Social Networking - Internet Company Update

February 14, 2011 BUY

QUEPASA CORPORATION (QPSA) Recent Stock Volatility… “Much Ado About Nothing”. 4Q10 Results and Subsequent Events Show Investment Thesis On Track. Reiterate Buy Rating and Price Target of $16.00. COMPANY & MARKET DATA 2/14/2011 Investment Rating BUY Highlights Prior Rating Price Target (12-month)$ 16.00  Stock Volatility… “Much Ado About Nothing” – Last week’s Prior Target trading in QPSA was the manifestation of our previously stated Liquidity Risk. QPSA opened the week of February 7-11, 2011 at th TRADING DATA QPSA $13.60 per share, traded as high at $14.25 on the 8 , collapsed to a th Price $ 11.10 low of $9.82 (> 30% decline) on the 10 , before moderating and 52 - Week High$ 15.45 closing the week at $11.10. It is our opinion that this volatility was due 52 - Week Low$ 2.90 more to “How” the Company communicated with the Street, not Mkt. Capitalization ($mm)$ 169.69 “What” was communicated. As such, we believe the volatility was Primary Shares Outstanding (mm) 15.3 “Much Ado About Nothing.” Fully Diluted Shares Outstanding (mm) 25.3  4Q10 and FY10 Results. 4Q10 revenues came in at $1.85 million, $150 thousand less than our $2.00 million expectation. EPS came in Avg. Daily Trading Vol. (000) 286.9 at a loss of 13¢ versus our estimate of a loss of 9¢. At this stage of the Company’s growth, we don’t believe either of these misses is material BALANCE SHEET (in millions) 12/31/2010 to the ongoing story. Cash and Cash Equivalents$ 13.55 Accounts Receivable$ 1.36  EBITDA Positive for the year. DSM and Web Development contracts Debt - Notes Payable$ 6.27 (the majority of which were with affiliated Directors) of $7.3 million were signed during 2010, of which $5.7 million were recognized. This REVENUE AND EARNINGS ESTIMATES led to EBITDA coming in positive for the year. Combined with their 2009 2010 2011E 2012E December offering to put QPSA in a much better cash position Revenues ($mm) $ 0.54 $ 6.05 $ 15.03 $ 35.59 ($13.55 million) than they were at the beginning of 2010. 1Q EPS$ (0.20) $ (0.21) $ (0.13) Most Importantly, Events Occurring Subsequent to Year End Show 2Q EPS$ (0.20) $ (0.15) $ (0.11) That Our Investment Thesis For the Company is On Track. 3Q EPS$ (0.23) $ (0.03) $ (0.06)  Record Membership Growth. At Year-End 2010, QPSA had 27.2 4Q EPS $ (0.20) $ (0.13) $ (0.01) million members, in-line with our estimate. However, January 2011 EPS - Basic$ (0.84) $ (0.51) $ (0.31) $ 0.22 saw a record 2.32 million newly registered members added, of which EPS - Fully Diluted$ (0.84) $ (0.34) $ (0.19) $ 0.13 26% were from Brazil and 14% from Mexico. Consensus EPS na na na na  TechFront Acquisition. In our opinion, this was the most important announcement the Company has made. On February 1, 2011, QPSA announced the acquisition of XtFt Games, the owner of TechFront Desenvolvimento de Software, a Brazilian social game developer.  Not all Wine and Roses this Valentine’s Day. While membership growth continues to be impressive, in our opinion, we continue to be concerned about the stickiness of users, their page usage, and monetization.  Maintaining Rating and Price Target. Nothing that was reported in the past week changes our long-term Investment Thesis. In fact, we believe the TechFront acquisition could prove to be key to the Company achieving “stickiness” and monetization. We continue to rate the shares of QPSA a Buy, and maintain a Price Target of $16. We recommend investors accumulate on any price weakness. Source: bigcharts.com E. Brian Harvey 305-572-4110 [email protected] Disclosures and Analyst Certifications can be found in Appendix A.

NEW YORK, NY MELVILLE, NY PRINCETON, NJ MIAMI, FL BOCA RATON, FL

4400 Biscayne Boulevard, 12th Floor  Miami, FL 33137  Telephone: 305-572-4100 800-LAD-THAL

Member: NYSE, NYSE Amex, FINRA, all other principal exchanges and SIPC

E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

4Q10 and FY10 Results Reported

4Q10 revenues came in at $1.85 million, $150 thousand less than our $2.00 million expectation. EPS came in at a loss of 13¢ versus our estimate of a loss of 9¢.

