As filed with the Securities and Exchange Commission on August 26, 2011

Registration No. 333-176235

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

To

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Quepasa Corporation

(Exact name of registrant as specified in its charter)

Nevada	7310	86-0879433
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

324 Datura Street, Ste. 114, West Palm Beach, FL 33401, (561) 366-1249

(Address, including ZIP code, and telephone number, including area code, of registrant’s principal executive offices)

 Michael Matte, 324 Datura Street, Ste. 114, West Palm Beach, FL 33401, (561) 366-1249

 (Name, address, including ZIP code, and telephone number, including area code, of agent for service)

Copies to:

Michael D. Harris, Esq. Brian S. Bernstein, Esq. Harris Cramer LLP 3507 Kyoto Gardens Drive Ste. 320 Palm Beach Gardens, FL  33410 (561) 478-7077 Thomas L. Hanley, Esq.  SNR Denton US LLP 1301 K Street, N.W. Washington, DC  20005   (202) 408-9234  Roland S. Chase, Esq. SNR Denton US LLP 101 JFK Parkway Short Hills, NJ  07078 (973) 912-7179

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	Accelerated filer  o	Non-accelerated filer  o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

o Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

o Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such dates as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of such securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to appropriate registration or qualification under the securities laws of such jurisdiction.

SUBJECT TO COMPLETION DATED AUGUST 26, 2011

PROSPECTUS

and

PROXY STATEMENT

of

QUEPASA CORPORATION

Special Meeting of Shareholders to be held on [—], 2011

This Prospectus and Proxy Statement, which we refer to as the “proxy statement/prospectus”, of Quepasa Corporation, or Quepasa, is being used to solicit proxies on behalf of Quepasa from Quepasa shareholders in connection with a Special Meeting of Shareholders of Quepasa to be held on [—], 2011, which we refer to as the “Special Meeting.”  Quepasa and Insider Guides, Inc., which is doing business as “myYearbook.com” and which we refer to as “myYearbook,” have entered into a merger agreement, which we refer to as the “Merger Agreement” providing for the acquisition of myYearbook by Quepasa, which we refer to as the “Merger.”  Pursuant to the terms of the Merger Agreement, myYearbook will be merged with and into a wholly-owned subsidiary of Quepasa with the Quepasa subsidiary surviving.  If the Merger is completed, holders of myYearbook’s common stock, preferred stock, options and warrants will receive an aggregate of $18 million in cash and $82 million in Quepasa common stock (not including cash paid for any fractional shares).  The exact number of shares of Quepasa common stock to be issued will be based upon what we refer to as the “Transaction Share Price,” which will be the lesser of (A) $10 per share and (B) the average of (i) $7.5715 and (ii) the average closing price of Quepasa common stock on the 20 trading days ending with the trading day three days prior to the closing of the Merger. The Transaction Share Price may be lower than or higher than the market price as of the time of closing.  It is a condition to closing the Merger that the Transaction Share Price not be lower than $5.00, which condition may be waived.

At the Special Meeting, shareholders of Quepasa will be asked to consider and vote on the following proposals:

1. To approve the issuance of shares of Quepasa common stock in connection with the Merger, which includes the issuance of shares to myYearbook security holders as partial consideration for the Merger and the issuance of shares that Quepasa intends to issue in a related financing to help fund the cash portion of the Merger consideration payable to myYearbook security holders (referred to as “Proposal 1” or the “share issuance proposal”);

2. To approve an increase in Quepasa’s authorized common stock from 50 million to 100 million shares (referred to as “Proposal 2” or the “authorized common shares increase proposal”);

3. To approve the reincorporation of Quepasa in the state of Delaware (referred to as “Proposal 3” or the “reincorporation proposal”);

4. To approve an amendment to Quepasa’s 2006 Stock Incentive Plan authorizing an additional 2,000,000 shares to be available for grant (referred to as “Proposal 4” or the “Stock Incentive Plan proposal”); and

5. To approve any adjournment of the Special Meeting, for any reason, including, if necessary, to solicit additional proxies if there are not sufficient votes to approve one or more of the proposals (referred to as “Proposal 5” or the “adjournment proposal”).

This proxy statement/prospectus also constitutes the prospectus of Quepasa under the Securities Act of 1933 for the offering of shares of Quepasa common stock to the holders of myYearbook’s common stock, preferred stock, options and warrants in connection with the Merger.  This prospectus does not cover resales of the Quepasa common stock to be issued in connection with the Merger, and no person is authorized to use this prospectus in connection with any resale.

Quepasa common stock is currently traded on the NYSE Amex under the symbol “QPSA.”  On [●], 2011, the day immediately prior to the date of this proxy statement/prospectus, the closing price of Quepasa’s common stock on the NYSE Amex was [●] per share.  There is no public market for myYearbook’s securities.

The obligations of Quepasa and myYearbook to complete the Merger are subject to the satisfaction or waiver of several conditions.

This proxy statement/prospectus contains detailed information about Quepasa, myYearbook, the Special Meeting, the Merger Agreement and the Merger.  Both the shareholders of Quepasa and the holders of myYearbook’s securities are strongly urged to read and consider carefully this proxy statement/prospectus in its entirety.

See the section entitled “Risk Factors” beginning on page 17 for a discussion of the risks associated with the Merger and related transactions.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the proxy statement/prospectus or determined if the proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this proxy statement/prospectus is [—], 2011

This proxy statement/prospectus and the accompanying form of proxy for Quepasa shareholders are first being mailed or delivered to Quepasa shareholders on or about [—], 2011.

i

324 Datura Street, Ste. 114

West Palm Beach, Florida 33401

YOUR VOTE IS VERY IMPORTANT

[—], 2011

To the Shareholders of Quepasa Corporation:

I am pleased to invite you to attend the Special Meeting of Shareholders of Quepasa Corporation, a Nevada corporation, or Quepasa, which will be held at [—] on [—] at [—], New York time, and which we refer to as the “Special Meeting.”

Quepasa and Insider Guides, Inc., which is doing business as “myYearbook.com” and which we refer to as “myYearbook,” have entered into a Merger Agreement providing for the acquisition of myYearbook by Quepasa, which we refer to as the “Merger.”  Pursuant to the terms of the Merger Agreement, myYearbook will be merged with and into a wholly-owned subsidiary of Quepasa with the Quepasa subsidiary surviving.  If the Merger is completed, holders of myYearbook’s common stock, preferred stock, options and warrants will receive an aggregate of $18 million in cash and $82 million in Quepasa common stock (not including cash paid for any fractional shares).

Quepasa will be holding the Special Meeting for several reasons.  One of those reasons is to obtain the approval of Quepasa shareholders of the issuance of shares of Quepasa common stock in connection with the Merger, including the issuance of shares to myYearbook security holders as partial consideration for the Merger and the issuance of shares that Quepasa intends to issue in a related financing to help fund the cash portion of the Merger consideration payable to myYearbook security holders.  Shareholder approval of these share issuances is required by a Rule of the NYSE Amex requiring approval whenever more than 20% of outstanding shares of common stock are issued in a transaction of this type.  The exact number of shares to be issued as partial consideration for the Merger will depend on the average closing price of Quepasa common stock on the 20 trading days ending with the trading day three days prior to the closing of the Merger.  Based on an assumed Transaction Share Price of $7.5715, the number of shares of common stock that would be issued in the Merger is 10,830,086.  The actual number of shares may be higher or lower, depending on the actual Transaction Share Price.  Similarly, the number of shares to be issued in the related financing will depend on the price or prices at which we are able to sell the shares to investors.  Assuming a sales price per share of $7.5715, Quepasa would issue approximately: (i) 1.3 million additional shares in order to raise $10 million or (ii) 2.4 million additional shares in order to raise the full $18 million needed to fund the cash portion of the Merger consideration.  Quepasa estimates that if $10 million is raised existing Quepasa shareholders would own approximately 60.1% and if $18 million is raised existing Quepasa shareholders would own approximately 58.0% of the shares of Quepasa common stock outstanding immediately following the Merger (assuming a Transaction Share Price and related financing sales price of $7.5715).  We are not asking our shareholders to approve the Merger.

In order to have sufficient authorized common stock after the Merger to be able to issue additional shares for a variety of purposes, including in connection with financing transactions, additional acquisitions and compensatory purposes, we are also asking our shareholders in the Special Meeting to approve an increase in our authorized common stock from 50 million shares to 100 million shares.  We are again asking our shareholders to approve our reincorporation in Delaware from Nevada where we are now incorporated.  We are also asking shareholders to approve an amendment to our 2006 Stock Incentive Plan to increase the shares available for grant under the plan by 2,000,000 shares.  Additionally, we are seeking shareholder approval to adjourn the Special Meeting for any reason, including, if necessary, to solicit additional proxies if there are not sufficient votes to approve one or more of the proposals.

Your vote is very important, regardless of the number of Quepasa shares you own. Whether or not you expect to attend the Special Meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the Special Meeting.

Our Board of Directors recommended that Quepasa shareholders vote “FOR” the proposal to approve the issuance of shares of Quepasa common stock in connection with the Merger, “FOR” the proposal to approve an increase in our authorized common stock, “FOR” the proposal to reincorporate in Delaware, “FOR” the proposal to increase the shares available for grant under the 2006 Stock Incentive Plan and “FOR” the proposal to adjourn the Special Meeting if necessary.  All of these proposals are described in further detail in the proxy statement/prospectus.

The obligations of Quepasa and myYearbook to complete the Merger are subject to the satisfaction or waiver of several conditions. The proxy statement/prospectus contains detailed information about Quepasa, myYearbook, the Special Meeting, the Merger Agreement and the Merger.  You should read the proxy statement/prospectus carefully and in its entirety before voting, including the section entitled “Risk Factors” beginning on page 17.

I sincerely hope that you will be able to attend the Special Meeting. However, whether or not you plan to attend, please complete and return the enclosed proxy in the accompanying envelope or vote your shares by telephone or via the Internet. If you hold your Quepasa shares through your broker or other nominee, please provide voting instructions to your broker or nominee.  If you attend the meeting, you may, if you wish, withdraw any proxy previously given and vote your shares in person.

Sincerely,

/s/ John Abbott

John Abbott

Chairman of the Board

ii

324 Datura Street, Ste. 114

West Palm Beach, Florida 33401

(561) 366-1249

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On [—]

To the Shareholders of Quepasa Corporation:

We are pleased to invite you to attend the Special Meeting of Shareholders of Quepasa Corporation, a Nevada corporation, or Quepasa, which will be held at [—] on [—] at [—], New York time, and which we refer to as the “Special Meeting,” for the following purposes:

At the Special Meeting, shareholders of Quepasa will be asked to consider and vote on the following proposals:

1. To approve the issuance of shares of Quepasa common stock in connection with the Merger, which includes the issuance of shares to myYearbook security holders as partial consideration for the Merger and the issuance of shares that Quepasa intends to issue in a related financing to help fund the cash portion of the Merger consideration payable to myYearbook security holders (referred to as “Proposal 1” or the “share issuance proposal”);

2. To approve an increase in Quepasa’s authorized common stock from 50 million to 100 million shares (referred to as “Proposal 2” or the “authorized common shares increase proposal”);

3. To approve the reincorporation of Quepasa in the state of Delaware (referred to as “Proposal 3” or the “reincorporation proposal”);

4. To approve an amendment to Quepasa’s 2006 Stock Incentive Plan authorizing an additional 2,000,000 shares to be available for grant (referred to as “Proposal 4” or the “Stock Incentive Plan proposal”); and

5. To approve any adjournment of the Special Meeting, for any reason, including, if necessary, to solicit additional proxies in favor of the share issuance proposal if there are not sufficient votes to approve one or more of the proposals (referred to as “Proposal 5” or the “adjournment proposal”).

Quepasa will transact no other business at the Special Meeting except such business as may properly be brought before the Special Meeting or any adjournments or postponements thereof. Please refer to the proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the Special Meeting.

The Quepasa Board of Directors recommends that Quepasa shareholders vote “FOR” each of the proposals listed above.

The Quepasa Board of Directors has fixed the close of business on [—] as the record date for determination of shareholders entitled to receive notice of, and to vote at, the Special Meeting or any adjournments or postponements thereof. Only Quepasa shareholders of record at the close of business on the record date are entitled to receive notice of the Special Meeting, attend the Special Meeting and vote on all matters that properly come before the Special Meeting.

Your vote is very important. Whether or not you expect to attend the Special Meeting in person, we urge you to submit a proxy to vote your shares as promptly as possible.  If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction card provided by your broker, bank or other nominee.

The enclosed proxy statement/prospectus provides a detailed description of the Merger and the Merger Agreement. We urge you to read this proxy statement/prospectus, including any documents incorporated by reference, and the Annexes, carefully and in their entirety. If you have any questions concerning the proposed acquisition or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of Quepasa common stock, please contact Quepasa’s proxy solicitor:  [—]

By Order of the Board of Directors of Quepasa,

/s/ John Abbott

John Abbott

Chairman of the Board

[—], 2011

iii

ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Quepasa from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this proxy statement/prospectus free of charge by requesting them in writing or by telephone from Quepasa at 324 Datura Street, Ste. 114, West Palm Beach, Florida 33401, Attention: Corporate Secretary or (561) 366-1249.

If you would like to request any documents, please do so by [—] in order to receive them before the Special Meeting.

For a more detailed description of the information incorporated by reference in this proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 113.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission, or the SEC, by Quepasa, constitutes a prospectus of Quepasa under the Securities Act with respect to the shares of Quepasa common stock to be issued to holders of myYearbook’s common stock, preferred stock, options and warrants in connection with the Merger. This proxy statement/prospectus also constitutes a proxy statement for Quepasa under Section 14(a) of the Securities Exchange Act of 1934, or the Exchange Act. It also constitutes a notice of meeting with respect to the Special Meeting of Quepasa shareholders.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated [—].  You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither our mailing of this proxy statement/prospectus to Quepasa shareholders will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation.

iv

TABLE OF CONTENTS

v

vi

PROPOSAL 3: REINCORPORATION OF QUEPASA FROM THE STATE OF NEVADA TO THE STATE OF DELAWARE
Summary
General Information
Reasons for the Reincorporation
Changes as a Result of Reincorporation
The Plan of Merger
Effect of Not Obtaining the Required Vote for Approval
Description of Quepasa’s Capital Stock Upon the Effectiveness of Reincorporation
Anti-Takeover Implications
Comparison of Quepasa’s and myYearbook’s Security Holders’ Rights Before and After the Reincorporation and/or Merger
Accounting Treatment under Reincorporation
Certain Federal Income Tax Consequences of Reincorporation
PROPOSAL 4: AMENDMENT TO THE 2006 STOCK INCENTIVE PLAN TO AUTHORIZE THE ISSUANCE OF ADDITIONAL SHARES UNDER THE PLAN
Administration
Eligibility
Limitations on Awards
Awards
Amendment and Termination
Federal Income Tax Consequences
Equity Compensation Plan Information
New Plan Benefits
PROPOSAL 5: ADJOURNMENT OF THE SPECIAL MEETING
NO DISSENTERS’ RIGHTS OF APPRAISAL
LEGAL MATTERS
EXPERTS
FUTURE QUEPASA SHAREHOLDER PROPOSALS
OTHER MATTERS PRESENTED AT THE SPECIAL MEETING
WHERE YOU CAN FIND MORE INFORMATION
MATERIAL CHANGES
INSIDER GUIDES UNAUDITED FINANCIAL STATEMENTS MARCH 31, 2011 AND 2010
INSIDER GUIDES FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009
Annex A	Merger Agreement
Annex B-1	Quepasa Voting Agreement
Annex B-2	myYearbook Voting Agreement
Annex B-3	Mexicans and Americans Trading Together, Inc. Voting Agreement
Annex C	Opinion of Raymond James & Associates, Inc.
Annex D	Plan of Merger – Reincorporation
Annex E	Amended and Restated Certificate of Incorporation (Quepasa Delaware)
Annex F	Amended and Restated Bylaws (Quepasa Delaware)

vii

324 Datura Street, Ste. 114

West Palm Beach, Florida 33401

(561) 366-1249

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE QUEPASA SPECIAL MEETING

The following are some questions that you, as a shareholder of Quepasa and/or a shareholder of myYearbook, may have regarding the Merger and the Quepasa Special Meeting and brief answers to those questions.  We urge you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Merger and the Special Meeting. Additional important information is also contained in the Annexes to and the documents incorporated by reference into this proxy statement/prospectus.

