Nevada
|
001-33105
|
86-0879433
|
(State or other Jurisdiction of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
324 Datura Street, Ste. 114
West Palm Beach, FL
|
33401
|
(Address of principal executive offices)
|
(Zip Code)
|
(Former name or former address if changed since last report)
|
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5 "F" PR
|
Mario Miguel Tomaz Tannhauser Junior
Contador CRC 1SP217245/0-8 "S" PR
|
Balance Sheets at December 31
(In US dollars)
|
Assets
|
2010
|
2009
|
Liabilities and net capital deficiency
|
2010
|
2009
|
||||||||||||
Current assets
|
Current liabilities
|
||||||||||||||||
Cash and cash equivalents (Note 4)
|
23,185 | 13,094 |
Trade accounts payable
|
25,828 | 27,119 | ||||||||||||
Trade accounts receivable (Note 5)
|
82,075 |
Loans (Note 7)
|
284,969 | 173,903 | |||||||||||||
Taxes recoverable
|
2,952 | 25,124 |
Taxes payable (Note 8)
|
44,398 | 27,033 | ||||||||||||
Payroll accruals
|
59,139 | 57,637 | |||||||||||||||
26,137 | 120,293 |
Provisions for labor liabilities (Note 9)
|
1,752,655 | 1,242,720 | |||||||||||||
Long-term asset
|
2,166,989 | 1,528,412 | |||||||||||||||
Judicial deposits (Note 10)
|
156,946 | 104,294 | |||||||||||||||
Property, plant, and equipment (Note 6)
|
100,689 | 127,893 |
Long-term liabilities
|
||||||||||||||
Intangible assets
|
3,008 | 1,035 |
Loans (Note 7)
|
151,386 | |||||||||||||
Taxes payable (Note 8)
|
45,500 | 18,711 | |||||||||||||||
260,643 | 233,222 |
Provision for contingencies (Note 10)
|
156,945 | 104,293 | |||||||||||||
353,831 | 123,004 | ||||||||||||||||
Net capital deficiency
|
|||||||||||||||||
Capital
|
85,484 | (257 | ) | ||||||||||||||
Accumulated deficit
|
(2,016,435 | ) | (1,099,253 | ) | |||||||||||||
Accumulated other comprehensive (losses)
|
(303,089 | ) | (198,905 | ) | |||||||||||||
Total net capital deficiency
|
(2,234,040 | ) | (1,297,901 | ) | |||||||||||||
Total assets
|
286,780 | 353,515 |
Total liabilities and net capital deficiency
|
286,780 | 353,515 |
Statements of Operations Years ended December 31
(In USD dollars, except quota data)
|
2010
|
2009
|
|||||||
Net service revenues (Note 11)
|
1,226,271 | 968,537 | ||||||
Cost of services rended
|
(1,435,843 | ) | (1,293,548 | ) | ||||
Gross losses
|
(209,572 | ) | (325,011 | ) | ||||
Selling expenses
|
(18,497 | ) | (19,656 | ) | ||||
General and administrative expenses
|
(364,777 | ) | (305,626 | ) | ||||
(383,274 | ) | (325,282 | ) | |||||
Operating losses
|
(592,846 | ) | (650,293 | ) | ||||
Interest income (expenses)
|
||||||||
Interest income (Note 12)
|
1 | 3,056 | ||||||
Interest expenses (Note 12)
|
(211,423 | ) | (157,961 | ) | ||||
Loss before taxation
|
(804,268 | ) | (805,198 | ) | ||||
Income tax expense (Note 13)
|
(112,914 | ) | (100,233 | ) | ||||
Net Loss for the year
|
(917,182 | ) | (905,431 | ) | ||||
Foreign currency translation adjustments
|
(104.184 | ) | (198.905 | ) | ||||
Comprehensive losses
|
(1.021.366 | ) | (1.104.336 | ) | ||||
Net Loss per quota
|
(6.78 | ) | (1,840.56 | ) |
Statements of Net Capital Deficiency
(In US dollars)
|
Capital
|
Accumulated
deficit
|
Accumulated
Other
comprehensive
(losses)
|
Total net
capital
deficiency
|
|||||||||||||
Balances at December 31, 2008
|
257 | (193,822 | ) | (193,565 | ) | |||||||||||
Loss for the year
|
(905,431 | ) | (905,431 | ) | ||||||||||||
Currency translation differences
|
(198,905 | ) | (198.905 | ) | ||||||||||||
Balances at December 31, 2009