Actual Estimate Difference 4Q10 Revenues (mm) $1.85 $2.00 ($0.15) FY10 Revenues (mm) $6.05 $6.20 ($0.15) 4Q10 EPS ($0.13) ($0.09) ($0.04) FY10 Cash Flow $26,207 n/a n/a

While the revenue growth Quepasa showed year-over-year is impressive, we note that according to the Company, 95% of the revenues for the year came from two companies of which a director of Quepasa is an officer or director. With recently announced DSM reselling arrangements with Sony Pictures Television Ad Sales (SNE, $34.90, Not Rated) and Grupo Expansion (a division of Time), we expect non-affiliated revenues to improve in 2011. Current DSM backlog totals $1.6 million, which management expects to recognize in 2011.

Cash Improves at Year End

The previously discussed positive cash flow combined with an equity offering ($12.6 million) completed in December led to a cash balance of $13.55 million at year end 2010, versus $1.03 million at year end 2009.

Important to validate the DSM Platform.

We have heard some concern about affiliated revenues from some investors, but in our opinion, these affiliated revenues have been critical to help generate data about the ability of the DSM Platform to reach the appropriate advertising targets. Our conversations with management about this lead us to believe that the validation of the platform has been very important as Quepasa has now gathered data and expectations that it is bringing to third- party advertisers. According to management, several of the campaigns have achieved 3- 4x their anticipated engagements, as is shows in the example below.

DSM Engagements Exceeding Expectations

Subsequent to year-end, Quepasa announced that one of its DSM campaigns, “Ley de Fomento al Primer Empleo” (“Law of the First Employment”), which was run for 30 days, generated more than 8 million total views, votes and shares across a targeted base of 30 million internet users in Mexico. Management noted that 3-months after the start of the campaign, the Law was passed by the Mexican Senate, and they believe the campaign generated over 180,000 votes in support of the law and reached users in over 2,300 cities and municipalities across Mexico.

Additional Revenue Opportunities.

Management notes that aside from the expansion of DSM revenues with other non- affiliated sources, they expect to seek additional revenue sources from marketing, political, and environmental campaigns. But it is our belief that to generate meaningful revenues, Quepasa will have to have success in turning its membership in to gamers.

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E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

Events Subsequent to Year End

Record Membership Announced

In January, Quepasa added 2.32 million additional members, bringing the total user base to 29.5 million, in-line with our expectations. Page views which were 184 million in December 2010 rose to 214 million in January. While we view the page view growth trend as encouraging, we believe the company will need to increase both the number of monthly Unique visits and visitors, along with page views in order to capture more monetization opportunities. It is our opinion that better “gaming” offerings will lead to this “stickiness”.

Exhibit 1: Quepasa Membership Chart

Membership Cumulative Unique Growth (mm) Members (mm) Visits (mm) January 2010 1.4 9.0 February 2010 1.5 10.5 March 2010 1.5 12.0 April 2010 1.3 13.3 May 2010 1.1 14.4 9.6 June 2010 1.2 15.5 10.8 July 2010 1.4 16.9 12.4 August 2010 1.8 18.7 14.4 September 2010 2.0 20.7 16.0 October 2010 2.1 22.8 16.3 November 2010 2.3 25.1 17.4 December 2010 2.2 27.2 16.4 January 2011 2.3 29.5 17.6

Source: Company Reports, Ladenburg Thalmann & Co. Inc. Estimates.

TechFront Acquisition

In February Quepasa announced what we believe to be the most important piece of news the Company has made in years, the acquisition of XtFt Games, the owner of substantially all the assets of TechFront Desenvolvimento de Software, a social game development studio based in Brazil. TechFront was founded in 2006 as a developer of multi-platform console, Web, and mobile games. In 2010 TechFront began developing games for Orkut in partnership with US-based eGames. The acquisition brings Quepasa a team of 41 full- time game developers focusing on culturally relevant social gaming.

We see the importance of this acquisition in many different areas.

