ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES EXCHANGE ACT OF 1934
|
||
For the quarterly period ended June 30, 2012
|
||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES EXCHANGE ACT OF 1934
|
||
For the transition period from ________________ to ________________
|
Delaware
|
86-0879433
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
100 Union Square Drive
New Hope, Pennsylvania
|
18938
|
(Address of principal executive offices)
|
(Zip Code)
|
Class
|
Outstanding as of August 9, 2012
|
|
Common Stock, $0.001 par value per share
|
36,372,578 shares
|
Page
|
|
PART I. FINANCIAL INFORMATION
|
|
Item 1 Financial Statements
|
3 |
Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and December 31, 2011
|
3 |
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended and the six months ended June 30, 2012 and 2011 (Unaudited)
|
4 |
Consolidated Statement of Changes in Stockholders’ Equity for the six months ended June 30, 2011 (Unaudited)
|
5 |
Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011 (Unaudited)
|
6 |
Condensed Notes to Unaudited Consolidated Financial Statements
|
7 |
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
24 |
Item 3 Quantitative and Qualitative Disclosures about Market Risk
|
37 |
Item 4 Controls and Procedures
|
37 |
PART II. OTHER INFORMATION
|
|
Item 1 Legal Proceedings
|
38 |
Item 1A Risk Factors
|
38 |
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
|
38 |
Item 3 Defaults Upon Senior Securities
|
38 |
Item 4 Mine Safety Disclosures
|
38 |
Item 5 Other Information
|
38 |
Item 6 Exhibits
|
38 |
SIGNATURES
|
39 |
INDEX TO EXHIBITS
|
40 |
June 30,
2012
|
December 31,
2011
|
|||||||
(Unaudited)
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 5,886,970 | $ | 8,271,787 | ||||
Accounts receivable, net of allowance of $486,510 and $270,210, at June 30, 2012
and December 31, 2011, respectively
|
14,696,770 | 10,293,752 | ||||||
Notes receivable - current portion, including $0 and $559 of accrued interest, at
June 30, 2012 and December 31, 2011, respectively
|
139,010 | 169,955 | ||||||
Prepaid expenses and other current assets
|
1,056,786 | 1,082,184 | ||||||
Restricted cash
|
- | 275,000 | ||||||
Current asset from discontinued operations
|
54,955 | 149,796 | ||||||
Total current assets
|
21,834,491 | 20,242,474 | ||||||
Goodwill, net
|
70,646,036 | 70,646,036 | ||||||
Goodwill from discontinued operations, net
|
- | 2,402,446 | ||||||
Intangible assets, net
|
7,725,743 | 8,567,772 | ||||||
Property and equipment, net
|
5,034,901 | 4,318,619 | ||||||
Property and equipment from discontinued operations, net
|
15,409 | 90,075 | ||||||
Other assets
|
379,474 | 385,683 | ||||||
Other assets from discontinued operations
|
- | 151,591 | ||||||
Total assets
|
$ | 105,636,054 | $ | 106,804,696 | ||||
Liabilities and Stockholders' Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 2,559,196 | $ | 2,054,851 | ||||
Accrued expenses and other liabilities
|
2,885,897 | 1,318,594 | ||||||
Current liabilities from discontinued operations
|
702,018 | 629,620 | ||||||
Deferred revenue
|
226,337 | 316,863 | ||||||
Accrued dividends
|
69,455 | 169,455 | ||||||
Unearned grant income
|
8,380 | 9,040 | ||||||
Current portion of long-term debt
|
2,616,252 | 2,405,191 | ||||||
Total current liabilities
|
9,067,535 | 6,903,614 | ||||||
Long term debt, net of discount
|
9,267,239 | 9,255,508 | ||||||
Total liabilities
|
18,334,774 | 16,159,122 | ||||||
Commitments and Contingencies (see Note 9)
|
||||||||
Stockholders' Equity:
|
||||||||
Preferred stock, $.001 par value, authorized 5,000,000 shares:
|
||||||||
Convertible preferred stock Series A, $.001 par value; authorized - 1,000,000 shares;
no shares issued and outstanding at June 30, 2012, Liquidation preference of $2,500,000
|
- | - | ||||||
Convertible preferred stock Series A-1, $.001 par value; authorized - 5,000,000 shares;
1,000,000 shares issued and outstanding at June 30, 2012 and December 31, 2011.
