional paid-in capital.

During 2007, the Company issued 41,250 unrestricted shares of common stock to members of the Company’s Board of Directors pursuant to the 2006 Stock Incentive Plan (see below) as compensation valued at $227,101 at the time of issuance, which is recorded as stock-based compensation expense for the year ended December 31, 2007.

As of December 31, 2007, the Company has 8,953,325 shares of common stock reserved for future issuance with respect to stock options and warrants outstanding.

1998 Stock Option Plan

In October 1998, the Company stockholders adopted and later amended the 1998 Stock Option Plan (the “1998 Plan”), which provides for the granting of options to employees, officers, directors and consultants. The 1998 Plan permits the granting of incentive stock options meeting the requirements of Section 422A of the Internal Revenue Code as well as non-qualified stock options. The Company reserved 6,000,000 shares of common stock to be granted under the 1998 Plan. Incentive stock options are issuable only to employees, while non-qualified options may be issued to non-employee directors, consultants and others, as well as to employees.

Stock options granted pursuant to the 1998 Plan may not have an option price that is less than the fair market value of the Company’s common stock on the date of grant. Incentive stock options granted to significant stockholders must have an exercise price of not less than 110% of the fair market value of the Company’s common stock on the date of grant. Generally, options granted under the 1998 Plan vest ratably over a three year service period and expire ten years from the date of the grant (or 90 days after the termination of employment). The Board of Directors of the Company may modify the exercise price, vesting term and expiration date of the individual grants at their discretion.

In September 2006, the Board of Directors approved, subject to stockholder approval, the 2006 Stock Incentive Plan (See 2006 Stock Incentive Plan section below). On June 27, 2007, the stockholders approved the 2006 Stock Incentive Plan. As a result, no new awards will be available for issuance under the 1998 Plan, effective September 2006.

F-14

A summary of employee stock option activity for the years ended December 31, 2007 and 2006 is as follows:

Employees:


	For the years ended December 31,
	2007							2006
				Weighted							Weighted
				Avg.		Remaining					Avg.		Remaining
1998 Plan - Employee				Exercise		Life					Exercise		Life
Stock Options:	Shares			Price		(years)		Shares			Price		(years)
Options outstanding, beginning of year		2,248,075		$	2.42				2,211,375		$	1.65
Granted		—			—				820,200			3.59
Exercised		(531,000	)		1.68				(758,500	)		1.48
Expired or forfeited		(902,569	)		2.55				(25,000	)		1.50

Options outstanding, end of year		814,506		$	2.76		0.8		2,248,075		$	2.42		6.2

Options exercisable, end of year		809,506		$	2.73		0.7		1,822,078		$	2.04		5.4

The fair values of share-based payments are estimated on the date of grant using a Black-Scholes option pricing model that uses the weighted average assumptions noted in the following table. Expected volatility is based on historical volatility of the Company’s common stock. The Company has elected to use the simplified method described in Staff Accounting Bulletin 107, “ Share-Based Payment ,” to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.

For the years ended December 31, 2007 and 2006, respectively, the Company recorded $582,561 and $1,381,625 of stock-based compensation expense for stock options granted to employees under the 1998 Plan. The fair value of each employee stock option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the year ended December 31, 2006:


	For the year ended
	December 31, 2006
	(As Restated)
Risk-free interest rate:		4.6	%
Expected term:	5 years
Expected dividend yield:		0	%
Expected volatility:		170	%

Consultants:

In May 2005, the Company issued stock options under the 1998 Plan to two consultants. The stock options entitled the consultants to purchase 150,000 and 100,000 shares of common stock at exercise prices of $1.40 and $1.50 per share, respectively. These stock options vested immediately and terminate 7 years from the date of the grant. The stock option to purchase 150,000 shares of common stock was exercised in 2006. The stock option to purchase 100,000 shares of common stock is still outstanding at December 31, 2007. The fair value of the stock options of $247,447 was included in general and administrative expenses on the statements of operations for the year ended December 31, 2005 and was determined using the Black-Scholes option pricing model with the following assumptions:


Risk-free interest rate:		4.5	%
Expected term:	7 years
Expected dividend yield:		0.00	%
Expected volatility:		123	%

In July 2006, the Company issued stock options under the 1998 Plan to a consultant. The stock options entitled the consultant to purchase 10,000 shares of common stock at an exercise price of $6.25 per share. These stock options vest 50% on each of the first two anniversary dates of the grant and terminate in ten years. In October 2007, the consultant was terminated. As of the termination date, 50%, or 5,000 shares, of the stock options were vested, and the consultant has ninety days to exercise the vested portion of the stock options from the date of termination. The vested portion of the stock options, 5,000 shares, is still outstanding at December 31, 2007. For the years ended December 31, 2007 and 2006, respectively, the Company recorded $16,609 and $13,402, or 50% of the fair value of the stock options, of stock-based compensation expense which has been classified as product and content development expenses on the accompanying statements of operations. The fair value of the stock options has been determined using the Black-Scholes option pricing model with the following assumptions:


Risk-free interest rate:		4.99	%
Expected term:	6 years
Expected dividend yield:		0.00	%
Expected volatility:		167	%

F-15

Totals for 1998 Plan:

As of December 31, 2007, there are a total of 919,506 stock options outstanding under the 1998 Plan including 814,506 to employees and 105,000 to consultants. As of December 31, 2007, there is $24,877 in total unrecognized compensation cost related to non-vested employee stock options granted under the 1998 Plan. That cost is expected to be recognized over a weighted average period of 7 months.

2006 Stock Incentive Plan

On September 19, 2006, the Board of Directors approved the 2006 Stock Incentive Plan (the “2006 Plan”), subject to stockholder approval. On June 27, 2007, the stockholders approved the 2006 Plan, which provides for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, or stock grant awards to eligible participants. As of June 27, 2007, all stock options previously granted under the 2006 Plan, subject to stockholder approval, were outstanding. Pursuant to the terms of the 2006 Plan, the Company may issue up to 3,700,000 shares of common stock plus an additional number of shares of common stock equal to the number of shares previously granted under the 1998 Stock Option Plan that either terminate, expire, or lapse after the date of the Board of Directors’ approval of the 2006 Plan. As of December 31, 2007, there are 855,000 shares of common stock reserved for issuance under the 2006 Plan.

Stock options granted pursuant to the 2006 Plan may not have an option price that is less than the fair market value of the Company’s common stock on the date of grant. Incentive stock options granted to significant stockholders must have an exercise price of not less than 110% of the fair market value of the Company’s common stock on the date of grant. Generally, options granted under the 2006 Plan vest ratably over a two or three year service period and expire ten years from the date of the grant (or immediately upon termination of employment). The Board of Directors of the Company may modify the exercise price, vesting term and expiration date of the individual grants at their discretion.

Employees:

A summary of employee stock option activity for the years ended December 31, 2007 is as follows:


	For the year ended December 31, 2007
				Weighted
				Avg.		Remaining
				Exercise		Life
2006 Plan Employee Stock Options:	Shares			Price		(years)

Options outstanding, beginning of year		—		$	—
Granted		3,815,319			3.91
Exercised		—			—
Expired or forfeited		(215,000	)		9.59


Options outstanding, end of year		3,600,319		$	3.57		9.4


Options exercisable, end of year		152,000		$	10.00		1.0

The fair values of share-based payments are estimated on the date of grant using a Black-Scholes option pricing model that uses the weighted average assumptions noted in the following tables. Expected volatility is based on historical volatility of the Company’s common stock. The Company has elected to use the simplified method described in Staff Accounting Bulletin 107, “ Share-Based Payment ,” to estimate the expected term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.

F-16

Non-Executive Employees:

For the year ended December 31, 2007 the Company granted options to non-executive employees pursuant to the 2006 Plan to purchase 307,000 shares of common stock at a weighted average exercise price of $10.00 per share with a weighted average vesting period of 0.9 years. The company recorded $426,792 of stock-based compensation expense for stock options granted to non-executive employees for the year ended December 31, 2007. The fair value of each employee stock option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the year ended December 31, 2007:


	For the year ended
	December 31, 2007
Risk-free interest rate:		5.0	%
Expected term:	5.5 years
Expected dividend yield:		0	%
Expected volatility:		157	%

Executive Employees:

For the year ended December 31, 2007 the Company granted options to executive employees pursuant to the 2006 Plan to purchase 3,508,319 shares of common stock at a weighted average exercise price of $3.38 per share with a weighted average vesting period of 1.6 years. The Company recorded $1,072,192 of stock-based compensation expense for stock options granted to executive employees for the year ended December 31, 2007. The fair value of each employee stock option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the year ended December 31, 2007:


	For the year ended
	December 31, 2007
Risk-free interest rate:		4.0	%
Expected term:	5.8 years
Expected dividend yield:		0	%
Expected volatility:		153	%

Consultants:

For the year ended December 31, 2007 the Company issued stock options under the 2006 Plan to a consultant. The stock options entitled the consultant to purchase 1,000 shares of common stock at an exercise price of $10.00 per share. These stock options vest 50% on each of the first two anniversary dates of the grant and terminate in ten years. The Company recorded $2,465 of stock-based compensation expense for stock options granted to the consultant for the year ended December 31, 2007. The fair value of each employee stock option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the year ended December 31, 2007:


	For the year ended
	December 31, 2007
Risk-free interest rate:		5.0	%
Expected term:	5.5 years
Expected dividend yield:		0	%
Expected volatility:		156	%

Totals for 2006 Plan:

As of December 31, 2007, there are a total of 3,601,319 stock options outstanding under the 2006 Plan including 3,600,319 to employees and 1,000 to a consultant. As of December 31, 2007, there is $9,603,268 in total unrecognized compensation cost related to non-vested employee stock options granted under the 2006 Plan. That cost is expected to be recognized over a weighted average period of 2.8 years.

Warrants

In February, March and April 2004, the Company issued three warrant packages to purchase 25,000 shares of common stock each at exercise prices of $1.50, $2.00, and $2.50 per share as compensation for financial advisory services. These warrants were exercised in 2006.

In May 2004, the Company issued a warrant to purchase 125,000 shares of common stock at an exercise price of $2.00 per share as compensation for general business advisory services. These warrants were exercised in 2006.

F-17

In September 2004, the Company issued a warrant package to purchase 50,000 shares of common stock and 10,000 shares of common stock at exercise prices of $2.00 and $2.60 per share, respectively, as compensation for services in connection with a financing transaction. These warrants were exercised in 2006.

In September 2004, the Company issued warrants to purchase 250,000 shares of common stock at an exercise price of $2.00 per share to investors in connection with a financing transaction. Warrants to purchase 235,000 shares of common stock were exercised in 2005 and the remaining warrants were exercised in 2006.

In December 2004, the Company issued warrants to purchase 278,000 shares of common stock at an exercise price of $3.13 per share as compensation for services in connection with a financing transaction. These warrants were exercised in 2006.

In December 2004, the Company issued warrants to purchase 342,240 shares of common stock at an exercise price of $4.50 per share to investors in connection with a financing transaction. Warrants to purchase 335,840 shares of common stock were exercised in 2006. Warrants to purchase 6,400 shares of common stock were exercised in January 2007.

In January 2005, the Company issued warrants to purchase 64,000 shares of common stock at an exercise price of $4.50 per share to investors in connection with a financing transaction. These warrants were exercised in 2006. See Common Stock section in Note 6.

In December 2005, the Company issued warrants to purchase 235,000 shares of common stock at an exercise price of $4.00 per share to investors in exchange for the exercise of warrants to purchase 235,000 shares of common stock which were previously issued to the investors in September 2004. Warrants to purchase 12,500 shares of common stock were exercised in 2006. Warrants to purchase 222,500 shares of common stock remain outstanding at December 31, 2006 and expire in 2008.

In January 2006, the Company issued warrants to purchase 10,000 shares of common stock at an exercise price of $4.00 per share to an investor in exchange for the exercise of warrants to purchase 10,000 shares of common stock which were previously issued to the investor in September 2004. These warrants are still outstanding at December 31, 2006 and expire in 2008.

In March 2006, the Company issued warrants to purchase 200,000 shares of common stock at an exercise price of $3.55 per share as compensation to its Chief Executive Officer. These warrants are still outstanding on December 31, 2006 and expire in March 2016. The fair value of these warrants of $667,581 was determined using the Black-Scholes option pricing model with the assumptions listed below and recognized in general and administrative expenses on the accompanying statements of operations.


Risk-free interest rate:		4.68	%
Expected term:	5 years
Expected dividend yield:		0.00	%
Expected volatility:		163.73	%

During March 2006, the Company issued three series of warrants to purchase 1,000,000 shares of common stock each at exercise prices of $2.87, $4.00, and $7.00 as compensation for certain strategic initiatives, including acquiring the services of the Company’s Chief Executive Officer. The first warrant was exercised in 2006. The two remaining warrants are still outstanding at December 31, 2007 and expire in March 2016. The fair value of these warrants of $7,387,979 was determined using the Black-Scholes option pricing model with the assumptions listed below and recognized in general and administrative expenses on the accompanying statements of operations.


	Warrant #1			Warrants #2 and #3
Risk-free interest rate:		4.69	%		4.68	%
Expected term:	0.25 years			5 years
Expected dividend yield:		0.00	%		0.00	%
Expected volatility:		53.98	%		163.73	%

In October 2006, the Company issued two series of warrants to purchase 1,000,000 shares of common stock each at exercise prices of $12.50 and $15.00 per share to MATT Inc. in connection with the issuance of common stock. These warrants expire in October 2016 and are still outstanding as of December 31, 2007. See Common Stock section of Note 6.

F-18

Note 7—Income Taxes

The Company did not provide a current or deferred U.S. federal, state or foreign income tax provision or benefit for any of the periods presented because it has experienced recurring operating losses. The Company has provided a full valuation allowance on the deferred tax assets, consisting primarily of the net operating losses, because evidence does not indicate that the deferred tax assets will more likely than not be realized.

At December 31, 2007, the Company had net operating losses of approximately $93,812,000 related to U.S. federal and state jurisdictions. Utilization of the net operating losses, which expires at various times starting in 2012 through 2026, may be subject to certain limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and other limitations under state and foreign tax laws.

Actual income tax benefit differs from the amount calculated using the Federal statutory tax rate of 34% as follows:


	2007			2006
U.S. federal income tax at statutory rate	$	(4,542,000	)	$	(4,626,000	)
Nondeductible expenses		45,000			2,530,000
Exercise of non-qualified stock options		(1,059,000	)		(1,624,000	)
Change in valuation allowance		6,304,000			4,562,000
State tax benefit, net of federal provision (benefit)		(753,000	)		(502,000	)
Other		5,000			(340,000	)

Income tax expense	$	—		$	—

Significant components of the Company’s deferred tax assets (liabilities) are approximately as follows:


	December 31,
	2007
Net operating loss	$	36,193,000
Deferred revenue		—
Property and equipment		5,000
Stock options and warrants		1,690,000
Accrued Professional Fees		196,000
Other		20,000

Total deferred tax assets		38,104,000
Valuation allowance		(38,104,000	)

Net deferred tax assets	$	—

Note 8—Related Party Transactions

In October 2006, the Company entered into a series of transactions with MATT Inc. In November 2006, the Company’s Board of Directors elected Alonso Ancira, the Chairman of the Board of Directors of MATT Inc., to the Company’s Board of Directors as a non-employee director. See Note 3 — Jet Rights, Note 4 — Long-term Debt, and Note 6 — Common Stock section.

In October 2006, the Company paid a $300,000 finders fee to Lionel Sosa, a member of its Board of Directors, upon the consummation of the financing transaction with MATT Inc. See Common Stock section of Note 6.

Lionel Sosa, a member of the Company’s Board of Directors, is the Chief Executive Officer of the Organization, which, pursuant to the terms of the CSMSA, the Company has agreed to support through October 2016. For the years ended December 31, 2007 and 2006, respectively, the Company has made net payments of $375,000 and $69,293 to the Organization. In December 2007, the Company recorded a liability in the amount of $7,250,562 to recognize our future obligations to the Organization under the terms of the CSMA, partially offset by $55,248 due from the Organization to reimburse the Company for costs and expenses incurred maintaining the Organization’s website. See Note 4.

In May 2007, the Company entered into a rental agreement with Altos Hornos de Mexico, S.A.B. de C.V. (“AHMSA”) for office space in Mexico City. Alonso Ancira, a member of the Company’s Board of Directors, is the Chairman of the Board of Directors of AHMSA. The rental agreement is for a one year lease, which expires in April 2008. For the year ended December 31, 2007, the Company has paid $24,000 to AHMSA pursuant to the terms of the rental agreement. In March 2008, the rental agreement was terminated.

F-19

In January 2008, the Company and MATT Inc. entered into a Note Purchase Agreement to raise $5,000,000 of financing for the Company. Alonso Ancira, a member of our Board of Directors, is also the Chairman of the Board of Directors of MATT Inc. and AHMSA. See Note 10 — Subsequent events for details of the transaction.

Note 9—Restatements of Previously Issued Financial Statements

April 2007 Restatement:

In April 2007, the Company determined that a restatement of the Company’s consolidated financial statements for the first through the third quarters of 2006 was required. The Company identified accounting errors related to its accounting for stock options and warrants during 2006. Upon review of the assumptions applied during 2006, it was determined that certain assumptions related to the expected terms and volatility rates used in the Black-Scholes option pricing model were incorrect. Also, the Company restated its interim financial information for the third quarter of 2006 related to a grant of common stock and stock options to a consultant that was rescinded in January 2007. These corrections resulted in a charge of $4,871,642, which resulted in an increase in net loss of $0.58 per share, for the nine months ended September 30, 2006. In addition, the Company determined that certain reclassifications between operating expense line items on the consolidated statements of operations were required for the first three quarters of 2006. These reclassifications had no effect on total operating expenses or net loss in 2006. The restatements had no effect on the Company’s cash flows from operating, investing or financing activities for any of the quarters in 2006.

October 2007 Restatement:

In October 2007, the Company determined that a restatement of the consolidated financial statements for the fiscal year ended December 31, 2006 and for the interim periods ended March 31, 2006, June 30, 2006, September 30, 2006, March 31, 2007, and June 30, 2007 was required. Upon review of the assumptions applied in the Black-Scholes option pricing model for warrants and stock option awards granted in 2006 and 2007, the Company determined that the expected volatility rates used in the April 2007 restatement were not annualized rates, resulting in lower expected volatility rates and under-valued fair values of the stock options granted in 2006 and 2007. In addition, the Company found minor inconsistencies with the application of the simplified method described in Staff Accounting Bulletin 107, “ Share-Based Payment ,” to estimate the expected term of employee stock options. As a result of expected volatility errors and minor inconsistencies with the expected terms, the Company recorded an additional $2,156,547 and $77,440 in non-cash stock compensation expense in fiscal year ended December 31, 2006 and in the interim six month period ended June 30, 2007, respectively, causing increases in the Company’s net loss per share of $0.24 and $0.00, respectively. The restatements had no effect on the Company’s cash flows from operating, investing or financing activities for the affected periods in 2006 or 2007.

The following table summarizes the effects of the two restatements on the Company’s interim financial information for the three months ended March 31, 2006:


	Originally			April’07			October’07
	Reported			Restatement			Restatement			Restated
	*(Unaudited)*
For the three months ended March 31, 2006:
Loss from operations	$	(2,172,554	)	$	(4,668,568	)	$	(1,969,821	)	$	(8,810,943	)
Net Loss		(2,164,774	)		(4,668,568	)		(1,969,821	)		(8,803,163	)
Loss per share		(0.27	)		(0.60	)		(0.25	)		(1.12	)

The following table summarizes the effects of the two restatements on the Company’s interim financial information for the three and six months ended June 30, 2006:


	Originally			April’07			October’07
	Reported			Restatement			Restatement			Restated
	*(Unaudited)*
For the three months ended June 30, 2006:
Loss from operations	$	(890,891	)	$	(174,899	)	$	(118,754	)	$	(1,184,544	)
Net Loss		(883,226	)		(174,899	)		(118,754	)	$	(1,176,879	)
Loss per share		(0.11	)		(0.02	)		(0.01	)		(0.14	)

F-20


	Originally			April'07			October'07
	Reported			Restatement			Restatement			Restated
	*(Unaudited)*
For the six months ended June 30, 2006:
Loss from operations	$	(3,063,445	)	$	(4,843,467	)	$	(2,088,575	)	$	(9,995,487	)
Net Loss		(3,048,000	)		(4,843,467	)		(2,088,575	)	$	(9,980,042	)
Loss per share		(0.38	)		(0.60	)		(0.26	)		(1.24	)

The following table summarizes the effects of the two restatements on the Company’s interim financial information for the three and nine months ended September 30, 2006:


	Originally			April'07			October'07
	Reported			Restatement			Restatement			Restated
	*(Unaudited)*
For the three months ended September 30, 2006:
Loss from operations	$	(1,324,134	)	$	(28,175	)	$	(57,046	)	$	(1,409,355	)
Net Loss		(1,297,301	)		(28,175	)		(57,046	)		(1,382,522	)
Loss per share		(0.14	)		—			(0.01	)		(0.15	)

For the nine months ended September 30, 2006:
Loss from operations	$	(4,387,579	)	$	(4,871,642	)	$	(2,145,621	)	$	(11,404,842	)
Net Loss		(4,345,301	)		(4,871,642	)		(2,145,621	)	$	(11,362,564	)
Loss per share		(0.51	)		(0.58	)		(0.25	)		(1.34	)

The following table summarizes the effects of the two restatements on the Company’s financial information for the year ended December 31, 2006:


	Originally			April'07		October'07
	Reported			Restatement		Restatement			Restated
	*(Audited)*
For the year ended December 31, 2006:
Loss from operations	$	(11,644,548	)	$	—	$	(2,156,547	)	$	(13,801,095	)
Net Loss		(11,449,484	)		—		(2,156,547	)	$	(13,606,031	)
Loss per share		(1.26	)		—		(0.24	)		(1.50	)

The following table summarizes the effects of the two restatements on the Company’s interim financial information for the three months ended March 31, 2007:


	Originally			April'07		October'07
	Reported			Restatement		Restatement			Restated
	*(Unaudited)*
For the three months ended March 31, 2007:
Loss from operations	$	(3,332,838	)	$	—	$	(49,267	)	$	(3,382,105	)
Net Loss		(3,155,744	)		—		(49,267	)	$	(3,205,011	)
Loss per share		(0.26	)		—		(0.00	)		(0.26	)

F-21

The following table summarizes the effects of the two restatements on the Company’s interim financial information for the three and six months ended June 30, 2007:


	Originally			April'07		October'07
	Reported			Restatement		Restatement			Restated
	*(Unaudited)*
For the three months ended June 30, 2007:
Loss from operations	$	(3,775,573	)	$	—	$	(28,173	)	$	(3,803,746	)
Net Loss		(3,643,157	)		—		(28,173	)	$	(3,671,330	)
Loss per share		(0.30	)		—		(0.00	)		(0.30	)

For the six months ended June 30, 2007:
Loss from operations	$	(7,108,411	)	$	—	$	(77,440	)	$	(7,185,851	)
Net Loss		(6,798,901	)		—		(77,440	)	$	(6,876,341	)
Loss per share		(0.56	)		—		(0.00	)		(0.56	)

The following table summarizes the effects of the two restatements and the reclassifications on the Company’s operating costs and expenses for the periods shown:


					Product and					Depreciation
	Search		Sales and		Content		General and			and
	Services		Marketing		Development		Administrative			Amortization		Total
	*(Unaudited)*
For the three months ended March 31, 2006:
Originally reported	$	118,152	$	24,232	$	41,809	$	2,131,377		$	21,549	$	2,337,119
April’07 restatement		—		—		34,407		4,634,161			—		4,668,568
April’07 reclassifications		—		26,438		105,761		(132,199	)		—		—
October’07 restatement		—		—		8,888		1,960,933			—		1,969,821

Restated	$	118,152	$	50,670	$	190,865	$	8,594,272		$	21,549	$	8,975,508


For the three months ended June 30, 2006:
Originally reported	$	47,178	$	33,686	$	76,562	$	797,152		$	20,220	$	974,798
April’07 restatement		—		—		38,036		136,863			—		174,899
April’07 reclassifications		—		55,308		116,433		(171,741	)		—		—
October’07 restatement		—		—		9,578		109,176			—		118,754

Restated	$	47,178	$	88,994	$	240,609	$	871,450		$	20,220	$	1,268,451


For the six months ended June 30, 2006:
Originally reported	$	165,330	$	57,918	$	118,371	$	2,928,529		$	41,769	$	3,311,917
April’07 restatement		—		—		72,443		4,771,024			—		4,843,467
April’07 reclassifications		—		81,746		222,194		(303,940	)		—		—
October’07 restatement		—		—		18,466		2,070,109			—		2,088,575