Q:           Why am I receiving these materials?

A:           Quepasa and myYearbook have agreed to the acquisition of myYearbook by Quepasa under the terms of the Merger Agreement, which is described in further detail under the caption “The Merger Agreement” beginning on page 66 of this proxy statement/prospectus.  In order to complete the Merger and the issuance of shares of Quepasa common stock to myYearbook security holders as partial consideration for the Merger, Quepasa shareholders must approve the issuance of those shares and shares that Quepasa intends to issue in a related financing to fund all or some of the cash portion of the Merger consideration payable to myYearbook security holders.  Quepasa will hold a Special Meeting of its shareholders to seek this approval and the approval of certain additional proposals.  These materials describe the Merger, the proposed share issuance and the other proposals and are being sent to Quepasa shareholders as Quepasa’s proxy statement in connection with its Special Meeting.

These materials also constitute Quepasa’s prospectus in connection with its planned issuance of shares to myYearbook security holders as partial consideration for the Merger, whereby myYearbook security holders will exchange their myYearbook securities for shares of Quepasa common stock.  This document is not a proxy statement or information statement of myYearbook in connection with any matter upon which myYearbook may solicit proxies or consents from its security holders.

This document contains important information about the Merger, the Quepasa Special Meeting, the matters to be considered and voted upon by Quepasa shareholders at the Special Meeting and information about Quepasa and myYearbook.  You should read it carefully.

Q:           What is the Merger?

A:           The Merger is the proposed transaction through which Quepasa and myYearbook will combine the two companies.  The Merger will be accomplished under an Agreement and Plan of Merger by and among Quepasa Corporation, IG Acquisition Company, which we refer to as Merger Sub, and Insider Guides, Inc. (myYearbook’s formal corporate name) dated July 19, 2011, which we refer to as the Merger Agreement.  Pursuant to the Merger Agreement, myYearbook will merge with and into IG Acquisition Company, myYearbook’s separate corporate existence will cease, and IG Acquisition Company will survive as the wholly-owned subsidiary of Quepasa. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

Q:           Why are Quepasa and myYearbook proposing the Merger?

A:           Quepasa and myYearbook believe that the Merger will make the combined company a market leader in social discovery.  myYearbook’s and Quepasa’s focus on social discovery, social gaming, virtual goods and brand advertising are very similar.  Their boards of directors believe that myYearbook’s platform for monetization and engagement and Quepasa’s growing user base will permit each company to capitalize on the other’s business strengths.

Q:           What is the value of the Merger consideration?

A:           In the Merger, while Quepasa will pay $18 million in cash and issue $82 million of shares of Quepasa common stock to myYearbook’s security holders, the exact value of the Merger consideration that myYearbook security holders receive will depend upon the price per share of Quepasa common stock leading up to and just prior to the effective time of the Merger as explained in the next question and answer, which we refer to as the Transaction Share Price.  Quepasa recommends that myYearbook security holders obtain current market quotations for Quepasa common stock.  myYearbook common and preferred stock have no established trading market.

1

Q:           How many shares of Quepasa common stock will Quepasa issue to myYearbook shareholders in connection with the Merger?

A:           The $82 million of Quepasa common stock will be issued based upon the Transaction Share Price, which will be the lesser of (A) $10 per share and (B) the average of (i) $7.5715 and (ii) the average closing price on the 20 trading days ending with the trading day three days prior to the closing of the Merger.  That price will not be known prior to or at the time of the Special Meeting or any meeting of myYearbook shareholders to consider and vote upon the Merger, and may be less than the current price at the time of the Special Meeting or any myYearbook stockholder meeting.  As a result, although the Merger consideration per share will not change, the number of shares of Quepasa common stock myYearbook security holders will receive will in fact fluctuate based upon changes in the trading price for Quepasa common stock.

Q:           What will each myYearbook security holder receive in the Merger?

A.           After holders of myYearbook’s Series A Preferred Stock and Series B Preferred Stock receive their liquidation preferences as described below, the remaining Merger consideration, which, on a per share basis, we refer to as the Merger Consideration Share Price, will be paid to the holders of myYearbook’s common stock and the holders of vested options to purchase myYearbook’s common stock.  The Merger Consideration Share Price is calculated by subtracting the liquidation preferences, which total $18,128,910.15, from $100 million and dividing that sum by the total number of myYearbook shares of common stock and preferred stock outstanding (including shares issuable upon exercise of vested options and warrants), treating all outstanding preferred stock on an as-converted-to-common-stock basis.

The Merger consideration will be paid partially in cash and partially in Quepasa common stock.  Because the holders of vested myYearbook options will receive only shares of Quepasa common stock as Merger consideration, while all other myYearbook security holders will receive their Merger consideration partially in cash and partially in shares of Quepasa common stock, the exact amount of cash and number of shares of Quepasa common stock that each myYearbook security holder (other than holders of vested options) will receive depends on (a) whether any myYearbook options are granted or forfeited or otherwise canceled prior to the effective time of the Merger, (b) the number of options that vest prior to the effective time of the Merger and (c) the number of vested options that are exercised prior to the completion of the Merger.

If the Merger had been completed on August 31, 2011, myYearbook security holders (other than holders of vested options) would have received Merger consideration consisting of approximately 19.71% in cash and 80.29% in Quepasa common stock.  If the Merger were to be completed on December 1, 2011 and assuming that (i) no additional options are granted or forfeited or otherwise canceled, (ii) outstanding options continue to vest in accordance with their respective schedules and (iii) no options are exercised between the date of this proxy statement/prospectus and December 1, 2011, myYearbook security holders (other than holders of vested options) would receive Merger consideration consisting of approximately 19.77% in cash and 80.23% in Quepasa common stock.

If the Merger is completed, myYearbook security holders will receive the following Merger consideration (paid in cash and shares of Quepasa common stock as described above):

·           Holders of myYearbook Common Stock. For each share of myYearbook common stock that they own, myYearbook shareholders will receive the Merger Consideration Share Price of $3.43.

·           Holders of myYearbook Series A Preferred Stock. For each share of myYearbook Series A Preferred Stock that they own, myYearbook shareholders will receive a liquidation preference of $1.0023 and the Merger Consideration Share Price of $3.43.

2

·           Holders of myYearbook Series B Preferred Stock.  For each share of myYearbook Series B Preferred Stock that they own, myYearbook shareholders will receive a liquidation preference of $3.04 and the Merger Consideration Share Price of $3.43.

·           Holders of vested myYearbook options. These option holders will receive $3.43 less the amount of the exercise price and an amount sufficient to cover required tax withholdings listed below.  Holders of vested myYearbook options will receive 100% of their Merger consideration in shares of Quepasa common stock.

Issue Dates	Exercise Price (to be deducted)	Estimated Taxes (to be deducted)
January 2007 through December 2007	$0.24	$0.116
January 2008 through July 2008	$0.34	$0.156
August 2008 through February 2009	$0.74	$0.277
March 2009 through February 2010	$0.42	$0.185
February 2010 through March 2011	$0.91	$0.311
March 2011 through present	$1.83	$0.345

·           Holders of myYearbook Series A Warrants. For each warrant to purchase myYearbook Series A Preferred Stock that they own, such holders will receive the same Merger consideration as the holders of Series A Preferred Stock are to receive, consisting of a liquidation preference of $1.0023 and the Merger Consideration Share Price of $3.43.

·           Holders of myYearbook Series B Warrants.  For each warrant to purchase myYearbook Series B Preferred Stock that they own, such holders will receive the same Merger consideration as the holders of Series B Preferred Stock are to receive, consisting of  a liquidation preference of $3.04 and the Merger Consideration Share Price of $3.43.

Q:           What are Quepasa shareholders being asked to vote upon in connection with the Special Meeting?

A:           Quepasa shareholders will be asked to consider and to vote upon five proposals in connection with the Special Meeting:

· To approve the issuance of shares of Quepasa common stock in connection with the Merger, which includes the issuance of shares to myYearbook security holders as partial consideration for the Merger and the issuance of shares that Quepasa intends to issue in the related financing to help fund the cash portion of the Merger consideration payable to myYearbook security holders;

· To approve an increase in Quepasa’s authorized common stock from 50 million to 100 million shares;

· To approve the reincorporation of Quepasa in Delaware;

· To approve an amendment to Quepasa’s 2006 Stock Incentive Plan authorizing an additional 2,000,000 shares to be available for grant; and

· To approve any adjournment of the Special Meeting, including, if necessary, to solicit additional proxies in favor of the proposal if there are not sufficient votes to approve one or more of the proposals.

No separate approval of the Merger Agreement or Merger by Quepasa shareholders is necessary; Quepasa shareholders are not being asked to vote upon the Merger Agreement or the Merger.

Q:           What vote of Quepasa shareholders is required to approve each of the proposals?

A:           The table below describes the vote required to approve each of the proposals.

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	Proposal		Vote Required
Ÿ	Approval of the issuance of shares of Quepasa common stock in connection with the Merger, which includes the issuance of shares to myYearbook security holders as partial consideration for the Merger and the issuance of shares that Quepasa intends to issue in the related financing to help fund the cash portion of the Merger consideration payable to myYearbook security holders.	Ÿ	The affirmative vote of the majority of the votes cast.
Ÿ	Approval of an increase in Quepasa’s authorized common stock from 50 million to 100 million shares.	Ÿ	The affirmative vote of the holders of a majority of the shares outstanding.
Ÿ	Approval of the reincorporation of Quepasa in Delaware.	Ÿ	The affirmative vote of the holders of a majority of the shares outstanding.
Ÿ	Approval of an amendment to Quepasa’s 2006 Stock Incentive Plan authorizing an additional 2,000,000 shares to be available for grant.	Ÿ	The affirmative vote of the majority of the votes cast.
Ÿ	To approve any adjournment of the Special Meeting, including, if necessary, to solicit additional proxies if there are not sufficient votes to approve one or more of the proposals.	Ÿ	The affirmative vote of the majority of the votes cast.

Q:           How does the Quepasa board of directors recommend that Quepasa shareholders vote with respect to the Quepasa proposals?

A:           The Quepasa board of directors recommends that Quepasa shareholders vote “FOR” each of the Quepasa proposals to be considered and voted upon at the Special Meeting.

Q:           Are there any Quepasa shareholders already committed to voting in favor of the proposals?

A:           Yes. Pursuant to voting agreements entered into with myYearbook, Quepasa directors, executive officers and certain shareholders have agreed to vote their shares of Quepasa common stock in favor of the share issuance proposal. The shares held by such directors, officers and shareholders collectively represented approximately 11.3% of the outstanding shares of Quepasa common stock as of August 23, 2011.  For a more complete description of these voting agreements, see “Voting Agreements; Restrictions on Resales” beginning on page 78 of this proxy statement/prospectus.  The forms of voting agreement are also attached to this proxy statement/prospectus as Annex B-1, B-2and B-3.

Q:           What happens if the share issuance proposal is not approved?

A:           If the share issuance proposal is not approved, the Merger cannot be completed because Quepasa will not be able to issue shares to myYearbook security holders as partial consideration for the Merger, nor will it be able to issue additional shares for cash in the related financing to help fund the cash portion of the Merger consideration.

Q:           What happens if the proposal to increase Quepasa’s authorized common stock is not approved?

A:           While the approval of this proposal is not a condition to completion of the Merger, Quepasa will have a limited number of authorized shares of common stock available for grants to employees, consultants and directors, which may affect Quepasa’s ability to retain and recruit people.  We will also be limited in our ability to make future acquisitions using Quepasa’s stock and in raising additional capital through new issuances of shares.

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Q:           What happens if the Delaware reincorporation proposal is not approved?

A:           Quepasa will remain a Nevada corporation and subject to Nevada law and its existing articles of incorporation and bylaws will continue to apply.  The approval of this proposal is not a condition to completion of the Merger

Q:           What happens if the proposal to amend Quepasa’s 2006 Stock Incentive Plan to authorize an additional 2,000,000 shares to be available for grant is not approved?

A:           Quepasa will be unable to make additional grants to employees, consultants and directors, which may affect Quepasa’s ability to retain and recruit people.  The approval of this proposal is not a condition to completion of the Merger.

Q:           How will Quepasa pay the cash portion of the Merger consideration?

A:           Quepasa currently plans to pay the $18 million cash portion of the Merger consideration using a combination of its available cash resources and funds obtained through the sale of newly-issued shares of its common stock in a transaction that we sometimes refer to as the “related financing.”  Quepasa has already received a $5 million financing commitment from Mexicans & Americans Trading Together, Inc., who we refer to as MATT, Inc., which is a large existing Quepasa shareholder.  

Q:           What is required to complete the Merger?

A:           Important conditions to the completion of the Merger include:

· Quepasa shareholder approval of the share issuance proposal;

· myYearbook shareholder approval of the Merger; and

· Satisfaction or waiver of all of the other conditions to completion of the Merger.  For a description of these conditions, see the section entitled “The Merger Agreement” beginning on page 66.

Q:           Could the Quepasa stock price affect the closing of the Merger?

A:           Yes.  If the closing price of Quepasa common stock as of the day three days prior to the closing of the Merger is less than $5.00, either Quepasa or myYearbook has the right to terminate the Merger Agreement.  In addition, if the Transaction Share Price is less than $5.00 per share, either Quepasa or myYearbook has the right to terminate the Merger Agreement.

Q:           When do Quepasa and myYearbook expect to complete the Merger?

A:           Quepasa and myYearbook currently expect to complete the Merger in the fourth quarter of 2011.  Completion of the Merger will only be possible, however, after all conditions to the completion of the Merger contained in the Merger Agreement are satisfied or waived, including Quepasa shareholder approval of the share issuance proposal and myYearbook shareholder approval of the Merger.  It is possible that factors outside of either company’s control could require them to complete the Merger at a later time or not complete it at all.

Q:           What are the United States federal income tax consequences of the Merger?

A:           The Merger is intended to qualify as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986, or the Code. See page 84 for a further description of the material U.S. Federal income tax consequences of the Merger.

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Q:           What effect will the Merger have on Quepasa shareholders?

A:           Quepasa shareholders will continue to hold the same number of shares of Quepasa common stock after the Merger. The issuance of the shares of Quepasa common stock to myYearbook security holders in connection with the Merger and the issuance of shares in the related financing will dilute the ownership of existing Quepasa shareholders.

Assuming a Transaction Share Price of $7.5715, Quepasa would issue 10,830,086 shares to myYearbook security holders for the stock portion of the Merger consideration.  In addition, assuming a sales price per share of $7.5715, Quepasa would also issue approximately: (i) 1.3 million additional shares in order to raise $10 million or (ii) 2.4 million additional shares in order to raise the full $18 million needed to fund the cash portion of the Merger consideration.  Quepasa estimates that if $10 million is raised existing Quepasa shareholders would own approximately ___% and if $18 million is raised existing Quepasa shareholders would own approximately ___% of the shares of Quepasa common stock outstanding immediately following the Merger (assuming a Transaction Share Price and related financing sales price of $7.5715).  For a discussion of the assumptions relating to these estimates, please see the section of this proxy statement/prospectus entitled “Ownership of Quepasa Pre- and Post-Merger” beginning on page 62.