 By promoting culturally relevant games, we believe the stickiness of users will increase.  We believe this will allow for better economics to Quepasa, as we had previously expected gaming revenue to average a 40/60 revenue split. With the game creation capacity in-house, we believe the economic proposition will improve over the longer-term.  Leverage. As both a publisher and a platform, we believe games created by TechFront for Quepasa will also be ported to other platforms, thereby creating additional revenue streams for the games.  We see the cost of $4 million to be reasonable ($3.7 million in shares of Quepasa, $300 thousand cash), and the “earn out” provisions to be particularly encouraging.  TechFront will receive additional shares in QPSA based on achieving the following “earn out” considerations: Min. Revenues Max Cost Earn Out % 2011 $9,000,000 $2,300,000 33.34% 2012 $27,000,000 $5,500,000 33.33% 2013 $35,000,000 $6,000,000 33.33%

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E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

We don’t see the “earn out” as a revenue projection, but we believe it indicates the type of growth management expects from the gaming side of their business. Events Subsequent to Year End (continued)

In support of this acquisition, management made several additional important announcements.

Appoints Lars Fuhrken-Batista to its

Mr. Batista, a Brazilian native, brings a wealth of technology experience, currently serving on the Board of Advisors of Ideiasnet, Brazil’s largest venture fund focused on technology, media and telecom. He also serves as the Director of Information and Computer Technology at the EBX Group, overseeing infrastructure and new technology investments.

Partners with eGames

Quepasa recently signed an agreement with eGames to provide five new social game titles to quepasa.com beginning in January 2011. Additionally Quepasa will act as a distributor on eGames behalf, on other third-party social networking sites.

Partners with PlaySpan to Expand Monetization Solutions

PlaySpan offers solutions that enable online, mobile and social games and application developers to monetize users through virtual currency wallets. We see this as an important step toward monetizing “micro-payments” that gamers use. What does it all mean?

Combined, these announcements indicate to us, that Quepasa, while growing its membership rapidly over the past year, is beginning to introduce games/applications that will increase stickiness and web site usage, all while working to generate monetization opportunities.

All of these are consistent with our expectations. What is the Opportunity? Over $1 billion.

According to eMarketer (1/21/11), they expect the Social Gaming Market to surpass $1 billion in 2011, up 27% over 2010, and grow to $1.3 billion in 2012. They expect spending on Virtual Goods to increase from just over $500 million last year, to almost $800 million in 2012. They note that only 6% of US Social Gamers spend money on virtual goods. If the percentage of Gamers figure increases, we believe the total dollar figure could grow exceptionally.

Exhibit 2 – QPSA Valuation Table QPSA Valuation Matrix (per share) Members (in millions) 25 40 50 54.25 60 75 Value Per $30 $22.23 $35.57 $44.47 $48.25 $53.36 $66.70 Member $20 $14.82 $23.72 $29.64 $32.16 $35.57 $44.47 $15 $11.12 $17.79 $22.23 $24.12 $26.68 $33.35 $10 $7.41 $11.86 $14.82 $16.08 $17.79 $22.23 $5 $3.71 $5.93 $7.41 $8.04 $8.89 $11.12

We apply a 25% discount due to the valuation to account for execution risk. We use 25.3 mm fully diluted shares.

Source, Ladenburg, Thalmann & Co. Estimates.

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E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

Exhibit 3: Quepasa: Historical and Projected Income Statement

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2007A FY 2008A Mar 09 Jun 09 Sep 09 Dec 09 FY 2009 Mar 10 Jun 10 Sep 10 Dec 10 FY 2010 Mar 11E Jun 11E Sep 11E Dec 11E FY 2011E FY 2012E DSM/Advertising and Other Revenues 1,854,295 1,854,295 1,750,000 2,000,000 2,250,000 2,500,000 8,500,000 10,000,000 Gaming Revenues - - - 732,600 2,135,250 3,658,500 6,526,350 25,587,000 Total Revenues 219,466 56,006 69,159 76,032 51,827 338,958 535,976 321,970 1,156,116 2,721,760 1,854,295 6,054,141 1,750,000 2,732,600 4,385,250 6,158,500 15,026,350 35,587,000