Restated	$	165,330	$	139,664	$	431,474	$	9,465,722		$	41,769	$	10,243,959


For the three months ended September 30, 2006:
Originally reported	$	34,812	$	46,252	$	101,474	$	1,171,395		$	23,914	$	1,377,847
April’07 restatement		—		15,743		13,946		(1,514	)		—		28,175
April’07 reclassifications		—		103,312		174,661		(277,973	)		—		—
October’07 restatement		—		2,500		2,478		52,068			—		57,046

Restated	$	34,812	$	167,807	$	292,559	$	943,976		$	23,914	$	1,463,068

F-22


					Product and						Depreciation
	Search		Sales and		Content			General and			and
	Services		Marketing		Development			Administrative			Amortization		Total
	*(Unaudited)*
For the nine months ended September 30, 2006:
Originally reported	$	200,142	$	104,170	$	219,845		$	4,099,924		$	65,683	$	4,689,764
April’07 restatement		—		15,743		86,389			4,769,510			—		4,871,642
April’07 reclassifications		—		185,058		396,855			(581,913	)		—		—
October’07 restatement		—		2,500		20,944			2,122,177			—		2,145,621

Restated	$	200,142	$	307,471	$	724,033		$	10,409,698		$	65,683	$	11,707,027


	*(Audited)*
For the year ended December 31, 2006:
Originally reported	$	210,832	$	555,073	$	1,221,505		$	9,923,527		$	129,043	$	12,039,980
April’07 restatement		—		—		—			—			—		—
April’07 reclassifications		—		—		—			—			—		—
October’07 restatement		—		6,413		24,651			2,125,483			—		2,156,547

Restated	$	210,832	$	561,486	$	1,246,156		$	12,049,010		$	129,043	$	14,196,527


For the three months ended March 31, 2007:
Originally reported	$	—	$	490,781	$	993,637		$	1,808,299		$	92,603	$	3,385,320
April’07 restatement		—		—		—			—			—		—
April’07 reclassifications		—		—		—			—			—		—
October’07 restatement		—		3,361		3,173			42,733			—		49,267

Restated	$	—	$	494,142	$	996,810		$	1,851,032		$	92,603	$	3,434,587


For the three months ended June 30, 2007:
Originally reported	$	—	$	314,772	$	1,339,238		$	2,091,165		$	103,658	$	3,848,833
April’07 restatement		—		—		—			—			—		—
April’07 reclassifications		—		—		—			—			—		—
October’07 restatement		—		3,761		3,900			20,512			—		28,173
October’07 reclassifications		—		32,599		(130,500	)		97,901			—		—

Restated	$	—	$	351,132	$	1,212,638		$	2,209,578		$	103,658	$	3,877,006


For the six months ended June 30, 2007:
Originally reported	$	—	$	805,553	$	2,332,875		$	3,899,464		$	196,261	$	7,234,153
April’07 restatement		—		—		—			—			—		—
April’07 reclassifications		—		—		—			—			—		—
October’07 restatement		—		7,122		7,073			63,245			—		77,440
October’07 reclassifications		—		32,599		(130,500	)		97,901			—		—

Restated	$	—	$	845,274	$	2,209,448		$	4,060,610		$	196,261	$	7,311,593

F-23

The following table summarizes the effects of the two restatements on the Company’s stockholders’ equity for the periods shown:


											Accumulated Other			Total
	Preferred		Common			Additional		Accumulated			Comprehensive			Stockholders'
	Stock		Stock			Paid-in Capital		Deficit			Income (Loss)			Equity
	*(Unaudited)*
As of March 31, 2006:

Originally Reported	$	—	$	8,082		$	117,899,635	$	(116,652,907	)	$	(11,413	)	$	1,243,397
April’07 Restatement		—		—			4,668,568		(4,668,568	)		—			—
October’07 Restatement		—		—			1,969,821		(1,969,821	)		—			—

Restated	$	—	$	8,082		$	124,538,024	$	(123,291,296	)	$	(11,413	)	$	1,243,397


As of June 30, 2006:

Originally Reported	$	—	$	8,520		$	118,683,701	$	(117,536,133	)	$	(23,972	)	$	1,132,116
April’07 Restatement		—		—			4,843,467		(4,843,467	)		—			—
October’07 Restatement		—		—			2,088,575		(2,088,575	)		—			—

Restated	$	—	$	8,520		$	125,615,743	$	(124,468,175	)	$	(23,972	)	$	1,132,116


As of September 30, 2006:

Originally Reported	$	—	$	9,754		$	122,626,287	$	(118,833,434	)	$	(13,544	)	$	3,789,063
April’07 Restatement		—		(10	)		4,871,652		(4,871,642	)		—			—
October’07 Restatement		—		—			2,145,621		(2,145,621	)		—			—

Restated	$	—	$	9,744		$	129,643,560	$	(125,850,697	)	$	(13,544	)	$	3,789,063


	*(Audited)*
As of December 31, 2006:

Originally Reported	$	—	$	11,706		$	141,114,562	$	(125,937,617	)	$	1,497		$	15,190,148
April’07 Restatement		—		—			—		—			—			—
October’07 Restatement		—		—			2,156,547		(2,156,547	)		—			—

Restated	$	—	$	11,706		$	143,271,109	$	(128,094,164	)	$	1,497		$	15,190,148


	*(Unaudited)*
As of March 31, 2007:

Originally Reported	$	—	$	12,231		$	142,270,210	$	(129,093,361	)	$	10,060		$	13,199,140
Roll-forward of fiscal year 2006 restatement		—		—			2,156,547		(2,156,547	)		—			—
April’07 Restatement		—		—			—		—			—			—
October’07 Restatement		—		—			49,267		(49,267	)		—			—

Restated	$	—	$	12,231		$	144,476,024	$	(131,299,175	)	$	10,060		$	13,199,140


As of June 30, 2007:

Originally Reported	$	—	$	12,271		$	143,053,292	$	(132,736,518	)	$	1,533		$	10,330,578
Roll-forward of fiscal year 2006 restatement		—		—			2,156,547		(2,156,547	)		—			—
April’07 Restatement		—		—			—		—			—			—
October’07 Restatement		—		—			77,440		(77,540	)		—			—

Restated	$	—	$	12,271		$	145,287,279	$	(134,970,505	)	$	1,533		$	10,330,578

F-24

Note 10—Subsequent Events

On January 9, 2008, the Company issued a $300,000 Multiple Advance Promissory Note (the “BRC Note”) to BRC Group, LLC (“BRC”). BRC owns La Alianza de Futbol Hispano (“La Alianza”), an organization involved in the support and development of amateur Hispanic soccer in the United States. The Company and BRC agreed to the terms of the BRC Note with the understanding that the Company and BRC would work towards finalizing an agreement, which would provide for, among other things, the Company becoming the official social networking sponsor for La Alianza.

On January 10, 2008, the Company advanced $300,000 to BRC under the terms of the BRC Note.

On March 27, 2008, the Company entered into a Loan Agreement with BRC for a maximum amount of $600,000. Among other things, pursuant to the terms of the Loan Agreement: (i) the $300,000 advanced by the Company pursuant to the BRC Note becomes advancement under the terms of the Loan Agreement; (ii) the Company will advance BRC an additional $50,000 on April 1, 2008; and (iii) the Company will advance BRC an additional $250,000 on September 1, 2008. BRC executed a promissory note on March 27, 2008, in favor of the Company and agreed to repay all advancements made by the Company under the Loan Agreement by January 8, 2011.

In addition, also on March 27, 2008, and in connection with the Loan Agreement, the Company entered into an Equity Interests Purchase Warrant, a Right of Purchase and Right of First Refusal Agreement, and a Website Development and Hosting Agreement with BRC. Pursuant to the terms and conditions of these agreements the Company will: (i) become an official sponsor of the 2008 La Alianza soccer tournament; (ii) retain the online rights to the La Alianza soccer tournament for a period of three years; (iii) host and develop the La Alianza website; (iv) build the La Alianze community within the Quepasa.com website; and (v) share equally with BRC in the advertising revenues generated from the La Alianza website.

The foregoing descriptions of the Loan Agreement, Right of First Refusal, Webpage Development and Hosting Agreement, Promissory Note, and Equity Interests Purchase Warrant do not purport to be complete. For an understanding of their terms and provisions, reference should be made to the agreements attached hereto as Exhibits 10.35, 10.36, 10.37, 10.38, and 10.39, respectively.

On January 18, 2008, the Board of Directors of the Company approved a Consulting Agreement with Jeffrey Valdez and Valdez Productions, Inc. (“Valdez Productions”). The Consulting Agreement is effective October 24, 2007, and the initial term will end on October 24, 2008. Prior to the end of the initial term , upon 30 days written notice, either Valdez Productions or the Company may terminate the Consulting Agreement without cause. After the initial term, the Consulting Agreement will automatically renew for successive 3 month periods unless a party provides 30 days written notice of its desire to terminate the Consulting Agreement, in which case the Consulting Agreement will expire 30 days from the date such notice is received. Pursuant to the terms of the Consulting Agreement, Valdez Productions will provide certain consulting services in the areas of web based programming content, marketing, branding, and any other services mutually agreed to among the parties. In exchange for the services rendered under the Consulting Agreement, the Company will pay Valdez Productions $8,333 per month for the term of the agreement. In addition, the Company will grant Valdez Productions options to purchase 210,000 shares of the Company’s common stock at an exercise price of $2.49 per share (which was the closing price of the Company’s common stock on January 18, 2008). One third of such options will vest on October 24, 2008, and the remaining options will vest in 24 equal monthly installments over the following two years. However, the options become fully vested in the event the Consulting Agreement is terminated without cause.

On January 25, 2008, the Company and MATT Inc. entered into a Note Purchase Agreement (the “MATT Agreement”). Pursuant to the terms of the MATT Agreement: (i) MATT Inc. purchased a $5,000,000 subordinated promissory note from the Company (the “MATT Note”); (ii) the exercise price of MATT Inc.’s outstanding Series 1 Warrant to purchase 1,000,000 shares of the Company’s common stock was reduced from $12.50 per share to $2.75 per share; (iii) the exercise price of MATT Inc.’s outstanding Series 2 Warrant to purchase 1,000,000 shares of the Company’s common stock was reduced from $15.00 per share to $2.75 per share; and (iv) the Amended and Restated Support Agreement between the Company and MATT Inc. was terminated, which terminates MATT Inc.’s obligation to provide the Company with the use of a corporate jet for up to 25 hours per year through October 2016. See Note 4.

On January 25, 2008, the Company and Richard L. Scott Investments, LLC (“RSI”) entered into a Note Purchase Agreement (the “RSI Agreement”). Pursuant to the terms of the RSI Agreement: (i) RSI purchased a $2,000,000 subordinated promissory note from the Company (the “RSI Note”); (ii) the exercise price of RSI’s outstanding Series 2 Warrant to purchase 500,000 shares of the Company’s common stock was reduced from $4.00 per share to $2.75 per share; and (iii) the exercise price of RSI’s outstanding Series 3 Warrant to purchase 500,000 shares of the Company’s common stock was reduced from $7.00 per share to $2.75 per share.

Effective May 1, 2008, the Company terminated its future lease obligations of $344,495, relating to one of its operating leases for office space in Scottsdale, Arizona. Under the terms of the Lease Termination Agreement, the Company must pay $64,261 to the Lessor and forfeit the security deposit in the amount of $44,703.

F-25

Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None

Item 8A. Controls and Procedures

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company. Internal control over financial reporting is a process designed by, or under the supervision of, our chief executive and chief financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals.

Limitations on the Effectiveness of Controls

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The Company’s management, including its Chief Executive Officer and its Chief Financial Officer, do not expect that the Company’s disclosure controls will prevent or detect all errors and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control - Integrated Framework. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was not effective as of December 31, 2007.

This annual report does not include an audit or attestation report of our registered public accounting firm regarding our internal control over financial reporting. Our management’s report was not subject to audit or attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

Remediation of Weaknesses

During the financial reporting process for the fiscal year end December 31, 2007, certain weaknesses in the Company’s internal control over financial reporting were identified, including inadequate documentation of policies, procedures, and internal controls; weaknesses in information technology controls and procedures; a lack of sufficient accounting personnel and expertise to address the Company’s expanding and increasingly complex financial reporting needs; and incorrect accounting treatment of certain expenses and equity issuances.

The Company is addressing these identified weaknesses. Among other things, the Company has hired additional and more experienced accounting and finance staff to bolster the Company’s internal capabilities and expertise; recently hiring a Chief Technology Officer, a new Chief Financial officer, VP of Finance, and an outside consultant to address information technology controls and procedures; increased oversight of the Company’s operations in Mexico; improving the Company’s technology related to its business and operations; and undertaking to systemically resolve such weaknesses in consultation with its independent auditor.

Management has augmented its internal accounting resources by using external resources in connection with its review and completion of the financial reporting process for the fiscal year ended December 31, 2007. Management believes that there are no material inaccuracies or omissions of material fact and, to the best of its knowledge, believes that the consolidated financial statements for the year ended December 31, 2007, fairly present in all material respects the financial condition and results of operations for the Company in conformity with accounting principles generally accepted in the United States of America.

Changes in Internal Control over Financial Reporting

Except for the weaknesses and remediations identified above, there was no change in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 8B. Other Information.

On January 10, 2008, the Company advanced $300,000 to BRC under the terms of the BRC Note.

The foregoing description of the lease termination agreement does not purport to be complete. For an understanding of its terms and provisions, reference should be made to the lease termination agreement attached hereto as Exhibit 10.40.

On March 27, 2008, the Compensation Committee of the Company’s Board of Directors approved amendments to the Employment Agreements with John C. Abbott, the Company’s Chief Executive Officer (the “Abbott Amendment”) and Michael D. Matte, the Company’s Chief Financial Officer (the “Matte Amendment” and together with the Abbott Amendment, the “Amendments”)). The Abbott Amendment and Matte Amendment are both effective March 27, 2008, and are attached hereto as Exhibits 10.18 and 10.21, respectively, and are incorporated by reference herein.

The Amendments amend their Employment Agreements to provide that, following a change of control (as defined in their Employment Agreements), all of their stock options granted pursuant to the Employment Agreements shall vest immediately and they will have the right to exercise these stock options for a period of two years after their termination. The Amendments further amend the Employment Agreements to bring them in compliance with Section 409A of the Internal Revenue code. All other terms and conditions in their Employment Agreements remain unchanged.

The foregoing descriptions of the Amendments do not purport to be complete. For an understanding of their terms and provisions, reference should be made to the Abbott Amendment and the Matte Amendment attached hereto as Exhibits 10.18 and 10.21, respectively.

PART III


Item 9.		Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.

The information under the subheading “Executive Officers of the Company” in Part I, Item I of this Form 10-KSB is incorporated by reference into this section. Otherwise, except as set forth herein, the information required by this item is incorporated by reference from the Company’s Proxy Statement for its 2008 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2007.

Item 10. Executive Compensation.

The information required by this item is incorporated by reference to the Company’s Proxy Statement for its 2008 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2007.

Item 11. Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters.

Except as set forth herein, the information required by this item is incorporated by reference from the Company’s Proxy Statement for its 2008 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2007.

Disclosure with Respect to the Company’s Equity Compensation Plans as of December 31, 2007

The following table summarizes the options, warrants and securities available for issuance under our equity compensation plans as of December 31, 2007:

Number of securities remaining

Number of securities to

Weighted-average

available for future issuance

be issued upon exercise

exercise price of

under equity compensation

of outstanding options,

outstanding options,

plans (excluding securities

warrants and rights

reflected in column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders ⁽¹⁾

4,520,825

3.38

855,000


(1)		2006 Stock Incentive Plan

Item 12. Certain Relationships and Related Transactions, and Director Independence.

Item 13. Exhibits.

See Exhibit Index

Item 14. Principal Accountant Fees and Services.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Quepasa Corporation
	/s/ John C. Abbott
	John C. Abbott
	Chief Executive Officer

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jerry Yang and Blake Jorgensen, his/her attorneys-in-fact, each with the power of substitution, for him/her in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with Exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature	Title	Date

/s/ John C. Abbott John C. Abbott	Chief Executive Officer and Director	March 31, 2008

/s/ Michael D. Matte Michael D. Matte	Chief Financial Officer (Principal Accounting Officer) and Executive Vice President	March 31, 2008

/s/ Jeffrey Valdez Jeffrey Valdez	Chairman of the Board of Directors	March 31, 2008

/s/ Alonso Ancira Alonso Ancira	Director	March 31, 2008

/s/ Ernesto Cruz Ernesto Cruz	Director	March 31, 2008

/s/ Malcolm Jozoff Malcolm Jozoff	Director	March 31, 2008

/s/ Lionel Sosa Lionel Sosa	Director	March 31, 2008

/s/ Dr. Jill Syverson-Stork Dr. Jill Syverson-Stork	Director	March 31, 2008

Exhibit Index


Exhibit No.		Description of Exhibit
3.1		Certificates of Restated Articles of Incorporation (1)
3.2		Amended and Restated Bylaws (2)
4.1		Specimen Common Stock Certificate (3)
10.1		Securities Purchase Agreement dated October 17, 2006 by and between Quepasa Corporation and Mexicans and Americans Trading Together, Inc. (4)
10.2		Series 1 Common Stock Purchase Warrant dated October 17, 2006 by and between Quepasa Corporation and Mexicans and Americans Trading Together, Inc. (4)
10.3		Series 2 Common Stock Purchase Warrant dated October 17, 2006 by and between Quepasa Corporation and Mexicans and Americans Trading Together, Inc. (4)
10.4		Registration Rights Agreement dated October 17, 2006 by and between Quepasa Corporation and Mexicans and Americans Trading Together, Inc. (4)
10.5		Amended and Restated Support Agreement dated November 20, 2006 and effective October 17, 2006 by and between Quepasa Corporation and Mexicans and Americans Trading Together, Inc. (5)
10.6		Corporate Sponsorship and Management Services Agreement dated November 20, 2006 and effective October 17, 2006 by and between Quepasa Corporation and Mexicans and Americans Trading Together, Inc. (5)
10.8		Warrant Purchase Agreement dated March 21, 2006 by and between Quepasa Corporation, Richard L. Scott Investments, LLC and F. Stephen Allen (6)
10.9		Series 1 Common Stock Purchase Warrant dated March 21, 2006 by and between Quepasa Corporation and Richard L. Scott Investments, LLC. (7)
10.10		Series 1 Common Stock Purchase Warrant dated March 21, 2006 by and between Quepasa Corporation and F. Stephen Allen (7)
10.11		Series 2 Common Stock Purchase Warrant dated March 21, 2006 by and between Quepasa Corporation and Richard L. Scott Investments, LLC (7)
10.12		Series 2 Common Stock Purchase Warrant dated March 21, 2006 by and between Quepasa Corporation and F. Stephen Allen (7)
10.13		Series 3 Common Stock Purchase Warrant dated March 21, 2006 by and between Quepasa Corporation and Richard L. Scott Investments, LLC (7)
10.14		Series 3 Common Stock Purchase Warrant dated March 21, 2006 by and between Quepasa Corporation and F. Stephen Allen (7)
10.15		Registration Rights Agreement dated March 21, 2006 by and between Quepasa Corporation, Richard L. Scott Investments, LLC, and F. Stephen Allen (7)
***10.16		Amended and Restated 1998 Stock Option Plan (8)
***10.17		Employment Agreement with John C. Abbott dated October 25, 2007 (9)
*10.18		Amendment to the Employment Agreement with John C. Abbott dated March 27, 2008
10.19		Separation Agreement and General Release with Robert B. Stearns dated October 25, 2007 (9)
***10.20		Employment Agreement with Michael D. Matte dated October 25, 2007 (9)
*10.21		Amendment to the Employment Agreement with Michael D. Matte dated March 27, 2008
***10.22		Quepasa Corporation 2006 Stock Incentive Plan (2)
***10.23		Quepasa Corporation Form of 2006 Stock Incentive Plan Non-Qualified Stock Option Agreement (2)
***10.24		Quepasa Corporation Form of 2006 Stock Incentive Plan Incentive Stock Option Agreement (2)
***10.25		Quepasa Corporation Executive Incentive Plan (10)
10.26		Note Purchase Agreement dated January 25, 2008 by and between Quepasa Corporation and Mexicans & Americans Trading Together, Inc. (11)
10.27		Note Purchase Agreement dated January 25, 2008 by and between Quepasa Corporation and Richard L. Scott Investments, LLC (11)
10.28		Amendment No. 1 to Series 1 Common Stock Purchase Warrant dated January 25, 2008 by and between Quepasa Corporation and Mexicans & Americans Trading Together, Inc. (11)


Exhibit No.		Description of Exhibit
10.29		Amendment No. 1 to Series 2 Common Stock Purchase Warrant dated January 25, 2008 by and between Quepasa Corporation and Mexicans & Americans Trading Together, Inc. (11)
10.30		Amendment No. 1 to Series 2 Common Stock Purchase Warrant dated January 25, 2008 by and between Quepasa Corporation and Richard L. Scott Investments, LLC (11)
10.31		Amendment No. 1 to Series 3 Common Stock Purchase Warrant dated January 25, 2008 by and between Quepasa Corporation and Richard L. Scott Investments, LLC (11)
10.32		Subordinated Promissory Note dated January 25, 2008 by and between Quepasa Corporation and Mexicans & Americans Trading Together, Inc. (11)
10.33		Subordinated Promissory Note dated January 25, 2008 by and between Quepasa Corporation and Richard L. Scott Investments, LLC (11)
*10.34		Consulting Agreement with Jeffrey Valdez dated March 27, 2008
*10.35		Loan Agreement dated March 27, 2008 by and between Quepasa Corporation and BRC Group, LLC.
*10.36		Right of First Refusal dated March 27, 2008 by and between Quepasa Corporation and BRC Group, LLC.
*10.37		Webpage Development and Hosting Agreement dated March 27, 2008 by and between Quepasa Corporation and BRC Group, LLC.
*10.38		Promissory Note dated March 27, 2008 by BRC Group, LLC.
*10.39		Equity Interests Purchase Warrant dated March 27, 2008 by and between Quepasa Corporation and BRC Group, LLC.
*10.40		Lease termination Agreement dated March 10, 2008 by and between Quepasa Corporation and Airpark Billorado, LLC
*21.1		Subsidiaries of the small business issuer
*23.1		Consent of Berenfeld, Spritzer, Shechter & Sheer, LLP
*23.2		Consent of Perelson Weiner LLP
*24.1		Power of Attorney (See Signatures page)
*31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
*31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
**32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith

**		Furnished herewith

***		Indicates management compensatory contract, plan or arrangement

(1)		Incorporated by reference to the Registrant’s Quarterly Report on Form 10-QSB as filed with the Commission on August 15, 2007.

(2)		Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on July 3, 2007.

(3)		Incorporated by reference to the Registrant’s Registration Statement on Form 8-A12G as filed with the Commission on March 16, 1999.

(4)		Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on October 19, 2006.

(5)		Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on November 27, 2006.

(6)		Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on March 22, 2006.

(7)		Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 as filed with the Commission on January 30, 2007.

(8)		Incorporated by reference to the Registrant’s Registration Statement on Form S-1 as filed with the Commission on April 29, 1999.

(9)		Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on October 30, 2007.

(10)		Incorporated by reference to the Registrant’s Registrant’s Current Report on Form 8-K as filed with the Commission on January 25, 2008.

(11)		Incorporated by reference to the Registrant’s Registrant’s Current Report on Form 8-K as filed with the Commission on January 30, 2008.

Copies of any of the exhibits referred to above will be furnished at no cost to stockholders who make a written request therefore to Michael D. Matte, Quepasa Corporation, 7550 E. Redfield Rd. Scottsdale, Arizona 85034.

Exhibit 10.18

AMENDMENT NO. 1
TO
TO THE EMPLOYMENT AGREEMENT

This Amendment No.1 (“ Amendment ”) to the Employment Agreement by and between Quepasa Corporation, a Nevada corporation (the “ Company ”), and John C. Abbott is entered into and effective as of March 27, 2008. Capitalized terms used but not otherwise defined herein have the meanings assigned thereto in the Employment Agreement.

RECITALS

WHEREAS, the parties to this Amendment are parties to that certain Employment Agreement, dated as of October 25, 2007 (the “ Employment Agreement ”); and

WHEREAS, the parties hereto desire to amend the Employment Agreement to bring it into compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“ Code ”) and make certain other changes.