Q:           Are there risks that Quepasa shareholders and myYearbook security holders should consider?

A:           Yes. You should carefully review the section entitled “Risk Factors” beginning on page 17 of this proxy statement/prospectus, which discusses risks and uncertainties related to the Merger, the combined companies and the business and operations of each of Quepasa and myYearbook.  In addition, you are encouraged to read Quepasa’s publicly filed documents incorporated by reference into this proxy statement/prospectus.

Q:           When and where will the Quepasa Special Meeting take place?

A:           The Special Meeting will be held at [ Ÿ ] on [ Ÿ ] at [ Ÿ ], New York time.

Q:           Who may attend and vote at the Quepasa Special Meeting?

A:           All Quepasa shareholders of record as of the close of business on [ Ÿ ], 2011 may vote at the Special Meeting. Each Quepasa shareholder is entitled to one vote for each share of Quepasa common stock owned as of that record date.

If your shares of Quepasa common stock are registered directly in your name with the transfer agent, you are the shareholder of record with respect to those shares, and the proxy statement/prospectus and Quepasa proxy card are being sent directly to you.  If you are a Quepasa shareholder of record, you may attend the Special Meeting and vote your Quepasa shares in person.  However, even if you plan to attend the Special Meeting in person, please sign and return the enclosed Quepasa proxy card or vote your shares by telephone or via the Internet to ensure that your shares will be represented at the Special Meeting if you are unable to attend.

If your shares of Quepasa common stock are held in a brokerage account or by another nominee, then you are considered the beneficial owner of shares that are held in “street name,” and the proxy statement/prospectus is being forwarded to you by your broker or other nominee together with a voting instruction card to for you to return to your broker or other nominee to direct them to vote on your behalf.  As the beneficial owner, you are also invited to attend the Special Meeting.  However, because a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Special Meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the Special Meeting.

Q:           What do I need to do now?  How do I vote?

A:           If you are a record holder of Quepasa common stock:

Quepasa shareholders who are record holders of their Quepasa common stock should read this proxy statement/prospectus carefully and then complete and sign the proxy card and return it in the enclosed envelope or vote their shares by telephone or via the Internet. This will enable their shares to be represented at the Special Meeting.

A:           If your shares of Quepasa common stock are held in “street name” by your broker or other nominee:

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If your shares are held in “street name” in an account at your broker or another nominee, you must instruct the broker or such other nominee as to how to vote your shares by following the instructions that the broker or other nominee provides to you.  Brokers usually offer the ability for shareholders to submit voting instructions by mail by completing a voting instruction card, by telephone or over the Internet.  If you do not provide instructions to your broker or other nominee, your shares will not be voted on any proposal on which your broker or other nominee does not have discretionary authority to vote. This is called a “broker non-vote.”  Brokers will not have discretionary authority to vote on any of the proposals being submitted to a vote of Quepasa shareholders at the Special Meeting.

Q:           What happens if I do not return my proxy card or if I abstain from voting?

A:           If you fail to send in a proxy card or vote at the Special Meeting or if your shares are held in “street name” and you fail to instruct your broker how to vote your shares, your shares will not be counted as present for the purpose of determining the presence of a quorum, which is required to transact business at the Special Meeting.  If you fail to send in your proxy card or fail to instruct your broker how to vote (resulting in a “broker non-vote”), this will have the same effect as voting “AGAINST” the proposal to increase in Quepasa’s authorized common stock from 50 million to 100 million shares and the proposal to approve the reincorporation of Quepasa in Delaware. If you fail to send in your proxy card or fail to instruct your broker how to vote (resulting in a “broker non-vote”), because no vote will have been cast, this will have no effect on the outcome of the share issuance proposal or the proposal to approve an amendment to Quepasa’s 2006 Stock Incentive Plan authorizing an additional 2,000,000 shares to be available for grant.  If you fail to send in your proxy card, this will have no effect on the outcome of the proposal to adjourn the Special Meeting to solicit additional proxies, if necessary.

An abstention occurs when a shareholder attends a meeting, either in person or by proxy, but specifically indicates an abstention from voting on one or more of the proposals.  If you submit a proxy card or provide proxy instructions to your broker or other nominee and affirmatively elect to abstain from voting, your proxy will be counted as present for the purpose of determining the presence of a quorum for the Special Meeting, but will not be voted at the Special Meeting. As a result, your abstention will have the same effect as voting “AGAINST” each of the proposals.

If you do not include any instructions on a properly executed proxy or voting instruction card, your shares will be voted “FOR” each of the proposals.

Q:           May I revoke or change my vote after I have sent in my proxy card or provide proxy instructions to my broker?

A:           Yes.  If you are a holder of record of Quepasa shares, you may change your vote at any time before your proxy is voted at the Special Meeting by:

· delivering a signed written notice of revocation to the Corporate Secretary of Quepasa at:

324 Datura Street, Ste. 114, West Palm Beach, FL 33401, Attention: Corporate Secretary

· signing and delivering a new, valid proxy bearing a later date; or

· attending the Special Meeting and voting in person, although your attendance alone will not revoke your proxy.

If your shares are held in a “street name” you must contact your broker or other nominee to change your vote.

Q:           Do I have dissenters’ or appraisal rights in connection with any of the proposals?

A:           No.  There are no dissenters’ rights, appraisal rights or similar rights available to Quepasa shareholders in connection with any of the proposals or the Merger.

Q:           Who is paying for Quepasa’s proxy solicitation?

A:           Quepasa will bear the cost of soliciting proxies for the Special Meeting. Quepasa’s directors, officers and employees may solicit proxies by telephone and facsimile, by mail, over the Internet or in person. They will not be paid any additional amounts for soliciting proxies.  Quepasa has retained [ Ÿ ] to assist it in the solicitation of proxies.  Quepasa expects to pay [—] a fee of [—] for its services plus [—] per shareholder called by telephone and also reimburse it for expenses.  Quepasa also will request that banks, brokerage firms, custodians, trustees, nominees, fiduciaries and other similar record holders forward the solicitation materials to the beneficial owners of common stock held of record by such person, and Quepasa will, upon request of such record holders, reimburse forwarding charges and out-of-pocket expenses.

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Q:           What should I do if I receive more than one set of voting materials for the Special Meeting?

A:           You may receive more than one set of voting materials for the Special Meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards.  For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record of Quepasa common stock and your shares are registered in more than one name, you will receive more than one proxy card.  Please complete, sign, date and return each proxy card and voting instruction card that you receive.

Q:           Whom should I contact if I have any questions?

A:           Please contact:  [ Ÿ ]

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SUMMARY

This summary highlights certain information contained elsewhere in this proxy statement/prospectus and may not contain all the information that is important to you. To better understand the Merger and the matters to be considered and voted upon at the Quepasa Special Meeting, you should read this proxy statement/prospectus carefully, including the attached Annexes, and the other documents to which we have referred you. In addition, you should read the information Quepasa has incorporated by reference into this proxy statement/prospectus, which includes important information about Quepasa that has been filed with the SEC.  See the section entitled “Where You Can Find More Information” beginning on page 113, which describes how you may obtain the information incorporated by reference into this proxy statement/prospectus without charge.  We have included page references in this summary to direct you to a more complete description of the topics presented below.

In this proxy statement/prospectus “Quepasa” refers to Quepasa Corporation, and where appropriate, its subsidiaries, “myYearbook” refers to Insider Guides, Inc., and where appropriate, its subsidiaries and “Merger Sub” refers to IG Acquisition Company. In addition, the “Merger” refers to the proposed merger of myYearbook with and into Merger Sub and the “Merger Agreement” refers to the Agreement and Plan of Merger, dated as of July 19, 2011, by and among Quepasa, Merger Sub and myYearbook.  When this proxy statement/prospectus refers to the “combined company,” it means Quepasa and myYearbook and their respective subsidiaries, collectively, after completion of the Merger.

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The Companies (See page 50)

Quepasa Corporation

Quepasa is a social media technology company which owns Quepasa.com, a leading online social network and game platform for the Latino community, Quepasa Games, a cross platform social game development studio, and Quepasa DSM, a cross platform social advertising and contest platform.  Quepasa.com provides fun, interactive, and easy to use social tools, and rich multimedia content in English, Spanish and Portuguese to embrace Latinos everywhere, and empower them to connect online, compete in contests and games and share their interests, ideas, and activities.

Our common stock is traded on the NYSE Amex under the symbol “QPSA.”

The principal executive offices of Quepasa are located at 324 Datura Street, Ste. 114, West Palm Beach, Florida 33401, and its telephone number is (561) 366-1249.

For more information on Quepasa, see the reports and other information Quepasa files with the SEC, including its annual report on Form 10-K for the year ended December 31, 2010.  These filings may be viewed on the Internet at www.sec.gov/edgar/searchedgar/companysearch.html.  Additional information about Quepasa is included in the documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 113.

Insider Guides, Inc.

Insider Guides, Inc. owns and operates myYearbook.com, a social networking site.  We refer to Insider Guides, Inc. as “myYearbook” in this proxy statement/prospectus.  myYearbook’s mission is to provide its users a platform that makes meeting new people fun and easy - whether online or via mobile phone. myYearbook combines innovative social and mobile games, a location-based news feed, video chat, and a robust virtual currency called “Lunch Money” to facilitate introductions and break the ice among its users.

myYearbook is a private company and therefore has no established trading market for its common stock.

The principal executive offices of myYearbook are located at 280 Union Square Drive, New Hope, Pennsylvania 18938, and its telephone number is

(215) 862-1162.

IG Acquisition Company

Merger Sub is a wholly-owned subsidiary of Quepasa and was incorporated in Delaware in July 2011, solely for the purpose of facilitating the Merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement.

The Merger (see page 50)

The Merger will be accomplished pursuant to the Merger Agreement.  Pursuant to the Merger Agreement, myYearbook will merge with and into Merger Sub, myYearbook’s separate corporate existence will cease, and Merger Sub will survive as the wholly-owned subsidiary of Quepasa.  The surviving company will change its name to Insider Guides, Inc.

A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus and is incorporated into this proxy statement/prospectus by reference.  Quepasa encourages you to read the entire Merger Agreement carefully because it is the principal document governing the Merger.

Merger Consideration (see page 67)

In the Merger, Quepasa will pay $18 million in cash and issue $82 million of shares of Quepasa common stock to myYearbook’s security holders. The exact value of the Merger consideration that myYearbook security holders receive will depend upon the price per share of Quepasa common stock leading up to and just prior to the effective time of the Merger.

Financing of the Merger (see page 61)

The cash portion of the Merger consideration payable to myYearbook security holders is $18 million. Quepasa currently plans to pay the $18 million cash portion of the Merger consideration using a combination of its available cash resources and funds obtained through the sale of newly-issued shares of its common stock.  The Merger Agreement requires Quepasa to complete an equity financing of at least $10 million in order to fund the cash portion of the Merger consideration, which we sometimes refer to in this proxy statement/prospectus as the “related financing.”  Quepasa has received a $5 million financing commitment from MATT, Inc., a large shareholder of Quepasa.  The financing commitment provides for MATT, Inc. to purchase shares of common stock at the lesser of: (i) the Transaction Share Price and (ii) 85% of the average closing price of Quepasa’s common stock during the 20 trading days ending with the trading day three days prior to the closing of the Merger.  MATT, Inc. will also receive registration rights, and certain participation rights and first right of refusal rights with respect to the remaining amounts Quepasa will seek to raise in the related financing.

Special Meeting of Quepasa Shareholders

The Special Meeting of Quepasa shareholders will be held on [ Ÿ ] at [ Ÿ ] at the [ Ÿ ].  All Quepasa shareholders of record as of the close of business on [ Ÿ ], 2011 may vote at the Special Meeting. Each Quepasa shareholder is entitled to one vote for each share of Quepasa common stock owned as of that record date.

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At the Special Meeting, Quepasa shareholders will be asked to consider and to vote upon five proposals:

· to approve the issuance of shares of Quepasa common stock in connection with the Merger, which includes the issuance of shares to myYearbook security holders as partial consideration for the Merger and the issuance of shares that Quepasa intends to issue in the related financing to help fund the cash portion of the Merger consideration payable to myYearbook security holders (referred to as “Proposal 1” or the “share issuance proposal”);

· to approve an increase in Quepasa’s authorized common stock from 50 million to 100 million shares (referred to as “Proposal 2”);

· to approve the reincorporation of Quepasa in Delaware (referred to as “Proposal 3” or the “reincorporation proposal”);

· to approve an amendment to Quepasa’s 2006 Stock Incentive Plan authorizing an additional 2,000,000 shares to be available for grant (referred to as “Proposal 4” or the “Stock Incentive Plan proposal”); and

· to approve any adjournment of the Special Meeting, for any reason, including, if necessary, to solicit additional proxies in favor of the share issuance proposal if there are not sufficient votes to approve one or more of the proposals (referred to as “Proposal 5” or the “Adjournment Proposal”).

No separate approval of the Merger Agreement or Merger by Quepasa shareholders is necessary; Quepasa shareholders are not being asked to vote upon the Merger Agreement or Merger.

Reasons for entering into the Merger (see page 56)

In evaluating the Merger, including the issuance of the shares of Quepasa common stock in connection with the Merger and the related financing, the Quepasa Board of Directors, or the Board, consulted with Quepasa management, and, in reaching its decision to recommend the issuance of shares of our common stock in connection with the Merger, the Quepasa Board considered a number of factors including myYearbook’s focus on social discovery, its growing numbers of United States members, its mobile phone applications and its retention and monetization expertise. The Board also relied on the opinion of Raymond James & Associates, Inc.  See “Opinion of Quepasa Corporation’s Financial Advisor” beginning on page 78 of this proxy statement/prospectus.

The myYearbook board of directors believes that the merger of Quepasa and myYearbook will provide the combined company with the opportunity to be a market leader in social discovery.  The combination of the two companies is expected to provide myYearbook greater growth prospects and higher shareholder value than if myYearbook continued to operate alone. The  myYearbook board of directors believes that by more than doubling the number of registered users, entering international markets, and increasing the size of the development team, the combined entity can build a global brand for social discovery.

Recommendation of the Quepasa Board of Directors (see page 87)

After careful consideration, Quepasa’s Board determined that: (i) issuing shares of Quepasa’s common stock in connection with the Merger, (ii) amending Quepasa’s Articles of Incorporation to increase our authorized common stock to 100 million shares, (iii) reincorporating in Delaware, (iv) amending the 2006 Stock Incentive Plan, or the Plan, to increase the shares available for grant under the Plan by 2,000,000 shares and (v) adjourning the Special Meeting, for any reason, including if necessary, to solicit additional proxies, are each in the best interest of Quepasa and its shareholders.  Our Board recommends that you vote “FOR” each of the proposals.

Opinion of Quepasa Corporation’s Financial Advisor (see page 78)

Quepasa retained Raymond James & Associates, Inc., referred to herein as Raymond James, to deliver its opinion as to the fairness, from a financial point of view, of the consideration to be paid by Quepasa to myYearbook pursuant to the Merger Agreement.  The fee paid to Raymond James by Quepasa for its services was $325,000.  Raymond James provided its opinion to the Quepasa Board in connection with its consideration of the transactions contemplated by the Merger Agreement, and its opinion does not constitute a recommendation as to how any holder of Quepasa common stock should vote with respect to approving the issuance of additional shares of Quepasa common stock in connection with the proposed Merger or any other proposal to be considered and voted upon at the Special Meeting. The full text of the Raymond James opinion, which sets forth assumptions made, matters considered and limitations on and qualifications to the review undertaken by Raymond James in connection with its opinion, is attached as Annex C to this proxy statement/prospectus.