|
1,000 | 1,000 | ||||||
Common stock, $.001 par value; authorized - 100,000,000 shares; 36,372,578
and 36,145,084 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively
|
36,374 | 36,146 | ||||||
Additional paid-in capital
|
272,417,267 | 269,974,789 | ||||||
Accumulated deficit
|
(184,597,987 | ) | (178,903,412 | ) | ||||
Accumulated other comprehensive loss
|
(555,374 | ) | (462,949 | ) | ||||
Total stockholders’ equity
|
87,301,280 | 90,645,574 | ||||||
Total liabilities and stockholders’ equity
|
$ | 105,636,054 | $ | 106,804,696 |
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Revenues
|
$ | 13,054,861 | $ | 1,620,473 | $ | 23,450,590 | $ | 3,864,037 | ||||||||
Operating Costs and Expenses:
|
||||||||||||||||
Sales and marketing
|
1,676,243 | 280,048 | 3,442,639 | 627,846 | ||||||||||||
Product development and content
|
8,224,749 | 1,436,700 | 14,721,208 | 3,059,795 | ||||||||||||
General and administrative
|
2,379,313 | 944,449 | 4,323,846 | 1,850,271 | ||||||||||||
Depreciation and amortization
|
965,155 | 93,521 | 1,863,539 | 179,691 | ||||||||||||
Acquisition and restructuring costs
|
247,877 | 69,166 | 537,944 | 436,917 | ||||||||||||
Total Operating Costs and Expenses
|
13,493,337 | 2,823,884 | 24,889,176 | 6,154,520 | ||||||||||||
Loss from Operations
|
(438,476 | ) | (1,203,411 | ) | (1,438,586 | ) | (2,290,483 | ) | ||||||||
Other Income (Expense):
|
||||||||||||||||
Interest income
|
4,318 | 17,474 | 9,892 | 34,034 | ||||||||||||
Interest expense
|
(288,216 | ) | (151,219 | ) | (586,284 | ) | (301,205 | ) | ||||||||
Other income (expense), net
|
497 | 574 | 1,030 | 1,170 | ||||||||||||
Total other income (expense)
|
(283,401 | ) | (133,171 | ) | (575,362 | ) | (266,001 | ) | ||||||||
Loss before income taxes
|
(721,877 | ) | (1,336,582 | ) | (2,013,948 | ) | (2,556,484 | ) | ||||||||
Income taxes
|
- | - | - | - | ||||||||||||
Net loss from continuing operations
|
$ | (721,877 | ) | $ | (1,336,582 | ) | $ | (2,013,948 | ) | $ | (2,556,484 | ) | ||||
Loss from discontinued operations, including $48,084 loss on disposal of assets, net of taxes
|
$ | (3,114,040 | ) | $ | (970,026 | ) | $ | (3,680,627 | ) | $ | (1,239,250 | ) | ||||
Net loss
|
$ | (3,835,917 | ) | $ | (2,306,608 | ) | $ | (5,694,575 | ) | $ | (3,795,734 | ) | ||||
Preferred stock dividends
|
- | (12,830 | ) | - | (40,705 | ) | ||||||||||
Net Loss Allocable To Common Shareholders
|
$ | (3,835,917 | ) | $ | (2,319,438 | ) | $ | (5,694,575 | ) | $ | (3,836,439 | ) | ||||
Basic and diluted net loss per common shareholders:
|
||||||||||||||||
Continuing operations
|
$ | (0.02 | ) | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.16 | ) | ||||
Discontinued operations
|
$ | (0.09 | ) | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.08 | ) | ||||
Basic and diluted net loss per common shareholders:
|
$ | (0.11 | ) | $ | (0.14 | ) | $ | (0.16 | ) | $ | (0.23 | ) | ||||
Weighted Average Number of Shares
Outstanding, Basic and Diluted:
|
36,240,472 | 16,037,343 | 36,306,886 | 16,344,063 | ||||||||||||
Net Loss
|
$ | (3,835,917 | ) | $ | (2,319,438 | ) | $ | (5,694,575 | ) | $ | (3,836,439 | ) | ||||
Foreign currency translation adjustment
|
(144,458 | ) | 213,296 | (92,425 | ) | 244,770 | ||||||||||
Comprehensive Loss
|
$ | (3,980,375 | ) | $ | (2,106,142 | ) | $ | (5,787,000 | ) | $ | (3,591,669 | ) |
Preferred Stock
|
Common Stock
|
Additional Paid-in
|
Accumulated
|
Accumulated
Other Comprehensive
|
Total Stockholders'
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Equity
|
|||||||||||||||||||||||||
Balance—December 31,
2010
|
25,000 | $ | 25 | 15,287,280 | $ | 15,287 | $ | 175,276,319 | $ | (166,096,889 | ) | $ | (6,851 | ) | $ | 9,187,891 | ||||||||||||||||
Vesting of stock options
for compensation
|
4,169,236 | 4,169,236 | ||||||||||||||||||||||||||||||
Vesting of warrants
|
178,903 | 178,903 | ||||||||||||||||||||||||||||||
Issuance of common stock for
the acquisition of Quepasa Games
|
348,723 | 349 | 2,730,152 | 2,730,501 | ||||||||||||||||||||||||||||
Contingent issuance of stock for
the acquisition of Quepasa Games
|
978,750 | 978,750 | ||||||||||||||||||||||||||||||
Issuance of common
stock for conversion of preferred stock
|
(25,000 | ) | (25 | ) | 336,927 | 337 | (312 | ) | - | |||||||||||||||||||||||
Issuance of preferred stock for cash
|
2,000,000 | 2,000 | 9,998,000 | 10,000,000 | ||||||||||||||||||||||||||||
Issuance of common
stock for conversion of preferred stock
|
(1,000,000 | ) | (1,000 | ) | 1,479,949 | 1,480 | (480 | ) | - | |||||||||||||||||||||||
Issuance of common
stock for cash
|
716,246 | 716 | 2,556,284 | 2,557,000 | ||||||||||||||||||||||||||||
Issuance of common stock for
the acquisition of Insider Guides, Inc.