NOW, THEREFORE, in consideration of the foregoing, the mutual promises contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the parties agree as follows:

AGREEMENT

1. Section 7(b)(i) of the Employment Agreement shall be amended by adding the following language at the end thereof:

Notwithstanding the foregoing, if Employee is a “Specified Employee” of the Company for purposes of Code Section 409A at the time of a payment event set forth in Sections 7(b) and the Company determines in good faith that no applicable exception to the requirements of Code Section 409A exists for the payment, then no payments pursuant to Section 7(b)(i) shall be made to Employee by the Company until the amount of time has passed that is necessary to avoid incurring excise taxes under Code Section 409A. Should this provision result in a delay of payments to Employee, on the first day any such payments may be made without incurring a penalty pursuant to Code Section 409A (the “409A Payment Date”), the Company shall begin to make such payments as described in this 7(b)(i), provided that any amounts that would have been payable earlier but for the application of this paragraph 7(b(i)), shall be paid in lump-sum on the 409A Payment Date along with accrued interest at the prime rate of interest set forth in the Western Edition of the Wall Street Journal from the date that payments to Employee should have been made under this Agreement. The balance of such severance payments shall be payable in accordance with regular payroll timing and the COBRA premiums shall be reimbursed monthly. For purposes of this provision, the term Specified Employee shall have the meaning set forth in Code Section 409A(2)(B)(i) or any successor provision and the treasury regulations and rulings issued hereunder.

2. Section 8(a) of the Employment Agreement shall be amended and restated in its entirety as follows:

a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS. Following the occurrence of a Change of Control (other than as a consequence of his death or Disability (as defined below), Employee shall be entitled to receive from the Company, the following:

(i) Base Salary. An amount equal to two (2) times Employee’s Base Salary as in effect at the date of termination shall be paid in a lump sum on the date of termination;

(ii) Target Bonus. An amount equal to two (2) times Employee’s target bonus amount under the Management Bonus Program for the fiscal year in which the date of termination occurs, to be paid in a lump sum on the date of termination; and

(iii) Other Benefits. All benefits under Paragraphs 7(b)(ii), 7(b)(iii), 7(b)(iv), and 7(b)(v) shall be extended to Employee as described in such Paragraphs; provided, however, that all stock options held by Employee as of the date of a Change in Control shall fully vest and immediately become exercisable in full. In the event that Employee is terminated following a Change in Control, all stock options held by Employee shall remain exercisable for a period of two (2) years following such termination.

(iv) Section 409A Compliance . Notwithstanding the foregoing, if Employee is a “Specified Employee” of the Company for purposes of Code Section 409A at the time of a payment event set forth in Section 8(a) and the Company determines in good faith that no applicable exception to the requirements of Code Section 409A exists for the payment, then no payments pursuant to Section 8(a)(i) and (ii) shall be made to Employee by the Company until the amount of time has passed that is necessary to avoid incurring excise taxes under Code Section 409A. Should this provision result in a delay of payments to Employee, on the first day any such payments may be made without incurring a penalty pursuant to Code Section 409A (the “409A Payment Date”), the Company shall begin to make such payments as described in Section 8(a)(i) and (ii), provided that any amounts that would have been payable earlier but for the application of this paragraph 8(a)(iv)), shall be paid in lump-sum on the 409A Payment Date along with accrued interest at the prime rate of interest set forth in the Western Edition of the Wall Street Journal from the date that payments to Employee should have been made under this Agreement. The balance of such severance payments shall be payable in accordance with regular payroll timing and the COBRA premiums shall be reimbursed monthly. For purposes of this provision, the term Specified Employee shall have the meaning set forth in Code Section 409A(2)(B)(i) or any successor provision and the treasury regulations and rulings issued hereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.


		QUEPASA CORPORATION

		/s/ Michael D. Matte

		By: Michael D. Matte
		Its: Chief Financial Officer

		EMPLOYEE

		/s/ John C. Abbott

		By: John C. Abbott

[Signature page to Amendment No. 1]

Exhibit 10.21

AMENDMENT NO. 1
TO
TO THE EMPLOYMENT AGREEMENT

This Amendment No.1 (“ Amendment ”) to the Employment Agreement by and between Quepasa Corporation, a Nevada corporation (the “ Company ”), and Michael D. Matte is entered into and effective as of March 27, 2008. Capitalized terms used but not otherwise defined herein have the meanings assigned thereto in the Employment Agreement.

RECITALS

WHEREAS, the parties to this Amendment are parties to that certain Employment Agreement, dated as of October 25, 2007 (the “ Employment Agreement ”); and

AGREEMENT

1. Section 7(b)(i) of the Employment Agreement shall be amended by adding the following language at the end thereof:

2. Section 8(a) of the Employment Agreement shall be amended and restated in its entirety as follows:

(i) Base Salary. An amount equal to two (2) times Employee’s Base Salary as in effect at the date of termination shall be paid in a lump sum on the date of termination;

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.


		QUEPASA CORPORATION

		/s/ John C. Abbott

		By: John C. Abbott
		Its: Chief Executive Officer

		EMPLOYEE

		/s/ Michael D. Matte

		By: Michael D. Matte

[Signature page to Amendment No. 1]

Exhibit 10.34

EXECUTION VERSION

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (“ Agreement” ) is made effective as of the 24th day of October, 2007 (the “ Effective Date ”), by and between Quepasa Corporation (the “ Company ”), Valdez Productions, Inc. (“ Valdez Productions ”) and Jeffrey Valdez (“ Mr. Valdez ” and together with Valdez Productions, the “ Consultant ” and collectively with the Company, the “ Parties ”).

RECITALS

WHEREAS, Mr. Valdez is a co-founder of SiTV, Inc. and, while acting as Chairman and Chief Creative Officer for SiTV, Inc., established SiTV, Inc.’s presence in the cable television marketplace;

WHEREAS, due to Mr. Valdez’s creative expertise and invaluable vision relating to the Latino marketplace, Mr. Valdez was recently appointed to serve as the non-executive Chairman of the Board of the Company and the Company now desires to retain Mr. Valdez to perform non-exclusive consulting services, except as otherwise provided herein, for the Company through Valdez Productions; and

WHEREAS, Valdez Productions, Mr. Valdez and the Company wish to enter into this Agreement to set forth the obligations and responsibilities of each in connection with their contractual relationship.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the Parties hereto agree as follows:

AGREEMENT

1. NATURE OF WORK

Valdez Productions will provide the Company with the consulting services of Mr. Valdez in the areas of web based programming content, marketing, branding of the Company and any other consulting services mutually agreed between the Parties that is determined by the Parties to be beneficial to the Company (the “ Services ”). The Consultant shall provide the Services on a non-exclusive basis, except in the case of consulting services for internet programming content produced in Spanish that does not conflict with Consultant’s agreement with Maya Entertainment (“ Special Services ”), and in such case, the Consultant shall provide the Special Services on an exclusive basis. The Parties agree that Consultant shall only use the Consultant Intellectual Property (as defined herein) relating to the Special Services for media programming targeting English speaking audiences. The Company acknowledges that Valdez has and is currently involved creatively and sits on the Board of Si TV, Maya Entertainment, Valdez Productions and Sandbox Entertainment (the “ Affiliated Businesses ”) and to the extent agreements relating to these entities conflict with this Agreement, this Agreement shall be subordinate to such pre-existing agreements. The Company acknowledges that the Affiliated Businesses are all involved in the bilingual, English and Spanish language media (including television and internet) media space.

2. DURATION

The term of this Agreement shall be from the Effective Date, and, unless otherwise terminated, shall continue until the first (1 ^st ) anniversary of the Effective Date, following which the Term shall automatically renew for successive three (3) month periods unless and until a party delivers at least thirty (30) days prior written notice of the desire to terminate this Agreement to the other parties, in which this Agreement will expire thirty (30) days from the date such notice is received (the “ Term ”). Notwithstanding the above and in the event that the Company becomes involved in the television business during the Term, subject to Section 12 , the Company will have the option to renegotiate in good faith the Agreement and the Term hereof realizing that Mr. Valdez currently has a non compete agreement with Si TV that prohibits him from launching an “English Language Latino Themed cable nerwork.”

3. COMPENSATION

(a) Monthly Payment for Services . For the Services rendered under this Agreement, the Company will pay to Valdez Productions Eight Thousand Three Hundred and Thirty-Three Dollars ($8,333.00) per month for the Term of this Agreement. At the election of the Consultant, such payment may be made in the form of options to purchase the Company’s common stock. Valdez Productions shall provide monthly invoices for the Services rendered by Mr. Valdez during the month preceding the invoice. Payment shall be made to Valdez Productions within ten (10) business days following the Company’s receipt of each such invoice. All invoices shall be directed to the attention of the Chief Executive Officer or his designee.

(b) Stock Options . Within ten (10) business days of the execution of this Agreement, a grant of nonqualified stock options shall be provided to Valdez Productions to purchase shares of the Company’s common stock in an amount equal to the greater of 210,000 shares or the number of shares that equals One Percent (1%) of the fully-diluted shares of the Company (the “ Optioned Shares ”), and at the price set forth in the Non-Qualified Stock Option Agreement executed by Valdez Productions and the Company in conjunction with this Agreement, one-third of the optioned shares shall vest and become exercisable on October 24, 2008 and the remaining two-thirds of the optioned shares will vest and become exercisable in twenty-four (24) equal monthly installments commencing immediately thereafter.

4. PERFORMANCE OF DUTIES

(a) Good Faith Performance . Consultant agrees that it will at all times faithfully, industriously, and to the best of its ability, experience and talent, and in good faith, perform all of the duties that may be required pursuant to the express terms hereof, and the Company will provide all necessary information and other support appropriate to the performance of the Services. Consultant shall report directly to the Chief Executive Officer of the Company for the Term of this Agreement.

(b) Location . Consultant agrees that Mr. Valdez will primarily perform the Services from the office of Valdez Productions. Travel outside of the Greater Los Angeles area shall require approval by Mr. Valdez, and reasonable and necessary business expenses for such long distance travel shall be paid by the Company provided such expenses have been pre-authorized by the Chief Executive Officer.

5. CONFIDENTIALITY .

During the term of this Agreement and at all times thereafter, the Consultant will keep confidential, not use for Consultant’s own benefit, and not divulge, furnish or make accessible to anyone any Confidential Information. As used herein, “ Confidential Information ” means all information concerning or related to the Services and the Company’s business, operations, financial condition and prospects of the Company and its Affiliates, regardless of the form in which such information appears and whether or not such information has been reduced to a tangible form, and will specifically include: (a) all information regarding the stockholders, directors, officers, employees, customers, suppliers, distributors, sales representatives and licensees of the Company and its Affiliates, in each case whether past, present or prospective; (b) all software, inventions, discoveries, trade secrets, processes, techniques, methods, formulae, ideas and know-how of the Company and its Affiliates; (c) all financial statements, audit reports, budgets and business plans or forecasts of the Company and its Affiliates, and (d) all Consultant Intellectual Property created by or for Consultant hereunder; provided, that Confidential Information will not include information which is or becomes generally known to the public through no act or omission of Consultant; “ Affiliate ” means any Person which controls, is controlled by or is under common control with the Company; “ control ” means, with respect to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise; and “ Person ” means any individual, firm, corporation, partnership, limited liability the Company, trust, estate, association or other legal entity.

6. OWNERSHIP AND USE OF INTELLECTUAL PROPERTY .

(a) Any protectable Intellectual Property relating to the Services that is conceived, developed, or reduced to practice, or caused to be conceived, developed, or reduced to practice, in whole or in part by Consultant in its performance of the Services, during Consultant’s engagement hereunder (the “ Consultant Intellectual Property ”) will be deemed to have been made or developed by Consultant and will be the exclusive property of Consultant. Consultant hereby grants to Company an exclusive, royalty-free, non-transferable, worldwide license to make and use the Consultant Intellectual Property throughout the Term of this Agreement and for a period of six (6) months after termination of this Agreement. Notwithstanding the foregoing, Consultant shall be permitted to use the Consultant Intellectual Property related to the Special Services solely for media programming in English during the Term of this Agreement. The Parties agree that during the Term of this Agreement, Consultant shall not use the Consultant Intellectual Property relating to the Spanish-language Special Services for any entity other than Company. The Parties agree that Consultant, during the Term of this Agreement, shall use its best efforts to mark and/or brand any Consultant Intellectual Property used for third parties with Company’s trademarks; provided, however, Consultant shall only be permitted to use Company’s trademarks, service marks, and/or trade dress with the prior written approval of Company. Notwithstanding this Section 6(a), nothing in this Agreement shall be construed to grant Consultant any rights in (i) Company customer data, (ii) Company trademarks, service marks and trade dress, and/or (iii) Company Confidential Information, and Company hereby retains all such rights. During the Term of this Agreement and for a period of six (6) months after termination of this Agreement, Consultant hereby agrees to pay Company twenty percent (20%) of any net revenue related to Consultant’s exploitation of Consultant Intellectual Property with third parties.

(b) As used herein, “ Intellectual Property ” means any and all Inventions, Works, trade secrets, trademarks, mask works, and copyrights. “ Invention(s) ” means any and all discoveries, improvements, ideas, concepts, creative works, and designs, whether or not in writing or reduced to practice, and whether or not they are patentable, including, but not limited to, processes, methods, formulas, and techniques and know-how; and “ Works ” means those works fixed in any tangible medium of expression from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device, whether or not they are copyrightable.

7. RIGHT OF FIRST REFUSAL .

(a) If Consultant desires to sell or transfer any of its interests in or any of its content that it developed for the Affiliated Businesses, to another entertainment company, the Consultant shall afford the Company a right of first refusal.

(b) Consultant shall provide the Company with ninety (90) days’ prior written notice of its intention to make a transfer of any of its interests in or any of its content that it developed for the Affiliated Businesses (the “ Disposition Notice ”). In the Disposition Notice, the Consultant shall specify the price at which the interests or content is proposed to be sold or transferred, the portion of the Consultant’s interest or content to be sold or transferred, the identity of the proposed purchaser or transferee, and the terms and conditions of the proposed transfer or sale.

(c) The Company may elect within sixty (60) days after receiving the Disposition Notice, to purchase the interests or content to be sold or transferred by the Consultant at the proposed price as contained in the Disposition Notice. The terms and conditions of the purchase by the Company shall be the terms and conditions of the proposed transfer or sale as set forth in the Disposition Notice. Any purchase pursuant to the foregoing alternative method shall be made in cash within sixty (60) days after receiving the Disposition Notice.

(d) If the Company decides not to purchase the interest or content offered by the Consultant, within thirty (30) days after the Company reaches such decision, and, in any event, at the expiration of the first sixty (60) days of the notice period specified in Section 7(b) , the Company shall so notify the Consultant. The notice shall state that the Company did not exercise its option to purchase the interest or content developed for the Affiliated Businesses offered by the Consultant.

(f) If the Company does not purchase the interests or content covered by the Disposition Notice as provided in the foregoing subsections of this Section 7 within the first ninety (90) days of the notice period, the Consultant may sell the interest or content to Person other than the Company, provided that any disposition must be made on the terms and conditions and to the party specified in the Disposition Notice and must be consummated within the ninety (90) day notice period.

8. NON-DISPARAGEMENT .

(a) Neither Mr. Valdez, Valdez Productions nor Valdez Productions’ shareholders, officers, directors, members, managers, or employees will make any statements (or cause or encourage others to make any statements), written or verbal, that defame, disparage or in any way criticize the personal or business reputation, practices or conduct of the Company or its shareholders, officers, directors, or employees.

(b) Neither the Company nor the Company’s shareholders, officers, directors, members, managers, or employees will make any statements (or cause or encourage others to make any statements), written or verbal, that defame, disparage or in any way criticize the personal or business reputation, practices or conduct of Mr. Valdez, Valdez Productions or Valdez Productions’ shareholders, officers, directors, or employees.

9. REPRESENTATIONS AND WARRANTIES OF VALDEZ PRODUCTIONS .

Valdez Productions hereby represents and warrants to, and covenants with, the Company as follows:

(a) Valdez Productions has the full legal right and power and all authority required to enter into and to perform according to the terms of this Agreement. This Agreement is duly and validly executed and delivered by Valdez Productions, and constitutes legal, valid, and binding obligations of Valdez Productions enforceable against Valdez Productions in accordance with its terms.

(b) The execution, delivery and performance of this Agreement by Valdez Productions do not and will not (i) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement or other instrument or other understanding to which Valdez Productions is a party or by which any property or asset of Valdez Productions is bound or affected, or (ii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Valdez Productions is subject (including federal and state securities laws and regulations), or by which any property or asset of Valdez Productions is bound or affected. Consultant Intellectual Property does not misappropriate or infringe any third party intellectual property rights.

10. REPRESENTATIONS AND WARRANTIES OF COMPANY .

The Company hereby represents and warrants to, and covenants with, the Consultant as follows:

(a) The Company has the full legal right and power and all authority required to enter into and to perform according to the terms of this Agreement. This Agreement is duly and validly executed and delivered by the Company, and constitutes legal, valid, and binding obligations of the Company enforceable against the Company in accordance with its terms.

(b) The execution, delivery and performance of this Agreement by the Company does not and will not (i) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement or other instrument or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (ii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected.

11. INDEPENDENT CONSULTANT RELATIONSHIP .

At all times during the Term, Consultant and the Company shall have the relationship of independent contractors. In no event shall Consultant be deemed to be an employee of the Company, and Consultant shall not at any time be entitled to any Company employment rights or benefits or be deemed to be an agent of the Company or have any power to bind or commit the Company or otherwise act on the Company’s behalf unless expressly authorized to do so in writing by an officer of the Company. Consultant shall have the independent authority to determine the means and manner of engaging in the Services within the reasonable guidelines established by the Company.

12. TERMINATION

(a) Expiration of Term . The Term of this Agreement shall continue for successive three (3) month periods unless terminated in accordance with Section 2 hereof.

(b) Death or Disability . If Mr. Valdez dies during the Term of this Agreement, this Agreement shall be deemed to terminate on the date of Mr. Valdez’s death.

(c) Without Cause . Valdez Productions or the Company may terminate the Term of this Agreement without cause upon providing thirty (30) days written notice to the Company.

(d) Compensation on Termination . In the event of termination of the Term of this Agreement by (i) the Company for any reason other than for cause or by Consultant without cause or (ii) the death of Mr. Valdez, Valdez Productions shall be entitled to payment for the Services rendered by Mr. Valdez up to and including the date of termination of the Term of this Agreement and the Optioned Shares shall immediately vest and become exercisable for a period of two years following the termination. In the event of termination of the Term of this Agreement by the Company with cause, the Optioned Shares shall cease to vest as of the date of termination of the Term of this Agreement; however, Valdez Productions shall be permitted to exercise the Optioned Shares, which have fully vested prior to such date of termination for a period of two years following the date of termination.

(e) Compensation upon a Change of Control . In the event of termination of the Term of this Agreement by (i) the Company for any reason other than for cause or by Consultant without cause or (ii) the death of Mr. Valdez, Valdez Productions shall be entitled to payment for the Services rendered by Mr. Valdez up to and including the date of termination of the Term of this Agreement and the Optioned Shares shall immediately vest and become exercisable for a period of two years following the termination. In the event of termination of the Term of this Agreement by the Company with cause, the Optioned Shares shall cease to vest as of the date of termination of the Term of this Agreement; however, Valdez Productions shall be permitted to exercise the Optioned Shares, which have fully vested prior to such date of termination for a period of two years following the date of termination.

13. Notices . All notices required or permitted by the terms of this Agreement shall be sufficient if given in writing and delivered personally, by facsimile, or by certified mail or courier service, requiring written acknowledgement of receipt, to the following addresses for the persons or entities listed:


		For the Company:		John C. Abbott
				Chief Executive Officer
				Quepasa Corporation
				7550 E. Redfield Road
				Scottsdale, AZ 85260
				Fax: (___) _________

		With a copy to:
				Travis J. Leach, Esq.
				Snell & Wilmer, L.L.P.
				One Arizona Center
				Phoenix, Arizona 85004
				Fax: (602) 382-6070

		For Mr. Valdez and
		Valdez Productions:		Channing D. Johnson, Esq.
				Akin Gump Strauss Hauer & Feld LLP
				2029 Century Park East, Suite 2400
				Los Angeles, CA 90067
				Facsimile: (310) 229-1001

14. Governing Law . This Agreement is governed by and shall be construed and interpreted according to the laws of the State of Nevada.

[Remainder of Page Intentionally Left Blank]

Execution Version

IN WITNESS WHEREOF, this Agreement is effective between the parties as of the Effective Date.


THE COMPANY:			THE CONSULTANT:

	QUEPASA CORPORATION			JEFF VALDEZ

	By:	/s/ John C. Abbott		/s/ Jeff Valdez

	Name: John C. Abbott
	Title: Chief Executive Officer			Date:	March 27, 2008


Date:	March 27, 2008

				VALDEZ PRODUCTIONS, INC.

				By:

				Name:

				Title:

				Date:

Signature Page for Consulting Agreement

Exhibit 10.35

LOAN AGREEMENT

This Loan Agreement (“ Agreement ”) is made as of the 27th day of March, 2008, by and between Quepasa Corporation, a Nevada corporation (“ Lender ”), and BRC Group LLC, a California limited liability company (“ Borrower ”).

I. Background and Basic Terms

1.1 Agreement to Borrow and Lend; Background .

(a) Subject to the terms and conditions set forth in this Agreement, Lender agrees to make advances to or for the benefit of Borrower, and Borrower agrees to borrow, a loan in the maximum principal amount of $600,000.00 (the “ Loan ”). Advances under the Loan will be made at Lender’s discretion in accordance with the advance schedule set forth in paragraph (b) below, but only if an Event of Default has occurred and has not been cured within any grace or cure period.

(b) If all of the conditions precedent described in Section 1.4 are satisfied, then, subject to Section 1.1(a), Lender will advance to Borrower the Loan amount as follows: (i) $300,000.00 on the date hereof (“ Closing Date ”); (ii) $50,000.00 on April 1, 2008; and (iv) $250,000.00 on September 1, 2008.

(c) All advances made by Lender pursuant to this Agreement shall be evidenced by the Note and Ancillary Documents (as defined in Section 1.2).

1.2 Loan Documents .

(a) The Loan will be evidenced by a Promissory Note of even date herewith in the principal amount of $600,000.00, made by Borrower and payable to the order of Lender (the “ Note ”) as described in this Agreement. Individually and collectively, the Note and this Agreement are called the “ Loan Documents ”.

(b) In addition to the Note, Borrower and a majority in interest of Borrower’s Members, including Richard Copeland and Brad Rothenberg (individually and collectively, the “Members”) have concurrently with the execution of this Agreement executed and delivered to Lender an Equity Interests Purchase Warrant of even date (the “ Warrant ”), a Right of Purchase and Right of First Refusal Agreement (the “ ROFR Agreement ”) and a Website Development and Hosting Agreement between Lender, Borrower, and Alianza De Futbol, L.L.C., a Texas limited liability company, of even date herewith (the “ Website Agreement ”). Individually and collectively, the Warrant, the ROFR Agreement, and the Website Agreement are called the “ Ancillary Documents .”

1.3 Application of Loan Principal To Exercise Warrant . Lender shall have the right to cause the outstanding principal balance of the Loan, evidenced by this Agreement and the Note, to be applied to pay the exercise price for the Equity Interest in accordance with the terms and conditions described in the Warrant.

1.4 Advance Conditions .

(a) The obligation of Lender to make the Loan, and each and every advance under the Loan, is expressly subject to the following conditions precedent:

(i) Borrower’s delivery to Lender of the executed Loan Documents and a copy of its Articles of Organization and Operating Agreement, with all amendments and modifications thereto.

(ii) Borrower’s delivery of a certified resolution adopted by Borrower’s Members and Managers authorizing Borrower to enter into this Agreement and to enter into and consummate the transactions contemplated by the Loan Documents and the Ancillary Documents.

(iii) All representations and warranties by Borrower hereunder shall remain true and correct in all material respects, and all agreements that Borrower is to have performed or complied with by the Closing Date shall have been performed or complied with, as of the Closing Date.

(iv) No Event of Default exists and no event has occurred or condition exists that, with the giving of notice or lapse of time, or both, would constitute an Event of Default.

(v) Prior to Lender making any advance, Borrower shall deliver to Lender a non-default certificate attesting that no Event of Default has occurred under this Agreement and that if such Event of Default has occurred it has been cured in its entirety and that no event has occurred that with the giving of Notice or the passage of time, or both, would constitute an Event of Default.