Operating expenses Sales and Marketing 1,160,514 382,193 119,239 124,098 111,774 100,316 455,427 173,696 207,198 221,311 289,775 891,980 300,000 300,000 300,000 300,000 1,200,000 1,250,000 Product and Content Development 4,773,965 3,831,849 758,723 697,743 718,533 695,412 2,870,411 763,499 850,353 844,466 1,966,284 4,774,694 2,000,000 2,100,000 2,200,000 2,250,000 8,550,000 9,000,000 General and Administrative 7,829,217 7,289,881 1,480,526 1,485,178 1,796,930 1,865,207 6,627,841 1,795,371 1,743,147 1,761,810 1,177,034 6,123,083 1,200,000 1,250,000 1,300,000 1,350,000 5,100,000 5,500,000 Gaming Revenue Split and Expenses ------439,560 1,281,150 2,195,100 3,915,810 15,352,200 Depreciation and Amortization 446,635 463,588 131,240 132,263 130,527 118,947 512,977 107,660 85,183 62,310 64,626 319,779 100,000 100,000 100,000 125,000 425,000 500,000 Total operating expenses 14,210,331 11,967,511 2,489,728 2,439,282 2,757,764 2,779,882 10,466,656 2,840,226 2,885,881 2,889,897 3,497,719 12,109,536 3,600,000 4,189,560 5,181,150 6,220,100 19,190,810 31,602,200

Operating Income/(Loss) (13,990,865) (11,911,505) (2,420,569) (2,363,250) (2,705,937) (2,440,924) (9,930,680) (2,518,256) (1,729,765) (168,137) (1,643,424) (6,055,395) (1,850,000) (1,456,960) (795,900) (61,600) (4,164,460) 3,984,800

Other income (expense) Interest income 430,205 149,248 11,234 14,689 10,128 2,300 38,351 345 57 940 4,887 6,229 50 50 50 50 200 350 Interest expense (741) (930,816) (149,904) (150,702) (151,500) (151,501) (603,607) (149,904) (150,700) (151,500) (151,505) (603,609) (150,000) (150,000) (150,000) (150,000) (600,000) (600,000) Gain (Loss) on Disposal, net 4,638 (39,134) - - - (650) (650) ------Gain on Exthinguishment of Debt - 5,056,052 ------Loss on Settlement of Receivable - - - - (100,000) - (100,000) ------Other Income 198,264 536,836 5,439 5,860 9,041 739 21,079 525 534 524 524 2,125 525 534 524 - 1,583 -

Profit/(Loss) Before Taxes (13,358,499) (7,139,319) (2,553,800) (2,493,403) (2,938,268) (2,590,036) (10,575,507) (2,667,290) (1,879,874) (318,173) (1,789,518) (6,650,650) (1,999,425) (1,606,376) (945,326) (211,550) (4,762,677) 3,385,150

Income Taxes ------

Net Income (13,358,499) (7,139,319) (2,553,800) (2,493,403) (2,938,268) (2,590,036) (10,575,507) (2,667,290) (1,879,874) (318,173) (1,789,518) (6,650,650) (1,999,425) (1,606,376) (945,326) (211,550) (4,762,677) 3,385,150

Preferred Stock Dividends - 55,750 27,875 27,875 27,875 27,875 111,500 27,875 27,875 27,875 27,875 111,500 27,875 27,875 27,875 27,875 111,500 111,500

Net Income Allocable To Common Shareholders (13,358,499) (7,195,069) (2,581,675) (2,521,278) (2,966,143) (2,617,911) (10,687,007) (2,695,165) (1,907,749) (346,048) (1,817,393) (6,762,150) (2,027,300) (1,634,251) (973,201) (239,425) (4,874,177) 3,273,650

Basic weighted average shares outstanding 12,233,573 12,621,621 12,715,411 12,722,336 12,729,261 12,729,261 12,724,067 12,797,725 12,963,227 12,982,326 13,609,609 13,117,845 15,287,280 15,287,280 15,287,280 15,287,280 15,287,280 15,287,280 Basic EPS$ (1.09) $ (0.57) $ (0.20) $ (0.20) $ (0.23) $ (0.20) $ (0.84) (0.21) (0.15) (0.03) (0.13) (0.51) (0.13) (0.11) (0.06) (0.01) (0.31) 0.22