|
16,999,943 | 17,000 | 72,062,761 | 72,079,761 | ||||||||||||||||||||||||||||
Exercise of stock options
|
811,016 | 812 | 1,282,841 | 1,283,653 | ||||||||||||||||||||||||||||
Exercise of warrants
|
165,000 | 165 | 742,335 | 742,500 | ||||||||||||||||||||||||||||
Preferred stock dividends
|
(40,705 | ) | (40,705 | ) | ||||||||||||||||||||||||||||
Foreign currency
translation adjustment
|
(456,098 | ) | (456,098 | ) | ||||||||||||||||||||||||||||
Net loss
|
(12,765,818 | ) | (12,765,818 | ) | ||||||||||||||||||||||||||||
Balance—December 31,
2011
|
1,000,000 | $ | 1,000 | 36,145,084 | $ | 36,146 | $ | 269,974,789 | $ | (178,903,412 | ) | $ | (462,949 | ) | $ | 90,645,574 | ||||||||||||||||
Vesting of stock options
for compensation
|
2,030,092 | 2,030,092 | ||||||||||||||||||||||||||||||
Exercise of stock options
|
227,494 | 228 | 412,386 | 412,614 | ||||||||||||||||||||||||||||
Foreign currency
translation adjustment
|
(92,425 | ) | (92,425 | ) | ||||||||||||||||||||||||||||
Net loss
|
(5,694,575 | ) | (5,694,575 | ) | ||||||||||||||||||||||||||||
Balance—June 30,
2012
|
1,000,000 | $ | 1,000 | 36,372,578 | $ | 36,374 | $ | 272,417,267 | $ | (184,597,987 | ) | $ | (555,374 | ) | $ | 87,301,280 |
For the six months ended
June 30,
|
||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss from continuing operations
|
$ | (2,013,948 | ) | $ | (2,556,484 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
1,863,528 | 179,428 | ||||||
Vesting of stock options for compensation
|
1,878,586 | 1,372,011 | ||||||
Vesting of warrants
|
- | 178,903 | ||||||
Grant income
|
(1,014 | ) | (1,131 | ) | ||||
Bad debt expense (recovery)
|
216,300 | (6,600 | ) | |||||
Amortization of discounts on notes payable and debt issuance costs
|
145,306 | 144,504 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(4,438,824 | ) | (1,754,179 | ) | ||||
Prepaid expenses, other current assets, and other assets
|
181,751 | (147,153 | ) | |||||
Restricted cash
|
275,000 | - | ||||||
Accounts payable and accrued expenses
|
1,973,090 | 335,171 | ||||||
Deferred revenue
|
155,821 | - | ||||||
Net cash provided (used) by continuing operating activities
|
235,596 | (2,255,530 | ) | |||||
Net cash provided (used) by discontinuing operating activities
|
(1,142,339 | ) | (897,029 | ) | ||||
Net cash provided (used) by operating activities
|
(906,743 | ) | (3,152,559 | ) | ||||
Cash flows from investing activities:
|
||||||||
Acquisition of Quepasa Games
|
- | (500,000 | ) | |||||
Purchase of property and equipment
|
(308,406 | ) | (159,986 | ) | ||||
Purchase of trademarks
|
(125,000 | ) | - | |||||
Loan payments from BRC
|
30,386 | 25,585 | ||||||
Advance to Hollywood Creations
|
- | (40,000 | ) | |||||
Net cash (used) provided by investing activities
|
(403,020 | ) | (674,401 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from exercise of stock options
|
412,614 | 1,470,739 | ||||||
Payments on capital leases
|
(68,274 | ) | - | |||||
Payments of dividends
|
(100,000 | ) | - | |||||
Payments on long-term debt
|
(1,310,677 | ) | - | |||||
Net cash provided by financing activities
|
(1,066,337 | ) | 1,470,739 | |||||
Cash and cash equivalents prior to effect of foreign currency exchange rate on cash
|
(2,376,100 | ) | (2,356,221 | ) | ||||
Effect of foreign currency exchange rate on cash
|
(8,717 | ) | 2,158 | |||||
Net increase (decrease) in cash and cash equivalents
|
(2,384,817 | ) | (2,354,063 | ) | ||||
Cash and cash equivalents at beginning of the period
|
8,271,787 | 13,546,572 | ||||||
Cash and cash equivalents at end of period
|
$ | 5,886,970 | $ | 11,192,509 | ||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid for interest
|
$ | 435,130 | $ | - | ||||
Cash paid for income taxes
|
$ | - | $ | - | ||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
|
||||||||
Purchase of property and equipment through capital leases | $ | 1,302,712 | $ | |||||
Preferred stock dividends accrued and charged to accumulated deficit
|
$ | - | $ | 40,705 |
Goodwill
|
$ | 3,772,792 | ||
Property and equipment
|
106,626 | |||
Other assets
|
170,843 | |||
Total assets acquired
|
4,050,261 | |||
Accounts payable and accrued liabilities
|
(341,010 | ) | ||
Total liabilities assumed
|
(341,010 | ) | ||
Issuance of common stock, 348,723 shares
|
2,730,501 | |||
Contingent issuance of common stock for acquisition
|
978,750 |
June 30,
|
December 31,
|
|||||||
|
2012
|
2011
|
||||||
Stock options
|
10,125,603 | 9,611,931 | ||||||
Warrants
|
4,200,000 | 4,200,000 | ||||||
Series A-1 convertible preferred stock
|
1,479,949 | 1,479,949 | ||||||
Totals
|
15,805,552 | 15,291,880 |
Property and equipment
|
$ | 119,760 | ||
Other assets
|
191,887 | |||
Total assets acquired
|
311,647 | |||
Accounts payable and accrued liabilities
|
(383,014 | ) | ||
Total liabilities assumed
|
(383,014 | ) | ||
Goodwill
|
4,280,618 | |||
Total purchase price
|
$ | 4,209,251 |
Goodwill
|