II. Representations and Warranties

Borrower represents and warrants to Lender as follows:

2.1 Organizational Matters .

(a) Borrower and its constituent principals, by executing this Agreement or borrowing resolutions or authorizations referring to this Agreement: (i) approve and ratify the terms and provisions of the Loan Documents and the Ancillary Documents; (ii) agree that the provisions of the Loan Documents and the Ancillary Documents shall govern to the extent of any inconsistency with the provisions of Borrower’s organizational documents, as between Borrower and Lender; and (iii) agree that Lender shall have no duty to inquire into the powers of Borrower or the persons acting or purporting to act on behalf of Borrower and shall have no responsibility of any nature to determine or be concerned with any provisions of Borrower’s organizational documents or any fiduciary or other duty of Borrower or any manager or member thereof to any other person. Nothing in this paragraph shall affect any powers, rights and obligations between or among Borrower and any persons other than Lender (and its successors and assigns), the sole purpose of this paragraph being to eliminate any duty or obligation of Lender to determine or be concerned with any such powers, rights or obligations.

(b) Until the principal balance of the Loan is paid in full, Borrower’s organizational documents shall not be modified or amended in any respect without Lender’s prior written consent. Borrower shall provide copies of any modification or amendment of its organizational documents to Lender. Lender may impose such documentary, title insurance, opinion of counsel and/or recording and filing conditions and requirements as Lender may determine on a conservative basis are required or prudent to assure that Lender’s rights under this Agreement and the other Loan Documents will be maintained in full force and effect and will not be impaired.

2.2 Status of Borrower . Borrower is a manager-managed limited liability company duly organized, validly existing under the laws of the State of California. Borrower is in good standing and qualified to transact business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to so qualify could have a material adverse effect on its business, financial condition or operations. Borrower is not a “foreign corporation,” “foreign partnership,” “foreign trust,” or “foreign estate” as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder.

2.3 Authority of Borrower; Valid and Binding Obligation . Borrower has full power and authority to own its properties and assets and to carry on its business as now being conducted. Borrower and the person(s) acting herein on its behalf are fully authorized and permitted to enter into the Loan Documents and the Ancillary Documents, to execute any and all documentation required therein, to borrow the amounts contemplated in the Loan Documents and the Ancillary Documents upon the terms set forth therein and to perform the terms of the Loan Documents and the Ancillary Documents, none of which require the consent or approval of any third person or do or will conflict with or violate any Legal Requirement applicable to Borrower or any of its managers or constituent members or with the governing organizational documents of Borrower or any of its managers or constituent members. The Loan Documents constitute valid and binding legal obligations of Borrower, enforceable in accordance with their terms, free from any set-off, claim or defense of any nature.

2.4 Liens, Security Interests and Assignments . Any liens, security interests and assignments created by the Loan Documents will, if and when granted and duly filed or recorded, constitute valid, effective, properly perfected and enforceable liens, security interests and assignments.

2.5 No Breach or Default under Other Instruments or Agreements . The execution, delivery and performance of the Loan Documents, the Ancillary Documents and all other documents and instruments relating to the Loan will not result in any breach of, or constitute a default under, any agreement or instrument to which Borrower is a party or under which it is obligated. No such party is in default in the performance or observance of any obligations, covenants or conditions of any such agreement or instrument.

2.6 No Actions, Suits or Proceedings . No actions, suits or legal or administrative proceedings are pending before any court, arbitrator or governmental body, or, to the best knowledge of Borrower, are threatened (nor, to the best knowledge of Borrower, does any basis exist therefor), against Borrower or affecting any such party’s property or assets that might materially and adversely affect the repayment of the Loan, such party’s performance under the Loan Documents or the Ancillary Documents, such party’s financial condition, business or operations or the value of Lender’s security. Borrower is not in default under, or in violation of, any order, writ, injunction, decree, judgment, award, determination, direction or demand of any court, arbitrator or governmental body, nor is there any outstanding judgment or arbitration award against any such party.

2.7 Survival of Representations and Warranties . All representations and warranties made herein shall survive the execution of this Agreement, the making of any advance hereunder and the execution and delivery of all other documents and instruments in connection with the Loan, so long as Lender has any commitment to lend to Borrower hereunder and until the Loan has been paid in full.

2.8 Loan Documents . The Loan Documents and the Ancillary Documents are valid and enforceable according to their terms.

2.9 Financial Information . Each balance sheet and income statement and any other financial statements provided by Borrower to Lender (individually and collectively, the “Financial Statements”) shall be submitted to Lender timely and shall be accurate, true and correct in all material respects and shall present fairly the financial condition of Borrower as of the date thereof and the results of operation of Borrower for the period covered thereby. Borrower hereby has no knowledge of any liabilities, contingent or otherwise, as of the date of any Financial Statement not reflected in the balance sheet. No Financial Statement shall fail to state any material fact necessary to make the information contained therein, not misleading.

2.10 Title to Assets . Borrower has good and marketable title to all of its assets, and Borrower’s assets are not subject to any mortgage, deed of trust, pledge, lien or other security interests, other than those permitted by Lender, consented to by Lender and evidenced, which consent is evidenced in writing.

2.11 Franchises and Permits . Borrower has all material permits, franchises, contracts and licenses and required trademarks and other intellectual property necessary to conduct its business as it is presently conducted.

2.12 Taxes . Borrower has filed all tax returns and reports required to be filed and has pay all applicable federal, state and local franchise, income, property and employment taxes, which may now or hereafter become payable.

2.13 Compliance with Law . Borrower has complied with all laws applicable to Borrower.

III. Covenants

So long as Lender has any commitment to lend to Borrower hereunder and until the Loan has been paid in full:

3.1 Financial Information . To provide the following financial information and statements and such additional information as requested by the Lender from time to time:

(a) As soon as available but not later than 120 days after the Borrower’s fiscal year end, the Borrower’s unaudited annual Financial Statements including balance sheet, income statement and source and use of funds statement. If Borrower has any subsidiaries, the statements shall be prepared on a consolidated basis.

(b) Upon Lender’s request, the Borrower’s unaudited quarterly financial statements, including balance sheet, income statement and source and use of funds statement, if such statements are available. If Borrower has any subsidiaries, the statements shall be prepared on a consolidated basis.

(c) Upon Lender’s request, a statement of cash flow projections for at least the next 36 months for the Borrower on an unconsolidated basis if such statements are available.

(d) Copies of the Borrower’s federal income tax returns (with all forms attached), within 15 days of filing with the IRS, and, if requested by the Lender, copies of any extensions of the filing date.

In addition, Borrower shall promptly notify Lender of any condition or event of which it has knowledge that constitutes an Event of Default, and of any material adverse change in the financial condition of Borrower; and promptly notify Lender of any litigation or claims that could materially and adversely affect the repayment of the Loan or the performance by Borrower under the Loan Documents, the financial condition or operations of Borrower or the value of Lender’s security.

3.2 Indemnification of Lender .

(a) Borrower shall indemnify and hold Lender, and its respective successors and assigns (collectively, “ Indemnitees ”), harmless for, from and against any and all claims asserted against any Indemnitee by any person arising out of or in connection any gross negligence or willful misconduct of Borrower in connection with the Loan Documents. The foregoing indemnity shall not apply to claims which arise solely out of an Indemnitee’s gross negligence or willful misconduct. Borrower shall have the first opportunity to defend against any such claim; provided, however, that if, in the reasonable judgment of Lender, Indemnitors are incapable of defending (due to a conflict of interest or otherwise), or unwilling to defend, the relevant Indemnitee(s) against such claims or fail to defend the relevant Indemnitee(s) against such claims in a manner Lender reasonably deems appropriate, then Lender shall be entitled to appear in any action or proceeding to defend the relevant Indemnitee(s) against such claims with counsel of its own choice, and Indemnitors shall reimburse Lender for all costs incurred by Lender in connection therewith, including reasonable attorneys’ fees, within ten (10) business days after demand therefor. Any failure to so reimburse Lender within the specified time period shall constitute an Event of Default, and the unreimbursed amount shall be added to the outstanding balance of the Loan, and shall be subject to the Warrant. The indemnity obligations in this paragraph 3.2 shall survive repayment of the Loan and the termination of any other portions of this Agreement.

(b) The relevant Indemnitee(s), at its sole option, shall be entitled to settle or compromise any claim asserted against it, subject to the prior reasonable approval of Borrower, and such settlement shall be binding upon Indemnitors for purposes of the foregoing indemnification; provided, however, that, upon ten business days’ prior written notice (or such shorter time period as may then be practicable under the circumstances), Indemnitors may settle or compromise any such claim, or decide not to settle or compromise any such claim, as long as all Indemnitees are fully released from any and all liability thereon. Payment by Lender pursuant to such settlement or compromise, or payment by Lender of any judgment or claim successfully asserted against an Indemnitee or any Membership Interests, shall be added to the outstanding balance of the Loan, and be payable upon demand of Lender.

3.3 Further Assignment, Transfer or Encumbrance . Except as expressly permitted by this Agreement or the Warrant, without the prior written consent of Lender, Borrower and the Members shall not: (a) create or suffer to be created any mortgage, pledge, security interest, encumbrance or other lien on any Membership Interest; or (b) transfer, or create or suffer to be created any mortgage, pledge, security interest, encumbrance or other lien on, any other property or assets now owned or hereafter acquired by Borrower except in return for Borrower’s contemporaneous receipt of benefits of at least equal value.

3.4 Use of Proceeds; Business Activities . Borrower shall use the proceeds of the Loan solely for the operation of Borrower’s business, in Borrower’s discretion, but shall not use said proceeds to pay compensation to the Borrower’s managers or officers.

3.5 Compliance with Laws . Borrower shall comply, in all material respects, with the laws, regulations and orders of any government body with authority over Borrower’s business.

3.6 Restrictions . Until the principal balance evidenced by the Note is paid in full, Borrower shall not make any loans, advances or other extensions of credit to, officers, directors, executives, managers, or members without Lender’s prior written consent.

3.7 Insurance . Until the principal balance evidenced by the Note is paid in full, Borrower shall maintain commercial general liability coverage with reasonable limits for Borrower’s business activities and to maintain all-risk property insurance on real or personal property maintained or owned by Borrower in a reasonable amount for Borrower’s business activities.

3.8 Transfer of Membership Interest . Borrower shall not assign, transfer or convey any of its right, title or interest in any Membership Interest that in an aggregate equals more than 50% of the total issued and outstanding Membership Interests. Upon any transfer by Borrower in violation of this Section 3.8, the total outstanding principal under the Note shall become due payable in full.

3.9 Additional Negative Covenants . Borrower shall not, without Lender’s prior written consent:.

(a) Engage in any business activities substantially different from the Borrower’s present business plan, as provided to Lender on or before the date first written above (“ Borrower’s Business Plan”);

(b) Liquidate or dissolve the Borrower’s business;

(d) Acquire or purchase a business or its assets for a consideration, including assumption of debt, in excess of One Hundred Thousand Dollars ($100,000) in the aggregate, unless such acquisition or purchase is consistent with Borrower’s Business Plan;

(e) Sell or otherwise dispose of any assets for less than fair market value; or

(f) Use any proceeds of the Loan for personal, family, household or other consumer purposes.

IV. Default and Remedies

4.1 Events of Default . Occurrence of one or more of the following events shall constitute an “ Event of Default ” under this Agreement:

(a) Any failure to pay any amount due Lender (i) under the Note or any one or more of the other Loan Documents as and when the same becomes due and payable, or (ii) under any other agreement between Borrower and Lender.

(b) Any failure or neglect to perform or observe any of the terms, provisions, conditions or covenants of any one or more of the Loan Documents, any one or more of the Ancillary Documents, or any other document or instrument executed or delivered in connection with the Loan.

(c) Any warranty, representation or statement contained in any one or more of the Loan Documents or any other document or instrument executed or delivered in connection with the Loan, or made or furnished to Lender by or on behalf of Borrower, shall be or shall prove to have been false, inaccurate or misleading in any material respect when made or furnished.

(d) Richard Copeland or Brad Rothenberg dies or becomes physically incapacitated or mentally incompetent;

(e) Borrower is dissolved, liquidated or terminated, or otherwise ceases to exist.

(f) Borrower makes or furnishes Lender with any financial or other statement or certificate required or provided for under this Agreement or any other Loan Document or otherwise which is false, inaccurate or misleading in any material respect, whether or not Lender has actual knowledge of any such falsity, inaccuracy or misleading nature.

(g) Borrower becomes insolvent; makes an assignment for the benefit of creditors; fails generally to pay its debts as they become due; a receiver, trustee, custodian or conservator is appointed with respect to all or part of Borrower’s assets; or a petition for relief under any chapter of the federal Bankruptcy Code (or any similar debtor relief laws to which the parties may be subject) is filed by or against Borrower.

(h) Breach of any term or condition of the Warrant.

(i) Any breach by Borrower under the ROFR Agreement.

(j) A default by Borrower under any other agreement by Borrower for the loan of money to Borrower that is not cured within any applicable loan or grace period or the institution of any legal action or proceedings to enforce a lien upon the Membership Interest or any part thereof.

(k) The occurrence of any adverse change in the financial condition or business affairs of Borrower that Lender, in its reasonable discretion, deems material, or if Lender in good faith shall believe that the prospect of payment or performance of all or part of the Loan is materially impaired, and such adverse change is not cured by a substitute income stream within the six (6) month period following such occurrence.

(l) Any Loan Document shall, at any time, and for any reason (except as may be approved by Lender), cease to be in full force and effect other than by the terms thereof or shall be declared null and void, or the validity or enforceability thereof shall be contested by Borrower, or Borrower shall deny that it has any further liability or obligation thereunder other than by the terms thereof.

(m) The occurrence of any other default under any Loan Document, or any other document or instrument executed or delivered in connection with the Loan, whether or not such default is expressly defined therein as an “event of default.”

4.2 Cure Period . If an Event of Default occurs, but is capable of cure within the cure periods sets forth herein, except for those Events of Default described in Section 4.1(a), (c), (d), (e), (f) and (g), Borrower shall have ten (10) calendar days after the earlier of (i) the date of such Event of Default, or (ii) the date Lender gives written notice to Borrower as provided by paragraph 5.17 specifying the nature of the Event of Default, in which to cure the Event of Default; provided that Lender shall not be obligated to notify Borrower of any Event of Default described in Section 4.1(a), (c), (d), (e), (f) or (g). The ten (10) calendar period described in the foregoing sentence shall be extended by another twenty (20) calendar days (for a total of thirty (30) calendar days) if: (a) the relevant Event of Default is reasonably capable of being cured, but not within ten (10) calendar days and not by the payment of moneys; and (b) Borrower immediately commences, expeditiously takes and diligently pursues all reasonable steps to cure the Event of Default.

The giving of any such notice shall not preclude Lender from giving other or additional notices of other Events of Default, whether or not any such other Events of Default are or were in existence at the time of such notice. As used in this Agreement: (i) “ Matured Default ” means an Event of Default that Lender has formally declared to exist in a written communication pursuant to paragraph 5.17 that either (A) is described in Section 4.1(a), (c), (d), (e), (f) or (g), (B) is not reasonably capable of being cured, or (C) is reasonably capable of being cured, but has not been cured within the applicable cure period; and (ii) “Event of Default” includes any event described in paragraph 4.1 above, regardless of whether Lender has formally declared the event to exist in a written communication, as well as any Matured Default. Without limiting the scope of Events of Default that will not be deemed capable of cure within the meaning of this paragraph, Borrower acknowledges that the filing of a voluntary petition for relief under any chapter of the federal Bankruptcy Code by any person described in paragraph 4.1(g) shall constitute Events of Default that are not capable of cure. Lender shall not be required under any circumstance to give Borrower more than one notice or cure period with respect to a given Event of Default or to extend the cure period with respect to a given Event of Default beyond the applicable cure period described above. Notwithstanding any provision of any Loan Document to the contrary, no notice or cure period need be given prior to accelerating the Loan by reason of the failure to pay all amounts due upon the maturity of the Loan. Borrower acknowledges and agrees that all cure periods provided in the Loan Documents will run concurrently with all applicable statutory cure periods if Lender so elects.

4.3 Exercise of Remedies by Lender .

(a) If a Matured Default exists, Lender shall have the right, at its sole option, to declare the whole principal sum of the Loan then outstanding immediately due and payable, together withall other costs, charges and indebtednesses described in the Loan Documents or any other document executed in connection with this Agreement. Any sums advanced or costs or expenses incurred by Lender pursuant to the terms of the Loan Documents shall be subject to the Warrant. The foregoing sentence shall be equally applicable to costs and expenses incurred by Lender in any proceeding under the federal Bankruptcy Code.

(b) If a Matured Default exists, Lender may, at its option, withhold any further advances under this Agreement or take any other actions which Lender determines in good faith are necessary to preserve and protect the Membership Interests. If an involuntary petition is filed against Borrower under any chapter of the federal Bankruptcy Code, Lender may, at its option, withhold any advances under this Agreement until such petition is dismissed or the bankruptcy court enters an appropriate order confirming that Lender’s liens on any then-owned or after-acquired property of Borrower shall remain in full force and effect with respect to any indebtedness then or thereafter evidenced by the Note.

(c) Anything in this Agreement to the contrary notwithstanding, at any time an Event of Default exists, and without regard to whether a Matured Default exists, Lender, in its sole and absolute discretion, may cause any unpaid principal due it under this Agreement and the Note to be applied, to the extent permitted by the Warrant, to pay the exercise price set forth in the Warrant.Exercise of the Warrant, and the sole and exclusive ownership in and to the Webpage, Developer Content, Work Product (as each of the foregoing terms is defined in the Webpage Development and Hosting Agreement between Holder and Maker of approximate date herewith) and all statistical information obtained through the tracking and monitoring the Webpage, shall be Lender’s sole remedy and recourse to collect any unpaid amounts due under the Loan Documents.

V. General and Miscellaneous Provisions

5.1 Term of Agreement . The term of this Agreement shall commence immediately upon its execution and delivery and the covenants, agreements, representations and warranties contained in this Agreement shall survive the making of the Loan and shall continue so long as any part of the Loan, or any extension, modification or renewal thereof, remains unpaid or unperformed.

5.2 Right to Assign or Participate . Lender may not assign, negotiate, participate, pledge or otherwise hypothecate all or any portion of its rights under any of the Loan Documents or any of its security, and may not assign and delegate any or all of its primary supervisory and disbursing functions, without the written consent of Borrower. In case of such assignment, Borrower will accord full recognition thereto and hereby agrees that all rights and remedies of Lender in connection with the interest so assigned shall be enforceable against Borrower by Lender’s assignee. On and after the effective date of such assignment, the assignee shall for all purposes become the Lender under the Loan Documents, and shall have all of the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were the original Lender, and the assigning Lender shall thereafter be released from further obligation with respect to the assigned portion of the Loan. Lender may furnish to any prospective, assignee of the Loan, or to any governmental or regulatory authority, any information or documentation that Lender may have regarding Borrower or the Loan. Notwithstanding the foregoing, Borrower shall not withhold its consent for such an assignment unless the assignee thereof competes with Borrower in the business of producing soccer tournaments.

5.3 Integration; Amendments . The Loan Documents constitute a complete integration of the agreement of Lender and Borrower respecting the Loan, and may be amended or modified in the future only by written amendment signed by Lender and Borrower. Any and all prior oral and/or written commitments from Lender to Borrower, any predecessor in interest of Borrower with respect to all or any portion of the financing described in this Agreement have been merged in the Loan Documents and the other documentation executed and delivered concurrently herewith, and shall, except as expressly provided in the Loan Documents and the other documentation executed and delivered concurrently herewith, be of no further force or effect. No representations, promises, warranties, understandings or agreements, express or implied, verbal or written, exist with respect to the Loan except those expressly set forth in the Loan Documents and the other documentation executed and delivered concurrently herewith. Borrower acknowledges that its execution and delivery of the Loan Documents is its free and voluntary act and deed, and that its execution and delivery have not been induced by, or done in reliance upon, any representations, promises, warranties, understandings or agreements made by Lender or its agents, officers, employees or representatives that are not set forth in the Loan Documents.

5.4 Cumulative Rights . Lender may exercise any available right, power or remedy, at its option and in its sole and absolute discretion, without any obligation to do so. If Lender is given two or more alternative courses of action, Lender may elect any alternative or combination of alternatives, at its option and in its sole and absolute discretion. No single or partial exercise of any right, power or remedy shall preclude any other or further exercise thereof or of any other right, power or remedy. All moneys advanced by Lender under the terms of the Loan Documents and all amounts paid, suffered or incurred by Lender in exercising any authority granted in the Loan Documents, including court costs and reasonable attorneys’ fees and the expenses, shall be immediately due and payable by Borrower, be added to the outstanding balance of the Loan, and be subject to the Warrant.

5.5 Governing Law and Venue . This Agreement and all other Loan Documents will be executed and delivered in, and shall be governed by and construed in accordance with the substantive laws and judicial decisions of the State of Arizona (regardless of Arizonaconflict of laws principles or the residence, location, domicile or place of business of Borrower, any guarantor, or any of their constituent principals) and applicable federal laws, rules and regulations, as more particularly described in paragraph 14 of the Note. Borrower expressly acknowledges and agrees that any judicial action to enforce any right of Lender under this Agreement or any of the other Loan Documents may be brought and maintained in the venue(s) described in paragraph 14 of the Note. Borrower waives any objection thereto based on improper venue or the alleged inconvenience of such a court as a forum in which to litigate or arbitrate the action.

5.6 Waivers by Borrower . Borrower waives presentment, demand, protest and notices of protest, nonpayment, partial payment and all other notices and formalities except as expressly called for in this Agreement. Borrower further consents to, and waives notice of (a) the granting of indulgences or extensions of time of payment, and (b) the addition or release of persons who may be or become primarily or secondarily liable for the Loan or any part thereof, all in such a manner and at such time as Lender may deem advisable.

5.7 Waivers by Lender . No delay or omission by Lender in exercising any right, power or remedy hereunder, or indulgence given to Borrower with respect to any condition set forth herein, or Event of Default shall: (a) impair any right, power or remedy of Lender under this Agreement; (b) be construed as Lender’s waiver of, or acquiescence in, such condition or any Event of Default; or (c) be construed as a variation or waiver of any of the terms, conditions or provisions of this Agreement. No waiver by Lender of any Event of Default shall constitute a waiver of any other prior or subsequent Event of Default, or of the same Event of Default, after notice to Borrower demanding strict performance. Lender shall not be estopped from taking any action with respect to any Event of Default because of any delay by Lender in giving notice of such Event of Default or exercising any remedy based thereon. No waiver of any Event of Default shall be effective unless it is written and signed by an authorized officer of Lender.

5.8 Time of the Essence . Time is of the essence of this Agreement, the other Loan Documents and of each term, provision and condition thereof.

5.9 Successors and Assigns; No Third Party Beneficiaries . Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; however, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto and their respective permitted successors and assigns.

5.10 Construction of Agreement; Incorporation by Reference . This Agreement shall apply to the parties hereto according to the context hereof, without regard to the number or gender of words or expressions used herein. The headings or captions of Articles and paragraphs in this Agreement are for convenience and reference only, and in no way define or limit the scope or intent of this Agreement or the provisions of such Articles or paragraphs. Article, paragraph, subparagraph, clause and exhibit references are to this Agreement, unless otherwise specified. This Agreement shall be construed as a whole, in accordance with the fair meaning of its language, and, as each party has been represented by legal counsel of its choice in the negotiation of this Agreement or deliberately chosen not to be so represented, neither this Agreement nor any provision thereof shall be construed for or against either party by reason of the identity of the party drafting this Agreement. As used in this Agreement, the terms: (a) “include(s)” or “including” shall mean without limitation by reason of enumeration; (b) “herein,” “hereunder,” “hereof,” “hereinafter” or similar terms refer to this Agreement as a whole rather than to any particular Article or paragraph; (c) “person” includes a corporation, trust, partnership, joint venture, limited liability company, association, governmental body or other entity, as well as a natural person; (d) “month” means a calendar month unless otherwise provided; (e) “days” means calendar days unless otherwise provided; and (f) “good faith” shall have the meaning provided in A.R.S. § 47-1201 as of the date of this Agreement. Any document incorporated herein by reference shall be made a part hereof for all purposes, and references in this Agreement to such document shall be deemed to include such reference and incorporation, and reference to any agreement, document or instrument (including this Agreement and any other Loan Document) means such agreement, document or instrument as amended, modified, replaced, superseded or restated. Unless otherwise expressly provided in this Agreement or another Loan Document, the provisions of this Agreement shall prevail in the event that an irreconcilable conflict or discrepancy exists between the provisions of this Agreement and the provisions of any other Loan Document, and specific provisions of the Loan Documents that irreconcilably conflict with general provisions of the same or another Loan Document that is not otherwise entitled to priority in construction shall prevail over the general provisions. Technical words and phrases and those that have acquired particular meanings in the commercial mortgage lending, real estate and construction industries shall be construed according to those particular meanings when the context in which they are used in this Agreement reasonably indicates that the technical meaning is intended.