Quepasa urges its shareholders to read the opinion carefully.

Interests and Voting Power of Directors, Executive Officers and their Affiliates (see page 61)

Neither Quepasa nor any of our executive officers or directors beneficially owns any of myYearbook’s outstanding securities.  Five current directors of Quepasa, [ Ÿ ], and three current directors of myYearbook, Geoffrey Cook, Richard Lewis, and Terry Herndon (or replacement designees selected by myYearbook) are expected to serve as directors of Quepasa after the Merger.  In addition, a condition of the closing of the Merger is that certain key employees of myYearbook enter into multi-year employment agreements with Quepasa providing them with base salaries and potential bonus compensation, the right to receive stock options and severance.  Mr. Cook will be appointed Chief Operating Officer of Quepasa and also will serve as President of the Consumer Internet Division.

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Approval of the issuance of Quepasa shares in connection with the Merger and the related financing by Quepasa shareholders requires the affirmative vote of the majority of the votes cast at the Special Meeting. As of the record date for the Special Meeting, the directors and executive officers of Quepasa, together with their affiliates, owned approximately 1.9 million shares of Quepasa common stock, entitling them to exercise approximately [ Ÿ ]% of the voting power of the Quepasa common stock at the Special Meeting.

Ownership of Combined Entity (see page 62)

As of the effective time of the Merger, the ownership of Quepasa outstanding common stock will be approximately as follows:

	Assuming $10 Million Raise	Assuming $18 Million Raise
Existing Quepasa shareholders (1)	60.1%	58.0%
Existing myYearbook security holders (1)	37.6%	36.3%

(1)  Assumes the Transaction Share Price will be $7.5715 per share.

Expected Timing of the Merger

Quepasa and myYearbook currently expect to complete the Merger in the fourth quarter of 2011.  Completion of the Merger is subject to all conditions to closing being satisfied or waived.  It is possible that factors outside of either company's control could require Quepasa and myYearbook to complete the Merger at a later time or not complete it at all.

Representations, Warranties and Covenants in the Merger Agreement (see page 68)

Quepasa and myYearbook have made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, each of Quepasa and myYearbook is required, among other things, to conduct its business in the ordinary course in all material respects during the interim period between the execution of the Merger Agreement and the closing of the Merger.

Restrictions on Soliciting Other Transactions (see page 71)

The Merger Agreement provides that neither Quepasa nor myYearbook may solicit alternative business combination transactions and, subject to certain exceptions, may not engage in discussions or negotiations regarding any alternative business combination transaction.

Conditions to Completion of the Merger (see page 75)

The obligations of Quepasa and myYearbook to complete the Merger are subject to the satisfaction (or waiver, where permitted) of the following conditions:

· approval by Quepasa shareholders of the share issuance proposal;

· approval of the Merger and Merger Agreement by the holders of at least the majority of the outstanding shares of myYearbook common stock and 70% of the outstanding shares of myYearbook preferred stock;

· the registration statement on Form S-4, of which this proxy statement/prospectus is a part, shall have been declared effective by the Securities and Exchange Commission;

· authorization of listing on the NYSE Amex of the shares of Quepasa common stock to be issued in connection with the Merger, subject to official notice of issuance;

· completion of an equity financing transaction by Quepasa of at least $10 million in order to partially fund the cash portion of the Merger consideration;

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· no material adverse effect (or any change, event or development that could reasonably be expected to have a material adverse effect) shall have occurred with respect to Quepasa or myYearbook;

· the representations and warranties of the other party in the Merger Agreement shall be true and correct in all material respects (subject to certain limitations and exclusions);

· all agreements and obligations of the other party shall have been complied with in all material respects;

· the closing price of Quepasa common stock as of three days prior to the closing of the Merger shall not be less than $5.00;

· the Transaction Share Price shall not be less than $5.00;

· the total number of dissenting shares shall not exceed five percent (5%) of the total number of issued and outstanding shares of myYearbook’s capital stock;

· no statute, rule, regulation, writ, order, temporary restraining order or preliminary or permanent injunction shall have been enacted, entered, promulgated or enforced by any court or other tribunal or governmental body or authority, which remains in effect, and prohibits the consummation of the Merger or otherwise makes it illegal; and

· no person or governmental agency has instituted any action, suit or proceeding which remains pending and which seeks, and which is reasonably likely, to enjoin, restrain or prohibit the consummation of the Merger.

Termination of the Merger Agreement (see page 76)

Quepasa and myYearbook may mutually agree to terminate the Merger Agreement at any time prior to effectiveness of the Merger.  Either party may also terminate the Merger Agreement if:

· the Merger is not completed by January 19, 2012;

· a statute, rule, regulation or executive order is enacted or entered prohibiting the consummation of the Merger substantially on the terms contemplated by the Merger Agreement;

· a court or other government entity shall have issued an order, decree or ruling or taken any other action  having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger;

· the other party has breached any of its representations or warranties or failed to perform any of the obligations to be performed by and under the Merger Agreement and such breach or failure to perform (i) will result in the failure by such party to satisfy the closing conditions with respect to the accuracy of such parties representations and warranties or the performance by such party of its obligations and (ii) is incapable of being cured or has not been cured by the later of 20 business days of written notice of the breach;

· a “Triggering Event” (described below) has occurred with respect to the other party; or

· after complying with the terms of the Merger Agreement relating to considering alternative business combination transactions, it determines to pursue an alternative business combination transaction instead of the Merger.

Triggering Events generally involve: (i) the failure of the Board of Directors of one of the parties to recommend the share issuance (in the case of Quepasa) or the Merger (in the case of myYearbook), (ii)  the failure to recommend that their security holders reject a competing tender offer, (iii) the Board of Directors of either Quepasa or myYearbook has approved or recommended an alternative business combination, or (iv) either company has entered into a letter of intent or agreement with respect to an alternative business combination.

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Termination Fees and Expense Reimbursement (see page 77)

Generally, all fees and expenses incurred in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement will be paid by the party incurring those expenses.  However, under certain circumstances, including termination of the Merger Agreement by either Quepasa or myYearbook as a result of a Triggering Event, the other party will reimburse the party entitled to reimbursement up to $1 million of such party’s expenses.  If following a termination due to a Triggering Event, the party causing the Triggering Event enters into a letter of intent or definitive agreement within 12 months of the termination through which such party is to be acquired by a third party (or if certain similar events occur), the other party shall be entitled to a termination fee of $3 million (less any previously-reimbursed expenses).

Risk Factors (see page 17)

You should carefully review the section entitled “Risk Factors” beginning on page 17 of this proxy statement/prospectus, which discusses risks and uncertainties related to the Merger, the combined companies and the business and operations of each of Quepasa and myYearbook.

Accounting Treatment (see page 87)

Quepasa prepares its financial statements in accordance with the accounting principles generally accepted in the United States of America, which are referred to as GAAP. The Merger will be accounted for using the acquisition method of accounting.

Material U.S. Federal Income Tax Consequences of the Merger (see page 84)

The Merger is intended to qualify as a “reorganization” under Section 368(a) of the Code, as discussed below under “Material U.S. Federal Income Tax Consequences of the Merger” on page 84.

No Dissenters’ Rights of Appraisal (see page 112)

Under Nevada law, the holders of shares of Quepasa common stock are not entitled to dissenters’ rights of appraisal in connection with any of the proposals to be considered and acted upon at the Special Meeting.  In addition, because the Merger is not subject to Quepasa shareholder approval under Nevada law, the holders of shares of Quepasa common stock are not entitled to dissenters’ rights of appraisal in connection with the Merger.

myYearbook security holders will have certain dissenters’ rights under Delaware law with respect to the Merger which rights will be described in separate materials to be provided by myYearbook to its security holders in connection with their consideration and vote to approve the Merger. This proxy statement/prospectus is only seeking Quepasa shareholder votes.

Voting Agreements (See page 78)

Certain Quepasa directors, executive officers and shareholders have agreed to vote their shares of Quepasa common stock in favor of the issuance of the Quepasa shares in connection with the Merger and the related financing. The shares held by these Quepasa directors, officers and shareholders collectively represented approximately 11.3% of the outstanding shares of Quepasa common stock as of August 23, 2011.  In addition, each of the directors and executive officers of myYearbook and certain other shareholders of myYearbook agreed to vote in favor of the approval and adoption of the Merger Agreement and approval of the Merger.  The securities held by these myYearbook directors, officers and shareholders are sufficient to approve and adopt the Merger Agreement and approve the Merger at myYearbook’s special meeting of its shareholders.  Each of these Quepasa and myYearbook security holders also has agreed to certain transfer restrictions on their securities until completion of the Merger.

Resale Restrictions (See page 78)

Thirty percent of the shares issued to the myYearbook security holders in the Merger will have no resale restrictions and may be immediately sold following the closing of the Merger. The remaining shares held by the myYearbook security holders will be subject to restrictions on sales following the closing of the Merger as follows:

· After one month following the closing of the Merger, each shareholder may sell up to an additional 35% of the shares of Quepasa common stock held by such shareholder; and

· After two months following the closing of the Merger, the resale restrictions lapse entirely and each shareholder may sell all of the shares of Quepasa common stock held by such shareholder.

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In each case, shares of Quepasa common stock owned or controlled by myYearbook security holders who become “affiliates” of Quepasa following the Merger may only be sold in compliance with the applicable provisions of Rule 144 of the Securities Act.

Sales Rights Agreement (see page 78)

Quepasa and certain myYearbook security holders entered into a Sales Rights Agreement which provides for the security holders to have certain registration rights with respect to the shares of Quepasa common stock they acquire in the Merger. If during the 24 month period following the closing of the Merger, Quepasa proposes to sell common stock in a public or private offering, these myYearbook security holders will have the opportunity to participate and sell their shares of common stock in the offering, subject to certain limitations and conditions.

Market Price and Dividend Information

On July 19, 2011, the date immediately preceding the announcement of the Merger, Quepasa common stock closed at $7.13 and on [ Ÿ ], 2011, the date immediately preceding the date of this proxy statement/prospectus Quepasa common stock closed at $[ Ÿ ].  Following the consummation of the Merger, Quepasa’s common stock, including the shares of Quepasa common stock issued in connection with the Merger and in the related financing is expected to continue to trade on the NYSE Amex. Following the Merger, Quepasa currently intends to retain earnings, if any, to finance the growth and development of its business, and does not expect to pay any cash dividends to its shareholders in the foreseeable future.

Regulatory Approvals

Quepasa must comply with applicable securities laws in connection with the issuance of shares of Quepasa common stock in connection with the Merger and the related financing transaction.  In addition, Quepasa must obtain approval of the NYSE Amex to list the shares of common stock to be issued in connection with the Merger and the related financing transaction.

Differences in Rights of Security Holders (see page 92)

Due to differences between the states of incorporation and the governing documents of Quepasa and myYearbook, myYearbook security holders receiving Quepasa common stock in connection with the Merger will have different rights once they become Quepasa shareholders.  The material differences are described in detail under the section entitled “Comparison of Quepasa's and myYearbook's Security Holder's Rights Before and After the Reincorporation and/or Merger” on page 92.  One of the proposals to be considered and voted upon by Quepasa shareholders at the Special Meeting is the reincorporation of Quepasa in Delaware.  If the proposal is approved by Quepasa shareholders, Quepasa will re-incorporate in Delaware shortly following the Merger, and, if that were to occur, the differences in the rights of security holders would be limited to the differences between the governing documents of Quepasa and myYearbook as described on page 92.

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 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements.  The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements.  We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.  Specific forward looking statements include, without limitation, statements regarding the following:

· The number of shares of Quepasa common stock to be issued;

· The effects of the Merger on our shareholders;

· The anticipated timing of the completion of the Merger;

· The anticipated benefits expected from the Merger; and

· The expected federal tax consequences from the Merger.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are contained in the risk factors that follow and elsewhere in this proxy statement/prospectus and the incorporated documents. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. For more information regarding some of the ongoing risks and uncertainties of our business, see the risk factors that follow and or that are disclosed in our incorporated documents.

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RISK FACTORS

In addition to the other information included and incorporated by reference in this proxy statement/prospectus, you should carefully consider the following risks before deciding whether to vote for the proposal to approve the share issuance and to purchase or sell Quepasa common stock. See the section entitled “Where You Can Find More Information” beginning on page 113.

Risks Relating to the Merger

Because the market price of Quepasa common stock will fluctuate, myYearbook security holders cannot be sure of the exact value of the Merger consideration they will receive.

Upon the closing of the Merger, each myYearbook security holder will receive Merger consideration consisting of cash and shares of Quepasa common stock.  Not including the cash value of a fractional share of Quepasa common stock, 18% of the Merger consideration will consist of cash and 82% will consist of Quepasa common stock.  However, the Transaction Share Price (or the value of a share of Quepasa common stock used in determining the number of shares of Quepasa common stock to be issued) may be less than or more than the market price of Quepasa common stock as of the date of this proxy statement/prospectus, at the time of the Special Meeting or as of the closing of the Merger.  Additionally, the price of Quepasa common stock can fluctuate between the time of the closing of the Merger and the time that myYearbook security holders receive their shares of Quepasa common stock as Merger consideration, so that myYearbook security holders will be subject to the risk of a decline in the price of Quepasa common stock during that period.  Quepasa’s stock price may also fluctuate following the Merger due to a variety of factors, many of which are beyond our control.

Quepasa and myYearbook may not realize all of the anticipated benefits of the Merger.

The success of the Merger will depend, in large part, on the ability of the combined company to realize the anticipated benefits from combining the businesses of Quepasa and myYearbook. To realize the anticipated benefits of the Merger, the combined company must successfully integrate the businesses of Quepasa and myYearbook. This integration will be complex and time-consuming.

Potential difficulties Quepasa and myYearbook may encounter include, among others:

·  unanticipated issues in integrating logistics, information, communications and other systems;

·  integrating personnel from the two companies while maintaining focus on providing a consistent, high quality level of service;

·  integrating complex systems, technology, networks and other assets of myYearbook in a seamless manner that minimizes any adverse impact on, suppliers, employees and other constituencies;

·  performance shortfalls at one or both of the companies as a result of the diversion of management's attention from day-to-day operations caused by activities surrounding the completion of the Merger and integration of the companies’ operations;

·  potential unknown liabilities, liabilities that are significantly larger than anticipated, unforeseen expenses or delays associated with the Merger and the integration process;

·  unanticipated changes in applicable laws and regulations;

·  the impact on Quepasa’s internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002, including, but not limited to, complexities that arise as a result of integrating the accounting system and internal controls of a private with that of a public company; and

·  complexities associated with managing the larger, combined business.

Some of these factors are outside the control of either company.

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Quepasa has not completed a merger or acquisition comparable in size or scope to the Merger. The failure of the combined company, after the Merger, to successfully integrate the operations of Quepasa and myYearbook or otherwise to realize any of the anticipated benefits of the Merger could cause an interruption of, or a loss of momentum in, the activities of the combined company and could adversely affect its results of operations. The integration process maybe more difficult, costly or time-consuming than anticipated, which could cause Quepasa’s stock price to decline.

The pendency of the Merger could adversely affect Quepasa’s stock price and could adversely affect Quepasa’s and myYearbook’s respective businesses, financial condition, results of operations or business prospects.