$ | 70,646,036 | ||
Intangible assets
|
8,889,994 | |||
Cash and cash equivalents
|
7,315,783 | |||
Accounts receivable
|
7,207,685 | |||
Property and equipment
|
3,650,119 | |||
Other assets
|
1,257,263 | |||
Total assets acquired
|
98,966,880 | |||
Accounts payable, accrued and other liabilities
|
(3,878,238 | ) | ||
Notes payable
|
(5,008,724 | ) | ||
Total liabilities assumed
|
(8,886,962 | ) | ||
Total purchase price
|
$ | 90,079,918 |
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Games Revenues
|
$ | 432,739 | $ | 221,174 | $ | 840,190 | $ | 221,174 | ||||||||
Games expenses
|
496,285 | 282,219 | 1,032,366 | 262,469 | ||||||||||||
Product development and content
|
349,601 | 566,889 | 552,563 | 735,516 | ||||||||||||
Depreciation and amortization
|
7,087 | 125,219 | 16,102 | 175,509 | ||||||||||||
Exit costs
|
431,418 | - | 431,418 | - | ||||||||||||
Loss on disposal of assets
|
48,084 | - | 48,084 | - | ||||||||||||
Stock-based compensation
|
(74,472 | ) | 216,873 | 151,508 | 286,930 | |||||||||||
Loss on impairment of goodwill
|
2,288,776 | - | 2,288,776 | - | ||||||||||||
Total
|
3,546,779 | 1,191,200 | 4,520,817 | 1,460,424 | ||||||||||||
Loss from discontinued operations attributable to Quepasa Games
|
$ | (3,114,040 | ) | $ | (970,026 | ) | $ | (3,680,627 | ) | $ | (1,239,250 | ) |
June 30, 2012
|
December 31, 2011
|
|||||||
Assets
|
||||||||
Accounts receivable, prepaid and other current assets
|
$ | 54,955 | $ | 149,796 | ||||
Goodwill, net
|
- | 2,402,446 | ||||||
Property and equipment, net
|
15,409 | 90,075 | ||||||
Other assets
|
- | 151,591 | ||||||
Total assets of discontinued operations
|
$ | 70,364 | $ | 2,793,908 | ||||
Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$ | 702,018 | $ | 629,620 | ||||
Total current liabilities of discontinued operations
|
$ | 702,018 | $ | 629,620 |
June 30, 2012
|
December 31, 2011
|
|||||||
Notes Receivable BRC
|
$ | 139,010 | $ | 169,396 | ||||
Accrued Interest
|
- | 559 | ||||||
Notes Receivable Hollywood Creations
|
- | - | ||||||
Accrued Interest
|
- | - | ||||||
Total Notes Receivable, including accrued interest
|
$ | 139,010 | $ | 169,955 | ||||
Notes Receivable, current portion
|
$ | 139,010 | $ | 169,955 | ||||
Notes Receivable, long-term portion
|
- | - | ||||||
Total Notes Receivable
|
$ | 139,010 | $ | 169,955 |
Goodwill, opening balance January 1, 2011
|
$ | - | ||
Addition:
|
||||
Goodwill, Quepasa Games
|
3,419,485 | |||
Goodwill, Insider Guides, Inc.
|
70,646,036 | |||
74,065,521 | ||||
Less accumulated impairment losses
|
(3,419,485 | ) | ||
Total Goodwill—net
|
$ | 70,646,036 |
June 30, 2012
|
December 31, 2011
|
|||||||
Trademark and domain names
|
$ | 6,125,298 | $ | 5,999,994 | ||||
Advertising relationships
|
1,165,000 | 1,165,000 | ||||||
Mobile applications
|
1,725,000 | 1,725,000 | ||||||
9,015,298 | 8,889,994 | |||||||
Less accumulated amortization
|
(1,289,555 | ) | (322,222 | ) | ||||
Intangibles assets—net for continuing operations
|
$ | 7,725,743 | $ | 8,567,772 |
June 30, 2012
|
December 31, 2011
|
|||||||
Servers and computer equipment and software
|
$ | 7,734,561 | $ | 6,458,584 | ||||
Vehicle
|
16,785 | 16,180 | ||||||
Office furniture and equipment
|
200,404 | 150,762 | ||||||
Leasehold improvements
|
352,881 | 58,935 | ||||||
Other equipment
|
8,775 | 8,459 | ||||||
Property and equipment from continuing operations
|
8,313,406 | 6,692,920 | ||||||
Less accumulated depreciation
|
(3,278,505 | ) | (2,374,301 | ) | ||||
Property and equipment from continuing operations-net
|
$ | 5,034,901 | $ | 4,318,619 | ||||
Property and equipment from discontinued operations
|
54,477 | 117,727 | ||||||
Less accumulated depreciation
|
(39,068 | ) | (27,652 | ) | ||||
Property and equipment from discontinued operations-net
|
$ | 15,409 | $ | 90,075 |
June 30, 2012
|
December 31, 2011
|
|||||||
Notes Payable, face amount
|
$ | 5,000,000 | $ | 5,000,000 | ||||
Discounts on Notes:
|
||||||||
Revaluation of Warrants
|
(1,341,692 | ) | (1,341,692 | ) | ||||
Termination of Jet Rights
|
(878,942 | ) | (878,942 | ) | ||||
Accumulated Amortization
|
1,127,387 | 1,000,574 | ||||||
Total Discounts
|
(1,093,247 | ) | (1,220,060 | ) | ||||
Accrued Interest
|
988,635 | 877,132 | ||||||
MATT Note Payable, net
|
$ | 4,895,388 | $ | 4,657,072 |
June 30, 2012
|
December 31, 2011
|
|||||||
Notes Payable, face amount
|
$ | 2,000,000 | $ | 2,000,000 | ||||
Discounts on Notes:
|
||||||||
Revaluation of Warrants
|
(263,690 | ) | (263,690 | ) | ||||
Accumulated Amortization
|
143,267 | 127,152 | ||||||
Total Discounts
|
(120,423 | ) | (136,538 | ) | ||||
Accrued Interest
|
395,453 | 350,853 | ||||||
RSI Notes Payable, net
|
$ | 2,275,030 | $ | 2,214,315 |
Original
Borrowings
|
Interest
Rates
|
June 30,
2012
|
December 31,
2011
|
||||||||||||||
Growth Term Loans:
|
|||||||||||||||||
LSA2
|
$ | 97,500 | 12.50% | $ | 210,887 | $ | 290,960 | ||||||||||
Equipment Term Loans:
