Q U E P A S A C O R P

F O R M 1 0 - K
















UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-K




Quepasa Corporation
(Exact name of registrant as specified in its charter)


280 Union Square Drive
New Hope, Pennsylvania 18938
(Address of Principal Executive Office) (Zip Code)

(215) 862-1162
(Registrants telephone number, including area code)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. o Yes
No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes o No

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2011
Or

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

For the transition period from: _____________ to _____________
Delaware 001-33105 86-0879433
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or Organization) File Number) Identification No.)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
Common Stock, $0.001 par value NYSE Amex LLC

Securities registered pursuant to Section 12(g) of the Act: None



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. 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.


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing price as of
the last business day of the registrants most recently completed second fiscal quarter, June 30, 2011, was approximately $94,000,000.

The number of shares outstanding of the registrants common stock, as of March 13, 2012, was 36,199,916.


Large accelerated filer o Accelerated filer
Non-accelerated filer o Smaller reporting company o

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrants proxy statement for its 2012 Annual Meeting of Shareholders are incorporated by reference in Part III of this
Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the
registrants fiscal year ended December 31, 2011.



INDEX





Page
Part I.

Item 1. Business. 1
Item 1A. Risk Factors. 7
Item 1B. Unresolved Staff Comments. 28
Item 2. Properties. 28
Item 3. Legal Proceedings. 28
Item 4. Mine Safety Disclosures. 29

Part II.

Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 30
Item 6. Selected Financial Data. 30
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. 30
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 42
Item 8. Financial Statements and Supplementary Data. 42
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 42
Item 9A. Controls and Procedures. 42
Item 9B. Other Information. 43

Part III.

Item 10. Directors, Executive Officers and Corporate Governance. 44
Item 11. Executive Compensation. 44
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 44
Item 13. Certain Relationships and Related Transactions, and Director Independence. 44
Item 14. Principal Accounting Fees and Services. 44

Part IV.

Item 15. Exhibits, Financial Statement Schedules. 45

SIGNATURES



PART I

ITEM 1. BUSINESS.

COMPANY OVERVIEW

Quepasa Corporation seeks to be the public market leader for meeting new people, with 78.1 million cumulative registered users, and
approximately 7.5 billion total pages views in 2011. These figures support our belief that were on track to establishing ourselves as the leading
global destination for meeting new people online . Whereas Facebook connects you with people you already know, we connect you to people
you want to know . We make meeting new people fun through social games and applications, which we monetize through advertising and virtual
currency. We own and operate two primary social discovery platforms, the North American platform myYearbook and the Latin American
platform Quepasa (collectively the Quepasa Platforms). In addition to myYearbook and Quepasa, we operate Quepasa Games, a cross
platform social game development studio. By creating best of breed social experiences that intelligently leverages location, interest,
demographic and other data, we believe we are poised to optimize the global opportunity for meeting new people online.

2011 was a milestone year for Quepasa. Furthering our goal of creating the leading social network for meeting new people, we completed our
merger (the "Merger") with Insider Guides, Inc. (d/b/a myYearbook), which operated the leading social discovery destination in the U.S.,
myYearbook.com and the myYearbook mobile platforms. This combination has put us on an accelerated trajectory by enabling us to expand our
audience both within and outside of the U.S., and leverage myYearbooks impressive product development organization. In 2011 myYearbook's
number of active users grew by more than 40%, new registrations grew more than 100%, and total visits grew more than 75%. Notably, more
than half of myYearbooks users access the platform on mobile devices with the vast majority of those visiting on iPhone, iPad, and Android
versus just 2% in 2010 . We believe mobile expansion will be critical as we look to reach beyond our existing audiences.

BUSINESS OVERVIEW

Our Vision

Our vision is to build the best place to meet new people on the web and mobile devices by capitalizing on the social discovery segment of the
broader social networking industry. We believe the social graph of the people you want to know is a multi-billion dollar opportunity, and
exploiting that opportunity is the mission of this company. We believe everyone in the world has a desire for friendship, and that as friendships
themselves increasingly migrate online, it is only natural that friendship-making will too.

Our Strategy

We are focused on continuing to grow and engage our user base by offering compelling products and applications while continuing to develop
and improve our engagement and monetization through two primary channels display advertising and virtual currency product and subscription
sales.




Mobile: A majority of myYearbook users are accessing the service using mobile devices, representing a 300% increase in 2011 versus
2010. We believe that we are extremely well positioned to capitalize on global trends toward greater consumption of social media via
smartphones and tablets and look forward to making our mobile application available in Spanish and Portuguese during 2012.
Mobile Monetization: In February, 2012, we launched our first major initiative toward monetizing mobile through the introduction of
mobile credits. Given that mobile is the fastest growing segment of our audience, we see potential for significant leverage vis--vis both
our current U.S. mobile audience and our Latin America user base that has not had access to our mobile product.

1


Our Consumer Properties

We believe our core products and services will allow us to grow our userbase and engagement levels. We will leverage the growth in social
media advertising budgets, virtual currency products, and our currency-incented products, such as Social Theater.

myYearbook

On November 10, 2011, we completed our acquisition of myYearbook. The acquisition of myYearbook expanded the Quepasa platform to North
America, where over 80% of myYearbooks users originate. myYearbook has 37.2 million registered users as of December 31, 2011.

The myYearbook social networking discovery platform launched in 2005, and is currently available on the internet to both personal computers
and mobile devices. According to comScore, an independent data service, the myYearbook website is one of the 40 largest properties in the U.S.
in terms of pageviews, minutes and minutes per user per month. It is also the #1 property in the U.S. in the comScore Teen
category. myYearbook is also available on iPhone and Android mobile devices. Mobile device visits account for over 55% of total visits to the
myYearbook platform. As of December 31, 2011, myYearbook had 37.2 million registered users, an increase of 28% from 29.1 million as of
December 31, 2010. Over 85% of myYearbooks traffic is based on the United States and approximately 66% of its users are between the ages
of 13 and 24.

We believe that the acquisition of myYearbook will represent an important strategic development for Quepasa as it will allow us to significantly
expand our platform outside of Latin America. The myYearbook platform also drives significant revenue scale along with industry leading
engagement and monetization which we plan to introduce to our Quepasa platform.

Quepasa

We launched the Quepasa social networking discovery platform in 2008 and currently we offer it over the internet. As of December 31, 2011,
Quepasa had 41.0 million registered internet users, an increase of 50.3% from 27.2 million as of December 31, 2010. Users of the Quepasa
platform are located predominantly across South and Latin America and India.

In March 2012, we announced plans to migrate myYearbook.com and Quepasa.com onto a common, rebranded platform. Because of its
superior engagement and monetization metrics, the myYearbook.com internet and mobile platforms will become the global platform for all
properties over the course of 2012. Prior to the integration of the two audiences, a rebranding will occur on the myYearbook.com
site. Quepasa.com will also change its name when the user migration process starts in the second half of 2012. The new name will then become
the global name for all properties and will better reflect the company mission of being the best place to meet new people. The migration and
rebranding will not change our mission, products and monetization strategies.

Quepasa Games

Quepasa acquired XtFt Games S/S Ltda (XtFt), on March 2, 2011 and on July 14, 2011 changed XtFts name to Quepasa Games S/S Ltda
(Quepasa Games). Now a wholly owned Brazilian based subsidiary, Quepasa Games, creates and distributes social games on the Quepasa
Platforms, Orkut, and Facebook. During the second quarter of 2011, Quepasa Games announced the launch of its first social game offering,
Wonderful City Rio (Cidade Maravilhosa), across multiple social networking platforms. As of December 31, 2011, Wonderful City had 6.5
million installs across Quepasa, Facebook and Orkut.


International Brand Consolidation: We are on track with our efforts to unite all of our users, both Quepasa and myYearbook, onto a
single, global platform with a new, distinctive brand that we will use worldwide. We believe that myYearbook's internet and mobile
products will allow us to better grow within Quepasas traditional Latin America markets and also establish the foundation for growth
in markets outside of the Americas.

2

Operating Metrics

We measure site, application and game activity in terms of monthly active users (MAUs), visits and pageviews. We define a "MAU" as a
registered user of one of our platforms who has logged in and visited our websites or mobile applications within the last month of
measurement. A "visit" represents a distinct user session, and a "pageview" is a page that a user views during a visit.


myYearbook visits and pageviews represent the entire quarter periods. The merger with myYearbook did not close until November 10, 2011.

Our Advertising Solutions

Advertising

We serve over three billion ad impressions each month on our internet properties and over one billion ad impressions each month on the
myYearbook mobile platform. An ad impression refers to an image or video placed with the web page or mobile screen to promote a product or
company. Our brand and agency advertising is generally directed at companies looking for high-impact ad units and brand engagement from
our younger, global demographic. Remnant impressions refers to ad impressions that we are not able to sell directly to a brand or agency and
that we therefore attempt to fill through a third party advertising exchange or network. Our direct advertisers have included leading companies
and brands such as McDonalds, ABC Family, Universal Studios, Walt Disney, Paramount Studios, Got Milk?, Sony Ericsson, Wrigley (Skittles
and Juicy Fruit), and Mens Warehouse. Our remnant advertisers have included Google Adsense, DoubleClick, TrafficMarketplace (TMP) and
Glam Media on the internet, and Millennial, JumpTap and Nexage on mobile devices. We also have the ability to run in-game advertisements
and sponsorships within Quepasa Games. Our advertising revenue is generated from many advertisers and is not dependent on one or a few
major customers.

The majority of our ad impressions are IAB (Interactive Advertising Bureau) standard impression sizes on both the internet and mobile
devices. However, we do provide our advertisers the ability to purchase non-standard ad units, such as homepage and section takeovers,
sponsored items, and video pre-roll units. Non-standard and direct sold ad units typically deliver a higher CPM (cost per thousand) than
standard IAB ad units. We also offer advertisers the ability to target certain users based on location, age and gender, among other demographics
and enthusiast groups. Higher precision targeted ad impressions also generally deliver a higher CPM than a similar ad impression that is not
targeted to a specific demographic.



Monthly
Average -
Quarter Ended
December 31,
2011
Monthly
Average -
Quarter Ended
December 31,
2010
MAU myYearbook 2,975,792 2,085,448
MAU Quepasa 1,191,677 2,771,716
MAU Quepasa Games 2,112,118 -
6,279,587 4,857,164


Quarter Ended
December 31,
2011
Quarter Ended
December 31,
2010
Visits myYearbook 282,300,423 159,882,444
Visits Quepasa 26,512,522 63,647,862
308,812,945 223,530,306

Pageviews myYearbook 7,999,614,088 3,905,932,204
Pageviews - Quepasa 678,296,301 520,851,172
8,677,910,389 4,426,783,376

3

We refer to the core success metric for our ad impressions as an engagement. An engagement generated from an advertising impression or
campaign is defined as a measurable online activity initiated by a member, including for example, watching a branded video or clicking an
advertising unit. A common measure of the success of an ad impression or engagement is Click Through Rate or "CTR. An ad CTR equals
the number of clicks or actions generated from that ad unit divided by the total number of that ad unit displayed over time. The higher the CTR
for a specific ad unit, generally the higher the CPM we derive from that unit.

Virtual Currency & Social Theater

Virtual Currency products include direct purchases from members for our virtual currencies, Lunch Money and Credits on myYearbook, VIP
subscription memberships on myYearbook and currency engagement actions (i.e. sponsored engagement advertisements) on all of our platforms,
including cost-per-action (CPA) currency incented promotions and sales on our proprietary cross-platform currency monetization product,
Social Theater. Social Theater is a video advertising platform in which users of social games across leading social networks, including
Facebook, watch videos and perform other actions to earn virtual currency. An advertiser uses Social Theater to distribute its video ad to
millions of targeted individuals. In order to promote the ad and drive views, virtual currency is awarded to the viewer for viewing the ad to
completion. Social Theater can also be used by advertisers to drive Likes and Shares on Facebook and other social platforms. Social
Theater is distributed primarily across platforms outside of Quepasa and myYearbook, including Facebook, through partnerships with companies
like Trialpay. Where Social Theater is distributed outside of our owned and operated properties and mobile applications we pay a distribution
fee. Social Theater is recorded as virtual currency product revenue, since users earn virtual currency every time they complete a Social Theater
engagement, and we earn product revenue from the advertiser.

Virtual currency offers advertisers the possibility of substantial engagement to advertisers, with 20% of myYearbooks users completing an
average of eight branded actions each month in exchange for virtual currency. Branded actions include incented video views through services
such as Social Theater, registration for a service or product (such as Netflix) or collection of an email for product marketing. Clients of Social
Theater or branded currency actions measure the effectiveness of each campaign by measuring the number of people that view a specific video
or complete the requested action, such as registering for a particular product or site or providing the information requested in the call to action.

All of our paid currency products are processed through a variety of payment partners, including credit card processors like Visa and Mastercard,
PayPal, Zong (on mobile devices) and PayMentez, among others.

DSM Social Media Advertising

We seek to build innovative social media advertising products that allow advertisers to reach audiences both on our owned platforms as well as
across the internet. Our offerings attract advertising partners that want to go beyond traditional online channels and leverage social media to
drive the viral consumption of their brand messaging and the content associated with it.

DSM was launched on the Quepasa platform in 2009. DSM was a social contest platform that gave users the opportunity to compete for prizes
by way of sharing a brand message on Quepasa and across their social profiles. The viral nature of DSM campaigns helped brands and agencies
achieve highly engaging, word-of-mouth advertising across popular social media sites.

Effective November 2011 with the merger of myYearbook, the DSM product on Quepasa has now become a part of Social Theater, a cross
platform, virtual currency product. DSM is no longer offered as a distinct product. DSM campaigns are recorded as advertising revenue.



4

PRODUCT DEVELOPMENT

We are continually developing new products, as well as optimizing our existing platform and feature set in order to meet the evolving needs of
our audience, game developers and advertising partners.

We develop most of our software internally. We will, however, purchase technology and license intellectual property rights in the event that it is
strategically important, operationally compatible, and is economically advantageous. For instance, we partner with third party game developers
to bring additional social gaming titles to our platforms. We also partner with third parties to further our internationalization efforts as we look
to bring additional languages into our existing platforms. We are not materially dependent upon licenses and other agreements with third parties
relating to product development.

Our technology team consists of our product development and engineering team, our database administration team, our quality assurance team
and our network system operators. These teams are responsible for feature enhancements to and general maintenance across all of our
platforms. Our technology team is headquartered in New Hope, Pennsylvania with support offices in Hermosillo, Mexico and Curitiba, Brazil.

SALES AND MARKETING

Our user base has grown according to the following table since January of 2011:



We primarily rely on viral growth to acquire new members. By encouraging members to invite their friends to join our sites and to share their
activity across other external platforms, including Facebook and Twitter, and providing them with easy-to-use tools, we have been able to grow
the user base successfully while minimizing marketing costs. We focus primarily on creating a truly differentiated experience and compelling
value proposition for new users in our markets, and developing the technologies needed to facilitate their word-of-mouth marketing on our
behalf in order to attract and retain new members.

Our advertising team of 23 full-time employees covers major brand agencies, direct response and cost per action engagement advertisers, ad
networks and mobile agencies. Our advertising office is headquartered in New York City, with additional sales people located in Los Angeles,
Miami and Sao Paulo, Brazil.


Month Ending Number of Members
January 31, 2012 86,271,227
December 31, 2011 84,601,711
November 30, 2011 83,019,784 (a)
October 31, 2011 45,772,231
September 30, 2011 44,673,920
August 31, 2011 43,447,289
July 31, 2011 41,878,856
June 30, 2011 40,311,765
May 31, 2011 38,729,743 (b)
April 30, 2011 35,623,929
March 31, 2011 33,628,285
February 28, 2011 31,640,681
January 31, 2011 29,557,869
(a) myYearbook merger completed. myYearbook registrations included starting November 2011
(b) Wonderful City launched by Quepasa Games. New registrations started in May 2011

5

INTELLECTUAL PROPERTY

Our intellectual property includes trademarks related to our brands, product and services; copyrights in software and creative content; trade
secrets; domain names; and other intellectual property rights and licenses of various kinds. We seek to protect our intellectual property through
copyright, trade secret, trademark and other laws of the U.S. and other countries of the world, and through contractual provisions.

We consider the myYearbook, Quepasa and Social Theater trademarks and our related trademarks to be valuable to Quepasa and we have
registered these trademarks in the U.S. and other countries throughout the world and aggressively seek to protect them.

COMPETITION

We operate in the internet and mobile device products, services, and content markets, which are highly competitive and characterized by rapid
change, converging technologies and increasing competition. Our most significant competition for users, advertisers, publishers and developers
comes from other companies in the broader social networking category, such as Facebook, Google, MySpace, Twitter, LinkedIn, Orkut, Zynga,
Tagged, Badoo, PlentyOfFish, Skout, okcupid, Banjo, Highlight, Yahoo and Airtime along with a number of special interest and regional social
networks. We also face competition for users from a growing number of sites and mobile applications that also focus on meeting new people,
including Tagged, Badoo and Skout, along with many other smaller but well-funded start-ups that can quickly gain attention and compete with
us for users. We also compete with these companies to obtain media attention and agreements with software publishers, ISPs, mobile carriers,
device manufacturers and others to distribute and promote our services to their users.

Our principal considerations related to attracting and retaining users include functionality, performance, ease of use, usefulness, accessibility,
integration, and personalization of the online and mobile services that we offer, as well as the overall user experience and quality of support on
our properties. Our principal considerations related to attracting advertisers and publishers are the reach, effectiveness, and efficiency of our
marketing and advertising services as well as the creativity of the marketing solutions that we offer. Reach refers to the audience and/or
demographic that can be accessed through our platforms. Many of our competitors offer a broader and larger reach than we currently do on our
platforms. Effectiveness for advertisers refers to our ability to deliver against advertisers targets and to measure and optimize our
achievements against those targets. Effectiveness for publishers refers to our advertising technology and the monetization opportunities we are
able to offer through our technology and marketing services.

Our Quepasa Games platform also faces competition from many public and private gaming companies such as Zynga, Disney/Playdon, Vostu
and Mentez, among others. While these companies could be potential partners to Quepasa and publish their titles across the Quepasa Platforms,
many of their games are similar to our existing game, Wonderful City. We compete with these companies for new users to install our game and
for existing installs to choose and play our game more than they play other games.

Additional information regarding certain risks related to our competition is included in Part I. Item 1A. "Risk Factors" of this report.

EMPLOYEES

As of February 29, 2012, we employed approximately 202 full time and 11 part time employees, 131 full time and 7 part time employees in the
United States, 34 full time employees in Hermosillo, Mexico and 37 full time and 4 part time employees in Curitiba, Brazil. None of our
employees are represented by a labor union. Our future success is substantially dependent on the performance of our senior management and
key technical personnel, as well as our continuing ability to attract, maintain the caliber of, and retain highly qualified technical and managerial
personnel. Additional information regarding certain risks related to our employees is included in Part I, Item 1A Risk Factors of this Annual
Report on Form 10-K and is incorporated herein by reference.



6

CORPORATE HISTORY

We were incorporated in the State of Nevada in June 1997. In 2011, we acquired myYearbook and XtFt Games S/S Ltda (now Quepasa
Games). In December 2011, we re-incorporated in Delaware.

GOVERNMENT REGULATION

In the United States, advertising and promotional information presented to visitors on our website and our other marketing activities are subject
to federal and state consumer protection laws that regulate unfair and deceptive practices. There are a variety of state and federal restrictions on
the marketing activities conducted by email, or over the Internet, including U.S. federal and state privacy laws and the CAN-SPAM Act of 2003.
We are also subject to laws in the various South and Latin America and other countries in which we operate. The rules and regulations are
complex and may be subject to different interpretations by courts or other governmental authorities. We might unintentionally violate such laws,
such laws may be modified and new laws may be enacted in the future. Any such developments (or developments stemming from enactment or
modification of other laws) or the failure to anticipate accurately the application or interpretation of these laws could create liability to us, result
in adverse publicity and negatively affect our businesses. Additional information regarding certain risk related to government regulations is
included in Part I, Item 1A. "Risk Factors" of this report.

AVAILABLE INFORMATION

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or
furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, are available free of charge on our Investor Relations
website at www.quepasacorp.com/investors/sec-filings/ as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the SEC. The information posted on our website is not incorporated into this report.

ITEM 1A. RISK FACTORS.

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below,
together with all of the other information in this Report, including the consolidated financial statements and the related notes included elsewhere
in this Report, before deciding whether to invest in shares of our common stock. The risks and uncertainties described below are not the only
ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material may also become important
factors that adversely affect our business. If any of the following risks actually occurs, our business, financial condition, results of operations,
and future prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you
could lose part or all of your investment.

If we are unable to successfully integrate the operations of Quepasa and myYearbook, our results of operations will be adversely
affected.

In November 2011 we completed our acquisition of myYearbook. Our success will depend in part on our ability to integrate the
operations of myYearbook into our existing operations. This process poses a variety of challenges and may disrupt or interrupt our
business. These challenges include, among others:



our ability to consolidate Quepasa.com and myYearbook.com into a new site with a new brand;
our ability to retain users on our Quepasa platform pending this transition:

7


These disruptions and difficulties, if they occur, may cause us to fail to realize cost savings, revenue enhancements and other benefits that
we expect resulting from that integration and may cause material adverse short and long-term effects on our operating results and financial
condition. Also, any cost savings and other synergies may be offset by costs incurred in integrating the companies, increases in other expenses,
operating losses or problems in the business unrelated to the acquisition. If we are not able to integrate the businesses, our future results of
operations may reflect declining revenue growth.

As a result of the Merger, the size of our business is significantly larger and our revenues have increased substantially. Our future success
will depend, in part, upon our ability to manage this expanded business, which will pose substantial challenges for our management. We cannot
assure you that we will be successful or that we will realize the expected operating efficiencies, synergies, revenue enhancements and other
benefits currently anticipated to result from the Merger.

When we rebrand myYearbook.com, the myYearbook mobile application and Quepasa.com, we face the risk that users will not be
attracted to our new name resulting in decreased visits to our website or slower future growth.

In 2012, we plan to rebrand myYearbook.com, the myYearbook mobile application and Quepasa.com to a single new name which we
believe better reflects our role as the place to meet new people. While we have devoted resources to this new identity and received favorable
feedback from focus groups, the sample size of our test marketing is relatively small. If our rebranding is not successful, it will result in
decreased visits and slower future growth. Either event will hamper our ability to monetize and adversely affect our future revenues.

If the migration of the Quepasa.com platform to the myYearbook.com platform is unsuccessful, we may lose users which would
adversely affect our results of operations.

We are planning on migrating all of the users of Quepasa.com to myYearbooks platform. The migration process will be complex and will
require the expenditure of significant time and resources and poses translation risks. Delays or difficulties in, or disruptions and inconveniences
caused by, the migration process could result in the loss of users, as well as delays in recognizing or reductions in the anticipated benefits of the
Merger, any of which could negatively impact our business and operating results. If Quepasa.com users do not like being on the myYearbook
website, they may choose to no longer visit our website which could adversely affect our business.


potential loss of key employees including software engineers;
integrating complex systems, technology, networks and other assets in a seamless manner that minimizes any adverse impact on
employees and other constituencies;
possible inconsistencies in standards, controls, procedures and policies among the combined companies and the need to implement
company-wide financial, accounting, information and other systems;
failure to maintain the quality of services that the companies have historically provided;
diversion of managements attention from day-to-day business; and
complexities associated with managing the larger, combined business.

8

We have limited operating experience with a new business model, which makes it difficult to evaluate our prospects and future financial
results and may increase the risk that we will not be successful.

Our business model is based on social discovery by offering social games and applications, monetized through both advertising and virtual
currency. We offer both free applications and premium applications for a fee. Only a small percentage of our users pay for virtual goods. We
must continue to add new members to our user base and retain existing members by offering new and engaging features and products. The
challenges we face include, among other things, our ability to:




attract new users and retain existing users at a consistent rate to myYearbooks experience;

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;

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


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;

expand our business internationally; and

monetize mobile devices.

9

If we fail to retain existing users or add new users, or if our users decrease their level of engagement, our revenue, financial results, and
business may be significantly harmed.

The size of our user base and our users level of engagement are critical to our success. We had 4.1 million monthly active users (MAUs)
on average per month in the fourth quarter 2011, up from the 2.8 million MAU in the same period in 2010. However, Quepasa.com MAUs
decreased over the period June through December 2011. Our financial performance has been and will continue to be significantly determined by
our success in adding, retaining, and engaging active users. If people do not perceive our products to be useful, reliable, and trustworthy, we
may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement. A number of other
social networking companies that achieved early popularity have since seen their active user bases or levels of engagement decline, in some
cases precipitously. There is no guarantee that we will not experience a similar erosion of our active user base or engagement levels. A decrease
in user retention, growth, or engagement could render us less attractive to advertisers, which may have a material and adverse impact on our
revenue, business, financial condition, and results of operations. Any number of factors could potentially negatively affect user retention,
growth, and engagement, including if:


If we are unable to maintain and increase our user base and user engagement, our revenue, financial results, and future growth potential may be
adversely affected.


our users increasingly engage with competing websites and mobile applications;
we fail to introduce new and improved services or if we introduce new services that are not favorably received;
we are unable to identify and respond to emerging technological trends in the market;
we are unable to successfully balance our efforts to provide a compelling user experience with the decisions we make with respect to
the frequency, prominence, and size of ads and other commercial content we display;
we are unable to continue to develop features for mobile devices that users find engaging, that work with a variety of mobile operating
systems and networks, and that achieve a high level of market acceptance;
we are unable to acquire or license leading technologies;
we are unable to enhance our services by adding innovative features that differentiate our services from those of our competitors;
there are changes in the user sentiment about the quality or usefulness of our services or concerns related to privacy and sharing, safety,
security, or other factors;
we are unable to manage and prioritize information to ensure users are presented with content that is interesting, useful and relevant to
them;
technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise affect the user
experience;
we adopt policies or procedures that are perceived negatively by our users or the general public;
we fail to provide adequate customer service to users or advertisers; or
we or other companies in our industry are the subject of adverse media reports or other negative publicity.

10

If our acquisition strategy is unsuccessful or if we are unable to integrate future acquisitions our business will be materially and
adversely affected.

We plan to make acquisitions of companies which complement our business model. Our success will depend in part on our ability to
manage the integration of future acquisitions. Integrating businesses poses a variety of challenges, which we must meet.

The process of integrating any future acquired business may be disruptive to our business and may cause an interruption of or a loss of
momentum in, our business as a result of the factors similar to the risks of integrating myYearbook and Quepasa. See the "Risk Factors"
beginning on page 7.

Because the number of our registered members is higher than the number of active 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 active
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 active 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.

If our members do not interact with each other or our viral marketing strategy fails, our ability to attract new members will suffer and
our revenue will decrease.

The majority of our members do not visit our website frequently and spend a limited amount of time when they do visit. If we are unable to
encourage our members to interact more frequently and to increase the amount of user generated content they provide, our ability to attract new
users to our website and our financial results will suffer. In addition, part of our success depends on our members interacting with our website
and contributing to our viral advertising platform (Social Theater). If our Social Theater platform is unsuccessful and our members do not
spread our advertisers messages throughout the Internet, our operating results will suffer.



11

Because we generate a substantial majority of our revenue from advertising, the loss of advertisers, or reduction in spending by
advertisers, could seriously harm our business.

The substantial majority of our revenue is currently generated from parties advertising on our platform. In 2011 and 2010 aggregate
advertising accounted for 80% and 94%, respectively, of our revenue. As is common in the industry, our advertisers typically do not have long-
term advertising commitments with us. Many of our advertisers spend only a relatively small portion of their overall advertising budget with
us. Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not
deliver ads and other commercial content in an effective manner, or if they do not believe that their investment in advertising with us will
generate a competitive return relative to other alternatives. Our advertising revenue could be adversely affected by a number of other factors,
including:











The occurrence of any of these or other factors could result in a reduction in demand for our ads and other commercial content, which may
reduce the prices we receive for our ads and other commercial content, or cause advertisers to stop advertising with us altogether, either of which
would negatively affect our revenue and financial results.

As more than a majority of myYearbook users visit using mobile devices, where we do not currently display ads, rather than on
personal computers, our future revenue and financial results may be adversely affected.

In 2011, the number of myYearbook mobile users grew by more than 300%, and currently more than half of our daily active users access
myYearbook using a mobile device. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall
MAUs for the foreseeable future, in part due to our focus on developing mobile services to encourage mobile usage of myYearbook. Although
the majority of our mobile users also access and engage with myYearbook on personal computers where we display advertising, our users could
decide to increasingly access our products primarily or exclusively through mobile devices. We do not currently directly generate any
meaningful revenue from the use of myYearbook on mobile devices, and our ability to do so successfully is unproven. Accordingly, if users
continue to increasingly access myYearbook on mobile devices as a substitute for access through personal computers, and if we are unable to
successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.


decreases in user engagement, including time spent on our websites;
changes in our services that adversely affect the ads and other commercial content that we display;

our inability to improve our analytics and measurement solutions that demonstrate the value of our ads and other commercial
content;
loss of advertising market share to our competitors;

adverse legal developments relating to advertising, including legislative and regulatory developments and developments in
litigation;
adverse media reports or other negative publicity involving us or other companies in our industry;
our inability to create new services that sustain or increase the value of our ads and other commercial content;
changes in the way online advertising is priced;
the impact of new technologies that could block or obscure the display of our ads and other commercial content; and
the impact of macroeconomic conditions and conditions in the advertising industry in general.

12

Because we face significant competition from other social networks and companies with greater resources, we may not be able to
compete effectively.

We face significant competition from other companies that seek to connect members online. Our competitors are other companies providing
portal and online community services, such as Facebook, Google, MySpace, Twitter, LinkedIn, Orkut, Zynga, Tagged, Badoo, PlentyOfFish,
Skout, okcupid, Banjo, Highlight, Yahoo and Airtime. Some of these companies have greater resources, more established reputations, a broader
range of content and products and services, longer operating histories and more established relationships with their users than we do. Facebook
dominates social networking websites. We seek to compete by creating a place where people can meet new people rather than interact with their
friends.

Our competitors can use their experience and resources against us in a variety of competitive ways, including developing ways to attract and
maintain users. These factors may allow our competitors to respond more effectively than us to new or emerging technologies and changes in
market requirements. Our competitors may develop products, features, or services that are similar to ours or that achieve greater market
acceptance, may undertake more far-reaching and successful efforts at developing new services or marketing campaigns, or may adopt more
aggressive pricing policies.

We believe that our ability to compete effectively depends upon many factors both within and beyond our control, including:



the usefulness, ease of use, performance, and reliability of our services compared to our competitors;

the size and composition of our user base;

the engagement of our users with our services;


the timing and market acceptance of services, including developments and enhancements to our or our competitors
services;

13









If we are not able to effectively compete, our user base and level of user engagement may decrease, which could make us less attractive to
developers and advertisers and materially and adversely affect our revenue and results of operations.

If technologies are developed that block our email invitations to join our sites, we may be unable to grow our user base.

We send mass emails for our members to invite their friends to join our social network. We believe that our business will continue to rely on
this method for attracting users in the foreseeable future. Unsuccessful email delivery could impact our ability to monetize our products. As a
result, any email or ad-blocking technology could, in the future, adversely affect our business .

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

Major brand and network advertising drives most of our revenue. We rely primarily on cost per thousand (CPM) advertising, where we
base the price we charge for advertising on the number of users who view it. In addition to Internet companies, we face competition from
companies that offer traditional media advertising opportunities. Most large advertisers have set advertising budgets, a portion of which is
allocated to Internet advertising. We expect that large advertisers will continue to increase their advertising efforts on the Internet. If we fail to
convince these companies to spend a portion of their advertising budgets on social media and specifically with us, however, our operating results
would be harmed.


our ability to monetize our services, including our ability to successfully monetize mobile usage;

the frequency, size, and relative prominence of the ads and other commercial content displayed by us or our competitors;
customer service and support efforts;
marketing and selling efforts;

changes mandated by legislation, regulatory authorities, or litigation, including settlements and consent decrees, some of
which may have a disproportionate effect on us;
acquisitions or consolidation within our industry, which may result in more formidable competitors;
our ability to attract, retain, and motivate talented employees, particularly software engineers;
our ability to cost-effectively manage and grow our operations; and
our reputation and brand strength relative to our competitors.

14

We rely on Facebook as a significant distribution, marketing and promotion platform.

Facebook is an important distribution, marketing and promotion platform for our content and applications. We generate a significant
portion of our new users through the Facebook platform and we expect to continue to do so for the foreseeable future. As such, we are subject to
Facebooks 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 our ability to acquire new members and provide services to our existing members:


We have benefited from Facebooks strong brand recognition and large user base. If Facebook loses its market position or otherwise falls
out of favor with Internet users, we would need to identify alternative channels for marketing, promoting and distributing our content and
applications, which could 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 us and other developers, and any such changes could be unfavorable. 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 the
Facebook platform.

Because many individuals are using devices other than personal computers to access the Internet, if versions of our applications
developed for these devices do not gain widespread adoption, or do not function as intended, our business could be adversely affected.

The number of people who access the Internet through smart phones, cell phones, iPads, and other handheld tablets has increased
dramatically in the past few years and is projected to continue to increase. We have launched a myYearbook mobile application for Android
smart phones, iPhones and iPads; we have not launched a mobile application for Quepasa. We are dependent on interoperability with popular
mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade our platforms
functionality or give preferential treatment to competitive services could adversely affect myYearbook usage on mobile devices. 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. Smart phones, cell phones and handheld tablets generally have lower
processing speed, power, functionality and memory than computers. As a result, our mobile phone application and games and similar
applications we may develop in the future may not be compelling to users. As new devices and new platforms are continually being released, it
is difficult to predict the problems that 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. If we cannot effectively monetize the
continuing shift to devices other than personal computers to access the Internet, our business will be negatively affected.



Facebook discontinues or limits access to its platform by us 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.

15

We rely on the Apple App Store and the Android Marketplace to obtain new mobile myYearbook members; if either denies us
access or changes its search and rating algorithms we may not be able to acquire new mobile members.

We acquire new mobile members for myYearbook primarily through the Apple App Store and Google "Play" (formerly the Android
Market). In February and March 2012, Apple rejected the new versions of our myYearbook application because of user-generated content and
other concerns. In response we devoted additional resources to image review, changed some of our content allowance policies, and made certain
other changes to address Apple's concerns. Until Apple accepts these new versions, we continue to offer in the App Store old versions of our
application that contain fewer features. Although we have dedicated significant resources to obtain Apple's approval of our product releases, we
cannot be assured of obtaining such approval, or that Apple will allow us to offer new products and features through the Apps Store. If we fail to
maintain access to either or both of the Apps Store and Google Play, or if members no longer login because we are unable to offer new features
causing our content to be considered out of date, our business and operating results will suffer.

In addition, our 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 our rating and search results, causing a drop in new mobile and application downloads and
causing our business and operating results to suffer.

If our members fail to comply with existing or future laws and regulations, it could adversely affect our business.

We provide platforms for meeting new people. Although we devote substantial resources to member services and safety, our members have
in the past and will in the future commit crimes against other members or violate other laws in interacting with such members, which could
impair our brand and raise the prospect of litigation that may be costly to defend. Additionally, as mentioned in the risk above, any inappropriate
content could cause our mobile application to be removed from the Apple App Store and Google Marketplace which could adversely affect our
ability to monetize our mobile application.



16

If we are unable to continue to develop successful applications and games for mobile platforms, our growth prospects will suffer.

myYearbook has offered applications for mobile platforms since May 2010. We expect to continue to devote substantial resources to the
development of mobile applications, but there can be no assurances that we will continue to succeed in developing applications that appeal to
users or advertisers. For instance, we may encounter difficulty in attracting leading advertisers to our mobile applications. We may also
encounter difficulty transitioning features that were successful on the web to applications developed for mobile platforms. We may also face
challenges working with wireless carriers, mobile platform providers and other mobile communications partners. Finally, we 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 we will continue to succeed in developing commercially viable applications for mobile platforms. If we do not succeed in
doing so, our growth prospects will suffer.

If we cannot address technological change in our industry in a timely fashion and develop new services, our future results of operations
may be adversely affected.

The Internet and electronic commerce industries are characterized by:


Our future performance will depend, in part, on our ability to develop, license or acquire leading technologies and program formats, enhance
our existing services and respond to technological advances and consumer tastes and emerging industry standards and practices on a timely and
cost-effective basis. Developing website and other technology involves significant technical and business risks. We also cannot assure you that
we will be able to successfully use new technologies or adapt our platforms and technology to emerging industry standards. We may not be able
to remain competitive or sustain growth if we do not adapt to changing market conditions or customer requirements.


rapidly changing technology;
evolving industry standards and practices that could render our platform and technology obsolete;
changes in consumer tastes and demands; and
frequent introductions of new services or products that embody new technologies.

17

We plan to continue expanding our operations abroad where we have limited operating experience and may be subject to increased
business and economic risks that could affect our financial results.

While Quepasa.com has operated in Central and South America, myYearbook has limited international experience.

We plan to continue the international expansion of our business operations and the translation of our services. We may enter new
international markets where we have limited or no experience in marketing, selling, and deploying our services. If we fail to deploy or manage
our operations in international markets successfully, our business may suffer. In addition, we are subject to a variety of risks inherent in doing
business internationally, including:


If we are unable to expand internationally and manage the complexity of our global operations successfully, our financial results could be
adversely affected.

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 credit cards or bank debit cards to use in paying for virtual goods and services. Users in some
countries in which we operate do not always have access to credit and debit cards and other payment methods common in the United States. If
we are unable to implement payment gateways that provide our members the ability to pay for goods and services easily, 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.


political, social, or economic instability;


risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy, and
unexpected changes in laws, regulatory requirements, and enforcement;


potential damage to our brand and reputation due to compliance with local laws, including potential censorship or
requirements to provide user information to local authorities;

fluctuations in currency exchange rates;

higher levels of credit risk and payment fraud;

enhanced difficulties of integrating any foreign acquisitions;

burdens of complying with a variety of foreign laws;

reduced protection for intellectual property rights in some countries;


difficulties in staffing and managing global operations and the increased travel, infrastructure, and legal compliance costs
associated with multiple international locations;

compliance with the United States Foreign Corrupt Practices Act and similar laws in other jurisdictions; and

compliance with statutory equity requirements and management of tax consequences.

18

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

We conduct business in countries outside of the United States, 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.

Our business is subject to complex and evolving United States and foreign laws and regulations regarding privacy, data protection, and
other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims,
changes to our business practices, increased cost of operations, or declines in user growth or engagement, or otherwise harm our
business.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including
user privacy, rights of publicity, data protection, intellectual property, gaming, electronic contracts and other communications, competition,
protection of minors, consumer protection, taxation, and online payment services. Foreign data protection, privacy, and other laws and
regulations are often more restrictive than those in the United States. United States federal and state and foreign laws and regulations are
constantly evolving and can be subject to significant change. 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 application
and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we
operate. For example, the interpretation and application of privacy, data protection and data retention laws and regulations are currently
unsettled in the United States 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.



19

If governments were to restrict access to our websites in their countries, it could substantially harm our business and financial results.

It is possible that governments of one or more countries may seek to censor content available on our sites in their country, restrict access
from their country entirely, or impose other restrictions that may affect the accessibility of our sites in their country for an extended period of
time or indefinitely. In addition, governments may seek to restrict access to our sites if they consider us to be in violation of their laws. In the
event that access our sites were restricted, in whole or in part, in one or more countries or our competitors are able to successfully penetrate
geographic markets that we cannot access, our ability to retain or increase our user base and user engagement may be adversely affected, we may
not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.

Increased government regulation of the Internet could adversely affect our business.

Due to the rapid growth and widespread use of the Internet, national and local governments are enacting and considering various laws and
regulations. Companies engaging in online search, commerce and related businesses face uncertainty related to future government
regulation. New laws and regulations designed to protect consumers could adversely affect our business and operations by exposing us to
substantial compliance costs and liabilities and impeding growth in use of the Internet. Furthermore, the application of existing domestic laws
and regulations to Internet companies remains somewhat unclear, and courts may apply these laws in unintended and unexpected ways. As we
expand internationally, we will also become increasingly subject to foreign laws and regulations which could be inconsistent from country to
country. Foreign governments may restrict Internet social networking usage, pass laws that negatively impact our business, or prosecute us for
our services. We may incur substantial liabilities for expenses necessary to comply with laws and regulations or penalties for any failure to
comply. Additionally, restrictions and compliance costs associated with current and possible future laws and regulations could harm our
business and operating results.

A new tax treatment of companies engaged in Internet commerce could adversely affect the commercial use of our marketing services
and our financial results.

Due to the global nature of the Internet, it is possible that governments might attempt to tax our activities, including game usage and the sale
of virtual currency. New or revised tax regulations may subject us to additional sales, income and other taxes. We cannot predict the effect of
current attempts to impose sales, income or other taxes on commerce over the Internet. New or revised taxes and especially sales taxes would
likely increase the cost of doing business online, reduce Internet sales and decrease the attractiveness of advertising over the Internet. Any of
these events could have an adverse effect on our business and results of operations.



20

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

We have posted on our websites our own privacy policies and practices concerning the collection, use, and disclosure of user data. Any
actual 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. Our efforts to protect the information that our users have chosen to share may be unsuccessful due to the
actions of third parties, software bugs or other technical malfunctions, employee error or malfeasance, or other factors. In addition, third parties
may attempt to fraudulently induce employees or users to disclose information in order to gain access to our data or our users data. If any of
these events occur, our users information could be accessed or disclosed improperly.

Further, actual 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 our brands, and ultimately in a loss of users and advertising partners, any of which could adversely affect our
business.

We have been subject to regulatory investigations and settlements and we expect to continue to be subject to such proceedings in the
future which could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to
our business.

From time to time, we receive inquiries from regulators regarding our compliance with laws and other matters. For example, in June 2011,
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 cooperated fully and supplied documents we believed were directly relevant to the inquiry. Our attorneys
advised us that they did not believe our e-mail marketing involved any deceptive practices; nevertheless, we voluntarily instituted certain
changes in order to address the concerns of the New York Attorney General. 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 managements attention. If we are unsuccessful, we may have to change our e-mail
marketing practices that 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.

It is possible that other regulatory inquiries could result in changes to our policies or practices. Violation of existing or future regulatory
orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition
and results of operations. In addition, it is possible that future orders issued by, or enforcement actions initiated by, regulatory authorities could
cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.



21

If we do not attract and retain highly qualified employees, we may not be able to grow effectively.

Our ability to compete and grow depends in large part on the efforts and talents of our executive officers and other 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 we devote significant resources to identifying, hiring, training, successfully integrating and retaining
these employees. We require key employees to enter into employment agreements, but employees are free to leave an employer at any time
without penalties. The loss of employees or the inability to hire additional skilled employees as necessary could result in significant disruptions
of our business, and the integration of replacement personnel could be time-consuming and expensive and cause us additional disruptions.

Any failure or significant interruption in our network could harm our business.

Our technology infrastructure is critical to the performance of our applications and to user satisfaction. Any damage to or failure of our
systems or our inability to scale our systems could result in interruptions in our service. We lease space for our data center and rely on a co-
location partner for power, security, connectivity and other services. We also rely on third party providers for bandwidth and content
delivery. We do not control these vendors and it would take significant time and effort to replace them. We have 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. Our 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 our
systems. 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 using the site and become less likely to return as often, if at all. We expect to continue to make significant
investments in our technology infrastructure to maintain and improve all aspects of user experience and site performance. To the extent that our
disaster recovery systems are not adequate, or we do not effectively address capacity constraints, upgrade our systems and continually develop
our technology and network architecture to accommodate increasing traffic, our business and operating results may suffer.

Our software is highly technical and undetected errors, if any, could adversely affect our business.

Our services incorporate software that is highly technical and complex. Our software has contained, and may now or in the future contain,
undetected errors, bugs, flaws, corrupted data or vulnerabilities. Some errors in our software code may only be discovered after the code has
been released. Any errors, bugs, flaws, corrupted data or vulnerabilities discovered in our code after release could result in damage to our
reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results.



22

Computer malware, viruses, hacking and phishing attacks, and spamming could harm our business.

Security breaches, computer malware and computer hacking attacks have become more prevalent in the social media industry, have
occurred on our 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 our business, financial condition and operating
results. We have experienced and expect to 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 our network
infrastructure to the satisfaction of its users may harm our reputation and our ability to retain existing users and attract new users.

If we cannot protect our intellectual property rights, we may be unable to compete with competitors developing similar technologies.

We regard the protection of our trademarks, trade dress, domain names, trade secrets, copyrights and other intellectual property rights as
critical to our success. We strive to protect our intellectual property by relying on federal, state and common law rights, as well as foreign rights
and contractual restrictions. We pursue the registration of domain names and trademarks in the United States and in an increasing number of
foreign jurisdictions, a process that is expensive and time-consuming and may not be successful or inclusive enough. Our efforts, however, may
not prevent misappropriation of our intellectual property or deter the independent development of similar technologies by others. Failure to
protect our intellectual property rights may harm our business and operating results and circumstances beyond our control could threaten our
intellectual property rights. For example, effective intellectual property protection may not be available in the United States or other countries in
which we do business. Although we have taken measures to protect our proprietary rights, there can be no assurance that others will not offer
products or concepts that are substantially similar to ours and compete with our business. We regularly contribute software source code under
open source licenses and have made other technology we developed available under other open licenses, and we include open source software in
our products. As a result of our open source contributions and the use of open source in our products, we may license or be required to license
innovations that turn out to be material to our business and may also be exposed to increased litigation risk. If the protection of our proprietary
rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be
diminished and competitors may be able to more effectively mimic our service and methods of operations. Any of these events could have an
adverse effect on our business and financial results.



23

If we become subject to intellectual property infringement claims, it could cause us to incur significant expenses, pay substantial
damages and prevent service delivery.

Companies in the Internet, social media technology and other industries own large numbers of patents, copyrights, and trademarks and
frequently request license agreements, threaten litigation, or file suit based on allegations of infringement or other violations of intellectual
property rights. From time to time, we face, and expect to face in the future, allegations that we have infringed the trademarks, copyrights,
patents and other intellectual property rights of third parties, including competitors and non-practicing entities. As we face increasing
competition and as our business grows, we will likely face more claims of infringement. Any such claims, regardless of merit or outcome, could
result in substantial costs, adverse publicity or diversion of management and technical resources, any of which could adversely affect our
business and operating results. If we do not prevail against such claims, we could be required to pay substantial damages and/or be obligated to
indemnify our business partners. Furthermore, we could be prevented from providing products and services unless we enter into license or other
agreements. We may not be able to obtain such agreements at all or on terms acceptable to us, and as a result, we may be precluded from
offering products and services.

Changes in accounting rules could adversely affect our results of operations.

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. These
accounting principles are subject to interpretation by the Financial Accounting Standards Board, the Public Company Accounting Oversight
Board, the Securities and Exchange Commission, the American Institute of Certified Public Accountants and various other bodies formed to
interpret and create appropriate accounting policies. A change in these policies or a new interpretation of an existing policy could affect our
reported results or require changes in presentation or disclosure, and could affect our reporting of transactions before a change is adopted, which
in turn could have a significant adverse effect on our results of operations.

