SOFTWARE & SERVICES                                                                                                       ...
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THE WEB 2.0 UNIVERSE
 Ninety-one public Web 2.0 companies identified: Our Web 2.0 universe contains 91 companies...
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CAPITAL MARKETS ACTIVITY (M&A AND FINANCING)
Total capital raised in August (so far) is $129.4 million: Online ga...
(US$m)




                                                                                       0.0
                    ...
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 Ad Netw ork remains the most active sector in dollars raised: Following recent trends, Ad Networks as a sector s...
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 A w eak price performance w eek: Most companies in our universe had a weak stock price performances over the pas...
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INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS)
K ey Developmen ts
C ompany                       ...
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
09 08 18 Web 2.0 Weekly
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09 08 18 Web 2.0 Weekly

  1. 1. SOFTWARE & SERVICES 18 AUGUST 2009 DAVID SHORE, CFA, MBA 416.860.6784 WEB 2.O WEEKLY david.shore@researchcapital.com Arun Thomas (Associate) 416.860.7666 VENTURE CAPITAL EXITS TAKING LONGER SOFT WAR E CO MPAN IES TAK ING A BOUT 91 MONTH S TO EXIT A recent research report published by SVB Financial elucidates how difficult it has been for venture capitalists to exit their investment across various sectors. Data combined from Dow Jones Venture Source and SVB measures the time and capital it takes for a venture-backed company to go public, be sold or go out of business. In the software sector, the median exit multiple (calculated as the value of the company at the time of exit divided by the amount of capital invested in the company) since 2001 was 0.0x to 0.1x compared to 3.7x to 10.7x between 1994 and 2001. Moreover, the median time it takes to exit these companies is at an all-time high of 91 months (7.6 years). Total capital raised in August (so far) is $129.4 million: Online gaming company Turbine, Inc. raised $50 million in August – the largest transaction in August. Mint, a vertical community site (offering web-based solutions for financial management), was a distant second raising $14.1 million. Total capital raised in July on 31 transactions was $178.7 million, averaging $5.8 million, and June was $196.1 million (averaging $4.9 million). The average for August, month- to-date so far, is $10 million. Financing Activity Last Twelve Months 350.0 18.0 16.2 16.0 300.0 14.0 250.0 12.0 10.3 10.0 200.0 9.7 10.0 (US$m) (US$m) 8.0 150.0 7.0 7.0 7.1 6.5 6.6 6.6 6.2 5.6 6.0 5.0 100.0 4.0 50.0 2.0 0.0 0.0 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Total Average A w eak price performance w eek: Most companies in our universe had a weak stock price performance over the past week (for stocks with prices greater than $1) (Figure 6), with 36 companies showing negative returns on the week. Quepasa Corp. (OTCBB:QPSA) led the group with a 12.0% return, while Spark Networks, Inc. (AMEX:LOV) had the worst return, dropping 23.1% in the week. This report has been created by Anal ysts that are employed by Research Capital Corporation, a Canadian Investment Dealer. www.researchcapital.com Toronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