|
257 | (1,099,253 | ) | (198,905 | ) | (1,297,901 | ) | |||||||||
Increase of capital (Note 14)
|
85,227 | 85,227 | ||||||||||||||
Loss for the year
|
(917,182 | ) | (917,182 | ) | ||||||||||||
Currency translation differences
|
(104,184 | ) | (104.184 | ) | ||||||||||||
Balances at December 31, 2010
|
85,484 | (2,016,435 | ) | (303,089 | ) | (2,234,040 | ) |
Statements of Cash Flows
Years ended December 31
(In US dollars, unless otherwise stated)
|
2010
|
2009
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
(804,268 | ) | (805,198 | ) | ||||
Adjustments to reconcile net loss to cash provided by operating activities
|
||||||||
Depreciation and amortization
|
32,907 | 27,573 | ||||||
Provisions for labor liabilities
|
396,623 | 571,676 | ||||||
Interest, monetary and foreign exchange variations
|
203,365 | 153,711 | ||||||
Decrease/increase in operating assets and liabilities
|
||||||||
Trade accounts receivable
|
(82,075 | ) | 222,288 | |||||
Trade accounts payable
|
(1,291 | ) | 24,657 | |||||
Judicial deposits
|
(52,651 | ) | (104,294 | ) | ||||
Other assets and liabilities, net
|
73,583 | (138,662 | ) | |||||
Net cash used in operating activities
|
(233,806 | ) | (48,250 | ) | ||||
Cash flows from investing activities
|
||||||||
Purchases of property, plant and equipment
|
(15,490 | ) | (31,991 | ) | ||||
Net cash used in investing activities
|
(15,490 | ) | (31,991 | ) | ||||
Cash flows from financing activities
|
||||||||
New loans
|
164,650 | 250,861 | ||||||
Payment of loans
|
(161,665 | ) | ||||||
Increase of capital
|
85,227 | |||||||
Net cash provided by financing activities
|
249,877 | 89,197 | ||||||
Net increase in cash and cash equivalents
|
10,091 | 8,956 | ||||||
Cash and cash equivalents at the beginning of the year
|
13,094 | 4,139 | ||||||
Cash and cash equivalents at the end of the year
|
23,185 | 13,094 |
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
1
|
Operations
|
2
|
Presentation of the Financial Statements
|
3
|
Significant Accounting Policies
|
(a)
|
Revenues and expenses
|
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
(b)
|
Use of estimates
|
(c)
|
Cash and cash equivalents
|
(d)
|
Trade accounts receivable and allowance for doubtful accounts
|
(e)
|
Judicial deposits
|
(f)
|
Property, plant and equipment Property, plant and equipment are recorded at cost of purchase or construction.
|
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
(g)
|
Estimated liability for legal proceedings and labor claims
|
(h)
|
Income taxes
|
(i)
|
Loans payable
|
(j)
|
Currency remeasurement
|
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
(k)
|
Fair value estimation
|
4
|
Trade Accounts Receivable
|
2010
|
2009
|
|||||||
Cash in hand
|
50 | 49 | ||||||
Cash at banks
|
23,135 | 13,045 | ||||||
23,185 | 13,094 |
5
|
Trade Accounts Receivable
|
2010
|
2009
|
||||||
Foreign customers
|
82,075 | ||||||
82,075 |
6
|
Property, Plant and Equipment
|
2010
|
2009
|
|||||||
Machinery and equipment
|
34,241 | 29,819 | ||||||
Computer equipment
|
143,990 | 126,147 | ||||||
Furniture and fixtures
|
35,809 | 34,122 | ||||||
214,040 | 190,089 | |||||||
Accumulated depreciation
|
(113,351 | ) | (62,190 | ) | ||||
Total
|
100,689 | 127,893 |
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
7
|
Loans
|
Annual | ||||||||||||
interest rate - %
|
2010
|
2009 | ||||||||||
Working capital loans
|
||||||||||||
Bank loans
|
37.16 | 280,438 | 173,903 | |||||||||