Diluted weighted average shares outstanding 12,233,573 12,621,621 12,715,411 12,722,336 12,729,261 12,725,894 12,725,894 23,583,873 23,583,873 23,583,873 23,793,688 19,559,264 25,300,537 25,300,537 25,300,537 25,300,537 25,300,537 25,300,537 Diluted EPS$ (1.09) $ (0.57) $ (0.20) $ (0.20) $ (0.23) $ (0.20) $ (0.84) $ (0.11) $ (0.08) $ (0.01) $ (0.08) $ (0.34) $ (0.08) $ (0.06) $ (0.04) $ (0.01) $ (0.19) $ 0.13

Net Income (13,358,499) (7,139,319) (2,553,800) (2,493,403) (2,938,268) (2,590,036) (10,575,507) (2,667,290) (1,879,874) (318,173) (1,789,518) (6,650,650) (1,999,425) (1,606,376) (945,326) (211,550) (4,762,677) 3,385,150 Foreign Currency Translation Adjustment 4,368 (5,765) (1,256) (5,334) (509) 944 (6,155) (414) 825 (924) (1,207) (796) (414) 825 (924) - - - Comprehensive Loss (13,354,131) (7,145,084) (2,555,056) (2,498,737) (2,938,777) (2,589,092) (10,581,662) (2,667,704) (1,879,049) (319,097) (1,790,725) (6,651,446) (1,999,839) (1,605,551) (946,250) (211,550) (4,762,677) 3,385,150

Source: Ladenburg Thalmann & Co. Inc. estimates and Company Reports.

Exhibit 4: Quepasa: Historical Balance Sheet

Balance Sheet QUEPASA CORPORATION (all figures in $) Fiscal Year ends December

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2007A FY 2008A Mar 09 Jun 09 Sep 09 Dec 09 FY2009A Mar 10 Jun 10 Sep 10 Dec 10 FY2010A Assets Current Assets Cash and Cash Equivalents 3,673,281 4,932,629 3,858,256 2,950,369 2,074,308 1,028,267 1,028,267 639,186 516,914 527,854 13,546,572 13,546,572 Accounts Receivable, net 38,306 21,775 53,782 59,899 34,247 310,781 310,781 308,346 379,796 1,819,803 1,361,024 1,361,024 Other Current Assets 146,876 397,582 282,762 119,325 134,561 190,513 190,513 141,659 103,694 220,210 703,062 703,062 Total Current Assets 3,858,463 5,351,986 4,194,800 3,129,593 2,243,116 1,529,561 1,529,561 1,089,191 1,000,404 2,567,867 15,610,658 15,610,658

Property and Equipment, net 1,023,041 916,442 780,868 670,032 537,906 422,548 422,548 413,051 369,716 312,896 645,728 645,728 Jet Rights, net 885,712 ------Note Receivable - 274,595 282,842 291,432 250,000 250,000 250,000 250,000 250,000 467,023 156,079 156,079 Other Assets 133,692 198,682 188,603 180,096 125,992 48,282 48,282 48,779 42,425 41,243 40,324 40,324 Total Assets 5,900,908 6,741,705 5,447,113 4,271,153 3,157,014 2,250,391 2,250,391 1,801,021 1,662,545 3,389,029 16,452,789 16,452,789

Liabilities Current liabilities Accounts Payable 887,598 60,694 67,345 49,686 161,088 118,001 118,001 67,051 25,055 42,060 286,990 286,990 Accrued Expenses 306,130 182,047 97,806 109,376 111,729 180,288 180,288 182,911 229,945 237,358 414,249 414,249 Deferred Revenue 250,000 297,679 Accrued Dividends - 55,750 83,625 111,500 139,375 167,250 167,250 195,125 223,000 250,875 278,750 278,750 Unearned Grant Income 65,917 29,545 22,782 18,945 13,777 13,810 13,810 13,962 12,982 12,805 12,364 12,364 Current Portion of Long Term Debt 1,668,808 ------Total current liabilities 2,928,453 328,036 271,558 289,507 425,969 479,349 479,349 709,049 788,661 543,098 992,353 992,353

Long-Term Debt 5,526,506 ------Notes Payable, net of discount - 5,074,858 5,223,587 5,373,102 5,523,401 5,673,702 5,673,702 5,822,431 5,971,944 6,122,243 6,272,545 6,272,545 Total liabilities 8,454,959 5,402,894 5,495,145 5,662,609 5,949,370 6,153,051 6,153,051 6,531,480 6,760,605 6,665,341 7,264,898 7,264,898