Because our stock price may be volatile due to factors beyond our control, you may lose all or part of your investment.

Our operating results have been in the past, and in the future are likely to be, subject to quarterly and annual fluctuations as a result of
numerous factors, including:



changes in the number of our members;
changes in usage by our members;
independent reports relating to the metrics of our website, including the number of MAUs;
our failure to generate increases in revenue;

24


In the past, following periods of volatility in the market price of a companys securities, securities class action litigation has often been
instituted. A securities class action suit against us could result in substantial costs and divert our managements time and attention, which would
otherwise be used to benefit our business.

We may issue preferred stock without the approval of our shareholders, which could make it more difficult for a third party to acquire
us and could depress our stock price.

Our Board may issue, without a vote of our shareholders, one or more additional series of preferred stock that have more than one vote per
share. This could permit our Board to issue preferred stock to investors who support our management and give effective control of our business
to our management. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline
in interest of our common stock. This could make it more difficult for shareholders to sell their common stock. This could also cause the market
price of our common stock shares to drop significantly, even if our business is performing well.

Because most of our outstanding shares are freely tradable, sales of these shares could cause the market price of our common stock to
drop significantly, even if our business is performing well.

As of March 13, 2012, we had 36,199,916 shares of common stock outstanding of which our directors and executive officers beneficially
own approximately 11.3 million which are subject to the limitations of Rule 144 under the Securities Act. Most of the remaining outstanding
shares, including a substantial amount of shares issuable upon the exercise of warrants and options are and will be freely tradable.


our failure to achieve or maintain profitability;
actual or anticipated variations in our quarterly results of operations;
announcements by us or our competitors of significant contracts, new services, acquisitions;
commercial relationships, joint ventures or capital commitments;
the loss of significant business relationships;
changes in market valuations of social media companies;
the loss of major advertisers;
future acquisitions;
the departure of key personnel;
short selling activities; or
regulatory developments.

25

In general, Rule 144 provides that any non-affiliate, who has held restricted common stock for at least six-months, is entitled to sell his
restricted stock freely, provided that we stay current with our SEC filings. After two years, a non-affiliate may sell without any restrictions, even
if we fail to stay current in our SEC filings.

An affiliate of ours may sell after six months with the following restrictions:


Because most of our outstanding shares are freely tradable and a number of shares held by our affiliates may be freely sold (subject to Rule
144 limitation), sales of these shares could cause the market price of our common stock to drop significantly, even if our business is performing
well.

In making your investment decision, you should not rely on information in public media that is published by third parties, including
bloggers.

In the past, we have received media coverage, including coverage that is not directly attributable to statements made by our officers and
employees, that incorrectly reports on statements made by our officers or employees, or that is misleading as a result of omitting information
provided by us, our officers, or employees. You should rely only on the information contained in this Form 10-K and our other SEC filings in
determining whether to invest in our common stock.

If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us
or our business. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about
our business, our common stock price would likely decline.


(i) we are current with our filings;

(ii) certain manner of sale provisions;

(iii) filing of Form 144; and

(iv) volume limitations limiting the sale of shares within any three-month period to a number of shares that does not exceed the 1% of
the total number of outstanding shares, or the average weekly trading volume during the four calendar weeks preceding the filing of
a notice of sale.

26

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid cash dividends on our common stock. We currently intend to retain any future earnings to finance the
operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future on our common
stock. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases. In
addition, our credit facility contains restrictions on our ability to pay dividends on common stock.

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 applications or enhance our existing applications, 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.

If we default on our leasing and credit obligations, our operations may be interrupted and our business and financial results could be
adversely affected.

We finance a portion of our expenditures through leasing arrangements, some of which are not required to be reflected on our balance sheet,
and we may enter into additional similar arrangements in the future. In particular, we have used these types of arrangements to finance some of
our equipment and data centers. In addition, we have a revolving credit facility that we may draw upon to finance our operations or other
corporate purposes, such as funding our tax withholding. If we default on these leasing and credit obligations, our leasing partners and lenders
may, among other things:







require repayment of any outstanding lease obligations or amounts drawn on our credit facility;
terminate our leasing arrangements and credit facility;
stop delivery of ordered equipment;
sell or require us to return our leased equipment; or
require us to pay significant damages.

27

If some or all of these events were to occur, our operations may be interrupted and our ability to fund our operations or obligations, as well
as our business, financial results, and financial condition, could be adversely affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our headquarters are located in New Hope, Pennsylvania and consists of approximately 9,900 square feet of office space. The lease expires
in April 2012. We also lease office space in West Palm Beach, Florida, New York City, New York, and Los Angeles, California. Our data
centers are operated in Secaucus, New Jersey, Dallas, Texas and Tempe, Arizona. Our technical operations are provided in leased offices located
in New Hope, Pennsylvania and Hermosillo, Mexico. We will be relocating our New Hope and West Palm Beach offices in April 2012 to
facilities that are adequate to meet current requirements, and that suitable additional or substitute space will be available as needed to
accommodate any further physical expansion of operations.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. We operate
our business online, which is subject to extensive regulation by federal and state governments. In July 2011, the Company received a subpoena
from the New York Attorney General (NYAG) seeking records relating to our operations including specifically our e-mail marketing
practices. Our attorneys advised us that the NYAGs inquiry was preempted by federal law in the absence of any deceptive acts, and that they
did not believe our e-mail marketing involved any deceptive practices. Nevertheless, we chose to cooperate fully with the NYAG, supplied
documents we believed directly relevant, and made certain changes to our email practices to address the NYAGs specific concerns. We believe
the NYAG has concluded his investigation and will take no further action, and we are currently negotiating a settlement agreement. However,
we cannot make assurances that we will reach our anticipated closure with the NYAG or that other regulators will not challenge aspects of our
business. In such event, defending this or any other action could cause us to incur substantial expenses and divert our managements
attention. Any such defense, or change in our marketing or other practices could reduce our future revenues and increase our costs, and
adversely affect our future operating results.

On August 3, 2011, Michelle Kaffko (the Plaintiff) filed a class action lawsuit against the Company in the United States District Court for
the District of Nevada. The Company filed a motion to transfer the case to the Southern District of Florida and the Court granted that
motion. The complaint alleges that the Company sent unauthorized text messages to thousands of consumers by using equipment that had the
capacity to generate random telephone numbers. The Plaintiff is seeking, for herself and on behalf of the members of the class, $500 for each
alleged violation. The Company has investigated the Plaintiffs claims and believes they have no merit. Accordingly, the Company has filed
motions to dismiss and for summary judgment.

On September 8, 2011, the Company received a complaint filed with the Equal Employment Opportunity Commission (EEOC) by a
former employee alleging sexual discrimination by the Company. The Company filed a written response denying the allegations and on
November 15, 2011, engaged in mediation that ended in an impasse. The EEOC has not taken any further action on this complaint. The
Company believes the plaintiffs claims are without merit.



28

On September 15, 2011, FotoMedia Technologies, LLC (FotoMedia) sued Insider Guides, Inc. (IG) and four other defendant
companies in the United States District Court for the District of Delaware for infringement of certain patents relating to digital photo-sharing.
FotoMedia alleged that IG infringed five of six separate patents that FotoMedia owned. On November 21, 2011, IG and two other defendants
filed a motion to dismiss the case for failure to state a claim upon which relief could be granted. On December 22, 2011, prior to any ruling on
the motion to dismiss, FotoMedia filed a Notice of Dismissal Without Prejudice with the Court. Accordingly, the action was dismissed without
prejudice as of such date.

On November 18, 2011, a former member of the Companys Board of Directors who was also a paid consultant to the Company sued the
Company in the Superior Court of California for breach of contract relating to the ownership and use of certain intellectual property that he
allegedly created. The plaintiff also claimed that the Company and its Chief Executive Officer never intended to honor the contract. The
Company denies these allegations and maintains that the plaintiff did not create any original intellectual property and that the Company is not
otherwise using any intellectual property created by the plaintiff. The Company intends to defend against these claims vigorously.

Future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation
or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting
periods.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.



29

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.

Since January 21, 2011 our common stock has been listed on the NYSE Amex Stock Exchange under the symbol QPSA. Previously,
our common stock was quoted on the Over-the-Counter Bulletin Board (the Bulletin Board). The last reported sales price of our common
stock as reported by the NYSE Amex on March 12, 2012 was $3.99 per share.

For the period that our common stock was quoted on the Bulletin Board, the table provides the high and low bid price information for our
common stock for the periods indicated which reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.


Shareholders

According to the records of our transfer agent, there were 706 holders of record of our common stock on March 13, 2012. Because many
of these shares are held by brokers and other institutions on behalf of shareholder, we are unable to estimate the total number of shareholders
represented by these record holders.

Dividend Policy

We have not paid cash dividends on our common stock and do not plan to pay such dividends in the foreseeable future. Our Board of
Directors will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements, and
general business conditions. Our current credit facility precludes us from paying dividends.

Recent Sales of Unregistered Securities

None.

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included
elsewhere in this Form 10-K. Managements Discussion and Analysis of Financial Condition and Results of Operations contains forward-
looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-
looking statements. Factors that could cause or contribute to these differences include those discussed elsewhere in this report, particularly in
Risk Factors, located under Item 1A.


Year Quarter Ended Stock Price
High Low
2011 March 31 $15.45 $5.15
June 30 $9.64 $4.86
September 30 $10.42 $3.40
December 31 $4.98 $2.74

2010 March 31 $4.20 $1.95
June 30 $5.50 $3.37
September 30 $5.38 $3.25
December 31 $12.23 $5.10

30

Company Overview

Our mission is to be the best place to meet new people. We develop mobile and internet platforms to make meeting people fun through
social games and apps. Our social graph is not the people you know but the people you want to know. We believe the ubiquity of the smart
phone and emergence of social networks will fundamentally transform how people discover one another and make relationships in a mobile-first
world.

Highlights for 2011 included:






Trends in Our Metrics

We measure site, application and game activity in terms of monthly active users (MAUs), visits and page views. We define an MAU as a
registered user of one of our platforms who logged in and visited our websites or mobile applications within the last month of measurement. A
visit represents the number of times that an MAU came to the site for a distinct session over the measurement period. A pageview is page than
an MAU views during a visit. As of December 31, 2011, we had 5.9 million MAUs, an increase of 103% from December 31, 2010. We
experienced growth from the acquisition of myYearbook in November 2011 and across different geographies, with users in Brazil and India
representing a key source of growth on the Quepasa Games.

We define a mobile MAU as a user who accessed our sites by a mobile app or by mobile-optimized versions of our website whether on a
mobile phone or tablet such as the iPad, during the period of measurement. We had more than 1.4 million mobile MAUs in December 2011. Our
mobile MAU growth was also driven by product enhancements across several mobile platforms. For example, we improved our product offering
on feature phones and we launched the myYearbook app for the iPad in December 2011. Improving our mobile products and increasing mobile
usage of Facebook are key priorities that we believe are critical to help us maintain and grow our user base and engagement over the long term.
We expect global consumers will continue to increase the amount of time they spend and the information they share and consume through
mobile devices. myYearbook surpassed 50% of its traffic accessing on mobile devices, and launched the tablet application myYearbook for
iPad , which is now available in the iTunes App Store.

We do not currently display ads to users who access our site via mobile apps. To the extent that increasing usage through mobile apps or
our mobile website substitutes for the use of the website through personal computers where we do show ads, the number of ads that we deliver to
users and our revenue may be negatively affected unless and until we include ads or sponsored stories on our mobile apps and mobile website.
We believe that people around the world will continue to increase their use of site from mobile devices, and that some of this mobile usage has
been and will continue to be a substitute for use through personal computers.


As of December 31, 2011 registered users increased to 78.1 million, up from the 27.3 million reported at the end of the fourth quarter of
2010.
Page views totaled 5.43 billion in the fourth quarter of 2011, up from the 521 million page views in the same period of 2010.
Sequentially, page views were up in the fourth quarter of 2011 from the 580 million in the third quarter of 2011.
Visits totaled 192.5 million in the fourth quarter of 2011, up from the 63.6 million visits in the same period of 2010. Visits were up
sequentially from the 30.2 million in the third quarter of 2011.
Quepasa completed its merger with myYearbook, creating the public market leader for social discovery.
Quepasa acquired Brazilian Social Game Development Studio XtFt Games (now known as Quepasa Games).

31

Factors Affecting Our Performance

Growth trends in MAUs and mobile MAUs are critical variables that affect our revenue and financial results by influencing the number of
advertisements we are able to show, the value of those ads, the volume of payments transactions, as well as our expenses and capital
expenditures.

In addition, changes in user engagement patterns also affect our revenue and financial performance. We believe that overall engagement
as measured by the percentage of users who create content (such as wall posts, messages, or photos) or generate feedback has remained stable or
increased as our user base has grown. Moreover, the average amount of content and feedback created by each user has continued to increase over
time.

Our revenue trends are also affected by advertisement inventory management changes affecting the number, size, or prominence of
advertisements we display. We make ongoing product changes intended to enhance the user experience. In 2011, we continued to make
significant investments in our technical infrastructure to ensure that our growing user base can access the site rapidly and reliably.

At the end of 2011, we had 202 full-time employees, an increase of 126 from the year prior. Our employee headcount has increased significantly
and we expect this growth to continue for the foreseeable future. We have also made and intend to make acquisitions with the primary objective
of adding software engineers, product designers, and other personnel with certain technology expertise.

Critical Accounting Policies, Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have
been prepared in accordance with Generally Accepted Accounting Principles (GAAP). The consolidated financial statements include our
accounts and the accounts of our wholly-owned subsidiaries, Quepasa.com de Mexico, Quepasa Servios em Solucoes de Publicidade E
Tecnologia Ltda (inactive), Quepasa Games S/S Ltda (from March 2, 2011), and Insider Guides, Inc. (formerly known as IG Acquisition
Company from November 10, 2011). All intercompany accounts and transactions have been eliminated in consolidation. The preparation of
these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Most significant estimates in the accompanying consolidated financial statements include the estimated
lives and playing periods that we use for games revenue recognition, the allowance on accounts receivable, valuation of notes receivable,
valuation of deferred tax assets, valuation of the discount on notes payable, valuation of equity instruments granted for services, valuation of re-
pricing of warrants, valuation of assets acquired and liabilities assumed in business combinations, evaluating goodwill and long-lived assets for
impairment and the measurement and accrual of restructuring costs. We base our estimates on historical experience and on various other
assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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

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



32

Accounts Receivable Allowances

We maintain 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. We maintain an allowance for potential discounts based on
historical experience and other information available to management.

Goodwill

Goodwill is subject to impairment tests on an annual basis or more frequently if facts and circumstances warrant such a review. Goodwill is
evaluated using specific methods, including potentially, a discounted cash flows method to determine the fair value of a reporting unit and
comparison of the carrying value of goodwill to its implied fair value. The analysis necessarily involves significant management judgment to
evaluate the capacity of an acquired business to perform within projections. If the carrying amount of a reporting unit exceeds its fair value,
determined by conducting a valuation, then the goodwill impairment test is performed to measure the amount of the impairment loss, if any.
Management performs a qualitative assessment of goodwill to determine if it is more likely than not that the fair value of a reporting unit is less
than its carrying value including goodwill. In the event facts and circumstances indicate the carrying value of goodwill is impaired, the goodwill
carrying value will be reduced to its implied fair value through a charge to operating expenses.

Contingencies

We accrue for contingent obligations, including legal costs and restructuring costs, when the obligation is probable and the amount can be
reasonably estimated. As facts concerning contingencies become known we reassess our position and make 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.

Income Taxes

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

Stock-Based Compensation

We follow the fair value recognition provisions of ASC 718, Compensation Stock Compensation . The fair values of share-based payments
are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is
based on historical volatility of our common stock. We have elected to use the simplified method described in GAAP to estimate the expected
term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense
is recognized on a straight-line basis over the requisite service period of the award.

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

Revenue Sources and Recognition

During the years ended December 31, 2011 and 2010, our revenue was generated from six principal sources: revenue earned from the sale of
DSM campaigns, website development services, and advertising on our websites, games, virtual currency and royalty revenue.

DSM Revenues: We recognize DSM revenues over the period of the contest or as the services are provided. Approximately 35% and 74% of our
revenue came from DSM campaigns both during the years ended December 30, 2011 and 2010, respectively.

Website Development Revenue: We recognize website development revenues as the service is provided. Approximately 1% and 20% of our
revenue came from website development during the year ended December 31, 2011 and 2010, respectively.

Advertising Revenue: Advertising and custom sponsorship revenues consist primarily of advertising fees earned from the display of
advertisements and click-throughs on text based links on our websites myYearbook.com and Quepasa.com. 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

Companys websites. Revenue from the display of click-throughs on text based links is recognized as click-throughs occur. Consistent with
GAAP, we recognize advertising revenue from customers that are advertising networks on a net basis, while advertising revenues earned directly
from advertisers are recognized on a gross basis. Sponsorship revenue is recognized over the time period in which the sponsorship on the website
occurs. Approximately 46% and 4% of our revenue came from display advertising during the year ended December 31, 2011 and 2010,
respectively.


33

Game Revenue: Game revenue is recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable,
collectability is reasonable assured, and the service has been rendered. For the purpose of determining when the service has been provided to the
player, we determine an implied obligation exists to the paying player to continue displaying the purchased virtual items within the online game
of a paying player over their estimated life. The virtual goods are categorized as either consumable or durable. Consumable goods represent
goods that are consumed immediately by a specific player action and have no residual value. Revenue from consumable goods is recognized at
the time of sale. Durable goods add to the players game environment over the playing period. Durable items, that otherwise do not have a
limitation on repeated use, are recorded as deferred revenue at time of sale and recognized as revenue ratably over the estimated average playing
period of a paying player. For these items, the Company considers the average playing period that the paying players typically play the game,
currently to be 18 months. If we do not have the ability to differentiate revenue attributable to durable virtual goods from the consumable virtual
goods for the specific game, we recognize revenue on the sale of the virtual goods for the game ratably over the estimated average playing period
that paying players typically play the game. Any adjustments arising from changes in the average playing period would be applied prospectively
on the basis that such changes are caused by new information indicating a change in the game player behavior patterns.

As the Company controls the game process and acts as a principal in the transaction, revenue for internally developed games is recognized on a
gross basis from sales proceeds reported by pay aggregators which are net of payment rejections, charge-backs and reversals. The related games
costs including the website hosting fees, advertising, marketing, administration and payment service fees, and foreign taxes are recorded as cost
of sales. The revenue from third party developed games is recorded net of revenue sharing payments and costs to the third party as the Company
is considered to be acting as an agent in these transactions. Approximately 9% of our revenue came from games during the year ended
December 31, 2011. No significant game revenue was generated during the year ended December 31, 2010.

Virtual Currency : Revenue is earned from virtual currency monetization products sold to our website users. These products include Lunch
Money, credits on myYearbook, and VIP subscriptions and revenue is recognized as the products are consumed.

The Company also earns advertisement products revenue from currency engagement actions (i.e. sponsored engagement advertisements) by
users on all of our platforms, including cost-per-action (CPA) currency incented promotions and sales on our proprietary cross-platform currency
monetization product, Social Theater. When a user performs an action, the user earns virtual currency from us and the Company earns product
revenue. Social Theater is a video advertising platform in which users of social games across leading social networks, including Facebook, watch
videos and perform other actions to earn virtual currency. An advertiser uses Social Theater to distribute its video advertising to millions of
targeted individuals. In order to promote the advertising and drive views, virtual currency is awarded to the viewer for viewing the
advertisement to completion. Social Theater can also be used by advertisers to drive Likes and shares on Facebook and other social
platforms. Social Theater is distributed primarily across platforms outside of Quepasa and myYearbook, including Facebook, through
partnerships with companies such as Trialpay. Where Social Theater is distributed outside of our owned and operated properties and mobile
applications we pay a distribution fee. When we run Social Theater campaigns within our owned platforms, we retain 100% of the revenue. The
Company controls and develops the Social Theater product and CPA promotions and acts as a principal in these transactions and recognizes the
related revenue on a gross basis when collections are reasonable assured and upon delivery of the virtual currency to the users account.
Approximately 9% of our revenue came from virtual currency revenues during the year ended December 31, 2011. No significant virtual
currency revenue was generated during the year ended December 31, 2010.



34

Royalty Revenue: Royalty revenue is generated as a percentage of product sales from certain partnership arrangements. We recognize royalty
revenues on a net basis, as reported to us by third parties. Less than one percent of our revenue came from royalty revenues during the years
ended December 31, 2011 and 2010.

Operating Expenses

Our principal operating expenses are divided into the following categories:










Sales and Marketing Expenses: Our sales and marketing expenses consist primarily of salaries, benefits, and share-based
compensation for our employees engaged in sales, sales support, and marketing.
Product Development and Content Expenses: Our product development and content expenses including costs incurred in the
classification and organization of listings within our websites, including salaries, benefits, and share-based compensation for
our employees, utility charges, occupancy and support for our offsite technology infrastructure, bandwith and content delivery
fees, and internet game development and maintenance costs, are charged to expense as incurred.
Games expense: Our Games expenses represent the direct expenses for hosting, marketing, site fees, reporting and foreign
taxes.
General and Administrative Expenses: Our general and administrative expenses consist primarily of salaries, benefits, and
share-based compensation for our executives as well as our finance, legal, human resources, and other administrative
employees. In addition our general and administrative expenses include outside consulting, legal and accounting services, and
facilities and other supporting overhead costs.
Depreciation and Amortization Expenses: Our depreciation and amortization are non-cash expenses which have consisted
primarily of depreciation and amortization related to our property and equipment, and intangible assets. Currently the majority
of our depreciation and amortization expense is attributable to tangible and intangible assets associated with the acquisitions of
myYearbook and Quepasa Games.
Acquisition and Restructuring Costs: Acquisition and restructuring costs, include costs incurred related to the business
acquisitions made by the Company and costs incurred in conjunction with the restructuring of the Companys business
processes. Acquisition costs include the fees for broker commissions, investment banking, legal, accounting and other
professional services, proxy, printing and filing costs, and travel costs incurred by the Company during the acquisition process.
Restructuring costs include employee termination and relocation costs recorded as incurred, and exit costs for the office
closures.
Loss on Impairment of goodwill : In the event facts and circumstances indicate the carrying value of goodwill is impaired, the
goodwill carrying value will be reduced to its implied fair value through a charge to loss on impairment of goodwill expense.
Other Income (Expense): Other income (expense) consists primarily of interest earned, interest expense and earned grant
income. We have invested our cash in AAA rated, fully liquid instruments. Interest income relates to our Notes Receivable
discussed in Note 3 of our Consolidated Financial Statements and our cash balances. Interest expense relates to our Loan and
Notes Payable discussed in Note 7 of our Consolidated Financial Statements. Earned grant income represents the amortized
portion of a cash grant received from the Mexican government for approved capital expenditures. The grant is being
recognized on a straight-line basis over the useful lives of the purchased assets.

35

Comparison of the year ended December 31, 2011 with the year ended December 31, 2010

The following table sets forth a modified version of our Consolidated Statements of Operations and Comprehensive Loss that is used in the
following discussions of our results of operations:


Revenues

Our revenues were $11,850,852 for the year ended December 31, 2011, an increase of $5,796,711 or 96% compared to $6,054,141 for the same
period in 2010. The increase in revenues for 2011 is primarily the result of approximately $5.7 million and $1.1 million, respectively, of revenue
from Insider Guides doing business as myYearbook (myYearbook) which was acquired by merger on November 10, 2011, and Quepasa
Games acquired on March 2, 2011. Offsetting these revenues was a decrease in DSM and website designs revenues associated with DSM
campaigns of $1.4 million. We earned approximately $4.2 and $3.7 million of DSM revenue and $120,000 and $1.2 million of website
development revenue for the years ended December 31, 2011 and 2010, respectively, from AHMSA, which owns MATT, Inc. We earned $0 and
$800,000 of DSM revenue for the years ended December 31, 2011 and 2010, respectively, from the Companys largest shareholder, MATT Inc.,
without commission or fees.

Operating Costs and Expenses

Sales and Marketing: Sales and marketing expenses increased $994,018, or 111%, to $1,885,998 for the year ended December 31, 2011 from
$891,980 in 2010. The increases are primarily a result of the inclusion of the approximately $874, 000 of myYearbook sales and marketing
related costs from the date of the acquisition. The acquisition of myYearbook brought 23 person full-time sales and sales support staff located
primarily in the New York and New Hope offices .

Product Development and Content: Product development and content expenses increased $4,750,374, or 99%, to $9,525,068 for the year ended
December 31, 2011 from $4,774,694 in 2010. myYearbook operating costs accounted for $2.4 million or 50% of the increase and Quepasa
Games costs accounted for $1.4 million or 29% of the increase. The balance of the increases relates primarily to salary and related costs for
increased development engineering heads and additional cost of website hosting . The acquisition of myYearbook brought 73 person full-time
development staff located primarily in the New Hope office.


For the the years ended December 31,
2011 2010 Change ($) Change (%)

REVENUES $ 11,850,852 $ 6,054,141 $ 5,796,711 96 %

OPERATING EXPENSES
Sales and marketing 1,885,998 891,980 994,018 111 %
Product development and content 9,525,068 4,774,694 4,750,374 99 %
Games expenses 1,553,450 - 1,553,450
General and administrative 6,599,020 6,123,083 475,937 8 %
Depreciation and amortization 1,097,867 319,779 778,088 243 %
Acquisition and restructuring costs 1,948,432 - 1,948,432
Loss on impairment of goodwill 1,409,127 - 1,409,127
Operating Expenses 24,018,962 12,109,536 11,909,426 98 %

LOSS FROM OPERATIONS (12,168,110 ) (6,055,395 ) (6,112,715 ) 101 %

OTHER INCOME (EXPENSE):
Interest income 57,265 6,229 51,036 819 %
Interest expense (657,184 ) (603,609 ) (53,575 ) -100 %
Other income 2,211 2,125 86 4 %
TOTAL OTHER INCOME (EXPENSE) (597,708 ) (595,255 ) (2,453 ) 0 %

NET LOSS $ (12,765,818 ) $ (6,650,650 ) $ (6,115,168 ) 92 %

36

Games Expenses : For the year ended December 31, 2011 games expense was $1,553,450. The expense reflects the direct cost for website
hosting fees, advertising, marketing, administrative and payment service fees and foreign taxes for the game since the launch of Wonderful City
Rio, in April of 2011. There was no games expense in 2010.

General and Administrative: General and administrative expenses increased $475,937, or 8%, to $6,599,020 for the year ended December 31,
2011 from $6,123,083 for the same period in 2010. The increase in expense is primarily due to the inclusion of the results of myYearbook of
approximately $722,000 from the acquisition date through December 31, 2011. Additional increases in salary, bonus and stock compensation of
approximately $630,000, bad debt write-off of approximately $293,000. Offsetting these expenses was a decrease of $1.9 million in stock based
compensation due to fully vesting of options during 2010.

Stock Based Compensation: Stock based compensation expense, which is included in the other operating expense categories as discussed above,
decreased $1,516,830 to $4,348,139 for the year ended December 31, 2011 from $5,864,969 in 2010. Stock based compensation expense
represented 18% and 48% of operating expenses for the year ended December 31, 2011 and 2010, respectively. As of December 31, 2011, there
was $16,463,999 in total unrecognized compensation cost, which is expected to be recognized over a period of approximately three years.


Stock Based Compensation is composed of the following:


The amortization of prepaid expenses includes compensation for professional services in which the professionals vested in stock options prior to
the performance of services. The amount of compensation is amortized over the lengths of the contracts.

Depreciation and amortization expense: Depreciation and amortization expense for the year-ended December 31, 2011 increase by $778,088
or 243%. The increase is primarily due to the depreciation and amortization of tangible and intangible assets associated with the acquisition of
myYearbook and Quepasa Games.

Acquisition and Restructuring Costs: For the year ended December 31, 2011 acquisition and restructurings costs were $1,948,432. The
Company incurred approximately $368,000 of broker commissions, legal and professional fees and travel costs during the acquisition of
Quepasa Games. The Company incurred approximately $1.2 million of investment banking, legal and professional fees, proxy printing and
filing fees and travel costs during the acquisition of Insider Guides, Inc. Restructuring costs include contractual employee severance costs of
approximately $221,000, approximately $97,000 of remaining lease and contract obligations for the closure of Los Angeles office, and $33,000
of related travel costs. No acquisition and restructuring costs were incurred during the year ended December 31, 2010.



For the years ended
December 31,
2011 2010 Changes ($)
Sales and marketing 567,380 412,183 155,197
Product and content development 1,077,863 918,844 159,019
General and administrative 2,702,896 4,533,942 (1,831,046 )
Total Stock Based Compensation 4,348,139 5,864,969 (1,516,830 )

For the years ended
December 31,
2011 2010
Vesting of Stock Option 4,169,236 5,574,536
Vesting of Warrants 178,903 116,286
Re-pricing of warrants - 147,813
Issuance of common stock for professional services - 26,334
Total Stock Based Compensation 4,348,139 5,864,969

37

Loss on Impairment of Goodwill: A valuation of the Quepasa Games was performed and a $2.5 million fair value was determined. A
comparison of the Companys approximately $3.8 million carrying value of the Quepasa Games and the $2.4 million implied value of goodwill
resulted in a loss on impairment of approximately $1.4 million. The translated value of goodwill for Quepasa Games will vary at each reporting
period due to changes in the foreign exchange rates.

Liquidity and Capital Resources


Net cash used in operations was $7,742,348 for the year ended December 31, 2011 compared to $709,801 for 2010. For the year ended
December 31, 2011, net cash used by operations consisted primarily of a net loss of $12,765,818, offset by non-cash expenses of $1,409,127 loss
on impairment of goodwill, $1,097,867 of depreciation and amortization expense, $4,169,236 related to stock based compensation for the
vesting of stock options and $178,903 for vesting of warrants, $291,405 in amortization of discounts on notes payable and debt issuance costs,
$272,614 net write off of the Hollywood Creation note receivable, related accrued interest, and allowance adjustments. Additionally, changes in
working capital impacted the net cash used in operating activities. These changes included increases in accounts receivable of $1,868,568,
in prepaid expenses, other current assets and other assets of $234,003 and decreases in accounts payable and accrued expenses of $559,264
offset by an increase in deferred revenue of $268,317. For the year ended December 31, 2010, net cash used by operations consisted primarily of
a net loss of $6,650,650, offset by non-cash expenses of $319,779 in depreciation and amortization expenses and $5,574,536 related to stock
based compensation for the vesting of stock options and $26,334 for issuance of common stock for professional services, $147,813 for re-pricing
of warrants and $116,286 for issuance of warrants, and $291,409 in amortization of discounts on notes payable and debt issuance
costs,. Additionally, changes in working capital impacted the net cash used in operating activities. These changes included increases in accounts
receivable of $1,027,714 and in restricted cash of $275,000, offset by an increase in in accounts payable and accrued expenses of $715,150 and a
$76,231 decrease in prepaid expenses, other current assets and other assets.

Net cash used in investing activities in the year ended December 31, 2011 of $11,730,774, was primarily attributable to net payments made for
the acquisitions of Insider Guides, Inc. of $10,684,025 and $500,000 for Quepasa Games, capital expenditures of $587,335 primarily for
computer servers to increase capacity, improve performance, provide redundant backup for content, a $40,000 loan disbursement to Hollywood
Creations, offset by $80,604 of loan receivable payments received from BRC. Net cash used in investing activities in the year ended December
31, 2010 of $759,626, was primarily attributable capital expenditures of $542,959 primarily for computer servers to increase capacity, improve
performance and provide redundant backup for content and we made a $216,617 loan disbursement to Hollywood Creations.

There was $14,213,742 provided by financing activities for the year ended December 31, 2011, $10,000,000 was attributable to proceeds from
the issuance of convertible preferred stock and $2,557,000 from the issuance of common stock, $2,026,153 from the exercise of stock options
and offset by $219,411 of debt payments and $150,000 dividend payments on preferred stock. In December 2010, we completed a private
offering of 1,753,329 shares of our common stock for cash proceeds of $12,632,357, net of offering costs. Cash proceeds from the exercise of
stock options were $1,356,171 for the year ended December 31, 2010.



For the years ended
December 31,
2011 2010
Net cash used in operating activities (7,742,348 ) (709,801 )
Net cash used in investing activities (11,730,774 ) (759,626 )
Net cash provided by financing activities 14,213,742 13,988,528
(5,259,380 ) 12,519,101

38


Our cash balances are kept liquid to support our growing infrastructure needs for operational expansion. The majority of our cash is
concentrated in two large financial institutions, Comerica and JP Morgan Chase.

Quepasa had a positive working capital of $13,338,860 and 14,618,305 at December 31, 2011 and 2010 respectively, which consisted primarily
of trade receivables and cash.

Non-GAAP Financial Measures

The following discussion and analysis includes both financial measures in accordance with GAAP, as well as non-GAAP financial
measures. Generally, a non-GAAP financial measure is a numerical measure of a companys performance, financial position or cash flows that
either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented
in accordance with GAAP. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered as
alternatives to net income, operating income, cash flow from operating activities, liquidity or any other financial measures. They may not be
indicative of the historical operating results of the Company nor is it intended to be predictive of potential future results. Investors should not
consider these non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning,
forecasting and analyzing future periods. Our management uses these non-GAAP financial measures in evaluating its financial and operational
decision making and as a means to evaluate period-to-period comparison. Our management uses and relies on the following non-GAAP financial
measures:

EBITDA Our management believes period-to-period comparisons of EBITDA helps identify additional trends in our financial results
that may not be shown solely by period-to-period comparisons of income or loss, or income or loss from operations. Our management
recognizes that EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature.

Adjusted EBITDA Our management believes Adjusted EBITDA is an important measure of our operating performance because it
allows management, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of
changes to our capitalization structure, acquisition related costs, and other items of a non-operational nature that affect comparability. Our
management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring
in nature.

Bookings Our management uses bookings to evaluate the results of our operations, generate future operating plans and assess the
performances of our social games business. Our management recognizes that Bookings has inherent limitations because it does not reflect our
receipt of payment from subscribers.

Non-Cash Earn (Burn) - Our management believes that net cash earn (burn) rate provides meaningful information about our ability to
meet our working capital needs.

We have included reconciliations of our non-GAAP financial measures to the most comparable financial measure calculated in
accordance with GAAP. We believe that providing the non-GAAP financial measures, together with reconciliations to GAAP, helps investors
make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that
companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific
definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under
applicable SEC rules.


December 31, December 31,
2011 2010
Cash and cash equivalents $ 8,271,787 $ 13,546,572
Total assets $ 106,804,696 $ 16,452,789
Percentage of total assets 8 % 82 %

39

EBITDA and Adjusted EBITDA - Non-GAAP

The Company defines EBITDA as earnings (or loss) before interest expense, income taxes, depreciation and amortization, and amortization of
non-cash stock-based compensation. The Company excludes stock-based compensation because it is non-cash in nature. The Company defines
adjusted EBITDA as EBITDA excluding non-recurring acquisition and restructuring expenses and the goodwill impairment charge. The
following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net Income (loss), a GAAP financial measure:


Bookings - Non-GAAP

The Company defines bookings as the total amount of revenue from the sale of virtual goods in our online games that would have been
recognized in a period if we recognized all revenue immediately at the time of sale. We record the sale of durable virtual goods as deferred
revenue and then recognize revenue over the estimated average life of the purchased virtual goods or as virtual goods are consumed. Bookings
are calculated as revenue recognized in the period plus the change in deferred revenue during the period. For additional discussion of the
estimated average life of virtual goods, see Note 1 to our Consolidated Financial Statements Revenue Recognition Games. The following
table presents a reconciliation of bookings, a non-GAAP financial measure to Revenue, a GAAP financial measure:




For the the years ended December
31,
2011 2010

Net Loss Allocable to Common Shareholders $ (12,806,523 ) $ (6,762,150 )

Interest Expense 657,184 603,609
Depreciation and amortization 1,097,867 319,779
Stock based compensation expense 4,348,139 5,864,969
EBITDA (Loss) (6,703,333 ) 26,207
Loss on Impairment of goodwill 1,409,127 -
Acquisition and restructuring 1,948,432 -
Adjusted EBITDA (Loss) $ (3,345,774 ) $ 26,207
Reconciliation of Revenue to Bookings:
For the the year
ended
December 31,
2011



Games Revenue $ 1,181,095
Change in deferred revenue 268,317
Bookings $ 1,449,412

40

Net Cash Earn (Burn) Non-GAAP

The Company defines net cash earn (burn) as loss from operations plus non-cash operating expenses including stock based compensation
expenses, depreciation, amortization and other non-cash charges. The following table is a reconciliation of our non-GAAP financial measure to
Loss From Operations:


We have budgeted capital expenditures of $3,500,000 for 2012, which will allow us to continue to grow the business given our member growth,
by increasing capacity, improving performance and providing redundant backup for content. The severance costs of payments, requiring future
service were measured at December 31, 2011 totaling approximately $550,000 and employee relocation expenses will be during 2012.

As of the date of the filing of this report, we have approximately $7 million in cash and $8 million in accounts receivable. Management believes
that we have sufficient working capital to operate beyond the next 12 months.

Cautionary Note Forward-Looking Statements

This report includes forward-looking statements including statements regarding:


All statements other than statements of historical facts contained in this report, 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.

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" under Item 1A. of this report.
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 and our other
filings with the SEC.



For the the years ended December
31,
2011 2010

LOSS FROM OPERATIONS (12,168,110 ) (6,055,395 )

NON CASH OPERATING EXPENSES
Loss on impairment of goodwill 1,409,127 -
Stock based compensation expense 4,348,139 5,864,969
Depreciation and amortization 1,097,867 319,779
TOTAL NON CASH OPERATING EXPENSES 6,855,133 6,184,748

NET CASH EARN (BURN) (5,312,977 ) 129,353
NET MONTHLY CASH EARN (BURN) RATE (442,748 ) 10,779
establishing ourselves as the leading global brand for meeting new people,
our ability to optimize the opportunity for meeting new people online,

being well positioned to capitalize on global trends toward greater consumption of social media via smartphones and making our
mobile application available in Spanish and Portuguese in 2012,
potential for significant leverage from our U.S. mobile audience and Latin American user base,

our beliefs regarding myYearbooks web and mobile products potential growth in Latin American markets and establishing the
foundation for growth in markets outside of the Americas,
our beliefs regarding our products and services and our ability to leverage the growth of social media,
our expectations from our budgeted capital expenditures, and
our beliefs regarding our liquidity and working capital.

41

Recent Accounting Pronouncements

See Note 1 to our Consolidated Financial Statements included in this report for discussion of recent accounting pronouncements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See pages F-1 through F-26.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls

We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934 (the Exchange Act), under the
supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a15
(e). Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer's
reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and
forms and (ii) information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosures.

The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information
generated for use in this report. This type of evaluation is done quarterly so that the conclusions concerning the effectiveness of these controls
can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified
as circumstances warrant.

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and
procedures are effective in timely alerting them to material information which is required to be included in our periodic reports filed with the
SEC as of the end of the period covering this report.

Managements Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31,
2011 based on the criteria set forth in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on our evaluation under the criteria set forth in Internal Control Integrated Framework, our management
concluded that our internal control over financial reporting was effective as of December 31, 2011.



42

However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Management necessarily applied its judgment in assessing the benefits of controls relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the company have been detected. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions, regardless of how remote. Because of the inherent limitations in a control system, misstatements due to error or
fraud may occur and may not be detected.

The effectiveness of our internal controls over financial reporting as of December 31, 2011 has been audited by Salberg & Co. P.A., an
independent registered public accounting firm, as stated in their report which appears in Item 8 of this Annual Report on Form 10-K.

As permitted by the rules of SEC, managements report on internal controls did not include myYearbook.

Changes in Internal Control Over Financial Reporting

Except as discussed below, during our most recent fiscal quarter, there were no changes in the Companys internal control over financial
reporting as such term is defined in Exchange Act Rule 13a-15(f) that have materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting. On November 10, 2011, the Company completed the acquisition of myYearbook. The
Company is currently integrating policies, processes, people, technology, and operations for the combined company. Management will continue
to evaluate the Companys internal controls over financial reporting as it continues its integration work.

ITEM 9B. OTHER INFORMATION.

None.



43

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Except as set forth in the following paragraph, the information required by this Item 10 of Form 10-K that is found in our 2012 Proxy
Statement to be filed with the SEC in connection with the solicitation of proxies for the Companys 2012 Annual Meeting of Shareholders
(2012 Proxy Statement) is incorporated by reference to our 2012 Proxy Statement. The 2012 Proxy Statement will be filed with the SEC
within 120 days after the end of the fiscal year to which this report relates.

We have adopted a Code of Conduct and Ethics that applies to all of our directors and employees. To see a copy of the Code of Conduct
and Ethics, please go to the Quepasa corporate website at www.quepasacorp.com/investors/governance/.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference in our 2012 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.

The information required by this Item is incorporated by reference in our 2012 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this Item is incorporated by reference in our 2012 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is incorporated by reference in our 2012 Proxy Statement.



44

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Documents filed as part of the report.

(1) All Financial Statements

(2) Exhibits. The exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this Form 10-K



45

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on March 13, 2012.


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



QUEPASA CORPRATION


By:
/s/ John Abbott
John Abbott
Chief Executive Officer
(Principal Executive Officer)
Signatures Title Date

/s/ Michael Matte Chief Financial Officer
March 13, 2012
Michael Matte (Principal Financial Officer)

/s/ John Abbott Chairman of the Board of Directors March 13, 2012
John Abbott

Director
Alonso Ancira

/s/ Lars Batista Director March 13, 2012
Lars Batista

/s/ Geoffrey Cook Director March 13, 2012
Geoffrey Cook

/s/ Ernesto Cruz Director March 13, 2012
Ernesto Cruz

/s/ Terry Herndon Director March 13, 2012
Terry Herndon

/s/ Malcolm Jozoff Director March 13, 2012
Malcolm Jozoff

/s/ Richard Lewis Director March 13, 2012
Richard Lewis

46

Exhibit Index



Incorporated by Reference
Filed or
Furnished
Exhibit
No. Exhibit Description Form Date Number Herewith

2.1
Agreement of Merger and Plan of Merger and Reorganization Delaware
Reincorporation 8-K 12/8/11 2.1
2.2
Agreement and Plan of Merger among Quepasa, IG Acquisition Company
and Insider Guides, Inc. dated July 19, 2011* 8-K 7/20/11 2.1
2.3
Amendment to the Agreement and Plan of Merger among Quepasa
Corporation, IG Acquisition Company and Insider Guides, Inc. dated July
19, 2011 8-K 9/21/11 2.1
3.1 Certificate of Incorporation 8-K 12/8/11 3.1
3.2 Certificate of Designation Series A-1 8-K 11/10/11 3.1
3.3 Bylaws 8-K 12/8/11 3.2
4.1 Form of Hollywood Note 8-K 9/24/10 4.1
10.1 Amended and Restated 2006 Stock Incentive Plan 10-Q 8/9/10 10.1
10.2 Amendment to the Amended and Restated 2006 Stock Incentive Plan S-8
10.3 John Abbott Employment Agreement** 8-K 10/30/07 10.2
10.4 Abbott Employment Agreement Amendment No. 1** 10-KSB 3/31/08 10.18
10.5 Abbott Employment Agreement Amendment No. 2** S-1 12/29/10 10.6
10.6 Michael Matte Employment Agreement** 8-K 10/30/07 10.3
10.7 Matte Employment Agreement Amendment No. 1** 10-KSB 3/31/08 10.21
10.8 Matte Employment Agreement Amendment No. 2** S-1 12/29/10 10.9
10.9 Louis Bardov Employment Agreement** 10-Q 7/25/08 10.18
10.10 Geoffrey Cook Employment Agreement** 8-K 7/20/11 10.5
10.11 Jim Bugden Employment Agreement** S-4 8/11/11 10.21
10.12 William Alena Employment Agreement** S-4 8/11/11 10.23
10.13 AHMSA Marketing Services Agreement 10-Q 11/12/10 10.5
10.14 AHMSA Promotional Campaign Agreement 10-Q 11/12/10 10.6
10.15 MATT, Inc. Note Purchase Agreement 8-K 1/30/08 10.1
10.16 MATT, Inc. Subordinated Promissory Note 8-K 1/30/08 10.11
10.17 RSI LLC Note Purchase Agreement 8-K 1/30/08 10.6
10.18 RSI LLC Promissory Note 8-K 1/30/08 10.12
10.19 Securities Purchase Agreement - MATT, Inc. S-3 11/18/11 10.2
10.20 Registration Rights Agreement - MATT, Inc. S-3 11/18/11 4.3
10.21 Hollywood Note Purchase Agreement 8-K 9/24/10 4.1
10.22 Form of Employee Option Agreement Filed
10.23 Form of Executive Option Agreement (in Lieu of Cash Compensation) 10-Q 11/12/10 10.3
10.24 Form of Executive Option Agreement 10-Q 11/12/10 10.4
10.25 Form of Indemnification Agreement S-4 8/11/11 10.29
10.26 Form of Indemnification Agreement Lewis S-4 8/11/11 10.30
10.27 Loan and Security Agreement dated November 21, 2008* Filed
10.28
Supplement No. 1 to the Loan and Security Agreement dated November 21,
2008* Filed
10.29
Supplement No. 2 to the Loan and Security Agreement dated November 21,
2008* Filed
10.30 Loan and Security Agreement dated December 13, 2010* Filed
10.31 Supplement No. 1 Loan and Security Agreement dated December 13, 2010* Filed

47


* The confidential disclosure schedules are not filed in accordance with SEC Staff policy, but will be provided to the Staff upon request. The
agreement contains representations and warranties, which are qualified by the following factors:


Notwithstanding the above, any information contained in a schedule that would cause a reasonable investor (or that a reasonable investor would
consider important in making a decision) to buy or sell our common stock has been included. We have been further advised by our counsel that
in all instances the standard of materiality under the federal securities laws will determine whether or not information has been omitted; in other
words, any information that is not material under the federal securities laws may be omitted. Furthermore, information which may have a
different standard of materiality would nonetheless have been disclosed if material under the federal securities laws.

** Management contract or compensatory plan or arrangement.

*** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item
601 of Regulation S-K.

****Attached as Exhibit 101 to this report are the Companys financial statements for the year ended December 31, 2011 formatted in XBRL
(eXtensible Business Reporting Language). The XBRL-related information in Exhibit 101 to this report shall not be deemed filed or a part of
a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, and is not filed for purposes of Section 18
of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of those sections.


21.1 List of Subsidiaries Filed
23.1 Consent of Salberg & Company, P.A. Filed
31.1 Certification of Principal Executive Officer (Section 302) Filed
31.2 Certification of Principal Financial Officer (Section 302) Filed
32.1
Certification of Principal Executive Officer and Principal Financial Officer
(Section 906) *** Furnished
101.INS XBRL Instance Document ****
101.SCH XBRL Taxonomy Extension Schema Document ****
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document ****
101.DEF XBRL Taxonomy Extension Definition Linkbase Document ****
101.LAB XBRL Taxonomy Extension Label Linkbase Document ****
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document ****
(i) the representations and warranties contained in the agreement were made for the purposes of allocating contractual risk between the parties
and not as a means of establishing facts;
(ii) the agreement may have different standards of materiality than standards of materiality under applicable securities laws;
(iii) the representations are qualified by a confidential disclosure schedule that contains nonpublic information that is not material under
applicable securities laws;
(iv) facts may have changed since the date of the agreement; and
(v) only parties to the agreement and specified third-party beneficiaries have a right to enforce the agreement.