5.11 Severability; Partial Invalidity . Each covenant, provision and condition of this Agreement shall be interpreted in such a manner as to be valid and effective under applicable law. If any such covenant, provision or condition shall be held to be void or invalid, the same shall not affect the remainder hereof, which shall be valid and effective as though the void or invalid covenant, provision or condition had not been contained herein.

5.12 Time Periods . Time periods referred to herein shall be determined by excluding the day of the event when the period commences or from which it runs and shall expire at 5:00 p.m. Phoenix, Arizona time on the last day included in such period unless it is not a business day, in which case it shall expire at 5:00 p.m. on the next business day.

5.13 Relationship between Parties . The sole and only relationship created by this Agreement is that of borrower and lender, and Borrower is not and shall not be the agent of Lender for any purpose whatsoever. Lender shall have no fiduciary responsibilities to Borrower, or undertake any responsibility to Borrower to review or inform Borrower of any matter in connection with any aspect of Borrower’s business or operations.

5.14 Assignment of Borrower’s Rights . Borrower may not assign, sell or otherwise transfer any of its rights under this Agreement, and any such purported assignment, sale or transfer shall be void and constitute an Event of Default which is incapable of cure.

5.15 Further Documents and Acts . Upon the request of Lender, Borrower shall execute and deliver or authorize, as appropriate, such further documents, including financing statements or replacement promissory notes, guaranties or other loan documents, and take such further actions as may be reasonably necessary to correct clerical errors or omissions in any loan closing documentation, or to replace any lost or destroyed loan closing documentation, if considered necessary or desirable by Lender to carry out the intent of this Agreement and to perfect and preserve the rights, interests and priority of Lender hereunder.

5.16 Standard of Approval . When the approval of Lender is required or permitted, or Lender’s consent may be granted or withheld, under this Agreement or any other Loan Document, and no standard for the exercise of Lender’s discretion is otherwise specified, Lender may grant or withhold its approval or consent in Lender’s sole and absolute discretion.

5.17 Relationship of Loan Agreement to Ancillary Documents . Except as otherwise explicitly provided hereunder, Lender’s rights under this Agreement and the Note are separate and distinct from any rights Lender may have under any of the Ancillary Documents. In no event shall any breach or default by Lender under any of the Ancillary Documents create or afford Borrower a right of setoff or deduction against the obligations due Lender under this Agreement or the Note, and Borrower waives any such right of setoff or deduction against the obligations of Borrower under this Agreement and the Note. Borrower’s obligations under this Agreement and the Note are absolute. The foregoing notwithstanding, regardless of whether Lender, in its sole discretion, exercises its rights under the Warrant, Borrower’s obligations under this Agreement and the Note shall be extinguished and deem to be paid in full as of the Expiration Date, as defined in the Warrant.

5.18 Notices . All notices, requests, demands or documents which are required or permitted to be given or served hereunder shall be in writing and: (a) personally delivered to the party to be notified, in which instance notice shall be deemed to have been given and received upon actual delivery; (b) sent by certified United States mail, return receipt requested, postage prepaid, addressed to the party to be notified, in which instance notice shall be deemed to have been given upon deposit in the mail at any postal station and received twenty-four (24) hours after such deposit or such earlier date as may be shown on the return receipt; (c) sent by a reputable national overnight commercial courier service (such as Federal Express, but not including United States Postal Service Express Mail) addressed to the party to be notified, in which instance notice shall be deemed to have been given upon deposit with such courier service for delivery and received on the first (1st) business day after deposit; or (d) sent by telecopier transmission to the party to be notified, in which instance notice shall be deemed to have been given and received upon acknowledgment of receipt, by the party to be notified, of the telecopier transmission during regular business hours at the fax number hereinafter specified, or, if after regular business hours or on a day which is not a business day, at 8:00 a.m. on the next business day. The addresses of the parties for notice by any of the foregoing means shall be as follows:


		If to Borrower:		BRC Group, LLC Attention: Richard Copeland 425 2 ^nd Street Suite 505 San Francisco, California 94107 Phone: Fax:

		If to Lender:		Quepasa Corporation Attention: 7550 East Redfield Road Suite A Scottsdale, Arizona 85260 Phone: Fax:

		With copies to:		Ryley, Carlock & Applewhite One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Attention: Tara M.A. Pauls Phone: 602/440-4839 Fax: 602/257-6939

Any party may change its address from time to time by giving ten (10) days’ prior written notice to the other parties as described above.

5.19 Mutual Waiver of Right to Jury Trial . AS A MATERIAL PART OF THE CONSIDERATION FOR THE MAKING OF THE LOAN, BORROWER AND LENDER HEREBY UNCONDITIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY PRESENT OR FUTURE CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE LOAN, ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH THE LOAN, OR IN ANY WAY CONNECTED WITH OR RELATED TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN OR ANY DOCUMENTS EXECUTED IN CONNECTION THEREWITH. IF ANY DISPUTE IN CONNECTION WITH THE LOAN OR THE LOAN DOCUMENTS IS DECIDED BY LITIGATION AS PERMITTED BY THE LOAN DOCUMENTS, SUCH DISPUTE SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY.

5.20 Counterparts . This Agreement may be executed in one or more counterparts, each of which may be executed by one or more of the signatory parties. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to form one legally effective document.

DATED as of the date first written above.


		Quepasa Corporation, a Nevada corporation

		By:		/s/ Michael D. Matte

		Its:		Chief Financial Officer


		LENDER

		BRC Group LLC, a California limited liability company

		By:		/s/ Richard Copeland

				Richard Copeland, its Manager

		By:		/s/ Brad Rothenberg

				Brad Rothenberg, its Manager

		BORROWER

Exhibit 10.36

RIGHT OF PURCHASE AND RIGHT OF FIRST REFUSAL AGREEMENT

This Right of Purchase and Right of First Refusal Agreement (the “Agreement”) is entered into as of March 27, 2008, by Quepasa Corporation, a Nevada corporation (“QPSA”) and BRC Group, LLC, a California limited liability company (“BRC”), Richard Copeland (“Copeland”), and Brad Rothenberg (“Rothenberg”). Copeland and Rothenberg are hereinafter individually and collectively referred to as the “Majority Members.”

RECITALS

A. QPSA has agreed to extend to BRC an interest-free loan in the amount of $600,000.00 (the “Loan”), to be evidenced by a Loan Agreement and certain other documents (individually and collectively, the “Loan Documents”).

B. To induce QPSA to agree to enter into the Loan Documents and to make the Loan evidenced by the Loan Documents, BRC and the Majority Members have agreed to grant QPSA certain rights with respect to the purchase of one hundred percent (100%) of the issued and outstanding Equity Interest (as defined below) of BRC in accordance with the terms and conditions of this Agreement.

C. The parties understand and agree that the terms and conditions of this Agreement are separate from and independent of the Loan Documents, except as otherwise provided herein.

AGREEMENT

1. Right of Purchase Equity Interest .

(a) Anytime between September 1, 2008 and August 31, 2009, QPSA shall have the right to offer to purchase from the Majority Members not less than 100% of the issued and outstanding Equity Interests of BRC. For purposes of this Agreement, the term Equity Interest means any class or series of equity interest in the Company issued and outstanding at any time, as evidenced by the Company’s Articles of Organization and Operating Agreement in effect from time to time, and any other securities or interests into which such Equity Interests may be converted from time to time, together with all rights associated therewith, including, without limitation, voting rights, rights to distributions, allocations of profit or loss, profits interests, preferences, priorities, preferred returns, and any other rights associated with any such Equity Interests. Notwithstanding the foregoing, in the event that QPSA does not advance the loan amount of Two Hundred Fifty Thousand Dollars ($250,000) to BRC on September 1, 2008, as provided in the Loan Documents, QPSA’s rights under this Section 1 shall not commence until QPSA has advanced such loan amount to BRC.

(b) The purchase price for the Equity Interests shall be paid in the common stock of QPSA, par value $0.001 per share (the “Shares”), which Shares need not be registered and shall constitute restricted securities. The Shares shall be restricted to comply with any applicable federal or state securities laws. The purchase price for the Equity Interest shall not be less than $2,000,000, nor more than $4,800,000, but shall be payable solely in Shares; provided that the value of the Equity Interests shall be determined after deducting from BRC’s value all

indebtedness owed by BRC, including the unpaid principal balance of the Loan. At the time of the purchase of the Equity Interests, the Shares of QPSA used to pay the purchase price shall be traded on the Over-the-Counter Pinksheets or another recognized securities exchange at an average price of not less than $5.00 per Share, determined during the 30-day period prior to QPSA’s issuance of the written offer to the Majority Members. If for any reason the average price of QPSA’s Shares exceeds $5.00 per Share, QPSA may, in its discretion, reduce the number of Shares offered. The Majority Members shall have the right to accept or reject QPSA’s offer, provided that if such offer is not accepted within 15 business days after the date QPSA’s written offer is delivered to the Majority Members (the “Offer Date”), QPSA may withdraw the offer. Nothing in this Agreement shall require that QPSA make any offer to the Majority Members for the purchase of 100% of the Equity Interests nor shall the Majority Members be obligated to accept any offer made by QPSA under this Section.

(c) If the Majority Members elect to accept QPSA’s offer made under this Section 1, the Majority Members covenant and agree that prior to the closing of QPSA’s purchase of 100% of the Equity Interests, the Majority Members will purchase from the minority members of BRC, at the sole expense of the Majority Members, all Equity Interests owned by such minority members and shall cause such Equity Interests to be delivered to QPSA at the closing. Compliance with the covenants of this paragraph by the Majority Members shall be a condition precedent to QPSA’s obligation to pay for and close the purchase of 100% of the Equity Interests.

(d) The closing of the purchase contemplated by the QPSA offer shall occur at the offices of QPSA sixty (60) days following the date the Majority Members accept the QPSA offer to purchase 100% of the Equity Interests.

2. Third Party Offers; Right of First Refusal .

(a) If, during the period from September 1, 2008, through August 31, 2009, any person delivers a bona fide offer to BRC or the Majority Members (i) to purchase any portion of the issued and outstanding Equity Interests of BRC, or (ii) to purchase substantially all of the assets of BRC (in either case, the “Original Offer”), or (iii) to cause the Company to merge with or to engage in a share or equity exchange or any similar transaction which would result in the sale of BRC, substantially all of its assets or a majority interest of its Equity Interests, to any other entity or person, and if said Original Offer is one which the Majority Members desire to accept, then the Majority Members, or, if applicable, BRC, and if said offer is one which the Majority Members desire to accept, then BRC shall give written notice to QPSA of the Original Offer (the “Purchase Notice”). The Purchase Notice shall include a complete copy of the Original Offer and all letters and correspondence relating thereto, including, without limitation, any valuation analysis. QPSA shall have the number of days after receipt of the Purchase Notice that is equal to the number of days BRC is entitled to accept the Original Offer under the terms of the Original Offer (the “ROFR Exercise Period”) within which to notify the Majority Members or BRC, as applicable, in writing that it will purchase either all of the Equity Interests or all of the BRC’s assets on substantially the same terms set forth in the Purchase Notice (the “ROFR Exercise Notice”); provided that the Exercise Period shall in no event be for a period of less than ten days. Upon receipt by the Majority Members or BRC, as applicable, of the ROFR Exercise Notice, the Majority Members or BRC, as the case may be, shall be obligated to sell the Equity Interests or the assets of BRC, as applicable, to QPSA, on the terms and conditions set forth in the ROFR Exercise Notice, and QPSA shall be obligated to purchase such property on the same terms. If for any reason QPSA fails to deliver the ROFR Exercise Notice within the ROFR Exercise Period specified above, BRC and the Majority Members shall be free to sell the Equity Interests or the BRC assets free and clear of any rights of QPSA under this Agreement.

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(b) QPSA shall have until sixty (60) days from the date the ROFR Exercise Notice is delivered to consummate and close the purchase of the Equity Interests from the Majority Members or the assets from BRC, as applicable.

(c) The purchase price for the Equity Interests or the BRC assets, as applicable, shall be payable to the applicable party in the consideration specified in the Original Offer, and at the time or times specified in the Original Offer, unless the holders of the Equity Interests or BRC, as applicable, agrees to accept some or all of the purchase price in the stock of QPSA. The foregoing notwithstanding, with respect to any consideration payable BRC under this Section, QPSA shall be entitled to deduct the unpaid principal balance of any Loan as a credit against any purchase price due BRC for the assets.

(d) Notwithstanding the foregoing, in the event that QPSA does not advance the loan amount of Two Hundred Fifty Thousand Dollars ($250,000) to BRC on September 1, 2008, as provided in the Loan Documents, QPSA’s rights under this Section 2 shall not commence until QPSA has advanced such loan amount to BRC.

3. Failure to Close on Original Offer; Extension of Right of First Refusal . If for any reason the sale of the Equity Interests or the BRC assets to a third party is not closed within the time contemplated by the Original Offer, and if QPSA has not elected to exercise its rights under this Agreement, QPSA’s rights under this Agreement shall revive and QPSA shall have the identical right of first refusal set forth above in the event of any subsequent offer by any person, including the person who extended the Original Offer, for the duration of the term of this Agreement.

4. Injunctive Relief. If for any reason BRC or the Majority Members should violate Section 2, BRC and the Majority Members acknowledge that QPSA would be irreparably harmed and that monetary damages would not be an adequate remedy and QPSA shall be entitled to obtain, and neither BRC nor the Majority Members shall oppose, the issuance of a temporary, preliminary and final injunction barring the sale of Equity Interests or, if applicable, barring the occurrence of any Sales Event until the provisions of this Section are carried out in full. The Majority Members, BRC and QPSA each agree to negotiate in good faith in the event this Section becomes applicable.

5. Event Preventing Exercise of Right of First Refusal . If any event, order, stay or other occurrence exists which, as a matter of law, prevents QPSA from exercising any right or option it may hold under this Agreement, QPSA’s rights shall continue hereunder unaffected and QPSA shall have the rights described in Sections 3 and 4 for ninety (90) days after the date such legal impediment to the exercise of such right is removed or stayed by a final, non-appealable judgment.

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6. Expiration of Rights . This Agreement and the rights granted QPSA under this Agreement shall terminate at 11:59 p.m. August 31, 2009.

7. Non-Contravention. Notwithstanding any other provision of this Agreement, BRC and the Majority Members covenant and agree not to take any action that, directly or indirectly, would result in the contravention or negation of QPSA’s rights under this Agreement. Prior to undertaking any negotiation with any person interested in purchasing the Equity Interests or the assets of BRC, BRC and the Majority Members shall advise any such person of the existence of this Agreement and of QPSA’s rights hereunder and shall notify QPSA of any negotiations or discussions.

8. Remedies . In addition to any other remedies provided in this Agreement, if BRC or any of the Majority Members should breach or default in any provision of this Agreement or in the performance of the terms and conditions hereof, QPSA shall be entitled to any remedies available at law or in equity, including, without limitation, damages and injunctive relief.

9. Notices . All notices and other communications required under this Agreement from any party to the other shall be mailed by first class registered or certified mail, postage prepaid, or sent by overnight carrier (or sent by confirmed telecopy) to the address of the parties set forth below, and shall be in writing. If any address changes, the party whose address has changed shall be obligated to deliver to the other parties a new address to which notice may be given. Notices shall be sent as follows:


		If to QPSA:		Quepasa Corporation
				Attention:
				7550 East Redfield Road
				Suite A
				Scottsdale, Arizona 85260
				Phone:
				Fax:

		If to BRC:		BRC Group, LLC
				Attention: Richard Copeland
				425 2 ^nd Street
				Suite 505
				San Francisco, California 94107
				Phone:
				Fax:
				If to Lender:

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		If to the Majority Members:		Richard Copeland
				425 2 ^nd Street
				Suite 505
				San Francisco, California 94107

				and

				Brad Rothenberg
				1968 Pennsylvania
				San Francisco, California 94107

10. Governing Law . This Agreement shall be governed by the substantive laws of the State of Arizona, without regard to conflict of law principles.

11. No Assignment . No party hereto may assign their respective rights or obligations hereunder, whether voluntarily or by operation of law, without the prior written consent of the others. A change in ownership of fifty percent (50%) or more of the ownership interests of QPSA shall be considered an assignment for the purposes of this Section. Any assignment in contravention of this provision shall be void. Notwithstanding the foregoing, BRC shall not withhold its consent for an assignment by QPSA unless such assignment is to a party that competes with BRC.

12. Miscellaneous . If any provision of this Agreement is determined to be invalid, illegal or unenforceable, such illegal or unenforceable provision shall not affect any other provision of this Agreement.

13. Independence from Loan . The provisions of this Agreement shall be separate and independent from the Loan Documents and the Loan evidenced thereby except as provided in this Agreement and the Loan Documents; provided, however, that a breach of this Agreement shall also constitute a breach of the Loan Documents.

IN WITNESS WHEREOF, the parties have executed this Agreement as of date first written above.


		“QPSA”

		Quepasa Corporation, a Nevada corporation

		By:		/s/ Michael D. Matte

		Its:		Chief Financial Officer

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		“BRC”

		BRC Group LLC, a California limited liability company

		By:		/s/ Richard Copeland

				Richard Copeland, Manager

		By:		/s/ Brad Rothenberg

				Brad Rothenberg, Manager

		“Majority Members”

		/s/ Richard Copeland

		Richard Copeland

		/s/ Brad Rothenberg

		Brad Rothenberg

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Exhibit 10.37

WEBPAGE DEVELOPMENT AND HOSTING AGREEMENT

This WEBPAGE DEVELOPMENT AND HOSTING AGREEMENT (“Agreement”) is entered into effective as of February 1, 2008 (“Effective Date”) by and between QUEPASA CORPORATION, a Nevada corporation (“Developer”) and BRC GROUP, LLC, a California limited liability company (“BRC”) and ALIANZA DE FUTBOL, L.L.C., a Texas limited liability company (“ALIANZA”). ALIANZA and BRC shall collectively be referred to herein as (“BRC/ALIANZA”). Developer and BRC/ALIANZA may also be referred to in this Agreement individually as a “Party” and collectively as the “Parties.”

Recitals

A. BRC/ALIANZA is currently the registered owner of the domain names alianzadefutbol.net and alianzadefutbol.com (individually and collectively, “Domain Names”).

B. Developer is in the business of website design, development and hosting.

C. BRC/ALIANZA desires to retain Developer to host and maintain an online social networking community for BRC/ALIANZA to be hosted on Developer’s website at www.quepasa.com where ALIANZA members can go to: (i) access ALIANZA tournament information; (ii) create a profile; (iii) upload photographs; and (iv) upload videos. Such online community, including wherever Content resides and wherever users interact online with respect to ALIANZA, shall be referred to herein as the “Webpage”.

D. Developer desires to design, develop, host and maintain the Webpage on Developer’s www.quepasa.com website.

NOW, THEREFORE, in consideration of the promises, terms and conditions set forth herein and other valuable consideration, the sufficiency of which is hereby acknowledged by the Parties, Developer and BRC/ALIANZA hereby agree as follows:

Agreement

1. Incorporation of Recitals. The Parties agree that the foregoing recitals are accurate and are incorporated in this Agreement by this reference.

2. Definitions . The capitalized terms set forth in this Agreement and not defined elsewhere herein shall have the meanings set forth below:

2.1. “BRC/ALIANZA Content” means all data, text, pictures, sound, graphics, logos, marks, symbols, video, and other materials supplied by BRC/ALIANZA to Developer under this Agreement.

2.2. “BRC Loan Documents” means that certain Promissory Note in the principal amount of Six Hundred Thousand Dollars ($600,000), Loan Agreement, Right of Purchase and Right of First Refusal Agreement, and an Equity Interests Purchase Warrant, each dated March 10, 2008, between BRC Group, LLC and Developer.

2.3. “Developer Content” means all data, text, pictures, sound, graphics, logos, marks, symbols, video, and other materials supplied by Developer under this Agreement.

2.4. “Developer Tools” means any and all tools, both in object code and source code form, that Developer has already developed or that Developer independently develops or licenses from a third party. By way of example, Developer Tools may include, without limitation, toolbars for maneuvering between pages, search engines, Java applets, and ActiveX controls.

2.5. “Host Facility” means Developer’s Internet-based data center and network.

2.6. “Intellectual Property Rights” means, on a worldwide basis, any and all now known or hereafter known tangible and intangible (a) rights associated with works of authorship including, without limitation, copyrights, moral rights, and mask-works, (b) trademark and trade name rights and similar rights, (c) trade secret rights, (d) patents, designs, algorithms, and other industrial property rights, (e) all other intellectual and industrial property rights of every kind and nature and however designated, whether arising by operation of law, contract, license, or otherwise, and (f) all registrations, initial applications, renewals, extensions, continuations, divisions, or reissues thereof now or hereafter in force (including any rights in any of the foregoing).

2.7. “User Content” means all data, text, pictures, sound, graphics, logos, marks, symbols, video, and other materials provided by Webpage users.

2.8. “Work Product” means all HTML files, Java files, graphics files, animation files, data files, technology, scripts, and programs, both in object code and source code form, all documentation, and all other items and information, whether tangible or intangible and in whatever form or media, created, written, conceived, made, or discovered by Developer or any Developer personnel in connection with the performance of this Agreement.

3. Webpage Development.

3.1. Redirection of Domain Names. BRC/ALIANZA shall, on or before the date set forth in Exhibit “A,” redirect the uniform resource locators for the Domain Names to Developer’s website at www.quepasa.com.

3.2. Design Document. Beginning on or before February 1, 2008, Developer shall, after consultation with BRC/ALIANZA, use Developer’s commercially reasonable efforts to develop and deliver to BRC/ALIANZA, on or before the date set forth in Exhibit “A,” attached hereto and incorporated herein by reference (“Delivery Date”), a written document that describes the content and functionality of the Webpage, advertising and other obligations of the Parties in connection with this Agreement (“Design Document”). BRC/ALIANZA shall have ten (10) business days from the Delivery Date to approve or reject the Design Document. If BRC/ALIANZA rejects the Design Document, BRC/ALIANZA shall specify in writing the reasons for rejecting the Design Document and Developer shall use commercially reasonable efforts to modify and submit a final version of the Design Document in accordance with BRC/ALIANZA’s written comments.

3.3. Development Services. Upon BRC/ALIANZA’s approval of the final Design Document, Developer shall use commercially reasonable efforts to develop the Webpage according to the specifications set forth in the Design Document and to make available the Webpage to BRC/ALIANZA and the public pursuant to the timeline set forth in Exhibit “A.”

3.4. Change Orders . If at any time after receipt of Developer’s notice that the Webpage is publicly accessible, BRC/ALIANZA desires to modify the Webpage, other than for maintenance as set forth in Section 4 of this Agreement, BRC/ALIANZA shall notify Developer in writing and the Parties shall agree in writing to the terms and conditions regarding any such modifications to be made by Developer to the Webpage.

3.5. Accessibility of Webpage During Development. During the construction and development of the Webpage, the Webpage shall be accessible to BRC/ALIANZA. Until Developer receives BRC/ALIANZA’s written approval of the Webpage, as provided in Exhibit “A,” the Webpage shall not be accessible to third party users.

3.6. Content. Developer agrees to create or otherwise obtain rights to all Developer Content. BRC/ALIANZA shall from time to time provide BRC/ALIANZA Content to Developer for inclusion in the Webpage and access to Developer to BRC/ALIANZA databases. Developer shall coordinate the placement of all advertising and BRC/ALIANZA Content on the Webpage and shall provide and have the exclusive right to provide all statistical tracking for the Webpage.

3.7. Additional Services. Developer may provide additional media services for the Webpage, as set forth in Exhibit “B,” attached hereto and incorporated herein by reference, upon written notice from BRC/ALIANZA specifying BRC/ALIANZA’s election to receive such additional media services and the level of additional media services to be provided. The Parties shall amend this Agreement to reflect the terms and conditions regarding any such additional media services.

4. Maintenance. Unless this Agreement is terminated by either Party prior to the expiration of the term pursuant to the terms of Section 9 below, Developer shall have the exclusive right and responsibility to maintain the Webpage for the term of this Agreement. Maintenance services shall include updating or correcting: Developer Content, BRC/ALIANZA Content, proprietary notices, policies and procedures, and advertising on the Webpage. Maintenance services do not include, without limitation, any redesign of the Webpage, adding new functionality or creating new content. Developer has the exclusive right and responsibility to perform all maintenance services to and for the Webpage.