Loans from quotaholders
|
50.78 | 155,917 | ||||||||||
436,355 | 173,903 | |||||||||||
Current
|
(284,969 | ) | (173,903 | ) | ||||||||
Non current | 151,386 |
2010
|
||||
2012
|
51,117 | |||
2013
|
100,269 | |||
151,386 |
8
|
Taxes Payable
|
2010
|
2009
|
|||||||
Social Contribution on Net Income (CSLL)
|
6,950 | 13,275 | ||||||
Corporate Income Tax (IRPJ)
|
72,581 | 26,876 | ||||||
Other
|
10,367 | 5,593 | ||||||
89,898 | 45,744 | |||||||
Current
|
44,398 | 27,033 | ||||||
Non-current
|
45,500 | 18,711 |
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
9
|
Provisions for Labor Liabilities
|
Accruals | ||||||||
2010
|
2009
|
|||||||
National Institute of Social Security (INSS)
|
780,012 | 552,448 | ||||||
Government Severance Indemnity Fund for Employees (FGTS)
|
197,626 | 141,354 | ||||||
Provision for vacation pay
|
438,478 | 327,992 | ||||||
Income Tax Withheld at Source (IRRF)
|
336,539 | 220,926 | ||||||
1,752,655 | 1,242,720 |
10
|
Judicial Deposits
Provision for Contingencies
|
Judicial deposits
|
Provision for contingencies
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Tax contingencies
|
||||||||||||||||
Income Tax and Social Contribution on Gross Revenue (IRPJ and CSLL)
|
156,945 | 104,294 | 156,945 | 104,294 | ||||||||||||
156,945 | 104,294 | 156,945 | 104,294 |
Balance at December 31, 2008
|
|
Provision charged to expense | 104,294 |
Balance at December 31, 2009 | 104,294 |
Provision charged to expense | 56,651 |
Balance at December 31, 2010 | 156,945 |
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
11
|
Net service revenues
|
2010
|
2009
|
|||||||
Net service revenues | ||||||||
Services revenues | 1,215,405 | 967,653 | ||||||
Taxes and social contributions on sales | 861 | 66 | ||||||
PIS | 3.975 | 307 | ||||||
Cofins | 6.624 | 511 | ||||||
ISS | 10,866 | 884 | ||||||
1,226,271 | 968,537 |
12
|
Interest Income and Expenses
|
2010
|
2009
|
|||||||
Interes expenses
|
||||||||
Interest
|
154,449 | 110,449 | ||||||
Bank expenses
|
2,539 | 2,066 | ||||||
Tax on financial operations - IOF
|
5,519 | 2,184 | ||||||
Foreign exchange losses, net
|
48,916 | 43,262 | ||||||
211,423 | 157,961 |
2010
|
2009 | |||||||
Intere income
|
|
|||||||
Interest on financial investments | 1 | 3,056 |
13
|
Income Tax and Social Contribution on Net Income
|
2010
|
2009
|
|||||||
Presumed profit - 32% (tax basis)
|
372,136 | 327,009 | ||||||
Financial income
|
1 | 3,056 | ||||||
Tax basis
|
372,137 | 330,065 | ||||||
Income tax (15% plus 10% on excess)
|
79,421 | 70,526 | ||||||
Social contribution on net income (9%)
|
33,493 | 29,707 | ||||||
112,914 | 100,233 |
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
14
|
Capital
|
15
|
Risk Management and
Financial Instruments
|
(a)
|
Identification and valuation of financial instruments
|
(b)
|
Cash and cash equivalents,
accounts receivable, other current assets and accounts payable
|
(c)
|
Loans
|
(d)
|
Interest rate risk
|
Notes to the financial statements
at December 31, 2010 and 2009
(In US dollars, unless otherwise stated)
|
(e)
|
Foreign exchange rate risk
|
(f)
|
Credit risk
|
(g)
|
Liquidity risk
|
16
|
Subsequent events
|
Historical
|
||||||||||||||||||||||
Acquirer
|
Acquiree
|
Proforma Adjustments
|
||||||||||||||||||||
Quepasa
|
TechFront
|
Debit
|
Credit
|
Pro forma
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||||
CURRENT ASSETS:
|
|
|||||||||||||||||||||
Cash and cash equivalents
|