48

Table of Contents




Page


Report of Independent Registered Public Accounting Firm F-1

Consolidated Balance Sheets F-2

Consolidated Statements of Operations and Comprehensive Loss F-3

Consolidated Statements of Changes in Stockholders Equity (Deficit) F-4

Consolidated Statements of Cash Flows F-5

Notes to Consolidated Financial Statements F-6 - F-26






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of:
Quepasa Corporation

We have audited the accompanying consolidated balance sheets of Quepasa Corporation and Subsidiaries ("the Company") as of December 31,
2011 and 2010, and the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity (deficit), and cash
flows for each of the years in the two-year period ended December 31, 2011. We also have audited Quepasa Corporation and Subsidiaries
internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these
consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Managements Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company's internal control over financial
reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Quepasa Corporation and Subsidiaries as of December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for
each of the years in the two-year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, Quepasa Corporation and Subsidiaries maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2011, based on criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).


/S/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.
Boca Raton, Florida
March 13, 2012







QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets



See notes to consolidated financial statements.



December 31,
2011
December 31,
2010
Assets
Current Assets
Cash and cash equivalents $ 8,271,787 $ 13,546,572
Accounts receivable, net of allowance of $270,210 and $16,000, at December 31, 2011 and 2010,
respectively 10,436,067 1,361,024
Notes receivable - current portion, including $559 and $3,633 of accrued interest, at December 31,
2011 and 2010, respectively 169,955 314,221
Prepaid expenses and other current assets 1,089,665 113,841
Restricted cash 275,000 275,000
Total current assets 20,242,474 15,610,658

Goodwill, net 73,048,084 -
Intangible assets, net 8,568,170 -
Property and equipment, net 4,408,694 645,728
Notes receivable - long-term portion - 156,079
Other assets 537,274 40,324
Total assets $ 106,804,696 $ 16,452,789

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,054,851 $ 286,990
Accrued expenses and other liabilities 2,018,730 414,249
Deferred revenue 246,347 -
Accrued dividends 169,455 278,750
Unearned grant income 9,040 12,364
Current portion of long-term debt 2,405,191 -
Total current liabilities 6,903,614 992,353

Notes and loans payable, net of discount 9,255,508 6,272,545
Total liabilities 16,159,122 7,264,898

Commitments and Contingencies (see Note 9)

Stockholders' Equity:
Preferred stock, $.001 par value, authorized 5,000,000 shares:
Convertible preferred stock Series A, $.001 par value; authorized - 1,000,000 shares;
25,000 shares issued and outstanding at December 31, 2010, Liquidation preference of
$2,500,000 - 25
Convertible preferred stock Series A-1, $.001 par value; authorized - 5,000,000 shares;
1,000,000 shares issued and outstanding at December 31, 2011. 1,000 -
Common stock, $.001 par value; authorized - 100,000,000 shares; 36,145,084
and 15,287,280 shares issued and outstanding at December 31, 2011 and 2010, respectively 36,146 15,287
Additional paid-in capital 269,974,789 175,276,319
Accumulated deficit (178,903,412 ) (166,096,889 )
Accumulated other comprehensive loss (462,949 ) (6,851 )
Total stockholders equity 90,645,574 9,187,891
Total liabilities and stockholders equity $ 106,804,696 $ 16,452,789

F-2

QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss


See notes to consolidated financial statements.



For the Years Ended
December 31,
2011 2010

Revenues $ 11,850,852 $ 6,054,141
Operating Costs and Expenses:
Sales and marketing 1,885,998 891,980
Product development and content 9,525,068 4,774,694
Games expenses 1,553,450 -
General and administrative 6,599,020 6,123,083
Depreciation and amortization 1,097,867 319,779
Acquisition and restructuring costs 1,948,432 -
Loss on impairment of goodwill 1,409,127 -
Total Operating Costs and Expenses 24,018,962 12,109,536
Loss from Operations (12,168,110 ) (6,055,395 )
Other Income (Expense):
Interest income 57,265 6,229
Interest expense (657,184 ) (603,609 )
Other income (expense), net 2,211 2,125
Total Other Income (Expense) (597,708 ) (595,255 )
Loss Before Income Taxes (12,765,818 ) (6,650,650 )
Income taxes - -
Net Loss $ (12,765,818 ) $ (6,650,650 )
Preferred stock dividends (40,705 ) (111,500 )
Net Loss Allocable To Common Shareholders $ (12,806,523 ) $ (6,762,150 )

Net Loss Per Common Share Allocable To
Common Shareholders, Basic and Diluted $ (0.67 ) $ (0.52 )

Weighted Average Number of Shares
Outstanding, Basic and Diluted: 19,092,121 13,117,845

Net Loss $ (12,765,818 ) $ (6,650,650 )
Foreign currency translation adjustment (456,098 ) (796 )
Comprehensive Loss $ (13,221,916 ) $ (6,651,446 )

F-3

QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders Equity (Deficit)
For the Years Ended December 31, 2011 and 2010


See notes to consolidated financial statements.


Preferred Stock Common Stock
Additional
Paid-in Accumulated
Accumulated
Other
Comprehensive
Total
Stockholders'
Equity
Shares Amount Shares Amount Capital Deficit Loss (Deficit)
BalanceDecember 31, 2009 25,000 $ 25 12,743,111 $ 12,743 $ 155,425,366 $ (159,334,739 ) $ (6,055 ) $ (3,902,660 )
Vesting of stock options for
compensation $ 5,574,536 5,574,536
Issuance of (cancellation) common
stock for professional services 6,600 7 26,327 26,334
Issuance of common stock for cash,
net of offering costs 1,753,329 1,753 12,630,604 12,632,357
Re-pricing of warrants 147,813 147,813
Issuance of warrants 116,286 116,286
Exercise of stock options 784,240 784 1,355,387 1,356,171
Preferred stock dividends (111,500 ) (111,500 )
Foreign currency translation
adjustment (796 ) (796 )
Net loss (6,650,650 ) (6,650,650 )
BalanceDecember 31, 2010 25,000 $ 25 15,287,280 $ 15,287 $ 175,276,319 $ (166,096,889 ) $ (6,851 ) $ 9,187,891
Vesting of stock options for
compensation 4,169,236 4,169,236
Vesting of warrants 178,903 178,903
Issuance of common stock for the
acquisition of Quepasa Games 348,723 349 2,730,152 2,730,501
Contingent issuance of common stock
for the acquisition of Quepasa
Games 978,750 978,750
Issuance of common stock for
conversion of preferred stock (25,000 ) (25 ) 336,927 337 (312 ) -
Issuance of preferred stock for cash 2,000,000 2,000 9,998,000 10,000,000
Issuance of common stock for
conversion of preferred stock (1,000,000 ) (1,000 ) 1,479,949 1,480 (480 ) -
Issuance of common stock for cash 716,246 716 2,556,284 2,557,000
Issuance of common stock for the
acquisition of Insider Guides, Inc. 16,999,943 17,000 72,062,761 72,079,761
Exercise of stock options 811,016 812 1,282,841 1,283,653
Exercise of warrants 165,000 165 742,335 742,500
Preferred stock dividends (40,705 ) (40,705 )
Foreign currency translation
adjustment (456,098 ) (456,098 )
Net loss (12,765,818 ) (12,765,818 )
BalanceDecember 31, 2011 1,000,000 $ 1,000 36,145,084 $ 36,146 $ 269,974,789 $ (178,903,412 ) $ (462,949 ) $ 90,645,574

F-4
QUEPASA CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows


See notes to consolidated financial statements.



For the Years Ended
December 31,
2011 2010
Cash flows from operating activities:
Net loss $ (12,765,818 ) $ (6,650,650 )

Adjustments to reconcile net loss to net cash used in operating activities:
Loss on impairment of goodwill 1,409,127 -
Depreciation and amortization 1,097,867 319,779
Repricing of warrants - 147,813
Vesting of stock options for compensation 4,169,236 5,574,536
Vesting of warrants 178,903 -
Issuance of warrants - 116,286
Issuance (cancellation) of common stock for professional services - 26,334
Grant income (2,164 ) (1,446 )
Bad debt expense (recovery) 272,614 (22,529 )
Amortization of discounts on notes payable and debt issuance costs 291,405 291,409
Changes in operating assets and liabilities:
Accounts receivable (1,868,568 ) (1,027,714 )
Prepaid expenses, other current assets, and other assets (234,003 ) 76,231
Restricted cash - (275,000 )
Accounts payable and accrued expenses (559,264 ) 715,150
Deferred revenue 268,317 -
Net cash used in operating activities (7,742,348 ) (709,801 )
Cash flows from investing activities:
Acquisition of Insider Guides, Inc. (10,684,025 ) -
Acquisition of Quepasa Games (500,000 )
Purchase of property and equipment (587,353 ) (542,959 )
Loan payments from BRC 80,604
Advance to Hollywood Creations (40,000 ) (216,667 )
Net cash used in investing activities (11,730,774 ) (759,626 )
Cash flows from financing activities:
Proceeds from exercise of stock options 2,026,153 1,356,171
Net proceeds from the issuance of common stock 2,557,000 12,632,357
Net proceeds from the issuance of convertible preferred stock 10,000,000 -
Payments of dividends (150,000 )
Payments on long-term debt (219,411 ) -
Net cash provided by financing activities 14,213,742 13,988,528
Cash and cash equivalents prior to effect of foreign currency exchange rate on cash (5,259,380 ) 12,519,101
Effect of foreign currency exchange rate on cash (15,405 ) (796 )
Net increase (decrease) in cash and cash equivalents (5,274,785 ) 12,518,305
Cash and cash equivalents at beginning of year 13,546,572 1,028,267
Cash and cash equivalents at end of year $ 8,271,787 $ 13,546,572

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 52,221 $ -
Cash paid for income taxes $ - $ -

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Preferred stock dividends accrued and charged to accumulated deficit $ 40,705 $ 111,500

F-5

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010


Note 1Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

Quepasa Corporation, (the Company or Quepasa), was incorporated in Nevada in June 1997. On December 6, 2011, the Company changed
its legal domicile to Delaware. The Company is a social media technology company which owns and operates Quepasa.com and
myYearbook.com. Quepasa is a social network discovery company that makes meeting new people fun through social games and application,
monetized through both advertising and virtual currency. Quepasa owns and operates two primary social network discovery platforms, the North
American platform myYearbook and the Latin American platform Quepasa (collectively the Quepasa Platforms). In addition to myYearbook
and Quepasa, the Company operates Quepasa Games, a cross platform social game development studio. In 2011 and 2010, the Companys
revenues were generated from advertising, the DSM contest platform, website development, games internally developed and distributed to ours
and other sites, third party developed games introduced to the site, virtual currency, and royalty revenue.

The Quepasa.com community provides users with access to an expansive, multilingual menu of resources that promote social interaction,
information sharing, and other topics of interest to users. We offer online marketing capabilities, which enable marketers to display their
advertisements in different formats and in different locations on our website. We work with our advertisers to maximize the effectiveness of
their campaigns by optimizing advertisement formats and placement on the website.

The Company acquired XtFt Games S/S Ltda (XtFt), on March 2, 2011. On July 14, 2011 XtFts name was changed to Quepasa Games S/S
Ltda (Quepasa Games). The Companys wholly owned Brazilian based subsidiary, Quepasa Games, manages game development and creation
of intellectual properties. On November 10, 2011, the Company, IG Acquisition Company (Merger Sub), a wholly-owned subsidiary of the
Company, and Insider Guides, Inc., doing business as myYearbook.com (myYearbook) closed a Merger under which myYearbook merged
with and into Merger Sub (the Merger). Insider Guides, Inc. operates a social networking website, www.myyearbook.com, open to people of
all ages, with a concentration of members between the ages of 13 and 24. As Merger consideration, the security holders of myYearbook
securities received approximately $18 million in cash and approximately 17 million shares of Quepasa common stock (not including cash for
fractional shares). Following the Merger, Merger Sub changed its name to Insider Guides, Inc.

Principles of Consolidation

The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, Quepasa.com de
Mexico, Quepasa Servios em Solucoes de Publicidade E Tecnologia Ltda (inactive), Quepasa Games S/S Ltda (from March 2, 2011), and
Insider Guides, Inc. (from November 10, 2011). All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Cash Concentrations

We consider all highly liquid instruments purchased with an original maturity of three months or less to be cash and cash equivalents. We
continually monitor our positions with, and the credit quality of, the financial institutions we invest with.

Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have not
experienced any losses related to these balances. Such amounts on deposit in excess of federally insured limits at December 31, 2011 and 2010
approximated $5.8 million and $13.2 million, respectively.

Accounts Receivable Trade

We extend credit on a non-collateralized basis primarily to customers who are located in the United States and Mexico. We perform periodic
credit evaluations of our customers financial condition as part of our decision to provide credit terms. We maintain an allowance for potential
credit losses based on historical experience and other information available to management. The fees associated with 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. We maintain an allowance for potential discounts based on historical experience and other information available
to management.

Notes Receivable

We have entered into loan agreements with several entities as part of an ongoing effort to provide additional content and revenue streams to the
website. The portion of notes receivable due within twelve months of the balance sheet date is classified as current. In accordance with GAAP,

we review our notes receivable for impairment whenever events or changes in circumstances indicate that the carrying amount of the receivable
may not be recovered. If such receivables are considered to be impaired, the impairment loss recognized is the amount by which the carrying
value exceeds the fair value of the receivable. During the year ended December 31, 2011, a note receivable of $216,667 was deemed
uncollectible, was written off and the bad debt expense was included in general and administrative expense. No impairment occurred during the
year ended December 31, 2010.


F-6

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Restricted Cash

We are required by state laws to hold funds for certain DSM contests in separate trust accounts that require written notice from the state to be
released. Restricted cash is classified as current when the restriction is expected to lift within twelve months of the balance sheet date.

Consolidated Statement of Cash Flows Supplemental Disclosure

Non-cash investing activities:

On March 2, 2011, the following assets and liabilities of Quepasa Games were acquired:



On November 10, 2011, the following assets and liabilities of Insider Guides, Inc. were acquired:


Goodwill

Goodwill represents the excess of the Companys purchase prices of Insider Guides, Inc. and Quepasa Games (formerly known as XtFt Games
S/S Ltda), over the fair values of the respective identifiable assets acquired and liabilities assumed. Goodwill is not amortized. For the 2011
acquisitions, goodwill is not recognized for tax purposes. Goodwill is subject to impairment tests on an annual basis or more frequently if facts
and circumstances warrant such a review. Goodwill is evaluated using specific methods required in the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC), including potentially, a discounted cash flows method to determine the fair value of a
reporting unit and comparison of the carrying value of goodwill to its implied fair value. The analysis necessarily involves significant
management judgment to evaluate the capacity of an acquired business to perform within projections. If the carrying amount of a reporting unit
exceeds its fair value, determined by conducting a valuation, then the goodwill impairment test is performed to measure the amount of the
impairment loss, if any. Management performs a qualitative assessment of goodwill to determine if it is more likely than not that the fair value of
a reporting unit is less than its carrying value including goodwill. In the event facts and circumstances indicate the carrying value of goodwill is
impaired, the goodwill carrying value will be reduced to its implied fair value through a charge to operating expenses. During the year ended
December 31, 2011 the Company recorded approximately $1.4 million impairment charges related to goodwill.


Goodwill $ 3,772,792
Property and equipment 106,626
Other assets 170,843
Total assets acquired 4,050,261
Accounts payable and accrued liabilities (341,010 )
Total liabilities assumed (341,010 )
Issuance of common stock, 348,723 shares 2,730,501
Contingent issuance of common stock for acquisition 978,750
Goodwill $ 59,961,662
Intangible assets 8,889,994
Accounts receivable 7,207,685
Property and equipment 3,650,119
Other assets 1,257,263
Total assets acquired 80,966,723
Accounts payable and accrued liabilities (3,878,238 )
Notes payable (5,008,724 )
Total liabilities assumed (8,886,962 )
Issuance of common stock, 16,999,943 shares 72,079,761

F-7

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Intangible Assets

Intangible assets consist of acquired trademarks, domain names, advertising relationships and mobile applications, and customer contracts
recorded at fair value from the acquisition of Insider Guides, Inc. and Quepasa Games. Amortization is recorded using the straight-line method
over the estimated useful lives of the assets as follows:


Customer contracts are amortized using the straight-line method over the term of the individual contracts. Amortization expense was $519,466
for the years ended December 31, 2011.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets primarily consist of prepaid support and service contracts and rent, debt issue costs and deposits. Debt issue
costs, principally loan origination and related fees, are deferred and amortized over the life of the respective debt using the straight-line method.

Property and Equipment

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


Leasehold improvements are amortized using the straight-line method over the term of the individual lease. Depreciation expense was $578,401
and $319,779 for the years ended December 31, 2011 and 2010, respectively.

Long-Lived Assets

In accordance with GAAP, we review our long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recovered. For assets which are held and used in operations, the asset is deemed to be impaired if its
carrying value exceeds its estimated undiscounted future cash flows. If such assets are considered to be impaired, the impairment loss recognized
is the amount by which the carrying value exceeds the fair value of the asset or estimated discounted future cash flows attributable to the
asset. No asset impairment occurred during the years ended December 31, 2011 and 2010.

Fair Value of Financial Instruments and Fair Value Measurements

We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial
instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts
approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, also approximate fair value because
current interest rates available to us for debt with similar terms and maturities are substantially the same .

Effective January 1, 2008, we adopted accounting guidance for financial assets and liabilities. The adoption did not have a material impact on
our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires
certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements
that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance
discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or

Trademarks 5 years
Domain names 5 years
Applications, purchased and internally developed 5 years
Advertising relationships 3 years
Software 2 to 3 years
Servers and Computer equipment 3 to 5 years
Vehicles 4 to 5 years
Office furniture and equipment 5 to 10 years
Other equipment 3 to 13 years
cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).


F-8

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by
us, which reflect those that a market participant would use.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Most
significant estimates in the accompanying consolidated financial statements include the estimated lives and playing periods that we use for
games revenue recognition, the allowance on accounts receivable, valuation of notes receivable, valuation of deferred tax assets, valuation of the
discount on notes payable, valuation of equity instruments granted for services, valuation of re-pricing of warrants, valuation of assets acquired
and liabilities assumed in business combinations, evaluating goodwill and long-lived assets for impairment and the measurement and accrual of
restructuring costs. Actual results could differ from those estimates.

Foreign Currency

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

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase
price is fixed or determinable and collectability is reasonably assured. We recognize revenue in accordance with ASC 605, Revenue
Recognition , ASC 605-25, Multiple-Element Arrangements, and ASC 605-45 Principal Agent Considerations .

During the years ended December 31, 2011 and 2010, we executed three contracts with Altos Hornos de Mexico, S.A.B. de C.V. (AHMSA,)
which owns Mexicans & American Trading Together, Inc. (MATT Inc.), which qualify as Multiple-Element Arrangements. The first was a
$3.5 million contract to develop a website and a series of environmental campaigns using our DSM technology, with multiple delivery dates
from May 2010 through February 2011. The second was a $3.0 million contract to develop a website and a legislative campaign using our DSM
technology, with multiple delivery dates from June through December 2010. The third was a $3.0 million contract to develop the Job of Your
Dreams (El Empleo de tus Suenos) campaign using our DSM technology, with multiple delivery dates from March 2011 through December
2011. The revenue from these contracts is allocated between DSM and website development as separate units of accounting based on their
relative selling price. The selling price for DSM was determined using the ad impressions and click through rate that other advertising would
require to generate similar engagements, since the DSM technology is a relatively new concept we developed. The selling price for website
development was determined using the projected hours and prevailing rates for website development plus the cost of hardware, third party
vendors and premium for use of our development resources.

During the year ended December 31, 2011 and 2010, we performed transactions with several partners that qualify as principal agent
considerations. We recognize revenue net of amounts retained by third party entities, pursuant to revenue sharing agreements with advertising
networks for advertising and with other partners for royalties on product sales.

During the years ended December 31, 2011 and 2010, our revenue was generated from six principal sources: revenue earned from the sale of
DSM campaigns, website development services and advertising on our websites, games, virtual currency and royalty revenue.



F-9

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

DSM Revenues: We recognize DSM revenues over the period of the contest or as the services are provided. Approximately 35% and 74% of our
revenue came from DSM campaigns both during the years ended December 30, 2011 and 2010, respectively.

Website Development Revenue: We recognize website development revenues as the service is provided. Approximately 1% and 20% of our
revenue came from website development during the year ended December 31, 2011 and 2010, respectively.

Advertising Revenue: Advertising and custom sponsorship revenues consist primarily of advertising fees earned from the display of
advertisements and click-throughs on text based links on our websites myYearbook.com and Quepasa.com. 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
Companys websites. Revenue from the display of click-throughs on text based links is recognized as click-throughs occur. Consistent with
GAAP, we recognize advertising revenue from customers that are advertising networks on a net basis, while advertising revenues earned directly
from advertisers are recognized on a gross basis. Sponsorship revenue is recognized over the time period in which the sponsorship on the website
occurs. Approximately 46% and 4% of our revenue came from advertising during the year ended December 31, 2011 and 2010, respectively.

Game Revenue: Game revenue is recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable,
collectability is reasonable assured, and the service has been rendered. For the purpose of determining when the service has been provided to the
player, we determine an implied obligation exists to the paying player to continue displaying the purchased virtual items within the online game
of a paying player over their estimated life. The virtual goods are categorized as either consumable or durable. Consumable goods represent
goods that are consumed immediately by a specific player action and have no residual value. Revenue from consumable goods is recognized at
the time of sale. Durable goods add to the players game environment over the playing period. Durable items, that otherwise do not have a
limitation on repeated use, are recorded as deferred revenue at time of sale and recognized as revenue ratably over the estimated average playing
period of a paying player. For these items, the Company considers the average playing period that the paying players typically play the game,
currently to be 18 months. If we do not have the ability to differentiate revenue attributable to durable virtual goods from the consumable virtual
goods for the specific game, we recognize revenue on the sale of the virtual goods for the game ratably over the estimated average playing period
that paying players typically play the game. Any adjustments arising from changes in the average playing period would be applied prospectively
on the basis that such changes are caused by new information indicating a change in the game player behavior patterns.

As the Company controls the game process and acts as a principal in the transaction, revenue for internally developed games is recognized on a
gross basis from sales proceeds reported by pay aggregators which are net of payment rejections, charge-backs and reversals. The related games
costs including the website hosting fees, advertising, marketing, administrative and payment services fees, and foreign taxes are recorded as cost
of sales. The revenue from third party developed games is recorded net of revenue sharing payments and costs to the third party as the Company
is considered to be acting as an agent in these transactions. Approximately 9% of our revenue came from games during the year ended
December 31, 2011. No significant game revenue was generated during the year ended December 31, 2010.

Virtual Currency : Revenue is earned from virtual currency monetization products sold to our website users. These products include Lunch
Money, credits on myYearbook, and VIP subscriptions and revenue is recognized as the products are consumed.

The Company also earns revenue from advertisement products from currency engagement actions (i.e. sponsored engagement advertisements)
by users on all of our platforms, including cost-per-action (CPA) currency incented promotions and sales on our proprietary cross-platform
currency monetization product, Social Theater. When a user performs an action, the user earns virtual currency and the Company earns
product revenue from the advertiser. The Company controls and develops the Social Theater product and CPA promotions and acts as a principal
in these transactions and recognizes the related revenue on a gross basis when collections are reasonably assured and upon delivery of the virtual
currency to the users account. Approximately 9% of our revenue came from virtual currency revenues during the year ended December 31,
2011. No significant virtual currency revenue was generated during the year ended December 31, 2010.

Royalty Revenue: Royalty revenue is generated as a percentage of product sales from certain partnership arrangements. We recognize royalty
revenues on a net basis, as reported to us by third parties. Less than one percent of our revenue came from royalty revenues during the years
ended December 31, 2011 and 2010.



F-10

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Unearned Grant Income

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

Income Taxes

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

The Company follows the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly
certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the
merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10,
the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management
believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation
processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as
described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any
associated interest and penalties that would be payable to the taxing authorities upon examination.

Product Development and Content Costs

Product development and content costs, including costs incurred in the classification and organization of listings within our websites, salaries,
benefits and share-based compensation for our employees, utility charges, occupancy and support for our offsite technology infrastructure,
bandwith and content delivery fees, and internet game development and maintenance costs, are charged to expense as incurred.

Acquisition and Restructuring Costs

Acquisition and restructuring costs, include costs incurred related to the business acquisitions made by the Company and costs incurred in
conjunction with the restructuring of the Companys business processes. Acquisition costs include the fees for broker commissions, investment
banking, legal, accounting and other professional services, proxy, printing and filing costs, and travel costs incurred by the Company during the
acquisition process. During November 2011, management announced plans to restructure certain business processes that included consolidation
of development offices and closure of duplicative facilities. Restructuring costs include employee termination and relocation costs recorded as
incurred, and exit costs for the closure of our Los Angeles office. We incurred acquisition and restructuring costs of $1,948,432 during the year
ended December 31, 2011. No acquisition and restructuring costs were incurred during the year ended December 31, 2010.

Stock-Based Compensation

We follow the fair value recognition provisions of ASC 718, Compensation Stock Compensation . The fair values of share-based payments
are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted average assumptions. Expected volatility is
based on historical volatility of our common stock. We have elected to use the simplified method described in GAAP to estimate the expected
term of employee stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense
is recognized on a straight-line basis over the requisite service period of the award.

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



F-11

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
Comprehensive Income (Loss)

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

Net Loss per Share

The Company computes and presents earnings or losses per share in accordance with FASB ASC Topic 260, Earnings per share . Basic
earnings or losses per share are computed by dividing net income (loss) attributable to common stockholders by the weighted average number of
common shares outstanding. Diluted earnings or loss per share is computed by dividing net income (loss) attributable to common stockholders
by the weighted average number of common shares and common stock equivalents outstanding, calculated on the treasury stock method for
options and warrants using the average market prices during the period.

As the Company incurred a net loss in all periods presented, all potentially dilutive securities were excluded from the computation of diluted loss
per share since the effect of including them is anti-dilutive.

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


Significant Customers and Concentration of Credit Risk

During 2011, two customers comprised 36% and 14% of total revenues. During 2010, two customers comprised 82% and 13% of total revenues.

Six customers comprised 47% of total accounts receivable as of December 31, 2011. One customer comprised 90% of total accounts receivable
as of December 31, 2010.

Leases

In accordance with GAAP, we perform a review of newly acquired leases to determine whether a lease should be treated as a capital or operating
lease. Capital lease assets are capitalized and depreciated over the term of the initial lease. A liability equal to the present value of the aggregated
lease payments is recorded utilizing the stated lease interest rate. If an interest rate is not stated, we will determine an estimated cost of capital
and utilize that rate to calculate the present value. If the lease has an increasing rate over time, and(or) is an operating lease, all leasehold
incentives, rent holidays, or other incentives will be considered in determining if a deferred rent liability is required. Leasehold incentives are
capitalized and depreciated over the initial term of the lease.

Contingencies

We accrue for contingent obligations, including legal costs and restructuring costs, when the obligation is probable and the amount can be
reasonably estimated. As facts concerning contingencies become known we reassess our position and make 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.

Recent Accounting Pronouncements

We have implemented all new accounting pronouncements that are in effect and that may impact our financial statements and do not believe that
there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results
of operations.

December 31,
2011 2010
Stock options 9,611,931 7,236,111
Warrants 4,200,000 4,465,000
Series A-1 convertible preferred stock 1,479,949 -
Totals 15,291,880 11,701,111


F-12

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Note 2Business Acquisitions

On March 2, 2011, we completed a Stock Purchase Agreement (the Agreement) with XtFt, the owner of substantially all of the assets and
business of TechFront Desenvolvimento de Software S/S Ltda, a Brazilian company (TechFront). The Company acquired XtFt to obtain its
game development expertise and existing and future intellectual properties. On July 14, 2011 XtFts name was changed to Quepasa Games.

We acquired all of the outstanding equity interests of XtFt. The shares issued to XtFts owners were calculated contractually based on
$3,700,000 of our common stock (348,723 shares) at $10.61 per share which was based on the average closing price per share for the 10 trading
days prior to the date of closing the Agreement. The acquisition date value of the shares issued of $2,730,501 was calculated using the fair
market value of the 348,723 shares, at $7.83, the closing price of our common stock on the acquisition date. The prior owners of XtFt were
eligible to receive a potential earn out fee of 250,000 shares of our common stock based on Quepasa Games achieving specific performance
milestones. Because the 2011 milestones were not met, the prior owners of XtFt forfeited one-third of the earn-out or 83,334 shares. See Note 4
relating to 2012 performance. An additional cost of acquisition of $978,750 for the contingent earn out provision was calculated using the fair
market value of the probable shares to be granted based on the terms of the Agreement at a price per share valued at the date of acquisition.

In connection with the Agreement, on February 1, 2011, we entered into a Secured Revolving Line of Credit Agreement (Credit Agreement)
with TechFront and agreed to lend up to $500,000. Advances under the Credit Agreement may be used to pay off certain Techfront loans
specified in the Agreement. The secured revolving line of credit shall become due and payable on February 1, 2017. The Credit Agreement is
secured by certain U.S. and Brazilian Trademarks of TechFront. Prior to the acquisition date, $500,000 was advanced to TechFront under the
Credit Agreement. The collectability of this amount was deemed by management to be doubtful immediately upon the date of the first advance
and therefore in substance was deemed to be an additional cost of the acquisition.

The purchase price was allocated first to record identifiable assets and liabilities at fair value and the remainder to goodwill as follows:


The Company incurred approximately $368,000 of broker commissions, legal and professional fees and travel costs during the acquisition of
Quepasa Games that were expensed as incurred and classified as acquisition and restructuring costs during the year ended December 31, 2011.

On November 10, 2011, the Company, Merger Sub, and Insider Guides, Inc., closed the merger. Insider Guides operates the myYearbook.com
platform. The Company and Insider Guides Inc. had similar focus on social discovery, social gaming, virtual goods and brand advertising and
could capitalize on combined business strengths. As Merger consideration, the security holders of myYearbook received approximately $18
million in cash and approximately 17 million shares of Quepasa common stock (not including cash for fractional shares). Following the Merger,
Merger Sub changed its name to Insider Guides, Inc.


Property and equipment $ 119,760
Other assets 191,887
Total assets acquired 311,647
Accounts payable and accrued liabilities (383,014 )
Total liabilities assumed (383,014 )
Goodwill 4,280,618
Total purchase price $ 4,209,251

F-13

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

The purchase price was allocated first to record identifiable assets and liabilities at fair value and the remainder to goodwill as follows:



The Company incurred approximately $1.2 million of investment banking, legal and professional fees, proxy printing and filing fees and travel
costs during the acquisition of Insider Guides, Inc. that were expensed as incurred and classified as acquisition and restructuring costs during the
year ended December 31, 2011.

The amounts of revenues and net losses from Insider Guides, Inc. and Quepasa Games included in the Companys consolidated statement of
operations for the year ended December 31, 2011, and the unaudited supplemental pro forma revenues and net income (loss) of the combined
entity that give effect to the acquisitions had they occurred January 1, 2010 are as follows:


In preparing the unaudited pro forma information, various assumptions were made, and the Company does not purport this information to be
indicative of what would have occurred had acquisition been made as of January 1, 2010, nor is it indicative of the results of future combined
operations.

Note 3Notes Receivable

On March 27, 2008, we entered into a Loan Agreement with BRC Group, LLC (BRC) for a maximum amount of $600,000.

A dispute arose and on April 6, 2009, BRC filed a complaint in the U.S. District Court for the Northern District of California. We filed an
answer with counterclaims alleging a default by BRC and to accelerate the note.

In February 2010, we entered into a settlement agreement (the Settlement) with BRC effective as of September 22, 2009. Under the
Settlement, BRCs indebtedness to us was reduced from $350,000 to $250,000, evidenced by a new promissory note (the Note) dated
September 22, 2009. The Note contains a repayment term of 18 months commencing June 1, 2011, bearing interest at the rate of 4% per annum,
such interest to begin accruing February 1, 2011. As collateral for the Note, BRC issued us a warrant (the Warrant) permitting us to receive up
to a 30% membership interest in BRC upon default. If BRC defaults under the Note and the Warrant is exercised, BRC shall have 90 days to
repurchase the membership interest for the balance of the remaining principal and interest to date.


Goodwill $ 70,646,036
Intangible assets 8,889,994
Cash and cash equivalents 7,315,783
Accounts receivable 7,207,685
Property and equipment 3,650,119
Other assets 1,257,263
Total assets acquired 98,966,880
Accounts payable, accrued and other liabilities (3,878,238 )
Notes payable (5,008,724 )
Total liabilities assumed (8,886,962 )
Total purchase price $ 90,079,918
(Unaudited)
Revenues
Net Income
(Loss)

Insider Guides, Inc. actual for the period November 10, 2011 to December
31, 2011 $ 5,709,194 $ 1,003,411
Quepasa Games actual for the period March 2, 2011 to December 31, 2011 $ 1,154,489 $ (3,049,058 )

Supplemental unaudited consolidated pro forma information
for the year ended December 31, 2010 $ 30,944,817 $ (7,391,384 )

F-14

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

As a result of the Settlement and the Note, both parties agreed to a mutual release of the current litigation between the parties by filing a
dismissal of the litigation with prejudice. Furthermore, both parties agreed to terminate all prior agreements between each other entered into
before September 22, 2009, along with all duties rights and obligations thereunder.

On September 20, 2010, we entered into a Note Purchase Agreement with Hollywood Creations, Inc. (Hollywood) and agreed to lend
Hollywood $650,000 in three separate equal installments. This agreement relates to an arrangement for Quepasas exclusive right and license to
market and distribute games developed by Hollywood to Quepasa end users. Those rights will be subject to a revenue sharing agreement. Each
loan will be evidenced by a 6% Convertible Promissory Note due one year from the date of issuance (Note). The Note may be converted
under certain circumstances. In the year ended December 31, 2010, we lent the first $216,667 installment and Hollywood issued us a Note due
on September 20, 2011. In February 2011, we made another $40,000 advance due September 2011. In October, 2011 we deemed the Note
uncollectible and we charged the note receivable and related accrued interest of $271,404 to bad debt expense.


Notes receivable consist of the following:


Note 4Goodwill

Goodwill represents the fair value of the intangible assets, not subject to amortization, from the acquisitions of Quepasa Games and Insider
Guides, Inc. At December 31, 2011, management assessed relevant events and circumstances in evaluating whether it was more likely than not
that its fair values were less than respective carrying amounts of the acquired subsidiaries pursuant to ASC 350 Intangibles, Goodwill and
Other . After evaluation of Quepasa Games performance the period ended December 31, 2011 and projected 2012 performance, management
determined that Quepasa Games could not achieve the performance necessary for the earn-out provision of the stock-purchase agreement and
would require an impairment adjustment. A valuation of the Quepasa Games was performed and a $2.5 million fair value was determined. A
comparison of the Companys approximately $3.8 million carrying value of the Quepasa Games and the $2.4 million implied value of goodwill
resulted in a loss on impairment of approximately $1.4 million. The translated value of goodwill for Quepasa Games will vary at each reporting
period due to changes in the foreign exchange rates.

Managements assessment of the events and circumstance since the acquisition of Insider Guides, Inc. shows positive operating performance,
key metrics, customer retention, and no indicators that its fair value was less than its carrying amount at December 31, 2011.



December 31,
2011
December 31,
2010

Notes Receivable BRC $ 169,396 $ 250,000
Accrued Interest 559 -
Notes Receivable Hollywood Creations - 216,667
Accrued Interest - 3,633
Total Notes Receivable, including accrued interest $ 169,955 $ 470,300

Notes Receivable, current portion $ 169,955 $ 314,221
Notes Receivable, long-term portion - 156,079
Total Notes Receivable $ 169,955 $ 470,300

F-15

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Goodwill consists of the following:


Loss on impairment of goodwill was $1,409,127 for the year ended December 31, 2011.

Note 5Intangible Assets

Intangible assets consist of the following:


Annual amortization expense for the Company's intangible assets is as follows:



Note 6Property and Equipment

Property and equipment consist of the following:


Goodwill, opening balance January 1, 2011 $ -
Addition:
Goodwill, Quepasa Games 3,811,175
Goodwill, Insider Guides, Inc. 70,646,036
74,457,211
Less accumulated impairment losses (1,409,127 )
Total Goodwillnet $ 73,048,084

December 31,
2011

Trademark and domain names $ 5,999,994
Advertising relationships 1,165,000
Mobile applications 1,725,000
Contracts 170,843
9,060,837
Less accumulated amortization (492,667 )
Intangibles assetsnet $ 8,568,170
2012 1,933,730
2013 1,933,332
2014 1,868,610
2015 1,544,999
2016 1,287,499
Total $ 8,568,170

December 31,
2011
December 31,
2010

Servers and computer equipment $ 6,550,899 $ 2,338,831
Vehicle 16,180 18,248
Office furniture and equipment 176,174 133,217
Leasehold Improvements 58,935 -
Other equipment 8,459 9,540
6,810,647 2,499,836
Less accumulated depreciation (2,401,953 ) (1,854,108 )
Property and equipmentnet $ 4,408,694 $ 645,728

F-16

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Note 7 Loans and Notes Payable

Subordinated Notes Payable

On January 25, 2008, we entered into a Note Purchase Agreement (the MATT Agreement) with MATT Inc. Pursuant to the terms of the
MATT Agreement: (i) MATT Inc. invested $5,000,000 in Quepasa and Quepasa issued MATT Inc. a subordinated promissory note due October
16, 2016 with 4.46% interest per annum (the MATT Note); (ii) the exercise price of MATT Inc.s outstanding Series 1 Warrant to purchase
1,000,000 shares of our common stock was reduced from $12.50 per share to $2.75 per share; (iii) the exercise price of MATT Inc.s outstanding
Series 2 Warrant to purchase 1,000,000 shares of our common stock was reduced from $15.00 per share to $2.75 per share (see Note 10); and
(iv) the Amended and Restated Support Agreement between Quepasa and MATT Inc. was terminated, which terminated MATT Inc.s obligation
to provide us with the use of a corporate jet for up to 25 hours per year through October 2016. Debt issuance costs of $24,580 related to this
transaction have been capitalized within the other assets section of the balance sheet and are being amortized to interest expense over the life of
the note. The balance of deferred debt issuance costs was $13,505 and $16,320 at December 31, 2011 and 2010 respectively and is included in
other assets. MATT note payable consisted of the following at December 31, 2011 and 2010:


On January 25, 2008, we entered into a Note Purchase Agreement (the RSI Agreement) with Richard L. Scott Investments, LLC (RSI).
Pursuant to the terms of the RSI Agreement: (i) RSI invested $2,000,000 in Quepasa and Quepasa issued RSI a subordinated promissory note
due March 21, 2016 with 4.46% interest per annum (the RSI Note); (ii) the exercise price of RSIs outstanding Series 2 Warrant to purchase
500,000 shares of our common stock was reduced from $4.00 per share to $2.75 per share, (See Note 10); and (iii) the exercise price of RSIs
outstanding Series 3 Warrant to purchase 500,000 shares of our common stock was reduced from $7.00 per share to $2.75 per share. Debt
issuance costs of $15,901 related to this transaction have been capitalized within the Other Assets section of the balance sheet and are being
amortized to interest expense over the life of the note. The balance of deferred debt issuance costs was $8,233 and $10,182 at December 31,
2011 and 2010 respectively and is included in other assets. RSI note payable consisted of the following at December 31, 2011 and 2010:


Loans Payable

On November 10, 2011 in conjunction with the acquisition of Insider Guides, Inc., the Company assumed loans payable consisting of a growth
capital term loan and three equipment term loans. The loans payable are collateralized by substantially all the assets of the Company. Under the
Loan and Security Agreement Number 2 (LSA2) growth term and equipment term loans, dated December 13, 2010, principal and interest are
payable monthly at a fixed interest rate of 12.50% per annum, and the loans are due September 2014. Under the Supplemental Loan and
Security Agreement (SLSA), dated November 21, 2008, principal and interest are payable in monthly at a fixed interest rate of 12.60% per


December 31,
2011
December 31,
2010
Note Payable, face amount $ 5,000,000 $ 5,000,000
Discounts on Notes:
Revaluation of Warrants (1,341,692 ) (1,341,692 )
Termination of Jet Rights (878,942 ) (878,942 )
Accumulated Amortization 1,000,574 746,250
Total Discounts (1,220,060 ) (1,474,384 )
Accrued Interest 877,132 654,133
MATT Note Payable, net $ 4,657,072 $ 4,179,749

December 31,
2011
December 31,
2010
Note Payable, face amount $ 2,000,000 $ 2,000,000
Discounts on Notes:
Revaluation of Warrants (263,690 ) (263,690 )
Accumulated Amortization 127,152 94,833
Total Discounts (136,538 ) (168,857 )
Accrued Interest 350,853 261,653
RSI Notes Payable, net $ 2,214,315 $ 2,092,796
annum, and the loan is due April 2012. Under the Supplement Number 2 Loan and Security Agreement (S2LSA) dated January 22, 2010,
principal and interest are payable in monthly at a fixed interest rate of 12.50% per annum, and the loan is due June 2013.


F-17

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

The following is a schedule of the loans and notes payable at December 31, 2011.


The following is a schedule of the aggregate maturities of the loans payable and subordinated notes including accrued interest:



Note 8Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:



Original Interest
Borrowings Rates
December 31,
2011
Growth Term Loans:
LSA2 $ 97,500 12.50 % $ 290,960
Equipment Term Loans:
SLSA 2,500,000 12.60 % 272,172
S2LSA 2,500,000 12.50 % 1,336,342
LSA2 8,607 12.50 % 2,889,838
$ 5,106,107

4,789,312

Loans payable - current portion



$ 2,405,191

Loans payable - long term portion 2,384,121
MATT Note payable 5,000,000 4.46 % 5,000,000
RSI Note payable 2,000,000 4.46 % 2,000,000
9,384,121
Add: Accrued interest 1,227,985
Less: unamortized discount (1,356,598 )
Total notes payable - long term portion

$ 9,255,508
Years ending December 31:

2012 $ 2,405,191
2013 1,903,368
2014 480,753
2015 -
2016 8,227,985
Total $ 13,017,297

December 31,
2011
December 31,
2010

Accrued expenses $ 1,224,584 $ 191,293
Accrued employee benefits 528,428 222,956
Accrued restructuring costs 195,202 -
Prepaid advertising and deferred subscription revenue 70,516 -
Accrued expenses and other liabilities $ 2,018,730 $ 414,249

F-18

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Note 9Commitments and Contingencies

Operating Leases

We lease our operating facilities in the United State of America, Mexico, and Brazil under operating leases and accordingly rent is expensed as
incurred. Future minimum lease payments under these leases as of December 31, 2011 are as follows:


Rent expense under these leases was $410,506 and $129,151 for the years ended December 31, 2011 and 2010, respectively.

Litigation

From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. We operate our
business online, which is subject to extensive regulation by federal and state governments. In July 2011, the Company received a subpoena from
the New York Attorney General (NYAG) seeking records relating to our operations including specifically our e-mail marketing practices. Our
attorneys advised us that the NYAGs inquiry was preempted by federal law in the absence of any deceptive acts, and that they did not believe
our e-mail marketing involved any deceptive practices. We chose to cooperate fully with the NYAG, supplied documents we believed directly
relevant, and made certain changes to our email practices to address the NYAGs specific concerns. We believe the NYAG has concluded his
investigation and will take no further action, and we are currently negotiating a settlement agreement. However, we cannot make assurances that
we will reach our anticipated closure with the NYAG or that other regulators will not challenge aspects of our business. In such event,
defending this or any other action could cause us to incur substantial expenses and divert our managements attention. Any such defense, or
change in our marketing or other practices could reduce our future revenues and increase our costs, and adversely affect our future operating
results.

On August 3, 2011, Michelle Kaffko (the Plaintiff) filed a class action lawsuit against the Company in the United States District Court for the
District of Nevada. The Company filed a motion to transfer the case to the Southern District of Florida and the Court granted that motion. The
complaint alleges that the Company sent unauthorized text messages to thousands of consumers by using equipment that had the capacity to
generate random telephone numbers. The Plaintiff is seeking, for herself and on behalf of the members of the class, $500 for each alleged
violation. The Company has investigated the Plaintiffs claims and believes they have no merit. Accordingly, the Company has filed motions to
dismiss and for summary judgment.

On September 8, 2011, the Company received a complaint filed with the Equal Employment Opportunity Commission (EEOC) by a former
employee alleging sexual discrimination by the Company. The Company filed a written response denying the allegations and on November 15,
2011, engaged in mediation that ended in an impasse. The EEOC has not taken any further action on this complaint. The Company believes the
plaintiffs claims are without merit.

On September 15, 2011, FotoMedia Technologies, LLC (FotoMedia) sued Insider Guides, Inc. (IG) and four other defendant companies in
the United States District Court for the District of Delaware for infringement of certain patents relating to digital photo-sharing. FotoMedia
alleged that IG infringed five of six separate patents that FotoMedia owned. On November 21, 2011, IG and two other defendants filed a motion
to dismiss the case for failure to state a claim upon which relief could be granted. On December 22, 2011, prior to any ruling on the motion to
dismiss, FotoMedia filed a Notice of Dismissal Without Prejudice with the Court. Accordingly, the action was dismissed without prejudice as of
such date.

On November 18, 2011, a former member of the Companys Board of Directors who was also a paid consultant to the Company sued the
Company in the Superior Court of California for breach of contract relating to the ownership and use of certain intellectual property that he
allegedly created. The plaintiff also claimed that the Company and its Chief Executive Officer never intended to honor the contract. The

2012 $ 1,571,258
2013 730,133
2014 455,807
2015 450,749
2016 457,119
Thereafter 114,981
$ 3,780,047
Company denies these allegations and maintains that the plaintiff did not create any original intellectual property and that the Company is not
otherwise using any intellectual property created by the plaintiff. The Company intends to defend against these claims vigorously.


F-19

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or
claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting
periods.

Restructuring Costs

On November 16, 2011, management announced a restructure plan consolidating operations. Restructuring costs include the employee
relocation expenses, severance costs of terminated employees, the costs of contractual termination benefits and future service required payments,
and exit costs of office closures. Employee relocation expenses, contractual employee severance costs of approximately $221,000,
approximately $97,000 of remaining lease and contract obligations for the closure of Los Angeles office, and $33,000 of related travel costs
were expensed as incurred and classified as acquisition and restructuring costs. Approximately $195,000 of restructuring costs were accrued at
December 31, 2011. The severance cost of payments requiring future service was measured at December 31, 2011 totaling approximately
$550,000 and will be amortized over the expected service period during 2012.