5. Hosting; Webpage Availability.

5.1. Hosting Services . Commencing on the Webpage Launch Date, as set forth in Exhibit A , Developer shall host, maintain, and manage the Webpage, including access thereto, and install and maintain the equipment by which the Webpage is being operated, all as more fully described as follows:

a. Internet Access . Developer shall be solely responsible, at Developer’s expense, for acquiring, handling, maintaining, and executing any agreements for Internet access necessary to make the Webpage available on the Internet for access by BRC/ALIANZA and the Webpage users in accordance with this Agreement.

b. Webpage Back-Up . Developer shall maintain back-up copies of the Webpage in accordance with Developer’s policies and procedures.

c. Host Facility . The Host Facility (including, but not limited to, the equipment used to perform the hosting services as set forth in this Section 5) shall be secured, operated and maintained in accordance with Developer’s policies and procedures.

d. Technology Refreshing . Developer shall, at no additional cost to BRC/ALIANZA, apply developments, versions and updates of Internet-related technology (individually and collectively, “Developments”) obtained or otherwise adopted by Developer during the term of this Agreement to the Webpage to the extent such Developments may be incorporated in the Webpage.

e. Webpage Capacity . Developer shall employ commercially reasonable efforts to provide hosting capacity to achieve or exceed the service levels agreed upon by the Parties in the Design Document. BRC/ALIANZA agrees to use reasonable efforts to cooperate with Developer to forecast and anticipate increases in Webpage traffic due to marketing events or other special circumstances that could change the rate of Webpage usage typically observed under normal Webpage operation.

5.2. Downtime .

a. Unless this Agreement is terminated by Developer prior to the expiration of the term, Developer shall use commercially reasonable efforts to make the Webpage available twenty-four (24) hours per day, seven (7) days per week for the term of this Agreement. BRC/ALIANZA agrees that from time to time the Webpage may be unavailable for, but not limited to, the following reasons: (a) equipment malfunction; (b) periodic maintenance procedures or repairs; or (c) causes beyond the control of Developer, including interruption or failure of telecommunication or digital transmission links or hostile network attacks (individually and collectively, “Downtime Event”). Developer shall provide at least twenty-four (24) hours’ advance written notice to BRC/ALIANZA regarding any scheduled Downtime Event. Developer shall notify Webpage users of any scheduled Downtime Event by placing a written notice on the Webpage at least twelve (12) hours prior to any scheduled Downtime Event or, if possible, within thirty (30) minutes after Developer receives notice of any unscheduled Downtime Event. Developer shall use commercially reasonable efforts to repair and/or restore the Webpage as quickly as possible.

b. In the event that the Webpage in unavailable for five (5) consecutive days, BRC/ALIANZA shall have the right to terminate this Agreement upon written notice to Developer, which notice shall be accompanied by payment in full of any amounts outstanding under the Loan Agreement dated March 10, 2008 between the Parties. In the event of such termination, the provisions of Section 9.2 shall apply.

c. OTHER THAN AS SET FORTH IN THIS AGREEMENT, DEVELOPER MAKES NO REPRESENTATION OR WARRANTY RELATED TO UPTIME, THE SECURITY OF THE WEBPAGE, OR VULNERABILITY OF THE WEBPAGE TO ANY ATTACK OR OTHER MALICIOUS, HARMFUL OR DISABLING DATA, WORK, CODE OR PROGRAM.

6. Consideration.

6.1. Consideration. In exchange for Developer’s services provided to and on behalf of BRC/ALIANZA under this Agreement, BRC/ALIANZA hereby agrees that Developer shall be named the official sponsor the 2008 National Alianza Tournament (“Tournament”) and shall receive the promotional opportunities set forth in Exhibit “C, ” attached hereto and incorporated herein by reference. The Parties agree that the sponsorship and promotional opportunities have a value of Three Hundred Thousand and No/100 Dollars ($300,000).

6.2. Advertising Revenue.

a. As part of the Design Document, the Parties shall agree upon the parameters of advertising to be sold on the Webpage, including pricing, package elements, and terms and conditions. Developer and BRC/ALIANZA shall each use commercially reasonable efforts to sell advertising on the Webpage, provided, however, that the Parties shall agree upon an advertising plan to be set forth in the Design Document and shall further communicate regularly to avoid duplication of efforts and sales to competing companies. Both Parties must consent to each advertiser on the Webpage. Each Party agrees to provide written notice to the other Party concerning the identity of each proposed advertiser for the other Party’s approval, which approval shall not be unreasonably withheld. Each Party will be deemed to have approved the advertiser(s) set forth in the other Party’s written notice, unless the noticed Party provides the other Party with written notice to the contrary within ten (10) days from the date of the noticing Party’s written notice. The Parties shall not sell any advertising which extends beyond the term of this Agreement. Each Party shall be responsible for its own costs and expenses incurred in connection with advertising sales, including sales commissions. Any information related to an advertiser shall be owned by the Party that sold the advertisement.

b. Developer and BRC/ALIANZA agree to share equally in all gross revenue generated from online advertising related to the Webpage. Gross revenues shall include monies generated from all online Webpage advertising, whether secured by BRC/ALIANZA or Developer, during the term of this Agreement and shall be calculated prior to deduction of sales commissions, taxes or other expenses. Notwithstanding the foregoing, any sponsors secured by BRC/ALIANZA prior to the Effective Date of this Agreement, as set forth in the Design Document, shall be entitled to run agreed upon banner advertisement campaigns on the Webpage without charge.

c. Each Party shall be solely responsible for the collection and accounting of all revenue generated as a result of advertising on the Webpage attributable to the advertising sold by that Party. Each Party agrees to reasonably cooperate with and assist the other Party with the collection of advertising fees as may be requested by the other Party from time to time during the term of this Agreement. Each Party shall provide the other Party with monthly reports with respect to all revenue which it receives and shall remit to the other Party its share of such revenue within fifteen (15) days of the end of the month in which such revenue was received.

6.3. Expenses. Developer shall be liable for the payment of all expenses arising from or in connection with Developer’s services provided under this Agreement, including, without limitation, expenses for facilities, computer hardware and equipment, software, utilities, Developer Content licenses and permissions, Internet and/or telecommunications charges, management, administrative services and supplies. Notwithstanding the foregoing, Developer shall not be liable for expenses related to any change orders pursuant to Section 3.4 or for expenses related to any development or design service not included in the original Design Document or for services that are excluded from maintenance as set forth in Section 4.

6.4. Reporting. Developer shall provide to BRC/ALIANZA written reporting regarding user traffic, impressions, page views, video creation and storage and other relevant statistics related to the functionality offered in the Webpage on a monthly basis. If and when Developer adopts web-based technologies for reporting, Developer shall offer BRC/ALIANZA the opportunity to obtain such reports electronically.

6.5. Audit Rights. Each Party shall maintain complete and accurate records with respect to the calculation of all payments received by that Party for advertising, sponsorship or other benefits sold by that Party with respect to the Webpage. Each Party shall have the right, at its expense, to audit the other Party’s books and records for the purpose of verifying and tracking payment amounts due to the Party under the terms of this Agreement. Any audits made pursuant to this Section 6.5 shall be made not more than once per year, on not less than ten (10) days prior written notice, during regular business hours, by auditors reasonably acceptable to the Party whose records are to be audited. If the auditor’s figures reflect payment due under this Agreement other than those reported by the reporting Party, then the reporting Party shall pay the amount owed (if such amount is higher than reported), or the auditing Party shall reimburse the reporting Party for the difference (if such amount is lower than reported), as the case may be. In addition, for any audit performed hereunder, if the auditor’s figures vary by more than ten percent (10%) from the figures provided by the reporting Party, then the reporting Party shall pay the reasonable expenses incurred by the auditing Party for the audit.

7. Intellectual Property Issues .

7.1. Licenses by BRC/ALIANZA .

a. BRC/ALIANZA hereby grants Developer a non-transferable, non-exclusive, royalty-free (except as provided herein), worldwide license to publicly display, publicly perform, transmit, modify, distribute and reproduce BRC/ALIANZA Content for the term of this Agreement for the purpose of Developer performing its obligations hereunder. Developer shall NOT be responsible for obtaining any necessary permissions or authorizations for BRC/ALIANZA Content or Developer’s access to and use of the databases.

b. BRC/ALIANZA hereby grants to Developer a non-transferable, non-exclusive, world-wide, royalty-free right and license to use the trademarks set forth in the Design Document for the term of this Agreement in connection with the Webpage and in and on Developer’s promotional materials and websites, subject to the prior written approval of BRC/ALIANZA in each case, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, where Developer requests approval, such approval shall be deemed to be granted by BRC/ALIANZA, if BRC/ALIANZA does not respond in writing to the contrary within ten (10) days from the date Developer requested approval.

7.2. Ownership of Work Product . The Work Product is and shall remain the sole and exclusive property of Developer and Developer shall retain all Intellectual Property Rights therein.

7.3. Ownership of Content and Webpage . As between the Parties, all BRC/ALIANZA Content shall at all times remain the sole and exclusive property of BRC/ALIANZA or its licensors, which shall retain all Intellectual Property Rights therein. Developer shall have no rights in such BRC/ALIANZA Content other than the limited right to use it for the purposes expressly set forth in this Agreement. As between the Parties, all Developer Tools, Work Product, and Developer Content shall at all times remain the sole and exclusive property of Developer or its licensors, which shall retain all Intellectual Property Rights therein. As between the Parties, User Content and all other user data and information shall be co-owned by the Parties. Upon termination of this Agreement, Developer shall provide to BRC/ALIANZA for BRC/ALIANZA’s use the names and email addresses of all BRC/ALIANZA Webpage members and a copy of all User Content.

7.4. Domain Name Ownership; Statistical Data. BRC/ALIANZA shall retain all right, title and interest in the BRC/ALIANZA Domain Names, unless otherwise transferred to Developer under a separate agreement. Developer shall retain all right, title and interest to all statistical data generated through statistical tracking of the Webpage.

7.5. Retention of Rights by BRC/ALIANZA . Subject to Developer’s rights as set forth in this Agreement, BRC/ALIANZA shall have the right to grant other online rights, except for a social networking content related page, with respect to BRC, ALIANZA, and/or the Tournament to third parties in its discretion.

8. Term. The term of this Agreement shall commence on the Effective Date and shall continue for a period of three (3) years, unless earlier terminated by either Party pursuant to the terms of Section 9 below.

9. Termination .

9.1. Termination for Cause.

a. By BRC/ALIANZA . If Developer fails to perform any of its material obligations under this Agreement and such breach continues for a period of thirty (30) days following Developer’s receipt of written notice from BRC/ALIANZA specifying such breach, BRC/ALIANZA shall have the right to terminate this Agreement upon delivery of written notice of termination to Developer (“Termination Notice”). If the breach specified in BRC/ALIANZA’s Termination Notice is curable but of a nature such that it cannot be cured through the exercise of reasonable diligence within the thirty (30) day cure period, the cure period shall be extended to a period as is reasonable (but in no event more than 90 days) to cure the breach.

b. By Developer . If BRC/ALIANZA fails to perform any of its material obligations under this Agreement, including, without limitation, agreeing to the terms of the final Design Document submitted by Developer pursuant to Section 3.2 above, or breaches any other term or condition of this Agreement or any other agreement executed by and between the Parties, including, without limitation, any uncured default under the BRC Loan Documents, Developer may immediately terminate this Agreement upon delivery of written notice to BRC/ALIANZA, in addition to seeking any and all other remedies available to Developer.

9.2. Effect of Termination . Upon any expiration or early termination of this Agreement, the following shall apply:

a. Except for a termination under Section 9.1(b) for a breach by BRC/ALIANZA, Developer shall, at no cost to BRC/ALIANZA: (a) return to BRC/ALIANZA all BRC/ALIANZA Content within ten (10) business days following the termination or expiration date of this Agreement; (b) immediately on the date that the Webpage is no longer publicly accessible, and for a period of ninety (90) days thereafter, maintain the Webpage’s URL and, at such URL, provide one (1) page (including a hypertext link) that BRC/ALIANZA may use to direct its users to its new webpage or some other URL of BRC/ALIANZA’s choosing; as BRC/ALIANZA may request and transferring all operations of the Webpage to a new provider chosen by BRC/ALIANZA.

b. Subject to the terms of Section 9.2(c) below, within thirty (30) days from the expiration or termination date of this Agreement, each Party shall deliver a final accounting of all advertising revenues received and due to the other Party, but not yet paid to the other Party (“Advertising Amounts Due”), along with payment of all Advertising Amounts Due to the other Party.

c. Upon termination by Developer under Section 9.1(b) for a breach by BRC/ALIANZA, BRC/ALIANZA shall have no right to any share of advertising revenues received by Developer after the termination date for any and all advertising placed on the Webpage after the termination date. Developer shall have the right in its discretion to maintain the Webpage, including BRC/ALIANZA Content, User Content, BRC/ALIANZA Confidential Information and all Intellectual Property Rights and other rights arising from or in connection thereto until February 1, 2011, to sell advertising on the Webpage subject to BRC/ALIANZA’s consent rights set forth in Section 6.2(a) and BRC/ALIANZA’s sponsors’ rights set forth in Section 6.2(b), and to retain all advertising revenues arising from or in connection with the Webpage. Developer shall take the steps set forth in 9.2(a) upon the earlier of February 1, 2011 or the date Developer no longer maintains the Webpage.

d. Each Party shall promptly return to the other all Confidential Information and other materials owned by or licensed to the other in such Party’s direct or indirect possession or control. Notwithstanding the foregoing, this Section 9.2(d) shall not apply if Developer terminates this Agreement under Section 9.1(b), and Developer shall have the right to retain BRC/ALIANZA Confidential Information until the later of February 1, 2011 or the date Developer no longer maintains the Webpage.

10. Confidential Information.

10.1. Protection of Confidential Information. Each Party (“Disclosing Party”) may from time to time during the term of this Agreement disclose to the other Party (“Receiving Party”) certain non-public information regarding the Disclosing Party’s business, including technical, marketing, member, financial, personnel, vendor and sponsor, planning, statistical and other information (collectively, “Confidential Information”). The Disclosing Party shall mark all such Confidential Information in tangible form with the legend “Confidential,” “Proprietary” or a similar legend. With respect to Confidential Information disclosed orally, the Disclosing Party shall describe such Confidential Information as such at the time of disclosure and shall confirm such Confidential Information in writing within thirty (30) days after the date of oral disclosure. Except as expressly permitted by this Agreement, the Receiving Party shall not disclose the Confidential Information of the Disclosing Party and shall protect the Confidential Information of the Disclosing Party using the same degree of care the Receiving Party ordinarily uses with respect to its own Confidential Information, but in no event with less than reasonable care. The Receiving Party shall not use the Confidential Information of the Disclosing Party for any purpose not expressly permitted by this Agreement, and shall limit disclosure of Confidential Information of the Disclosing Party to the employees, contractors or agents of the Receiving Party who have a need to know such Confidential Information for the purposes of this Agreement and who are, with respect to the Confidential Information of the Disclosing Party, bound in writing by confidentiality terms no less restrictive than those contained in this Agreement. The Receiving Party shall provide copies of such written agreements to the Disclosing Party upon request; provided, however, that such agreements shall themselves be deemed the Confidential Information of the Receiving Party.

10.2. Exceptions. Notwithstanding anything herein to the contrary, Confidential Information shall not include any information that: (a) was already lawfully known to the Receiving Party at the time of disclosure by the Disclosing Party as reflected in the written records of the Receiving Party; (b) was or has been disclosed by the Disclosing Party to a third party without obligation of confidence; (c) was or becomes lawfully known to the general public without breach of this Agreement; (d) is independently developed by the Receiving Party without access to, or use of, the Confidential Information; (e) the Disclosing Party approves in writing a written request of the Receiving Party to disclose certain Confidential Information; (f) was required to be disclosed in order for the Receiving Party to enforce its rights under this Agreement; or (g) is required to be disclosed by law or by the order of a court or similar judicial or administrative body; provided, however, that the Receiving Party shall notify the Disclosing Party of such requirement immediately and in writing, and shall cooperate reasonably with the Disclosing Party, at the Disclosing Party’s expense in obtaining a protective or similar order with respect to the Confidential Information.

10.3. Return of Confidential Information. The Receiving Party shall return to the Disclosing Party, destroy or erase all Confidential Information and materials containing or referencing the Confidential Information of the Disclosing Party: (a) upon the written request of the Disclosing Party, or (b) subject to Developer’s rights under Section 9.2(c),upon the expiration or termination of this Agreement, whichever comes first, and in both cases, the Receiving Party shall certify promptly and in writing that the Receiving Party has done so.

11. BRC/ALIANZA Covenants, Representations and Warranties. BRC/ALIANZA covenants and represents and warrants, for the benefit of Developer, as of the Effective Date and throughout the term of this Agreement:

11.1. Power and Authority . The individual executing this Agreement on behalf of BRC/ALIANZA is fully authorized to do so and has the power and authority to enter into and bind BRC/ALIANZA to perform all of BRC/ALIANZA’s obligations under this Agreement.

11.2. No Conflict. BRC/ALIANZA is under no, and will not enter into any, obligation, agreement or restriction that would in any way interfere or conflict with BRC/ALIANZA’s obligations or the consideration to be provided to Developer under this Agreement.

11.3. Ownership Rights . BRC/ALIANZA is the author, owner or licensee of all BRC/ALIANZA Content, , Confidential Information and the Domain Names provided to Developer under this Agreement and BRC/ALIANZA has all necessary right, title and interest to assign or license all intellectual and other property rights in and to such content, Confidential Information and Domain Names to Developer as set forth in this Agreement.

11.4. Domain Names. BRC/ALIANZA is solely responsible for the maintenance of the registration of the Domain Names and the redirection of the uniform resource locators for the Domain Names to Developer’s website at www.quepasa.com.

11.5. Compliance with Laws. All BRC/ALIANZA Content, database, information, Confidential Information and Domain Names comply with all applicable international, national and local laws and regulations, including, without limitation, those pertaining to intellectual property rights, unfair competition, defamation, false advertising and anti-discrimination and that the content provided by BRC/ALIANZA shall not contain any material which is illegal, immoral, vulgar, obscene, indecent, pornographic, harassing, or intimidating.

12. Developer Covenants, Representations and Warranties. Developer covenants and represents and warrants, for the benefit of BRC/ALIANZA, as of the Effective Date and throughout the term of this Agreement that the individual executing this Agreement on behalf of Developer is fully authorized to do so and has the power and authority to enter into and bind Developer to perform all of Developer’s obligations under this Agreement.

13. Disclaimer of Warranties. BRC/ALIANZA ACCEPTS THE WEBPAGE ON AN “AS IS” BASIS. DEVELOPER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO THE WEBPAGE, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY. DEVELOPER DOES NOT WARRANT THAT THE WEBPAGE WILL BE SECURE, ERROR-FREE, FREE FROM ATTACK, VIRUSES, WORMS, OR OTHER MALICIOUS CODE, OR AVAILABLE ON DEMAND. DEVELOPER SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER ARISING OUT OF THE CREATION, HOSTING OR MAINTENANCE OF THE WEBPAGE. BRC/ALIANZA UNDERSTANDS AND AGREES THAT DEVELOPER SHALL NOT BE RESPONSIBLE FOR STORAGE AND BACK-UP OF THE WEBPAGE AND THAT DEVELOPER SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY CONTENT PROVIDED BY BRC/ALIANZA OR POSTED ON THE WEBPAGE BY THIRD PARTY USERS.

14. Limitation of Liability. DEVELOPER SHALL NOT BE LIABLE TO BRC/ALIANZA, ITS DIRECTORS, OFFICERS, MEMBERS, MANAGERS, EMPLOYEES, CONTRACTORS, AGENTS, REPRESENTATIVES, INSURERS, GUARANTORS, AFFILIATES, USERS OR SUCCESSORS OR ASSIGNS, FOR ANY LOSS OF USE, INTERRUPTION OF BUSINESS OR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, REGARDLESS OF THE FORM OF ACTION WHETHER IN CONTRACT, TORT (INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. BRC/ALIANZA UNDERSTANDS AND AGREES THAT, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BRC/ALIANZA’S SOLE REMEDY UNDER THIS AGREEMENT WILL BE CORRECTION OF THE WEBPAGE CONTENT OR DEVELOPER’S COMMERCIALLY REASONABLE EFFORTS TO RESTORE FUNCTIONALITY TO THE WEBPAGE.

15. Indemnification and Insurance.

15.1. Indemnification By BRC/ALIANZA . BRC/ALIANZA agrees to indemnify, defend and hold Developer and its affiliates, members, managers, officers, directors, employees, contractors, agents and representatives harmless for, from and against any and all losses, threats, claims, demands, actions, judgments, obligations, suits, liabilities, costs, or other damages, including, without limitation, reasonable attorneys’ fees, expert witness fees, costs of court and other expenses, resulting from or in connection with any claims by third parties or liabilities or damages related to: (i) any intellectual property claims, including, without limitation, any BRC/ALIANZA Content; (ii) any breach by BRC/ALIANZA of this Agreement, including, without limitation, any covenants, representations or warranties made herein; and (iii) any negligence or willful misconduct of BRC/ALIANZA with respect to this Agreement or the performance hereof. Developer shall give BRC/ALIANZA prompt written notice of each known claim and tender to BRC/ALIANZA the defense or settlement of each claim at the BRC/ALIANZA’s expense.

15.2. Indemnification By Developer . Developer agrees to indemnify, defend and hold BRC/ALIANZA and its affiliates, members, managers, officers, directors, employees, contractors, agents and representatives harmless for, from and against any and all losses, threats, claims, demands, actions, judgments, obligations, suits, liabilities, costs, or other damages, including, without limitation, reasonable attorneys’ fees, expert witness fees, costs of court and other expenses, resulting from or in connection with any claims by third parties or liabilities or damages related to: (i) any breach by Developer of this Agreement, including, without limitation, any covenants, representations or warranties made herein; and (ii) any negligence or willful misconduct of Developer with respect to this Agreement or the performance hereof.. BRC/ALIANZA shall give Developer prompt written notice of each known claim and tender to Developer the defense or settlement of each claim at the Developer’s expense.

15.3. Insurance . Each Party, during the term of this Agreement and for a period of no less than three (3) years from the termination or expiration date of this Agreement, shall carry comprehensive general liability insurance with minimum limits of One Million Dollars (US$1,000,000) for each occurrence, bodily injury and/or property damage plus excess liability insurance to a minimum of Two Million Dollars ($2,000,000) for each occurrence or such Party’s standard insurance limits, whichever is greater, and shall have the other Party designated as an additional insured thereunder. Each Party shall send a certificate from its insurance company to the other confirming that such insurance meets the requirements of this Section 15.3.

16. Notices. Any notice given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, facsimile, first class mail, or courier service, postage prepaid, to the Party to which such notice is given at the respective address set forth below, or at such other address as a Party may designate from time to time during the term of this Agreement by notice given to the other Parties pursuant to this Section 16. Notices shall be effective upon confirmation of receipt, or, if applicable, within seventy-two (72) hours of mailing.


		If to Developer:		7550 E. Redfield Road, Suite A Scottsdale, Arizona 85260 Attn: Facsimile:

		If to BRC:		425 2nd Street, Suite 505 San Francisco, California 94107 Attn: Facsimile:

		If to ALIANZA:		2001 Bryan Street, Suite 3050 Dallas, Texas 75201 Attn: Facsimile:

17. Miscellaneous.

17.1. Entire Agreement; Amendment. This Agreement, the Design Document all Exhibits hereto, and the terms of the note and other agreements entered into by and between the Parties contemporaneous with this Agreement, constitute the entire Agreement between Developer and BRC/ALIANZA with respect to the subject matter set forth in this Agreement and shall supersede any and all prior agreements, understandings, conduct, promises and representations made concerning the subject matter set forth in this Agreement. This Agreement, the Design Document and/or any Exhibit may only be amended in writing and must be signed by an authorized representative of each Party.

17.2. Headings . The headings of the articles, paragraphs, clauses and/or sections used in this Agreement are included for convenience only and are not to be used in construing or interpreting this Agreement.

17.3. Plurals . In this Agreement plurals shall be considered singular and vice versa as the context may require.

17.4. Waiver . The failure of either Party to insist upon the performance of any provision of this Agreement or to exercise any right hereunder shall not constitute a waiver of the provision. No waiver of any right or obligation under this Agreement shall be effective unless in writing and signed by the Party intended to be bound.

17.5. Assignment. BRC/ALIANZA shall not assign its rights or obligations under this Agreement, in whole or in part, without Developer’s prior written consent, which consent shall not be unreasonably withheld. Developer may assign its rights and obligations under this Agreement; provided that if Developer desires to assign its rights to a direct competitor of BRC/ALIANZA, Developer shall obtain BRC/ALIANZA’s written consent prior to such assignment, which consent not to be unreasonably withheld by BRC/ALIANZA. . Any assignment without Developer’s prior written consent shall be void.