  2. 2. Page 2 THE WEB 2.0 UNIVERSE Ninety-one public Web 2.0 companies identified: Our Web 2.0 universe contains 91 companies, with a combined market cap of ~$62 billion (Figure 1). The median market cap for the group is ~$60 million, with average trailing revenue of ~$159.6 million (median $54.9 million). The companies are also generally profitable, with a median EBITDA margin of 13.1%. On a valuation basis, the overall average is 4.8x trailing revenue (median 1.8x) and 11.0x trailing EBITDA (median 9.8x). Twenty-one of the companies have more than 500 employees. C omparable C ompany Analys is > Web 2.0 Trading C urrent US D Market US D L TM Total US D L TM Total E B ITDA TE V/L TM TE V/L TM C ompany Name L TM as of Tic ker E xc hange C urrenc y HQ P ric e C ap ($m) R ev ($m) E B ITDA ($m) % R evenue E B ITDA E mployees Accelerize New Media, Inc. 3/31/2009 AC L Z OT C B B US D United S ta tes 0. 57 15.8 4.1 (4.4) NM 5. 1x - 11 Actoz S oft C o. , L td. 3/31/2009 A052790 K OS E KR W S outh K orea 21,300 146.0 91. 8 19.9 21.7% 1. 3x 5.9x NA AQ Interactive, Inc. 3/31/2009 3838 TS E JPY J a pa n 49,600 28.6 65. 5 4.1 6.3% - - NA As s ocia ted Media Holdings Inc. 6/30/2007 AS MH OT C P K US D United S ta tes 0. 01 0. 6 0.1 (2.3) NM 15.6x - 3 B igs tring C orp. 3/31/2009 BSGC OT C B B US D United S ta tes 0. 02 1. 1 0.1 (2.0) NM 32.4x - 4 B etawave C orporation 3/31/2009 B W AV OT C B B US D United S ta tes 0. 06 1. 8 8.4 (12.6) NM - - 53 B eyond C ommerce, Inc. 3/31/2009 B Y OC OT C B B US D United S ta tes 0. 27 12.5 7.1 (9.5) NM 2. 4x - 69 B right T hings plc 9/30/2008 AIM:B G T AIM GBP United K ingdom 0. 01 4. 1 0.3 (1.8) NM 14.9x - 9 B roadW ebAs ia Inc. 9/30/2008 BWBA OT C P K US D United S ta tes 0. 23 19.5 0.0 (4.6) NM - - 46 C DC C orp. 3/31/2009 C HIN.A Na s daqG S US D Hong K ong 2. 54 269.5 389.9 30.8 7.9% 0. 7x 9.2x 2,227 C hangyou.com Limited 6/30/2009 C Y OU Na s daqG S US D C hina 37. 35 2,054.3 241.2 147. 2 61.0% 7. 4x 12.1x 628 C hina G ateway C orpora tion 9/30/2008 CGWY OT C P K US D United S ta tes 0. 02 0. 3 6.7 (6.6) -98.9% 0. 0x - 37 C hines e G amer International 3/31/2009 G T S M:3083 GTS M TWD T aiwan 412 1,051.6 56. 1 31.4 56.0% 17.6x 31.4x NA C L IC K E R Inc. 5/31/2009 C LK Z OT C B B US D United S ta tes 0. 01 0. 4 2.5 (1.2) -45.8% 0. 2x - 22 C ornerW orld C orporation 1/31/2009 CWR L OT C B B US D United S ta tes 0. 06 5. 7 1.3 NM NM 5. 5x - NA C yberplex Inc. 6/30/2009 T S X :C X TS X C AD C anada 2 97.0 88. 1 9.5 10.8% 0. 9x 8.1x NA DADA S pA 6/30/2009 C M:DA CM E UR Ita ly 6. 09 139.0 232.5 30.5 13.1% 0. 8x 6.1x NA DXN Holdings B hd 5/31/2009 DXN K LS E MY R Ma la ys ia 0. 49 31.5 75. 7 10.9 14.4% 0. 6x 4.2x NA Dibz Interna tiona l, Inc. NA DIB Z OT C P K US D United S ta tes 0. 00 0. 0 NA NM NM - - NA Digita lP os t Intera ctive, Inc. 3/31/2009 DG L P OT C B B US D United S ta tes 0. 05 3. 9 0.7 (2.6) NM 7. 5x - 7 Digita lT own, Inc. 5/31/2009 DG T W OT C B B US D United S ta tes 1. 30 35.6 NM (2.5) NM - - 3 Dolphin Digita l Media, Inc. 3/31/2009 DP DM OT C B B US D United S ta tes 0. 39 20.2 0.8 (3.7) NM 27.3x - NA E olith C o. L td. 12/31/2008 A041060 K OS E KR W S outh K orea 820 47.2 14. 6 (3.5) -23.6% 3. 4x - NA E xtens ions , Inc. 3/31/2009 E XT I OT C P K US D United S ta tes 0. 08 3. 6 NM NM NM - - 2 F luid Mus ic C ana da , Inc. 3/31/2009 T S X :F MN TS X C AD United S ta tes 1. 20 56.8 5.0 (6.9) NM 9. 9x - NA F rogs ter Intera ctive P ictures AG 12/31/2008 FR G XT R A E UR G erma ny 14. 00 49.8 3.2 (6.2) NM 14.9x - NA G a mania Digital E ntertainment C o., Ltd. 3/31/2009 6180 GTS M TWD T aiwan 56. 70 261.7 125.9 20.9 16.6% 1. 9x 11.4x NA G a meO n C o L td. 6/30/2009 3812 TS E JPY J a pa n 103,000 105.5 77. 6 19.0 24.5% 0. 4x 1.8x NA G eoS entric O yj 3/31/2009 G E O 1V HL S E E UR F inla nd 0. 05 63.2 6.0 (15.4) NM 9. 9x - 108 G ia nt Intera ctive G roup, Inc. 3/31/2009 GA NY S E US D C hina 8 1,734.5 218.9 NM NM - - 1,570 G igaMedia Ltd. 3/31/2009 G IG M Na s daqG S US D T aiwan 4. 