While neither Quepasa nor myYearbook is aware of any significant adverse effects to date, the pendency of the Merger could disrupt either or both of their businesses in a number of ways, including:

·  the attention of Quepasa’s and/or myYearbook’s management may be directed toward the completion of the Merger and related matters and may be diverted from the day-to-day business operations of their respective companies, including from other opportunities that might otherwise be beneficial to them;

·  certain customers, suppliers, business partners and other persons with whom Quepasa and/or myYearbook have a business relationship may delay or defer certain business decisions or seek to terminate, change or renegotiate their relationship with Quepasa or myYearbook as a result of the Merger, whether pursuant to the terms of their existing agreements or otherwise; and

·  current and prospective employees may experience uncertainty regarding their future roles with the combined company, which might adversely affect Quepasa’s and/or myYearbook’s ability to retain, recruit and motivate key personnel.

Provisions of the Merger Agreement limit Quepasa’s and myYearbook’s ability to pursue other business combinations and may deter third parties from proposing alternative transactions.

The Merger Agreement contains provisions that make it difficult for Quepasa or myYearbook to entertain a third-party proposal for an acquisition of Quepasa or myYearbook. These provisions include a general prohibition against solicitation or engaging in discussions or negotiations regarding any alternative acquisition proposal by each of Quepasa and myYearbook and a requirement that Quepasa and myYearbook pay a termination fee of $3 million to the other party and/or reimburse the other party’s fees and expenses up to $1 million if the Merger Agreement is terminated under certain circumstances.  See the Sections entitled “Termination of the Merger Agreement” and “Fees and Expenses” beginning on pages 76 and 77, respectively.

These provisions might discourage a third party that might otherwise be interested in making a proposal from considering or proposing an acquisition of either Quepasa or myYearbook, including an acquisition or similar transaction that may be deemed of greater value than the Merger to Quepasa shareholders or myYearbook security holders. In addition, even if a third party elected to propose an acquisition, the existence of a termination fee and reimbursement provision may result in that third party offering of a lower value than the third party might otherwise have offered.

myYearbook is a private company, making it difficult to determine its value.

myYearbook is a private company and, as such, there is no public trading market for its securities and no market price that may be used in valuing its securities. As a result, myYearbook’s value is difficult to determine.  The number of shares of Quepasa common stock to be issued to myYearbook security holders was determined based on negotiations between the parties, and it may not be indicative of myYearbook’s actual value.

Future financial results of the combined company may differ materially from the unaudited pro forma combined financial statements presented in this proxy statement/prospectus and the financial forecasts prepared in connection with discussions concerning the Merger.

The unaudited pro forma combined financial information included in this proxy statement/prospectus is derived from Quepasa’s and myYearbook’s separate historical consolidated financial statements.  This pro forma financial information may not necessarily reflect what Quepasa’s results of operations and financial position would have been had the Merger occurred during the periods presented in the pro forma combined financial information, or what Quepasa’s results of operations and financial position will be in the future.

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Failure to complete or delay of the Merger could negatively impact Quepasa’s and myYearbook’s respective businesses, financial condition or results of operations.

The completion of the Merger is subject to a number of conditions, as described under “Conditions to Completion of the Merger” beginning on page 75, and there can be no assurance that the conditions to the completion of the Merger will be satisfied. If the conditions are not satisfied or waived, the Merger will not be completed or will be delayed.  If the Merger is not completed or is delayed, Quepasa and myYearbook will be subject to several risks, including but not limited to:

·  the current market price of Quepasa’s common stock may reflect a market assumption that the Merger will occur or that it will occur by a certain date, and a failure to complete the Merger or a delay in the Merger could result in a negative perception by the market of Quepasa generally and a resulting decline in the market price of Quepasa’s common stock;

·  Quepasa or myYearbook may experience negative reactions from their respective employees, customers, suppliers and other business partners;

·  there may be substantial disruption to Quepasa’s and myYearbook’s businesses and a distraction of their respective management teams and employees from day-to-day operations, because matters related to the Merger have required substantial commitments of time and financial and other resources, which could otherwise have been devoted to other opportunities that might have been beneficial; 

·  Quepasa or myYearbook, as the case may be, may be required to pay a substantial termination fee to the other party and/or reimburse its Merger-related expenses if the Merger Agreement is terminated under certain circumstances; and

·  if the Merger is not completed, each of Quepasa and myYearbook would continue to face the risks that it currently faces as an independent company.

In addition to these factors, failure to complete the Merger will mean that Quepasa and myYearbook will not obtain the anticipated benefits of combining the two companies.  If the Merger is not completed, the risks described above may materialize and materially adversely affect Quepasa’s and/or myYearbook’s business, financial condition, results of operations and stock price.

The combined company’s future operating results will be adversely affected if it does not effectively manage its expanded operations following the Merger.

Following the Merger, the size of the combined company’s business will be significantly larger than the current businesses of Quepasa and myYearbook and its revenues will also increase substantially. The future success of the combined company will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for the combined company’s management. Quepasa cannot assure you that the combined company will be successful or that the combined company will realize the expected operating efficiencies, synergies, revenue enhancements and other benefits currently anticipated to result from the Merger.

The market price of Quepasa’s common stock after the Merger may be affected by factors different from those affecting the market price of Quepasa’s shares prior to the Merger.

The businesses of Quepasa and myYearbook differ in important respects and, accordingly, the results of operations of the combined company and the market price of Quepasa’s common stock following the Merger may be affected by factors different from those existing prior to the Merger.  For a discussion of the businesses of Quepasa and myYearbook and of certain factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus referred to under the section entitled “Where You Can Find More Information” and myYearbook’s business description beginning on page 113.

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The issuance of shares of Quepasa common stock to myYearbook security holders in connection with the Merger and in the related financing will significantly reduce the percentage ownership of current Quepasa shareholders.

Current Quepasa shareholders will experience a significant reduction in the relative percentage ownership of the company’s common stock upon completion of the Merger and the related financing.  If the Merger is completed, up to 10,830,086 shares of Quepasa common stock will be issued to myYearbook security holders as partial consideration in the Merger assuming a Transaction Share Price of $7.5715. The exact number of shares of common stock to be issued in the Merger will be based on the Transaction Share Price, as described on page 2.

The sale of additional shares of our common stock for cash to allow us to pay the cash portion of the Merger consideration will also result in further dilution of the percentage ownership of current Quepasa shareholders. As a result, assuming the price per share sold in the related financing is $7.5715, Quepasa would also issue approximately: (i) 1.3 million additional shares in order to raise $10 million or (ii) 2.4 million additional shares in order to raise the full $18 million needed to fund the cash portion of the Merger consideration.

The market price of Quepasa’s stock could decline as a result of the large number of shares that will be eligible for sale after completion of the Merger.

If the Merger is completed, assuming 10,830,086 new shares of Quepasa common stock are issued as part of the Merger consideration paid to myYearbook security holders, a total of 3,249,026 of such shares will be freely tradable immediately following the closing of the Merger, with an additional 3,790,530 of such shares becoming freely tradable one month following the closing of the Merger and an additional 3,790,530 of such shares becoming freely tradable two months following the closing of the Merger (subject, in each case, to restrictions on sales by persons deemed to be “affiliates” of Quepasa). Further, current Quepasa shareholders and former myYearbook security holders may not wish to maintain their investment in the combined company following the Merger, or for other reasons, may wish to dispose of some or all of their shareholdings in Quepasa following the Merger. Shares of Quepasa common stock sold to help finance the cash portion of the Merger consideration also will be freely tradable. Sales of substantial numbers of shares of both the newly issued and the existing Quepasa common stock in the public market following the Merger could adversely affect the market price of Quepasa stock.

The merger may be completed on different terms from those contained in the Merger Agreement.

Prior to the completion of the Merger, Quepasa and myYearbook may amend or alter the terms of the Merger Agreement or waive compliance with the terms and conditions of the Merger Agreement, including closing conditions.  Although certain types of amendments, alterations or waivers may not be made after the shareholder vote unless the votes of Quepasa shareholders and myYearbook security holders are re-solicited, most amendments, alterations and waivers will not require any re-solicitation.  Any such amendments or alterations may have negative consequences to Quepasa shareholders and/or myYearbook security holders or adversely affect the operations of the combined company.

If the Merger does not qualify as a tax-free reorganization for U.S. federal income tax purposes, there could be materially adverse tax consequences for myYearbook security holders.

The Merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, with the result that myYearbook security holders generally will not recognize gain or loss for U.S. federal income tax purposes with respect to the shares of Quepasa common stock they receive upon the exchange of their shares of myYearbook capital stock in connection with the Merger.  In the event that the Merger does not qualify as a reorganization, the Merger would result in taxable gain or loss for each myYearbook stockholder, with the amount of such gain or loss determined by the amount that each myYearbook stockholder’s adjusted tax basis in the myYearbook capital stock surrendered is less or more than the fair market value of the Quepasa common stock received in exchange therefore.

Because Quepasa will assume myYearbook’s indebtedness following the closing of the Merger, this indebtedness may limit Quepasa’s ability to raise capital in the future.

As a result of the closing of the Merger, Quepasa will be indirectly responsible for myYearbook’s indebtedness and become subject to any restrictions under the financing documents creating such indebtedness.  The effects of this indebtedness include:

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·  the effective annual interest rate is between 12% and 12.5% per year, which will be a charge against future earnings;

·  any future cash flow will be required to service the indebtedness and make operating lease payments, thereby reducing the availability of Quepasa’s cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; and

·  the terms of the indebtedness may limit Quepasa’s ability to obtain additional financing for capital expenditures and working capital needs.

In addition, covenants in the debt instruments governing this indebtedness may limit how Quepasa conducts its business following the Merger.

As a result of the Merger, Quepasa will record a significant amount of goodwill on its balance sheet, which could result in significant future impairment charges and negatively affect Quepasa’s future financial condition, results of operations and stock price.

As discussed further under “Accounting Treatment of the Merger,” applicable acquisition accounting rules require that to the extent that the purchase price paid by Quepasa in the Merger exceeds the net fair value of the myYearbook tangible and intangible assets and liabilities, Quepasa will record such assets as goodwill on its consolidated balance sheet.  Goodwill is not amortized, but is tested for impairment at least annually.  In testing goodwill for impairment, Quepasa’s management will be required to view its future operating results and cash flows.  If the future operating results and cash flows of myYearbook do not continue to follow its performance in 2010 and 2011, Quepasa may incur significant impairment charges in the future.  Any impairment charges will directly be treated as an expense and negatively affect Quepasa’s future financial results.  Announcement of such impairment charges may also significantly reduce the price of Quepasa’s common stock.

Our ability to use our net operating loss carryforwards and myYearbook’s net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes may be limited as a result of the Merger, or if taxable income does not reach sufficient levels.

As of December 31, 2010, Quepasa had federal net operating loss carryforwards, which we refer to as NOLs, of approximately $100 million available to offset future taxable income, which are not currently subject to an annual limitation under Section 382 of the Code.

As of December 31, 2010, myYearbook had NOLs of approximately $4.4 million available to offset future taxable income, which are not currently subject to an annual limitation under Section 382 of the Code. The NOLs expire between 2026 and 2029.

The ability of Quepasa to utilize its NOLs may be limited if it undergoes an “ownership change,” as defined in Section 382 of the Code. An ownership change could be triggered by substantial changes in the ownership of the outstanding stock of Quepasa. An ownership change would occur if certain shareholders increase their aggregate percentage ownership of Quepasa stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change. Depending upon the number of shares of Quepasa common stock issued as Merger consideration and the related financing, an ownership change of Quepasa may occur for purposes of Section 382 of the Code   on the date of the Merger.  Additionally, even if an ownership change does not occur on the date of the Merger, other ownership shifts in the subsequent three year period, when combined with the result of the Merger, could cause an ownership change in Quepasa for purposes of Section 382 of the Code.

The ability of Quepasa to utilize the myYearbook NOLs may be limited if myYearbook undergoes an ownership change for purposes of Section 382 of the Code. An ownership change could be triggered by substantial changes in the ownership of the outstanding stock of myYearbook. An ownership change would occur if certain shareholders increase their aggregate percentage ownership of myYearbook stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change. The Merger is currently expected to result in an ownership change of myYearbook for purposes of Section 382 of the Code. 

 If applicable, Section 382 of the Code imposes an annual limitation on the amount of post-ownership change taxable income that may be offset with pre-ownership change NOLs of the corporation that experiences an ownership change. The limitation imposed by Section 382 of the Code for any post-ownership change year generally would be determined by multiplying the value of such corporation’s stock immediately before the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may, subject to certain limits, be carried over to later years, and the limitation may under certain circumstances be increased by built-in gains or reduced by built-in losses in the assets held by such corporation at the time of the ownership change  and recognized (or deemed recognized) during the five year period after the ownership change.

In addition, Quepasa’s ability to use its NOLs and/or myYearbook NOLs will also depend on the amount of taxable income generated in future periods. The NOLs may expire before Quepasa can generate sufficient taxable income to utilize its NOLs and myYearbook NOLs.

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Risks Relating to Quepasa

In addition to the risk factors which are incorporated by reference into this proxy statement/prospectus, investors should consider the following risks relating to Quepasa.

If we are unable to expand and monetize our social gaming portfolio, our future results of operations may be adversely affected.

Quepasa believes that social games will be an extremely important part of its business model and its ability to generate significant revenue.  In March 2011, we acquired XtFt Games, which we re-named Quepasa Games, and are now developing all of our games in-house.  Our ability to develop successful new online games in-house will largely depend on our ability to (i) anticipate and effectively respond to changing of players’ interests and preferences and to technological advances in a timely manner, (ii) attract, retain and motivate talented online game development personnel and (iii) execute effectively our online game development plans. In-house development requires a substantial initial investment prior to the launch of a game, as well as a significant commitment of future resources to update and expand the games.  Quepasa Games recently launched its first social game for the Brazilian market and intends to localize it to two cities in Mexico and Columbia in the second half of 2011.  While initial results are encouraging, we cannot assure you the initial trend will continue.

We cannot assure you that we will be successful in developing and monetizing successful new games.  If we fail to expand our offering of social games, if our members do not play the games on a regular basis or if we do not receive sufficient revenue from gaming on our website or other websites, our future results of operations will be materially and adversely affected.

Because many individuals are using devices other than personal computers to access the Internet, if users of these devices do not widely adopt solutions we develop for these devices, our business could be adversely affected.

The number of people who access the Internet through devices other than personal computers, including smart phones, cell phones and handheld tablets or computers, has increased dramatically in the past few years and is projected to continue to increase.  Especially outside of the United States, where most active Quepasa members are, mobile devices are more widely used.  The generally lower processing speed, power, functionality and memory associated with these devices make playing our games through such devices more difficult; and the versions of our games developed for these devices may not be compelling to players.  In addition, each device manufacturer or platform provider may establish unique or restrictive terms and conditions for developers on such devices or platforms, and our games may not work well or be viewable on these devices as a result.  As new devices and new platforms are continually being released, it is difficult to predict the problems we may encounter in developing versions of our solutions for use on these alternative devices, and we may need to devote significant resources to the creation, support, and maintenance of such devices.

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myYearbook has developed and provides its members with a mobile phone application for the use of myYearbook.com.  After the Merger, we anticipate, with the help of myYearbook’s experience, developing a mobile solution for Quepasa.com.  It is difficult to predict the problems we may encounter in developing a mobile solution for Quepasa.com, and we cannot assure you that we will be able to develop a mobile application or that our members will use any such mobile application.   If we are unable to develop mobile solutions to meet the needs of our members, our business could suffer.