17.6. Injunctive Relief. Each Party understands that, notwithstanding any other provision of this Agreement, any breach of either Party’s obligations under Sections 3.1, 7, 9.2, 10, 11 and 12 will cause the other Party irreparable harm for which recovery of monetary damages would be an inadequate remedy, and that the non-breaching Party shall be entitled to obtain timely injunctive relief, including a temporary, preliminary or permanent injunction, to protect its rights under Sections 3.1, 7, 9.2, 10, 11 and 12 of this Agreement. The remedy set forth in this Section 17.6 shall be in addition to and not exclusive of any and all other remedies available under this Agreement.

17.7. Governing Law and Jurisdiction . This Agreement shall be governed by and interpreted under the laws of the State of Arizona without regard to conflict of laws principles. All disputes under this Agreement shall be resolved by litigation in the state or federal courts located in Maricopa County, Arizona. Each Party hereby consents to the jurisdiction of and venue in such courts, agree to accept service of process by mail, and hereby waive any objections or defenses to jurisdiction or venue in such courts.

17.8. Independent Contractor . Neither Party is, and will not hold itself out as the representative, agent, servant or employee of the other Party for any purpose. This Agreement creates no relationship of joint venture, partnership, limited partnership or agency between the Parties, and the Parties hereby acknowledge that no other facts or relations exist that would create any such relationship between them.

17.9. Survival. In the event of the termination or expiration of this Agreement, Sections 2, 6.5, 7, 9.2 10 11, 12, 13, 14, 15, 16 and 17 shall survive and shall continue to bind the Parties.

17.10. Attorneys’ Fees . If a proceeding or lawsuit is brought by either Party in connection with this Agreement, the prevailing Party in such proceeding is entitled to receive, in addition to any other relief granted, its costs, expert witness fees and reasonable attorneys’ fees, including costs and fees on appeal.

17.11. Force Majeure. Neither Party shall be liable to the other Party for a failure to comply with the terms hereof if such failure arises out of acts of God, strikes, lockouts, acts of public enemy, acts of terrorism, wars, blockades, insurrections, riots, epidemics, landslides, lightings, earthquakes, fires, storms, floods, civil disturbances, explosions or power failures beyond the control and without the fault or negligence of such Party, provided that such Party promptly gives the other Party written notice thereof and uses commercially reasonable efforts to perform. The suspension of a Party’s obligations pursuant to this section shall not relieve such Party from performing any other obligations not affected by such cause or extend the term of this Agreement.

17.12. Successors and Assigns . This Agreement shall inure to the benefit of and will be binding on and enforceable by the Parties and their respective successors and permitted assigns.

17.13. Counterparts; Facsimile Signatures . This Agreement may be executed in counterparts, each of which taken together shall constitute a single, binding agreement between all signatories. Any signature required by this Agreement may be made via facsimile and shall be deemed an original signature, binding upon such Party for all purposes.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized representatives as of the Effective Date.


“DEVELOPER”			“BRC/ALIANZA”
Quepasa Corporation, a Nevada corporation			BRC Group, LLC, a California limited liability company

By:	/s/ Michael D. Matte		By:	/s/ Richard Copeland

Printed Name:		Michael D. Matte	Printed Name:		Richard Copeland

Its:	Chief Financial Officer		Its:	Manager


			Alianza De Futbol, L.L.C., a Texas limited liability company

			By:	/s/ Richard Copeland

			Printed Name:		Richard Copeland

			Its:	Manager

EXHIBIT “A”

(Services)

Deliverables.


SERVICES TO BE COMPLETED:		DUE DATE:
1. Developer to commence work on Design Document		1. February 1, 2008
2. BRC/ALIANZA to redirect the Domain Names to Developer’s website at www.quepasa.com		2. June 1, 2008
3. Design Document completed and delivered by Developer to BRC/ALIANZA		3. Feb 22 ^nd , 2008
4. BRC/ALIANZA written approval or rejection of Design Document		4. Feb 27, 2008
5. Delivery of Modified Design Document to BRC/ALIANZA for approval		5. Feb 28, 2008
6. BRC/ALIANZA written approval of final Design Document		6. March 5, 2008
7. Webpage delivery date		7. May 14, 2008
8. BRC/ALIANZA written approval or request for modification of Webpage		8. May 19, 2008
9. Delivery of final version of Webpage		9. May 26, 2008
10. Webpage Launch Date		10. May 28, 2008

The designated environment for the Webpage shall consist of the following:

	(a)		Platform: LAMP

	(b)		Operating System: Linux

	(c)		Browser Brand and Version: Microsoft Internet Explorer version 6.0 and later.

	(d)		Screen Resolution: 1024 X 768

	(e)		Frames: N/A

	(f)		Java Script/Applets: N/A

	(g)		Plug-ins: N/A

	(h)		Internet Service Provider: N/A

The designated Webpage project representative for each Party is as follows:


		Developer:				BRC/ALIANZA:

		Name:				Name:
		Contact Information:				Contact Information:

EXHIBIT “B”

(Additional Media Services)

The following sets forth additional media services that Developer may provide to BRC/ALIANZA and the amount of Developer’s service fees for each additional media service package:

Title: $150,000

	•		Logo above the fold on every page in the Alianza Community

	•		Customized QuePasa Profile

	•		Profile will run as a featured profile on QuePasa’s front page for one week during the first local tournament

	•		On-Line Contest

	•		4 Branded E-Newsletters (1 per quarter)

	•		10 Branded results Bulletins (1 after each tourney)

	•		Run of Community Banner Ad Campaign

II.

Presenting: $100,000

	•		Logo above the fold on every page in the Alianza Community

	•		Customized QuePasa Profile

	•		On-Line Contest

	•		2 Branded E-Newsletters

	•		10 Branded results Bulletins (1 after each tourney)

	•		Run of Community Banner Ad Campaign

III.

Official: $50,000

	•		Logo above the fold on every page in the Alianza Community

	•		Customized QuePasa Profile

	•		2 Branded E-Newsletters (1 per quarter)

	•		Logo on the results Bulletins (1 after each tourney)

	•		Run of Community Banner Ads

EXHIBIT “C”

(Tournament Sponsorship)


A. DESIGNATION	Developer shall be designated and identified as an official sponsor of the Copa Alianza tournaments in all promotional applications. Developer shall be the only Hispanic online social network associated with the Copa Alianza tournament. The Parties acknowledge that Fox Sports en Espanol will have certain rights with respect to the Alianza tournament that can be promoted and exploited through their online site, which is hosted by and promoted on MSN.

B. ADVERTISING & PROMOTION	Each Weekend III shall be advertised and promoted with the following minimum elements, which shall include Developer identification.

	Radio advertising : Sixty (60) sixty-second (:60) spots.

	Print advertising : Six (6) quarter-page ads in daily and/or weekly newspapers.

	Promotional Collateral : 15,000 club cards and 100 posters.

	Online : Developer shall receive logo identification and banner ads on www.alianzadefutbol.com.

C. SIGNAGE	Developer shall have the right to display the following signage at Alianza Tournament venues. Alianza shall be responsible for setting up all banners at each venue. Developer shall be responsible for the costs of shipping its banners, tents or other display materials to and from each venue.

	1.	Alianza Tournament fields (Weekends I & II)

		a.	Right to display (4) Developer branded field banners on each tournament field. Banners to be provided by Developer.

		b.	Right to display eight (8) fence or perimeter banners.


	2.	Weekend III games (Copa Alianza Championship; Local All-Star Game; Youth All-Star Game).

		a.	Four (4) Developer branded field boards at each game. Field boards to be provided by Alianza.

		b.	Eight (8) fence or perimeter banners, venue permitting. Banners to be provided by Developer.

D. DISPLAY AREAS	Developer shall receive a 10’x 10’ area for product display, inflatable display and/or other Developer promotion at each Alianza Tournament venue. All tents and other materials and equipment shall be provided by Developer.

E. DATABASE	Developer shall have access to any and all databases owned and maintained by Alianza once annually throughout the term of the Agreement. Alianza shall provide its database(s) to a mutually agreed upon bonded mail house through which Developer may coordinate its mailing. All costs and expenses of any mailings to Alianza database shall be borne solely by Developer.

F. RESEARCH	Developer shall have the opportunity to include up to four (4) questions in any consumer research questionnaire that Alianza may conduct, in its sole discretion.

G. PA ANNOUNCEMENTS	Developer shall receive a minimum of eight (8) PA announcements each Alianza tournament day.

H. TICKETS & HOSPITALITY	Developer shall receive two hundred (200) complimentary tickets to each ticketed game or event. Developer shall also receive invitations for up to four (4) people at any hospitality area or function hosted by Alianza.

Exhibit 10.38

PROMISSORY NOTE



Principal Amount:		Scottsdale, Arizona
$600,000.00		March 27, 2008

1. Promise to Pay . For value received , BRC Group LLC, a California limited liability company (“ Maker ”), promises to pay to the order of Quepasa Corporation, a Nevada corporation (“ Holder ”), at 7550 East Redfield Road, Suite A, Scottsdale, AZ 85250, or at such other address as the Holder may designate by written notice to Maker, in lawful money of the United States of America, all amounts advanced by Holder to Maker under the Loan Agreement (defined below) and this Note. The proceeds of the credit accommodations evidenced by this Note (the “ Loan ”) shall be advanced at the times and in the amounts provided in that certain Loan Agreement of even date herewith between Maker and Holder (the “ Loan Agreement ”).

2. Required Payments . If not earlier due and payable, Maker agrees to pay all unpaid principal and all other amounts payable under the provisions of this Note in full on January 8, 2011 (the “ Maturity Date ”). Maker may prepay this Note in part or in full at any time prior to the Maturity Date without any penalty or premium.

3. Application of Payments . Unless otherwise specifically designated in the Loan Agreement, agreed in writing, or required by applicable law, all payments made by Maker and other credits shall be applied: (a) first, to reimburse Holder for all fees, costs and expenses payable by Maker under this Note; and (b) second, to principal. Any payment made by Maker must be received by Holder in immediately available funds no later than 1:00 p.m. Phoenix time in order to receive same day credit; any payment received thereafter shall be considered to have been made on the following business day.

4. Warrant and other Ancillary Documents . In connection with making the Loan evidenced by this Note, Holder and Maker have entered into that certain Equity Interest Purchase Warrant of even date herewith, pursuant to which Maker has granted Holder the right to acquire up to 50% of the total issued and outstanding equity interests of Maker (the “Warrant”) and have also entered into that certain Right of Purchase and Right of First Refusal Agreement of even date herewith, granting Holder certain rights with respect to the purchase of Maker’s assets or the equity interests of Maker (the “ROFR Agreement”). Except as provided herein, Holder’s rights under the Warrant and the ROFR Agreement are separate and distinct from Holder’s rights under this Note and the Loan Agreement. The indebtedness evidenced by this Note may, at Holder’s election after the Maturity Date and prior to the Expiration Date (as defined in the Warrant), be applied to pay the Exercise Price for the Equity Interest under the Warrant.. Exercise of the Warrant, and the sole and exclusive ownership in and to the Webpage, Developer Content, Work Product (as each of the foregoing terms is defined in the Webpage Development and Hosting Agreement between Holder and Maker of approximate date herewith) and all statistical information obtained through the tracking and monitoring the Webpage, shall be Holder’s sole remedy and recourse for unpaid amounts under this Note.

5. Collection Costs . If suit, arbitration or other legal proceeding or any nonjudicial foreclosure proceeding is instituted or any other action is taken by Holder to enforce the terms of this Note, Maker promises to pay Holder’s reasonable attorneys’ fees (including reasonably allocated costs of in-house counsel) and other costs (to be determined by the court or arbitrator and not by jury, in the case of litigation or arbitration) incurred thereby. Such fees and costs shall be included in any judgment or arbitration award obtained by Holder.

6. Waivers and Acknowledgments . Except as expressly provided in this Note to the contrary, Maker waives: (a) demand, notice, diligence, protest, presentment for payment, and notice of extension, dishonor, protest, demand and nonpayment of this Note; and (b) any release or discharge by reason of any release or substitution of, or other change in, any security given for the Note, or the obligation of any other person or entity who or which is now or may become directly or indirectly liable for all or any portion of the Note.

7. Acceleration .

(a) During the existence of any Event of Default, Holder may, at its option, exercise any one or more of the remedies described herein, including declaring all unpaid indebtedness then evidenced by this Note, and reasonable attorneys’ fees which are the obligation of Maker under this Note to be immediately due and payable. Unless Holder otherwise elects, such acceleration shall occur automatically upon the earlier of the Maturity Date or expiration of the applicable cure period set forth in the Note or the Loan Agreement for any curable Event of Default. For the purpose of this Note, an “Event of Default”, includes: (a) any event described in Section 4.1 of the Loan Agreement; or (b) Maker’s failure to pay money as required by this Note or the Loan Agreement (whether or not Holder has given any notice of default or any cure period has expired).

(b) All amounts payable under this Note shall become due and payable in full upon consummation of an agreement between Maker and any party or parties other than Holder for (a) the sale of all or substantially all of Maker’s assets, or (b) one or more sales of any equity interest in Maker that in the aggregate equals 50% or more of the total issued and outstanding equity interests in Maker.

8. Warrant Exercise . At any time after an Event of Default has occurred (whether or not Holder has given any notice of default or any cure period has expired), Holder, in its sole discretion, shall have the right to apply any unpaid principal due Holder under this Note to pay the exercise price for the Equity Interests Holder has the right to purchase under the Warrant.

9. Remedies . Except as provided in Sections 4 and 7(b) hereof, Holder’s sole recourse and remedy under this Note shall be the exercise of the Warrant.

10. Interest Limit . In no event shall the interest rate payable on this Note exceed the maximum rate of interest permitted to be charged under applicable law.

11. No Waiver by Holder . Failure of Holder to exercise any option hereunder shall not constitute a waiver of the right to exercise the same in the event of any subsequent default or in the event of continuance of any existing default after demand for strict performance hereof. Without limitation of the foregoing sentence, no acceptance of a past due installment shall be construed to waive Holder’s right to insist upon prompt payment thereafter or to impose late charges retroactively or prospectively. Holder may apply any payment of less than the total amount then due that it receives from Maker (regardless of whether Maker has marked such payment to indicate that its acceptance will constitute payment in full or an accord and satisfaction) on account to amounts then owing under this Note, but acceptance and application of such amount will not cure any existing default, constitute a waiver by Holder or an accord and satisfaction of any kind, or impair Holder’s ability to exercise any or all of its remedies.

12. Time of Essence . Time is of the essence of this Note.

13. Notices . All demands or notices required or permitted under this Note shall be given in the manner provided in the Loan Agreement.

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14. Governing Law and Venue . This Note is executed, delivered and payable in, and shall be governed by and construed according to the substantive laws and judicial decisions of, the State of Arizona, regardless of Arizona conflict of laws principles or the place of business, residence, location or domicile of Maker, any constituent principal thereof or any guarantor of any portion of the Note, and applicable federal laws, rules and regulations. Maker agrees that the laws or procedural rules of any jurisdiction except for Arizona purporting to limit or affect Holder’s ability to enforce its rights as set forth in this Note are not applicable to the enforcement of Holder’s rights hereunder. Maker intends and understands that Holder will rely upon the agreements in the foregoing sentences in accepting this Note, and specifically acknowledges that Holder may institute an action on this Note and/or any guaranty relating thereto. Maker acknowledges that Holder may permit Maker to execute this Note outside of Arizona, at the request of, and as an accommodation to Maker if Maker will be unable to be present in Arizona. Any action brought to enforce this Note may be commenced and maintained, at Holder’s option, in any state or federal district court in Arizona, or in any other court having personal jurisdiction over Maker. Maker irrevocably consents to jurisdiction and venue in such court for such purposes and agrees not to seek transfer or removal of any action commenced in accordance with the terms of this paragraph. Maker also waives the right to protest the domestication or collection of any judgment obtained against Maker with respect to this Note in any jurisdiction where Maker may now or hereafter maintain assets.

15. Mutual Waiver of Right to Jury Trial . AS A MATERIAL PART OF THE CONSIDERATION FOR THE MAKING OF THIS NOTE, MAKER (AND PAYEE, BY ACCEPTING THIS NOTE) UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY OF ANY PRESENT OR FUTURE CLAIMS, DEMANDS OR CAUSES OF ACTION OF ANY KIND ARISING UNDER OR RELATING TO THE NOTE. MAKER ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND REPRESENTS TO PAYEE THAT THIS WAIVER IS MADE KNOWINGLY AND VOLUNTARILY AFTER CONSULTATION WITH COUNSEL OF MAKER’S CHOICE. MAKER AND PAYEE AGREE THAT ALL SUCH CLAIMS WILL BE TRIED BEFORE A JUDGE OF A COURT OF COMPETENT JURISDICTION WITHOUT A JURY.

16. Construction of Instrument . This Note shall apply to the parties hereto according to the context hereof, without regard to the number or gender of words or expressions used herein. The headings or captions of paragraphs in this Note are for convenience and reference only, and in no way define or limit the scope or intent of this Note or the provisions of such paragraphs. As used in this Note, the terms: (a) “include(s)” or “including” shall mean without limitation by reason of enumeration; and (b) “business days” shall mean those days (other than Saturdays or Sundays) upon which banks are generally open in Arizona for the conduct of substantially all of their business activities, and wire transfers of funds can be made.

IN WITNESS WHEREOF, Maker has executed this Note as of the date first written above.


	BRC Group LLC, a California limited liability company
	By:	/s/ Richard Copeland
		Richard Copeland, Manager



	By:	/s/ Brad Rothenberg
		Brad Rothenberg, Manager

MAKER

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Exhibit 10.39

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE RESTRICTIONS SET FORTH HEREIN AND IN THE COMPANY’S OPERATING AGREEMENT (AS THE SAME MAY BE AMENDED AND RESTATED FROM TIME TO TIME).

EQUITY INTERESTS PURCHASE WARRANT

No. W- 01

Recitals

A. Quepasa Corporation, a Nevada corporation (“QPSA”), has agreed to loan to BRC Group, LLC, a California limited liability company (the “Company”), the sum of $600,000 on an interest-free basis (the “Loan”) to be evidenced by a Promissory Note and Loan Agreement dated as of March 27, 2008 (the “Loan Documents”).

B. To induce QPSA to make the Loan to the Company, the Company has agreed to issue to QPSA a warrant allowing QPSA to purchase up to 50% of the total issued and outstanding Equity Interests in the Company.

C. As of the date of this Warrant, the Company has issued and outstanding only Class A Membership Interests.

D. The terms “Membership Interest” and “Class A Membership Interest” shall have the same meanings as set forth in the Company’s Operating Agreement.

Agreement

1. Definitions . The capitalized terms set forth in this Warrant have the meanings set forth in Section 8 below.

2. Warrant.

2.1 Grant of Warrant . The Company hereby agrees that, for good and valuable consideration, the receipt of which is hereby acknowledged, QPSA, the recipient of this Warrant (“Holder”), or its assigns or transferees, is entitled to purchase from the Company upon the occurrence of any event listed in Section 2 of this Warrant, that amount of Equity Interests set forth in Section 2.3(a) of this Warrant, not to exceed fifty percent (50%) of the total issued and outstanding Equity Interests (subject to all the adjustments provided herein), for a total purchase price equal to Exercise Price. So long as the Company has issued and outstanding only Class A Membership Interests, the Company shall issue to Holder, upon exercise of this Warrant, only Class A Membership Interests in the appropriate percentage, as determined under Section 2.3 below.

2.2 Exercise of Warrant . The Warrant shall become exercisable in full upon the day immediately following the Due Date of the Loan if the Loan is not paid in full on the Due Date; provided that this Warrant shall not be exercisable if prior to that date, the Company has accepted QPSA’s offer to purchase 100% of the Company’s Equity Interests, or QPSA has exercised its right of first refusal to purchase the Equity Interests.

2.3 Exercise Price of Warrant; Interests Purchased .

(a) The amount of Equity Interest that may be purchased upon the exercise of this Warrant shall equal the product obtained by multiplying (i) .50 times (ii) a fraction, the numerator of which is the total unpaid principal balance of the Loan as of the Exercise Date (disregarding any imputed interest) and the denominator of which is $600,000 times (iii) the total of all issued and outstanding Equity Interests in the Company. For example, if upon the Exercise Date the unpaid principal balance of the Loan is $300,000, upon exercise of the Warrant, QPSA would receive that amount of Equity Interests which would represent 25% of all issued and outstanding Equity Interests in the Company.

(b) The Exercise Price at any time shall be the unpaid Loan Principal. Upon exercise of this Warrant, the unpaid Loan Principal shall be deemed to have been paid in full and the Company shall have no further liability therefore, and QPSA shall have a basis in the Equity Interest equal to the Exercise Price.

(c) The foregoing to the contrary notwithstanding, if when the Warrant is exercised the Company is subject to insolvency, bankruptcy, rehabilitation, conservancy or any similar proceeding, or any of these, Holder’s Exercise Price of this Warrant shall be $10,000 and the unpaid principal balance of the Loan shall remain outstanding, subject to a credit of $10,000.00 for payment of the Exercise Price.

(d) Upon exercise of this Warrant, Holder shall, with respect to the Equity Interests acquired by such exercise, automatically become a member of the Company and shall be entitled to all rights and benefits of membership in the Company, without the further approval or consent of any manager or member of the Company.

2.4 Method of Exercise . This Warrant may be exercised by delivery of this Warrant with the Notice of Exercise duly executed by such Holder, to the Company at its principal office prior to the Expiration Date. The “Exercise Date” shall mean the date the Exercise Notice is delivered to the Company.

2.5 Issuance of Equity Interest Upon Exercise . Upon exercise of this Warrant by Holder, the Company shall deliver to QPSA or its assignee, the Equity Interests and any Other Securities or other property required to be delivered to the Holder within seven business days after Holder’s exercise of this Warrant. The Company, at its expense, will cause to be issued in the name of and delivered to the Holder hereof, a certificate or certificates evidencing the Equity Interests or Other Securities or property to which such Holder is entitled.

2.6 Expiration of Warrant . This Warrant shall terminate on the earlier of (a) the last day of the 37 ^th calendar day following the date the Warrant first became exercisable or (b) upon payment in full of the Loan.

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3. Continuing Rights of Warrant Holder .

3.1 Reorganization, Consolidation and Other Transactions . Upon any reorganization, consolidation, merger, share exchange, or sale of assets, or any dissolution of the Company following any transaction, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the equity interests, limited liability company interests, shares of stock, debt, partnership interests, profits interest and any other securities and property receivable by the Company or its members after the consummation of such reorganization, consolidation, merger, exchange or other transaction, or the effective date of dissolution following any such transaction, as the case may be, and the terms and conditions of this Warrant shall be binding upon the issuers of any such other interests or other securities, including, in the case of such a transaction, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant.

3.2 No Dilution or Impairment . The Company will not, by amendment of its Articles of Organization, Operating Agreement, or any other documents or agreements, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of the Warrant against dilution. Without limiting the generality of the foregoing, the Company: (a) will not, if applicable, increase the par value of any Equity Interests receivable on the exercise of the Warrant above the amount payable therefor on such exercise; (b) will not alter or amend its Articles of Organization or its Operating Agreement as in effect as of the date of this Warrant without the prior written consent of the Holder; (c) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Equity Interests on the exercise of the Warrant from time to time outstanding and will reserve for future issuance a sufficient number of Equity Interests to allow this Warrant to be exercised as anticipated herein; and (d) will not transfer all or substantially all of its properties and assets to any other person or entity (corporate or otherwise), or consolidate with or merge into any other entity or permit any such entity to consolidate with or merge into the Company (if the Company is not the surviving entity), unless such other entity shall expressly assume in writing and will be bound by all the terms of this Warrant.

4. Adjustments for Issuance of Equity Interests and Amount of Outstanding Equity Interests .

4.1 General . If at any time there shall occur any equity split, equity dividend, reverse equity split or other subdivision of the Company’s Equity Interests (“Equity Event”), then the percentage of Equity Interests to be received by the Holder of this Warrant, as a percentage of all Equity Interests issued and outstanding, shall be appropriately adjusted so that Holder shall have the same proportion of Equity Interests issuable hereunder, at any time, on a fully diluted basis, up to a maximum Equity Interest of fifty percent (50%) of all Equity Interests issued and outstanding at any time, on a fully diluted basis, that the Holder could have purchased prior to the occurrence of such Equity Event, assuming that this Warrant was exercisable in full at the time of the Equity Event occurred. No adjustment to the Exercise Price shall be made in connection with any adjustment of the number of shares of Equity Interests receivable upon exercise of this Warrant, except that the Exercise Price shall be proportionately decreased or increased upon the occurrence of any equity split, equity dividend, reverse equity split or other subdivision of the Equity Interests so that the aggregate Exercise Price payable if the Warrant was exercised in full shall be the same both before and after the Equity Event.