41 240.4 183.6 NM NM 0. 9x - 751 G ra vity C o. , L td 3/31/2009 GR VY Na s daqG M US D S outh K orea 2. 01 55.9 45. 5 12.5 27.5% - - 469 G ree, Inc. 6/30/2009 T S E :3632 TS E JPY J a pa n 7,930 1,880.7 147.8 88.8 60.1% 12.0x 19.9x NA G ungHo O nline E ntertainment, Inc. 3/31/2009 3765 OS E JPY J a pa n 230,000 279.2 109.2 19.6 18.0% 2. 3x 12.8x NA Ha nbitS oft, Inc. 3/31/2009 A047080 K OS E KR W S outh K orea 4,125 71.8 54. 9 (14.7) -26.8% 1. 0x - NA IAC /InterActiveC orp. 6/30/2009 IAC I Na s daqG S US D United S ta tes 18. 40 2,436.2 1,392.3 52.7 3.8% 0. 5x 13.2x 3,200 IAS E nergy, Inc. 1/31/2009 IAS C .A OT C B B US D C anada 0. 12 8. 4 0.0 (0.8) NM - - NA is eemedia Inc. 3/31/2009 IE E T S XV C AD C anada 0. 06 2. 8 1.5 (4.9) NM 1. 2x - NA J umbuck E ntertainment P ty Ltd. 12/31/2008 AS X :J MB AS X AUD Aus tra lia 0. 36 14.4 14. 7 5.5 37.2% 0. 6x 1.7x 72 K AB Dis tribution Inc. 3/31/2009 T S X :K AB TS X C AD C anada 1 80.8 74. 2 8.8 11.9% 1. 2x 9.7x NA K ings oft C o. L td. 3/31/2009 3888 S E HK HK D C hina 8 1,182.3 129.0 52.0 40.3% 9. 2x 22.7x 2,271 L ingo Media C orpora tion 3/31/2009 T S X V : LM T S XV C AD C anada 1. 00 11.2 0.9 (1.6) NM 10.9x - NA L iveW orld Inc. 3/31/2009 LV W D OT C P K US D United S ta tes 0. 06 1. 7 11. 4 (0.0) -0.4% 0. 1x - NA L ookS mart, L td. 6/30/2009 LO O K Na s daqG M US D United S ta tes 1. 20 20.5 56. 8 (4.4) -7.8% - - 90 Magnitude Informa tion S ys tems Inc. 3/31/2009 MAG Y OT C B B US D United S ta tes 0. 01 3. 0 0.1 (3.1) NM - - 14 Mixi, Inc. 6/30/2009 2121 TS E JPY J a pa n 604000. 00 984.0 129.6 43.7 33.8% 6. 7x 19.9x NA Modern T imes G roup Mtg AB 6/30/2009 MT G B OM SEK S weden 288. 00 2,597.6 1,878.9 288. 7 15.4% 1. 7x 10.9x 2,969 MO K O .mobi L imited 12/31/2008 MK B AS X AUD Aus tra lia 0. 08 5. 3 1.2 (2.4) NM 3. 5x - NA Myria d G roup AG 12/31/2008 MY R N SWX C HF S witzerland 4. 26 84.1 40. 0 0.8 1.9% 2. 3x - 405 NE O W IZ G a mes C orporation 12/31/2008 A095660 K OS E KR W S outh K orea 31600. 00 528.5 196.7 52.8 26.8% 2. 6x 9.8x NA NetDragon W ebS oft, Inc. 3/31/2009 777 S E HK HK D C hina 6 404.4 86. 9 34.4 39.5% 3. 1x 7.9x 2,426 Netea s e.com Inc. 6/30/2009 NT E S Na s daqG S US D C hina 40. 21 5,204.2 471.9 297. 1 63.0% - - 3,109 NeuL ion Incorpora ted 3/31/2009 T S X :NLN TS X C AD C anada 1. 10 113.2 18. 1 (11.8) -65.2% 5. 8x - 237 NeXplore C orporation 6/30/2008 NXP C OT C P K US D United S ta tes 1 37.9 0.7 (6.2) NM - - NA Ngi G roup Inc. 3/31/2009 2497 TS E JPY J a pa n 32800. 00 43.0 93. 6 11.2 12.0% 0. 0x 0.2x NA Northga te T echnologies Limited 6/30/2009 590057 BSE INR India 34. 30 24.4 81. 3 (40.6) -50.0% 0. 3x - NA O pen T ext C orp. 3/31/2009 OT E X Na s daqG S US D C anada 38. 15 2,007.6 782.6 199. 2 25.5% 2. 6x 10.4x 3,400 O penwa ve S ys tems Inc. 6/30/2009 OP W V Na s daqG S US D United S ta tes 2. 80 233.3 191.7 5.3 2.8% 0. 6x 23.4x NA P erfect W orld C o., Ltd. 6/30/2009 PWRD Na s daqG S US D C hina 36. 15 1,777.9 255.4 142. 0 55.6% 0. 5x 0.8x 2,096 P NI Digita l Media Inc. 3/31/2009 T S XV :P N T S XV C AD C anada 1. 60 49.4 19. 5 0.5 2.3% 2. 5x - NA Q uepas a C orp. 3/31/2009 QP S A OT C B B US D United S ta tes 1 17.8 0.1 (10.8) NM - - 74 O AO R B C Informa tion S ys tems 12/31/2007 R BCI R TS US D R us s ia 1. 05 145.7 146.9 19.2 13.1% 0. 0x 0.2x NA S handa Intera ctive E ntertainment Ltd. 3/31/2009 S NDA Na s daqG S US D C hina 45. 40 3,031.3 569.9 260. 8 45.8% - - 3,124 S hutterfly, Inc. 6/30/2009 S FLY Na s daqG S US D United S ta tes 14. 75 375.5 218.6 27.3 12.5% 1. 4x 11.4x 514 S K C ommunications C o., L td. 12/31/2008 A066270 K OS E KR W S outh K orea 9850. 00 328.0 182.8 11.9 6.5% 1. 8x 27.6x NA S NAP Intera ctive, Inc. 3/31/2009 S TVI OT C B B US D United S ta tes 0 4. 3 3.3 0.9 28.0% 0. 