Because the number of our registered members is higher than the number of actual members, and a substantial majority of our page views are generated by a minority of our members, our future operating results will be adversely affected if we do not increase the number of active members and the average usage per member.

A substantial majority of our members do not visit our website on a monthly basis, and a substantial majority of our page views are generated by a minority of our members.  Also, the number of registered members in our network may be higher than the number of actual members because some members may have multiple registrations, other members may have died or may have become incapacitated, and others may have registered under fictitious names. Given the challenges inherent in identifying these accounts, we do not have a reliable system to accurately identify the number of actual persons who are members, and thus we rely on the number of registered members as our measure of the size of our network. If the number of our actual members does not meet our expectations or we are unable to increase the breadth and frequency of visits from members, then our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline.

Because we operate in a new and rapidly changing industry, it is difficult to evaluate our business and prospects.

Social games constitute a new and rapidly evolving industry. The growth of the social game industry and the level of demand and market acceptance of our games are subject to a high degree of uncertainty. Our future operating results will depend on numerous factors affecting the social game industry, many of which are beyond our control, including:

·  continued growth in the use of Quepasa.com, myYearbook.com and other social networks;

·  changes in consumer demographics and public tastes and preferences;

·  the availability and popularity of other forms of entertainment;

·  the worldwide growth of personal computer, broadband Internet and mobile device users, and the rate of any such growth;

·  general economic conditions, particularly economic conditions adversely affecting discretionary consumer spending; and

·  lawsuits by social gaming and other companies claiming that we misappropriated their intellectual property.

Our ability to plan for game development, distribution and promotional activities will be significantly affected by our ability to anticipate and adapt to relatively rapid changes in the tastes and preferences of our current and potential players. New and different types of entertainment may increase in popularity at the expense of social games. A decline in the popularity of social games in general, or our games in particular, would harm our business and prospects.

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If any of our social games have programming errors or flaws, it could harm our reputation or decrease market acceptance of our games, which would harm our operating results.

Our current or social games may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch, particularly as we launch new games and rapidly release new features to existing games under tight time constraints. We believe that if our players have a negative experience with our games, they may be less inclined to continue or resume playing our games or recommend our games to other potential players. Undetected programming errors, game defects and data corruption can disrupt our operations, adversely affect the game experience of our players by allowing players to gain unfair advantage, harm our reputation, cause our players to stop playing our games, divert our resources and delay market acceptance of our games, any of which could result in legal liability to us or harm our operating results.

Because there are low barriers to entry in the social game industry, our competition could continue to increase.

The social game industry is highly competitive, with low barriers to entry, and we expect more companies to enter the sector and a wider range of social games to be introduced. Our competitors that develop social games for social networks vary in size and include publicly-traded companies such as Electronic Arts Inc./Playfish Inc. and The Walt Disney Company/Playdom Inc., and privately-held companies such as Zynga Inc., Crowdstar, Inc., Popcap Games, Inc., Vostu, Ltd. and wooga GmbH. In addition, online game developers and distributors who are primarily focused on specific international markets, and high-profile companies with significant online presences that to date have not developed social games, such as Amazon.com, Facebook, Google Inc., Microsoft Corporation and Yahoo! Inc., may decide to develop social games.  Some of these current and potential competitors have significant resources for developing or acquiring additional games, may be able to incorporate their own strong brands and assets into their games, have a more diversified set of revenue sources than we do and may be less severely affected by changes in consumer preferences, regulations or other developments that may impact the online social game industry. In addition, we have limited experience in developing games for mobile and other platforms and our ability to succeed on those platforms is uncertain.  There can be no assurance that we will be able to compete successfully against current or future competitors or that increased competition will not have a material adverse effect on our business.

If we are unable to implement payment gateways to our users, our results of operations will be adversely affected.

We conduct our business in countries outside the United States and depend on payment gateways that are not as well developed as those in the United States where most people have Visa, MasterCard, PayPal, mobile payment or bank debit cards to use in paying for virtual goods and our services.  User of our social network in the countries we operate, outside of the United States, do not always have access to credit cards and other “typical” payment methods  our United States members have such as debit cards.  If we are unable to implement payment gateways that provide end-users of our social network the ability to easily pay for services and related game transactions, our future results will be adversely affected. Additionally, our inability to collect and receive payments from these other sources will have an adverse effect on our business and results of operations.

Failure to comply with existing or future laws, regulations or user concerns regarding privacy and protection of user data could adversely affect our business.

Federal and state, as well as foreign, laws and regulations govern the collection, use, retention, sharing, processing, disclosure and security of data that we receive from and about our users. We have posted on our website our own privacy policies and practices concerning the collection, use, and disclosure of user data. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade Commission requirements or orders, or other federal, state or foreign privacy or consumer protection-related laws, regulations or industry self-regulatory principles, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, could result in proceedings or actions against us by governmental entities, consumer advocacy groups or others, which could potentially have an adverse effect on our business.

Further, failure or perceived failure by us to comply with our policies, applicable requirements, or industry self-regulatory principles related to the collection, use, sharing or security of personal information, or other privacy or data protection-related matters could result in a loss of user confidence in us, damage to the Quepasa brand, and ultimately in a loss of users, and advertising partners, which could adversely affect our business.

In addition, federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning data privacy and retention issues which could adversely impact our business. The interpretation and application of privacy, data protection and data retention laws and regulations are currently unsettled in the U.S. and internationally. These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current data protection policies and practices. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

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If the New York State Attorney General or other regulator takes any action against us and if successful, it may result in us being required to change our e-mail marketing or other practices, or pay substantial fines, which could result in a future material adverse effect on our future operating results.

We operate our business online, which is subject to extensive regulation by federal and state governments. Recently, we received a subpoena from the New York Attorney General seeking records relating to our operations including specific information regarding our e-mail marketing practices. We intend to co-operate and supply those documents we believe are directly relevant to the inquiry, although our attorneys have advised us that their inquiry is pre-empted by federal law in the absence of any deceptive acts. Our attorneys have further advised us that they do not believe our e-mail marketing involves any deceptive practices. However, we cannot assure you that the New York Attorney General will agree or that other regulators may not challenge aspects of our business. In such event, defending this or any other action would cause us to incur substantial expenses and divert our management's attention. If we are unsuccessful, we may have to change our e-mail marketing practices which could impair our ability to obtain new users. Any change in our email marketing or defense of a regulatory investigation or action could reduce our future revenues and increase our costs and adversely affect our future operating results.

Because we have international operations, we are exposed to foreign currency risks.

Quepasa conducts business in countries outside of the United States and expects to generate most of its revenue outside of the United States including Brazil and Mexico, which exposes us to fluctuations in foreign currency exchange rates. We may enter into short-term forward exchange or option contracts to hedge this risk; nevertheless, volatile foreign currency exchange rates increase our risk related to products purchased in a currency other than the currencies in which our revenue is generated.  The realization of this risk could have a significant adverse effect on our financial results.  There can be no assurance that these and other factors will not have an adverse effect on our business.

Because we are pursuing a strategy of seeking to commercialize our services internationally, we are subject to risks frequently associated with international operations, and we may sustain large losses if we cannot deal with these risks.

Our business model is aimed at Spanish and Portuguese speaking persons who live primarily outside the United States as well as Latinos living in the United States. We also maintain material operations in Mexico and Brazil.  Because of the diverse number of countries including Mexico and those located in Central and South America, we will be required to focus our business on unique local cultural differences which vary from country to country. If we are able to successfully develop international markets, we would be subject to a number of risks besides currency fluctuations, including:

· Being able to attract users from countries with different local cultures;

· recruiting and retaining talented and capable management and employees in foreign countries;

· challenges caused by distance, language and cultural differences;

· developing and customizing games and other offerings that appeal to the tastes and preferences of players in international markets;

· competition from local game makers with significant market share in those markets and with a better understanding of player preferences;

· protecting and enforcing our intellectual property rights;

· negotiating agreements with local distribution platforms that are sufficiently economically beneficial to us and protective of our rights;

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· the inability to extend proprietary rights in our brand, content or technology into new jurisdictions;

· implementing alternative payment methods for virtual goods in a manner that complies with local laws and practices and protects us from fraud;

· compliance with applicable foreign laws and regulations, including privacy laws and laws relating to content;

· compliance with anti-bribery laws including without limitation, compliance with the Foreign Corrupt Practices Act;

· credit risk and higher levels of payment fraud;

· currency exchange rate fluctuations;

· protectionist laws and business practices that favor local businesses in some countries;

· foreign tax consequences;

· foreign exchange controls or U.S. tax restrictions that might restrict or prevent us from repatriating income earned in countries outside the United States;

· political, economic and social instability;

· higher costs associated with doing business internationally;

· restrictions on the export or import of technology; and

· trade and tariff restrictions.

If we cannot manage these risks, we may sustain large losses.

We may require additional capital to meet our financial obligations and support business growth, and this capital might not be available on acceptable terms or at all.

We intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.

Risks Relating to myYearbook’s Business

Some of the risks relating to Quepasa described above and incorporated by reference may also apply to myYearbook, including the risks discussed in the risk factors pertaining to operating in a new and rapidly changing industry, privacy and protection of user data, low barriers to entry in the industry, need for and availability of capital, and possibility of programming errors or flaws.  In addition, myYearbook faces the following risks:

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If myYearbook’s use of Facebook as a distribution, marketing and promotion platform is restricted, its business will suffer.

Facebook is an important distribution, marketing and promotion platform for myYearbook’s content and applications.  myYearbook generates a significant portion of its new users through the Facebook platform and expects to continue to do so for the foreseeable future.  As such, it is subject to Facebook’s standard terms and conditions for Facebook Connect and for application developers, which govern the promotion, distribution and operation of games and other applications on the Facebook platform.

If any of the following events occurs, it would harm myYearbook’s ability to acquire new members and provide services to its existing members:

· Facebook discontinues or limits access to its platform by myYearbook and other application developers;

· Facebook modifies its terms of service or other policies, including  changing how the personal information of its users is made available to application developers on the Facebook platform or shared by users; or

· Facebook develops its own competitive offerings.

myYearbook has benefited from Facebook’s strong brand recognition and large user base. If Facebook loses its market position or otherwise falls out of favor with Internet users, myYearbook would need to identify alternative channels for marketing, promoting and distributing its content and applications, which would consume substantial resources and may not be effective. In addition, Facebook has broad discretion to change its terms of service and other policies with respect to myYearbook and other developers, and those changes may be unfavorable to myYearbook.  Facebook may also change its fee structure, add fees associated with access to and use of the Facebook platform, change how the personal information of its users is made available to application developers on the Facebook platform or restrict how Facebook users can share information with friends on their platform.

If the Apple “App Store” and or the Android “Marketplace” change their search and rating algorithms we may not be able to acquire new mobile members.

myYearbook acquires new mobile members primarily through the Apple “App Store” and the Android “Marketplace.”  myYearbook’s iPhone and Android applications rank near the top of the “Free Social” categories and near the top of many key search terms.  However, Apple and Google have changed their rating and search algorithms in the past without notice.  Future changes to the rating and search algorithms by Apple or Google may impact myYearbook’s rating and search results, causing a drop in new mobile and application downloads and causing myYearbook’s business and operating results to suffer.

myYearbook has a new business model and a short operating history, which makes it difficult to evaluate its prospects and future financial results and may increase the risk that myYearbook will not be successful.

myYearbook began operations in 2005, and has a short operating history and a new business model, which makes it difficult to effectively assess its future prospects.  Its business model is based on offering applications and games that are free to use and play.  It is critical that myYearbook continue to add new members to its user base and retain existing users by offering new and engaging features and products.  Furthermore, only a small percentage of its users pay for virtual goods. You should consider myYearbook’s business and prospects in light of the challenges it faces, which include its ability to, among other things:

· attract new users and retain existing users at consistent rate;

· increase engagement by existing users;

· anticipate changes in the social networking industry;

· cost-effectively develop and launch applications and games;

· launch new products and release enhancements that become popular;

· develop and maintain a scalable, high-performance technology infrastructure that can efficiently and reliably handle increased member usage, fast load times and the deployment of new features and applications;

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· process, store and use data in compliance with governmental regulation and other legal obligations related to privacy;

· successfully compete with other companies that are currently in, or may in the future enter, the social networking  or entertainment industry;

· hire, integrate and retain world class talent;

· successfully expand its business, especially internationally and with respect to mobile devices; and

  ·   monetize mobile devices.

Any failure or significant interruption in myYearbook’s network could impact its operations and harm its business.

myYearbook’s technology infrastructure is critical to the performance of its applications and games and to user satisfaction.  myYearbook leases space for its data center and relies on its co-location partner for power, security, connectivity and other services.  myYearbook also relies on third party providers for bandwidth and content delivery.  myYearbook does not control these vendors and it would take significant time and effort to replace these vendors.  myYearbook has experienced, and may in the future experience, website disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints.  If the site or a particular application is unavailable when users attempt to access it or navigation through an application is slower than they expect, users may stop utilizing the site  and  may be less likely to return to the site as often, if at all. A failure or significant interruption in its service would harm myYearbook’s reputation and operations.  myYearbook expects to continue to make significant investments to its technology infrastructure to maintain and improve all aspects of user experience and site performance. To the extent that myYearbook’s disaster recovery systems are not adequate, or it does not effectively address capacity constraints, upgrade its systems as needed and continually develop its technology and network architecture to accommodate increasing traffic, its business and operating results may suffer.

Security breaches, computer viruses and computer hacking attacks could harm myYearbook’s business and results of operations.

Security breaches, computer malware and computer hacking attacks have become more prevalent in the social media industry, have occurred on myYearbook’s systems in the past and may occur on its systems in the future. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm myYearbook’s business, financial condition and operating results.  myYearbook has experienced and will continue to experience hacking attacks.  Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of myYearbook’s network infrastructure to the satisfaction of its users may harm its reputation and its ability to retain existing users and attract new users.

myYearbook’s growth prospects will suffer if it is unable to continue to develop successful applications and games for mobile platforms.

Since May 2010, myYearbook has been offering applications and games for mobile platforms. It expects to continue to devote substantial resources to the development of its mobile applications and games, but there can be no assurances that it will continue to succeed in developing applications and games that appeal to existing non-paying and paying members or advertisers.  For instance, myYearbook may encounter difficulty in attracting leading advertisers to its mobile applications.  It may also encounter difficulty transitioning features that were successful on the web to applications and games developed for mobile platforms.  It may also face challenges working with wireless carriers, mobile platform providers and other mobile communications partners.  Finally, myYearbook may face challenges converting mobile users into users that pay for virtual currency or other virtual items.

These and other uncertainties make it difficult to know whether myYearbook will continue to succeed in developing commercially viable applications and games for mobile platforms. If it does not succeed in doing so, its growth prospects will suffer.

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Although key employees of myYearbook are required to enter into employment agreements as a condition of closing the Merger, if myYearbook fails to retain key personnel, it may not be able to achieve its anticipated level of growth and its business could suffer.

The Merger Agreement requires key employees of myYearbook to enter into long-term employment agreements with Quepasa.  However, employees are free to leave an employer at any time without penalties.  If a number of key employees become unhappy with being subject to certain restrictions relating to Quepasa’s status as a public company or are unhappy for other reasons, myYearbook’s future results of operations may be materially and adversely affected due to delays in being able to replace these employees, the inability to replace these employees with persons who are as effective, and the associated disruptions occurring from changes in personnel.