Note 10Common Stock

On December 21, 2010, we sold 1,753,329 shares of common stock in a private placement at $7.50 per share for $13,149,968 in gross
proceeds. We registered all of the shares in an S-1 filed with the Securities and Exchange Commission (SEC) on December 29, 2010. In
connection with this private placement, we paid Merriman Capital, Inc. a fee of $434,999 for acting as placement agent. Also, we paid $10,000
to Merriman for reimbursement of legal fees and other expenses. Other offering costs of $72,612 for legal and filing fees have been incurred as
of December 31, 2010, resulting in net proceeds of $12,632,357. We are using the proceeds from the private placement to support our growth
and for general corporate purposes, including working capital, capital expenditures and acquisition consideration.

On March 2, 2011, the Company shares issued 348,723 common shares to XtFts owners (currently known as Quepasa Games) in connection
with the acquisition of all of the outstanding equity interests of XtFt (see Note 2). The Company issued 336,927 shares of common in connection
with the conversion of preferred stock on May 12, 2011 (see Note 11). On November 9, 2011, our shareholders approved an increase in the
Companys authorized common stock from 50 million to 100 million shares. On November 10, 2011, the Company issued 1,479,949 common
shares upon the conversion of the Series A preferred stock (see Note 11). On November 10, 2011, the Company issued 16,999,943 shares of
common stock to the owners of Insider Guides, Inc. in connection with the closing of the Merger (see Note 2). On November 10, 2011 and
November 15, 2011, in connection with the closing of the Merger, the Company sold 436,134 and 280,112, respectively, shares of common
stock to four shareholders for $2,557,000. The Company issued 811,016 and 784,240 shares of common stock in connection with the exercises
of stock options during the years ended December 31, 2011 and 2010, respectively (see Note 12). During the year ended December 31, 2011,
the Company issued 165,000 common shares in connections with the exercises of warrants (see Note 13).

Note 11Convertible Preferred Stock

On June 30, 2008, we entered into a transaction with Mexicans & Americans Thinking Together Foundation, Inc. (the Organization)
terminating the Corporate Sponsorship and Management Services Agreement (the CSMSA). In consideration for the Transaction, we issued
the Organization 25,000 shares of Series A Preferred Stock, par value $0.001, (the Original Series A). Dividends on the Original Series A
accrued from the date of issuance at the rate per annum of 4.46% on the Stated Value ($100 per share) and were cumulative. Accrued dividends
were $169,455 and $278,750 at December 31, 2011 and 2010, respectively. On May 12, 2011 the preferred stock was converted to 336,927 of
common shares at the election of the Organization and dividend accrual terminated at the date of the conversion. On August 22, 2011 and
November 28, 2011, $100,000 and $50,000, respectively, partial dividend payments were made to the Organization.

On September 20, 2011, the Company amended the rights and preferences of the Original Series A (Series A). The Company sold 1,000,000
shares of new Series A convertible preferred for $5,000,000 to Harvest Small Cap Partners Master, LTD and Harvest Small Cap Partners, LP,
(Harvest). The new Series A were convertible at a conversion price per share based on the following: the lower of (i) $3.5785 or (ii), if the
Merger of Quepasa and myYearbook closes, the lower of (A) 85% of the closing price of Quepasas common stock on the closing date of the
Merger or (B) 85% of the volume weighted average price during the 20 trading days ending with the date of the closing of the Merger. On
November 10, 2011, Harvest converted the Series A into 1,479,949 shares of Quepasas common stock, at a purchase price per share of
approximately $3.38.



F-20

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

In connection with the closing of the Merger, the Company sold 1,000,000 shares of Series A-1 Preferred Stock (Series A-1) MATT Inc. for
$5,000,000. MATT Inc. was an existing shareholder of the Company. The Series A-1 shares are convertible, at MATT Inc.s option, into
1,479,949 shares of Quepasas common stock, at a purchase price per share of approximately $3.38, and have voting rights on as converted
basis.

Note 12Stock-Based Compensation

The fair values of share-based payments are estimated on the date of grant using the Black-Scholes option pricing model, based on weighted
average assumptions. Expected volatility is based on historical volatility of our common stock. The risk-free rate is based on the U.S. Treasury
yield curve in effect over the expected term at the time of grant. Compensation expense is recognized on a straight-line basis over the requisite
service period of the award. During 2011 and 2010, we continued to use the simplified method to determine the expected option term since our
stock option exercise experience does not provide a reasonable basis upon which to estimate the expected option term.

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

Share-based compensation expense for the year ended December 31, 2011 and 2010 includes incremental share-based compensation expense as
follows:


We recognized stock-based compensation expense for the vesting of options of $4,169,236 and $5,864,969 for the year ended December 31,
2011 and 2010, respectively. As of December 31, 2011, there was $16,463,999 in total unrecognized compensation cost, which is expected to be
recognized over a period of approximately three years.

Stock Option Plans

2006 Stock Incentive Plan

On June 27, 2007, the stockholders approved the 2006 Stock Incentive Plan (the 2006 Plan), providing for the issuance of up to 3,700,000
shares of common stock plus an additional number of shares of common stock equal to the number of shares previously granted under the 1998
Stock Option Plan that either terminate, expire, or lapse after the date of the Board of Directors approval of the 2006 Plan.

In 2008, our Board of Directors and stockholders approved an amendment to the 2006 Plan to authorize the issuance of an additional 2,000,000
shares of common stock. In November 2009, our Board of Directors approved an amendment to the 2006 Plan to authorize the issuance of an
additional 2,000,000 shares of common stock. On June 4, 2010, our stockholders ratified this amendment to the 2006 Plan. In June 2011 and
November 2011, our Board of Directors and stockholders approved amendments to the 2006 Plan to authorize the issuances of 4,000,000
additional shares of common stock. As of December 31, 2011, there were 2,166,451 shares of common stock available for grant under the 2006
Plan. Pursuant to the terms of the 2006 Plan, eligible individuals may be granted incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, or stock grant awards.



For the years ended
December 31,
2011 2010

Sales and marketing $ 567,380 $ 412,183
Product development and content 1,077,863 918,844
General and administrative 2,702,896 4,533,942
Total stock-based compensation $ 4,348,139 $ 5,864,969

F-21

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
A summary of stock option activity under the 2006 Stock Incentive Plan during the year ended December 31, 2011 is as follows:


____________

The weighted-average grant date fair value of options granted during the years 2011 and 2010 was $3.50 and $$4.24, respectively. The total
intrinsic value of options exercised during 2011 and 2010 was $4,917,989 and $2,198,675, respectively. The fair value of each stock option is
estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:



Weighted
Average
Number of Weighted- Remaining Aggregate
Stock Average Contractual Intrinsic
Options Options Exercise Price Life Value
Outstanding at December 31, 2010 (1) 7,236,111 $ 1.63
Granted 3,283,500 $ 5.02
Exercised (2) (811,016 ) $ 1.65
Forfeited or expired (3) (539,702 )
$
3.74
Outstanding at December 31, 2011 (4) 9,168,893
$
2.70 7.5 $ 11,862,786
Exercisable at December 31, 2011 (5) 3,423,908
$
1.43 6.3 $ 11,828,152
(1) Includes 272,198 outstanding options to purchase common stock at a weighted average exercise price of $2.62 per share being held by
consultants.
(2) Includes 125,834 options to purchase common stock at a weighted average exercise price of $1.23 per share being held by consultants.
(3) Includes 7,500 options to purchase common stock at a weighted average exercise price of $8.25 per share being held by consultants.
(4) Includes 138,864 outstanding options to purchase common stock at a weighted average exercise price of $3.58 per share being held by
consultants.
(5) Includes 59,051 exercisable options to purchase common stock at a weighted average exercise price of $2.90 per share being held by
consultants.
For the Years Ended
December 31,
2011 2010
Risk-free interest rate: 1.31% 1.86%
Expected term: 6.0 Years 5.8 Years
Expected dividend yield: - -
Expected volatility: 83% 89%

F-22

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
Non-Plan Options

The Board of Directors has approved and our stockholders have ratified the issuance of stock options outside of our stock incentive plans. A
summary of Non-Plan option activity during the year ended December 31, 2011 is as follows:



On July 8, 2009, the board of directors authorized an option exchange of 5,751,937 existing stock options to a new exercise price of $1.00 per
share in order to provide incentive for certain key employees. Some of the exchanged options were granted to our named executive officers
including: 2,268,466 to John Abbott, Chief Executive Officer, 1,826,971 to Michael Matte, the Chief Financial Officer and 732,500 to Louis
Bardov, the Chief Technology Officer. The financial impact of this transaction was an increase of $1,052,010 in stock based compensation to be
amortized over the remaining life of the options and was recognized through year ended December 31, 2010.

Note 13Warrants

In March 2006, we issued warrants to purchase 200,000 shares of common stock at an exercise price of $3.55 per share as compensation to our
then Chief Executive Officer. These warrants were still outstanding on December 31, 2011 and expire in March 2016. During March 2006, we
issued three series (Series 1, 2 and 3) of warrants to purchase 1,000,000 shares of common stock each at exercise prices of $2.87, $4.00, and
$7.00 as compensation for certain strategic initiatives, including acquiring the services of our then Chief Executive Officer. The Series 1 warrant
was exercised in 2006. Of the remaining warrants 50% (1,000,000) were owned by RSI. On January 25, 2008, the Company and RSI entered
into a Note Purchase Agreement (the RSI Agreement). Pursuant to the terms of the RSI Agreement the exercise price of RSIs outstanding
warrants were reduced to $2.75 per share. The warrant re-pricing resulted in a discount on the Note Payable of $263,690, to be amortized over
the life of the note, see Note 7. The Series 2 and Series 3 warrants were still outstanding at December 31, 2011 and expire in March 2016. The
fair value of the warrant re-pricing was determined by comparing the fair value of the modified warrant with the fair value of the unmodified
warrant on the modification date and recording any excess as a discount on the note


On February 19, 2010, we reduced the exercise price of the remaining 1,000,000 outstanding warrants to $3.55 per share. The warrant re-pricing
resulted in a $147,813 of stock compensation expense recognized in general and administrative expenses on the accompanying statement of
operations. The Series 2 and Series 3 warrants were still outstanding at December 31, 2011 and expire in March 2016. The fair value of the
warrant re-pricing was determined by comparing the fair value of the modified warrant with the fair value of the unmodified warrant on the
modification date. The fair value of the modified warrants was calculated using the Black-Scholes option-pricing model with the following
assumptions:


In October 2006, we issued two series of warrants to purchase 1,000,000 shares of common stock each at exercise prices of $12.50 and $15.00
per share to MATT Inc. in connection with the issuance of common stock. On January 25, 2008, we entered into a Note Purchase Agreement
(the MATT Agreement) with MATT Inc. Pursuant to the terms of the MATT Agreement the exercise price of MATT Inc.s outstanding
warrants were reduced to $2.75 per share. The warrant re-pricing resulted in a discount on the Note Payable of $1,341,692, to be amortized over

Weighted
Average
Number of Weighted- Remaining Aggregate
Stock Average Contractual Intrinsic
Options Options Exercise Price Life Value
Outstanding at December 31, 2010 443,038 $ 1.34
Granted - $ -
Exercised - $ -
Forfeited or expired - $ -
Outstanding at December 31, 2011 443,038
$
1.34 7.9 $ 877,215
Exercisable at December 31, 2011 443,038
$
1.34 7.9 $ 877,215
Risk-free interest rate: 3.24%
Expected term: 6.08 years
Expected dividend yield:
Expected volatility: 105.68%
the life of the note, (see Note 7). These warrants expire in October 2016 and were still outstanding as of December 31, 2011. The fair value of
the warrant re-pricing was determined by comparing the fair value of the modified warrant with the fair value of the unmodified warrant on the
modification date and recording any excess as a discount on the note.


F-23

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
In September 2010, we granted warrants to purchase 265,000 shares of common stock at an exercise price of $4.50 per share as compensation to
a consultant. These warrants were subject to vesting based on performance standards detailed in the agreement. Warrants to purchase 165,000
shares vested and the remaining 100,000 expired. During the year ended December 31, 2011 warrants to purchase 165,000 shares were
exercised. No warrants to purchase shares were outstanding and exercisable on December 31, 2011.
The fair value of these warrants of $178,903 was determined using the Black-Scholes option-pricing model with the assumptions listed below
and recognized in general and administrative expenses on the accompanying statements of operations.


A summary of warrant activity for the year ended December 31, 2011 is as follows:


We recognized stock-based compensation expense for consulting services for the vesting of warrants of $178,903 and $0 for the year ended
December 31, 2011 and 2010, respectively.

Note 14Income Taxes

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

At December 31, 2011, the Company had net operating loss carryforwards of approximately $126,476,000 related to U.S. federal and state
jurisdictions. Utilization of the net operating loss carryforwards, which expire at various times starting in 2012 through 2031, may be subject to
certain limitations under Section 382 of the Internal Revenue Code, as amended, and other limitations under state and foreign tax laws. The
Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability
for unrecognized tax benefits. As of December 31, 2011, tax years 2008, 2009, and 2010 remain open for IRS audit. The Company has received
no notice of audit from the Internal Revenue Service for any of the open tax years.


Risk-free interest rate: 0.87%
Expected term: 3.0 years
Expected dividend yield:
Expected volatility: 79.02%
Outstanding at December 31, 2010 4,465,000
Granted
Exercised (165,000)
Expired (100,000)
Outstanding at December 31, 2011 4,200,000
Exercisable at December 31, 2011 4,200,000

F-24

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010




Note 15Related Party Transactions

Alonso Ancira serves on our Board of Directors as a non-employee director. Mr. Ancira also serves on the Board of Directors of the
Organization, is the Chairman of the Board of Directors of MATT Inc., our largest shareholder and is the Chairman of the Board of Directors of
AHMSA, which owns MATT Inc. We have participated in several significant transactions with MATT Inc., the Organization and AHMSA,
Note 7 Notes and Loans Payable, Note 11 Convertible Preferred Stock, and Note 13 Warrants. These relationships do not qualify as
related parties for accounting purposes under GAAP.

We earned approximately $4.2 and $3.7 million of DSM revenue and $120,000 and $1.2 million of website development revenue for the years
ended December 31, 2011 and 2010, respectively, from AHMSA. At December 31, 2011 and 2010, approximately $2 million and $1.2 million
respectively of our accounts receivable were from AHMSA. We earned $0 and $800,000 of DSM revenue for the years ended December 31,
2011 and 2010, respectively, from MATT Inc. on behalf of the Municipalities of Acapulco, Cozumel and Ixtapa in Mexico without commission
or fees.

In connection with the closing of the Merger, the Company sold 1,000,000 shares of Series A-1 Preferred Stock to MATT Inc. for $5,000,000.

In connection with our December 21, 2010 private placement, MATT Inc. purchased 333,333 shares and Malcolm Jozoff, an outside director,
purchased 6,666 shares of our Companys stock on the same terms and conditions as other investors.


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


2011 2010
U.S. federal income tax at statutory rate $ (4,340,000 ) $ (2,261,000 )
Nondeductible expenses 113,000 2,000
Exercise and forfeitures of stock based compensation (1,298,000 ) (290,000 )
Change in valuation allowance 5,261,000 2,919,000
State tax benefit, net of federal provision (benefit) (677,000 ) (383,000 )
Foreign subsidiary loss 419,000 14,000
Adjustment for business combinations 522,000 -
Other - (1,000 )
Income Tax Expense $ - $ -
Significant components of the Company's deferred tax assets (liabilities) are approximately as follows:


December 31, 2011
December 31,
2010
Net operating loss $ 48,820,000 $ 42,333,000
Property and equipment (2,999,000 ) (92,000 )
Stock options and warrants 7,916,000 6,871,000
Other 691,000 55,000
Total deferred tax assets 54,428,000 49,167,000
Valuation allowance (54,428,000 ) (49,167,000 )
Net deferred tax assets $ - $ -

F-25

QUEPASA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2011 and 2010

Note 16Subsequent Events

Quepasa Corporation and its wholly owned subsidiary, Insider Guides, legally merged as of January 1, 2012.

On January 18, 2012, the Company paid $100,000 to the Organization as a partial dividend payment. See Note 11.

On January 20, 2012, the Company executed a non-cancelable master lease agreement for $1.5 million with Dell Financial Services for the
purchase or lease of equipment for our data centers. As of February 28, 2012, there was no outstanding balance on the master lease.

On February 13, 2012, the loans payable and security agreements were amended and restated to include additional debt covenants. The
amendment includes limitations of additional bank borrowing of $3 million and indebtedness for leased office equipment of $3 million. The
amendment requires that the Companys unrestricted cash and accounts receivable be greater than or equal to 200% of the borrowers
indebtedness and the Companys unrestricted cash be greater than or equal to the aggregate amount of interest that will accrue and be payable
through the maturity date of loans payable and security agreement.






F-26






Exhibit 10.22

EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT

THIS EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT (the Agreement) entered into as of __________, 2012 (the
Grant Date) between Quepasa Corporation (the Company) and _________ (the Optionee).

WHEREAS, by action taken by the Board of Directors (the Board) it has adopted the 2006 Stock Incentive Plan (the Plan); and

WHEREAS, pursuant to the Plan, it has been determined that in order to enhance the ability of the Company to attract and retain
qualified employees, consultants and directors, the Company has granted the Optionee the right to purchase the common stock of the Company
pursuant to stock options.

NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and for other good and valuable
consideration, receipt of which is acknowledged, the parties hereto agree as follows:

1. Grant of Non-Qualified Options . The Company irrevocably granted to the Optionee, as a matter of separate agreement and
not in lieu of salary or other compensation for services, the right and option to purchase all or any part of _____________ shares of authorized
but unissued or treasury common stock of the Company (the Options) on the terms and conditions herein set forth. This Agreement replaces
any stock option agreement previously provided to the Optionee, if any, with respect to these Options. The Optionee acknowledges receipt of a
copy of the Plan, as amended.

2. Price . The exercise price of the Options is $_________ per share.

3. Vesting - When Exercisable .

(a) The Option shall vest ___________________, subject to the Optionees continued employment with the Company on
each applicable vesting date. Any fractional vesting shall be rounded up to the extent necessary. Notwithstanding any other provision in this
Agreement, the Options shall vest immediately on the occurrence of a Change of Control as defined under the Plan.

(b) Subject to Sections 3(c) and 4 of this Agreement, any of the vested Options may be exercised prior to and until 6:00
p.m. New York time 10 years from the Grant Date (the Expiration Date). None of the Options may be exercised prior to vesting.

(c) Notwithstanding any other provision of this Agreement, upon resolution of the Board or the Committee (as defined in
the Plan), the Options, whether vested or unvested, shall be immediately forfeited in the event any of the following events occur:

(1) The Optionee is dismissed as an employee based upon fraud, theft, or dishonesty, which is reflected in a
written or electronic notice given to the employee;


1

(2) The Optionee purchases or sells securities of the Company in violation of the Companys insider trading
guidelines then in effect, if any;

(3) The Optionee breaches any duty of confidentiality including that required by the Companys insider trading
guidelines then in effect, if any;

(4) The Optionee competes with the Company during a period of one year following termination of
employment, including by soliciting customers located within or otherwise where the Company is doing business within any state, or where the
Company expects to do business within three months following termination and, in this later event, the Optionee has actual knowledge of such
plans;

(5) The Optionee recruits Company personnel for another entity or business within 12 months following
termination of employment; or

(6) The Optionee fails to assign any invention, technology, or related intellectual property rights to the
Company within 30 days after the Companys written request for such assignment, if such assignment is a condition of any agreement between
the Company and the Optionee.

4. Termination of Relationship .

(a) If for any reason, except death or disability as provided below, the Optionee ceases to be a member of the Board,
employee, officer, executive of, or consultant or advisor providing services to, the Company or a Subsidiary (as defined in the Plan), then all
rights granted hereunder shall terminate effective three months from that date. Any part of the Options that was not vested immediately before
termination of the Optionees employment shall terminate at that time.

(b) If the Optionee shall die while an employee of the Company, the Optionees estate or any Transferee, as defined
herein, shall have the right within one year of death to exercise the Optionees vested Options subject to Section 3(c). For the purpose of this
Agreement, Transferee shall mean a person to whom such shares are transferred by will or by the laws of descent and distribution. For
purposes of this Section 4(b) Company shall include each subsidiary and/or affiliates of the Company.

(c) If the Optionee becomes disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986)
while an employee of the Company, and the Optionees services are terminated as a consequence of such disability, then the vested Options may
be exercised within one year from the date the services were terminated as a result of the disability.



2

(d) Notwithstanding anything contained in this Section 4, the Options may not be exercised after the Expiration Date.

5. Profits on the Sale of Certain Shares; Redemption . Upon occurrence of any of the events specified in Section 3(c) of this
Agreement (the Event Date), all profits earned from the sale of shares of common stock underlying this Option, during the one-year period
commencing on the Event Date, shall be forfeited and immediately paid by the Optionee to the Company. Further, in such event, the Company
may at its option redeem shares of common stock acquired upon exercise of this Option by payment of the exercise price to the Optionee.

6. Method of Exercise . The Options shall be exercisable by a written notice in the form attached to this Agreement, which shall:

(a) be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any
person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or
persons to exercise the Options;

(b) be accompanied by full payment of the exercise price by (i) tender to the Company of an amount equal to the
exercise price multiplied by the number of underlying shares being purchased either in cash, by wire transfer, or by certified check or bank
cashiers check, payable to the order of the Company; (ii) a reduction in the number of shares of common stock received upon an exercise of the
Option equal to the exercise price, as described in the following paragraph (a Net Exercise); (iii) a broker assisted cashless exercise, whereby a
broker-dealer advances the exercise price to the Company on behalf of the Optionee; or (iv) by a combination of any of the foregoing methods;

If the Optionee elects to conduct a Net Exercise pursuant to (ii) above, the Company shall cause to be delivered to the Optionee a certificate or
certificates representing the number of shares of common stock computed using the following formula:



X=Y (A-B)
A

Where:
X = the number of shares of common stock to be issued to the Optionee;
Y = the portion of the Option (in number of shares of common stock) being exercised by the Optionee (at the date of such
calculation);
A = the Fair Market Value (as defined below) of one share of common stock; and
B = exercise price (as adjusted to the date of such calculation).

3

For purposes of this Agreement, Fair Market Value shall mean: (i) if the principal trading market for such securities is a national securities
exchange, the Over-the-Counter Bulletin Board or the OTC Markets (or a similar system then in use), the closing price on the last trading day
immediately prior to the exercise of such Option; or (ii) if (i) is not applicable, and if bid and ask prices for shares of common stock are reported
by the principal trading market, the average of the high bid and low asked prices so reported for the trading day immediately prior to the exercise
of such Option. Notwithstanding the foregoing, if there is no last reported sales price or bid and ask prices, as the case may be, for the day in
question, then Fair Market Value shall be determined as of the latest day prior to such day for which such last reported sales price or bid and
asked prices, as the case may be, are available. If the Companys common stock is not publicly traded, then Fair Market Value shall be
determined in good faith the Companys Board of Directors.

(c) be accompanied by payment of any amount that the Company, in its sole discretion, deems necessary to comply with
any federal, state or local withholding requirements for income and employment tax purposes. If the Optionee fails to make such payment in a
timely manner, the Company may: (i) decline to permit exercise of the Options or (ii) withhold and set-off against compensation and any other
amounts payable to the Optionee the amount of such required payment. Such withholding may be in the shares underlying the Options if a Net
Exercise is elected or otherwise at the sole discretion of the Company.

The certificate or certificates for shares of common stock as to which the Options shall be exercised shall be registered in the name of
the person or persons exercising the Options.

7. Anti-Dilution Provisions . The Options granted hereunder shall have the anti-dilution rights set forth in Section 14 of the Plan.

8. Necessity to Become Holder of Record . Neither the Optionee, the Optionees estate, nor any Transferee shall have any rights
as a shareholder with respect to any shares underlying the Options until such person shall have become the holder of record of such shares. No
dividends or cash distributions, ordinary or extraordinary, shall be provided to the holder if the record date is prior to the date on which such
person became the holder of record thereof.

9. Reservation of Right to Terminate Relationship . Nothing contained in this Agreement shall restrict the right of the Company
to terminate the relationship of the Optionee at any time, with or without cause. The termination of the relationship of the Optionee by the
Company, regardless of the reason therefor, shall have the results provided for in Sections 3 and 4 of this Agreement.

10. Conditions to Exercise of Options . If a Registration Statement on Form S-8 (or any other successor form) is not effective as
to the shares of common stock issuable upon exercise of the Options, the remainder of this Section 10 is applicable as to federal law. In order to
enable the Company to comply with the Securities Act of 1933 (the Securities Act) and relevant state law, the Company may require the
Optionee, the Optionees estate, or any Transferee as a condition of the exercising of the Options granted hereunder, to give written assurance
satisfactory to the Company that the shares subject to the Options are being acquired for such persons own account, for investment only, with no
view to the distribution of same, and that any subsequent resale of any such shares either shall be made pursuant to a registration statement under
the Securities Act and applicable state law which has become effective and is current with regard to the shares being sold, or shall be pursuant to
an exemption from registration under the Securities Act and applicable state law.



4

The Options are further subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing,
registration, or qualification of the shares of common stock underlying the Options upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with the issue or purchase
of shares underlying the Options, the Options may not be exercised in whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected.

11. Transfer . No transfer of the Options by the Optionee by will or by the laws of descent and distribution shall be effective to
bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the letters testamentary or such other
evidence as the Board may deem necessary to establish the authority of the estate and the acceptance by the Transferee or Transferees of the
terms and conditions of the Options.

12. Duties of the Company . The Company will at all times during the term of the Options:

(a) Reserve and keep available for issue such number of shares of its authorized and unissued common stock as will be
sufficient to satisfy the requirements of this Agreement;

(b) Pay all original issue taxes with respect to the issuance of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith;

(c) Use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall
be applicable thereto.

13. Parties Bound by Plan . The Plan and each determination, interpretation or other action made or taken pursuant to the
provisions of the Plan shall be final and shall be binding and conclusive for all purposes on the Company and the Optionee and the Optionees
respective successors in interest.

14. Severability . In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void parts were deleted.


15. Arbitration . Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application,
implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, except to the extent a party is seeking
equitable relief, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Bucks County,
Pennsylvania (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American
Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto
for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.



5

16. Benefit . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives,
successors and assigns.

17. Notices and Addresses . All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in
writing and shall be delivered to the addresses in person, by FedEx or similar receipted delivery as follows:


or to such other address as either of them, by notice to the other may designate from time to time.

18. Attorneys Fees . In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the
interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the
prevailing party shall be entitled to a reasonable attorneys fees, costs and expenses.

19. Governing Law . This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder
whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the
laws of Delaware without regard to choice of law considerations.

20. Oral Evidence . This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and
written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or
the change, waiver discharge or termination is sought.


The Optionee:



The Company: Quepasa Corporation
324 Datura Street, Ste. 114
West Palm Beach, FL 33401
Attention: Michael Matte

with a copy to: Michael D. Harris, Esq.
Harris Cramer LLP
3507 Kyoto Gardens Drive, Suite 320
Palm Beach Gardens, FL 33410

6

21. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

22. Section or Paragraph Headings . Section headings herein have been inserted for reference only and shall not be deemed to
limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.

23. Stop-Transfer Orders .

(a) The Optionee agrees that, in order to ensure compliance with the restrictions set forth in the Plan and this Agreement,
the Company may issue appropriate stop transfer instructions to its duly authorized transfer agent, if any, and that, if the Company transfers its
own securities, it may make appropriate notations to the same effect in its own records.

(b) The Company shall not be required (i) to transfer on its books any shares of the Companys common stock that have
been sold or otherwise transferred in violation of any of the provisions of the Plan or the Agreement or (ii) to treat the owner of such shares of
common stock or to accord the right to vote or pay dividends to any purchaser or other Transferee to whom such shares of common stock shall
have been so transferred.

24. Exclusive Jurisdiction and Venue . Any action brought by either party against the other concerning the transactions
contemplated by or arising under this Agreement shall be brought only in the state or federal courts of Pennsylvania and venue shall be in Bucks
County or appropriate federal district and division. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non
conveniens.


[Signature Page to Follow]



7

IN WITNESS WHEREOF the parties hereto have set their hand and seals the day and year first above written.



WITNESSES: QUEPASA CORPORATION



By:
Michael Matte
Chief Financial Officer


OPTIONEE:





8

NOTICE OF EXERCISE

To: __________________________
__________________________
__________________________
Attention _________, _______________
Facsimile: (____) _____-______

Please be advised that I hereby elect to exercise my option to purchase shares of ___________, pursuant to the Stock Option Agreement
dated __________________.

Number of Shares to Be Purchased: _______________

Multiplied by: Purchase Price Per Share $______________

Total Purchase Price $______________

Please check the payment method below:

____ Enclosed is a check for the total purchase price above.

____ Wire transfer sent on _____________, 20__.

Please contact me as soon as possible to discuss the possible payment of withholding taxes and any other documents we may require.

Name of Option Holder (Please Print): __________________________________________________

Address of Option Holder
_______________________________________________________________________________

Telephone Number of Option Holder: ________________________________

Social Security Number of Option Holder: ________________________________



9

If the certificate is to be issued to person other than the Option Holder, please provide the following for such person:

________________________________
(Name)

________________________________
(Address)

________________________________

________________________________


________________________________
(Telephone Number)

________________________________
(Social Security Number)


In connection with the issuance of the Common Stock, if the Common Stock may not be immediately publicly sold , I hereby represent to the
Company that I am acquiring the Common Stock for my own account for investment and not with a view to, or for resale in connection with, a
distribution of the shares within the meaning of the Securities Act of 1933 (the Securities Act).

I am______ am not ______ [ please initial one ] an accredited investor for at least one of the reasons on the attached Exhibit A. If the SEC has
amended the rule defining the definition of accredited investor, I acknowledge that as a condition to exercise the Options, the Company may
request updated information regarding the Holders status as an accredited investor. My exercise of the Options shall be in compliance with the
applicable exemptions under the Securities Act and applicable state law.



Signature of Option Holder


Dated: _________________

10

Exhibit A
To Stock Option Agreement

For Individual Investors Only:

1. A person who has an individual net worth, or a person who with his or her spouse has a combined net worth, in excess of
$1,000,000. For purposes of calculating net worth under this paragraph (1), (i) the primary residence shall not be included as an asset, (ii) to the
extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess
amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the
amount outstanding 60 days prior to exercising the stock options, other than as a result of the acquisition of the primary residence, the amount of
such excess shall be included as a liability.

2a. A person who had individual income (exclusive of any income attributable to the persons spouse) of more than who has
$200,000 in each of the two most recently completed years and who reasonably expects to have an individual income in excess of $200,000 this
year.

2b. Alternatively, a person, who with his or her spouse, has joint income in excess of $300,000 in each applicable year.

3. A director or executive officer of the Company.

Other Investors:

4. Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (Securities Act) whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; insurance company as defined
in Section 2(13) of the Securities Act; investment company registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or if a self-directed
plan, with investment decisions made solely by persons that are accredited investors.

5. A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.

6. An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business
trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

7. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act.

8. An entity in which all of the equity owners are accredited investors.


11

Exhibit 10.27

LOAN AND SECURITY AGREEMENT


Dated as of November 21, 2008


between


INSIDER GUIDES, INC.,
a Delaware corporation,

as Borrower ,


and


VENTURE LENDING & LEASING V, INC.,
a Maryland corporation,

as Lender




LOAN AND SECURITY AGREEMENT

The Borrower and Lender have entered or anticipate entering into one or more transactions pursuant to which Lender agrees to make
available to Borrower a loan facility governed by the terms and conditions set forth in this document and one or more Supplements executed by
Borrower and Lender which incorporate this document by reference. Each Supplement constitutes a supplement to and forms part of this
document, and will be read and construed as one with this document, so that this document and the Supplement constitute a single agreement
between the parties (collectively referred to as this Agreement ).

Accordingly, the parties agree as follows:

ARTICLE 1 - INTERPRETATION

1.1 Definitions. The terms defined in Article 10 and in the Supplement will have the meanings therein specified for purposes of this
Agreement.

1.2 Inconsistency. In the event of any inconsistency between the provisions of any Supplement and this document, the provisions of
the Supplement will be controlling for the purpose of all relevant transactions.

ARTICLE 2 - THE COMMITMENT AND LOANS

2.1 The Commitment . Subject to the terms and conditions of this Agreement, Lender agrees to make term loans to Borrower from
time to time from the Closing Date and to, but not including, the Termination Date in an aggregate principal amount not exceeding the
Commitment. The Commitment is not a revolving credit commitment, and Borrower does not have the right to repay and then to reborrow
hereunder. Each Loan requested by Borrower to be made on a single Business Day shall be for a minimum principal amount set forth in the
Supplement, except to the extent the remaining Commitment is a lesser amount.

2.2 Notes Evidencing Loans; Repayment . Each Loan shall be evidenced by a separate Note payable to the order of Lender, in the
total principal amount of the Loan. Principal and interest of each Loan shall be payable at the times set forth in the Note and regularly scheduled
payments thereof and each Final Payment shall be effected by automatic debit of the appropriate funds from Borrowers Primary Operating
Account as specified in the Supplement hereto.

2.3 Procedures for Borrowing .

(a) At least five (5) Business Days' prior to a proposed Borrowing Date (in the case of all Loans other than the initial Loans), Lender
shall have received from the Borrower a written request for a borrowing hereunder (a Borrowing Request ). Each Borrowing Request shall be
in substantially the form of Exhibit B to the Supplement, shall be executed by an authorized executive or financial officer of Borrower, shall
state how much is requested, and shall be accompanied by such other information and documentation as Lender may reasonably request,
including the original executed Note(s) for the Loan(s) covered by the Borrowing Request if such are not already in the possession of Lender.

(b) No later than 1:00 p.m. Pacific Standard Time on the Borrowing Date, if Borrower has satisfied the conditions precedent in Article 4,
Lender shall make the Loan available to Borrower in immediately available funds.

2.4 Interest . Except as otherwise specified in the applicable Note and/or Supplement, Basic Interest on the outstanding principal
balance of each Loan shall accrue daily at the Designated Rate from the Borrowing Date. If the outstanding principal balance of such Loan is
not paid at maturity, interest shall accrue at the Default Rate until paid in full, as further set forth herein.

2.5 Final Payment . Borrower shall pay the Final Payment with respect to each Loan on the date set forth in the Note evidencing such
Loan.

2.6 Interest Rate Calculation . Basic Interest, along with charges and fees under this Agreement and any Loan Document, shall be
calculated for actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year
were used. In no event shall Borrower be obligated to pay Lender interest, charges or fees at a rate in excess of the highest rate permitted by
applicable law from time to time in effect.

2.7 Default Interest . Subject to applicable grace periods, any unpaid payments of principal or interest or the Final Payment with
respect to any Loan shall bear interest from their respective maturities, whether scheduled or accelerated, at the Designated Rate for such Loan
plus five percent (5.00%) per annum, until paid in full, whether before or after judgment (the Default Rate ). Borrower shall pay such interest
on demand.





2.8 Late Charges. If Borrower is late in making any payment of principal or interest or Final Payment under this Agreement by more
than five (5) days, Borrower agrees to pay a late charge of five percent (5%) of the installment due, but not less than fifty dollars ($50.00) for
any one such delinquent payment. This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the
handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of the
circumstances existing on the date of this Agreement and represents a fair and reasonable estimate of the costs that will be sustained by Lender
due to the failure of Borrower to make timely payments. Borrower further agrees that proof of actual damages would be costly and
inconvenient. Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to
declare a default under this Agreement or any of the other Loan Documents or from exercising any other rights and remedies of Lender.

2.9 Lender's Records . Principal, Basic Interest, Final Payments and all other sums owed under any Loan Document shall be
evidenced by entries in records maintained by Lender for such purpose. Each payment on and any other credits with respect to principal, Basic
Interest, Final Payments and all other sums outstanding under any Loan Document shall be evidenced by entries in such records. Absent
manifest error, Lender's records shall be conclusive evidence thereof. Lender agrees to provide Borrower with copies of such records following
Borrowers reasonable request.

2.10 Grant of Security Interests; Filing of Financing Statements.

(a) To secure the timely payment and performance of all of Borrower's Obligations to Lender, Borrower hereby grants to Lender
continuing security interests in all of the Collateral. In connection with the foregoing, Borrower authorizes Lender to prepare and file any
financing statements describing the Collateral without otherwise obtaining the Borrowers signature or consent with respect to the filing of such
financing statements.

(b) Borrower is and shall remain absolutely and unconditionally liable for the performance of its obligations under the Loan
Documents, including, without limitation, any deficiency by reason of the failure of the Collateral to satisfy all amounts due Lender under any of
the Loan Documents.

(c) All Collateral pledged by Borrower under this Agreement and any Supplement shall secure the timely payment and performance of
all Obligations under this Agreement, the Notes and the other Loan Documents. Except as expressly provided in this Agreement, no Collateral
pledged under this Agreement or any Supplement shall be released until such time as all Obligations under this Agreement have been satisfied
and paid in full.


ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants that, except as set forth in the Supplement or the Schedule of Exceptions attached hereto as of the Closing
Date and each Borrowing Date:

3.1 Due Organization . Borrower is a corporation duly organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to conduct business and is in good standing in each other jurisdiction in which its business
is conducted or its properties are located, except where the failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect.

3.2 Authorization, Validity and Enforceability . The execution, delivery and performance of all Loan Documents executed by
Borrower are within Borrower's powers, have been duly authorized, and are not in conflict with Borrower's certificate of incorporation or by-
laws, or the terms of any charter or other organizational document of Borrower, as amended from time to time; and all such Loan Documents
constitute valid and binding obligations of Borrower, enforceable in accordance with their terms (except as may be limited by bankruptcy,
insolvency and similar laws affecting the enforcement of creditors' rights in general, and subject to general principles of equity).

3.3 Compliance with Applicable Laws . Borrower has complied with all licensing, permit and fictitious name requirements necessary
to lawfully conduct the business in which it is engaged, and to any sales, leases or the furnishing of services by Borrower, including without
limitation those requiring consumer or other disclosures, the noncompliance with which would have a Material Adverse Effect.





3.4 No Conflict . The execution, delivery, and performance by Borrower of all Loan Documents are not in material conflict with any
law, rule, regulation, order or directive, or any indenture, agreement, or undertaking to which Borrower is a party or by which Borrower may be
bound or affected. Without limiting the generality of the foregoing, the issuance of the Warrant to Lender (or its designee) and the grant of
registration rights in connection therewith do not violate any agreement or instrument by which Borrower is bound or require the consent of any
holders of Borrowers securities other than consents which have been obtained prior to the Closing Date.

3.5 No Litigation, Claims or Proceedings . There is no litigation, tax claim, proceeding or dispute pending, or, to the knowledge of
Borrower, threatened against or affecting Borrower, its property or the conduct of its business which could reasonably be expected to result in a
Material Adverse Effect.

3.6 Correctness of Financial Statements . Borrower's financial statements which have been delivered to Lender fairly and accurately
reflect Borrower's financial condition in accordance with GAAP as of the latest date of such financial statements; and, since that date there has
been no Material Adverse Change.

3.7 No Subsidiaries . Borrower is not a majority owner of or in a control relationship with any other business entity.

3.8 Environmental Matters . To its knowledge after reasonable inquiry, Borrower has concluded that Borrower is in compliance with
Environmental Laws, except to the extent a failure to be in such compliance could not reasonably be expected to have a Material Adverse Effect.

3.9 No Event of Default . No Default or Event of Default has occurred and is continuing.

3.10 Full Disclosure . None of the representations or warranties made by Borrower in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of Borrower in connection with the Loan Documents (including disclosure materials delivered by or on behalf of
Borrower to Lender prior to the Closing Date or pursuant to Section 5.2 hereof), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.

3.11 Specific Representations Regarding Collateral.

(a) Title. Except for the security interests created by this Agreement and Permitted Liens, (i) Borrower is and will be the unconditional
legal and beneficial owner of the Collateral, and (ii) the Collateral is genuine and subject to no Liens, rights or defenses of others. Except for the
security interests created by this Agreement and Permitted Liens, there exist no prior assignments or encumbrances of record with the U.S.
Patent and Trademark Office or U.S. Copyright Office affecting any Collateral in favor of any third party.





(b) Rights to Payment. The names of the obligors, amount owing to Borrower, due dates and all other information with respect to the
Rights to Payment are and will be correctly stated in all material respects in all Records relating to the Rights to Payment. Borrower further
represents and warrants, to its knowledge, that each Person appearing to be obligated on a Right to Payment has authority and capacity to
contract and is bound as it appears to be.

(c) Location of Collateral. Borrower's chief executive office, Inventory, Records, Equipment, and any other offices or places of
business are located at the address(es) shown on the Supplement.

(d) Business Names. Other than its full corporate name, Borrower has not conducted business using any trade names or fictitious
business names except as shown on the Supplement.

3.12 Copyrights, Patents, Trademarks and Licenses .

(a) Borrower owns or is licensed or otherwise has the right to use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other similar rights that are reasonably necessary for the operation of its business, without conflict with
the rights of any other Person.

(b) To Borrower's knowledge, no slogan or other advertising device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Borrower infringes upon any rights held by any other Person.

(c) No claim or litigation regarding any of the foregoing is pending or, to Borrower's knowledge, threatened, and no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard or code is pending or proposed which, in either case, could reasonably
be expected to have a Material Adverse Effect.

3.13 Regulatory Compliance. Borrower has met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Borrowers failure to comply with ERISA that is reasonably likely to
result in Borrowers incurring any liability that could have a Material Adverse Effect. Borrower is not an investment company or a company
controlled by an investment company within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning
of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act.

3.14 Survival. The representations and warranties of Borrower as set forth in this Agreement survive the execution and delivery of this
Agreement.

ARTICLE 4 - CONDITIONS PRECEDENT

4.1 Conditions to First Loan . The obligation of Lender to make its first Loan hereunder is, in addition to the conditions precedent
specified in Section 4.2 and in any Supplement, subject to the fulfillment of the following conditions and to the receipt by Lender of the
documents described below, duly executed and in form and substance satisfactory to Lender and its counsel:

(a) Resolutions . A certified copy of the resolutions of the Board of Directors of Borrower authorizing the execution, delivery and
performance by Borrower of the Loan Documents.

(b) Incumbency and Signatures . A certificate of the secretary of Borrower certifying the names of the officer or officers of Borrower
authorized to sign the Loan Documents, together with a sample of the true signature of each such officer.

(c) Legal Opinion . The opinion of legal counsel for Borrower as to such matters as Lender may reasonably request, including the
matters covered by Sections 3.1, 3.2, 3.4 and 3.5 hereof.

(d) Certificate and By-Laws . Certified copies of the Certificate of Incorporation and By-Laws of Borrower, as amended through the
Closing Date.

(e) This Agreement . Original counterparts of this Agreement and the initial Supplement, with all schedules completed and attached
thereto, and disclosing such information as is acceptable to Lender.

(f) Financing Statements . Filing copies (or other evidence of filing satisfactory to Lender and its counsel) of such UCC financing
statements, collateral assignments, account control agreements, and termination statements, with respect to the Collateral as Lender shall request.


(g) Insurance Certificates . Insurance certificates showing Lender as loss payee or additional insured.

(h) Lien Searches . UCC lien, judgment, bankruptcy and tax lien searches of Borrower from such jurisdictions or offices as Lender
may reasonably request, all as of a date reasonably satisfactory to Lender and its counsel.

(i) Good Standing Certificate . A certificate of status or good standing of Borrower as of a date acceptable to Lender from Delaware
and Pennsylvania.

(j) Warrant(s) . An original warrant issued by Borrower to Lender (or its designee) exercisable for such number, type and class of
shares of Borrower's capital stock, and for an initial exercise price as is specified in the Supplement.

(k) Intellectual Property Security Agreement. An Intellectual Property Security Agreement executed by Borrower substantially in
the form attached as Exhibit G to the Supplement.

(l) Other Documents . Such other documents and instruments as Lender may reasonably request to effectuate the intents and purposes
of this Agreement.

4.2 Conditions to All Loans . The obligation of Lender to make its initial Loan and each subsequent Loan is subject to the following
further conditions precedent that:




(a) No Default . No Default or Event of Default has occurred and is continuing or will result from the making of any such Loan, and
the representations and warranties of Borrower contained in Article 3 of this Agreement and Part 3 of the Supplement are true and correct as of
the Borrowing Date of such Loan.

(b) No Material Adverse Change . No event has occurred that has had or could reasonably be expected to have a Material Adverse
Change.

(c) Borrowing Request . Borrower shall have delivered to Lender a Borrowing Request for such Loan.

(d) Note . Borrower shall have delivered an original executed Note evidencing such Loan, substantially in the form attached to the
Supplement as an exhibit.

(e) Supplemental Lien Filings . Borrower shall have executed and delivered such amendments or supplements to this Agreement and
additional Security Documents, financing statements and third party waivers as Lender may reasonably request in connection with the proposed
Loan, in order to create, protect or perfect or to maintain the perfection of Lender's Liens on the Collateral.

(f) VCOC Limitation . Lender shall not be obligated to make any Loan under its Commitment if at the time of or after giving effect to
the proposed Loan Lender would no longer qualify as: (A) a venture capital operating company under U.S. Department of Labor Regulations
Section 2510.3-101(d), Title 29 of the Code of Federal Regulations, as amended; and (B) a business development company under the
provisions of federal Investment Company Act of 1940, as amended; and (C) a regulated investment company under the provisions of the
Internal Revenue Code of 1986, as amended. In the event that Lender fails to make any Loan pursuant to this Section 4.2(f) then the initial
number of shares of stock issuable under the Warrant issued to Lenders parent company shall be reduced, such reduction being in proportion to
the amount of Lenders Commitment that it has failed to fund.

(g) Financial Projections . Borrower shall have delivered to Lender Borrowers business plan and/or financial projections or forecasts
as most recently approved by Borrowers Board of Directors.


ARTICLE 5 - AFFIRMATIVE COVENANTS

During the term of this Agreement and until its performance of all Obligations, Borrower will:

5.1 Notice to Lender . Promptly give written notice to Lender of:

(a) Any litigation or administrative or regulatory proceeding affecting Borrower where the amount claimed against Borrower is at the
Threshold Amount or more, or where the granting of the relief requested could have a Material Adverse Effect; or of the acquisition by Borrower
of any commercial tort claim, including brief details of such claim and such other information as Lender may reasonably request to enable
Lender to better perfect its Lien in such commercial tort claim as Collateral.

(b) Any substantial dispute which may exist between Borrower and any governmental or regulatory authority that could reasonably be
expected to result in a Material Adverse Effect.

(c) The occurrence of any Default or any Event of Default.

(d) Any change in the location of any of Borrower's places of business or Collateral at least thirty (30) days in advance of such change,
or of the establishment of any new, or the discontinuance of any existing, place of business.

(e) Any dispute or default by Borrower or any other party under any joint venture, partnering, distribution, cross-licensing, strategic
alliance, collaborative research or manufacturing, license or similar agreement which could reasonably be expected to have a Material Adverse
Effect.

(f) Any other matter which has resulted or might reasonably result in a Material Adverse Change.