9x 3.1x 11 S NM G lobal Holdings 9/30/2008 S NMN OT C P K US D United S ta tes 0. 00 0. 0 2.0 (0.7) -34.8% 1. 1x - 33 S ocia l Media V enures , Inc. 12/31/2008 S MV I OT C P K US D United S ta tes 0 0. 0 0.1 (0.1) -60.6% 4. 5x - NA S ocia lwis e, Inc. 3/31/2009 S C LW OT C B B US D United S ta tes 0. 68 30.1 0.0 (4.8) NM - - NA S ohu.com Inc. 6/30/2009 S OHU Na s daqG S US D C hina 59. 92 2,297.0 485.1 209. 6 43.2% 3. 7x 8.5x 3,197 S park Networks , Inc. 6/30/2009 LO V AME X US D United S ta tes 2 43.2 50. 5 10.8 21.3% 0. 8x 3.8x 183 S pectrumDNA, Inc. 3/31/2009 S P XA OT C B B US D United S ta tes 0 11.2 0.1 (2.6) NM - - 7 T encent Holdings L td. 6/30/2009 700 S E HK HK D C hina 115 26,804.0 1,390.1 685. 2 49.3% 21.1x 42.8x 6,194 T he P a rent C ompa ny 8/2/2008 K IDS .Q OT C P K US D United S ta tes 0. 02 0. 4 112.0 (13.5) -12.0% 0. 2x - 347 T he9 Limited 12/31/2008 NC T Y Na s daqG S US D C hina 8. 28 211.2 250.3 85.4 34.1% - - 1,626 T heS treet.com, Inc. 3/31/2009 TSCM Na s daqG M US D United S ta tes 2. 24 68.6 67. 0 1.9 2.9% 0. 1x 2.1x 310 T otal S port Online AS 3/31/2006 T OS O O T C NO NO K Norway 0. 03 0. 1 2.2 (1.1) -50.6% 4. 6x - 16 T ree. C om, Inc. 6/30/2009 TR E E Na s daqG M US D United S ta tes 8. 90 96.1 216.6 (1.0) -0.4% 0. 5x - 700 Unis erve C ommunications C orp. 2/28/2009 T S X V : US S T S XV C AD C anada 0. 05 1. 0 23. 5 0.1 0.2% 0. 2x - NA United O nline Inc. 6/30/2009 UNT D Na s daqG S US D United S ta tes 7. 31 612.9 949.8 203. 2 21.4% 0. 9x 4.3x 1,469 UO MO Media , Inc 1/31/2009 UOMO OT C B B US D C anada 0 10.7 0.6 (0.5) -78.2% 17.4x - NA V a lueC lick Inc. 6/30/2009 V C LK Na s daqG S US D United S ta tes 10 872.4 563.6 99.0 17.6% 1. 3x 7.4x 1,189 V O IS , Inc. 3/31/2009 V OIS OT C B B US D United S ta tes 0 4. 1 0.0 (1.1) NM - - 4 W ebzen Inc. 3/31/2009 W ZE N Na s daqG M US D S outh K orea 2. 75 32.6 22. 8 (0.5) -2.4% - - NA W izza rd S oftware C orpora tion 3/31/2009 W ZE AME X US D United S ta tes 0. 47 23.7 5.6 (5.3) -94.5% 4. 5x - 110 W orlds . com Inc. 3/31/2009 W DDD OT C B B US D United S ta tes 0. 09 4. 7 0.0 (0.8) NM - - 1 W oozyF ly, Inc. 3/31/2009 W ZY F OT C B B US D United S ta tes 0. 15 2. 6 NM NM NM - - NA W ynds torm C orporation NA W Y ND OT C P K US D United S ta tes 0. 10 1. 8 NA NM NM - - NA XING AG 3/31/2009 O 1B C XT R A E UR G erma ny 27. 50 204.1 53. 3 16.6 31.2% 2. 8x 9.1x 239 Y edangO nline C orp. 12/31/2007 A052770 K OS E KR W S outh K orea 8,870 110.6 54. 5 11.7 21.6% 2. 2x 10.3x NA Y nk K orea Inc. 3/31/2009 A023770 K OS E KR W S outh K orea 4,770 20.2 10. 4 (0.8) -7.6% - - NA High 26,804.0 1,878.9 685.2 63.0% 32.4x 42.8x 6,194 L ow 0. 0 0.0 -40.6 -98.9% 0. 0x 0.2x 1 Average 688.8 159.6 36.9 6.9% 4.8x 11.0x 913 Media n 60.0 54.9 0.9 13.1% 1. 8x 9.8x 405 Figure 1. Web 2.0 Universe Summary Source. Capital IQ
  3. 3. Page 3 CAPITAL MARKETS ACTIVITY (M&A AND FINANCING) Total capital raised in August (so far) is $129.4 million: Online gaming company Turbine, Inc. raised $50 million in August – the largest transaction in August. Mint, a vertical community site (offering web based solutions for financial management), was a distant second raising $14.1 million. Total capital raised in July on 31 transactions was $178.7 million, averaging $5.8 million, and June was $196.1 million (averaging $4.9 million). The average for August, month-to- date so far, is $10 million. Financing Activity Last Twelve Months 350.0 18.0 16.2 16.0 300.0 14.0 250.0 12.0 10.3 10.0 200.0 9.7 10.0 (US$m) (US$m) 8.0 150.0 7.0 7.0 7.1 6.5 6.6 6.6 6.2 5.6 6.0 5.0 100.0 4.0 50.0 2.0 0.0 0.0 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Total Average Figure 2. Financings, Last Twelve Months Source. Company reports