Preferred Stock - 25 25 25 25 25 25 25 25 25 25 25 Common Stock 12,285 12,715 12,715 12,729 12,736 12,743 12,743 12,950 12,973 13,239 15,287 15,287 Additional Paid-In-Capital 138,880,462 149,973,703 151,169,791 152,352,965 153,918,710 155,425,366 155,425,366 157,292,939 158,832,239 161,000,693 175,276,319 175,276,319 Accumulated Deficit (141,452,663) (148,647,732) (151,229,407) (153,750,685) (156,716,828) (159,334,739) (159,334,739) (162,029,904) (163,937,653) (164,283,701) (166,096,889) (166,096,889) Accumulated Other Comprehensive Income 5,865 100 (1,156) (6,490) (6,999) (6,055) (6,055) (6,469) (5,644) (6,568) (6,851) (6,851) Total shareholder's equity (2,554,051) 1,338,811 (48,032) (1,391,456) (2,792,356) (3,902,660) (3,902,660) (4,730,459) (5,098,060) (3,276,312) 9,187,891 9,187,891

Total liabilities and shareholder's equity 5,900,908 6,741,705 5,447,113 4,271,153 3,157,014 2,250,391 2,250,391 1,801,021 1,662,545 3,389,029 16,452,789 16,452,789

Source: Ladenburg Thalmann & Co. Inc. estimates and Company Reports.

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E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

Risks Include, But are Not Limited To:

 Execution Risk. We believe the most significant risk to our Quepasa Investment Thesis is management’s successful execution of its business plan. To us, converting viral user growth to ongoing revenue streams and profits will be the most difficult task management faces. Because most of its competitors are not publicly-traded, they will not face the same expectations and demands from investors.  Financial Risk. Quepasa is an early-stage growth company that has burned though in excess of $100 million since its inception in 1997, while generating minimal revenues. As of 9/30/10, the company had only $0.5 million of cash on its balance sheet. We believe the recently announced financing alleviates the need to raise near- term additional capital and cash at year-end 2010 totaled $13.55 million. However, in the future, in order to meet its business objectives and obligations additional capital may be required. Raising capital may be costly and/or difficult and could dilute current stockholders’ ownership interests.  Competition for Latino Demographic. Quepasa competes in the intensely competitive Latino Social Networking space, targeting the young techno-savy Latino demographic. Their competitors tend to be much larger, and have access to greater resources than does Quepasa. Some of these competitors include: Yahoo! Espanol (YHOO, $16.85, Not Rated), , MySpace, AOL (a division of AOL, $21.22, Not Rated), .com, UOL.com (Brazil), Sonico, Orkut and .  Advertising Market. A key component of management’s strategy to monetize its membership is the expected growth in advertising across the Internet. If the global economy continues to deteriorate in 2011, or the global recession expands, advertisers may cut back from anticipated advertising expenditures or seek alternate forms of ad distribution. While advertising on social networking sites is expected to grow by 34% CAGR over the next few years, advertisers may return to traditional media if it is determined to be more effective.  Technology Risk. The availability of Quepasa’s products and services is dependent on the continuous operation of the Company’s Information Technology and Communications Systems. Failure of either could negatively impact the Company’s ability to deliver its services and could irreparably harm Quepasa’s reputation, and lead to its members seeking out alternate sites.  Option, Warrant and Preferred Stock Dilution. While QPSA has only 15.3 million primary shares outstanding, Stock Options (6.4 million with a weighted average exercise price of $1.13), Warrants (4.4 million) and Preferred Stock (Convertible into $2.5 million worth of stock) all aggregate to give the Company a fully diluted share count of ~25.3 million shares, nearly twice the primary figure.  Liquidity Risk. QPSA recently moved to the NYSE Amex. Trading volume in QPSA is comparatively light at an average of 287,000 shares per day. As such, news regarding QPSA, its membership growth, contracts, and/or competitors could lead to significant volatility in the stock price.

See Appendix A for additional risk factors.

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E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

APPENDIX A: IMPORTANT RESEARCH DISCLOSURES

ANALYST CERTIFICATION I, E. Brian Harvey, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report. The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

COMPANY BACKGROUND Quepasa Corporation is a leading trilingual (Spanish, Portuguese and English), Latino-based and networking company. As of January 31, 2011, Quepasa had more than 29.5 million members. Quepasa is headquartered in West Palm Beach, with offices in , CA, Scottsdale, AZ, Miami, FL, Hermosillo, Mexico, and Sao Paulo, Brazil.