5.2 Financial Statements . Deliver to Lender or cause to be delivered to Lender, in form and detail satisfactory to Lender the
following financial and other information, which Borrower warrants shall be accurate and complete in all material respects:

(a) Monthly Financial Statements . As soon as available but no later than thirty (30) days after the end of each month, Borrower's
balance sheet as of the end of such period, and Borrower's income statement for such period and for that portion of Borrower's financial

reporting year ending with such period, prepared in accordance with GAAP and attested by a responsible financial officer of Borrower as being
complete and correct and fairly presenting Borrower's financial condition and the results of Borrower's operations as of the date thereof. After a
Qualified Public Offering, the foregoing interim financial statements shall be delivered no later than 45 days after each fiscal quarter and for the
quarter-annual fiscal period then ended.




(b) Year-End Financial Statements . Contemporaneously with the delivery to the Board of Directors, a complete copy of Borrower's
audit report for each financial reporting year of Borrower (or, if Borrowers Board of Directors has waived the requirement for an audit with
respect to a particular financial reporting year, then an unaudited report for such year), which shall include balance sheet, income statement,
statement of changes in equity and statement of cash flows for such year, prepared in accordance with GAAP and certified by an independent
certified public accountant selected by Borrower and reasonably satisfactory to Lender (the Accountant ) unless the Board of Directors has
waived the audit requirement. Unless Borrowers Board of Directors has waived the requirement for an audit with respect to a particular
financial reporting year, the Accountant's certification shall not be qualified or limited due to a restricted or limited examination by the
Accountant of any material portion of Borrower's records or otherwise.

(c) Compliance Certificates . Simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b)
above, a certificate of the chief financial officer of Borrower substantially in the form of Exhibit C to the Supplement stating whether any
Default or Event of Default exists on the date of such certificate, and if so, setting forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto.

(d) Government Required Reports; Press Releases . Promptly after sending, issuing, making available, or filing, copies of all
statements released to any news media for publication, all reports, proxy statements, and financial statements that Borrower sends or makes
available to its stockholders, and, not later than five (5) days after actual filing or the date such filing was first due, all registration statements and
reports that Borrower files or is required to file with the Securities and Exchange Commission, or any other governmental or regulatory
authority.

(e) Other Information . Such other statements, lists of material property and accounts, budgets, sales projections, forecasts, reports,
operating plans, financial exhibits, and subject to compliance with applicable securities laws and regulations thereunder, information relating to
equity financings consummated after the Closing Date (including post-closing capitalization table(s)), or other information as Lender may from
time to time reasonably request.

5.3 Managerial Assistance from Lender . Permit Lender to substantially participate in, and substantially influence the conduct of
management of Borrower through the exercise of management rights, as that term is defined in 29 C.F.R. 2510.3-101(d), including without
limitation the following rights:

(a) Borrower agrees that (i) it will make its officers, directors, employees and affiliates reasonably available at Borrowers offices at
such times as Lender may reasonably request for Lender to consult with and advise as to the conduct of Borrowers business, its equipment and
financing plans, and its financial condition and prospects, (ii) Lender shall have the right to inspect Borrowers books, records, facilities and
properties at reasonable times during normal business hours on reasonable advance notice, and (iii) subject to any voting agreement (or the like)
among Borrower and its stockholders, Lender shall be entitled to recommend prospective candidates for election or nomination for election to
Borrowers Board of Directors and Borrower shall give due consideration to (but shall not be bound by) such recommendations, it being the
intention of the parties that Lender shall be entitled through such rights, inter alia , to furnish significant managerial assistance, as defined in
Section 2(a)(47) of the Investment Company Act of 1940, to Borrower.

(b) Without limiting the generality of (a) above, if Lender reasonably believes that financial or other developments affecting Borrower
have impaired or are likely to impair Borrower's ability to perform its obligations under this Agreement, permit Lender reasonable access to
Borrower's management and/or Board of Directors and the opportunity to present Lender's views with respect to such developments.

Lender shall cooperate with Borrower to ensure that the exercise of Lenders rights shall not disrupt the business of Borrower. The rights
enumerated above shall not be construed as giving Lender control over Borrowers management or policies.

5.4 Existence . Maintain and preserve Borrower's existence, present form of business, and all rights and privileges necessary or
desirable in the normal course of its business; and keep all Borrower's property in good working order and condition, ordinary wear and tear
excepted.





5.5 Insurance . Obtain and keep in force insurance in such amounts and types as is usual in the type of business conducted by
Borrower, with insurance carriers having a policyholder rating of not less than A and financial category rating of Class VII in Best's
Insurance Guide, unless otherwise approved by Lender. Such insurance policies must be in form and substance satisfactory to Lender, and shall
list Lender as an additional insured or loss payee, as applicable, on endorsement(s) in form reasonably acceptable to Lender. Borrower shall
furnish to Lender such endorsements, and upon Lender's request, copies of any or all such policies.

5.6 Accounting Records . Maintain adequate books, accounts and records, and prepare all financial statements in accordance with
GAAP, and in compliance with the regulations of any governmental or regulatory authority having jurisdiction over Borrower or Borrower's
business; and permit employees or agents of Lender at such reasonable times as Lender may request, at Borrower's reasonable expense, to
inspect Borrower's properties, and at Lenders expense, to examine, and make copies and memoranda of Borrower's books, accounts and records.

5.7 Compliance With Laws . Comply with all laws (including Environmental Laws), rules, regulations applicable to, and all orders
and directives of any governmental or regulatory authority having jurisdiction over, Borrower or Borrower's business, and with all material
agreements to which Borrower is a party, except where the failure to so comply would not have a Material Adverse Effect.

5.8 Taxes and Other Liabilities . Pay all Borrower's Indebtedness when due; pay all taxes and other governmental or regulatory
assessments before delinquency or before any penalty attaches thereto, except as may be contested in good faith by the appropriate procedures
and for which Borrower shall maintain appropriate reserves; and timely file all required tax returns.

5.9 Special Collateral Covenants.

(a) Maintenance of Collateral; Inspection. Do all things reasonably necessary to maintain, preserve, protect and keep all Collateral
in good working order and salable condition, ordinary wear and tear excepted, deal with the Collateral in all ways as are considered reasonable
commercial practice by owners of like property, and use the Collateral lawfully and, to the extent applicable, only as permitted by Borrower's
insurance policies. Maintain, or cause to be maintained, complete and accurate Records relating to the Collateral. Upon reasonable prior notice
at reasonable times during normal business hours, Borrower hereby authorizes Lender's officers, employees, representatives and agents to
inspect the Collateral and to discuss the Collateral and the Records relating thereto with Borrower's officers, and, in the case of any Right to
Payment, with any Person which is or may be obligated thereon.

(b) Documents of Title. Not sign or authorize the signing of any financing statement or other document naming Borrower as debtor or
obligor, or acquiesce or cooperate in the issuance of any bill of lading, warehouse receipt or other document or instrument of title with respect to
any Collateral, except those negotiated to Lender, or those naming Lender as secured party, or if solely to create, perfect or maintain a Permitted
Lien.

(c) Change in Location or Name. Without at least 30 days' prior written notice to Lender: (a) not relocate any Collateral or Records, its
chief executive office, or establish a place of business at a location other than as specified in the Supplement; and (b) not change its name,
mailing address, location of Collateral, jurisdiction of incorporation or its legal structure.

(d) Decals, Markings. At the request of Lender, firmly affix a decal, stencil or other marking to designated items of Equipment,
indicating thereon the security interest of Lender.

(e) Agreement With Real Property Owner/Landlord. Obtain and maintain such acknowledgments, consents, waivers and
agreements from the owner, lienholder, mortgagee and landlord with respect to any real property on which Equipment is located as Lender may
reasonably require, all in form and substance satisfactory to Lender.

(f) Certain Agreements on Rights to Payment. Other than in the ordinary course of business, not make any material discount, credit,
rebate or other reduction in the original amount owing on a Right to Payment or accept in satisfaction of a Right to Payment less than the
original amount thereof.





5.10 Authorization for Automated Clearinghouse Funds Transfer. (i) Authorize Lender to initiate debit entries to Borrowers Primary
Operating Account, specified in the Supplement hereto, through Automated Clearinghouse ( ACH ) transfers, in order to satisfy regularly
scheduled; payments of principal, interest and Final Payments (ii) provide Lender at least thirty (30) days notice of any change in Borrowers
Primary Operating Account; and (iii) grant Lender any additional authorizations necessary to begin ACH debits from a new account which
becomes the Primary Operating Account.


ARTICLE 6 - NEGATIVE COVENANTS

During the term of this Agreement and until the performance of all Obligations, Borrower will not:

6.1 Indebtedness. Be indebted for borrowed money, the deferred purchase price of property, or leases which would be capitalized in
accordance with GAAP; or become liable as a surety, guarantor, accommodation party or otherwise for or upon the obligation of any other
Person, except:

(a) Indebtedness incurred for the acquisition of supplies or inventory on normal trade credit;

(b) Indebtedness incurred pursuant to one or more transactions permitted under Section 6.4 ;

(c) Indebtedness of Borrower under this Agreement;

(d) Subordinated Debt;

(e) Indebtedness of Borrower under the 2007 Loan Agreement;

(f) Bank Debt not to exceed $500,000 in aggregate principal amount outstanding at any time (the Cap ), provided that the Cap shall be
automatically increased to $1,500,000 after such time as Borrower has provided satisfactory evidence to Lender, as determined by Lender in its
reasonable judgment, that Borrower has achieved at least 90% of Borrowers aggregate revenue and expense plan for the 9-month period ending
on June 30, 2009 (as set forth in the business plan delivered to Lender on or prior to the Closing Date in accordance with Section 4.2(g), with
respect to the initial Loan);

(g) Indebtedness for automobile leases and related insurance not to exceed $18,000 per calendar year;

(h) Indebtedness for leased office Equipment not to exceed $30,000 per calendar year; and

(i) any Indebtedness approved by Lender on or prior to the Closing Date as shown on Schedule 6.1 hereto.

6.2 Liens . Create, incur, assume or permit to exist any Lien, or grant any other Person a negative pledge, on any of Borrower's
property, except Permitted Liens. Borrower and Lender agree that this covenant is not intended to constitute a lien, deed of trust, equitable
mortgage, or security interest of any kind on any of Borrower's real property, and this Agreement shall not be recorded or
recordable. Notwithstanding the foregoing, however, violation of this covenant by Borrower shall constitute an Event of Default. Without
limiting the generality of the foregoing, and as a material inducement to Lenders making of the Commitment and entering into the Loan
Documents, Borrower agrees that (i) it shall not assign, mortgage, pledge, grant a security interest in, or encumber any of Borrowers Intellectual
Property, and (ii) it shall not permit the inclusion into any agreement, document, instrument or other arrangement with any Person (except with
or in favor of Lender) which directly or indirectly prohibits or has the effect of prohibiting Borrower from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrowers Intellectual Property, except as is otherwise permitted in Section 6.5(i)
of this Agreement, or would otherwise be a Permitted Lien hereunder.

6.3 Dividends . Except after a Qualified Public Offering, pay any dividends or purchase, redeem or otherwise acquire or make any
other distribution with respect to any of Borrower's capital stock, except (a) dividends or other distributions solely of capital stock of Borrower,
and (b) so long as no Event of Default has occurred and is continuing, repurchases of stock from employees upon termination of employment
under reverse vesting or similar repurchase plans not to exceed $100,000 in any calendar year.





6.4 Changes/Mergers . Liquidate or dissolve; or enter into any consolidation, merger or other combination in which the stockholders of
the Borrower immediately prior to the first such transaction own less than 50% of the voting stock of the Borrower immediately after giving
effect to such transaction or related series of such transactions, except that Borrower may consolidate or merge so long as: (A) the entity that
results from such merger or consolidation (the Surviving Entity ) shall have executed and delivered to Lender an agreement in form and
substance reasonably satisfactory to Lender, containing an assumption by the Surviving Entity of the due and punctual payment and performance
of all Obligations and performance and observance of each covenant and condition of Borrower in the Loan Documents; (B) all such obligations
of the Surviving Entity to Lender shall be guaranteed by any entity that directly or indirectly owns or controls more than 50% of the voting stock
of the Surviving Entity; (C) immediately after giving effect to such merger or consolidation, no Event of Default or, event which with the lapse
of time or giving of notice or both, would result in an Event of Default shall have occurred and be continuing; and (D) the credit risk to Lender,
in its sole discretion, of the Surviving Entity shall not be increased. In determining whether the proposed merger or consolidation would result in
an increased credit risk, Lender may consider, among other things, changes in Borrowers management team, employee base, access to equity
markets, venture capital support, financial position and/or disposition of intellectual property rights which may reasonably be anticipated as a
result of the transaction.

6.5 Sales of Assets . Sell, transfer, lease, license or otherwise dispose of (a Transfer ) any of Borrowers assets except (i) licenses of
Intellectual Property in the ordinary course of business consistent with industry practice, provided that such licenses of Intellectual Property
neither result in a legal transfer of title of the licensed Intellectual Property nor have the same effect as a sale of such Intellectual Property; (ii)
Transfers of worn-out, obsolete or surplus property (each as determined by the Borrower in its reasonable judgment) not constituting Equipment
as of which a Loan was made hereunder; (iii) Transfers of Inventory in the ordinary course of business not constituting Equipment as of which a
Loan was made hereunder; (iv) Transfers constituting Permitted Liens; and (v) Transfers permitted in Section 6.6 hereunder.

6.6 Loans/Investments . Make or suffer to exist any loans, guaranties, advances, or investments, except:

(a) accounts receivable in the ordinary course of Borrower's business;

(b) investments in domestic certificates of deposit issued by, and other domestic investments with, financial institutions organized under
the laws of the United States or a state thereof, having at least One Hundred Million Dollars ($100,000,000) in capital and a rating of at least
investment grade or A by Moody's or any successor rating agency;

(c) investments in marketable obligations of the United States of America and in open market commercial paper given the highest credit
rating by a national credit agency and maturing not more than one year from the creation thereof;

(d) temporary advances to cover incidental expenses to be incurred in the ordinary course of business; and

(e) investments in joint ventures, strategic alliances, licensing and similar arrangements customary in Borrowers industry and which do
not require Borrower to assume or otherwise become liable for the material obligations of any third party not directly related to or arising out of
such arrangement or, without the prior written consent of Lender, require Borrower to transfer ownership of non-cash assets to such joint venture
or other entity.

6.7 Transactions With Related Persons . Directly or indirectly enter into any transaction with or for the benefit of a Related Person on
terms more favorable to the Related Person than would have been obtainable in an arms' length dealing.

6.8 Other Business . Engage in any material line of business other than the business Borrower conducts as of the Closing Date.

6.9 Financing Statements and Other Actions. Fail to execute and deliver to Lender all financing statements, notices and other
documents from time to time reasonably requested by Lender to maintain a first perfected security interest in the Collateral in favor of Lender;
perform such other acts, and execute and deliver to Lender such additional conveyances, assignments, agreements and instruments, as Lender
may at any time request in connection with the administration and enforcement of this Agreement or Lender's rights, powers and remedies
hereunder.

6.10 Compliance. Become an investment company or controlled by an investment company, within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the
purpose of purchasing or carrying margin stock, or use the proceeds of any Loan for such purpose. Fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair
Labor Standards Act or violate any law or regulation, which violation could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Lenders Lien on the Collateral, or permit any of its subsidiaries to do any of the foregoing.





6.11 Other Deposit and Securities Accounts. Maintain any deposit accounts or accounts holding securities owned by Borrower except
(i) Deposit Accounts and investment/securities accounts as set forth in the Supplement, and (ii) other Deposit Accounts and securities/investment
accounts, in each case, with respect to which Borrower and Lender shall have taken such action as Lender reasonably deems necessary to obtain
a perfected first priority security interest therein, subject to Permitted Liens. The provisions of the previous sentence shall not apply to Deposit
Accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrowers
employees.

6.12 Prepayment of Indebtedness . Prepay, redeem or otherwise satisfy in any manner prior to the scheduled repayment thereof
any Indebtedness (other than the Loans). Notwithstanding the foregoing, Lender agrees that the conversion or exchange into Borrowers equity
securities of any Indebtedness (other than the Loans) shall not be prohibited by this Section 6.12.

ARTICLE 7 - EVENTS OF DEFAULT

7.1 Events of Default; Acceleration . Upon the occurrence and during the continuation of any Default, the obligation of Lender to
make any additional Loan shall be suspended. The occurrence of any of the following (each, an Event of Default ) that has not been cured
within any applicable cure period or waived by Lender shall terminate any obligation of Lender to make any additional Loan; and shall, at the
option of Lender (1) make all sums of Basic Interest and principal, all Final Payments, and any Obligations and other amounts owing under any
Loan Documents immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment
or dishonor or any other notices or demands, and (2) give Lender the right to exercise any other right or remedy provided by contract or
applicable law:

(a) Borrower shall fail to pay any principal, interest or Final Payment under this Agreement or any Note, or fail to pay any fees or other
charges when due under any Loan Document, and such failure continues for three (3) Business Days or more after the same first becomes due; or
an Event of Default as defined in any other Loan Document shall have occurred.

(b) Any representation or warranty made, or financial statement, certificate or other document provided, by Borrower under any Loan
Document shall prove to have been false or misleading in any material respect when made or deemed made herein.

(c) Borrower shall fail to pay its debts generally as they become due or shall commence any Insolvency Proceeding with respect to itself;
an involuntary Insolvency Proceeding shall be filed against Borrower, or a custodian, receiver, trustee, assignee for the benefit of creditors, or
other similar official, shall be appointed to take possession, custody or control of the properties of Borrower, and such involuntary Insolvency
Proceeding, petition or appointment is acquiesced to by Borrower or is not dismissed within sixty (60) days; or the dissolution or termination of
the business or permanent cessation of operations of Borrower; or Borrower shall take any corporate action for the purpose of effecting,
approving, or consenting to any of the foregoing.

(d) Borrower shall be in default beyond any applicable period of grace or cure under any other agreement involving the borrowing of
money, the purchase of property, the advance of credit or any other monetary liability of any kind to Lender or to any Person which results in the
acceleration of payment of such obligation in an amount in excess of the Threshold Amount.

(e) Any governmental or regulatory authority shall take any judicial or administrative action, or any defined benefit pension plan
maintained by Borrower shall have any unfunded liabilities, any of which would reasonably be expected to have a Material Adverse Effect.

(f) Any sale, transfer or other disposition of all or a substantial or material part of the assets of Borrower, including without limitation to
any trust or similar entity, shall occur, other than in accordance with Section 6.4 or Section 6.5.

(g) Any judgment(s) singly or in the aggregate in excess of the Threshold Amount shall be entered against Borrower which remain
unsatisfied, unvacated or unstayed pending appeal for ten (10) or more days after entry thereof.





(h) At any time prior to the initial sale of Borrowers equity securities to the public pursuant to a registration statement filed under the
Securities Act of 1933, as amended, any Person or two or more Persons (other than any Excluded Person as defined below) acting in concert
shall have acquired (in a single transaction or series of related transactions) beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission) of outstanding shares of voting stock of Borrower representing fifty percent (50%) or more of the voting
power of all shares of Borrowers voting stock that are outstanding immediately after such acquisition. As used in this paragraph, Excluded
Person means: (i) any Person who is a stockholder of Borrower as of the Closing Date; (ii) a venture capital firm or similar investment fund or
institution; or (iii) an affiliate of any Person described in clause (i) or (ii).

(i) Borrower shall fail to perform or observe any material covenant contained in Article 6 of this Agreement.

(j) Borrower shall fail to perform or observe any covenant contained in Article 5 or elsewhere in this Agreement or any other Loan
Document (other than a covenant which is dealt with specifically elsewhere in this Article 7) and, if capable of being cured, the breach of such
covenant is not cured within 30 days after the sooner to occur of Borrower's receipt of notice of such breach from Lender or the date on which
such breach first becomes known to any officer of Borrower; provided , however that if such breach is not capable of being cured within such
30-day period and Borrower timely notifies Lender of such fact and Borrower diligently pursues such cure, then the cure period shall be
extended to the date requested in Borrower's notice but in no event more than 90 days from the initial breach; provided , further , that such
additional 60-day opportunity to cure shall not apply in the case of any failure to perform or observe any covenant which has been the subject of
a prior failure within the preceding 180 days or which is a willful and knowing breach by Borrower.

7.2 Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, Lender shall be entitled to, at its
option, exercise any or all of the rights and remedies available to a secured party under the UCC or any other applicable law, and exercise any or
all of its rights and remedies provided for in this Agreement and in any other Loan Document. The obligations of Borrower under this
Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Obligations is rescinded or must
otherwise be returned by Lender upon, on account of, or in connection with, the insolvency, bankruptcy or reorganization of Borrower or
otherwise, all as though such payment had not been made.

7.3 Sale of Collateral. Upon the occurrence and during the continuance of an Event of Default, Lender may sell all or any part of the
Collateral, at public or private sales, to itself, a wholesaler, retailer or investor, for cash, upon credit or for future delivery, and at such price or
prices as Lender may deem commercially reasonable. To the extent permitted by law, Borrower hereby specifically waives all rights of
redemption and any rights of stay or appraisal which it has or may have under any applicable law in effect from time to time. Any such public or
private sales shall be held at such times and at such place(s) as Lender may determine. In case of the sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by Lender until the selling price is paid by the purchaser, but Lender shall not
incur any liability in case of the failure of such purchaser to pay for the Collateral and, in case of any such failure, such Collateral may be
resold. Lender may, instead of exercising its power of sale, proceed to enforce its security interest in the Collateral by seeking a judgment or
decree of a court of competent jurisdiction. Without limiting the generality of the foregoing, if an Event of Default is in effect,

(1) Subject to the rights of any third parties, and any existing licenses or sublicenses, Lender may license, or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive basis, any Copyrights, Patents or Trademarks included in the Collateral
throughout the world for such term or terms, on such conditions and in such manner as Lender shall in its sole discretion determine;

(2) Lender may (without assuming any obligations or liability thereunder), at any time and from time to time, enforce (and shall have the
exclusive right to enforce) against any licensee or sublicensee all rights and remedies of Borrower in, to and under any Copyright Licenses,
Patent Licenses or Trademark Licenses and take or refrain from taking any action under any thereof, and Borrower hereby releases Lender from,
and agrees to hold Lender free and harmless from and against any claims arising out of or relating to, any lawful action so taken or omitted to be
taken with respect thereto other than claims arising out of Lender's gross negligence or willful misconduct; and





(3) Upon request by Lender, Borrower will execute and deliver to Lender a power of attorney, in form and substance reasonably
satisfactory to Lender for the implementation of any lease, assignment, license, sublicense, grant of option, sale or other disposition of a
Copyright, Patent or Trademark. In the event of any such disposition pursuant to this clause 3 , Borrower shall cooperate with Lender and use
reasonable efforts to assist Lender with respect to its know-how and information relating to the products or services made or rendered in
connection with the products bearing Trademarks, and its information relating to the distribution of said products, to Lender.

7.4 Borrower's Obligations Upon Default. Upon the request of Lender after the occurrence and during the continuance of an Event
of Default, Borrower will:

(a) Assemble and make available to Lender the Collateral at such place(s) as Lender shall reasonably designate, segregating all
Collateral so that each item is reasonably capable of identification; and

(b) Subject to the rights of any lessor, permit Lender, by Lender's officers, employees, agents and representatives, to enter any premises
where any Collateral is located, to take possession of the Collateral, to complete the processing, manufacture or repair of any Collateral, and to
remove the Collateral, or to conduct any public or private sale of the Collateral, all without any liability of Lender for rent or other compensation
for the use of Borrower's premises.

ARTICLE 8 - SPECIAL COLLATERAL PROVISIONS

8.1 Compromise and Collection. Borrower and Lender recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Rights to Payment; that certain of the Rights to Payment may be or become uncollectible in
whole or in part; and that the expense and probability of success of litigating a disputed Right to Payment may exceed the amount that
reasonably may be expected to be recovered with respect to such Right to Payment. Borrower hereby authorizes Lender, after and during the
continuance of an Event of Default, to compromise with the obligor, accept in full payment of any Right to Payment such amount as Lender
shall negotiate with the obligor, or abandon any Right to Payment. Any such action by Lender shall be considered commercially reasonable so
long as Lender acts in good faith based on information known to it at the time it takes any such action.

8.2 Performance of Borrower's Obligations. Without having any obligation to do so, after the occurrence and during the continuance
of a Default or an Event of Default and upon reasonable prior notice to Borrower, Lender may perform or pay any obligation which Borrower
has agreed to perform or pay under this Agreement, including, without limitation, the payment or discharge of taxes or Liens levied or placed on
or threatened against the Collateral. In so performing or paying, Lender shall determine the action to be taken and the amount necessary to
discharge such obligations. Borrower shall reimburse Lender on demand for any amounts paid by Lender pursuant to this Section, which
amounts shall constitute Obligations secured by the Collateral and shall bear interest from the date of demand at the Default Rate.

8.3 Power of Attorney. For the purpose of protecting and preserving the Collateral and Lender's rights under this Agreement,
Borrower hereby irrevocably appoints Lender, with full power of substitution, as its attorney-in-fact with full power and authority, after the
occurrence and during the continuance of an Event of Default, to do any act which Borrower is obligated to do hereunder; to exercise such rights
with respect to the Collateral as Borrower might exercise; to use such Inventory, Equipment, Fixtures or other property as Borrower might use;
to enter Borrower's premises; to give notice of Lender's security interest in, and to collect the Collateral; and before or after Default, to execute
and file in Borrower's name any financing statements (including amendments thereto and continuations thereof) or other Security Documents
necessary or desirable to create, maintain, perfect or continue the perfection of Lender's security interests in the Collateral. Borrower hereby
ratifies all that Lender shall lawfully do or cause to be done by virtue of this appointment.

8.4 Authorization for Lender to Take Certain Action. The power of attorney created in Section 8.3 is a power coupled with an
interest and shall be irrevocable. The powers conferred on Lender hereunder are solely to protect its interests in the Collateral and shall not
impose any duty upon Lender to exercise such powers. Lender shall be accountable only for amounts that it actually receives as a result of the
exercise of such powers and in no event shall Lender or any of its directors, officers, employees, agents or representatives be responsible to
Borrower for any act or failure to act, except for gross negligence or willful misconduct. After the occurrence and during the continuance of an
Event of Default, Lender may exercise this power of attorney without notice to or assent of Borrower, in the name of Borrower, or in Lender's
own name, from time to time in Lender's sole discretion and at Borrower's expense. To further carry out the terms of this Agreement, after the
occurrence and during the continuance of an Event of Default, Lender may:





(a) Execute any statements or documents or take possession of, and endorse and collect and receive delivery or payment of, any checks,
drafts, notes, acceptances or other instruments and documents constituting Collateral, or constituting the payment of amounts due and to become
due or any performance to be rendered with respect to the Collateral.

(b) Sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts; drafts, certificates and
statements under any commercial or standby letter of credit relating to Collateral; assignments, verifications and notices in connection with
Accounts; or any other documents relating to the Collateral, including without limitation the Records.

(c) Use or operate Collateral or any other property of Borrower for the purpose of preserving or liquidating Collateral.

(d) File any claim or take any other action or proceeding in any court of law or equity or as otherwise deemed appropriate by Lender for
the purpose of collecting any and all monies due or securing any performance to be rendered with respect to the Collateral.

(e) Commence, prosecute or defend any suits, actions or proceedings or as otherwise deemed appropriate by Lender for the purpose of
protecting or collecting the Collateral. In furtherance of this right, upon the occurrence and during the continuance of an Event of Default,
Lender may apply for the appointment of a receiver or similar official to operate Borrower's business.

(f) Prepare, adjust, execute, deliver and receive payment under insurance claims, and collect and receive payment of and endorse any
instrument in payment of loss or returned premiums or any other insurance refund or return, and apply such amounts at Lender's sole discretion,
toward repayment of the Obligations or replacement of the Collateral.

8.5 Application of Proceeds. Any Proceeds and other monies or property received by Lender pursuant to the terms of this Agreement
or any Loan Document may be applied by Lender first to the payment of expenses of collection, including without limitation reasonable
attorneys' fees, and then to the payment of the Obligations in such order of application as Lender may elect.

8.6 Deficiency. If the Proceeds of any disposition of the Collateral are insufficient to cover all costs and expenses of such sale and the
payment in full of all the Obligations, plus all other sums required to be expended or distributed by Lender, then Borrower shall be liable for any
such deficiency.

8.7 Lender Transfer. Upon the transfer of all or any part of the Obligations, Lender may transfer all or part of the Collateral and shall
be fully discharged thereafter from all liability and responsibility with respect to such Collateral so transferred, and the transferee shall be vested
with all the rights and powers of Lender hereunder with respect to such Collateral so transferred, but with respect to any Collateral not so
transferred, Lender shall retain all rights and powers hereby given.

8.8 Lender's Duties.

(a) Lender shall use reasonable care in the custody and preservation of any Collateral in its possession. Without limitation on other
conduct which may be considered the exercise of reasonable care, Lender shall be deemed to have exercised reasonable care in the custody and
preservation of such Collateral if such Collateral is accorded treatment substantially equal to that which Lender accords its own property, it being
understood that Lender shall not have any responsibility for ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, declining value, tenders or other matters relative to any Collateral, regardless of whether Lender has or is deemed to have knowledge
of such matters; or taking any necessary steps to preserve any rights against any Person with respect to any Collateral. Under no circumstances
shall Lender be responsible for any injury or loss to the Collateral, or any part thereof, arising from any cause beyond the reasonable control of
Lender.

(b) Lender may at any time deliver the Collateral or any part thereof to Borrower and the receipt of Borrower shall be a complete and
full acquittance for the Collateral so delivered, and Lender shall thereafter be discharged from any liability or responsibility therefor.





(c) Neither Lender, nor any of its directors, officers, employees, agents, attorneys or any other person affiliated with or representing
Lender shall be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower or
any other party through the ordinary negligence of Lender, or any of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Lender.

8.9 Termination of Security Interests. Upon the payment in full of the Obligations and satisfaction of all Borrowers obligations
under this Agreement and the other Loan Documents, and if Lender has no further obligations under its Commitment, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to Borrower. Upon any such termination, the Lender shall, at
Borrower's reasonable expense, execute and deliver to Borrower such documents as Borrower shall reasonably request to evidence such
termination.


ARTICLE 9 - GENERAL PROVISIONS

9.1 Notices . Any notice given by any party under any Loan Document shall be in writing and personally delivered, sent by overnight
courier, or United States mail, postage prepaid, or sent by facsimile, or other authenticated message, charges prepaid, to the other party's or
parties' addresses shown on the Supplement. Each party may change the address or facsimile number to which notices, requests and other
communications are to be sent by giving written notice of such change to each other party. Notice given by hand delivery shall be deemed
received on the date delivered; if sent by overnight courier, on the next Business Day after delivery to the courier service; if by first class mail,
on the third Business Day after deposit in the U.S. Mail; and if by facsimile, on the date of transmission.

9.2 Binding Effect . The Loan Documents shall be binding upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns; provided, however, that Borrower may not assign or transfer Borrower's rights or obligations under any Loan
Document. Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender's
rights and obligations under the Loan Documents. In connection with any of the foregoing, Lender may disclose all documents and information
which Lender now or hereafter may have relating to the Loans, Borrower, or its business. It is the intention of the parties that, as a venture
capital operating company, Venture Lending & Leasing V, LLC, the parent and sole owner of Lender ( LLC ), shall have the benefit of, and
the power to independently exercise, those management rights provided to Lender in Section 5.3. To that end, the references to Lender in
Sections 4.2(f), 5.1, 5.2, 5.3 and 5.9(a) hereof shall include LLC, and LLC shall have the right to exercise the advisory, inspection, information
and other rights given to lender under those Sections independently of Lender. No amendment or modification of this Agreement shall alter or
diminish LLCs rights under the preceding sentence without the consent of LLC.

9.3 No Waiver . Any waiver, consent or approval by Lender of any Event of Default or breach of any provision, condition, or covenant
of any Loan Document must be in writing and shall be effective only to the extent set forth in writing. No waiver of any breach or default shall
be deemed a waiver of any later breach or default of the same or any other provision of any Loan Document. No failure or delay on the part of
Lender in exercising any power, right, or privilege under any Loan Document shall operate as a waiver thereof, and no single or partial exercise
of any such power, right, or privilege shall preclude any further exercise thereof or the exercise of any other power, right or privilege. Lender
has the right at its sole option to continue to accept interest and/or principal payments due under the Loan Documents after default, and such
acceptance shall not constitute a waiver of said default or an extension of the maturity of any Loan unless Lender agrees otherwise in writing.

9.4 Rights Cumulative . All rights and remedies existing under the Loan Documents are cumulative to, and not exclusive of, any other
rights or remedies available under contract or applicable law.

9.5 Unenforceable Provisions . Any provision of any Loan Document executed by Borrower which is prohibited or unenforceable in
any jurisdiction, shall be so only as to such jurisdiction and only to the extent of such prohibition or unenforceability, but all the remaining
provisions of any such Loan Document shall remain valid and enforceable.

9.6 Accounting Terms . Except as otherwise provided in this Agreement, accounting terms and financial covenants and information
shall be determined and prepared in accordance with GAAP.





9.7 Indemnification; Exculpation . Borrower shall pay and protect, defend and indemnify Lender and Lender's employees, officers,
directors, shareholders, affiliates, correspondents, agents and representatives (other than Lender, collectively Agents ) against, and hold
Lender and each such Agent harmless from, all claims, actions, proceedings, liabilities, damages, losses, expenses (including, without limitation,
attorneys' fees and costs) and other amounts incurred by Lender and each such Agent, arising from (i) the matters contemplated by this
Agreement or any other Loan Documents, (ii) any dispute between Borrower and a third party, or (iii) any contention that Borrower has failed to
comply with any law, rule, regulation, order or directive applicable to Borrower's business; provided, however , that this indemnification shall
not apply to any of the foregoing incurred solely as the result of Lender's or any Agent's gross negligence or willful misconduct. This
indemnification shall survive the payment and satisfaction of all of Borrower's Obligations to Lender.

9.8 Reimbursement . Borrower shall reimburse Lender for all costs and expenses, including without limitation reasonable attorneys'
fees and disbursements expended or incurred by Lender in any arbitration, mediation, judicial reference, legal action or otherwise in connection
with (a) the preparation and negotiation of the Loan Documents, (b) the amendment and enforcement of the Loan Documents, including without
limitation during any workout, attempted workout, and/or in connection with the rendering of legal advice as to Lender's rights, remedies and
obligations under the Loan Documents, if and as such may be necessary, (c) collecting any sum which becomes due Lender under any Loan
Document, (d) any proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, or (e) the protection, preservation or
enforcement of any rights of Lender. For the purposes of this section, attorneys' fees shall include, without limitation, reasonable fees incurred
in connection with the following: (1) contempt proceedings; (2) discovery; (3) any motion, proceeding or other activity of any kind in
connection with an Insolvency Proceeding; (4) garnishment, levy, and debtor and third party examinations; and (5) postjudgment motions and
proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment. All of the foregoing costs and
expenses shall be payable upon demand by Lender, and if not paid within forty-five (45) days of presentation of invoices shall bear interest at the
highest applicable Default Rate.

9.9 Execution in Counterparts . This Agreement may be executed in any number of counterparts which, when taken together, shall
constitute but one agreement.

9.10 Entire Agreement . The Loan Documents are intended by the parties as the final expression of their agreement and
therefore contain the entire agreement between the parties and supersede all prior understandings or agreements concerning the subject matter
hereof. This Agreement may be amended only in a writing signed by Borrower and Lender.

9.11 Governing Law and Jurisdiction .

(a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF BORROWER AND LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.





9.12 Waiver of Jury Trial . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWER AND LENDER
EACH WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER AND LENDER EACH AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEMS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

ARTICLE 10 - DEFINITIONS

The definitions appearing in this Agreement or any Supplement shall be applicable to both the singular and plural forms of the defined
terms:

2007 Loan Agreement means that certain Loan and Security Agreement dated as of October 1, 2007, among Borrower, VLL4 and Lender,
together with all of the Loan Documents (as such term is defined therein), as the same have been and may be amended, supplemented, restated
or modified from time to time and any refinancings thereof.

Account means any account, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest and, in any event, shall include, without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to Borrower (including, without limitation, under any trade name, style or division thereof) whether arising
out of goods sold or services rendered by Borrower or from any other transaction, whether or not the same involves the sale of goods or services
by Borrower (including, without limitation, any such obligation that may be characterized as an account or contract right under the UCC) and all
of Borrower's rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of
Borrower's rights to any goods represented by any of the foregoing (including, without limitation, unpaid seller's rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), and all monies due or to become due to Borrower
under all purchase orders and contracts for the sale of goods or the performance of services or both by Borrower or in connection with any other
transaction (whether or not yet earned by performance on the part of Borrower), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.

Affiliate means any Person which directly or indirectly controls, is controlled by, or is under common control with Borrower. Control,
controlled by and under common control with mean direct or indirect possession of the power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or otherwise); provided, that control shall be conclusively presumed
when any Person or affiliated group directly or indirectly owns five percent (5%) or more of the securities having ordinary voting power for the
election of directors of a corporation.

Agreement means this Loan and Security Agreement and each Supplement thereto, as each may be amended or supplemented from time to
time.

Bank Debt means: (i) Indebtedness of Borrower (A) to a bank incurred for the purpose of financing capital Equipment acquisitions and (B)
secured solely by the Equipment financed with the proceeds of such Indebtedness and the Proceeds thereof, in which case the bank providing
such Indebtedness shall be permitted to have a first priority Lien on such Equipment and the Proceeds thereof; (ii) Indebtedness of Borrower (A)
to a bank which provides working capital financing to Borrower based upon a formula of eligible accounts receivable and (B) secured solely by
the Accounts and the cash and cash equivalents that constitute the Proceeds thereof, in which case the bank providing such Indebtedness shall be
permitted to have a first priority Lien on such Accounts and the cash and cash equivalents that constitute the Proceeds thereof; and (iii) any
combination of (i) and (ii).

Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. 101, et seq .), as amended.





Basic Interest means the fixed rate of interest payable on the outstanding balance of each Loan at the applicable Designated Rate.

Borrowing Date means the Business Day on which the proceeds of a Loan are disbursed by Lender.

Borrowing Request means a written request from Borrower in substantially the form of Exhibit B to the Supplement, requesting the
funding of one or more Loans on a particular Borrowing Date.

Business Day means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are
authorized or required by law to close.

Chattel Paper means any chattel paper, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

Closing Date means the date of this Agreement.

Collateral means all of Borrowers right, title and interest in and to the following property, whether now owned or hereafter acquired and
wherever located: (a) all Receivables; (b) all Equipment; (c) all Fixtures; (d) all General Intangibles; (e) all Inventory; (f) all Investment
Property; (g) all Deposit Accounts; (h) all other Goods and personal property of Borrower, whether tangible or intangible and whether now or
hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located; (i) all Records; and (j) all Proceeds of
each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.

Commitment means the obligation of Lender to make Loans to Borrower up to the aggregate principal amount set forth in the Supplement.

Copyright License means any written agreement granting any right to use any Copyright or Copyright registration now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

Copyrights means all of the following now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest: (i) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof or of any
other country; (ii) all registrations, applications and recordings in the United States Copyright Office or in any similar office or agency of the
United States, any State thereof or any other country; (iii) all continuations, renewals or extensions thereof; and (iv) any registrations to be issued
under any pending applications.

Default means an event which with the giving of notice, passage of time, or both would constitute an Event of Default.

Default Rate is defined in Section 2.7.

Deposit Accounts means any deposit accounts, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.

Designated Rate means the rate of interest per annum described in the Supplement as being applicable to an outstanding Loan from time to
time.

Documents means any documents, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

Environmental Laws means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to environmental, health, or safety matters.

Equipment means any equipment, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and any and all additions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

Event of Default means any event described in Section 7.1.

Final Payment means, with respect to a Loan, an amount equal to that percentage of the original principal amount of such Loan and payable
at the time specified in the Supplement or the Note evidencing such Loan.





Fixtures means any fixtures, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.

GAAP means generally accepted accounting principles and practices consistent with those principles and practices promulgated or adopted
by the Financial Accounting Standards Board and the Board of the American Institute of Certified Public Accountants, their respective
predecessors and successors. Each accounting term used but not otherwise expressly defined herein shall have the meaning given it by GAAP.

General Intangibles means any general intangibles, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest and, in any event, shall include, without limitation, all right, title and interest that
Borrower may now or hereafter have in or under any contract, all customer lists, Copyrights, Trademarks, Patents, websites, domain names, and
all applications therefor and reissues, extensions, or renewals thereof, other rights to Intellectual Property, interests in partnerships, joint ventures
and other business associations, Licenses, permits, trade secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, recipes, experience,
processes, models, drawings, materials and records, goodwill (including, without limitation, the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License), claims in or under insurance policies, including unearned
premiums, uncertificated securities, money, cash or cash equivalents, deposit, checking and other bank accounts, rights to sue for past, present
and future infringement of Copyrights, Trademarks and Patents, rights to receive tax refunds and other payments and rights of indemnification.

Goods means any goods, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.

Indebtedness of any Person means at any date, without duplication and without regard to whether matured or unmatured, absolute or
contingent: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes, or
other similar debt instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business; (iv) all obligations of such Person as lessee under capital leases (and not real estate
leases); (v) all obligations of such Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter of credit,
banker's acceptance, or similar instrument, whether drawn or undrawn; (vi) all obligations of such Person to purchase securities which arise out
of or in connection with the sale of the same or substantially similar securities; (vii) all obligations of such Person to purchase, redeem,
exchange, convert or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock,
now or hereafter outstanding, except to the extent that such obligations remain performable solely at the option of such Person; (viii) all
obligations to repurchase assets previously sold (including any obligation to repurchase any accounts or chattel paper under any factoring,
receivables purchase, or similar arrangement); (ix) obligations of such Person under interest rate swap, cap, collar or similar hedging
arrangements; and (x) all obligations of others of any type described in clause (i) through clause (ix) above guaranteed by such Person.

Insolvency Proceeding means with respect to a Person (a) any case, action or proceeding before any court or other governmental authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors with respect to such
Person, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement
in respect of such Persons creditors generally or any substantial portion of its creditors, undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code, but in each case, excluding any avoidance or similar action against such Person commenced by an assignee for
the benefit of creditors, bankruptcy trustee, debtor in possession, or other representative of another Person or such other Persons estate.

Instruments means any instrument, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

Intellectual Property means all Copyrights, Trademarks, Patents, Licenses, trade secrets, source codes, customer lists, proprietary or
confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, skill, expertise, experience, processes, models, drawings, materials, records and goodwill associated with the foregoing.





Intellectual Property Security Agreement means any Intellectual Property Security Agreement executed and delivered by Borrower in
favor of Lender, as the same may be amended, supplemented, or restated from time to time.

Inventory means any inventory, as such term is defined in the UCC, wherever located, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest, and, in any event, shall include, without limitation, all inventory, goods and other
personal property that are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished under a contract of service or
that constitute raw materials, work in process or materials used or consumed or to be used or consumed in Borrower's business, or the
processing, packaging, promotion, delivery or shipping of the same, and all finished goods, whether or not the same is in transit or in the
constructive, actual or exclusive possession of Borrower or is held by others for Borrower's account, including, without limitation, all goods
covered by purchase orders and contracts with suppliers and all goods billed and held by suppliers and all such property that may be in the
possession or custody of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or other Persons.

Investment Property means any investment property, as such term is defined in the UCC, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

Letter of Credit Rights means any letter of credit rights, as such term is defined in the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest, including any right to payment under any letter of credit.

License means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and any renewals or extensions thereof.

Lien means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, any lease in the nature of a security interest, and the filing of any financing statement (other than a precautionary financing
statement with respect to a lease that is not in the nature of a security interest) under the UCC or comparable law of any jurisdiction.

Loan means an extension of credit by Lender under this Agreement.

Loan Documents means, individually and collectively, this Loan and Security Agreement, each Supplement, each Note, the Intellectual
Property Security Agreement, and any security or pledge agreement(s), any Warrants issued by Borrower to Lender (or its designee) in
connection with this Agreement, and all other contracts, instruments, addenda and documents executed in connection with this Agreement or the
extensions of credit which are the subject of this Agreement.

Material Adverse Effect or Material Adverse Change means (a) a material adverse change in, or a material adverse effect upon, the
operations, business, properties, or condition (financial or otherwise) of Borrower; (b) a material impairment of the ability of Borrower to
perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Borrower
of any Loan Document.

Note means a promissory note substantially in the form attached to the Supplement as Exhibit A , executed by Borrower evidencing each
Loan.

Obligations means all debts, obligations and liabilities of Borrower to Lender currently existing or now or hereafter made, incurred or
created under, pursuant to or in connection with this Agreement or any other Loan Document, whether voluntary or involuntary and however
arising or evidenced, whether direct or acquired by Lender by assignment or succession, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Borrower may be liable individually or jointly, or whether recovery upon
such debt may be or become barred by any statute of limitations or otherwise unenforceable; and all renewals, extensions and modifications
thereof; and all attorneys' fees and costs incurred by Lender in connection with the collection and enforcement thereof as provided for in any
Loan Document.





Patent License means any written agreement granting any right with respect to any invention on which a Patent is in existence now owned
or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

Patents means all of the following property now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest: (a) all letters patent of, or rights corresponding thereto in, the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights corresponding thereto in, the United States or any other country, including,
without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country; (b) all reissues, continuations, continuations-in-part or extensions thereof; (c) all
petty patents, divisionals, and patents of addition; and (d) all patents to be issued under any such applications.

Permitted Lien means:

(a) involuntary Liens which, in the aggregate, would not have a Material Adverse Effect and which in any event would not exceed, in
the aggregate, the Threshold Amount;

(b) Liens for current taxes or other governmental or regulatory assessments which are not delinquent, or which are contested in good
faith by the appropriate procedures and for which appropriate reserves are maintained;

(c) security interests on any property held or acquired by Borrower in the ordinary course of business securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring such property; provided , that such Lien attaches solely to the
property acquired with such Indebtedness and that the principal amount of such Indebtedness does not exceed one hundred percent (100%) of the
cost of such property; and further provided , that such property is not equipment or other Collateral with respect to which a Loan has been made
hereunder;

(d) Liens in favor of Lender;

(e) bankers' liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business as long as an account
control agreement for each account in which such deposits are held in a form acceptable to Lender has been executed and delivered to Lender;

(f) materialmen's, mechanics', repairmen's, employees' or other like Liens arising in the ordinary course of business and which are not
delinquent for more than 45 days or are being contested in good faith by appropriate proceedings;

(g) any judgment, attachment or similar Lien, unless the judgment it secures has not been discharged or execution thereof effectively
stayed and bonded against pending appeal within 30 days of the entry thereof;

(h) licenses or sublicenses of Intellectual Property in accordance with Section 6.5;

(i) Liens securing Subordinated Debt;

(j) Liens securing financing under the 2007 Loan Agreement;

(k) Liens securing Bank Debt; provided, however , that as a condition precedent to granting any such Liens, Borrower shall have caused
the Person to whom Borrower proposes to grant such Liens to enter into an intercreditor agreement in form and substance satisfactory to Lender,
VLL4 and such Person; and

(l) Liens which have been approved by Lender in writing prior to the Closing Date, as shown on Schedule 6.2 .