  4. 4. (US$m) 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 People Media Super Rewards Turbine Friends Reunited AdLink Internet Media Source. Company reports Pandora Media xoopit MediaMath Edo Interactive Sugar Inc. Kontera Ltd. Ning Tumri Mint Boku RichRelevance QuickPlay Media Grab Networks Wimba Figure 3. Capital Market Activity, Last Three Months Traffiq AdChina Causes Goojet SAS Bill.com Outspark Figures 23 and 24 (at end of note). ConnectEdu Acquia, Inc beeTV AdMeld Inc. SBNation blueKiwi Software SA Nokeena Metaversum iMemories Boxee Bubble Motion Invodo Zoosk Sense Networks Gather Taomee MojoPages Animoto Quikr India Pvt. Ltd. GameGround OPEN Sports network Nexage StyleCaster RingRevenue TweetDeck Z2Live KODA Crowdcast YuMe eRepublik Busca ClickFuel Akademos Newser LLC ProtonMedia Inigral AdEx Media Roblox GROU.PS Financing & M/A Summary - Last Three Months OneTXT my6sense iLoop Mobile Yapta I Love Rewards Comunitae Lat49 Cliqset Aloqa ChessCube Tributes.com CoTweet Cellufun AdWhirl LiquidPlanner Picaboo Glubble Clikthrough Cognitive Match Limited TodaCell BookFresh People Capital MashLogic iSyndica Masher Media Jaxtr Jul-09 Jun-09 Aug-09 Page 4 far) at $129.4 million. In addition, Friends Reunited was acquired for $42 million. For additional details on financings, see in August. Mint was a distant second securing a $14.1 million round. Closely behind was RichRelevance raising $12.5 million. Of the total 13 transactions, eight were below $10 million each, bringing the total capital raised for August (thus Turbine, Inc. raises $50 million: On the capital raise front, Turbine, Inc. raised $50 million, the largest transaction so far
  5. 5. Page 5 Ad Netw ork remains the most active sector in dollars raised: Following recent trends, Ad Networks as a sector saw the most activity in dollars raised ($126.4 million), followed by the Social Network sector with 12 transactions, raising $99.6 million (Figure 4). Capital Market Activity by Sector - Last Three Months 140.0 120.0 100.0 80.0 (US$m) 126.4 60.0 99.6 40.0 80.0 69.9 64.2 64.0 20.0 35.0 32.6 24.0 22.3 21.5 19.3 19.1 13.0 12.5 12.0 10.7 5.0 4.1 3.2 3.0 1.0 1.0 0.0 0.5 0.5 0.0 Comment/Reputation Mobile Payment Communities Online Dating Gaming Online Calendar Enterprise Mobile Media Collaboration Online Learning Microblog Publishing Online Lending Music Infrastructure Blog Search Classified Mobile Ad SMS/Voice Social Networks Virtual World Video Ad Network Analytics Vertical # companies 13 12 1 5 7 10 1 5 2 7 4 3 4 1 1 2 2 1 1 1 2 1 1 1 1 0 Figure 4. Capital Market Activity, by Sector, Last Three Months Source. Company reports CAPITAL MARKETS ACTIVITY (PRICE PERFORMANCE) Web 2.0 index far outpaces NASDAQ recovery: Our Web 2.0 index (market-cap weighted) essentially mirrored the performance of the NASDAQ composite index from mid-2008 until earlier this year. However, the index has recently had a much stronger recovery relative to the NASDAQ index (Figure 5). Web 2.0 Index Price Performance 130 120 110 100 90 80 70 60 50 40 8/18/2008 9/1/2008 9/15/2008 9/29/2008 10/13/2008 10/27/2008 11/10/2008 11/24/2008 12/8/2008 12/22/2008 1/5/2009 1/19/2009 2/2/2009 2/16/2009 3/2/2009 3/16/2009 3/30/2009 4/13/2009 4/27/2009 5/11/2009 5/25/2009 6/8/2009 6/22/2009 7/6/2009 7/20/2009 8/3/2009 8/17/2009 ^COMP - Share Pricing Index: Web 2.0 X (Market Cap Weights) - Index Value Figure 5. Web 2.0 Price Performance Source. Capital IQ