|
|||||||||||||||||
SLSA
|
2,500,000 | 12.60% | - | 272,172 | |||||||||||||
S2LSA
|
2,500,000 | 12.50% | 924,273 | 1,336,342 | |||||||||||||
LSA2
|
8,607 | 12.50% | 2,343,474 | 2,889,838 | |||||||||||||
$ | 5,106,107 | 3,478,634 | 4,789,312 | ||||||||||||||
Capital Leases
|
1,500,000 | 4.5% | - | 7.36% | $ | 802,511 | - | ||||||||||
500,000 | 7.90% | $ | 431,928 | - | |||||||||||||
$ | 2,000,000 | 1,234,439 | - | ||||||||||||||
Loans payable - current portion
|
2,181,527 | 2,405,191 | |||||||||||||||
Capital lease - current portion
|
434,725 | ||||||||||||||||
Long term debt - current portion
|
$ | 2,616,252 | $ | 2,405,191 | |||||||||||||
Loans payable - long term portion
|
1,297,107 | 2,384,121 | |||||||||||||||
MATT Note payable
|
5,000,000 | 4.46% | 5,000,000 | 5,000,000 | |||||||||||||
RSI Note payable
|
2,000,000 | 4.46% | 2,000,000 | 2,000,000 | |||||||||||||
8,297,107 | 9,384,121 | ||||||||||||||||
Add: Accrued interest
|
1,384,088 | 1,227,985 | |||||||||||||||
Less: unamortized discount
|
(1,213,670 | ) | (1,356,598 | ) | |||||||||||||
Total notes payable - long term portion
|
8,467,525 | 9,255,508 | |||||||||||||||
Capital lease - long term portion
|
799,714 | - | |||||||||||||||
Long term debt
|
$ | 9,267,239 | $ | 9,255,508 |
For the six months ended
|
||||||||
June 30, 2012
|
June 30, 2011
|
|||||||
Sales and marketing
|
$ | 161,263 | $ | 270,685 | ||||
Product development and content
|
950,717 | 352,718 | ||||||
General and administrative
|
766,606 | 927,511 | ||||||
Total stock-based compensation for continuing operations
|
$ | 1,878,586 | $ | 1,550,914 | ||||
Total stock-based compensation for discontinued operations
|
$ | 151,506 | $ | 286,930 |
Options
|
Number of
Stock
|
Weighted-
Average
|
Average
Remaining
|
Aggregate
Intrinsic
|
||||||||||||
Outstanding at December 31, 2011
|
- | $ | - | |||||||||||||
Granted
|
118,500 | $ | 2.32 | |||||||||||||
Exercised
|
- | $ | - | |||||||||||||
Forfeited or expired
|
- | $ | - | |||||||||||||
Outstanding at June 30, 2012
|
118,500 | $ | 2.32 | 9.9 | $ | 300 | ||||||||||
Exercisable at June 30, 2012
|
- | $ | - | 0 | $ | - |
|
For the Six Months Ended June 30,
2012
|
|||
Risk-free interest rate:
|
0.62 | % | ||
Expected term (in years):
|
5.5 | |||
Expected dividend yield:
|
- | |||
Expected volatility:
|
85 | % |
Options
|
Number of
Stock
|
Weighted-
Average
|
Weighted
Average
|
Aggregate
Intrinsic
|
||||||||||||
Outstanding at December 31, 2011 (1)
|
9,168,893 | $ | 2.70 | |||||||||||||
Granted (2)
|
1,309,750 | $ | 3.69 | |||||||||||||
Exercised
|
(227,494 | ) | $ | 1.81 | ||||||||||||
Forfeited or expired
|
(687,084 | ) | $ | 6.00 | ||||||||||||
Outstanding at June 30, 2012 (3)
|
9,564,065 | $ | 2.61 | 7.5 | $ | 6,616,627 | ||||||||||
Exercisable at June 30, 2012 (4)
|
5,958,081 | $ | 1.76 | 6 | $ | 6,613,460 |
(1)
|
Includes 138,864 outstanding options to purchase common stock at a weighted average exercise price of $3.58 per share being held by consultants.
|
(2)
|
Includes 10,000 outstanding options to purchase common stock at a weighted average exercise price of $4.20 per share being held by consultants.
|
(3)
|
Includes 148,864 options granted to purchase common stock at a weighted average exercise price of $3.62 per share being held by consultants.
|
(4)
|
Includes 100,241 exercisable options to purchase common stock at a weighted average exercise price of $2.97 per share being held by consultants.
|
|
For the Six Months ended June 30,
|
|||||||
|
2012
|
2011
|
||||||
Risk-free interest rate:
|
0.80 | % | 2.17 | % | ||||
Expected term: (in years)
|
6.0 | 5.9 | ||||||
Expected dividend yield:
|
- | - | ||||||
Expected volatility:
|
82 | % | 80 | % |
Options
|
Number of
Stock
|
Weighted-
Average
|
Average
Remaining
|
Aggregate
Intrinsic
|
|||||||||||
Outstanding at December 31, 2011
|
443,038 | $ | 1.34 | ||||||||||||
Granted
|
- | $ | - | ||||||||||||
Exercised
|
- | $ | - | ||||||||||||
Forfeited or expired
|
- | $ | - | ||||||||||||
Outstanding at June 30, 2012
|
443,038 | $ | 1.34 | 7.4 | $ | 447,468 | |||||||||
Exercisable at June 30, 2012
|
443,038 | $ | 1.34 | 7.4 | $ | 447,468 |
Risk-free interest rate:
|
3.24 | % | ||
Expected term: (in years)
|
6.08
|
|||
Expected dividend yield:
|
— | |||
Expected volatility:
|
105.68 | % |
Risk-free interest rate:
|
0.87 | % | ||
Expected term: (in years)
|
3.0 | |||
Expected dividend yield:
|
— | |||
Expected volatility:
|
79.02 | % |
Warrants
|
Number of
Warrants
|
Weighted-
Average
|
||||||
Outstanding at December 31, 2011
|
4,200,000 | $ | 2.98 | |||||
Granted
|
- | $ | - | |||||
Exercised
|
- | $ | - | |||||
Forfeited or expired
|
- | $ | - | |||||
Outstanding at June 30, 2012
|
4,200,000 | $ | 2.98 | |||||
Exercisable at June 30, 2012
|
4,200,000 | $ | 2.98 |
|
·
|
As of June 30, 2012 registered users increased to 84.6 million, up from 81.5 million reported at the end of the first quarter of 2012.