Person means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).





Proceeds means proceeds, as such term is defined in the UCC and, in any event, shall include, without limitation, (a) any and all Accounts,
Chattel Paper, Instruments, cash or other forms of money or currency or other proceeds payable to Borrower from time to time in respect of the
Collateral, (b) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Borrower from time to time with respect to any
of the Collateral, (c) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any
Person acting under color of governmental authority), (d) any claim of Borrower against third parties (i) for past, present or future infringement
of any Copyright, Patent or Patent License or (ii) for past, present or future infringement or dilution of any Trademark or Trademark License or
for injury to the goodwill associated with any Trademark, Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

Qualified Public Offering means the closing of a firmly underwritten public offering of Borrower's common stock with aggregate proceeds
of not less than $20,000,000 (prior to underwriting expenses and commissions).

Receivables means all of Borrower's Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, and letters of credit and
Letter of Credit Rights.

Records means all Borrower's computer programs, software, hardware, source codes and data processing information, all written documents,
books, invoices, ledger sheets, financial information and statements, and all other writings concerning Borrower's business.

Related Person means any Affiliate of Borrower, or any officer, employee, director or equity security holder of Borrower or any Affiliate.

Rights to Payment means all Borrower's accounts, instruments, contract rights, documents, chattel paper and all other rights to payment,
including, without limitation, the Accounts, all negotiable certificates of deposit and all rights to payment under any Patent License, any
Trademark License, or any commercial or standby letter of credit.

Security Documents means this Loan and Security Agreement, the Supplement hereto, the Intellectual Property Security Agreement, and
any and all account control agreements, collateral assignments, chattel mortgages, financing statements, amendments to any of the foregoing and
other documents from time to time executed or filed to create, perfect or maintain the perfection of Lenders Liens on the Collateral.

Subordinated Debt means Indebtedness (i) approved by Lender; and (ii) where the holders right to payment of such Indebtedness, the
priority of any Lien securing the same, and the rights of the holder thereof to enforce remedies against Borrower following default have been
made subordinate to the Liens of Lender and to the prior payment to Lender of the Obligations, pursuant to a written subordination agreement
approved by Lender in its sole but reasonable discretion.

Subsidiary means any Person a majority of the equity ownership or voting stock of which is at the time owned by Borrower.

Supplement means that certain supplement to this Loan and Security Agreement, as the same may be amended or restated from time to time,
and any other supplements entered into between Borrower and Lender, as the same may be amended or restated from time to time.

Supporting Obligations means any supporting obligations, as such term is defined in the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.

Termination Date has the meaning specified in the Supplement.

Threshold Amount has the meaning specified in the Supplement.

Trademark License means any written agreement granting any right to use any Trademark or Trademark registration now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

Trademarks means all of the following property now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest: (a) all trademarks, tradenames, corporate names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings thereof, and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country or any political subdivision thereof and (b) reissues, extensions or renewals thereof.





UCC means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of California; provided , that in the
event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender's
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of California,
the term UCC shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. Unless
otherwise defined herein, terms that are defined in the UCC and used herein shall have the meanings given to them in the UCC.

VLL4 means Venture Lending & Leasing IV, Inc., together with its successors and assigns.


[Signature page follows]





[Signature page to Loan and Security Agreement]


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




[Schedules to Loan and Security Agreement follow]


BORROWER:

INSIDER GUIDES, INC.


By:
Name:
Title:


LENDER:

VENTURE LENDING & LEASING V, INC.


By:
Name:
Title:



EXHIBIT TO FINANCING STATEMENT
between
Insider Guides, Inc., as Debtor,
and
Venture Lending & Leasing V, Inc., as Secured Party



Continuation of collateral description:

All personal property and assets of Debtor, including without limitation, all of Debtors right, title and interest in and to the following property,
whether now owned or hereafter acquired and wherever located: (a) all Receivables; (b) all Equipment; (c) all Fixtures; (d) all General
Intangibles; (e) all Inventory; (f) all Investment Property; (g) all Deposit Accounts; (h) all Shares; (i) other Goods and personal property of
Debtor, whether tangible or intangible and whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Debtor and
wherever located; (j) all Records; and (k) all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and
rents, profits and products of each of the foregoing (the Collateral ).

Capitalized terms used herein are defined as follows:

Account means any account, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which Debtor now holds
or hereafter acquires any interest and, in any event, shall include, without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to Debtor (including, without limitation, under any trade name, style or division thereof) whether arising out
of goods sold or services rendered by Debtor or from any other transaction, whether or not the same involves the sale of goods or services by
Debtor (including, without limitation, any such obligation that may be characterized as an account or contract right under the UCC) and all of
Debtor's rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of Debtor's
rights to any goods represented by any of the foregoing (including, without limitation, unpaid seller's rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods), and all monies due or to become due to Debtor under all purchase
orders and contracts for the sale of goods or the performance of services or both by Debtor or in connection with any other transaction (whether
or not yet earned by performance on the part of Debtor), now in existence or hereafter occurring, including, without limitation, the right to
receive the proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by any Person with
respect to any of the foregoing.

Chattel Paper means any chattel paper, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which
Debtor now holds or hereafter acquires any interest.

Copyright License means any written agreement granting any right to use any Copyright or Copyright registration now owned or hereafter
acquired by Debtor or in which Debtor now holds or hereafter acquires any interest.

Copyrights means all of the following now owned or hereafter acquired by Debtor or in which Debtor now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof or of any other
country; (ii) all registrations, applications and recordings in the United States Copyright Office or in any similar office or agency of the United
States, any State thereof or any other country; (iii) all continuations, renewals or extensions thereof; and (iv) any registrations to be issued under
any pending applications.

Deposit Accounts means any deposit accounts, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which
Debtor now holds or hereafter acquires any interest.





Documents means any documents, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which Debtor now
holds or hereafter acquires any interest.

Equipment means any equipment, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which Debtor now
holds or hereafter acquires any interest and any and all additions, substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

Fixtures means any fixtures, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which Debtor now holds
or hereafter acquires any interest.

General Intangibles means any general intangibles, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now holds or hereafter acquires any interest and, in any event, shall include, without limitation, all right, title and interest that
Debtor may now or hereafter have in or under any contract, all customer lists, Intellectual Property, Copyrights, Trademarks, Patents, websites,
domain names, and all applications therefor and reissues, extensions, or renewals thereof, other rights to Intellectual Property, interests in
partnerships, joint ventures and other business associations, Licenses, permits, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, recipes, experience, processes, models, drawings, materials and records, goodwill (including, without limitation, the goodwill
associated with any Trademark, Trademark registration or Trademark licensed under any Trademark License), claims in or under insurance
policies, including unearned premiums, uncertificated securities, money, cash or cash equivalents, deposit, checking and other bank accounts,
rights to sue for past, present and future infringement of Copyrights, Trademarks and Patents, rights to receive tax refunds and other payments
and rights of indemnification.

Goods means any goods, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which Debtor now holds or
hereafter acquires any interest.

Instruments means any instrument, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in which Debtor
now holds or hereafter acquires any interest.

Intellectual Property means all Copyrights, Trademarks, Patents, Licenses, trade secrets, source codes, customer lists, proprietary or
confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, skill, expertise, experience, processes, models, drawings, materials, records and goodwill associated with the foregoing.

Inventory means any inventory, as such term is defined in the UCC, wherever located, now owned or hereafter acquired by Debtor or in
which Debtor now holds or hereafter acquires any interest, and, in any event, shall include, without limitation, all inventory, goods and other
personal property that are held by or on behalf of Debtor for sale or lease or are furnished or are to be furnished under a contract of service or
that constitute raw materials, work in process or materials used or consumed or to be used or consumed in Debtor's business, or the processing,
packaging, promotion, delivery or shipping of the same, and all finished goods, whether or not the same is in transit or in the constructive, actual
or exclusive possession of Debtor or is held by others for Debtor's account, including, without limitation, all goods covered by purchase orders
and contracts with suppliers and all goods billed and held by suppliers and all such property first may be in the possession or custody of any
carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or other Persons.

Investment Property means any investment property, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now holds or hereafter acquires any interest.

Letter of Credit Rights means any letter of credit rights, as such term is defined in the UCC, now owned or hereafter acquired by Debtor or
in which Debtor now holds or hereafter acquires any interest, including any right to payment under any letter of credit.





License means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter
acquired by Debtor or in which Debtor now holds or hereafter acquires any interest and any renewals or extensions thereof.

Lien means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, any lease in the nature of a security interest, and the filing of any financing statement (other than a precautionary financing
statement with respect to a lease that is not in the nature of a security interest) under the UCC or comparable law of any jurisdiction

Patent License means any written agreement granting any right with respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Debtor or in which Debtor now holds or hereafter acquires any interest.

Patents means all of the following property now owned or hereafter acquired by Debtor or in which Debtor now holds or hereafter acquires
any interest: (a) all letters patent of, or rights corresponding thereto in, the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of, or rights corresponding thereto in, the United States or any other country, including, without
limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country; (b) all reissues, continuations, continuations-in-part or extensions thereof; (c) all petty
patents, divisionals, and patents of addition; and (d) all patents to be issued under any such applications.

Person means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).

Proceeds means proceeds, as such term is defined in the UCC and, in any event, shall include, without limitation, (a) any and all Accounts,
Chattel Paper, Instruments, cash or other forms of money or currency or other proceeds payable to Debtor from time to time in respect of the
Collateral, (b) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Debtor from time to time with respect to any of
the Collateral, (c) any and all payments (in any form whatsoever) made or due and payable to Debtor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any Person
acting under color of governmental authority), (d) any claim of Debtor against third parties (i) for past, present or future infringement of any
Copyright, Patent or Patent License or (ii) for past, present or future infringement or dilution of any Trademark or Trademark License or for
injury to the goodwill associated with any Trademark, Trademark registration or Trademark licensed under any Trademark License and (e) any
and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

Receivables means all of Debtor's Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, and letters of credit and Letter
of Credit Rights.

Records means all Debtor's computer programs, software, hardware, source codes and data processing information, all written documents,
books, invoices, ledger sheets, financial information and statements, and all other writings concerning Debtor's business.

Rights to Payment means all Debtor's accounts, instruments, contract rights, documents, chattel paper and all other rights to payment,
including, without limitation, the Accounts, all negotiable certificates of deposit and all rights to payment under any Patent License, any
Trademark License, any contract or any commercial or standby letter of credit.

Shares means: (a) one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned or
held of record by Debtor in any domestic Subsidiary, and (b) 65% of the issued and outstanding capital stock, membership units or other
securities entitled to vote owned or held of record by Debtor in any Subsidiary that is a controlled foreign corporation (as defined in the Internal
Revenue Code).





Subsidiary means any Person a majority of the equity ownership or voting stock of which is at the time owned by Debtor.

Supporting Obligations means any supporting obligations, as such term is defined in the UCC, now owned or hereafter acquired by Debtor
or in which Debtor now holds or hereafter acquires any interest.

Trademark License means any written agreement granting any right to use any Trademark or Trademark registration now owned or hereafter
acquired by Debtor or in which Debtor now holds or hereafter acquires any interest.

Trademarks means all of the following property now owned or hereafter acquired by Debtor or in which Debtor now holds or hereafter
acquires any interest: (a) all trademarks, tradenames, corporate names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings thereof, and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country or any political subdivision thereof and (b) reissues, extensions or renewals thereof.

UCC means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of California; provided , that in the
event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Secured
Party's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of
California, the term UCC shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such
provisions. Unless otherwise defined herein, terms that are defined in the UCC and used herein shall have the meanings given to them in the
UCC.


Exhibit 10.28

SUPPLEMENT
to the
Loan and Security Agreement
dated as of November 21, 2008
between
Insider Guides, Inc. (Borrower)
and
Venture Lending & Leasing V, Inc. (Lender)




This is a Supplement identified in the document entitled Loan and Security Agreement dated as of November 21, 2008 (as amended,
restated, supplemented and modified from time to time, the Loan and Security Agreement ), by and between Borrower and Lender. All
capitalized terms used in this Supplement and not otherwise defined in this Supplement have the meanings ascribed to them in Article 10 of the
Loan and Security Agreement, which is incorporated in its entirety into this Supplement. In the event of any inconsistency between the
provisions of that document and this Supplement, this Supplement is controlling.

In addition to the provisions of the Loan and Security Agreement, the parties agree as follows:

Part 1 . - Additional Definitions :

Commitment Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, Lender
commits to make Equipment Loans to Borrower up to the aggregate original principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000).

Designated Rate means, for each Equipment Loan, a fixed rate of interest per annum equal to the Prime Rate as published on the
Business Day on which Lender prepares the Note for such Loan, plus four and one-half of one percent (4.50%); provided, however , that in no
event shall the Designated Rate for an Equipment Loan be less than nine percent (9.00%).

Eligible Equipment means any (i) computer equipment, (ii) lab, shop and test equipment, (iii) office equipment, and (iv) other
standard hardware acceptable to Lender, provided that none of the foregoing is subject to a license agreement between Borrower and any Person.

Equipment Loan means any Loan requested by Borrower and funded by Lender under its Commitment to finance Borrowers
acquisition or carrying of specific items of Eligible Equipment, and subject to Section 1(b), Soft Costs. Equipment Loans are sometimes referred
to herein individually as a Loan and collectively as the Loans .

Final Payment : Each Equipment Loan shall have a Final Payment equal to 6.723% of the original principal amount of such Loan.

Liquidity Event means: (i) the closing of a merger, acquisition or other transaction in accordance with the provisions of Section 6.4
of the Loan and Security Agreement; (ii) the closing of a sale of all or substantially all of a Borrowers assets in accordance with the provisions
the Loan and Security Agreement; or (iii) the closing of a firmly underwritten public offering of Borrowers securities either (A) pursuant to a
registration statement filed on Form S-1 under the Securities Act of 1933, as amended or (B) on a foreign exchange.

Prime Rate means the prime rate of interest, as published from time to time by The Wall Street Journal in the Money Rates
section of its Western Edition newspaper.





Soft Costs means Borrowers costs of acquiring (i) custom-made or non-standard equipment (not otherwise approved by Lender as
Eligible Equipment), (ii) tenant improvements at Borrowers primary business premises, (iii) software, (iv) sales tax, freight, maintenance and
installation charges in respect of items of Eligible Equipment and (v) other items of personal property approved by Lender that do not constitute
Eligible Equipment.

Termination Date means the earlier of (i) the date Lender may terminate making Loans or extending other credit pursuant to the
rights of Lender under Article 7 of the Loan and Security Agreement, or (ii) March 31, 2009; provided, however , that such date shall be
extended from March 31, 2009 to June 30, 2009 with respect to the lesser of (x) forty percent (40%) of the Commitment (i.e., One Million
Dollars ($1,000,000)), and (y) the portion of the Commitment that remains unfunded as of such date.

Threshold Amount : Fifty Thousand Dollars ($50,000).


Part 2 . - Additional Covenants and Conditions :

1. Commitment; Use of Proceeds; Limitations on Equipment Loans.

(a) Funding of Equipment Loans . Subject to the terms and conditions of the Loan and Security Agreement and this
Supplement, Lender agrees to make Equipment Loans to Borrower from time to time from the Closing Date up to and including the Termination
Date in an aggregate original principal amount up to but not exceeding the lesser of (i) the then unfunded portion of its Commitment, and (ii) an
amount equal to 100% of the amount paid by Borrower to a manufacturer, vendor or dealer who is not an Affiliate of Borrower for each item of
Eligible Equipment, and subject to Section 1(b), each Soft Cost being financed with the proceeds of such Equipment Loan as shown on an
invoice therefor (excluding (x) any commissions, (y) any portion of the amount invoiced which relates to servicing or maintenance of the
Eligible Equipment, and (z) delivery, freight and installation charges or sales taxes payable upon acquisition, unless the amounts described in
clauses (y) and (z) constitute Soft Costs that are being financed with the proceeds of such Loan) (the Original Cost ). Notwithstanding the
foregoing, no item of Eligible Equipment and no Soft Cost shall be eligible to be financed with the proceeds of an Equipment Loan if such item
was expended, acquired or first placed in service by Borrower earlier than ninety (90) days prior to the Borrowing Date of such Equipment Loan;
provided, however , that so long as the Borrowing Date of the initial Equipment Loan occurs on or before November 30, 2008 (or such later date
as may be agreed to by the parties on or before November 30, 2008), Borrower may finance Eligible Equipment and Soft Costs expended,
acquired or first placed in service from May 1, 2008 at the Original Cost of such items.

(b) Soft Costs . Up to fifteen percent (15%) of the Commitment, i.e., Three Hundred Seventy Five Thousand Dollars
($375,000) in aggregate amount, may be used to finance Soft Costs.

(c) Location of Equipment . All Eligible Equipment financed hereunder shall be located at all times at (i) Borrowers
place of business in New Hope, Pennsylvania, (ii) ReadyTechs, LLCs place of business in Secaucus, New Jersey or (iii) other places of business
located within the United States as may be consented to by Lender in writing.

(d) Minimum Funding Amount . Except to the extent the remaining Commitment is a lesser amount, any Equipment
Loans requested by Borrower to be made on a single Business Day shall be for a minimum aggregate principal amount of Fifty Thousand
Dollars ($50,000).

2. Maximum Number of Borrowing Requests . Borrower shall not submit a Borrowing Request more frequently than once
each calendar month.





3. Repayment of Loans . Principal of and interest on each Equipment Loan shall be payable as set forth in a Note
(substantially in the form of Exhibit A hereto) evidencing such Equipment Loan, which Note shall provide substantially as follows: principal
and interest at the Designated Rate shall be fully amortized over a period of thirty six (36) months in equal, monthly installments. In particular,
on the Borrowing Date applicable to the Equipment Loan evidenced by such Note, Borrower shall pay to Lender (i) if the Borrowing Date is not
the first day of the month , interest only at a rate equal to 1.00% per month, in advance, on the outstanding principal balance of the Loan
evidenced by such Note, for the period from such Borrowing Date through the last day of the calendar month in which such Borrowing Date
occurs, and (ii) the first (1
st
) amortization installment of principal and interest at the Designated Rate. Commencing on the first day of the
second full month after the Borrowing Date, and continuing on the first day of each consecutive calendar month thereafter, principal and interest
at the Designated Rate shall be payable, in advance, in 35 equal consecutive installments in an amount sufficient to fully amortize the Loan
evidenced by such Note. The Final Payment on such Loan shall be due and payable on the same date that the last installment payment of
principal and interest at the Designated Rate is due.

4. Prepayment . No Loan may be voluntarily prepaid except as provided in this Section 4.

(a) Voluntary Prepayment at any Time . Borrower may voluntarily prepay all, but not less than all, Loans in whole,
but not in part, at any time by tendering to Lender cash payment in respect of such Loans in an amount equal to the sum of: (i) all accrued and
unpaid interest on such Loans as of the date of prepayment; and (ii) an amount equal to the total amount of all scheduled but unpaid payments
(including Final Payments) that would have accrued and been payable from the date of prepayment through the stated maturity of the Loans had
they remained outstanding and been paid in accordance with the terms of the related Note(s).


(b) Prepayment after Twelve Months of Amortization. Notwithstanding anything to the contrary in Section 4(a), so
long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least twelve (12) consecutive payments
of principal and interest with respect to all Loans, Borrower may voluntarily prepay all, but not less than all, Loans in whole but not in part, by
tendering to Lender cash payment in respect of such Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such Loans
as of the date of prepayment; (ii) all outstanding principal balances of such Loans as of the date of prepayment; and (iii) an amount equal to
eighty percent (80%) of all interest that would have accrued and been payable from the date of prepayment through the stated date of maturity of
the Loans had they remained outstanding and been paid in accordance with the terms of the related Notes, in each case, as such amounts are
determined by Lender. Borrower agrees that its right to prepay the Loans pursuant to this Section 4(b) shall not apply in connection with a
Liquidity Event or at any time thereafter.

(c) Prepayment after Eighteen Months of Amortization. Notwithstanding anything to the contrary in Section 4(a),
so long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least eighteen (18) consecutive
payments of principal and interest with respect to all Loans, Borrowers may voluntarily prepay all, but not less than all, Loans in whole but not
in part, by tendering to Lender cash payment in respect of such Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on
such Loans as of the date of prepayment; (ii) all outstanding principal balances of such Loans as of the date of prepayment; and (iii) an amount
equal to seventy five percent (75%) of all interest that would have accrued and been payable from the date of prepayment through the stated date
of maturity of the Loans had they remained outstanding and been paid in accordance with the terms of the related Notes, in each case, as such
amounts are determined by Lender. Borrower agrees that its right to prepay the Loans pursuant to this Section 4(c) shall not apply in connection
with a Liquidity Event or at any time thereafter.

(d) Prepayment if Lender Fails or Refuses to Fund a Loan. Notwithstanding anything to the contrary in Section 4
(a), if prior to the Termination Date Borrower satisfies all of the conditions precedent with respect to the funding of a Loan and Lender fails or
refuses to make such Loan then Borrower may voluntarily prepay all, but not less than all, outstanding Loans in whole, but not in part, at any
time from the date of such failure or refusal up to the date which is sixty (60) days thereafter by tendering to Lender cash payment in respect of
such outstanding Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such outstanding Loans as of the date of
prepayment; and (ii) all outstanding principal balances of such outstanding Loans as of the date of prepayment, in each case, as such amounts are
reasonably determined by Lender.





5. Issuance of Warrant . As additional consideration for the making of the Commitment, Lender has earned and is entitled to
receive immediately upon the execution of the Loan and Security Agreement and this Supplement, a warrant instrument issued by Borrower
substantially in the form of Exhibit D attached hereto (the Warrant ). Borrower acknowledges that Lender has assigned its rights to receive
the Warrant to its parent, Venture Lending & Leasing V, LLC, and in connection therewith, Borrower shall issue the Warrant directly to Venture
Lending & Leasing V, LLC. Lender shall furnish to Borrower a copy of the agreement in which Lender has assigned such Warrant to its parent.

6. Payment of Commitment Fee. As an additional condition precedent under Section 4.1 of the Loan and Security
Agreement, Lender shall have completed to its satisfaction its due diligence review of Borrowers business and financial condition and
prospects, and Lenders investment committee shall have approved its Commitment. If this condition is not satisfied, the Twelve Thousand Five
Hundred Dollars ($12,500) commitment fee (the Commitment Fee ) previously paid by Borrower shall be refunded. Lender agrees that with
respect to each Equipment Loan advanced under its Commitment, on the Borrowing Date applicable to such Loan, Lender shall credit against the
payments due from Borrower on such date in respect of such Loan an amount equal to the product of Twelve Thousand Five Hundred Dollars
($12,500) and a fraction the numerator of which is the principal amount of such Loan and the denominator of which is Two Million Five
Hundred Thousand Dollars ($2,500,000), until the amount of such credits made by Lender equals but does not exceed Twelve Thousand Five
Hundred Dollars ($12,500). Except as set forth in this Section 6, the Commitment Fee is not refundable.

7. Documentation Fee Payment. Pursuant to Section 9.8(a) of the Loan and Security Agreement, Borrower shall pay Lender,
on demand, the total amount of Lenders actual costs and expenses incurred in connection with the preparation and negotiation of the Loan
Documents, including legal fees, plus actual filing fees incurred by Lender or its counsel related to perfection of the Liens granted under the
Loan and Security Agreement.

8. Borrowers Account and Wire Transfer Instructions:



9. Debits to Account for ACH Transfers. For purposes of Section 2.2 and 5.10 of the Loan and Security Agreement, the
Primary Operating Account shall be the bank account set forth in Section 8 above. Borrower hereby agrees that Loans will be advanced to the
account specified above and regularly scheduled payments of principal, interest and Final Payments will be automatically debited from the same
account.


Institution Name Comerica Bank
Address 226 Airport Parkway, Suite 100, M/C 4348
San Jose, CA 95110
ABA No.
Contact Name Louise DiBenedetto
Phone No. (617) 757-6300
E-mail lldibenedetto@comerica.com
Account Title Insider Guides, Inc.
Account No.



Part 3 . - Additional Representations :

Borrower represents and warrants that as of the Closing Date and each Borrowing Date:












Part 4 . - Additional Loan Documents :



Remainder of this page intentionally left blank; signature page follows


a) Its chief executive office is located at: 280 Union Square Drive New Hope, PA 18938.
b) Its Equipment is located at: ReadyTechs, LLC, 275 Hartz Way, Secaucus, NJ 07094.
c) Its Inventory is located at: 280 Union Square Drive New Hope, PA 18938.
d) Its Records are located at: 280 Union Square Drive New Hope, PA 18938.
e) In addition to its chief executive office, Borrower maintains offices or operates its business at the following
locations: N/A.
f) Other than its current, full corporate name, Borrower has conducted business under the following corporate name(s),
or using the following trade names or fictitious business names: Myyearbook.com; Insider Guides, LLC
g) Borrowers Delaware state corporation I.D. number is: 4242493.
h) Borrowers federal tax identification number is: 20-8303286.
i) In addition to the Primary Operating Account identified in Section 9, Borrower maintains the following other Deposit
Accounts and investment/securities accounts: None.
Institution Name Comerica Bank
Address 226 Airport Parkway, Suite 100, M/C 4348
San Jose, CA 95110
ABA No.
Contact Name Louise DiBenedetto
Phone No. (617) 757-6300
Email lldibenedetto@comerica.com
Account Title Insider Guides, Inc.
Account No.
Form of Promissory Note Exhibit A
Form of Borrowing Request Exhibit B
Form of Compliance Certificate Exhibit C
Form of Warrant Exhibit D
Form of Legal Opinion Exhibit E
Form of Landlord Waiver Exhibit F
Form of Intellectual Property Security Agreement Exhibit G



[ Signature page to Supplement ]


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





BORROWER:

INSIDER GUIDES, INC.

By:
Name:
Title:

Address for Notices: 280 Union Square Drive
New Hope. PA 18938
Attn:
Fax # 215-862-1655
Phone #
LENDER:

VENTURE LENDING & LEASING V,
INC.


By:
Name:
Title:

Address for Notices: 2010 North First Street, Suite 310
San Jose, CA 95131
Attn: Chief Financial Officer
Fax # 408-436-8625
Phone # 408-436-8577
Exhibit 10.29

SUPPLEMENT NO. 2
dated as of January 22, 2010
to the
Loan and Security Agreement
dated as of November 21, 2008
between
Insider Guides, Inc. (Borrower)
and
Venture Lending & Leasing V, Inc. (Lender)



This Supplement No. 2 ( Supplement No. 2 ) is a Supplement to that certain Loan and Security Agreement dated as of November 21,
2008, between Borrower and Lender (as amended, restated, supplemented and modified from time to time, the Loan and Security
Agreement ). This Supplement No. 2, together with the Loan and Security Agreement, constitute the agreement made as of January 22, 2010
(the Supplement No. 2 Closing Date ), between Borrower and Lender with respect to the loan commitment from Lender set forth in the
definition of Commitment No. 2 below, separate and apart from the commitment memorialized in the Loan and Security Agreement, as
supplemented by an earlier Supplement, dated as of November 21, 2008 (as amended, restated, supplemented and modified from time to time,
Supplement No. 1 ), by and between Borrower and Lender.

All capitalized terms used in this Supplement No. 2 and not otherwise defined in this Supplement No. 2 have the meanings ascribed to
them in Article 10 of the Loan and Security Agreement and Part 1 of Supplement No. 1, each of which is incorporated in its entirety into this
Supplement No. 2. In the event of any inconsistency between the provisions or definitions in the Loan and Security Agreement and Part 1 of
Supplement No. 1, on the one hand, and this Supplement No. 2, on the other hand, this Supplement No. 2 is controlling.

In addition to the provisions of the Loan and Security Agreement and Supplement No. 1, the parties agree as follows:


Part 1 . - Additional Definitions :

Commitment No. 2 Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement No. 2,
Lender commits to make Equipment Loans to Borrower up to the aggregate original principal amount of Two Million Five Hundred Thousand
Dollars ($2,500,000).

Designated Rate means, for each Equipment Loan funded pursuant to this Supplement No. 2, a fixed rate of interest per annum
equal to the Prime Rate as published on the Business Day on which Lender prepares the Note for such Loan, plus five and three-quarters of one
percent (5.75%); provided, however , that in no event shall the Designated Rate for an Equipment Loan funded pursuant to this Supplement No.
2 be less than nine percent (9.00%).

Eligible Equipment means any (i) computer equipment, (ii) lab, shop and test equipment, (iii) office equipment, and (iv) other
standard hardware acceptable to Lender, provided that none of the foregoing is subject to a license agreement between Borrower and any Person.

Equipment Loan means any Loan requested by Borrower and funded by Lender under its Commitment No. 2 to finance Borrowers
acquisition or carrying of specific items of Eligible Equipment, and subject to Section 1(b), Soft Costs. Equipment Loans are sometimes referred
to herein individually as a Loan and collectively as the Loans .




Final Payment : Each Equipment Loan funded pursuant to this Supplement No. 2 shall have a Final Payment equal to 6.723% of
the original principal amount of such Loan.

Liquidity Event means: (i) the closing of a merger, acquisition or other transaction in accordance with the provisions of Section 6.4
of the Loan and Security Agreement; (ii) the closing of a sale of all or substantially all of a Borrowers assets in accordance with the provisions
the Loan and Security Agreement; or (iii) the closing of a firmly underwritten public offering of Borrowers securities either (A) pursuant to a
registration statement filed on Form S-1 under the Securities Act of 1933, as amended or (B) on a foreign exchange.

Prime Rate means the prime rate of interest, as published from time to time by The Wall Street Journal in the Money Rates
section of its Western Edition newspaper.

Soft Costs means Borrowers costs of acquiring (i) custom-made or non-standard equipment (not otherwise approved by Lender as
Eligible Equipment), (ii) tenant improvements at Borrowers primary business premises, (iii) software, (iv) sales tax, freight, maintenance and
installation charges in respect of items of Eligible Equipment, (v) the domain names/URLs approved by Lender on or prior to the Supplement
No. 2 Closing Date and (vi) other items of personal property approved by Lender that do not constitute Eligible Equipment.

Termination Date means the earlier of (i) the date Lender may terminate making Loans or extending other credit pursuant to the
rights of Lender under Article 7 of the Loan and Security Agreement, or (ii) June 30, 2010; provided, however , that such date shall be extended
from June 30, 2010 to December 31, 2010 with respect to the lesser of (x) fifty percent (50%) of Commitment No. 2 (i.e., One Million Two
Hundred Fifty Dollars ($1,250,000)), and (y) the portion of Commitment No. 2 that remains unfunded as of such date.


Part 2 . - Additional Covenants and Conditions :

1. Commitment No. 2; Use of Proceeds; Limitations on Equipment Loans.

(a) Funding of Equipment Loans . Subject to the terms and conditions of the Loan and Security Agreement and this
Supplement No. 2, Lender agrees to make Equipment Loans to Borrower from time to time from the Supplement No. 2 Closing Date up to and
including the Termination Date in an aggregate original principal amount up to but not exceeding the lesser of (i) the then unfunded portion of its
Commitment No. 2, and (ii) an amount equal to 100% of the amount paid by Borrower to a manufacturer, vendor or dealer who is not an
Affiliate of Borrower for each item of Eligible Equipment, and subject to Section 1(b), each Soft Cost being financed with the proceeds of such
Equipment Loan as shown on an invoice therefor (excluding (x) any commissions, (y) any portion of the amount invoiced which relates to
servicing or maintenance of the Eligible Equipment, and (z) delivery, freight and installation charges or sales taxes payable upon acquisition,
unless the amounts described in clauses (y) and (z) constitute Soft Costs that are being financed with the proceeds of such Loan) (the Original
Cost ). Notwithstanding the foregoing, no item of Eligible Equipment and no Soft Cost shall be eligible to be financed with the proceeds of an
Equipment Loan if such item was expended, acquired or first placed in service by Borrower earlier than ninety (90) days prior to the Borrowing
Date of such Equipment Loan; provided, however , that so long as the Borrowing Date of the initial Equipment Loan occurs on or before January
31, 2010 (or such later date as may be agreed to by the parties on or before January 31, 2010), Borrower may finance Eligible Equipment and
Soft Costs expended, acquired or first placed in service from June 30, 2009 at the Original Cost of such items.

(b) Soft Costs . Up to fifteen percent (15%) of Commitment No. 2, i.e., Three Hundred Seventy Five Thousand
Dollars ($375,000) in aggregate amount, may be used to finance Soft Costs.

(c) Location of Equipment . All Eligible Equipment financed hereunder shall be located at all times at (i) Borrowers
place of business in New Hope, Pennsylvania, (ii) ReadyTechs, LLCs place of business in Secaucus, New Jersey or (iii) other places of business
located within the United States as may be consented to by Lender in writing.





(d) Minimum Funding Amount . Except to the extent the remaining Commitment No. 2 is a lesser amount, any
Equipment Loans requested by Borrower to be made on a single Business Day shall be for a minimum aggregate principal amount of Fifty
Thousand Dollars ($50,000).

2. Maximum Number of Borrowing Requests . Borrower shall not submit a Borrowing Request more frequently than once
each calendar month.

3. Repayment of Loans . Principal of and interest on each Equipment Loan funded by Lender under its Commitment No. 2
shall be payable as set forth in a Note (substantially in the form of Exhibit A hereto) evidencing such Equipment Loan, which Note shall
provide substantially as follows: principal and interest at the Designated Rate shall be fully amortized over a period of thirty six (36) months in
equal, monthly installments. In particular, on the Borrowing Date applicable to the Equipment Loan evidenced by such Note, Borrower shall
pay to Lender (i) if the Borrowing Date is not the first day of the month , interest only at a rate equal to 1.00% per month, in advance, on the
outstanding principal balance of the Loan evidenced by such Note, for the period from such Borrowing Date through the last day of the calendar
month in which such Borrowing Date occurs, and (ii) the first (1
st
) amortization installment of principal and interest at the Designated
Rate. Commencing on the first day of the second full month after the Borrowing Date, and continuing on the first day of each consecutive
calendar month thereafter, principal and interest at the Designated Rate shall be payable, in advance, in 35 equal consecutive installments in an
amount sufficient to fully amortize the Loan evidenced by such Note. The Final Payment on such Loan shall be due and payable on the same
date that the last installment payment of principal and interest at the Designated Rate is due.

4. Prepayment . No Loan funded pursuant to this Supplement No. 2 may be voluntarily prepaid except as provided in this
Section 4.

(a) Voluntary Prepayment at any Time . Borrower may voluntarily prepay all, but not less than all, Loans funded
pursuant to this Supplement No. 2 in whole, but not in part, at any time by tendering to Lender cash payment in respect of such Loans in an
amount equal to the sum of: (i) all accrued and unpaid interest on such Loans as of the date of prepayment; and (ii) an amount equal to the total
amount of all scheduled but unpaid payments (including Final Payments) that would have accrued and been payable from the date of prepayment
through the stated maturity of the Loans had they remained outstanding and been paid in accordance with the terms of the related Note(s).


(b) Prepayment after Twelve Months of Amortization. Notwithstanding anything to the contrary in Section 4(a), so
long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least twelve (12) consecutive payments
of principal and interest with respect to all Loans funded pursuant to this Supplement No. 2, Borrower may voluntarily prepay all, but not less
than all, such Loans in whole but not in part, by tendering to Lender cash payment in respect of such Loans in an amount equal to the sum of: (i)
all accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all outstanding principal balances of such Loans as of the date of
prepayment; and (iii) an amount equal to eighty percent (80%) of all interest that would have accrued and been payable from the date of
prepayment through the stated date of maturity of the Loans had they remained outstanding and been paid in accordance with the terms of the
related Notes, in each case, as such amounts are determined by Lender. Borrower agrees that its right to prepay the Loans funded pursuant to
this Supplement No. 2 pursuant to this Section 4(b) shall not apply in connection with a Liquidity Event or at any time thereafter.





(c) Prepayment after Eighteen Months of Amortization. Notwithstanding anything to the contrary in Section 4(a),
so long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least eighteen (18) consecutive
payments of principal and interest with respect to all Loans funded pursuant to this Supplement No. 2, Borrowers may voluntarily prepay all, but
not less than all, such Loans in whole but not in part, by tendering to Lender cash payment in respect of such Loans in an amount equal to the
sum of: (i) all accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all outstanding principal balances of such Loans as of
the date of prepayment; and (iii) an amount equal to seventy percent (70%) of all interest that would have accrued and been payable from the
date of prepayment through the stated date of maturity of the Loans had they remained outstanding and been paid in accordance with the terms
of the related Notes, in each case, as such amounts are determined by Lender. Borrower agrees that its right to prepay the Loans funded pursuant
to this Supplement No. 2 pursuant to this Section 4(c) shall not apply in connection with a Liquidity Event or at any time thereafter.

(d) Prepayment if Lender Fails or Refuses to Fund a Loan. Notwithstanding anything to the contrary in Section 4
(a), if prior to the Termination Date Borrower satisfies all of the conditions precedent with respect to the funding of a Loan and Lender fails or
refuses to make such Loan then Borrower may voluntarily prepay all, but not less than all, outstanding Loans funded pursuant to this Supplement
No. 2 in whole, but not in part, at any time from the date of such failure or refusal up to the date which is sixty (60) days thereafter by tendering
to Lender cash payment in respect of such outstanding Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such
outstanding Loans as of the date of prepayment; and (ii) all outstanding principal balances of such outstanding Loans as of the date of
prepayment, in each case, as such amounts are reasonably determined by Lender.

5. Issuance of Warrant . As additional consideration for the making of Commitment No. 2, Lender has earned and is entitled
to receive immediately upon the execution of this Supplement No. 2, a warrant instrument issued by Borrower substantially in the form of
Exhibit C attached hereto (the Warrant ). Borrower acknowledges that Lender has assigned its rights to receive the Warrant to its parent,
Venture Lending & Leasing V, LLC, and in connection therewith, Borrower shall issue the Warrant directly to Venture Lending & Leasing V,
LLC. Lender shall furnish to Borrower a copy of the agreement in which Lender has assigned such Warrant to its parent.

6. Payment of Commitment Fee. As an additional condition precedent under Section 13 of Part 2 of this Supplement No. 2,
Lender shall have completed to its satisfaction its due diligence review of Borrowers business and financial condition and prospects, and
Lenders investment committee shall have approved its Commitment No. 2. If this condition is not satisfied, the Twelve Thousand Five
Hundred Dollars ($12,500) commitment fee (the Commitment Fee ) previously paid by Borrower shall be refunded. Lender agrees that with
respect to each Equipment Loan advanced under its Commitment No. 2, on the Borrowing Date applicable to such Loan, Lender shall credit
against the payments due from Borrower on such date in respect of such Loan an amount equal to the product of Twelve Thousand Five Hundred
Dollars ($12,500) and a fraction the numerator of which is the principal amount of such Loan and the denominator of which is Two Million Five
Hundred Thousand Dollars ($2,500,000), until the amount of such credits made by Lender equals but does not exceed Twelve Thousand Five
Hundred Dollars ($12,500). Except as set forth in this Section 6, the Commitment Fee is not refundable.

7. Documentation Fee Payment. Borrower shall pay Lender, on demand, the total amount of Lenders actual costs and
expenses incurred in connection with the preparation and negotiation of this Supplement No. 2 and the other Loan Documents described herein,
including legal fees, plus actual filing fees incurred by Lender or its counsel related to perfection of the Liens granted under the Loan and
Security Agreement.

8. Borrowers Account and Wire Transfer Instructions:



Institution Name Comerica Bank
Address 226 Airport Parkway, Suite 100, M/C 4348
San Jose, CA 95110
ABA No.
Contact Name Louise DiBenedetto
Phone No. (617) 757-6300
E-mail lldibenedetto@comerica.com
Account Title Insider Guides, Inc.
Account No.



9. Debits to Account for ACH Transfers. For purposes of Section 2.2 and 5.10 of the Loan and Security Agreement, the
Primary Operating Account shall be the bank account set forth in Section 8 above. Borrower hereby agrees that Loans will be advanced to the
account specified above and regularly scheduled payments of principal, interest and Final Payments will be automatically debited from the same
account.

10. Amendments to Supplement No. 1 and Loan and Security Agreement.

(a) Amendment to Supplement No. 1 . Exhibit B to Supplement No. 1, the form of Borrowing Request, is hereby
amended and restated in its entirety by Exhibit B attached to this Supplement No. 2.

(b) Amendments to Loan and Security Agreement.

(i) Section 6.1 of the Loan and Security Agreement is hereby amended and restated in its entirety as follows:




(c) Indebtedness of Borrower under this Agreement;

(d) Subordinated Debt;

(e) Indebtedness of Borrower under the 2007 Loan Agreement;

(f) Bank Debt not to exceed $500,000 in aggregate principal amount outstanding at any time;

(g) Indebtedness for automobile leases and related insurance not to exceed $24,000 per calendar year;

(h) Indebtedness for leased office Equipment not to exceed $30,000 per calendar year; and

(i) any Indebtedness approved by Lender as shown on Schedule 6.1 hereto (as the same may be
amended from time to time with Lenders consent).


6.1 Indebtedness. Be indebted for borrowed money, the deferred purchase price of property, or leases which would be
capitalized in accordance with GAAP; or become liable as a surety, guarantor, accommodation party or otherwise for
or upon the obligation of any other Person, except:
(a) Indebtedness incurred for the acquisition of supplies or inventory on normal trade credit;
(b) Indebtedness incurred pursuant to one or more transactions permitted under Section 6.4 ;



(ii) The Schedule of Exceptions to the Loan and Security Agreement is hereby amended and restated in its
entirety as follows:

Schedule of Exceptions

Section 3.5 and Section 3.12(c)


Schedule 6.1 Permitted Indebtedness


Schedule 6.2 Permitted Liens


11. Borrowers Representations. Borrower hereby represents and warrants to Lender that: (a) Borrower has full corporate
power and authority to execute and deliver this Supplement No. 2, and to perform the obligations of its part to be performed hereunder and under
the Loan and Security Agreement, as amended and supplemented hereby; (b) Borrower has taken all necessary action, corporate or otherwise, to
authorize the execution and delivery of this Supplement No. 2 and each of the other Loan Documents described herein; (c) no consent or
approval of any Person (that has not been obtained), no waiver of any lien or similar right, and no consent, license, approval or authorization of
any governmental authority or agency is or will be required in connection with the execution or delivery by Borrower of this Supplement No. 2
and the Warrant, or the performance by Borrower of the Loan and Security Agreement, as amended and supplemented hereby; (d) this
Supplement No. 2 and the Warrant are, or upon delivery thereof to Lender will be, the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights generally; and (e) as of the date hereof, no Default or Event of Default has occurred and
is continuing, and subject to the Schedule of Exceptions attached to the Loan and Security Agreement (as amended and restated in Section 10(b)
(ii) hereof), the representations and warranties of Borrower contained in Article 3 of the Loan Agreement are true and correct in all material
respects.

12. Ratification by Borrower of Lenders Security Interest in Collateral. Borrower hereby confirms and ratifies Lenders
liens and security interests in and to all Collateral. Borrower acknowledges and agrees that such liens and security interests shall secure all of the
Obligations of Borrower under this Supplement No. 2, Supplement No. 1, the Loan and Security Agreement and the other Loan Documents. In
addition, Borrower hereby ratifies, confirms and reaffirms all obligations and covenants contained in the Loan and Security Agreement.

13. Conditions to Effectiveness. This Supplement No. 2 shall not be effective until each of the following conditions precedent
has been fulfilled to the satisfaction of Lender:

(a) original counterparts of this Supplement No. 2 and the Warrant shall have been duly executed and delivered to
Lender or its counsel;

(b) Lender shall have received a certificate executed by Borrowers secretary or another senior officer, which shall
certify that attached thereto are (i) a true and correct copy of resolutions duly adopted by Borrowers Board of Directors, which resolutions have
not been modified, amended, or rescinded in any respect and are in full force and effect as of the date hereof, and which resolutions authorize
and ratify any actions previously, concurrently, or subsequently taken by Borrower with respect to the execution and performance of this
Supplement No. 2 and the matters contemplated herein; (ii) true, correct and complete copies of Borrowers Amended and Restated Certificate
of Incorporation and Bylaws, each as amended through the Supplement No. 2 Closing Date; and (iii) the names of the officer or officers of
Borrower authorized to sign this Supplement No. 2 and each of the Loan Documents described herein, together with a sample of the true
signature of each such officer;





(c) Lender shall have received a legal opinion of Borrowers counsel covering the authority and enforceability of this
Supplement No. 2 and the Warrant, substantially in the form attached hereto as Exhibit D ; and

(d) Lender shall have received a Certificate Concerning Capitalization, substantially in the form attached hereto as
Exhibit E, executed by Borrower.


Part 3 . - Additional Representations :

Borrower represents and warrants that as of the Supplement No. 2 Closing Date and each Borrowing Date:












a) Its chief executive office is located at: 280 Union Square Drive New Hope, PA 18938.
b) Its Equipment is located at: ReadyTechs, LLC, 275 Hartz Way, Secaucus, NJ 07094.
c) Its Inventory is located at: 280 Union Square Drive New Hope, PA 18938.
d) Its Records are located at: 280 Union Square Drive New Hope, PA 18938.
e) In addition to its chief executive office, Borrower maintains offices or operates its business at the following
locations: 132 W. 36th Street, 9th Floor, New York, NY 10018.
f) Other than its current, full corporate name, Borrower has conducted business under the following corporate name(s),
or using the following trade names or fictitious business names: Myyearbook.com; Insider Guides, LLC
g) Borrowers Delaware state corporation I.D. number is: 4242493.
h) Borrowers federal tax identification number is: 20-8303286.
i) In addition to the Primary Operating Account identified in Section 8, Borrower maintains the following other Deposit
Accounts and investment/securities accounts: None.
Institution Name Comerica Bank
Address 226 Airport Parkway, Suite 100, M/C 4348
San Jose, CA 95110
ABA No.
Contact Name Louise DiBenedetto
Phone No. (617) 757-6300
Email lldibenedetto@comerica.com
Account Title Insider Guides, Inc.
Account No.



Part 4 . - Additional Loan Documents :



Remainder of this page intentionally left blank; signature page follows


Form of Promissory Note Exhibit A
Form of Borrowing Request Exhibit B
Form of Warrant Exhibit C
Form of Legal Opinion Exhibit D
Form of Certificate Concerning
Capitalization
Exhibit E



[ Signature page to Supplement No. 2 ]


IN WITNESS WHEREOF, the parties have executed this Supplement No. 2 as of the date first above written.




BORROWER:

INSIDER GUIDES, INC.

By:
Name:
Title:

Address for Notices: 280 Union Square Drive
New Hope. PA 18938
Attn:
Fax # 215-862-1655
Phone #
LENDER:

VENTURE LENDING & LEASING V,
INC.