  6. 6. Page 6 A w eak price performance w eek: Most companies in our universe had a weak stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), with 36 companies showing negative returns on the week. Quepasa Corp (OTCBB:QPSA) led the group with a 12.0% return, while Spark Networks, Inc. (AMEX:LOV) had the worst return, dropping 23.1% in the week. 1 Week P rice P erformance Quepas a Corp. 12.0% PNI Digital Media Inc. 8.1% Openw ave S y s tems Inc. 6.9% K ings oft Co. L td. 4.2% NeuLion Incorporated 3.8% NetDragon WebS of t, Inc. 3.7% Tencent Holdings L td. 3.5% My riad G roup A G 3.4% XING A G 3.0% Gree, Inc. 2.5% Ngi G roup Inc. 1. 9% Fluid Mus ic Canada, Inc. 1.7% Eolith Co. L td. 0. 0% DA DA S pA -0.2% IA C/InterA ctiveCorp. -0.5% GameOn Co L td. -0.7% Open Tex t Corp. -0.8% NEOWIZ Games Corporation -0.8% Modern Times G roup Mtg A B -1.7% Gamania Digital Entertainment -2.2% Mix i, Inc. -2.3% S K Communications Co., L td. -2.5% Northgate Technologies Limited -2.6% TheS treet.com, Inc. -2.6% Y nk K orea Inc. -2.9% Cy berplex Inc. -2.9% United Online Inc. -3.2% Perf ect World Co., L td. -3.3% Frogs ter Interactive Pic tures A G -3.4% LookS mart, L td. -4. 0% HanbitS of t, Inc. -4.2% G ravity Co., L td -4.3% Chines e Gamer International -4.3% Giant Interactive G roup, Inc. -4.6% Changy ou.com Limited -5.1% Y edangOnline Corp. -6.0% S ohu.com Inc. -6.4% S hutterf ly , Inc. -7.2% A Q Interactive, Inc. -7.5% CDC Corp. -7.8% V alueClick Inc. -8.0% S handa Interactive -9.1% A ctoz S of t Co., L td. -9.6% Tree.Com, Inc. -9.9% G igaMedia L td. -10.7% Neteas e.com Inc. -11.4% The9 Limited -11.7% Webz en Inc. -16.1% S park Netw orks , Inc. -23.1% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Figure 6. 1-Week Price Performance Source. Capital IQ
  7. 7. Page 7 INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) K ey Developmen ts C ompany Headline Notes OA O R BC Info rm atio n S ys tem s V E B Files S uit W orth R U B 202. 3 Million Aga inst R B C V neshec onomba nk (V E B ) has lodged a s uit a ga inst the R B C I nforma tion S ys tems for the s um of R UB 202. 30 million (E UR 4. 52 million US D (R TS : R B CI) Information S ys tems 6.41 mi llion) to the M os cow Arbitra tion Court. Ac cording to V E B , the la ws uit dema nds to rec over funds on bonds of R B C a c quired by V E B on the stoc k exc ha nge in 2008. P erfec t Wo rld C o. , Ltd. P erfec t W orld C o. , L td. ha s filed a S helf R egis tra tion in P erfec t W orld Co. , L td. ha s filed a S helf R egis tra tion in the a mount of $373. 30 million. (N as daqG S :P W R D) the a mount of $373. 30 million. P erfec t Wo rld C o. , Ltd. P erfec t W orld C o. L td. R eports U na udited C onsolida ted P erfec t W orld Co. L td. reported una udited c onsol ida ted ea rnings res ults for the sec ond qua rter ended J une 30, 2009 . For the quarter, tota l (N as daqG S :P W R D) E a rnings R esults for the S ec ond Q ua rter E nded J une 30, revenues were R MB 521,326, 842 a ga inst R MB 334, 412,759 a y ea r a go. O pera ting profit wa s R MB 279,667, 909 a ga ins t R MB 165,957, 778 a 2009; P rov ides R ev enue G uida nc e for the Third Q uarter yea r a go. P rofit before ta x wa s R M B 282, 232, 114 a ga ins t R M B 169,758, 739 a yea r a go. N et income wa s R MB 262,479, 619 a ga inst R MB of 2009 164,489, 367 a yea r a go. N et income a ttributa bl e to the c ompa ny's s ha reholders wa s R MB 262, 585,824 or R MB 0. 99 per diluted s ha re a ga inst R MB 164, 489,367 R M B 0. 55 per diluted s ha re a y ea r a go. N et c a sh provided by opera ting a c tiv ities wa s R MB 326,652, 835 a ga i nst R M B 131, 218,948 a yea r a go. Ca pita l ex penditure on purcha s e of property , equipment, a nd softwa re wa s R MB 41,752, 492 a ga ins t R MB 511,927, 172 a yea r a go. N on-G AAP opera ting profit wa s R M B 299,957, 997 a ga ins t R MB 177,812, 863 a y ea r a go. N on-G AAP net income a ttributa ble to the c ompa ny's s ha reholders wa s R MB 282, 875,912 a ga inst R MB 176, 344,452 a yea r a go. For the third qua rter of 2009 the c ompa ny 's tota l revenues a re expec ted to be between R MB 547 million a nd R MB 563 million, representing L o okS mart, Ltd. (N