|
|
·
|
Page views totaled 9.8 billion in the second quarter of 2012, sequentially up from 9.6 billion reported in the first quarter of 2012, and up from the 583 million page views in the same period of 2011.
|
|
·
|
Visits totaled 338.2 million in the second quarter 2012, sequentially up from the 336.9 million reported in the first quarter of 2012, and up from the 48.4 million visits in the same period of 2011.
|
|
·
|
The Company announced its rebrand to Meetme.com.
|
|
·
|
The Company announced the closure of its games operations on June 27, 2012.
|
|
•
|
Sales and Marketing Expenses:
Our sales and marketing expenses consist primarily of salaries, benefits, and share-based compensation for our employees engaged in sales, sales support, and marketing.
|
|
•
|
Product Development and Content Expenses:
Our product development and content expenses including costs incurred in the classification and organization of listings within our websites, including salaries, benefits, and share-based compensation for our employees, utility charges, occupancy and support for our offsite technology infrastructure, bandwith and content delivery fees, and internet game development and maintenance costs, are charged to expense as incurred.
|
|
•
|
General and Administrative Expenses:
Our general and administrative expenses consist primarily of salaries, benefits, and share-based compensation for our executives as well as our finance, legal, human resources, and other administrative employees. In addition our general and administrative expenses include outside consulting, legal and accounting services, and facilities and other supporting overhead costs.
|
|
•
|
Depreciation and Amortization Expenses:
Our depreciation and amortization are non-cash expenses which have consisted primarily of depreciation and amortization related to our property and equipment, and intangible assets. Currently the majority of our depreciation and amortization expense is attributable to tangible and intangible assets associated with the acquisitions of myYearbook and Quepasa Games.
|
|
•
|
Acquisition and Restructuring Costs:
Acquisition and restructuring costs, include costs incurred related to the business acquisitions made by the Company and costs incurred in conjunction with the restructuring of the Company’s business processes. Acquisition costs include the fees for broker commissions, investment banking, legal, accounting and other professional services, proxy, printing and filing costs, and travel costs incurred by the Company during the acquisition process. Restructuring costs include employee termination and relocation costs recorded as incurred, and exit costs for the office closures.
|
|
•
|
Other Income (Expense):
Other income (expense) consists primarily of interest earned, interest expense and earned grant income. We have invested our cash in AAA rated, fully liquid instruments. Interest income relates to our Notes Receivable discussed in Note 4 of our Consolidated Financial Statements and our cash balances. Interest expense relates to our Loan and Notes Payable discussed in Note 8 of our Consolidated Financial Statements. Earned grant income represents the amortized portion of a cash grant received from the Mexican government for approved capital expenditures. The grant is being recognized on a straight-line basis over the useful lives of the purchased assets.
|
For the three months ended June 30,
|
||||||||||||||||
2012
|
2011
|
Change ($)
|
Change (%)
|
|||||||||||||
Revenues
|
$ | 13,054,861 | $ | 1,620,473 | $ | 11,434,388 | 706 | % | ||||||||
Operating Expenses
|
||||||||||||||||
Sales and marketing
|
1,676,243 | 280,048 | 1,396,195 | 499 | % | |||||||||||
Product development and content
|
8,224,749 | 1,436,700 | 6,788,049 | 472 | % | |||||||||||
General and administrative
|
2,379,313 | 944,449 | 1,434,864 | 152 | % | |||||||||||
Depreciation and amortization
|
965,155 | 93,521 | 871,634 | 932 | % | |||||||||||
Acquisition and restructuring costs
|
247,877 | 69,166 | 178,711 | 258 | % | |||||||||||
Operating Expenses
|
13,493,337 | 2,823,884 | 10,669,453 | 378 | % | |||||||||||
Loss from Operations
|
(438,476 | ) | (1,203,411 | ) | 764,935 | 64 | % | |||||||||
Other Income (Expense):
|
||||||||||||||||
Interest income
|
4,318 | 17,474 | (13,156 | ) | -75 | % | ||||||||||
Interest expense
|
(288,216 | ) | (151,219 | ) | (136,997 | ) | -100 | % | ||||||||
Other income
|
497 | 574 | (77 | ) | -13 | % | ||||||||||
Total Other Income (Expense)
|
(283,401 | ) | (133,171 | ) | (150,230 | ) | -113 | % | ||||||||
Net loss from continuing operations
|
$ | (721,877 | ) | $ | (1,336,582 | ) | $ | 614,705 | 46 | % | ||||||
Net loss from discontinued operations
|
$ | (3,114,040 | ) | $ | (970,026 | ) | $ | (2,144,014 | ) | -221 | % | |||||
Net loss
|
$ | (3,835,917 | ) | $ | (2,306,608 | ) | $ | (1,529,309 | ) | -66 | % |
For the three months ended
June 30,
|
Changes ($)
|
|||||||||||
2012
|
2011
|
|||||||||||
Sales and marketing
|
92,776 | 128,614 | (35,838 | ) | ||||||||
Product and content development
|
520,473 | 176,967 | 343,506 | |||||||||
General and administrative