VALUATION METHODOLOGY We are valuing Quepasa based on our anticipated number of members by year-end 2011 (54.2 million), and applying a value per member of $10. From that we discount by 25% for execution risk, and divide by 25.3 million fully diluted shares, arriving at our target of $16.00. At this point, we don’t believe multiples of revenues, earnings, or cash flow are pertinent, as Quepasa is very early-stage in its development, and is competing in very high growth markets that offer tremendous operating leverage.

RISKS Risks to our recommendation and price target include, but are not limited to: 1) Financing risk and the potential dilution it brings; 2) Continued strength and growth of Latino Internet adoption; 3) Management’s ability to execute its business plan; 4) Highly competitive social networking environment; 5) Potential warrant and option dilution; 6) Growth of Internet advertising; 7) Technology standards and obsolescence; 8) Limited barriers to entry; 9) Integration of recent acquisitions.

STOCK RATING DEFINITIONS Buy: The stock’s return is expected to exceed 15% over the next twelve months. Neutral: The stock’s return is expected to be plus or minus 15% over the next twelve months. Sell: The stock’s return is expected to be negative 15% or more over the next twelve months.

Investment Ratings are determined by the ranges described above at the time of initiation of coverage, a change in risk, or a change in target price. At other times, the expected returns may fall outside of these ranges because of price movement and/or volatility. Such interim deviations from specified ranges will be permitted but will become subject to review.

RATINGS DISPERSION AND BANKING RELATIONSHIPS (As of 1/31/11) Buy 73% (30% are banking clients) Neutral 26% (19% are banking clients) Sell 1% (0% are banking clients)

COMPANY SPECIFIC DISCLOSURES: Ladenburg Thalmann & Co. Inc. makes a market in the subject company. Ladenburg Thalmann & Co. Inc. during the last 12 months, has neither managed or co-managed a public offering of securities, nor received any investment banking related compensation from the subject company. Ladenburg Thalmann & Co. Inc. has not had an investment banking relationship with the subject company in the past 12 months. Neither the Analyst nor members of the Analyst’s household own any securities issued by the subject company.

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E. Brian Harvey 305-572-4110 Quepasa Corporation (QPSA)

INVESTMENT RATING AND PRICE TARGET HISTORY

GENERAL DISCLAIMERS Information and opinions presented in this report have been obtained or derived from sources believed by Ladenburg Thalmann & Co. Inc. to be reliable. The opinions, estimates and projections contained in this report are those of Ladenburg Thalmann as of the date of this report and are subject to change without notice. Ladenburg Thalmann & Co. Inc. accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Ladenburg Thalmann & Co. Inc. This report is not to be relied upon in substitution for the exercise of independent judgment. Ladenburg Thalmann & Co. Inc. may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and Ladenburg Thalmann & Co. Inc. is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report. Some companies that Ladenburg Thalmann & Co. Inc. follows are emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Ladenburg Thalmann & Co. Inc. research reports may not be suitable for some investors. Investors must make their own determination as to the appropriateness of an investment in any securities referred to herein, based on their specific investment objectives, financial status and risk tolerance. Ladenburg Thalmann does not endorse or accept any responsibility for the content or use of third party websites. Links or references to such sites are provided only as a courtesy. Ladenburg has no control over third party websites and makes no warranties and/or representations related to such sites. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. The price, value of and income from any of the securities mentioned in this report can fall as well as rise. The value of securities is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk. Securities recommended, offered or sold by Ladenburg Thalmann & Co. Inc. (1) are not insured by the Federal Deposit Insurance Company; (2) are not deposits or other obligations of any insured depository institution; and (3) are subject to investment risks, including the possible loss of some or all of principal invested. Indeed, in the case of some investments, the potential losses may exceed the amount of initial investment and, in such circumstances; you may be required to pay more money to support these losses. The information and material presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or to buy any securities mentioned herein. This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Ladenburg Thalmann & Co. Inc. Member: NYSE, NYSE Amex, FINRA, all other principal exchanges and SIPC Additional Information Available Upon Request © 2011 - Ladenburg Thalmann & Co. Inc. All Rights Reserved.

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