as daqG M: LOOK ) L ookS ma rt, L td. L a unches P a y P er C lick S ea rch L ookS ma rt, L td. a nnounc ed the la unch of O ptima l P ric ing: a new initia tive to deliv er better performa nc e to s ea rc h a dv ertis ers by s egmenting Advertis ing M odel with O ptima l P ricing a nd pric ing tra ffic a c c ording to tha t tra ffic's v a lue. O ptima l P ric ing offers a dvertisers a unique opportunity to reac h a nd a ttra ct a udiences outs ide of the ma jor s ea rch engines, while ma na ging to meet a nd exc eed return-on-inves tment (R O I) goa ls. O ptima l P ricing a ggrega tes key word sea rc h tra ffic on the L ook S ma rt Advertiser Network , a nd cla s si fies performa nce da ta s o tha t the full s pectrum of tha t tra ffic is pric ed a ppropria tely a c cordi ng to traffic type, qua lity, and v olume. The model relies on informa tion a bout a dvertiser campa ign objectives a nd network structure to provide ea ch a dve rtis er a cha nc e to bid on the most va lua ble tra ffic a t a ll pric e points . As the c us tomer c a s e dia gra m illustra tes , this a pproa c h, when compa red to a s imple 'blended pricing' a pproa ch more c ommon in the sea rc h a dv ertis ing industry, a llows a dvertisers to genera te more pa id click s a nd c onvers ions , a nd to rea li ze conv ersions a t a lower c ost-per-conv ers ion. Open T ext C orp. (N as daqG S :OT E X) Ma ra thon O il C orpora tion S elects O pen Tex t eDis c overy O pen T ext C orp. a nnounc ed tha t Ma ra thon O i l C orpora tion ha s s elected O pen T ext eD isc overy E a rly C a s e As ses s ment, powered by E a rly C a s e Ass es sment R ec ommind, to prov ide the la tes t in eDis cov ery c a pa bilities . T he eD isc overy s olution a dds to a c ompa ny 's broa der enterpris e c ontent a nd records ma na gement s tra tegy. eD isc ov ery, wi th E CM initia tives , is des igned to improv e bus iness proces ses , proa c tiv ely ma na ge importa nt records in a c corda nc e with co mplia nce, lega l a nd polic y requirements , a nd gives employ ees new wa y s to sha re bus iness c ontent. T he O pen Text E CM S uite, the c ompa ny's fla gship offering, brings together the broa d ra nge of content ma na gement c a pa bilities orga niza tions need to sec urely a nd s a fely ma na ge a ll ty pes of enterprise informa tion-documents, v ita l rec ords, W eb c ontent, video, i ma ges , ema il, fo rms a nd reports -a cros s ma ny different enterprise s ys tems a nd a pplica tions . O pen T ext's E CM S uite offers the c ross -enterpris e E CM s olutions cus tomers need a s the s tra tegic importa nc e of E CM grows in la rge orga niz a tions , driven by c ompli a nce a nd the need to c ut c osts. T heS treet.c om, Inc . (Nas daqG M: T S CM) TheS treet.c om, Inc . a nnounc ed dela y ed 10-Q fil ing O n 08/11/2009, TheS treet. c om, I nc . a nnounced tha t they will be una ble to file thei r next 10-Q by the dea dline required by the S E C . T heS treet.c om, Inc . (Nas daqG M: T S CM) TheS treet U pda tes O n D elisting R eview O n Augus t 11, 2009, T heS treet. com, I nc. notified T he N AS D AQ S toc k Ma rk et tha t the Compa ny did not ti mely file its Q ua rterly R eport on Form 10-Q for the qua rter ended J une 30, 2009, a s a res ult of which the Compa ny is not currently in c omplia nce with R ule 5250(c)(1) of the NAS D AQ S toc k Ma rk et R ules – E qui ty R ules – N AS D AQ L is ting R ules. T he Company ha s identified an is s ue rela ting to its rec ording of certa in rev enue in P romotions . com, tha t the Compa ny ac quired in Augus t 2007. T he C ompa ny currently is a s ses sing the impa ct of this iss ue on the periods sinc e the a cquis ition a nd ha s not yet determined whether it will be required to res ta te a ny prior