|
455,256 | 442,156 | 13,100 | |||||||||
Total stock based compensation from continuing operations
|
1,068,505 | 747,737 | 320,768 | |||||||||
Total stock based compensation for discontinued operations
|
(74,472 | ) | 216,873 | (291,345 | ) | |||||||
Total stock based compensation
|
994,033 | 964,610 | 29,423 |
For the three months ended June 30,
December 31,
|
||||||||
2012
|
2011
|
|||||||
Vesting of Stock Options
|
1,068,505 | 568,834 | ||||||
Vesting of Warrants
|
- | 178,903 | ||||||
Total stock based compensation for continuing operations
|
1,068,505 | 747,737 |
For the Three Months Ended
June 30,
|
||||||||||||
2012
|
2011
|
Change
|
||||||||||
Games Revenues
|
$ | 432,739 | $ | 221,174 | $ | 211,565 | ||||||
Games Expenses
|
496,285 | 282,219 | 214,066 | |||||||||
Product development and content
|
349,601 | 566,889 | (217,288 | ) | ||||||||
Depreciation and amortization
|
7,087 | 125,219 | (118,132 | ) | ||||||||
Exit costs
|
431,418 | - | 431,418 | |||||||||
Loss on disposable of assets
|
48,084 | - | 48,084 | |||||||||
Stock-based compensation
|
(74,472 | ) | 216,873 | (291,345 | ) | |||||||
Loss on impairment of goodwill
|
2,288,776 | - | 2,288,776 | |||||||||
Total
|
3,546,779 | 1,191,200 | 2,355,579 | |||||||||
Loss from discontinued operations attributable to Quepasa Games
|
$ | (3,114,040 | ) | $ | (970,026 | ) | $ | (2,144,014 | ) |
For the six months ended June 30,
|
||||||||||||||||
2012
|
2011
|
Change ($)
|
Change (%)
|
|||||||||||||
Revenues
|
$ | 23,450,590 | $ | 3,864,037 | $ | 19,586,553 | 507 | % | ||||||||
Operating Expenses
|
||||||||||||||||
Sales and marketing
|
3,442,639 | 627,846 | 2,814,793 | 448 | % | |||||||||||
Product development and content
|
14,721,208 | 3,059,795 | 11,661,413 | 381 | % | |||||||||||
General and administrative
|
4,323,846 | 1,850,271 | 2,473,575 | 134 | % | |||||||||||
Depreciation and amortization
|
1,863,539 | 179,691 | 1,683,848 | 937 | % | |||||||||||
Acquisition and restructuring costs
|
537,944 | 436,917 | 101,027 | 23 | % | |||||||||||
Operating Expenses
|
24,889,176 | 6,154,520 | 18,734,656 | 304 | % | |||||||||||
Loss from Operations
|
(1,438,586 | ) | (2,290,483 | ) | 851,897 | 37 | % | |||||||||
Other Income (Expense):
|
||||||||||||||||
Interest income
|
9,892 | 34,034 | (24,142 | ) | -71 | % | ||||||||||
Interest expense
|
(586,284 | ) | (301,205 | ) | (285,079 | ) | -100 | % | ||||||||
Other income
|
1,030 | 1,170 | (140 | ) | -12 | % | ||||||||||
Total Other Income (Expense)
|
(575,362 | ) | (266,001 | ) | (309,361 | ) | -116 | % | ||||||||
Net loss from continuing operations
|
$ | (2,013,948 | ) | $ | (2,556,484 | ) | $ | 542,536 | -21 | % | ||||||
Net loss from discontinued operations
|
$ | (3,680,627 | ) | $ | (1,239,250 | ) | $ | (2,441,377 | ) | 197 | % | |||||
Net loss
|
$ | (5,694,575 | ) | $ | (3,795,734 | ) | $ | (1,898,841 | ) | 50 | % |
For the six months ended
June 30,
|
Changes ($)
|
|||||||||||
2012
|
2011
|
|||||||||||
Sales and marketing
|
161,263 | 270,685 | (109,422 | ) | ||||||||
Product and content development
|
950,717 | 352,718 | 597,999 | |||||||||
General and administrative
|
766,606 | 927,511 | (160,905 | ) | ||||||||
Total stock based compensation for continuing operations
|
1,878,586 | 1,550,914 | 327,672 | |||||||||
Total stock based compensation for discontinued operations
|
151,508 | 286,930 | (135,422 | ) | ||||||||
Total stock based compensation
|
2,030,094 | 1,837,844 | 192,250 |
For the six months ended
June 30,
|
||||||||
2012
|
2011
|
|||||||
Vesting of Stock Option
|
1,878,586 | 1,372,011 | ||||||
Vesting of Warrants
|
- | 178,903 | ||||||
Total stock based compensation for continuing operations
|
1,878,586 | 1,550,914 |
For the Six Months Ended
June 30,
|
||||||||||||
2012
|
2011
|
Change
|
||||||||||
Games Revenues
|
$ | 840,190 | $ | 221,174 | $ | 619,016 | ||||||
Games expenses
|
1,032,366 | 262,469 | 769,897 | |||||||||
Product development and content
|
552,563 | 735,516 | (182,953 | ) | ||||||||
Depreciation and amortization
|
16,102 | 175,509 | (159,407 | ) | ||||||||
Exit costs
|
431,418 | - | 431,418 | |||||||||
Loss on disposable of assets
|
48,084 | - | 48,084 | |||||||||
Stock-based compensation
|
151,508 | 286,930 | (135,422 | ) | ||||||||
Loss on impairment of goodwill
|
2,288,776 | - | 2,288,776 | |||||||||
Total
|
4,520,817 | 1,460,424 | 3,060,393 | |||||||||
Loss from discontinued operations attributable to Quepasa Games
|
$ | (3,680,627 | ) | $ | (1,239,250 | ) | $ | (2,441,377 | ) |
For the six months ended
June 30,
|
||||||||
2012
|
2011
|
|||||||
Net cash provided (used) by operating activities
|
(906,743 | ) | (3,152,559 | ) | ||||
Net cash used in investing activities
|
(403,020 | ) | (674,401 | ) | ||||
Net cash provided (used) by financing activities
|
(1,066,337 | ) | 1,470,739 | |||||
(2,376,100 | ) | (2,356,221 | ) |
|
June 30,
2012
|
December 31,
2011
|
||||||
Cash and cash equivalents
|
$ | 5,886,970 | $ | 8,271,787 | ||||
Total assets
|
$ | 105,636,054 | $ | 106,804,696 | ||||
Percentage of total assets
|
6% | 8% |
From
|
Total
|
Less Than 1 Year
|
1-3 Years
|
3-5 Years
|
More than 5 Years
|