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As used herein, “Warrant Equity” means the Equity Interests previously issued pursuant to this Warrant as of the time of determination, and any capital stock or other securities into which or for which such Equity Interests shall have been converted or exchanged pursuant to any recapitalization, reorganization or merger of the Company and any shares of capital stock issued with respect to the foregoing pursuant to any stock split or stock dividend.

4.2 Other Issuance of Equity Interests . Unless the Holder shall otherwise agree, if at any time there shall be any increase in amount of Equity Interests outstanding or which the Company is obligated to issue, or covered by any option, warrant or convertible security which is outstanding, or which the Company is obligated to issue, and the Equity Interests so issued or which the Company is obligated to issue are issued or issuable at a price which is less than the then current fair market value of such Equity Interests, as determined jointly by the Company and the Holder, then the Equity Interests to be received by the Holder shall be adjusted to that amount determined by multiplying (a) the maximum Equity Interests purchasable hereunder prior thereto, (including a Warrant Equity held by the Holder prior thereto by (b) a fraction (i) the numerator of which shall be the amount of Equity Interests outstanding, including any Equity Interests that the Company is obligated to issue, plus the maximum number of Equity Interests which are issuable pursuant to options, warrants or convertible securities which are outstanding or which the Company is obligated to issue, immediately after such increase, and (ii) the denominator of which shall be the Equity Interests outstanding, including any Equity Interests that the Company is obligated to issue, plus the maximum number of Equity Interests which are issuable pursuant to options, warrants or convertible securities which are outstanding or which the Company is obligated to issue, immediately prior to such increase. Thereupon, the Exercise Price shall be correspondingly reduced so that the aggregate Exercise Price for all Equity Interests covered hereby shall remain unchanged. The provisions of this Section 4.2 shall not apply to any issuance of additional Equity Interests for which an adjustment is provided under Section 4.1 hereof.

4.3 Other Securities . If any Other Securities shall have been issued, or shall then be subject to issue upon the conversion or exchange of any Equity Interests (or Other Securities) of the Company (or any other issuer of Other Securities or any other entity referred to in this Section 4 hereof) or to subscription, purchase or other acquisition pursuant to any rights or options granted by the Company (or such other issuer or entity), the Holder of this Warrant shall be entitled to receive upon exercise hereof, in addition to the Equity Interests, such amount of Other Securities (in lieu of, or in addition to, Equity Interests) as is determined in accordance with the terms hereof, treating all references to Equity Interests herein as references to Other Securities to the extent applicable, and the computations, adjustments and readjustments provided for in this Section 4 with respect to the Equity Interests issuable upon exercise of this Warrant shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable on the exercise of the Warrant, so as to provide the holder of the Warrant with the benefits intended by this Section 4 and the other provisions of this Warrant.

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4.4 Determination of Adjustments . In determining whether any adjustment or readjustment is required under this Section 4, and the extent of any such adjustment, the following provisions shall apply:

(a) In the case of the issuance of securities of the Company for cash, the amount of consideration received by the Company for such securities shall be deemed to be the amount of cash paid therefor, before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.

(b) In the case of the issuance of securities of the Company for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to have a dollar value equal to the fair market value of such non-cash consideration, irrespective of any accounting treatment thereof, as determined by the Managers of the Company, with the approval of the Holder.

(1) With respect to Options to purchase Equity Interests, the aggregate maximum amount of Equity Interests deliverable upon exercise of such Options shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 4.4(a) and (b) hereof), if any, received by the Company for such Options plus the minimum exercise price provided in such Options for Equity Interests covered thereby.

(2) With respect to Convertible Securities and Options to purchase Convertible Securities, the aggregate maximum amount of Equity Interests deliverable upon the conversion or exchange of any such Convertible Securities and the aggregate maximum amount of Equity Interests issuable upon the exercise of such Options to purchase of such Convertible Securities shall be deemed to have been issued at the time such convertible Securities or such Options were issued and for a consideration equal to the consideration, if any, received by the Company for any such Convertible Securities and Options, plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities or the exercise of such Options and the conversion or exchange of the Convertible Securities issuable upon exercise of such Options (the consideration in each case to be determined in the manner provided in Section 4.4(a) and (b) hereof).

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(3) If any change occurs in the amount of Equity Interests deliverable, or in the consideration payable to the Company, upon exercise of such Options or upon conversion or exchange of such Convertible Securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the amount of Equity Interests issuable upon exercise of this Warrant and the Exercise Price hereunder, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Equity Interests or any payment of such consideration upon the exercise of any such Options or the conversion or exchange of such Convertible Securities.

(4) Upon the expiration or termination of any such Options or any such rights to convert or exchange Convertible Securities, the amount of Equity Interests issuable upon exercise of this Warrant and the Exercise Price hereunder, to the extent in any way affected by or computed using such Options or Convertible Securities, shall be recomputed to reflect the issuance of only the amount of Equity Interests (and Options and Convertible Securities which remain in effect) that were actually issued upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities.

(5) The amount of Equity Interests deemed issued and the consideration deemed paid therefor pursuant to Section 4.4(c)(1) and (2) hereof shall be appropriately adjusted to reflect any change, termination or expiration

5. Notices . In the event of:

(a) any taking by the Company of a record of the holders of any class of Equity Interests for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

(b) any capital reorganization of the Company, any reclassification or recapitalization of the equity interests of the Company or any transfer of all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person; or

(d) any proposed issue or grant by the Company of any class of any equity interest or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than the issue of Equity Interests on the exercise of this Warrant),

then, and in each such event, the Company will mail or cause to be mailed to the Holder of this Warrant a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Equity Interests (or Other Securities) shall be entitled to exchange their shares of Equity Interests

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(or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up and (iii) the amount and character of any equity interest or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be given in accordance with Section 11 at least 30 days prior to the date specified in such notice on which any such record or other action is to be taken. The Company agrees that it will not take any of the action specified regarding clauses (a) through (d) above, without first obtaining the prior written consent of the Holder.

6. Reservation of Stock Issuable on Exercise of Warrant . The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, Equity Interests equal to the total maximum amount of Equity Interests from time to time issuable upon exercise of this Warrant, and, from time to time, subject to the terms of this Warrant will take all steps necessary to amend its Articles of Organization and Operating Agreement to provide sufficient reserves for the issuance of the Equity Interests upon exercise of this Warrant.

7. Certain Holder Rights . If Holder exercises this Warrant any time after the date the Warrant first becomes exercisable and acquires 50% of the total issued and outstanding Equity Interests, Holder shall have the right to elect a majority of the Company’s Managers. The Majority Members of the Company, by executing this Warrant, agree to the foregoing and hereby grant Holder an irrevocable proxy, which constitutes a power coupled with an interest, to vote all the interests of the Majority Members for the election of a majority of the Company’s Board of Directors or all of the Company’s Managing Members, as such persons may be selected by the Holder. Holder, in exercising the proxy granted hereby, shall owe no duty to the Majority Members in connection with the selection of the Company’s directors or Managers, and the Majority Members consent to such action as the Holder may take in order to protect its interests in and investment in the Company.

8. Definitions . As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) “Convertible Securities” means and includes any indebtedness or Equity Interests, profits interests, convertible into, or exchangeable for Equity Interests.

(b) “Due Date” means the earlier of January 8, 2011, or the date the Loan Principal becomes due and payable under the Loan Documents.

(d) “Equity Interests” means any Membership Interests that are issued by the Company, and outstanding, including without limitation (i) any Class A Membership Interests, (ii) any class or series of equity interest in the Company issued and outstanding at any time, as evidenced by the Company’s Articles of Organization, Operating Agreement and other Company documents in effect from time to time, and (iii) any Convertible Securities or Other Securities into which such Equity Interests may be converted from time to time, in each case,

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together with all rights associated therewith, including, without limitation, voting rights, rights to distributions, allocations of profit or loss, profits interests, preferences, priorities, preferred returns, and any other rights associated with any such Equity Interests. To quantify the amount of Equity Interest with respect to this Warrant or any other purpose, the Equity Interest shall be expressed as a percentage of all other Equity Interests then issued and outstanding, regardless of class or series, treating all Equity Interests as a single class.

(e) “Exercise Date” has the meaning specified in Section 2.4.

(f) “Exercise Price” has the meaning specified in Section 2.3(b).

(g) “Expiration Date” is the date specified in Section 2.6.

(h) “Holder” means the holder or holders of this Warrant from time to time.

(i) “Loan” has the meaning set forth in Recital A.

(j) “Loan Documents” has the meaning set forth in Recital A.

(k) “Loan Principal” means the principal balance of the Loan outstanding at any time as determined under the Loan Documents, without regard to the imputation of any interest.

(l) “Majority Members” means those persons, or their successors in interest, who individually or collectively own more than 50% of the Company’s Equity Interests, regardless of class.

(m) “Options” means rights (including contractual rights), options or warrants to subscribe for, purchase or otherwise acquire Equity Interests or Convertible Securities.

(n) “Other Securities” refers to any equity or profits interests (other than Equity Interests), including any class or series of common or preferred stock or Equity Interests, however denominated, and other securities of the Company or any other entity (corporate or otherwise) (i) which the Holder of this Warrant at any time shall be entitled to receive, or shall have received, on the exercise of this Warrant, in lieu of or in addition to Equity Interests, or (ii) which at any time shall be issuable or shall have been issued in exchange for or in replacement of Equity Interests or Other Securities, in each case pursuant to Section 3 or 4 hereof.

9. Company’s Representations and Warranties . The Company hereby makes the following representations and warranties to the Holder:

(a) The Company is a duly organized, and validly existing limited liability company, and in good standing under the laws of the State of California and is qualified to transact business in each jurisdiction where the Company currently transacts business. The Company holds all authorizations, certificates of authority, permits, and other consents necessary for the Company to conduct its business, as presently conducted. All limited liability company action necessary to authorize the Company to issue and deliver this Warrant has been taken and is in full force and effect, and has not been modified, revoked, or rescinded.

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(b) This Warrant is duly issued, outstanding and is binding and enforceable against the Company and its Members in accordance with its terms. The issuance of this Warrant to Holder, and Holder’s exercise of this Warrant, does not and will not violate the Company’s Articles of Organization, Operating Agreement, or any other agreement or obligation of the Company or the Majority Members or by which the Company or its Majority Members are subject or by which the assets or properties of either is bound.

(c) No consent by any third party or other person is necessary for the Company to issue, enter into, and to perform its obligations under this Warrant, whose consent has not already been obtained and is in full force and effect.

(d) The Company is not insolvent and the issuance of this Warrant or its exercise will not cause the Company to be in breach of or default under any agreement, covenant, or indenture to which the Company is a party or to which its assets are subject. The issuance of this Warrant and the Exercise of the Warrant will not contravene the organizational documents of the Company as they presently exist or may exist in the future.

10. Remedies . The Company agrees that the remedies at law of the Holder of this Warrant in the event of any breach or default or threatened breach or default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that, in addition to any claim for damages, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

11. Mailing of Notices . All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, or sent by overnight courier (or sent in the form of a telecopy) at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company.

12. Miscellaneous . If any provision of this Warrant is determined to be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Warrant and any term hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

13. No Assignment . Neither QPSA nor the Company may assign their respective rights or obligations hereunder, whether voluntarily or by operation of law, without the prior written consent of the other. A change in ownership of fifty percent (50%) or more of the ownership interests of QPSA shall be considered an assignment for the purposes of this Section.

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Any transfer or assignment in contravention of this provision shall be void. Notwithstanding the foregoing, the Company shall consent to an assignment by QPSA unless such assignment is to a party that competes with the Company in the business of producing soccer tournaments.

14. Governing Law . This Warrant shall be governed by and construed in accordance with the domestic substantive laws (and not the conflict of law rules) of the State of Arizona. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

15. Majority Members . The Majority Members have executed this Warrant for the purpose of consenting to the issuance of this Warrant and for the purpose of consenting to the Holder’s admission to the Company as a Class A Member upon exercise of this Warrant, and the Majority Members agree to be bound by all terms and conditions hereof and agree to cause the Company to carry out each and every obligation it owes to the Holder under this Warrant.

[Signature Page to Follow]

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IN WITNESS WHEREOF, the Company and Majority Members have caused this Warrant to be executed by the Company’s duly authorized officer and the Company’s corporate seal to be impressed hereon and attested by the Company’s Secretary.

DATED the 10th day of March, 2008.


		“Company”

		BRC Group, LLC, a California limited liability company

		By:		/s/ Richard Copeland

		Name:		Richard Copeland

		Its:		Manager


		“Majority Members”

		By:		/s/ Richard Copeland

				Signature Richard Copeland

		By:		/s/ Brad Rothenberg

				Signature Brad Rothenberg

(Corporate Seal)

Attest:



Name:

Title:		Secretary

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EXERCISE NOTICE

The undersigned hereby irrevocably elects to exercise this Warrant to purchase hereunder _____ % of the total issued and outstanding Equity Interests of the Company in consideration for the forgiveness of $ _____ of the Loan Principal and requests that the certificates for such shares be issued in the name of the undersigned and delivered to the address specified below.

DATED the _____ day of _____ , 20 _____




		(signature of holder)






		(address of holder)

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Exhibit 10.40

AGREEMENT REGARDING LEASE

By this Agreement Regarding Lease (this “ Agreement ”), AIRPARK BILLORADO LLC, an Arizona limited liability company (“ Lessor ”), and QUEPASA CORPORATION, a Nevada corporation authorized to do business in the State of Arizona (“ Lessee ”), agree, effective as of March 1, 2008, with respect to that certain Commercial Lease, dated May 1, 2006, by and between Lessor and Lessee, as modified by First Amendment thereto, dated February 2, 2007 (collectively, “ Lease ”), as follows:

RECITALS

The parties have executed and delivered the Lease (as amended as stated above). Lessee has indicated to Lessor that Lessee wishes to terminate its future obligations under the Lease effective May 1, 2008 (“ Turnover Date ”), subject to Maximus, Inc., a Virginia corporation (“ New Tenant ”), executing and delivering a new form of lease (“ New Lease ”) in form and substance satisfactory to Lessor. So long as New Tenant executes the New Lease on or prior to March 14, 2008, and Lessee is not otherwise in default under the Lease, Lessor agrees to not pursue Lessee for or on account of any further duties or obligations under the Lease as of the Turnover Date.

AGREEMENTS

NOW, THEREFORE, in consideration of Lessor’s conditional agreement not to pursue Lessee for further breaches of the Lease under the conditions set forth herein, of the making of the Turnover Payment from Lessee to Lessor and for other good and valuable consideration, the receipt and sufficiency of all of which is acknowledged, the parties agree as follows:

1. The Recitals set forth above are incorporated by reference into the body of this Agreement as representations, warranties, covenants and agreements of the parties. Lessee acknowledges that Lessor is not in default under the Lease, or if there are any existing defaults by Lessor thereunder, they are hereby expressly waived and discharged. So long as Lessor releases Lessee from all future duties and obligations under the Lease and terminates the Lease, all effective as of the Turnover Date (it being understood that the termination of the Lease shall only affect future duties and obligations of Lessee under the Lease, and shall not affect any breaches by Lessee thereof or duties or obligations of Lessee thereunder accrued or accruing prior to the Turnover Date), Lessee releases Lessor from any future obligation or claim under or arising out of the Lease or the Premises or the office complex of which the Premises are a part, known or unknown, fixed or contingent, if any, accruing after the Turnover Date, as consideration for execution and delivery of this Agreement. If the Turnover Condition (as herein defined) is fulfilled, Lessee will be deemed to release Lessor from any future obligation under or any part of the Lease or the Premises or the office complex which the Premises are a part, all as accruing from and after the Turnover Date.

2. On or before March 14, 2008, but in any event contemporaneous with the execution and delivery of the New Lease, Lessee shall pay to Lessor, by wire transfer to an account, information for which will be provided by Lessor, the sum of Sixty Four Thousand, Two Hundred Sixty One Dollars ($64,261.00) (“ Turnover Payment ”). The Turnover Payment represents payment of a full amount of expenses, commissions, costs, etc., all as set forth on the signed “spreadsheet” attached hereto as Exhibit “A” , less the Security Deposit (herein so called) presently held by Lessor of Forty Four Thousand, Seven Hundred Three and 25/100 Dollars ($44,703.25).

So long as Lessee is not in default under the Lease or hereunder upon the Turnover Date, and Lessee has timely, as of April 15, 2008, vacated all of the Premises and left the same broom-clean and in good order, repairing all damage occasioned by Lessee’s final vacation of the Premises in accordance with the further terms hereof, Lessor shall accept the Turnover Payment in full satisfaction of Lessee’s future duties and monetary obligations under the Lease accruing or occurring on or after the Turnover Date. Lessor will not further pursue Lessee for any future breaches of the Lease which may occur from and after the Turnover Date and the Lease will be terminated, subject to any existing obligations or liabilities of Lessee thereunder. Lessor may deal freely in the Premises after the Turnover Date, including, without limitation, executing and delivering and performing the New Lease with the New Tenant, it being understood that Lessor may execute and deliver the New Lease prior to the Turnover Date as contemplated hereby. It shall not be necessary for Lessee to execute any further leases or modifications of leases with regard to the Premises. From and after the Turnover Date and if the Turnover Condition is fulfilled, Lessor may also retain the Security Deposit free and clear of the claims of Lessee.

If Lessor is divested of all or any portion of the Turnover Payment or the Security Deposit due to Lessee’s subsequent bankruptcy or other similar formal proceeding, or if, in any such proceeding, any challenge is raised to the same, then Lessor’s covenants not to further pursue Lessee hereunder shall be null, void and of no force or effect and Lessor may seek to fully enforce the Lease against Lessee, to the fullest extent permitted by law.

3. Lessee shall continue, between the date hereof and the Turnover Date, to pay all rent and other charges due under the Lease for the entire Premises (as defined in the Lease), including, without limitation, stated rental and so-called “CAM charges” or expense charges accruing hereafter. So long as the Turnover Condition is fulfilled and Lessor thereupon is deemed to terminate the Lease as to future breaches of Lessee, it shall not be necessary for Lessor to provide to Lessee any further reconciliations of any Premises-related expenses, including, without limitation, the Security Deposit.

4. Effective as of March 1, 2008, Lessor and/or its designees may occupy the portion of the Premises cross-hatched on Exhibit “B” hereto (“ Work Space ”). Except for the area of the Work Space that contains Lessee’s computer server and associated computer, telephone and internet equipment (“ Remaining Property ”) also noted on Exhibit “B” , Lessee acknowledges that Lessee will remove its personnel, personal property, fixtures and operations from the Work Space to the balance of the Premises (“ Reduced Premises ”). Lessor acknowledges that Remaining Property cannot be temporarily relocated due to excessive cost and work. Lessee will remove the Remaining Property from the Work Space no later than April 1, 2008, Lessee acknowledging that Lessee will arrange removal of the Remaining Property in a manner so as not to interrupt or adversely affect the New Tenant Work (defined immediately below). Lessee represents to Lessor that Lessee has secured the Remaining Property from any potential damage or disruption which may be caused or occasioned by the conduct of the New Tenant Work in the portion of the Work Space in and about the area where the Remaining Property is currently located.

Lessee acknowledges that significant tenant improvement work will be undertaken within the Work Space, and has so secured the Remaining Property against any damage or disruption related thereto. Neither Lessor nor its contractors nor others performing any portion of the New Tenant Work nor New Tenant shall be liable or responsible for any damage to the Remaining Property, or any issues relating to damage or interruption of services related thereto, Lessee assuming absolutely all risk related to the Remaining Property, physical damage thereto, and/or any other damage or item arising out of the Remaining Property remaining in the Work Space until April 1, 2008. Lessee acknowledges that if service interruptions occur because of changes to the Remaining Property or otherwise arising out of the work activity described below, Lessee will make no claim against any party respecting same. Lessee will be due no other credit or other dispensation therefor, including any reduction in rent, Lessee acknowledging that Lessee will be responsible to pay rent and other charges related to the Work Space and the Reduced Premises until the Turnover Date.

Lessor may, as of March 1, 2008, undertake tenant improvement/preparation activities (collectively, “ New Tenant Work ”) in connection with the New Lease in the Work Space. Lessee acknowledges that Lessor will be undertaking such New Tenant Work, and will not make a claim against Lessor for noise; dust; interruptions in utility or other services to or benefitting the Premises; movement of equipment and/or personnel in and out of the Work Space, etc., arising out of such New Tenant Work. Lessee will reasonably cooperate with Lessor and/or its contractors in endeavoring to complete such New Tenant Work. Lessee acknowledges that preparing the Premises for New Tenant under the New Lease prior to the Turnover Date is of paramount importance to Lessor, and that Lessor would not have executed and delivered this Agreement were it not for Lessee’s contraction of its operations from, and permission of Lessor to enter, the Work Space early to so prepare.

5. On or before April 15, 2008, Lessee shall also vacate the Reduced Premises and shall reasonably cooperate with the New Tenant in turning the Reduced Premises over to the New Tenant in a timely manner on or before April 15, 2008. Lessee turning over the Work Area to Lessor upon execution of this Agreement and removing the Remaining Property from the Work Space in a timely manner as stated above, and in each case broom-clean and with all damage repaired, Lessee’s timely payment to Lessor of the Turnover Payment as stated herein and New Tenant executing the New Lease for the Premises, is herein collectively called the “ Turnover Condition ”.

6. This Agreement is subject to a fully executed lease with Maximus, Inc.

7. This Agreement may be executed in any number of counterparts and by facsimile or so-called “PDF” signature.

IN WITNESS WHEREOF , the parties have executed this Agreement as of the day and date first above-written.


	AIRPARK BILLORADO LLC, an Arizona limited liability company
	/s/ Cheryl Miller
	Cheryl Miller, Manager


	QUEPASA CORPORATION, a Nevada corporation authorized to do business in the State of Arizona
	By:	/s/ Michael Matte
		Its: Chief Financial Officer

EXHIBIT 21.1

QUEPASA CORPORATION
Subsidiaries

Quepasa.com de Mexico

PVBC, LLC, a Delaware limited liability company

QP Funding, LLC, a Delaware limited liability company

Quepasa Education, LLC, a Delaware limited liability company

Quepasa Market Intelligence, LLC, a Delaware limited liability company

Quepasa Mobile Entertainment, LLC, a Delaware limited liability company

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Quepasa Corporation and Subsidiaries

We hereby consent to the incorporation by reference in the registration statements of Quepasa Corporation on Form S-3, No. 333-40574, and Form S-8, No’s 333-146486, 333-118645, 333-88271 and 333-93637, of our report dated March 31, 2008 relating to the consolidated financial statements of Quepasa Corporation and subsidiaries as of December 31, 2007 and for the year then ended, which appears in this Form 10-KSB.

/s/ Berenfeld, Spritzer, Shechter & Sheer
Coral Gables, Florida
March 31, 2008

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Quepasa Corporation and Subsidiaries

We hereby consent to the incorporation by reference in registration statements of Quepasa Corporation and Subsidiaries on Form S-3, No. 333-40574, and Form S-8, Nos. 333-88271, 333-93637, 333-118645 and 333-146486 of our report dated April 17, 2007, except for Notes 8b and 9b to which the date of filing is October 29, 2007, relating to the consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the year ended December 31, 2006, (as restated), appearing in the Annual Report on Form 10-KSB of Quepasa Corporation and Subsidiaries for the year ended December 31, 2007.

/s/ Perelson Weiner LLP
New York, New York
March 31, 2008

EXHIBIT 31.1

CERTIFICATIONS

I, John C. Abbott, certify that:

1.		I have reviewed this annual report on Form 10-KSB of Quepasa Corporation;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.		The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting.

The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.



Dated: March 31, 2008	/s/ John C. Abbott
	Name:	John C. Abbott
	Title:	Chief Executive Officer

EXHIBIT 31.2

CERTIFICATIONS

I, Michael D. Matte, certify that:

1.		I have reviewed this annual report on Form 10-KSB of Quepasa Corporation;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.		The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting.

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.



Dated: March 31, 2008	/s/ Michael D. Matte
	Name:	Michael D. Matte
	Title:	Chief Financial Officer

EXHIBIT 32.1

QUEPASA CORPORATION AND SUBSIDIARIES

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

I, John C. Abbott, the Chief Executive Officer of Quepasa Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)		This Annual Report on Form 10-KSB of the Company for the fiscal period ended December 31, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated: March 31, 2008	/s/ John C. Abbott
	Name:	John C. Abbott
	Title:	Chief Executive Officer

EXHIBIT 32.2

QUEPASA CORPORATION AND SUBSIDIARIES

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

I, Michael D. Matte, the Chief Financial Officer of Quepasa Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)		This Annual Report on Form 10-KSB of the Company for the fiscal period ended December 31, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated: March 31, 2008	/s/ Michael D. Matte
	Name:	Michael D. Matte
	Title:	Chief Financial Officer