If myYearbook is unable to attract and retain highly qualified employees, it may not be able to grow effectively.

myYearbook’s ability to compete and grow depends in large part on the efforts and talents of its employees. Such employees, particularly product managers and engineers for both web and mobile applications, quality assurance personnel, graphic designers and salespeople, are in high demand, and myYearbook devotes significant resources to identifying, hiring, training, successfully integrating and retaining these employees.  The loss of employees or the inability to hire additional skilled employees as necessary could result in significant disruptions to myYearbook’s business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to its business.

myYearbook believes that a critical component of its success and ability to retain its best people is its culture . If the Merger is consummated and myYearbook effectively becomes a subsidiary of a public company, it may find it difficult to maintain its culture, which may cause some of its employees to leave.  In addition, many of myYearbook’s employees may be able to receive significant proceeds from sales of the Quepasa shares they receive in the Merger, which may reduce their motivation to continue to work for myYearbook. Moreover, the Merger may create disparities in wealth among myYearbook’s employees, which may harm its culture and relations among employees.

An increasing number of individuals are utilizing devices other than personal computers to access the Internet, and versions of myYearbook’s applications and games developed for these devices might not gain widespread adoption, or may not function as intended.

The number of people who access the Internet through devices other than personal computers, including smart phones, cell phones and handheld tablets or computers, has increased dramatically in the past few years and is projected to continue to increase.  myYearbook has developed and provides its members with access to a mobile phone application. However, smart phones, cell phones and handheld tablets or computers generally have lower processing speed, power, functionality and memory than computers.  As a result, myYearbook’s mobile phone application and games and similar applications it may develop in the future may not be compelling to users.   In addition, each device manufacturer or platform provider may establish unique or restrictive terms and conditions for developers on such devices or platforms, and myYearbook’s games may not work well or be viewable on these devices as a result.  As new devices and new platforms are continually being released, it is difficult to predict the problems that myYearbook may encounter in developing versions of its solutions for use on these alternative devices, and it may need to devote significant resources to the creation, support, and maintenance of such devices.  If myYearbook is unable to effectively monetize the continuing shift to devices other than personal computers to access the Internet, its growth may not be as anticipated.

myYearbook faces competition from traditional media companies, and it may not be included in the advertising budgets of large advertisers, which could harm its operating results.

The majority of myYearbook’s revenue is driven by major brand and network advertising.  myYearbook primarily relies on CPM advertising, where the price that myYearbook charges for advertising is based on the number of users who view that advertisement.  In addition to Internet companies, myYearbook faces 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. myYearbook expects that large advertisers will continue to increase their advertising efforts on the Internet. If myYearbook fails to convince these companies to spend a portion of their advertising budgets on social media, its operating results would be harmed.

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If myYearbook is unable to protect its intellectual property rights, it may be unable to compete with competitors developing similar technologies.

myYearbook regards the protection of its trade secrets, copyrights, trademarks, trade dress, domain names, patents and other intellectual property rights as critical to its success.  myYearbook strives to protect its intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.  However, the steps it takes to protect its intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.

myYearbook pursues the registration of its domain names and trademarks, in the United States and in certain locations outside the United States. It is seeking to protect its domain names and trade names in an increasing number of jurisdictions, a process that is expensive and time-consuming and may not be successful or which it may not pursue in every location.  myYearbook may, over time, increase its investment in protecting its innovations through increased patent filings that are expensive and time-consuming and may not result in issued patents that can be effectively enforced.

Circumstances outside myYearbook’s control could pose a threat to its intellectual property rights. For example, effective intellectual property protection may not be available in the United States or other countries in which its products and solutions are distributed. Also, the efforts it takes to protect its proprietary rights may not be sufficient or effective. Any significant impairment of its intellectual property rights could harm its business or its ability to compete. Also, protecting its intellectual property rights is costly and time-consuming. Any unauthorized disclosure or use of myYearbook’s intellectual property could make it more expensive to do business and harm its operating results.

Litigation may be necessary to enforce or protect myYearbook’s intellectual property rights or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity or diversion of management and technical resources, any of which could adversely affect myYearbook’s business and operating results.  If myYearbook fails to maintain, protect and enhance its intellectual property rights, its business and operating results may be harmed.

myYearbook is subject to intellectual property infringement claims, which could cause it to incur significant expenses, pay substantial damages and prevent service delivery.

Companies in the Internet, social media technology and other industries may own large numbers of patents, copyrights, and trademarks and may frequently request license agreements, threaten litigation, or file suit against myYearbook based on allegations of infringement or other violations of intellectual property rights. From time to time, myYearbook faces, and expects to face in the future, allegations that it has infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including its competitors and non-practicing entities. As myYearbook faces increasing competition and as its business grows, it will likely face more claims of infringement.

Any such claims could cause myYearbook to incur significant expenses and, if successfully asserted, could require that myYearbook pay substantial damages and prevent it from using licensed technology that may be fundamental to its business service delivery. Even if myYearbook were to prevail, any litigation regarding its intellectual property is generally very costly and time-consuming and diverts the attention of its management and key personnel from its business operations. myYearbook may also be obligated to indemnify its business partners in any such litigation, which could further exhaust its resources. Furthermore, as a result of an intellectual property challenge, myYearbook may be prevented from providing some of its services unless it enters into royalty, license or other agreements. myYearbook may not be able to obtain such agreements at all or on terms acceptable to it, and as a result, it may be precluded from offering some of its products and services.

Interruption or failure of its information technology and communications systems or its inability to scale its systems could hurt myYearbook’s ability to effectively provide its products and services, which could damage its reputation and harm its operating results.

The availability of myYearbook’s services depends on the continuing operation of its information technology and communications systems. Any damage to or failure of its systems or its inability to scale its systems could result in interruptions in its service, which could reduce its revenue, and damage its brand. myYearbook’s systems are vulnerable to damage or interruption from terrorist attacks, floods, fires, power loss, telecommunications failures, hurricanes, computer viruses, computer denial of service attacks or other attempts to harm its systems.  myYearbook’s data centers are subject to break-ins, sabotage and intentional acts of vandalism, and to potential disruptions if the operators of these facilities restrict access or close for any reason. If additional data center space is needed rapidly to scale with site usage, the lack of the availability of that space may cause service disruption or delays to product rollouts. Some of myYearbook’s systems are not fully redundant, and its disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a decision to close a facility it is using without adequate notice for any reason or other unanticipated problems at its data centers could result in lengthy interruptions in myYearbook’s service.

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Any of these errors, flaws, service interruptions or failures would harm myYearbook’s reputation, cause its users to stop using its applications and games, divert its resources and delay market acceptance of its applications and games, any of which could result in legal liability to myYearbook and/or harm its operating results.

Failure of members to comply with existing or future laws and regulations could adversely affect myYearbook’s business.

myYearbook provides a platform for meeting new people. Although myYearbook devotes substantial resources to member services and safety, users of the myYearbook web site have in the past and will in the future commit crimes against other members that they meet on the network or violate other laws in interacting with such members, impairing the myYearbook brand and raising the prospect of litigation that may be costly to defend.

Executive officers and directors have interest in the Merger that may be different from, or in addition to, the interest of myYearbook’s security holders generally.

myYearbook’s executive officers and directors negotiated the terms of the Merger Agreement.  A condition of closing of the Merger is that certain key employees of myYearbook will enter into multi-year employment agreements with Quepasa providing them with base salaries and potential bonus compensation, the right to receive stock options and severance.  In addition, certain larger myYearbook security holders will have the right to participate on a pro-rata basis for two years in any public or private offering or registration of shares for public sale on behalf of any Quepasa shareholder.  Finally, Quepasa has agreed to indemnify myYearbook’s officers and directors in accordance with myYearbook’s Certificate of Incorporation, Bylaws and Indemnification Agreements.  Additionally, these officers and directors will be entitled to directors and officers liability insurance protection for a period of time in the event that a claim is made against them by any myYearbook shareholder.  These interests may cause myYearbook’s executive officers and directors to view the Merger differently and more favorably than other myYearbook security holders may evaluate it.  See “Interest of myYearbook Directors and Executive Officers in the Merger” beginning on page 61.

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PRO FORMA FINANCIAL INFORMATION

The following presents our unaudited pro forma financial information for the six months ended June 30, 2011 and the year ended December 31, 2010.  The unaudited pro forma statement of operations for the year ended December 31, 2010 gives effect to the proposed Merger of myYearbook into IG Acquisition Company or Merger Sub, a wholly-owned subsidiary of Quepasa, and the completed acquisition of XtFt Games S/S Ltda or XtFt, the owner of substantially all of the assets of TechFront Desenvolvimento de Software S/S Ltda, a Brazilian company or TechFront, as if the proposed Merger and acquisition, respectively, had occurred at January 1, 2010. The unaudited pro forma statement of operations for the six months ended June 30, 2011 gives effect to the business combination of myYearbook as if the Merger had occurred at January 1, 2011. The unaudited pro forma balance sheet as of June 30, 2011 has been prepared as if the proposed Merger of myYearbook occurred on that date. As XtFt was formed in 2011, TechFront financial information was used in the preparation of the pro forma financial statements as the acquired company. The TechFront financial information does not necessarily reflect assets acquired and liabilities assumed by Quepasa when it purchased all outstanding XtFt common stock.  The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable.

The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period.  You should read the information set forth below together with the unaudited significant notes and assumptions to the pro forma statements, and the Annual Report of Quepasa on Form 10-K for the fiscal year ended December 31, 2010, and the quarterly report of Quepasa on Forms 10-Q for the six months ended June 30, 2011, which is incorporated by reference in this Form S-3, and the audited financial statement of myYearbook for the years ended December 31, 2010 and 2009 included in this Form S-3, the unaudited financial statements of myYearbook for the six months ended June 30, 2011included in this Form S-3, and the audited financial statements of TechFront for the year-ended December 31, 2010 and 2009 including the notes thereto, included in the Form 8-K/A filed on May 13, 2011.

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QUEPASA CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Balance Sheet

June 30, 2011

	Historical
	Acquirer			Acquiree Insider			Pro forma Adjustments						Combined
	Quepasa			Guides, Inc.			Debit			Credit			Pro forma
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	11,192,510		$	8,849,988			10,000,000	1		18,000,000	2	$	10,542,498
											1,500,000	3
Accounts receivable, net		3,081,726			6,383,968									9,465,694
Notes receivable - current portion		434,457			-									434,457
Restricted cash		275,000			-									275,000
Other current assets		202,039			593,404									795,443
Total current assets		15,185,732			15,827,360									21,513,092
Goodwill		4,529,645						78,310,229	2					82,839,874
Property and equipment, net		746,338			3,699,084									4,445,422
Intangible assets		-			1,299,350			8,000,000	2					9,299,350
Notes receivable - long-term portion		57,480			-									57,480
Other assets		126,893			44,992									171,885
Total assets	$	20,646,088		$	20,870,786								$	118,327,103
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		385,019			1,790,091									2,175,110
Accrued expenses		671,782			630,499									1,302,281
Accrued dividends		319,455			-									319,455
Deferred revenue		73,129			59,553									132,682
Unearned grant income		11,859			-									11,859
Current portion of long-term debt		-			2,352,246									2,352,246
Total current liabilities		1,461,244			4,832,389									6,293,633
Notes payable, net		6,570,788			2,348,626									8,919,414
Total liabilities		8,032,032			7,181,015									15,213,047
STOCKHOLDERS’ EQUITY:
Preferred stock, Series A (4,490,794 shares authorized, 4,096,700 issued, and outstanding) liquidation preference $4,106,122		-			4,097			4,097	2					-
Preferred stock, Series B (4,516,968 shares authorized, 4,318,983 issued and outstanding) liquidation preference $13,129,708		-			4,319			4,319	2					-
Common stock, $.001 par value; 50,000,000 shares; 16,645,781 shares issued and outstanding at June 30, 2011		16,647			-									28,798
Common stock, $.001 par value; 1,321,000 shares to be issued											1,321	1
Common stock, $.001 par value; 10,832,000 shares to be issued.											10,830	2
Common stock, $.001 par value 27,197,985 shares authorized 12,267,475 shares issued and outstanding		-			12,267			12267	2					-
Additional paid-in capital		182,292,819			19,942,375						62,046,795	2		274,280,668
											9,998,679	1
Accumulated deficit		(169,933,329	)		(6,273,287	)					6,273,287	2		(171,433,329	)
								1,500,000	3
Accumulated other comprehensive income		237,919			-									237,919
Total shareholders' equity		12,614,056			13,689,771									103,114,056
Total liabilities and  shareholders' equity	$	20,646,088		$	20,870,786		$	97,830,912		$	97,830,912		$	118,327,103

See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements.

32

QUEPASA CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Statement of Operations for the Six Months Ended

June 30, 2011

	Historical							Pro forma
	Acquirer Quepasa			Acquiree Insider Guides, Inc.				Adjustments Debit (Credit)			Combined Pro forma
REVENUES	$	4,085,211		$	13,383,865						$	17,469,076
OPERATING EXPENSES:
Sales and marketing		575,097			2,344,284							2,919,381
Product and content development		3,627,419			2,285,548							5,912,967
Games expenses		262,469			-							262,469
General and administrative		2,794,759			7,258,450							10,053,209
Depreciation and amortization		355,200			1,600,161			1,333,333		4		3,288,694
TOTAL OPERATING EXPENSES		7,614,944			13,488,443							22,436,720
LOSS FROM OPERATIONS		(3,529,733	)		(104,578	)						(4,967,644	)
OTHER INCOME (EXPENSE):
Interest income		34,034			11,543							45,577
Interest expense		(301,205	)		(291,299	)						(592,504	)
Other income		1,169			-							1,169
TOTAL OTHER INCOME (EXPENSE)		(266,002	)		(279,756	)						(545,758	)
LOSS BEFORE INCOME TAXES		(3,795,735	)		(384,334	)						(5,513,402	)
Income tax provision		-			(21,590	)						(21,590	)
NET LOSS		(3,795,735	)		(405,924	)						(5,534,992	)
Preferred stock dividends		(40,705	)		-							(40,705	)
Net LOSS ALLOCABLE TO COMMON SHAREHOLDERS	$	(3,836,440	)	$	(405,924	)	$	(1,333,333	)		$	(5,575,697	)
NET LOSS PER COMMON SHARE, ALLOCABLE TO COMMON SHAREHOLDERS, BASIC AND DILUTED	$	(0.23	)				$	(0.05	)		$	(0.20	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED		16,344,063						28,497,063				28,497,063

See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements.

33

QUEPASA CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Statement of Operations for the Year Ended

December 31, 2010

	Historical						Acquiree			Pro forma
	Acquirer Quepasa			Acquiree TechFront			Insider Guides, Inc.			Adjustments Debit (Credit)				Combined Pro forma
REVENUES	$	6,054,141		$	1,226,271		$	23,664,405						$	30,944,817
OPERATING EXPENSES:
Sales and marketing		891,980			18,497			2,690,309							3,600,786
Product and content development		4,774,694			1,435,843			3,948,385							10,158,922
General and administrative		6,123,083			364,777			12,306,939							18,794,799
Depreciation and amortization		319,779			-			2,953,307			2,666,667		5		6,167,936
											36,607		6
											191,576		7
TOTAL OPERATING EXPENSES		12,109,536			1,819,117			21,898,940							38,722,443
LOSS FROM OPERATIONS		(6,055,395	)		(592,846	)		1,765,465							(7,777,626	)
OTHER INCOME (EXPENSE):
Gain on sale of assets		-			-			1,895,000							1,895,000
Interest income		6,229			1			25,797							32,027
Interest expense		(603,609	)		(211,423	)		(512,010	)						(1,327,042	)
Other income		2,125			-			-							2,125
TOTAL OTHER INCOME (EXPENSE)		(595,255	)		(211,422	)		1,408,787							602,110
LOSS BEFORE INCOME TAXES		(6,650,650	)		(804,268	)		3,174,252							(7,175,516	)
Income tax provision		-			(112,914	)		(102,954	)						(215,868	)
NET LOSS		(6,650,650	)		(917,182	)		3,071,298							(7,391,384	)
Preferred stock dividends		(111,500	)		-			-							(111,500	)
NET LOSS ALLOCABLE TO COMMON SHAREHOLDERS	$	(6,762,150	)	$	(917,182	)	$	3,071,298		$	(2,894,850	)		$	(7,502,884	)
NET LOSS PER COMMON SHARE, ALLOCABLE TO COMMON SHAREHOLDERS, BASIC AND DILUTED	$	(0.52	)							$	(0.11	)		$	(0.29	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED		13,117,845									25,619,568				25,619,568

See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements.