$ | 13,546,572 | $ | 23,185 | 23,185 | 1 | $ | 12,723,572 | ||||||||||||||
500,000 | 2 | |||||||||||||||||||||
323,000 | 3 | |||||||||||||||||||||
Accounts receivable, net
|
1,361,024 | 2,952 | 2,952 | 1 | 1,361,024 | |||||||||||||||||
Notes receivable - current portion
|
314,221 | 0 | 314,221 | |||||||||||||||||||
Restricted cash
|
275,000 | 0 | 275,000 | |||||||||||||||||||
Other current assets
|
113,841 | 0 | 113,841 | |||||||||||||||||||
Total current assets | 15,610,658 | 26,137 | 14,787,658 | |||||||||||||||||||
Goodwill
|
4,280,618 | 2 | 4,280,618 | |||||||||||||||||||
Property and equipment, net
|
645,728 | 100,689 | 19,071 | 2 | 765,488 | |||||||||||||||||
Judicial deposits
|
156,946 | 156,946 | 1 | 0 | ||||||||||||||||||
Notes receivable - long-term portion
|
156,079 | 156,079 | ||||||||||||||||||||
Other assets
|
40,324 | 3,008 | 191,887 | 2 | 3,008 | 1 | 232,211 | |||||||||||||||
Total assets
|
$ | 16,452,789 | $ | 286,780 | $ | 20,222,054 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||
CURRENT LIABILITIES:
|
||||||||||||||||||||||
Accounts payable
|
$ | 286,990 | 25,828 | 323,527 | 2 | 636,345 | ||||||||||||||||
Accrued expenses
|
414,249 | 59,139 | 25,480 | 1 | 447,908 | |||||||||||||||||
Accrued dividends
|
278,750 | 278,750 | ||||||||||||||||||||
Taxes payable
|
44,398.00 | 44,398 | 1 | 0 | ||||||||||||||||||
Provision for labor liabilities
|
1,752,655.00 | 1,752,655 | 1 | 0 | ||||||||||||||||||
Unearned grant income
|
12,364 | 12,364 | ||||||||||||||||||||
Current portion of long-term debt
|
- | 284,969 | 284,969 | 1 | 0 | |||||||||||||||||
Total current liabilities | 992,353 | 2,166,989 | 1,375,367 | |||||||||||||||||||
Taxes Payable - long term
|
45,500 | 45,500 | 1 | 0 | ||||||||||||||||||
Provision for contigencies
|
156,945 | 156,945 | 1 | 0 | ||||||||||||||||||
Notes payable, net
|
6,272,545 | 151,386 | 151,386 | 1 | 6,272,545 | |||||||||||||||||
Total liabilities | 7,264,898 | 2,520,820 | 7,647,912 | |||||||||||||||||||
STOCKHOLDERS’ EQUITY:
|
||||||||||||||||||||||
Preferred stock,
|
25 | 25 | ||||||||||||||||||||
Common stock
|
15,287 | 349 | 2 | 15,636 | ||||||||||||||||||
Additional paid-in capital
|
175,276,319 | 85,484 | 69,762 | 1 | 178,985,221 | |||||||||||||||||
2,714,430 | 2 | |||||||||||||||||||||
978,750 | 2 | |||||||||||||||||||||
Accumulated deficit
|
(166,096,889 | ) | (2,016,435 | ) | 2,016,435 | 1 | (166,419,889 | ) | ||||||||||||||
300,000 | 3 | |||||||||||||||||||||
23,000 | 3 | |||||||||||||||||||||
0 | ||||||||||||||||||||||
Accumulated other comprehensive income
|
(6,851 | ) | (303,089 | ) | 303,089 | 1 | (6,851 | ) | ||||||||||||||
Total shareholders' equity | 9,187,891 | (2,234,040 | ) | 12,574,142 | ||||||||||||||||||
Totalliabilities and shareholders' equity
|
$ | 16,452,789 | $ | 286,780 | 7,345,671 | 7,345,671 | $ | 20,222,054 |
Historical
|
Proforma | ||||||||||||||||
Acquirer
|
Acquiree
|
Adjustments
|
|||||||||||||||
Quepasa
|
TechFront
|
Debit (Credit)
|
Pro forma
|
||||||||||||||
REVENUES
|
$ | 6,054,141 | $ | 1,226,271 | $ | 7,280,412 | |||||||||||
OPERATING EXPENSES:
|
|||||||||||||||||
Sales and marketing
|
891,980 | 18,497 | 910,477 | ||||||||||||||
Product and content development
|
4,774,694 | 1,435,843 | 6,210,537 | ||||||||||||||
General and administrative
|
6,123,083 | 364,777 | 6,487,860 | ||||||||||||||
Depreciation and amortization
|
319,779 | 36,607 | 4 | 547,962 | |||||||||||||
191,576 | 5 | ||||||||||||||||