By:
Name:
Title:

Address for Notices: 2010 North First Street, Suite 310
San Jose, CA 95131
Attn: Chief Financial Officer
Fax # 408-436-8625
Phone # 408-436-8577
Exhibit 10.30

LOAN AND SECURITY AGREEMENT


Dated as of December 13, 2010


between


INSIDER GUIDES, INC.,
a Delaware corporation,

as Borrower ,


and


VENTURE LENDING & LEASING V, INC.,
a Maryland corporation,

and

VENTURE LENDING & LEASING VI, INC.,
a Maryland corporation,

each, as Lender




LOAN AND SECURITY AGREEMENT

The Borrower and each of Venture Lending & Leasing V, Inc. ( VLL5 ) and Venture Lending & Leasing VI, Inc. ( VLL6 ) have
entered or anticipate entering into one or more transactions pursuant to which each Lender severally and not jointly agrees to make available to
Borrower a loan facility governed by the terms and conditions set forth in this document and one or more Supplements executed by Borrower
and Lender which incorporate this document by reference. Each Supplement constitutes a supplement to and forms part of this document, and
will be read and construed as one with this document, so that this document and the Supplement constitute a single agreement between the
parties (collectively referred to as this Agreement ).

Accordingly, the parties agree as follows:

ARTICLE 1 - INTERPRETATION

1.1 Definitions. The terms defined in Article 10 and in the Supplement will have the meanings therein specified for purposes of this
Agreement.

1.2 Inconsistency. In the event of any inconsistency between the provisions of any Supplement and this document, the provisions of
the Supplement will be controlling for the purpose of all relevant transactions.

1.3 Several Obligations of Lender. The parties are entering into this single Agreement for convenience, and this Agreement is and
shall be interpreted for all purposes as separate and distinct agreements between Borrower and VLL5, on the one hand, and Borrower and VLL6,
on the other hand, and nothing in this Agreement shall be deemed a joint venture, partnership or other association between VLL5 and
VLL6. Each reference in this Agreement to Lender shall mean and refer to each of VLL5 and VLL6, singly and independent of one
another. Without limiting the generality of the foregoing, the Commitment, covenants and other obligations of Lender under this Agreement
are several and not joint obligations of VLL5 and VLL6, and all rights and remedies of Lender under this Agreement may be exercised by
VLL5 and/or VLL6 independently of one another.

ARTICLE 2 - THE COMMITMENT AND LOANS

2.1 The Commitment . Subject to the terms and conditions of this Agreement, Lender agrees to make term loans to Borrower from
time to time from the Closing Date and to, but not including, the Termination Date in an aggregate principal amount not exceeding the
Commitment. The Commitment is not a revolving credit commitment, and Borrower does not have the right to repay and then to reborrow
hereunder. Each Loan requested by Borrower to be made on a single Business Day shall be for a minimum principal amount set forth in the
Supplement, except to the extent the remaining Commitment is a lesser amount.

2.2 Notes Evidencing Loans; Repayment . Each Loan shall be evidenced by a separate Note payable to the order of Lender, in the
total principal amount of the Loan. Principal and interest of each Loan shall be payable at the times set forth in the Note and regularly scheduled
payments thereof and each Final Payment shall be effected by automatic debit of the appropriate funds from Borrowers Primary Operating
Account as specified in the Supplement hereto.

2.3 Procedures for Borrowing .

(a) At least five (5) Business Days' prior to a proposed Borrowing Date (in the case of all Loans other than the initial Loans), Lender
shall have received from the Borrower a written request for a borrowing hereunder (a Borrowing Request ). Each Borrowing Request shall be
in substantially the form of Exhibit B to the Supplement, shall be executed by an authorized executive or financial officer of Borrower, shall
state how much is requested, and shall be accompanied by such other information and documentation as Lender may reasonably request,
including the original executed Note(s) for the Loan(s) covered by the Borrowing Request if such are not already in the possession of Lender.

(b) No later than 1:00 p.m. Pacific Standard Time on the Borrowing Date, if Borrower has satisfied the conditions precedent in Article 4,
Lender shall make the Loan available to Borrower in immediately available funds.

2.4 Interest . Except as otherwise specified in the applicable Note and/or Supplement, Basic Interest on the outstanding principal
balance of each Loan shall accrue daily at the Designated Rate from the Borrowing Date. If the outstanding principal balance of such Loan is
not paid at maturity, interest shall accrue at the Default Rate until paid in full, as further set forth herein.





2.5 Final Payment . Borrower shall pay the Final Payment with respect to each Loan on the date set forth in the Note evidencing such
Loan.

2.6 Interest Rate Calculation . Basic Interest, along with charges and fees under this Agreement and any Loan Document, shall be
calculated for actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year
were used. In no event shall Borrower be obligated to pay Lender interest, charges or fees at a rate in excess of the highest rate permitted by
applicable law from time to time in effect.

2.7 Default Interest . Subject to applicable grace periods, any unpaid payments of principal or interest or the Final Payment with
respect to any Loan shall bear interest from their respective maturities, whether scheduled or accelerated, at the Designated Rate for such Loan
plus five percent (5.00%) per annum, until paid in full, whether before or after judgment (the Default Rate ). Borrower shall pay such interest
on demand.

2.8 Late Charges. If Borrower is late in making any payment of principal or interest or Final Payment under this Agreement by more
than five (5) days, Borrower agrees to pay a late charge of five percent (5%) of the installment due, but not less than fifty dollars ($50.00) for
any one such delinquent payment. This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the
handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of the
circumstances existing on the date of this Agreement and represents a fair and reasonable estimate of the costs that will be sustained by Lender
due to the failure of Borrower to make timely payments. Borrower further agrees that proof of actual damages would be costly and
inconvenient. Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to
declare a default under this Agreement or any of the other Loan Documents or from exercising any other rights and remedies of Lender.

2.9 Lender's Records . Principal, Basic Interest, Final Payments and all other sums owed under any Loan Document shall be
evidenced by entries in records maintained by Lender for such purpose. Each payment on and any other credits with respect to principal, Basic
Interest, Final Payments and all other sums outstanding under any Loan Document shall be evidenced by entries in such records. Absent
manifest error, Lender's records shall be conclusive evidence thereof. Lender agrees to provide Borrower with copies of such records following
Borrowers reasonable request.

2.10 Grant of Security Interests; Filing of Financing Statements.

(a) To secure the timely payment and performance of all of Borrower's Obligations to Lender, Borrower hereby grants to Lender
continuing security interests in all of the Collateral. In connection with the foregoing, Borrower authorizes Lender to prepare and file any
financing statements describing the Collateral without otherwise obtaining the Borrowers signature or consent with respect to the filing of such
financing statements.

(b) Borrower is and shall remain absolutely and unconditionally liable for the performance of its obligations under the Loan
Documents, including, without limitation, any deficiency by reason of the failure of the Collateral to satisfy all amounts due Lender under any of
the Loan Documents.

(c) All Collateral pledged by Borrower under this Agreement and any Supplement shall secure the timely payment and performance of
all Obligations under this Agreement, the Notes and the other Loan Documents. Except as expressly provided in this Agreement, no Collateral
pledged under this Agreement or any Supplement shall be released until such time as all Obligations under this Agreement have been satisfied
and paid in full.


ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants that, except as set forth in the Supplement or the Schedule of Exceptions attached hereto as of the Closing
Date and each Borrowing Date:

3.1 Due Organization . Borrower is a corporation duly organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to conduct business and is in good standing in each other jurisdiction in which its business
is conducted or its properties are located, except where the failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect.





3.2 Authorization, Validity and Enforceability . The execution, delivery and performance of all Loan Documents executed by
Borrower are within Borrower's powers, have been duly authorized, and are not in conflict with Borrower's certificate of incorporation or by-
laws, or the terms of any charter or other organizational document of Borrower, as amended from time to time; and all such Loan Documents
constitute valid and binding obligations of Borrower, enforceable in accordance with their terms (except as may be limited by bankruptcy,
insolvency and similar laws affecting the enforcement of creditors' rights in general, and subject to general principles of equity).

3.3 Compliance with Applicable Laws . Borrower has complied with all licensing, permit and fictitious name requirements necessary
to lawfully conduct the business in which it is engaged, and to any sales, leases or the furnishing of services by Borrower, including without
limitation those requiring consumer or other disclosures, the noncompliance with which would have a Material Adverse Effect.

3.4 No Conflict . The execution, delivery, and performance by Borrower of all Loan Documents are not in material conflict with any
law, rule, regulation, order or directive, or any indenture, agreement, or undertaking to which Borrower is a party or by which Borrower may be
bound or affected. Without limiting the generality of the foregoing, the issuance of the Warrant to Lender (or its designee) and the grant of
registration rights in connection therewith do not violate any agreement or instrument by which Borrower is bound or require the consent of any
holders of Borrowers securities other than consents which have been obtained prior to the Closing Date.

3.5 No Litigation, Claims or Proceedings . There is no litigation, tax claim, proceeding or dispute pending, or, to the knowledge of
Borrower, threatened against or affecting Borrower, its property or the conduct of its business which could reasonably be expected to result in a
Material Adverse Effect.

3.6 Correctness of Financial Statements . Borrower's financial statements which have been delivered to Lender fairly and accurately
reflect Borrower's financial condition in accordance with GAAP as of the latest date of such financial statements; and, since that date there has
been no Material Adverse Change.

3.7 No Subsidiaries . Borrower is not a majority owner of or in a control relationship with any other business entity. Borrower shall
have the right from time to time to amend Borrowers representation in this Section 3.7 to reflect additions and deletions of subsidiaries and
control relationships with other business entities. Each such amendment shall be effective upon notice thereof to Lender.

3.8 Environmental Matters . To its knowledge after reasonable inquiry, Borrower has concluded that Borrower is in compliance with
Environmental Laws, except to the extent a failure to be in such compliance could not reasonably be expected to have a Material Adverse Effect.

3.9 No Event of Default . No Default or Event of Default has occurred and is continuing.

3.10 Full Disclosure . None of the representations or warranties made by Borrower in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of Borrower in connection with the Loan Documents (including disclosure materials delivered by or on behalf of
Borrower to Lender prior to the Closing Date or pursuant to Section 5.2 hereof), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.

3.11 Specific Representations Regarding Collateral.

(a) Title. Except for the security interests created by this Agreement and Permitted Liens, (i) Borrower is and will be the unconditional
legal and beneficial owner of the Collateral, and (ii) the Collateral is genuine and subject to no Liens, rights or defenses of others. Except for the
security interests created by this Agreement and Permitted Liens, there exist no prior assignments or encumbrances of record with the U.S.
Patent and Trademark Office or U.S. Copyright Office affecting any Collateral in favor of any third party.

(b) Rights to Payment. The names of the obligors, amount owing to Borrower, due dates and all other information with respect to the
Rights to Payment are and will be correctly stated in all material respects in all Records relating to the Rights to Payment. Borrower further
represents and warrants, to its knowledge, that each Person appearing to be obligated on a Right to Payment has authority and capacity to
contract and is bound as it appears to be.





(c) Location of Collateral. Borrower's chief executive office, Inventory, Records, Equipment, and any other offices or places of
business are located at the address(es) shown on the Supplement.

(d) Business Names. Other than its full corporate name, Borrower has not conducted business using any trade names or fictitious
business names except as shown on the Supplement.

3.12 Copyrights, Patents, Trademarks and Licenses .

(a) Borrower owns or is licensed or otherwise has the right to use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other similar rights that are reasonably necessary for the operation of its business, without conflict with
the rights of any other Person.

(b) To Borrower's knowledge, no slogan or other advertising device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Borrower infringes upon any rights held by any other Person.

(c) No claim or litigation regarding any of the foregoing is pending or, to Borrower's knowledge, threatened, and no patent, invention,
device, application, principle or any statute, law, rule, regulation, standard or code is pending or proposed which, in either case, could reasonably
be expected to have a Material Adverse Effect.

3.13 Regulatory Compliance. Borrower has met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Borrowers failure to comply with ERISA that is reasonably likely to
result in Borrowers incurring any liability that could have a Material Adverse Effect. Borrower is not an investment company or a company
controlled by an investment company within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning
of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act.

3.14 Survival. The representations and warranties of Borrower as set forth in this Agreement survive the execution and delivery of this
Agreement.

ARTICLE 4 - CONDITIONS PRECEDENT

4.1 Conditions to First Loan . The obligation of Lender to make its first Loan hereunder is, in addition to the conditions precedent
specified in Section 4.2 and in any Supplement, subject to the fulfillment of the following conditions and to the receipt by Lender of the
documents described below, duly executed and in form and substance satisfactory to Lender and its counsel:

(a) Resolutions . A certified copy of the resolutions of the Board of Directors of Borrower authorizing the execution, delivery and
performance by Borrower of the Loan Documents.

(b) Incumbency and Signatures . A certificate of the secretary of Borrower certifying the names of the officer or officers of Borrower
authorized to sign the Loan Documents, together with a sample of the true signature of each such officer.

(c) Legal Opinion . The opinion of legal counsel for Borrower as to such matters as Lender may reasonably request, including the
matters covered by Sections 3.1, 3.2, 3.4 and 3.5 hereof.

(d) Certificate and By-Laws . Certified copies of the Certificate of Incorporation and By-Laws of Borrower, as amended through the
Closing Date.

(e) This Agreement . Original counterparts of this Agreement and the initial Supplement, with all schedules completed and attached
thereto, and disclosing such information as is acceptable to Lender.

(f) Financing Statements . Filing copies (or other evidence of filing satisfactory to Lender and its counsel) of such UCC financing
statements, collateral assignments, account control agreements, and termination statements, with respect to the Collateral as Lender shall request.

(g) Insurance Certificates . Insurance certificates showing Lender as loss payee or additional insured.

(h) Lien Searches . UCC lien, judgment, bankruptcy and tax lien searches of Borrower from such jurisdictions or offices as Lender
may reasonably request, all as of a date reasonably satisfactory to Lender and its counsel.





(i) Good Standing Certificate . A certificate of status or good standing of Borrower as of a date acceptable to Lender from Delaware
and Pennsylvania.

(j) Warrant(s) . An original warrant issued by Borrower to Lender (or its designee) exercisable for such number, type and class of
shares of Borrower's capital stock, and for an initial exercise price as is specified in the Supplement.

(k) Intellectual Property Security Agreement. An Intellectual Property Security Agreement executed by Borrower substantially in
the form attached as Exhibit G to the Supplement.

(l) Other Documents . Such other documents and instruments as Lender may reasonably request to effectuate the intents and purposes
of this Agreement.

4.2 Conditions to All Loans . The obligation of Lender to make its initial Loan and each subsequent Loan is subject to the following
further conditions precedent that:

(a) No Default . No Default or Event of Default has occurred and is continuing or will result from the making of any such Loan, and
the representations and warranties of Borrower contained in Article 3 of this Agreement and Part 3 of the Supplement are true and correct as of
the Borrowing Date of such Loan.

(b) No Material Adverse Change . No event has occurred that has had or could reasonably be expected to have a Material Adverse
Change.

(c) Borrowing Request . Borrower shall have delivered to Lender a Borrowing Request for such Loan.

(d) Note . Borrower shall have delivered an original executed Note evidencing such Loan, substantially in the form attached to the
Supplement as an exhibit.

(e) Supplemental Lien Filings . Borrower shall have executed and delivered such amendments or supplements to this Agreement and
additional Security Documents, financing statements and third party waivers as Lender may reasonably request in connection with the proposed
Loan, in order to create, protect or perfect or to maintain the perfection of Lender's Liens on the Collateral.

(f) VCOC Limitation . Lender shall not be obligated to make any Loan under its Commitment if at the time of or after giving effect to
the proposed Loan Lender would no longer qualify as: (A) a venture capital operating company under U.S. Department of Labor Regulations
Section 2510.3-101(d), Title 29 of the Code of Federal Regulations, as amended; and (B) a business development company under the
provisions of federal Investment Company Act of 1940, as amended; and (C) a regulated investment company under the provisions of the
Internal Revenue Code of 1986, as amended. In the event that Lender fails to make any Loan pursuant to this Section 4.2(f) then the initial
number of shares of stock issuable under the Warrant issued to Lenders parent company shall be reduced, such reduction being in proportion to
the amount of Lenders Commitment that it has failed to fund.

(g) Financial Projections . Borrower shall have delivered to Lender Borrowers business plan and/or financial projections or forecasts
as most recently approved by Borrowers Board of Directors.


ARTICLE 5 - AFFIRMATIVE COVENANTS

During the term of this Agreement and until its performance of all Obligations, Borrower will:

5.1 Notice to Lender . Promptly give written notice to Lender of:

(a) Any litigation or administrative or regulatory proceeding affecting Borrower where the amount claimed against Borrower is at the
Threshold Amount or more, or where the granting of the relief requested could have a Material Adverse Effect; or of the acquisition by Borrower
of any commercial tort claim, including brief details of such claim and such other information as Lender may reasonably request to enable
Lender to better perfect its Lien in such commercial tort claim as Collateral.

(b) Any substantial dispute which may exist between Borrower and any governmental or regulatory authority that could reasonably be
expected to result in a Material Adverse Effect.

(c) The occurrence of any Default or any Event of Default.


(d) Any change in the location of any of Borrower's places of business or Collateral at least thirty (30) days in advance of such change,
or of the establishment of any new, or the discontinuance of any existing, place of business.




(e) Any dispute or default by Borrower or any other party under any joint venture, partnering, distribution, cross-licensing, strategic
alliance, collaborative research or manufacturing, license or similar agreement which could reasonably be expected to have a Material Adverse
Effect.

(f) Any other matter which has resulted or might reasonably result in a Material Adverse Change.

5.2 Financial Statements . Deliver to Lender or cause to be delivered to Lender, in form and detail satisfactory to Lender the
following financial and other information, which Borrower warrants shall be accurate and complete in all material respects:

(a) Monthly Financial Statements . As soon as available but no later than thirty (30) days after the end of each month, Borrower's
balance sheet as of the end of such period, and Borrower's income statement for such period and for that portion of Borrower's financial
reporting year ending with such period, prepared in accordance with GAAP and attested by a responsible financial officer of Borrower as being
complete and correct and fairly presenting Borrower's financial condition and the results of Borrower's operations as of the date thereof. After a
Qualified Public Offering, the foregoing interim financial statements shall be delivered no later than 45 days after each fiscal quarter and for the
quarter-annual fiscal period then ended.

(b) Year-End Financial Statements . Contemporaneously with the delivery to the Board of Directors, a complete copy of Borrower's
audit report for each financial reporting year of Borrower (or, if Borrowers Board of Directors has waived the requirement for an audit with
respect to a particular financial reporting year, then an unaudited report for such year), which shall include balance sheet, income statement,
statement of changes in equity and statement of cash flows for such year, prepared in accordance with GAAP and certified by an independent
certified public accountant selected by Borrower and reasonably satisfactory to Lender (the Accountant ) unless the Board of Directors has
waived the audit requirement. Unless Borrowers Board of Directors has waived the requirement for an audit with respect to a particular
financial reporting year, the Accountant's certification shall not be qualified or limited due to a restricted or limited examination by the
Accountant of any material portion of Borrower's records or otherwise.

(c) Compliance Certificates . Simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b)
above, a certificate of the chief financial officer of Borrower substantially in the form of Exhibit C to the Supplement stating whether any
Default or Event of Default exists on the date of such certificate, and if so, setting forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto.

(d) Government Required Reports; Press Releases . Promptly after sending, issuing, making available, or filing, copies of all
statements released to any news media for publication, all reports, proxy statements, and financial statements that Borrower sends or makes
available to its stockholders, and, not later than five (5) days after actual filing or the date such filing was first due, all registration statements and
reports that Borrower files or is required to file with the Securities and Exchange Commission, or any other governmental or regulatory
authority.

(e) Other Information . Such other statements, lists of material property and accounts, budgets, sales projections, forecasts, reports,
operating plans, financial exhibits, and subject to compliance with applicable securities laws and regulations thereunder, information relating to
equity financings consummated after the Closing Date (including post-closing capitalization table(s)), or other information as Lender may from
time to time reasonably request.

5.3 Managerial Assistance from Lender . Permit Lender to substantially participate in, and substantially influence the conduct of
management of Borrower through the exercise of management rights, as that term is defined in 29 C.F.R. 2510.3-101(d), including without
limitation the following rights:

(a) Borrower agrees that (i) it will make its officers, directors, employees and affiliates reasonably available at Borrowers offices at
such times as Lender may reasonably request for Lender to consult with and advise as to the conduct of Borrowers business, its equipment and
financing plans, and its financial condition and prospects, (ii) Lender shall have the right to inspect Borrowers books, records, facilities and
properties at reasonable times during normal business hours on reasonable advance notice, and (iii) subject to any voting agreement (or the like)
among Borrower and its stockholders, Lender shall be entitled to recommend prospective candidates for election or nomination for election to
Borrowers Board of Directors and Borrower shall give due consideration to (but shall not be bound by) such recommendations, it being the
intention of the parties that Lender shall be entitled through such rights, inter alia , to furnish significant managerial assistance, as defined in
Section 2(a)(47) of the Investment Company Act of 1940, to Borrower.





(b) Without limiting the generality of (a) above, if Lender reasonably believes that financial or other developments affecting Borrower
have impaired or are likely to impair Borrower's ability to perform its obligations under this Agreement, permit Lender reasonable access to
Borrower's management and/or Board of Directors and the opportunity to present Lender's views with respect to such developments.

Lender shall cooperate with Borrower to ensure that the exercise of Lenders rights shall not disrupt the business of Borrower. The rights
enumerated above shall not be construed as giving Lender control over Borrowers management or policies.

5.4 Existence . Maintain and preserve Borrower's existence, present form of business, and all rights and privileges necessary or
desirable in the normal course of its business; and keep all Borrower's property in good working order and condition, ordinary wear and tear
excepted.

5.5 Insurance . Obtain and keep in force insurance in such amounts and types as is usual in the type of business conducted by
Borrower, with insurance carriers having a policyholder rating of not less than A and financial category rating of Class VII in Best's
Insurance Guide, unless otherwise approved by Lender. Such insurance policies must be in form and substance satisfactory to Lender, and shall
list Lender as an additional insured or loss payee, as applicable, on endorsement(s) in form reasonably acceptable to Lender. Borrower shall
furnish to Lender such endorsements, and upon Lender's request, copies of any or all such policies.

5.6 Accounting Records . Maintain adequate books, accounts and records, and prepare all financial statements in accordance with
GAAP, and in compliance with the regulations of any governmental or regulatory authority having jurisdiction over Borrower or Borrower's
business; and permit employees or agents of Lender at such reasonable times as Lender may request, at Borrower's reasonable expense, to
inspect Borrower's properties, and at Lenders expense, to examine, and make copies and memoranda of Borrower's books, accounts and records.

5.7 Compliance With Laws . Comply with all laws (including Environmental Laws), rules, regulations applicable to, and all orders
and directives of any governmental or regulatory authority having jurisdiction over, Borrower or Borrower's business, and with all material
agreements to which Borrower is a party, except where the failure to so comply would not have a Material Adverse Effect.

5.8 Taxes and Other Liabilities . Pay all Borrower's Indebtedness when due; pay all taxes and other governmental or regulatory
assessments before delinquency or before any penalty attaches thereto, except as may be contested in good faith by the appropriate procedures
and for which Borrower shall maintain appropriate reserves; and timely file all required tax returns.

5.9 Special Collateral Covenants.

(a) Maintenance of Collateral; Inspection. Do all things reasonably necessary to maintain, preserve, protect and keep all Collateral
in good working order and salable condition, ordinary wear and tear excepted, deal with the Collateral in all ways as are considered reasonable
commercial practice by owners of like property, and use the Collateral lawfully and, to the extent applicable, only as permitted by Borrower's
insurance policies. Maintain, or cause to be maintained, complete and accurate Records relating to the Collateral. Upon reasonable prior notice
at reasonable times during normal business hours, Borrower hereby authorizes Lender's officers, employees, representatives and agents to
inspect the Collateral and to discuss the Collateral and the Records relating thereto with Borrower's officers, and, in the case of any Right to
Payment, with any Person which is or may be obligated thereon.

(b) Documents of Title. Not sign or authorize the signing of any financing statement or other document naming Borrower as debtor or
obligor, or acquiesce or cooperate in the issuance of any bill of lading, warehouse receipt or other document or instrument of title with respect to
any Collateral, except those negotiated to Lender, or those naming Lender as secured party, or if solely to create, perfect or maintain a Permitted
Lien.

(c) Change in Location or Name. Without at least 30 days' prior written notice to Lender: (a) not relocate any Collateral or Records, its
chief executive office, or establish a place of business at a location other than as specified in the Supplement; and (b) not change its name,
mailing address, location of Collateral, jurisdiction of incorporation or its legal structure.





(d) Decals, Markings. At the request of Lender, firmly affix a decal, stencil or other marking to designated items of Equipment,
indicating thereon the security interest of Lender.

(e) Agreement With Real Property Owner/Landlord. Obtain and maintain such acknowledgments, consents, waivers and
agreements from the owner, lienholder, mortgagee and landlord with respect to any real property on which Equipment is located as Lender may
reasonably require, all in form and substance satisfactory to Lender.

(f) Certain Agreements on Rights to Payment. Other than in the ordinary course of business, not make any material discount, credit,
rebate or other reduction in the original amount owing on a Right to Payment or accept in satisfaction of a Right to Payment less than the
original amount thereof.

5.10 Authorization for Automated Clearinghouse Funds Transfer. (i) Authorize Lender to initiate debit entries to Borrowers Primary
Operating Account, specified in the Supplement hereto, through Automated Clearinghouse ( ACH ) transfers, in order to satisfy regularly
scheduled; payments of principal, interest and Final Payments (ii) provide Lender at least thirty (30) days notice of any change in Borrowers
Primary Operating Account; and (iii) grant Lender any additional authorizations necessary to begin ACH debits from a new account which
becomes the Primary Operating Account.


ARTICLE 6 - NEGATIVE COVENANTS

During the term of this Agreement and until the performance of all Obligations, Borrower will not:

6.1 Indebtedness. Be indebted for borrowed money, the deferred purchase price of property, or leases which would be capitalized in
accordance with GAAP; or become liable as a surety, guarantor, accommodation party or otherwise for or upon the obligation of any other
Person, except:

(a) Indebtedness incurred for the acquisition of supplies or inventory on normal trade credit;

(b) Indebtedness incurred pursuant to one or more transactions permitted under Section 6.4 ;

(c) Indebtedness of Borrower under this Agreement;

(d) Subordinated Debt;

(e) Indebtedness of Borrower under (i) the 2007 Loan Agreement and (ii) the 2008 Loan Agreement;

(f) Bank Debt not to exceed $500,000 in aggregate principal amount outstanding at any time (the Cap ), provided that the Cap shall be
automatically increased to $1,000,000 from and after October 1, 2011, provided that Borrower has provided satisfactory evidence to Lender, as
determined by Lender in its reasonable judgment, that Borrower is operating to plan (i.e., as set forth in the business plan delivered to Lender on
or prior to the Closing Date), including three (3) consecutive quarters of increasing profitability in 2011 of at least $2,000,000 in aggregate net
profit;

(g) Indebtedness for automobile leases and related insurance not to exceed $24,000 per calendar year;

(h) Indebtedness for leased office Equipment not to exceed $30,000 per calendar year; and

(i) any Indebtedness approved by Lender as shown on Schedule 6.1 hereto (as the same may be amended from time to time with
Lenders consent).

6.2 Liens . Create, incur, assume or permit to exist any Lien, or grant any other Person a negative pledge, on any of Borrower's
property, except Permitted Liens. Borrower and Lender agree that this covenant is not intended to constitute a lien, deed of trust, equitable
mortgage, or security interest of any kind on any of Borrower's real property, and this Agreement shall not be recorded or
recordable. Notwithstanding the foregoing, however, violation of this covenant by Borrower shall constitute an Event of Default. Without
limiting the generality of the foregoing, and as a material inducement to Lenders making of the Commitment and entering into the Loan
Documents, Borrower agrees that (i) it shall not assign, mortgage, pledge, grant a security interest in, or encumber any of Borrowers Intellectual
Property, and (ii) it shall not permit the inclusion into any agreement, document, instrument or other arrangement with any Person (except with
or in favor of Lender) which directly or indirectly prohibits or has the effect of prohibiting Borrower from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrowers Intellectual Property, except as is otherwise permitted in Section 6.5(i)

of this Agreement, or would otherwise be a Permitted Lien hereunder.




6.3 Dividends . Except after a Qualified Public Offering, pay any dividends or purchase, redeem or otherwise acquire or make any
other distribution with respect to any of Borrower's capital stock, except (a) dividends or other distributions solely of capital stock of Borrower,
and (b) so long as no Event of Default has occurred and is continuing, repurchases of stock from employees upon termination of employment
under reverse vesting or similar repurchase plans not to exceed $100,000 in any calendar year.

6.4 Changes/Mergers . Liquidate or dissolve; or enter into any consolidation, merger or other combination in which the stockholders of
the Borrower immediately prior to the first such transaction own less than 50% of the voting stock of the Borrower immediately after giving
effect to such transaction or related series of such transactions, except that Borrower may consolidate or merge so long as: (A) the entity that
results from such merger or consolidation (the Surviving Entity ) shall have executed and delivered to Lender an agreement in form and
substance reasonably satisfactory to Lender, containing an assumption by the Surviving Entity of the due and punctual payment and performance
of all Obligations and performance and observance of each covenant and condition of Borrower in the Loan Documents; (B) all such obligations
of the Surviving Entity to Lender shall be guaranteed by any entity that directly or indirectly owns or controls more than 50% of the voting stock
of the Surviving Entity; (C) immediately after giving effect to such merger or consolidation, no Event of Default or, event which with the lapse
of time or giving of notice or both, would result in an Event of Default shall have occurred and be continuing; and (D) the credit risk to Lender,
in its sole discretion, of the Surviving Entity shall not be increased. In determining whether the proposed merger or consolidation would result in
an increased credit risk, Lender may consider, among other things, changes in Borrowers management team, employee base, access to equity
markets, venture capital support, financial position and/or disposition of intellectual property rights which may reasonably be anticipated as a
result of the transaction.

6.5 Sales of Assets . Sell, transfer, lease, license or otherwise dispose of (a Transfer ) any of Borrowers assets except (i) licenses of
Intellectual Property in the ordinary course of business consistent with industry practice, provided that such licenses of Intellectual Property
neither result in a legal transfer of title of the licensed Intellectual Property nor have the same effect as a sale of such Intellectual Property; (ii)
Transfers of worn-out, obsolete or surplus property (each as determined by the Borrower in its reasonable judgment) not constituting Equipment
as of which a Loan was made hereunder; (iii) Transfers of Inventory in the ordinary course of business not constituting Equipment as of which a
Loan was made hereunder; (iv) Transfers constituting Permitted Liens; and (v) Transfers permitted in Section 6.6 hereunder.

6.6 Loans/Investments . Make or suffer to exist any loans, guaranties, advances, or investments, except:

(a) accounts receivable in the ordinary course of Borrower's business;

(b) investments in domestic certificates of deposit issued by, and other domestic investments with, financial institutions organized under
the laws of the United States or a state thereof, having at least One Hundred Million Dollars ($100,000,000) in capital and a rating of at least
investment grade or A by Moody's or any successor rating agency;

(c) investments in marketable obligations of the United States of America and in open market commercial paper given the highest credit
rating by a national credit agency and maturing not more than one year from the creation thereof;

(d) temporary advances to cover incidental expenses to be incurred in the ordinary course of business; and

(e) investments in joint ventures, strategic alliances, licensing and similar arrangements customary in Borrowers industry and which do
not require Borrower to assume or otherwise become liable for the material obligations of any third party not directly related to or arising out of
such arrangement or, without the prior written consent of Lender, require Borrower to transfer ownership of non-cash assets to such joint venture
or other entity.

6.7 Transactions With Related Persons . Directly or indirectly enter into any transaction with or for the benefit of a Related Person on
terms more favorable to the Related Person than would have been obtainable in an arms' length dealing.





6.8 Other Business . Engage in any material line of business other than the business Borrower conducts as of the Closing Date.

6.9 Financing Statements and Other Actions. Fail to execute and deliver to Lender all financing statements, notices and other
documents from time to time reasonably requested by Lender to maintain a first perfected security interest in the Collateral in favor of Lender;
perform such other acts, and execute and deliver to Lender such additional conveyances, assignments, agreements and instruments, as Lender
may at any time request in connection with the administration and enforcement of this Agreement or Lender's rights, powers and remedies
hereunder.

6.10 Compliance. Become an investment company or controlled by an investment company, within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the
purpose of purchasing or carrying margin stock, or use the proceeds of any Loan for such purpose. Fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair
Labor Standards Act or violate any law or regulation, which violation could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Lenders Lien on the Collateral, or permit any of its subsidiaries to do any of the foregoing.

6.11 Other Deposit and Securities Accounts. Maintain any deposit accounts or accounts holding securities owned by Borrower except
(i) Deposit Accounts and investment/securities accounts as set forth in the Supplement, and (ii) other Deposit Accounts and securities/investment
accounts, in each case, with respect to which Borrower and Lender shall have taken such action as Lender reasonably deems necessary to obtain
a perfected first priority security interest therein, subject to Permitted Liens. The provisions of the previous sentence shall not apply to Deposit
Accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrowers
employees.

6.12 Prepayment of Indebtedness . Prepay, redeem or otherwise satisfy in any manner prior to the scheduled repayment thereof
any Indebtedness (other than the Loans). Notwithstanding the foregoing, Lender agrees that the conversion or exchange into Borrowers equity
securities of any Indebtedness (other than the Loans) shall not be prohibited by this Section 6.12.

ARTICLE 7 - EVENTS OF DEFAULT

7.1 Events of Default; Acceleration . Upon the occurrence and during the continuation of any Default, the obligation of Lender to
make any additional Loan shall be suspended. The occurrence of any of the following (each, an Event of Default ) that has not been cured
within any applicable cure period or waived by Lender shall terminate any obligation of Lender to make any additional Loan; and shall, at the
option of Lender (1) make all sums of Basic Interest and principal, all Final Payments, and any Obligations and other amounts owing under any
Loan Documents immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment
or dishonor or any other notices or demands, and (2) give Lender the right to exercise any other right or remedy provided by contract or
applicable law:

(a) Borrower shall fail to pay any principal, interest or Final Payment under this Agreement or any Note, or fail to pay any fees or other
charges when due under any Loan Document, and such failure continues for three (3) Business Days or more after the same first becomes due; or
an Event of Default as defined in any other Loan Document shall have occurred.

(b) Any representation or warranty made, or financial statement, certificate or other document provided, by Borrower under any Loan
Document shall prove to have been false or misleading in any material respect when made or deemed made herein.

(c) Borrower shall fail to pay its debts generally as they become due or shall commence any Insolvency Proceeding with respect to itself;
an involuntary Insolvency Proceeding shall be filed against Borrower, or a custodian, receiver, trustee, assignee for the benefit of creditors, or
other similar official, shall be appointed to take possession, custody or control of the properties of Borrower, and such involuntary Insolvency
Proceeding, petition or appointment is acquiesced to by Borrower or is not dismissed within sixty (60) days; or the dissolution or termination of
the business or permanent cessation of operations of Borrower; or Borrower shall take any corporate action for the purpose of effecting,
approving, or consenting to any of the foregoing.





(d) Borrower shall be in default beyond any applicable period of grace or cure under any other agreement involving the borrowing of
money, the purchase of property, the advance of credit or any other monetary liability of any kind to Lender or to any Person which results in the
acceleration of payment of such obligation in an amount in excess of the Threshold Amount.

(e) Any governmental or regulatory authority shall take any judicial or administrative action, or any defined benefit pension plan
maintained by Borrower shall have any unfunded liabilities, any of which would reasonably be expected to have a Material Adverse Effect.

(f) Any sale, transfer or other disposition of all or a substantial or material part of the assets of Borrower, including without limitation to
any trust or similar entity, shall occur, other than in accordance with Section 6.4 or Section 6.5.

(g) Any judgment(s) singly or in the aggregate in excess of the Threshold Amount shall be entered against Borrower which remain
unsatisfied, unvacated or unstayed pending appeal for ten (10) or more days after entry thereof.

(h) At any time prior to the initial sale of Borrowers equity securities to the public pursuant to a registration statement filed under the
Securities Act of 1933, as amended, any Person or two or more Persons (other than any Excluded Person as defined below) acting in concert
shall have acquired (in a single transaction or series of related transactions) beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission) of outstanding shares of voting stock of Borrower representing fifty percent (50%) or more of the voting
power of all shares of Borrowers voting stock that are outstanding immediately after such acquisition. As used in this paragraph, Excluded
Person means: (i) any Person who is a stockholder of Borrower as of the Closing Date; (ii) a venture capital firm or similar investment fund or
institution; or (iii) an affiliate of any Person described in clause (i) or (ii).

(i) Borrower shall fail to perform or observe any material covenant contained in Article 6 of this Agreement.

(j) Borrower shall fail to perform or observe any covenant contained in Article 5 or elsewhere in this Agreement or any other Loan
Document (other than a covenant which is dealt with specifically elsewhere in this Article 7) and, if capable of being cured, the breach of such
covenant is not cured within 30 days after the sooner to occur of Borrower's receipt of notice of such breach from Lender or the date on which
such breach first becomes known to any officer of Borrower; provided , however that if such breach is not capable of being cured within such
30-day period and Borrower timely notifies Lender of such fact and Borrower diligently pursues such cure, then the cure period shall be
extended to the date requested in Borrower's notice but in no event more than 90 days from the initial breach; provided , further , that such
additional 60-day opportunity to cure shall not apply in the case of any failure to perform or observe any covenant which has been the subject of
a prior failure within the preceding 180 days or which is a willful and knowing breach by Borrower.

7.2 Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, Lender shall be entitled to, at its
option, exercise any or all of the rights and remedies available to a secured party under the UCC or any other applicable law, and exercise any or
all of its rights and remedies provided for in this Agreement and in any other Loan Document. The obligations of Borrower under this
Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Obligations is rescinded or must
otherwise be returned by Lender upon, on account of, or in connection with, the insolvency, bankruptcy or reorganization of Borrower or
otherwise, all as though such payment had not been made.

7.3 Sale of Collateral. Upon the occurrence and during the continuance of an Event of Default, Lender may sell all or any part of the
Collateral, at public or private sales, to itself, a wholesaler, retailer or investor, for cash, upon credit or for future delivery, and at such price or
prices as Lender may deem commercially reasonable. To the extent permitted by law, Borrower hereby specifically waives all rights of
redemption and any rights of stay or appraisal which it has or may have under any applicable law in effect from time to time. Any such public or
private sales shall be held at such times and at such place(s) as Lender may determine. In case of the sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by Lender until the selling price is paid by the purchaser, but Lender shall not
incur any liability in case of the failure of such purchaser to pay for the Collateral and, in case of any such failure, such Collateral may be
resold. Lender may, instead of exercising its power of sale, proceed to enforce its security interest in the Collateral by seeking a judgment or
decree of a court of competent jurisdiction. Without limiting the generality of the foregoing, if an Event of Default is in effect,





(1) Subject to the rights of any third parties, and any existing licenses or sublicenses, Lender may license, or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive basis, any Copyrights, Patents or Trademarks included in the Collateral
throughout the world for such term or terms, on such conditions and in such manner as Lender shall in its sole discretion determine;

(2) Lender may (without assuming any obligations or liability thereunder), at any time and from time to time, enforce (and shall have the
exclusive right to enforce) against any licensee or sublicensee all rights and remedies of Borrower in, to and under any Copyright Licenses,
Patent Licenses or Trademark Licenses and take or refrain from taking any action under any thereof, and Borrower hereby releases Lender from,
and agrees to hold Lender free and harmless from and against any claims arising out of or relating to, any lawful action so taken or omitted to be
taken with respect thereto other than claims arising out of Lender's gross negligence or willful misconduct; and

(3) Upon request by Lender, Borrower will execute and deliver to Lender a power of attorney, in form and substance reasonably
satisfactory to Lender for the implementation of any lease, assignment, license, sublicense, grant of option, sale or other disposition of a
Copyright, Patent or Trademark. In the event of any such disposition pursuant to this clause 3 , Borrower shall cooperate with Lender and use
reasonable efforts to assist Lender with respect to its know-how and information relating to the products or services made or rendered in
connection with the products bearing Trademarks, and its information relating to the distribution of said products, to Lender.

7.4 Borrower's Obligations Upon Default. Upon the request of Lender after the occurrence and during the continuance of an Event
of Default, Borrower will:

(a) Assemble and make available to Lender the Collateral at such place(s) as Lender shall reasonably designate, segregating all
Collateral so that each item is reasonably capable of identification; and

(b) Subject to the rights of any lessor, permit Lender, by Lender's officers, employees, agents and representatives, to enter any premises
where any Collateral is located, to take possession of the Collateral, to complete the processing, manufacture or repair of any Collateral, and to
remove the Collateral, or to conduct any public or private sale of the Collateral, all without any liability of Lender for rent or other compensation
for the use of Borrower's premises.

ARTICLE 8 - SPECIAL COLLATERAL PROVISIONS

8.1 Compromise and Collection. Borrower and Lender recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Rights to Payment; that certain of the Rights to Payment may be or become uncollectible in
whole or in part; and that the expense and probability of success of litigating a disputed Right to Payment may exceed the amount that
reasonably may be expected to be recovered with respect to such Right to Payment. Borrower hereby authorizes Lender, after and during the
continuance of an Event of Default, to compromise with the obligor, accept in full payment of any Right to Payment such amount as Lender
shall negotiate with the obligor, or abandon any Right to Payment. Any such action by Lender shall be considered commercially reasonable so
long as Lender acts in good faith based on information known to it at the time it takes any such action.

8.2 Performance of Borrower's Obligations. Without having any obligation to do so, after the occurrence and during the continuance
of a Default or an Event of Default and upon reasonable prior notice to Borrower, Lender may perform or pay any obligation which Borrower
has agreed to perform or pay under this Agreement, including, without limitation, the payment or discharge of taxes or Liens levied or placed on
or threatened against the Collateral. In so performing or paying, Lender shall determine the action to be taken and the amount necessary to
discharge such obligations. Borrower shall reimburse Lender on demand for any amounts paid by Lender pursuant to this Section, which
amounts shall constitute Obligations secured by the Collateral and shall bear interest from the date of demand at the Default Rate.

8.3 Power of Attorney. For the purpose of protecting and preserving the Collateral and Lender's rights under this Agreement,
Borrower hereby irrevocably appoints Lender, with full power of substitution, as its attorney-in-fact with full power and authority, after the
occurrence and during the continuance of an Event of Default, to do any act which Borrower is obligated to do hereunder; to exercise such rights
with respect to the Collateral as Borrower might exercise; to use such Inventory, Equipment, Fixtures or other property as Borrower might use;
to enter Borrower's premises; to give notice of Lender's security interest in, and to collect the Collateral; and before or after Default, to execute
and file in Borrower's name any financing statements (including amendments thereto and continuations thereof) or other Security Documents
necessary or desirable to create, maintain, perfect or continue the perfection of Lender's security interests in the Collateral. Borrower hereby
ratifies all that Lender shall lawfully do or cause to be done by virtue of this appointment.





8.4 Authorization for Lender to Take Certain Action. The power of attorney created in Section 8.3 is a power coupled with an
interest and shall be irrevocable. The powers conferred on Lender hereunder are solely to protect its interests in the Collateral and shall not
impose any duty upon Lender to exercise such powers. Lender shall be accountable only for amounts that it actually receives as a result of the
exercise of such powers and in no event shall Lender or any of its directors, officers, employees, agents or representatives be responsible to
Borrower for any act or failure to act, except for gross negligence or willful misconduct. After the occurrence and during the continuance of an
Event of Default, Lender may exercise this power of attorney without notice to or assent of Borrower, in the name of Borrower, or in Lender's
own name, from time to time in Lender's sole discretion and at Borrower's expense. To further carry out the terms of this Agreement, after the
occurrence and during the continuance of an Event of Default, Lender may:

(a) Execute any statements or documents or take possession of, and endorse and collect and receive delivery or payment of, any checks,
drafts, notes, acceptances or other instruments and documents constituting Collateral, or constituting the payment of amounts due and to become
due or any performance to be rendered with respect to the Collateral.

(b) Sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts; drafts, certificates and
statements under any commercial or standby letter of credit relating to Collateral; assignments, verifications and notices in connection with
Accounts; or any other documents relating to the Collateral, including without limitation the Records.

(c) Use or operate Collateral or any other property of Borrower for the purpose of preserving or liquidating Collateral.

(d) File any claim or take any other action or proceeding in any court of law or equity or as otherwise deemed appropriate by Lender for
the purpose of collecting any and all monies due or securing any performance to be rendered with respect to the Collateral.

(e) Commence, prosecute or defend any suits, actions or proceedings or as otherwise deemed appropriate by Lender for the purpose of
protecting or collecting the Collateral. In furtherance of this right, upon the occurrence and during the continuance of an Event of Default,
Lender may apply for the appointment of a receiver or similar official to operate Borrower's business.

(f) Prepare, adjust, execute, deliver and receive payment under insurance claims, and collect and receive payment of and endorse any
instrument in payment of loss or returned premiums or any other insurance refund or return, and apply such amounts at Lender's sole discretion,
toward repayment of the Obligations or replacement of the Collateral.

8.5 Application of Proceeds. Any Proceeds and other monies or property received by Lender pursuant to the terms of this Agreement
or any Loan Document may be applied by Lender first to the payment of expenses of collection, including without limitation reasonable
attorneys' fees, and then to the payment of the Obligations in such order of application as Lender may elect.

8.6 Deficiency. If the Proceeds of any disposition of the Collateral are insufficient to cover all costs and expenses of such sale and the
payment in full of all the Obligations, plus all other sums required to be expended or distributed by Lender, then Borrower shall be liable for any
such deficiency.

8.7 Lender Transfer. Upon the transfer of all or any part of the Obligations, Lender may transfer all or part of the Collateral and shall
be fully discharged thereafter from all liability and responsibility with respect to such Collateral so transferred, and the transferee shall be vested
with all the rights and powers of Lender hereunder with respect to such Collateral so transferred, but with respect to any Collateral not so
transferred, Lender shall retain all rights and powers hereby given.

8.8 Lender's Duties.





(a) Lender shall use reasonable care in the custody and preservation of any Collateral in its possession. Without limitation on other
conduct which may be considered the exercise of reasonable care, Lender shall be deemed to have exercised reasonable care in the custody and
preservation of such Collateral if such Collateral is accorded treatment substantially equal to that which Lender accords its own property, it being
understood that Lender shall not have any responsibility for ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, declining value, tenders or other matters relative to any Collateral, regardless of whether Lender has or is deemed to have knowledge
of such matters; or taking any necessary steps to preserve any rights against any Person with respect to any Collateral. Under no circumstances
shall Lender be responsible for any injury or loss to the Collateral, or any part thereof, arising from any cause beyond the reasonable control of
Lender.

(b) Lender may at any time deliver the Collateral or any part thereof to Borrower and the receipt of Borrower shall be a complete and
full acquittance for the Collateral so delivered, and Lender shall thereafter be discharged from any liability or responsibility therefor.

(c) Neither Lender, nor any of its directors, officers, employees, agents, attorneys or any other person affiliated with or representing
Lender shall be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower or
any other party through the ordinary negligence of Lender, or any of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Lender.