|||||||||||||||
To
|
||||||||||||||||||||
Long Term Debt
|
$ | 10,649,052 | $ | 1,094,514 | $ | 2,384,121 | $ | 7,170,417 | $ | - | ||||||||||
Capital Lease Obligations
|
1,234,439 | 226,930 | 1,007,509 | - | - | |||||||||||||||
Operating Lease Obligations
|
3,559,452 | 953,613 | 2,033,739 | 572,100 | - | |||||||||||||||
Purchase Obligations
|
- | - | - | - | - | |||||||||||||||
Other Long Term Liabilities
|
- | - | - | - | - | |||||||||||||||
On Balance Sheet
|
- | |||||||||||||||||||
Total
|
$ | 15,442,943 | $ | 2,275,057 | $ | 5,425,369 | $ | 7,742,517 | $ | - |
For the three months ended June 30,
|
For the six months ended June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net Loss from Continuing Operations Allocable to Common Shareholders
|
$ | (721,877 | ) | $ | (1,336,582 | ) | $ | (2,013,948 | ) | $ | (2,556,484 | ) | ||||
Interest expense
|
288,216 | 151,219 | 586,284 | 301,205 | ||||||||||||
Depreciation and amortization
|
965,155 | 93,521 | 1,863,539 | 179,691 | ||||||||||||
Stock based compensation expense
|
1,068,505 | 747,737 | 1,878,586 | 1,550,914 | ||||||||||||
Acquisition and restructuring
|
247,877 | 69,166 | 537,944 | 436,917 | ||||||||||||
Adjusted EBITDA (Loss) from continuing operations
|
$ | 1,847,876 | $ | (274,939 | ) | $ | 2,852,405 | $ | (87,757 | ) |
●
|
Liquidity;
|
●
|
Capital Expenditures;
|
●
|
Growth of our business; and
|
●
|
Expectations regarding mobile usage.
|
MeetMe, Inc.
|
||
August 9, 2012
|
|
/s/ John Abbott
|
John Abbott
|
||
Chief Executive Officer
(Principal Executive Officer)
|
||
|
||
August 9, 2012
|
/s/ Michael Matte
|
|
Michael Matte
|
||
Chief Financial Officer
(Principal Financial Officer)
|
2.1
|
Agreement of Merger and Plan of Merger and Reorganization – Delaware Reincorporation
|
8-K
|
12/8/11
|
2.1
|
||||||
2.2
|
Agreement and Plan of Merger among Quepasa, IG Acquisition Company and Insider Guides, Inc. dated July 19, 2011*
|
8-K
|
7/20/11
|
2.1
|
||||||
2.3
|
Amendment to the Agreement and Plan of Merger among Quepasa Corporation, IG Acquisition Company and Insider Guides, Inc. dated July 19, 2011
|
8-K
|
9/21/11
|
2.1
|
||||||
3.1
|
Certificate of Incorporation
|
8-K
|
12/8/11
|
3.1
|
||||||
3.2 | Certificate of Amendment to the Certificate of Incorporation – Name Change | Filed | ||||||||
3.3
|
Certificate of Designation – Series A-1
|
8-K
|
11/10/11
|
3.1
|
||||||
3.4
|
Bylaws
|
8-K
|
12/8/11
|
3.2
|
||||||
10.1
|
Amended and Restated 2006 Stock Incentive Plan
|
10-Q
|
8/9/10
|
10.1
|
||||||
10.2
|
Amendment to the Amended and Restated 2006 Stock Incentive Plan
|
S-8
|
7/1/11
|
4.1
|
||||||
10.3 | 2012 Omnibus Incentive Plan | 8-K | 6/5/12 | 10.1 | ||||||
31.1
|
Certification of Principal Executive Officer (Section 302)
|
Filed
|
||||||||
31.2
|
Certification of Principal Financial Officer (Section 302)
|
Filed
|
||||||||
32.1
|
Certification of Principal Executive Officer and Principal Financial Officer (Section 906)
|
Furnished **
|
||||||||
101.INS
|
XBRL Instance Document
|
***
|
||||||||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
***
|
||||||||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
***
|
||||||||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
***
|
||||||||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
***
|
||||||||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
***
|
(i)
|
the representations and warranties contained in the agreement were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts;
|
(ii)
|
the agreement may have different standards of materiality than standards of materiality under applicable securities laws;
|
(iii)
|
the representations are qualified by a confidential disclosure schedule that contains nonpublic information that is not material under applicable securities laws;
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(iv)
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facts may have changed since the date of the agreement; and
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(v)
|
only parties to the agreement and specified third-party beneficiaries have a right to enforce the agreement.
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QUEPASA CORPORATION
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||
By:
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/s/ Michael Matte
|
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Michael Matte
Chief Financial Officer
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/s/ John Abbott
|
|
John Abbott
Chief Executive Officer
(Principal Executive Officer)
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/s/ Michael Matte
|
|
Michael Matte
Chief Financial Officer
(Principal Financial Officer)
|
|
1.
|
The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
|
|
2.
|
The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John Abbott | |
John Abbott
Chief Executive Officer
(Principal Executive Officer)
|
|
1.
|
The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
|
|
2.
|
The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Michael Matte
|
|
Michael Matte
Chief Financial Officer
(Principal Financial Officer)
|