period res ults . T he C ompa ny currently does not believ e tha t this ma tter is lik ely to res ult in a ny signific a nt percenta ge revis ion to the a ggrega te revenue or ex pense previous ly reported by the C ompa ny s inc e the a c quis ition (a lthough the C ompa ny c a nnot give a ny a s s ura nces with respe ct to this ma tter a s its rev iew is not y et complete) but ma y result in ma teria l revi sions upwa rd or downwa rd to the net income reported by the C ompa ny during IB 3 N etworks , Inc . (OT CB B:IBN W ) IB 3 N etwork s I nc. Announces C hanges in C ertify ing O n Augus t 3, 2009, B oa rd of D irectors of the I B 3 Network s Inc . dis mis s ed M oore & As soc ia tes Cha rtered, its independent registered public Acc ounta nt a cc ount firm. O n the s a me da te, Augus t 3, 2009, the a c counting firm of S ea le a nd B eers , CP As wa s enga ged a s the c ompa ny 's new independent registered public a cc ount firm. The B oa rd of Direc tors of the compa ny a nd the co mpa ny 's Audit C ommittee a pproved of the dismis sa l of Moore & Ass oc ia tes C ha rtered a nd the enga gement of S ea le a nd B eers , CP A s a s its independent a uditor. S NM G lobal H oldings (OTCP K:S N MN ) S NM G loba l H oldings Completes Join t V enture to S NM G loba l Holdings a nnounced a joi nt venture with High S peed Ma ga z ine a nd its editor 'D J ' Foothill to develop a soc ia l media network a nd Dev elop S oc ia l Media Network la unch a n onlin e ma ga zine. T he new entity will be a n online soc ia l media community tha t will inc lude a n online ma ga zine, a rea lity televi sion progra m, intera c tiv e enterta inment tools a nd the development of pa rtners hips with other s oc ia l network ing s ites. T he compa ny will la unc h a n online s ports a nd enterta inment ma ga zine with empha s is on upcoming a thletes a nd enterta iners. S NM will la unc h the online s ite with a limited V IP ha rd c opy run in the firs t qua rter of 2010. T he joint venture pla ns to expand to a dditiona l loc a tions , inc luding N ew Y ork, O rl a ndo, a nd a site in S outh F lorida to be s elec ted la ter. S park Networks , Inc . (AME X:L OV) S pa rk N etwork s I nc. R eports Una udited Cons olida ted S pa rk Network s I nc. reported una udited cons olida ted ea rnings res ults for the s econd qua rter a nd six months ended J une 30, 2009. For the E a rnings R esults for the S ec ond Q ua rter a nd S ix M onths qua rter, the c ompa ny reported net income of $1, 887,000 or $0.09 ba sic a nd diluted ea rnings per s ha re on net rev enue of $11, 242,000 E nded J une 30, 2009 compa red to net income of $1,641 ,000 or $0. 07 ba s ic a nd diluted ea rnings per sha re on net revenue of $14, 987,000 for the s a me period a yea r a go. O pera ting inc ome wa s $ 1,930, 000 a nd inc ome before inc ome tax es wa s $3,815, 000 c ompa red to opera ting income of $2,923, 000 a nd inc ome before inc ome taxes of $3, 147, 000 for the sa me period a yea r a go. E B I TD A wa s $4,321, 000 a nd a djus ted E B I TD A wa s $2,553, 000 c ompa red to E B IT DA of $3, 581,000 a nd a djus ted E B I T DA of $4,386, 000 for the sa me period a yea r a go. As of June 30, 2009, the compa ny ha d a pproxima tely $7. 8 million of debt outs ta nding. For six months the compa ny reported net income of $2,197, 000 or $0. 11 ba s ic a nd diluted ea rnings per sha re on net rev enue of $23,274, 000 compa red to net income of $3,207 ,000 or $0. 13 ba s ic a nd diluted ea rnings per sha re on net revenue of $30, 009,000 for the s a me period a yea r a go. O pera ting inc ome wa s $ 3,138, 000 a nd inc ome before inc ome tax es wa s $4,531, 000 c ompa red to opera ting income of $5,400, 000 a

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