8.9 Termination of Security Interests. Upon the payment in full of the Obligations and satisfaction of all Borrowers obligations
under this Agreement and the other Loan Documents, and if Lender has no further obligations under its Commitment, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to Borrower. Upon any such termination, the Lender shall, at
Borrower's reasonable expense, execute and deliver to Borrower such documents as Borrower shall reasonably request to evidence such
termination.


ARTICLE 9 - GENERAL PROVISIONS

9.1 Notices . Any notice given by any party under any Loan Document shall be in writing and personally delivered, sent by overnight
courier, or United States mail, postage prepaid, or sent by facsimile, or other authenticated message, charges prepaid, to the other party's or
parties' addresses shown on the Supplement. Each party may change the address or facsimile number to which notices, requests and other
communications are to be sent by giving written notice of such change to each other party. Notice given by hand delivery shall be deemed
received on the date delivered; if sent by overnight courier, on the next Business Day after delivery to the courier service; if by first class mail,
on the third Business Day after deposit in the U.S. Mail; and if by facsimile, on the date of transmission.

9.2 Binding Effect . The Loan Documents shall be binding upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns; provided, however, that Borrower may not assign or transfer Borrower's rights or obligations under any Loan
Document. Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender's
rights and obligations under the Loan Documents; provided, however , that so long as no Event of Default has occurred and is then continuing,
any such assignment, transfer, negotiation or grant of a participation by Lender shall require Borrowers prior written consent, which shall not be
unreasonably withheld. In connection with any of the foregoing, Lender may disclose all documents and information which Lender now or
hereafter may have relating to the Loans, Borrower, or its business. It is the intention of the parties that, as a venture capital operating
company, each of Venture Lending & Leasing V, LLC (the parent and sole owner of VLL5), and Venture Lending & Leasing VI, LLC (the
parent and sole owner of VLL6) (together, LLC ) shall have the benefit of, and the power to independently exercise, those management
rights provided to Lender in Section 5.3. To that end, the references to Lender in Sections 4.2(f), 5.1, 5.2, 5.3 and 5.9(a) hereof shall include
LLC, and LLC shall have the right to exercise the advisory, inspection, information and other rights given to lender under those Sections
independently of Lender. No amendment or modification of this Agreement shall alter or diminish LLCs rights under the preceding sentence
without the consent of LLC.

9.3 No Waiver . Any waiver, consent or approval by Lender of any Event of Default or breach of any provision, condition, or covenant
of any Loan Document must be in writing and shall be effective only to the extent set forth in writing. No waiver of any breach or default shall
be deemed a waiver of any later breach or default of the same or any other provision of any Loan Document. No failure or delay on the part of
Lender in exercising any power, right, or privilege under any Loan Document shall operate as a waiver thereof, and no single or partial exercise
of any such power, right, or privilege shall preclude any further exercise thereof or the exercise of any other power, right or privilege. Lender
has the right at its sole option to continue to accept interest and/or principal payments due under the Loan Documents after default, and such
acceptance shall not constitute a waiver of said default or an extension of the maturity of any Loan unless Lender agrees otherwise in writing.






9.4 Rights Cumulative . All rights and remedies existing under the Loan Documents are cumulative to, and not exclusive of, any other
rights or remedies available under contract or applicable law.

9.5 Unenforceable Provisions . Any provision of any Loan Document executed by Borrower which is prohibited or unenforceable in
any jurisdiction, shall be so only as to such jurisdiction and only to the extent of such prohibition or unenforceability, but all the remaining
provisions of any such Loan Document shall remain valid and enforceable.

9.6 Accounting Terms . Except as otherwise provided in this Agreement, accounting terms and financial covenants and information
shall be determined and prepared in accordance with GAAP.

9.7 Indemnification; Exculpation . Borrower shall pay and protect, defend and indemnify Lender and Lender's employees, officers,
directors, shareholders, affiliates, correspondents, agents and representatives (other than Lender, collectively Agents ) against, and hold
Lender and each such Agent harmless from, all claims, actions, proceedings, liabilities, damages, losses, expenses (including, without limitation,
attorneys' fees and costs) and other amounts incurred by Lender and each such Agent, arising from (i) the matters contemplated by this
Agreement or any other Loan Documents, (ii) any dispute between Borrower and a third party, or (iii) any contention that Borrower has failed to
comply with any law, rule, regulation, order or directive applicable to Borrower's business; provided, however , that this indemnification shall
not apply to any of the foregoing incurred solely as the result of Lender's or any Agent's gross negligence or willful misconduct. This
indemnification shall survive the payment and satisfaction of all of Borrower's Obligations to Lender.

9.8 Reimbursement . Borrower shall reimburse Lender for all costs and expenses, including without limitation reasonable attorneys'
fees and disbursements expended or incurred by Lender in any arbitration, mediation, judicial reference, legal action or otherwise in connection
with (a) the preparation and negotiation of the Loan Documents, (b) the amendment and enforcement of the Loan Documents, including without
limitation during any workout, attempted workout, and/or in connection with the rendering of legal advice as to Lender's rights, remedies and
obligations under the Loan Documents, if and as such may be necessary, (c) collecting any sum which becomes due Lender under any Loan
Document, (d) any proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, or (e) the protection, preservation or
enforcement of any rights of Lender. For the purposes of this section, attorneys' fees shall include, without limitation, reasonable fees incurred
in connection with the following: (1) contempt proceedings; (2) discovery; (3) any motion, proceeding or other activity of any kind in
connection with an Insolvency Proceeding; (4) garnishment, levy, and debtor and third party examinations; and (5) postjudgment motions and
proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment. All of the foregoing costs and
expenses shall be payable upon demand by Lender, and if not paid within forty-five (45) days of presentation of invoices shall bear interest at the
highest applicable Default Rate.

9.9 Execution in Counterparts . This Agreement may be executed in any number of counterparts which, when taken together, shall
constitute but one agreement.

9.10 Entire Agreement . The Loan Documents are intended by the parties as the final expression of their agreement and
therefore contain the entire agreement between the parties and supersede all prior understandings or agreements concerning the subject matter
hereof. This Agreement may be amended only in a writing signed by Borrower and Lender.

9.11 Governing Law and Jurisdiction .

(a) THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.





(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF BORROWER AND LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

9.12 Waiver of Jury Trial . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWER AND LENDER
EACH WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER AND LENDER EACH AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEMS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

ARTICLE 10 - DEFINITIONS

The definitions appearing in this Agreement or any Supplement shall be applicable to both the singular and plural forms of the defined
terms:

2007 Loan Agreement means that certain Loan and Security Agreement dated as of October 1, 2007, among Borrower, VLL4 and Lender,
together with all of the Loan Documents (as such term is defined therein), as the same have been and may be amended, supplemented, restated
or modified from time to time and any refinancings thereof.

2008 Loan Agreement means that certain Loan and Security Agreement dated as of November 21, 2008, among Borrower and VLL5,
together with all of the Loan Documents (as such term is defined therein), as the same have been and may be amended, supplemented, restated
or modified from time to time and any refinancings thereof.

Account means any account, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest and, in any event, shall include, without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to Borrower (including, without limitation, under any trade name, style or division thereof) whether arising
out of goods sold or services rendered by Borrower or from any other transaction, whether or not the same involves the sale of goods or services
by Borrower (including, without limitation, any such obligation that may be characterized as an account or contract right under the UCC) and all
of Borrower's rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of
Borrower's rights to any goods represented by any of the foregoing (including, without limitation, unpaid seller's rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), and all monies due or to become due to Borrower
under all purchase orders and contracts for the sale of goods or the performance of services or both by Borrower or in connection with any other
transaction (whether or not yet earned by performance on the part of Borrower), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.





Affiliate means any Person which directly or indirectly controls, is controlled by, or is under common control with Borrower. Control,
controlled by and under common control with mean direct or indirect possession of the power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or otherwise); provided, that control shall be conclusively presumed
when any Person or affiliated group directly or indirectly owns five percent (5%) or more of the securities having ordinary voting power for the
election of directors of a corporation.

Agreement means this Loan and Security Agreement and each Supplement thereto, as each may be amended or supplemented from time to
time.

Bank Debt means: (i) Indebtedness of Borrower (A) to a bank incurred for the purpose of financing capital Equipment acquisitions and (B)
secured solely by the Equipment financed with the proceeds of such Indebtedness and the Proceeds thereof, in which case the bank providing
such Indebtedness shall be permitted to have a first priority Lien on such Equipment and the Proceeds thereof; (ii) Indebtedness of Borrower (A)
to a bank which provides working capital financing to Borrower based upon a formula of eligible accounts receivable and (B) secured solely by
the Accounts and the cash and cash equivalents that constitute the Proceeds thereof, in which case the bank providing such Indebtedness shall be
permitted to have a first priority Lien on such Accounts and the cash and cash equivalents that constitute the Proceeds thereof; and (iii) any
combination of (i) and (ii).

Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. 101, et seq .), as amended.

Basic Interest means the fixed rate of interest payable on the outstanding balance of each Loan at the applicable Designated Rate.

Borrowing Date means the Business Day on which the proceeds of a Loan are disbursed by Lender.

Borrowing Request means a written request from Borrower in substantially the form of Exhibit B to the Supplement, requesting the
funding of one or more Loans on a particular Borrowing Date.

Business Day means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are
authorized or required by law to close.

Chattel Paper means any chattel paper, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

Closing Date means the date of this Agreement.

Collateral means all of Borrowers right, title and interest in and to the following property, whether now owned or hereafter acquired and
wherever located: (a) all Receivables; (b) all Equipment; (c) all Fixtures; (d) all General Intangibles; (e) all Inventory; (f) all Investment
Property; (g) all Deposit Accounts; (h) all other Goods and personal property of Borrower, whether tangible or intangible and whether now or
hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located; (i) all Records; and (j) all Proceeds of
each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.

Commitment means the obligation of Lender to make Loans to Borrower up to the aggregate principal amount set forth in the Supplement.

Copyright License means any written agreement granting any right to use any Copyright or Copyright registration now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

Copyrights means all of the following now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest: (i) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof or of any
other country; (ii) all registrations, applications and recordings in the United States Copyright Office or in any similar office or agency of the
United States, any State thereof or any other country; (iii) all continuations, renewals or extensions thereof; and (iv) any registrations to be issued
under any pending applications.

Default means an event which with the giving of notice, passage of time, or both would constitute an Event of Default.

Default Rate is defined in Section 2.7.





Deposit Accounts means any deposit accounts, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.

Designated Rate means the rate of interest per annum described in the Supplement as being applicable to an outstanding Loan from time to
time.

Documents means any documents, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

Environmental Laws means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to environmental, health, or safety matters.

Equipment means any equipment, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and any and all additions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

Event of Default means any event described in Section 7.1.

Final Payment means, with respect to a Loan, an amount equal to that percentage of the original principal amount of such Loan and payable
at the time specified in the Supplement or the Note evidencing such Loan.

Fixtures means any fixtures, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.

GAAP means generally accepted accounting principles and practices consistent with those principles and practices promulgated or adopted
by the Financial Accounting Standards Board and the Board of the American Institute of Certified Public Accountants, their respective
predecessors and successors. Each accounting term used but not otherwise expressly defined herein shall have the meaning given it by GAAP.

General Intangibles means any general intangibles, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest and, in any event, shall include, without limitation, all right, title and interest that
Borrower may now or hereafter have in or under any contract, all customer lists, Copyrights, Trademarks, Patents, websites, domain names, and
all applications therefor and reissues, extensions, or renewals thereof, other rights to Intellectual Property, interests in partnerships, joint ventures
and other business associations, Licenses, permits, trade secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, recipes, experience,
processes, models, drawings, materials and records, goodwill (including, without limitation, the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License), claims in or under insurance policies, including unearned
premiums, uncertificated securities, money, cash or cash equivalents, deposit, checking and other bank accounts, rights to sue for past, present
and future infringement of Copyrights, Trademarks and Patents, rights to receive tax refunds and other payments and rights of indemnification.

Goods means any goods, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest.

Indebtedness of any Person means at any date, without duplication and without regard to whether matured or unmatured, absolute or
contingent: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes, or
other similar debt instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business; (iv) all obligations of such Person as lessee under capital leases (and not real estate
leases); (v) all obligations of such Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter of credit,
banker's acceptance, or similar instrument, whether drawn or undrawn; (vi) all obligations of such Person to purchase securities which arise out
of or in connection with the sale of the same or substantially similar securities; (vii) all obligations of such Person to purchase, redeem,
exchange, convert or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock,
now or hereafter outstanding, except to the extent that such obligations remain performable solely at the option of such Person; (viii) all
obligations to repurchase assets previously sold (including any obligation to repurchase any accounts or chattel paper under any factoring,
receivables purchase, or similar arrangement); (ix) obligations of such Person under interest rate swap, cap, collar or similar hedging
arrangements; and (x) all obligations of others of any type described in clause (i) through clause (ix) above guaranteed by such Person.





Insolvency Proceeding means with respect to a Person (a) any case, action or proceeding before any court or other governmental authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors with respect to such
Person, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement
in respect of such Persons creditors generally or any substantial portion of its creditors, undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code, but in each case, excluding any avoidance or similar action against such Person commenced by an assignee for
the benefit of creditors, bankruptcy trustee, debtor in possession, or other representative of another Person or such other Persons estate.

Instruments means any instrument, as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

Intellectual Property means all Copyrights, Trademarks, Patents, Licenses, trade secrets, source codes, customer lists, proprietary or
confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, skill, expertise, experience, processes, models, drawings, materials, records and goodwill associated with the foregoing.

Intellectual Property Security Agreement means any Intellectual Property Security Agreement executed and delivered by Borrower in
favor of Lender, as the same may be amended, supplemented, or restated from time to time.

Inventory means any inventory, as such term is defined in the UCC, wherever located, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest, and, in any event, shall include, without limitation, all inventory, goods and other
personal property that are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished under a contract of service or
that constitute raw materials, work in process or materials used or consumed or to be used or consumed in Borrower's business, or the
processing, packaging, promotion, delivery or shipping of the same, and all finished goods, whether or not the same is in transit or in the
constructive, actual or exclusive possession of Borrower or is held by others for Borrower's account, including, without limitation, all goods
covered by purchase orders and contracts with suppliers and all goods billed and held by suppliers and all such property that may be in the
possession or custody of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or other Persons.

Investment Property means any investment property, as such term is defined in the UCC, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

Letter of Credit Rights means any letter of credit rights, as such term is defined in the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest, including any right to payment under any letter of credit.

License means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and any renewals or extensions thereof.

Lien means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, any lease in the nature of a security interest, and the filing of any financing statement (other than a precautionary financing
statement with respect to a lease that is not in the nature of a security interest) under the UCC or comparable law of any jurisdiction.

Loan means an extension of credit by Lender under this Agreement.





Loan Documents means, individually and collectively, this Loan and Security Agreement, each Supplement, each Note, the Intellectual
Property Security Agreement, and any security or pledge agreement(s), any Warrants issued by Borrower to Lender (or its designee) in
connection with this Agreement, and all other contracts, instruments, addenda and documents executed in connection with this Agreement or the
extensions of credit which are the subject of this Agreement.

Material Adverse Effect or Material Adverse Change means (a) a material adverse change in, or a material adverse effect upon, the
operations, business, properties, or condition (financial or otherwise) of Borrower; (b) a material impairment of the ability of Borrower to
perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against Borrower
of any Loan Document.

Note means a promissory note substantially in the form attached to the Supplement as Exhibit A , executed by Borrower evidencing each
Loan.

Obligations means all debts, obligations and liabilities of Borrower to Lender currently existing or now or hereafter made, incurred or
created under, pursuant to or in connection with this Agreement or any other Loan Document, whether voluntary or involuntary and however
arising or evidenced, whether direct or acquired by Lender by assignment or succession, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Borrower may be liable individually or jointly, or whether recovery upon
such debt may be or become barred by any statute of limitations or otherwise unenforceable; and all renewals, extensions and modifications
thereof; and all attorneys' fees and costs incurred by Lender in connection with the collection and enforcement thereof as provided for in any
Loan Document.

Patent License means any written agreement granting any right with respect to any invention on which a Patent is in existence now owned
or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

Patents means all of the following property now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest: (a) all letters patent of, or rights corresponding thereto in, the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights corresponding thereto in, the United States or any other country, including,
without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country; (b) all reissues, continuations, continuations-in-part or extensions thereof; (c) all
petty patents, divisionals, and patents of addition; and (d) all patents to be issued under any such applications.

Permitted Lien means:

(a) involuntary Liens which, in the aggregate, would not have a Material Adverse Effect and which in any event would not exceed, in
the aggregate, the Threshold Amount;

(b) Liens for current taxes or other governmental or regulatory assessments which are not delinquent, or which are contested in good
faith by the appropriate procedures and for which appropriate reserves are maintained;

(c) security interests on any property held or acquired by Borrower in the ordinary course of business securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring such property; provided , that such Lien attaches solely to the
property acquired with such Indebtedness and that the principal amount of such Indebtedness does not exceed one hundred percent (100%) of the
cost of such property; and further provided , that such property is not equipment or other Collateral with respect to which a Loan has been made
hereunder;

(d) Liens in favor of Lender;

(e) bankers' liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business as long as an account
control agreement for each account in which such deposits are held in a form acceptable to Lender has been executed and delivered to Lender;

(f) materialmen's, mechanics', repairmen's, employees' or other like Liens arising in the ordinary course of business and which are not
delinquent for more than 45 days or are being contested in good faith by appropriate proceedings;

(g) any judgment, attachment or similar Lien, unless the judgment it secures has not been discharged or execution thereof effectively
stayed and bonded against pending appeal within 30 days of the entry thereof;





(h) licenses or sublicenses of Intellectual Property in accordance with Section 6.5;

(i) Liens securing Subordinated Debt;

(j) Liens securing financing under (i) the 2007 Loan Agreement and (ii) the 2008 Loan Agreement;

(k) Liens securing Bank Debt; provided, however , that as a condition precedent to granting any such Liens, Borrower shall have caused
the Person to whom Borrower proposes to grant such Liens to enter into an intercreditor agreement in form and substance satisfactory to Lenders
(including VLL5 in its capacity as Lender under the 2008 Loan Agreement) and such Person; and

(l) Liens which have been approved by Lender in writing prior to the Closing Date, as shown on Schedule 6.2 .

Person means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).

Proceeds means proceeds, as such term is defined in the UCC and, in any event, shall include, without limitation, (a) any and all Accounts,
Chattel Paper, Instruments, cash or other forms of money or currency or other proceeds payable to Borrower from time to time in respect of the
Collateral, (b) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Borrower from time to time with respect to any
of the Collateral, (c) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any
Person acting under color of governmental authority), (d) any claim of Borrower against third parties (i) for past, present or future infringement
of any Copyright, Patent or Patent License or (ii) for past, present or future infringement or dilution of any Trademark or Trademark License or
for injury to the goodwill associated with any Trademark, Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

Qualified Public Offering means the closing of a firmly underwritten public offering of Borrower's common stock with aggregate proceeds
of not less than $20,000,000 (prior to underwriting expenses and commissions).

Receivables means all of Borrower's Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, and letters of credit and
Letter of Credit Rights.

Records means all Borrower's computer programs, software, hardware, source codes and data processing information, all written documents,
books, invoices, ledger sheets, financial information and statements, and all other writings concerning Borrower's business.

Related Person means any Affiliate of Borrower, or any officer, employee, director or equity security holder of Borrower or any Affiliate.

Rights to Payment means all Borrower's accounts, instruments, contract rights, documents, chattel paper and all other rights to payment,
including, without limitation, the Accounts, all negotiable certificates of deposit and all rights to payment under any Patent License, any
Trademark License, or any commercial or standby letter of credit.

Security Documents means this Loan and Security Agreement, the Supplement hereto, the Intellectual Property Security Agreement, and
any and all account control agreements, collateral assignments, chattel mortgages, financing statements, amendments to any of the foregoing and
other documents from time to time executed or filed to create, perfect or maintain the perfection of Lenders Liens on the Collateral.

Subordinated Debt means Indebtedness (i) approved by Lender; and (ii) where the holders right to payment of such Indebtedness, the
priority of any Lien securing the same, and the rights of the holder thereof to enforce remedies against Borrower following default have been
made subordinate to the Liens of Lender and to the prior payment to Lender of the Obligations, pursuant to a written subordination agreement
approved by Lender in its sole but reasonable discretion.





Subsidiary means any Person a majority of the equity ownership or voting stock of which is at the time owned by Borrower.

Supplement means that certain supplement to this Loan and Security Agreement, as the same may be amended or restated from time to time,
and any other supplements entered into between Borrower and Lender, as the same may be amended or restated from time to time.

Supporting Obligations means any supporting obligations, as such term is defined in the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.

Termination Date has the meaning specified in the Supplement.

Threshold Amount has the meaning specified in the Supplement.

Trademark License means any written agreement granting any right to use any Trademark or Trademark registration now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

Trademarks means all of the following property now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest: (a) all trademarks, tradenames, corporate names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings thereof, and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country or any political subdivision thereof and (b) reissues, extensions or renewals thereof.

UCC means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of California; provided , that in the
event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender's
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of California,
the term UCC shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. Unless
otherwise defined herein, terms that are defined in the UCC and used herein shall have the meanings given to them in the UCC.

VLL4 means Venture Lending & Leasing IV, Inc., together with its successors and assigns.


[Signature page follows]





[Signature page to Loan and Security Agreement]


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



[Schedules to Loan and Security Agreement follow]

BORROWER:

INSIDER GUIDES, INC.


By:
Name:
Title:


LENDER:

VENTURE LENDING & LEASING V, INC.


By:
Name:
Title:


LENDER:

VENTURE LENDING & LEASING VI, INC.


By:
Name:
Title:
Exhibit 10.31

SUPPLEMENT
to the
Loan and Security Agreement
dated as of December 13, 2010
between
Insider Guides, Inc. (Borrower)
and
Venture Lending & Leasing V, Inc. (VLL5)
and
Venture Lending & Leasing VI, Inc. (VLL6)
(each of VLL4 and VLL5, as Lender)



This is a Supplement identified in the document entitled Loan and Security Agreement dated as of December 13, 2010 (as amended,
restated, supplemented and modified from time to time, the Loan and Security Agreement ), by and between Borrower and Lender. All
capitalized terms used in this Supplement and not otherwise defined in this Supplement have the meanings ascribed to them in Article 10 of the
Loan and Security Agreement, which is incorporated in its entirety into this Supplement. In the event of any inconsistency between the
provisions of, or definitions in, that document and this Supplement, this Supplement is controlling.

The parties are entering into this single Supplement to the Loan and Security Agreement for convenience, and this Supplement is and
shall be interpreted for all purposes as separate and distinct agreements between Borrower and VLL5, on the one hand, and Borrower and VLL6,
on the other hand, and nothing in this Supplement shall be deemed a joint venture, partnership or other association between VLL5 and
VLL6. Each reference in this Supplement to Lender shall mean and refer to each of VLL5 and VLL6, singly and independent of one
another. Without limiting the generality of the foregoing, the Commitment, covenants and other obligations of Lender under the Loan and
Security Agreement, as supplemented hereby, are several and not joint obligations of VLL5 and VLL6, and all rights and remedies of Lender
under the Loan and Security Agreement, as supplemented hereby, may be exercised by VLL5 and/or VLL6 independently of one another.

In addition to the provisions of the Loan and Security Agreement, the parties agree as follows:

Part 1 . - Additional Definitions :

Commitment means, as the context may require, the VLL5 Commitment or the VLL6 Commitment. Each Lenders Commitment is
several and not joint with the Commitment of the other Lender.

Designated Rate means a fixed rate of interest per annum equal to the Prime Rate as published on the Business Day on which
Lender prepares the Note for each Loan, plus five and three-quarters of one percent (5.75%); provided, however , that in no event shall the
Designated Rate for any Loan be less than nine percent (9.00%).

Eligible Equipment means any (i) computer equipment, (ii) lab, shop and test equipment, (iii) office equipment, and (iv) other
standard hardware acceptable to Lender, provided that none of the foregoing is subject to a license agreement between Borrower and any Person,
and excluding any Soft Costs that are financed with the proceeds of a Soft Cost Loan.

Equipment Loan means any Loan requested by Borrower and funded by Lender under its Equipment Loan Commitment to finance
Borrowers acquisition or carrying of specific items of Eligible Equipment.




Equipment Loan Commitment means, as the context may require, the VLL5 Equipment Loan Commitment or the VLL6
Equipment Loan Commitment. Each Lenders Equipment Loan Commitment is several and not joint with the Equipment Loan Commitment of
the other Lender.

Final Payment : Each Equipment Loan shall have a Final Payment equal to 6.723% of the original principal amount of such Loan;
and each Soft Cost Loan and each Growth Capital Loan shall have a Final Payment equal to 5.294% of the original principal amount of such
Loan.

Growth Capital Loan means any Loan requested by Borrower and funded by Lender under its Growth Capital Loan Commitment
for purposes of financing Borrowers acquisitions.

Growth Capital Loan Commitment means, as the context may require, the VLL5 Growth Capital Loan Commitment or the VLL6
Growth Capital Loan Commitment. Each Lenders Growth Capital Loan Commitment is several and not joint with the Growth Capital Loan
Commitment of the other Lender.

Liquidity Event means: (i) the closing of a merger, acquisition or other transaction in accordance with the provisions of Section 6.4
of the Loan and Security Agreement; (ii) the closing of a sale of all or substantially all of a Borrowers assets in accordance with the provisions
the Loan and Security Agreement; or (iii) the closing of a firmly underwritten public offering of Borrowers securities either (A) pursuant to a
registration statement filed on Form S-1 under the Securities Act of 1933, as amended or (B) on a foreign exchange.

Loan or Loans mean, as the context may require, individually an Equipment Loan, a Soft Cost Loan or a Growth Capital Loan,
and collectively, the Equipment Loans, the Soft Cost Loans and the Growth Capital Loans.

Prime Rate means the prime rate of interest, as published from time to time by The Wall Street Journal in the Money Rates
section of its Western Edition newspaper.

Soft Cost Loan Sub-Commitment means, as the context may require, the VLL5 Soft Cost Loan Sub-Commitment or the VLL6
Soft Cost Loan Sub-Commitment. Each Lenders Soft Cost Loan Sub-Commitment is several and not joint with the Soft Cost Loan Sub-
Commitment of the other Lender

Soft Costs means Borrowers costs of acquiring (i) custom-made or non-standard equipment (not otherwise approved by Lender as
Eligible Equipment), (ii) tenant improvements at Borrowers primary business premises, (iii) domain names, (iv) software, (v) sales tax, freight,
maintenance and installation charges in respect of items of Eligible Equipment and (vi) other items of personal property approved by Lender that
do not constitute Eligible Equipment.

Termination Date means the earlier of (i) the date Lender may terminate making Loans or extending other credit pursuant to the
rights of Lender under Article 7 of the Loan and Security Agreement, or (ii)(A) with respect to the Equipment Loan Commitment , September 30,
2011, provided, however , that such date shall be extended from September 30, 2011 to December 31, 2011 with respect to the lesser of (x)
37.5% of the Commitment (i.e., $750,000 per Lender, for an aggregate commitment of $1,500,000) and (y) the then unfunded portion of
Lenders Equipment Loan Commitment, (B) with respect to the Growth Capital Loan Commitment , January 31, 2011.

Threshold Amount : Fifty Thousand Dollars ($50,000).

VLL5 Commitment : Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, VLL5
commits to make:



(i) Equipment Loans to Borrower up to the aggregate original principal amount of Two Million Dollars ($2,000,000)
(the VLL5 Equipment Loan Commitment );






VLL6 Commitment : Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, VLL6
commits to make:





Part 2 . - Additional Covenants and Conditions :


1. Equipment Loan Commitment; Soft Cost Loan Commitment; Use of Proceeds; Limitations on Equipment Loans and
Soft Cost Loans.

(a) Funding of Equipment Loans. Subject to the terms and conditions of the Loan and Security Agreement and this
Supplement, Lender agrees to make Equipment Loans to Borrower from time to time from the Closing Date up to and including the Termination
Date in an aggregate original principal amount up to but not exceeding the lesser of (i) the then unfunded portion of its Equipment Loan
Commitment, and (ii) an amount equal to 100% (the Original Cost ) of the amount paid by Borrower to a manufacturer, vendor or dealer who
is not an Affiliate of Borrower for each item of Eligible Equipment being financed with the proceeds of such Equipment Loan as shown on an
invoice therefor (excluding (x) any commissions, (y) any portion of the amount invoiced which relates to servicing or maintenance of the
Eligible Equipment, and (z) delivery, freight and installation charges or sales taxes payable upon acquisition, unless the amounts described in
clauses (y) and (z) constitute Soft Costs that are being financed with the proceeds of a contemporaneous Soft Cost Loan). Notwithstanding the
foregoing, no item of Eligible Equipment shall be eligible to be financed with the proceeds of an Equipment Loan if such item was acquired or
first placed in service by Borrower earlier than ninety (90) days prior to the Borrowing Date of such Equipment Loan; provided, however , that
so long as the Borrowing Date of the initial Equipment Loan occurs on or before December 31, 2010, Borrower may finance Eligible Equipment
acquired or first placed in service from September 1, 2010 at the Original Cost of such items (so long as the same have not been financed under
the 2008 Loan Agreement).


(ii) as a sub-facility of the VLL5 Equipment Loan Commitment, Soft Costs Loans to Borrower up to the aggregate
original principal amount of Four Hundred Thousand Dollars ($400,000) (the VLL5 Soft Cost Loan Sub-
Commitment ); and
(iii) Growth Capital Loans to Borrower up to the aggregate original principal amount of Two Hundred Fifty
Thousand Dollars ($250,000) (the VLL5 Growth Capital Loan Commitment ); provided, however , that the
aggregate original principal amount of all Equipment Loans, the Soft Cost Loans and the Growth Capital Loans
advanced to Borrower by VLL5 shall not exceed Two Million Dollars ($2,000,000).
(i) Equipment Loans to Borrower up to the aggregate original principal amount of Two Million Dollars ($2,000,000)
(the VLL6 Equipment Loan Commitment )
(ii) as a sub-facility of the VLL5 Equipment Loan Commitment, Soft Costs Loans to Borrower up to the aggregate
original principal amount of Four Hundred Thousand Dollars ($400,000) (the VLL6 Soft Cost Loan Sub-
Commitment ); and
(iii) Growth Capital Loans to Borrower up to the aggregate original principal amount of Two Hundred Fifty
Thousand Dollars ($250,000) (the VLL6 Growth Capital Loan Commitment ); provided, however , that the
aggregate original principal amount of all Equipment Loans, the Soft Cost Loans and the Growth Capital Loans
advanced to Borrower by VLL6 shall not exceed Two Million Dollars ($2,000,000).



(b) Funding of Soft Cost Loans. Subject to the terms and conditions of the Loan and Security Agreement and this
Supplement, Lender agrees to make Soft Cost Loans to Borrower from time to time from the Closing Date up to and including the Termination
Date in an aggregate original principal amount up to but not exceeding the lowest of (i) the then unfunded portion of its Equipment Loan
Commitment, (ii) the then unfunded portion of its Soft Cost Loan Sub-Commitment, and (i) an amount equal the Original Cost of the amount
paid by Borrower to a manufacturer, vendor or dealer who is not an Affiliate of Borrower for each Soft Cost being financed with the proceeds of
such Soft Cost Loan as shown on an invoice therefor. Notwithstanding the foregoing, no Soft Cost shall be eligible to be financed with the
proceeds of a Soft Cost Loan if the same was expended, acquired or first placed in service by Borrower earlier than ninety (90) days prior to the
Borrowing Date of such Soft Cost Loan; provided, however , that so long as the Borrowing Date of the initial Soft Cost Loan occurs on or before
December 31, 2010, Borrower may finance Soft Costs expended, acquired or first placed in service from September 1, 2010 at the Original Cost
of such items (so long as the same have not been financed under the 2008 Loan Agreement).

(c) Location of Equipment and Soft Costs. All Eligible Equipment and Soft Costs, if applicable, financed hereunder
shall be located at all times at (i) Borrowers place of business in New Hope, Pennsylvania, (ii) ReadyTechs, LLCs place of business in
Secaucus, New Jersey or (iii) other places of business located within the United States as may be consented to by Lender in writing.

(d) Minimum Funding Amount. Except to the extent the remaining Equipment Loan Commitment or Soft Cost Loan
Sub-Commitment is a lesser amount, any Equipment Loans and Soft Cost Loans requested by Borrower to be made on a single Business Day
shall be for a minimum aggregate principal amount of Fifty Thousand Dollars ($50,000).

2. Growth Capital Loan Commitment; Funding of Growth Capital Loans .

(a) Funding of Growth Capital Loans . Subject to the terms and conditions of the Loan and Security Agreement and
this Supplement, Lender agrees to make Growth Capital Loans to Borrower from time to time from the Closing Date up to and including the
Termination Date in an aggregate original principal amount up to but not exceeding the then unfunded portion of its Growth Capital Loan
Commitment.

(b) Minimum Funding Amount. Except to the extent the remaining Growth Capital Loan Commitment is a lesser
amount, any Growth Capital Loans requested by Borrower to be made on a single Business Day shall be for a minimum aggregate principal
amount of Fifty Thousand Dollars ($50,000).

3. Maximum Number of Borrowing Requests. Borrower shall not submit a Borrowing Request more frequently than once
each calendar month, provided that a Borrowing Request may request that more than one type of Loan be funded pursuant to it.

4. Repayment of Loans.

(a) Equipment Loans. Principal of and interest on each Equipment Loan shall be payable as set forth in a Note
(substantially in the form of Exhibit A-1 hereto) evidencing such Equipment Loan, which Note shall provide substantially as
follows: principal and interest at the Designated Rate shall be fully amortized over a period of thirty six (36) months in equal, monthly
installments. In particular, on the Borrowing Date applicable to the Equipment Loan evidenced by such Note, Borrower shall pay to Lender (i) if
the Borrowing Date is not the first day of the month , interest only at a rate equal to 1.00% per month, in advance, on the outstanding principal
balance of the Loan evidenced by such Note, for the period from such Borrowing Date through the last day of the calendar month in which such
Borrowing Date occurs, and (ii) the first (1
st
) amortization installment of principal and interest at the Designated Rate. Commencing on the first
day of the second full month after the Borrowing Date, and continuing on the first day of each consecutive calendar month thereafter, principal
and interest at the Designated Rate shall be payable, in advance, in 35 equal consecutive installments in an amount sufficient to fully amortize
the Loan evidenced by such Note. The Final Payment on such Loan shall be due and payable on the same date that the last installment payment
of principal and interest at the Designated Rate is due.





(b) Soft Cost Loans and Growth Capital Loans . Principal of and interest on each Soft Cost Loan and each Growth
Capital Loan shall be payable as set forth in a Note (substantially in the form of Exhibit A-2 hereto) evidencing such Loan, which Note shall
provide substantially as follows: principal and interest at the Designated Rate shall be fully amortized over a period of thirty (30) months in
equal, monthly installments. In particular, on the Borrowing Date applicable to the Equipment Loan evidenced by such Note, Borrower shall
pay to Lender (i) if the Borrowing Date is not the first day of the month , interest only at a rate equal to 1.00% per month, in advance, on the
outstanding principal balance of the Loan evidenced by such Note, for the period from such Borrowing Date through the last day of the calendar
month in which such Borrowing Date occurs, and (ii) the first (1
st
) amortization installment of principal and interest at the Designated
Rate. Commencing on the first day of the second full month after the Borrowing Date, and continuing on the first day of each consecutive
calendar month thereafter, principal and interest at the Designated Rate shall be payable, in advance, in 29 equal consecutive installments in an
amount sufficient to fully amortize the Loan evidenced by such Note. The Final Payment on such Loan shall be due and payable on the same
date that the last installment payment of principal and interest at the Designated Rate is due.

5. Prepayment . No Loan funded pursuant to the Loan and Security Agreement and this Supplement may be voluntarily
prepaid except as provided in this Section 5.

(a) Voluntary Prepayment at any Time . Borrower may voluntarily prepay all, but not less than all, Loans funded
pursuant to the Loan and Security Agreement and this Supplement in whole, but not in part, at any time by tendering to each Lender cash
payment in respect of such Lenders Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such Loans as of the date of
prepayment; and (ii) an amount equal to the total amount of all scheduled but unpaid payments (including Final Payments) that would have
accrued and been payable from the date of prepayment through the stated maturity of the Loans had they remained outstanding and been paid in
accordance with the terms of the related Note(s).


(b) Prepayment after Twelve Months of Amortization. Notwithstanding anything to the contrary in Section 5(a), so
long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least twelve (12) consecutive payments
of principal and interest with respect to all Loans funded pursuant to the Loan and Security Agreement and this Supplement, Borrower may
voluntarily prepay all, but not less than all, such Loans in whole but not in part, by tendering to each Lender cash payment in respect of such
Lenders Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all
outstanding principal balances of such Loans as of the date of prepayment; and (iii) an amount equal to eighty percent (80%) of all interest that
would have accrued and been payable from the date of prepayment through the stated date of maturity of the Loans had they remained
outstanding and been paid in accordance with the terms of the related Notes, in each case, as such amounts are determined by such
Lender. Borrower agrees that its right to prepay the Loans funded pursuant to the Loan and Security Agreement and this Supplement pursuant to
this Section 5(b) shall not apply in connection with a Liquidity Event or at any time thereafter.

(c) Prepayment after Eighteen Months of Amortization. Notwithstanding anything to the contrary in Section 5(a),
so long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least eighteen (18) consecutive
payments of principal and interest with respect to all Loans funded pursuant to the Loan and Security Agreement and this Supplement, Borrower
may voluntarily prepay all, but not less than all, such Loans in whole but not in part, by tendering to each Lender cash payment in respect of
such Lenders Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all
outstanding principal balances of such Loans as of the date of prepayment; and (iii) an amount equal to seventy percent (70%) of all interest that
would have accrued and been payable from the date of prepayment through the stated date of maturity of the Loans had they remained
outstanding and been paid in accordance with the terms of the related Notes, in each case, as such amounts are determined by such
Lender. Borrower agrees that its right to prepay the Loans funded pursuant to the Loan and Security Agreement and this Supplement pursuant to
this Section 5(c) shall not apply in connection with a Liquidity Event or at any time thereafter.





(d) Prepayment if Lender Fails or Refuses to Fund a Loan. Notwithstanding anything to the contrary in Section 5
(a), if prior to the Termination Date Borrower satisfies all of the conditions precedent with respect to the funding of a Loan and Lenders fail or
refuse to make such Loan then Borrower may voluntarily prepay all, but not less than all, outstanding Loans funded pursuant to the Loan and
Security Agreement and this Supplement in whole, but not in part, at any time from the date of such failure or refusal up to the date which is
sixty (60) days thereafter by tendering to each Lender cash payment in respect of such Lenders outstanding Loans in an amount equal to the
sum of: (i) all accrued and unpaid interest on such outstanding Loans as of the date of prepayment; and (ii) all outstanding principal balances of
such outstanding Loans as of the date of prepayment, in each case, as such amounts are reasonably determined by such Lender.

6. Issuance of Warrants . As additional consideration for the making of the VLL5 Commitment: VLL5 has earned and is
entitled to receive immediately upon the execution of the Loan and Security Agreement and this Supplement, a warrant instrument issued by
Borrower (the VLL5 Warrant ); and (b) VLL6 has earned and is entitled to receive immediately upon the execution of the Loan and Security
Agreement and this Supplement, a warrant instrument issued by Borrower (the VLL6 Warrant and together with the VLL5 Warrant, the
Warrants ). The Warrants shall be substantially in the form of Exhibit D attached hereto. Borrower acknowledges that: (i) VLL5 has
assigned its rights to receive the VLL5 Warrant to its parent, Venture Lending & Leasing V, LLC, and in connection therewith, Borrower shall
issue the VLL5 Warrant directly to Venture Lending & Leasing V, LLC; and (ii) VLL6 has assigned its rights to receive the VLL6 Warrant to its
parent, Venture Lending & Leasing VI, LLC, and in connection therewith, Borrower shall issue the VLL6 Warrant directly to Venture Lending
& Leasing VI, LLC. Lender shall furnish to Borrower a copy of the agreement in which such Lender assigned its Warrant to its parent.

7. Payment of Commitment Fee. As an additional condition precedent under Section 4.1 of the Loan and Security
Agreement, Lender shall have completed to its satisfaction its due diligence review of Borrower's business and financial condition and prospects,
and Lenders investment committee shall have approved its Commitment. If this condition is not satisfied, the Twenty Thousand Dollars
($20,000) commitment fee (the Commitment Fee ) previously paid by Borrower shall be refunded. VLL5 agrees that with respect to each
Loan advanced under its Commitment, on the Borrowing Date applicable to such Loan, VLL5 shall credit against the payments due from
Borrower on such date in respect of such Loan an amount equal to the product of Ten Thousand Dollars ($10,000) and a fraction the numerator
of which is the principal amount of such Loan and the denominator of which is Two Million Dollars ($2,000,000), until the amount of such
credits made by VLL5 equals but does not exceed Ten Thousand Dollars ($10,000); and VLL6 agrees that with respect to each Loan advanced
under its Commitment, on the Borrowing Date applicable to such Loan, VLL6 shall credit against the payments due from Borrower on such date
in respect of such Loan an amount equal to the product of Ten Thousand Dollars ($10,000) and a fraction the numerator of which is the principal
amount of such Loan and the denominator of which is Two Million Dollars ($2,000,000), until the amount of such credits made by VLL6 equals
but does not exceed Ten Thousand Dollars ($10,000). Except as set forth in this Section 7, the Commitment Fee is not refundable.

8. Documentation Fee Payment. Pursuant to Section 9.8(a) of the Loan and Security Agreement, Borrower shall pay Lender,
on demand, the total amount of Lenders actual costs and expenses incurred in connection with the preparation and negotiation of the Loan
Documents, including legal fees, plus actual filing fees incurred by Lender or its counsel related to perfection of the Liens granted under the
Loan and Security Agreement.

9. Borrowers Account and Wire Transfer Instructions:



Institution Name Comerica Bank
Address 226 Airport Parkway, Suite 100, M/C 4348
San Jose, CA 95110
ABA No.
Contact Name Brian Marshall
Phone No. (617) 757-6343
E-mail bjmarshall@comerica.com
Account Title Insider Guides, Inc.
Account No.



10. Debits to Account for ACH Transfers. For purposes of Section 2.2 and 5.10 of the Loan and Security Agreement, the
Primary Operating Account shall be the bank account set forth in Section 9 above. Borrower hereby agrees that Loans will be advanced to the
account specified above and regularly scheduled payments of principal, interest and Final Payments will be automatically debited from the same
account.

Part 3 . - Additional Representations :

Borrower represents and warrants that as of the Closing Date and each Borrowing Date:













a) Its chief executive office is located at: 280 Union Square Drive New Hope, PA 18938.
b) Its Equipment is located at: Equinix Operating Co., Inc., 275 Hartz Way, Secaucus, NJ 07094.
c) Its Inventory is located at: 280 Union Square Drive New Hope, PA 18938.
d) Its Records are located at: 280 Union Square Drive New Hope, PA 18938.
e) In addition to its chief executive office, Borrower maintains offices or operates its business at the following
locations: 132 W. 36th Street, 9th Floor, New York, NY 10018.
f) Other than its current, full corporate name, Borrower has conducted business under the following corporate name(s),
or using the following trade names or fictitious business names: Myyearbook.com; Insider Guides, LLC.
g) Borrowers Delaware state corporation I.D. number is: 4242493.
h) Borrowers federal tax identification number is: 20-8303286.
i) In addition to the Primary Operating Account identified in Section 9, Borrower maintains the following Deposit
Accounts and investment/securities accounts:
Institution Name Comerica Bank
Address 226 Airport Parkway, Suite 100, M/C 4348
San Jose, CA 95110
ABA No.
Contact Name Brian Marshall
Phone No. (617) 757-6343
Email bjmarshall@comerica.com
Account Title Insider Guides, Inc.
Account No.



Part 4 . - Additional Loan Documents :


Remainder of this page intentionally left blank; signature page follows


Forms of Promissory Notes Exhibits A-1 and A-2
Form of Borrowing Request Exhibit B
Form of Compliance Certificate Exhibit C
Form of Warrant Exhibit D
Form of Legal Opinion Exhibit E
Form of Landlord Waiver Exhibit F
Form of Intellectual Property Security Agreement Exhibit G



[ Signature page to Supplement ]


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







BORROWER:

INSIDER GUIDES, INC.

By:
Name:
Title:

Address for Notices: 280 Union Square Drive
New Hope. PA 18938
Attn:
Fax # 215-862-1655
Phone #
LENDER:

VENTURE LENDING & LEASING V,
INC.


By:
Name:
Title:

Address for Notices: 2010 North First Street, Suite 310
San Jose, CA 95131
Attn: Chief Financial Officer
Fax # 408-436-8625
Phone # 408-436-8577
LENDER:

VENTURE LENDING & LEASING
VI, INC.


By:
Name:
Title:

Address for Notices: 2010 North First Street, Suite 310
San Jose, CA 95131
Attn: Chief Financial Officer
Fax # 408-436-8625
Phone # 408-436-8577
Exhibit 21.1


Subsidiaries


Quepasa.com de Mexico Mexico
Quepasa Games S/S Ltda Brazil
Exhibit 23.1


Consent of Independent Registered Public Accounting Firm


We hereby consent to the incorporation by reference in the Registration Statements of Quepasa Corporation on Form S-3, Nos. 333-178063 and
333-177021 and Form S-8, Nos. 333-167795, 333-146486 and 333-175310 of our report dated March 13, 2012 on the consolidated financial
statements of Quepasa Corporation as of December 31, 2011 and 2010 and for each of the two years in the period ending December 31, 2011,
appearing in the annual report on Form 10-K of Quepasa Corporation for the year ended December 31, 2011.



/s/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.
Boca Raton, Florida
March 13, 2012
Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, John Abbott, certify that:

1. I have reviewed this annual report on Form 10-K of Quepasa Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and

d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial reporting; and

5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the
equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information;
and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal control over financial reporting.

Date: March 13, 2012



/s/ John Abbott
John Abbott
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2


CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Michael Matte, certify that:

1. I have reviewed this annual report on Form 10-K of Quepasa Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and

d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial reporting; and

5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the
equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information;
and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal control over financial reporting.

Date: March 13, 2012



/s/ Michael Matte
Michael Matte
Chief Financial Officer
(Principal Financial Officer)

Exhibit 32.1


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the annual report of Quepasa Corporation (the Company) on Form 10-K for the period ended December 31, 2011,
as filed with the Securities and Exchange Commission on the date hereof, I, John Abbott, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:




Dated: March 13, 2012





In connection with the annual report of Quepasa Corporation (the Company) on Form 10-K for the period ended December 31, 2011,
as filed with the Securities and Exchange Commission on the date hereof, I, Michael Matte, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:



Dated: March 13, 2012

1. The annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ John Abbott
John Abbott
Chief Executive Officer
(Principal Executive Officer)

1. The annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Michael Matte
Michael Matte
Chief Financial Officer
(Principal Financial Officer)