TOTAL OPERATING EXPENSES
|
12,109,536 | 1,819,117 | 14,156,836 | ||||||||||||||
LOSS FROM OPERATIONS
|
(6,055,395 | ) | (592,846 | ) | (6,876,424 | ) | |||||||||||
OTHER INCOME (EXPENSE):
|
|||||||||||||||||
Interest income
|
6,229 | 1 | 6,230 | ||||||||||||||
Interest expense
|
(603,609 | ) | (211,423 | ) | (815,032 | ) | |||||||||||
Other income
|
2,125 | 2,125 | |||||||||||||||
TOTAL OTHER INCOME (EXPENSE)
|
(595,255 | ) | (211,422 | ) | (806,677 | ) | |||||||||||
LOSS BEFORE INCOME TAXES
|
(6,650,650 | ) | (804,268 | ) | (7,683,101 | ) | |||||||||||
Income taxes
|
0 | (112,914 | ) | (112,914 | ) | ||||||||||||
NET LOSS
|
(6,650,650.00 | ) | (917,182.00 | ) | (7,796,015 | ) | |||||||||||
Preferred stock dividends
|
(111,500 | ) | (111,500 | ) | |||||||||||||
Net LOSS ALLOCABLE TO COMMON SHAREHOLDERS
|
(6,762,150 | ) | 228,183 | (7,907,515 | ) | ||||||||||||
NET LOSS PER COMMON SHARE, ALLOCABLE TO
|
|||||||||||||||||
COMMON SHAREHOLDERS, BASIC AND DILUTED
|
(0.52 | ) | 0.02 | (0.59 | ) | ||||||||||||
NET LOSS PER COMMON SHARE, ALLOCABLE TO
|
|||||||||||||||||
COMMON SHAREHOLDERS, DILUTED
|
(0.52 | ) | 0.02 | (0.59 | ) | ||||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES
|
|||||||||||||||||
OUTSTANDING, BASIC AND DILUTED
|
13,117,845 | 13,466,568 | 13,466,568 | ||||||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES
|
|||||||||||||||||
OUTSTANDING, DILUTED
|
13,117,845 | 13,466,568 | 13,466,568 |
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 |
Debit
|
Credit
|
|||||||
1 | ||||||||
Cash
|
23,185 | |||||||
Accounts receivable
|
2,952 | |||||||
Property and equipment
|
||||||||
Judical deposits
|
156,946 | |||||||
Other assets
|
3,008 | |||||||
Accounts payable
|
||||||||
Accrued expenses
|
||||||||
Taxable payable - current
|
44,398 | |||||||
Taxable payable-long term
|
45,500 | |||||||
Provision for labor liabilities
|
1,752,655 | |||||||
Provision for contingencies
|
156,945 | |||||||
Note payable
|
284,969 | |||||||
Note payable
|
151,386 | |||||||
Additional paid capital
|
69,762 | |||||||
Accumulated deficit
|
2,016,435 | |||||||
Accumulated other comprehensive losses
|
303,089 | |||||||
To remove asset not acquired and liabilities not assumed.
|
||||||||
2 |
Cash
|
500,000 | ||||||
Goodwill
|
4,280,618 | |||||||
Property and equipment
|
19,071 | |||||||
Other assets
|
191,887 | |||||||
Accounts payable
|
323,527 | |||||||
Accrued expenses
|
25,480 | |||||||
Common Stock
|
349 | |||||||
Addition paid in capital - common stock issuance
|
2,714,430 | |||||||
Addition paid in capital - contingent issuance of common stock
|
978,750 | |||||||
To record at fair market value assets acquired and liablities assumed pursuant to the Stock Purchase Agreement.
|
||||||||
3 |
Cash
|
323,000 | ||||||
Accumulated deficit - brokerage fee
|
300,000 | |||||||
Accumulated deficit - legal fees
|
23,000 | |||||||
To record non-recurring acquirer expense incurred in the acquisition.
|
||||||||
4 |
Depreciation expense
|
36,607 | ||||||
Accumulated amortization
|
36,607 | |||||||
To record annual amortization on tangible assets acquired.
|
||||||||
5 |
Amortization expense
|
191,576 | ||||||
Accumulated amortization
|
191,576 | |||||||
To record annual amortization of customer contracts acquired.
|
||||||||
Total
|
7,573,854 | 7,573,854 |
QUEPASA CORPORATION
|
|||
Date: May 11, 2011
|
By:
|
/s/ Michael Matte | |
Name: | Michael Matte | ||
Title: | Chief Financial Officer |