34

Quepasa Corporation

Significant Notes and Assumptions to Pro-forma Financial Statements

(Unaudited)

On March 2, 2011, we completed a business acquisition of XtFt through a Stock Purchase Agreement. Prior to the acquisition date, XtFt was formed and it acquired substantially all of the assets and assumed certain liabilities of TechFront.

On July 19, 2011, Quepasa, Merger Sub, and myYearbook, entered into a Merger Agreement, providing for the acquisition of myYearbook by Quepasa. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, myYearbook will be merged with and into Merger Sub. Following the Merger, Merger Sub will change its name to Insider Guides, Inc. Subject to the terms and conditions of the Merger Agreement, which has been approved by the Boards of Directors of the respective parties, if the Merger is completed, holders of myYearbook securities will receive $100 million consisting of approximately $18 million in cash and $82 million in Quepasa common stock. The number of shares of Quepasa common stock to be issued will be based upon the Transaction Share Price, which will be the lesser of (A) $10 per share and (B) the average of (i) $7.5715 and (ii) the average closing price of Quepasa common stock on the 20 trading days ending with the trading day three days prior to the closing of the Merger. The Transaction Share Price may be lower than or higher than the market price as of the time of closing. The closing price of a share of Quepasa common stock on NYSE Amex on the day three days prior to the closing date of the Merger shall not be less $5.00 than per share or the Merger will not close (unless this condition is waived). The parties agree that any difference between the cash consideration to be paid by Quepasa pursuant to the Merger Agreement and the amount raised in the related proposed financing transaction will be funded by the Quepasa from cash on hand.

The accompanying unaudited pro-forma financial information reflects the financial statements of Quepasa, myYearbook and TechFront. The pro forma adjustments to the balance sheet give effect to the acquisition of myYearbook as if it occurred on June 30, 2011. The pro forma adjustments to the statements of operations for the six months ended June 30, 2011 give effect to the myYearbook acquisition as if it occurred on January 1, 2011.  The pro forma adjustments to the statements of operations for the year ended December 31, 2010 give effect to the myYearbook and XtFt acquisitions as if they occurred on January 1, 2010.

Significant Assumptions Include:

The myYearbook financial statements do not necessarily reflect assets acquired and liabilities assumed at the future date of the proposed Merger, will be subject to valuation and purchase price allocation, and may differ substantially from the estimates provided in preparing the pro-forma financial statements.

The TechFront financial information does not necessarily reflect assets acquired and liabilities assumed in the Quepasa’s acquisition.

Quepasa anticipates raising between $10 million and $18 million of capital for the myYearbook through issuance of common shares.  The number of shares and share price were estimated at 1,321,004 and $7.5715, respectively for $10 million capital raised for purposes of the pro forma financial information.

The shares to be issued to myYearbook security holders were calculated contractually based on a formula specified in the Merger Agreement.  The number of shares issued 10,830,086 was calculated for the purposes of this pro forma presentation using $82,000,000 of value at $7.5715 per share.  The actual number of shares issued could  differ based on average closing price of Quepasa common stock on the 20 trading days ending with the trading day three days prior to the closing of the Merger. The Transaction Share Price may be lower than or higher than the market price as of the time of closing.  The fair value of the shares issued to myYearbook owners may differ from the value calculated contractually based on the terms of the Merger Agreement and impact the computation of the purchase price for the business combination accounting. A fair value of $7.5715 per share and an issuance of 10,830,086 shares have been assumed for purposes of calculating the purchase price using business combination accounting in the pro forma financial information.

35

Quepasa Corporation

Significant Notes and Assumptions to Pro-forma Financial Statements

(Unaudited)

XtFt’s owners were issued 348,723 shares of common stock under the Stock Purchase Agreement.

We have estimated $1,500,000 acquisition costs associated with the myYearbook acquisition which is reflected as adjustments to accumulated deficit at June 30, 2011.  

The myYearbook estimated purchase price was allocated, for the purposes of the pro forma presentation only, first to record identifiable assets and liabilities at fair value and the remainder to goodwill as follows:

Cash and cash equivalents	$	8,849,988
Accounts receivable		6,383,968
Property and equipment		3,699,084
Intangible assets		9,299,350
Other current and other assets		638,396
Total assets acquired		28,870,786
Accounts payable and accrued liabilities		(2,480,143	)
Notes Payable		(4,700,872	)
Total liabilities assumed		(7,181,015	)
Goodwill		78,310,229
Total purchase price	$	100,000,000

No valuation of the myYearbook assets and liabilities has been made.  The fair market value of the myYearbook assets at the date of acquisition could differ substantially impacting the purchase price allocation.

Intangible assets of myYearbook represent customer contracts, intellectual properties, trademark license recorded at estimated fair value and are amortized using straight-line method over the estimated life of three years. The fair market value of myYearbook intangible assets could differ substantially after the completion of the valuation of assets and purchase price allocation at the date of acquisition. Amortization of myYearbook intangible assets was determined giving effect to the acquisition as if it occurred on January 1, 2010 and January 1, 2011, respectively on the pro forma statements of operations for the year ended December 31, 2010 and the six months ended June 30, 2011.

Other assets from the XtFt acquisition represent customer contracts recorded at fair value and are amortized using straight-line method over the life of the individual contract. Amortization of XtFt customer contracts and depreciation of property and equipment have been given effect to the acquisition as if it occurred on January 1, 2010 pro forma statements of operations for the year ended December 31, 2010

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The following reflect the pro forma adjustments at June 30, 2011 and for the six months ended June 30, 2011 and for the year ended December 31, 2010:

QUEPASA CORPORATION AND SUBSIDIARIES

Unaudited Pro forma Adjustments for June 30, 2011 and the six months then ended and for the year ended December 31, 2010.

		Debit		Credit
1	Cash		10,000,000
	Common Stock				1,321
	Additional Paid in Capital				9,998,679
	To record stock to be issued to raise capital for the proposed myYearbook acquisition
2	Cash				18,000,000
	Goodwill		78,310,229
	Intangible assets		8,000,000
	Preferred Stock, Series A		4,097
	Preferred Stock, Series B		4,319
	Common Stock - myYearbook		12,267
	Additional Paid in Capital				62,046,795
	Accumulated Deficit				6,273,287
	Common Stock				10,830
	Addition paid in capital - common stock issuance
	To adjust to fair market value the assets acquired and liabilities assumed pursuant to the proposed Merger Agreement and record common stock issuance and the cash to be paid as consideration
3	Cash				1,500,000
	Accumulated deficit - fees		1,500,000
	Accumulated deficit - legal fees
	To record non-recurring acquirer expense incurred in the acquisition
4	Amortization expense		1,333,333
	Accumulated amortization				1,333,333
	To record amortization of intangibles allocated from myYearbook proposed acquisition for the six month ended June 30, 2011.
5	Amortization expense		2,666,667
	Accumulated amortization				2,666,667
	To record 2010 annual amortization of intangibles allocated from myYearbook proposed acquisition.
6	Depreciation expense		36,607
	Accumulated depreciation				36,607
	To record 2010 annual amortization on tangible assets acquired with the XtFt acquisition
7	Amortization expense		191,576
	Accumulated amortization				191,576
	To record 2010 annual amortization of customer contracts acquired with the XtFt acquisition
	Total	$	102,059,095	$	102,059,095

See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements.

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myYearbook’s Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with myYearbook’s audited historical financial statements, which are included elsewhere in this proxy statement/prospectus.  The following discussion 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 under the caption “Risk Factors” beginning on page 17.

Company Overview

myYearbook.com makes meeting new people fun and easy online and on your mobile phone. myYearbook combines innovative social games, virtual goods, social and mobile games, a location-based news feed, video chat, and a robust virtual currency called “Lunch Money” to facilitate introductions and break the ice among its users.

myYearbook is the #1 site for “Teens” in terms of minutes, visits and pageviews in the comScore Teens category and is consistently ranked in the top 40 of all U.S. web domains in a number of leading statistics including minutes per user per month, page views and visits per visitor according to comScore.  myYearbook drives revenue from a mix of advertising and virtual currency.  In June 2011, myYearbook’s mobile applications accounted for over 40% of its total active users, up from only 2% in January 2010.

Recent myYearbook highlights include:

· In January 2009, myYearbook launched the ability to purchase virtual currency directly with a credit card, PayPal or mobile phone.  This was the first non-advertising revenue generated on the site.

· In May 2009, myYearbook launched the “VIP Club”.  The VIP Club provides members with a monthly Lunch Money increase, unlocks feature within most applications and awards increased Lunch Money for performing certain actions.  VIP Club revenue quickly became a leading source of virtual currency revenue.

· In November 2009, myYearbook launched “Live Feed” which became its most popular application and increased member retention and page views.  The Live Feed remains the core feature across the website and mobile applications today.

· In January 2010, myYearbook launched the Live gaming platform.  Live is a real-time, synchronous gaming platform that pairs games with live video chat.

· In May 2010, myYearbook launched its first mobile application on the iPhone.  Through June 2011, the iPhone application has been installed over 800,000 times.

· In July 2010, myYearbook launched its mobile application for Android.  Through June 2011, the Android application has been installed over 1.2 million times.  Mobile traffic now accounts for over 40% of total logins to the site.

· In March 2011, myYearbook announced that it acquired four mobile games and a mobile technology platform.  As of June 2011, the mobile games account for over 11.5 million installs.  The mobile technology platform will support a planned social layer across all of myYearbook’s mobile applications and games.

In 2010, myYearbook’s revenue and net income was $23.7 million and $3.1 million, respectively, which represented an increase from 2009 of $8.2 million and $4.6 million, respectively.  myYearbook generates revenue through a mix of advertising and virtual currency sales.  myYearbook serves three billion ad impressions each month on the web and one billion on mobile devices.  Currency sales consist of direct Lunch Money purchases, “VIP” memberships and currency engagement actions including actions on myYearbook’s cross-platform currency monetization product Social Theater.

Critical Accounting Policies, Judgments and Estimates

myYearbook’s management’s discussion and analysis of its financial condition and results of operations is based upon its financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires myYearbook 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.

myYearbook bases its estimates on historical experience and on various other assumptions that it believes 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.

myYearbook believes that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.

In addition, there are other items within myYearbook’s 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 its financial statements.

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Revenue Recognition

Advertising and custom sponsorship revenues consist primarily of advertising fees earned from the display of advertisements and click-throughs on text based links on myYearbook’s website. Revenue from online advertising is recognized as impressions are delivered. An impression is delivered when an advertisement appears on pages viewed by members of the myYearbook website.  Revenue from the display of click-throughs on text based links is recognized as click-throughs occur. Sponsorship revenue is recognized over the time period in which the sponsorship on the website occurs. Revenue from the sale of virtual currency is recognized when redeemed on the myYearbook website.  myYearbook records deferred revenue on the accompanying balance sheets when payments for virtual currency are received in advance of usage.

Accounts Receivable Allowances

myYearbook maintains an allowance for potential credit losses based on historical experience and other information available to management. The fees associated with display advertising are often based on “impressions,” which are created when the ad is viewed.  The amount of impressions often differs between tracking systems, resulting in discounts on some payments.  myYearbook maintains an allowance for potential discounts based on historical experience and other information available to management.

Income Taxes

myYearbook 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 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.

Contingencies

myYearbook accrues for contingent obligations, including legal costs, when the obligation is probable and the amount can be reasonably estimated. As facts concerning contingencies become known, myYearbook reassess its position and makes appropriate adjustments to the financial statements. Estimates that are particularly sensitive to future changes include those related to tax, legal, and other regulatory matters that are subject to change as events evolve and additional information becomes available.

Share-Based Compensation

myYearbook records compensation expense for share-based awards based on the estimated fair value calculated using the Black­-Scholes option pricing model.  The option pricing model requires a number of assumptions, of which the most significant are expected stock price volatility and the expected option term.  Since it was not practicable for myYearbook to estimate the expected volatility of its share price, myYearbook accounted for its options based on a value calculated using the historical volatility of an appropriate industry sector index.  Unvested option compensation expense will be recognized over the remaining option term.

myYearbook accounts for  stock options granted to non-employees on a fair value basis over the vesting period using the Black-Scholes option pricing model.  The initial non-cash charge to operations for non-employee options with vesting is revalued at the end of each reporting period based upon the change in the fair value of myYearbook’s common stock and amortized to consulting expense over the related vesting period.

Results of Operations

Revenue Sources

During the years ended December 31, 2009 and 2010 and through the second quarter of 2011, which ended on June 30, 2011, myYearbook’s revenue was generated from a mix of advertising and virtual currency.

· Advertising:  myYearbook serves three billion ad impressions each month on the web and 1 billion on mobile devices.  myYearbook sells ads to major brand agencies, direct response and cost per action advertisers, ad networks and mobile agencies.  myYearbook’s brand and agency advertising is generally directed at companies looking for high-impact ad units and brand engagement from its teen and young adult demographic.

· Virtual Currency: myYearbook’s virtual currency revenue consists of direct Lunch Money purchases, “VIP” memberships and currency engagement actions including sales on myYearbook’s cross-platform currency monetization product Social Theater.  Social Theater is distributed across platforms outside of myYearbook, including Facebook.

39

Operating Expenses

myYearbook’s principal operating expenses are divided into the following categories:

· Sales and Marketing Expenses:Sales and marketing expenses consist of web and mobile advertising and branding campaigns, public relations and promotions and safety initiatives.

· Information Technology Expenses:  Information technology expenses consist of occupancy and utility charges and support for its offsite technology infrastructure, bandwidth and content delivery fees and the purchase of specific technology, particularly software and hardware related to its infrastructure.

· General and Administrative Expenses:  General and administrative expenses consist of all of myYearbook’s personnel costs, occupancy costs, general operating costs, travel and corporate professional fees such as legal and accounting fees.

· Depreciation:  myYearbook’s depreciation and amortization are non-cash expenses which have consisted primarily of depreciation related to its property and equipment.

· Other Income (Expense):  Other income (expense) consists primarily of interest earned, interest expense and gain (loss) on the sale of assets.  Interest income relates to its cash and cash equivalents discussed in Note 2 to myYearbook’s Financial Statements.  myYearbook invests all of its cash and cash equivalents in fully liquid, money market securities.  Interest expense relates to long-term debt discussed in Note 6 to myYearbook’s Financial Statements.  The gain on sale of asset relates to the sale of intellectual property.

Comparison of the year ended December 31, 2010 with the year ended December 31, 2009

The following table sets forth myYearbook’s Statement of Operations that is used in the following discussions of results of operations:

	For the years ended December 31,
	2010		2009		Change ($)		Change (%)
REVENUE	$	23,664,405	$	15,427,514	$	8,236,891		54	%
OPERATING EXPENSES
Sales and marketing		2,690,309