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09 01 27 Web 2.0 Weekly
 

09 01 27 Web 2.0 Weekly

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January 2009 busiest month for financing since April 2008.

January 2009 busiest month for financing since April 2008.

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    09 01 27 Web 2.0 Weekly 09 01 27 Web 2.0 Weekly Document Transcript

    • SOFTWARE & SERVICES 27 JANUARY 2009 DAVID SHORE, CFA, MBA 416.860.6784 WEB 2.O WEEKLY david.shore@researchcapital.com Arun Thomas (Associate) 416.860.7666 BUSIEST FINANCING MONTH SINCE APRIL 2008 S UMM AR Y W e have identified 80 public companies for our W eb 2.0 universe. These include a wide variety of companies, including MMOG (Massive Multi-Player Online Gaming) companies, social networking software companies, media sharing companies, and social lending companies. The average market cap for the group is ~$300 million, with average trailing revenue of $100 million. The companies are also highly profitable, with an average EBITDA margin of 17.5%. On a valuation basis, the overall average is 3.8x trailing revenue and 8.4x trailing EBITDA. Seventeen of the companies have more than 500 employees. CA P IT AL M AR K ET A CT I V IT Y After 18 financings in December totalling $122.1 million (average $6.8 million), the New Year has started strong, with 23 financings already totalling $158.1 million (average $6.9 million). This is the largest number of financings since April 2008. The largest financing in the last three months was of HuffingtonPost for $25.0 million in November (Figure 2). Eight companies have raised more than $10 million each thus far in January – with Aster Data Systems the largest at $12 million so far. Microblogging phenomenon Twitter is rumoured to be raising more than $20 million with a valuation of $250 million. Financing Transactions by Month 30 25 20 (#) 15 28 27 25 23 10 19 18 17 17 16 16 15 13 11 11 5 10 9 9 7 7 7 7 6 6 6 6 6 5 5 5 4 4 4 4 3 3 3 3 1 1 1 1 1 0 Nov-05 Feb-06 Mar-06 May-06 Nov-06 Feb-07 Mar-07 May-07 Nov-07 Feb-08 Mar-08 May-08 Nov-08 Jul-05 Aug-05 Sep-05 Oct-05 Dec-05 Jan-06 Apr-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Dec-06 Jan-07 Apr-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Dec-07 Jan-08 Apr-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Dec-08 Jan-09 IN DU ST R Y N E W S This section discusses corporate activity such as partnerships, new product launches, and financial results. V AL U AT I O N This section provides an overview of valuation metrics for the 80 public W eb 2.0 companies we have identified thus far. W e calculate TEV/Revenue, TEV/EBITDA, and P/E multiples for the companies in our universe. We also compare multiples by country and exchange. This report has been created b y Anal ysts that are emplo yed b y Research Capital Corporation, a Canadian Investment Dealer. w w w . r e s e a rc h c a p i t a l . c o m T o ro n t o 4 1 6 . 8 6 0 . 7 6 0 0 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
    • Page 2 THE WEB 2.0 UNIVERSE 80 public Web 2.0 companies identified: W e have identified 80 public companies for our W eb 2.0 universe. These include a wide variety of companies, including MMOG (Massive Multi-Player Online Gaming) companies, social networking software companies, media sharing companies, and social lending companies. See below for a summary of the full universe (Figure 1). Note that we have not included the large technology and media companies such as Google, Yahoo, Disney, and Sony in our universe as they would skew the results due to their immense size relative to the rest of the group. The average market cap for the group is ~$300 million, with average trailing revenue of $100 million. The companies are also highly profitable with an average EBITDA margin of 17.5%. On a valuation basis, the overall average is 3.8x trailing revenue and 8.4x trailing EBITDA. Seventeen of the companies have more than 500 employees. C omparable C ompany Analys is > Web 2.0 S ummary US D L TM Trading C urrent US D Market Total US D L TM Total TE V /L TM TEV /L TM C ompany Name L TM as of Ticker E xc hange C urrency HQ P rice Cap ($m) R ev ($m) EB ITDA ($m) E B ITDA % R evenue EB ITDA Employees Website Acce lerize N ew Media, Inc. 9/30 /2 00 8 AC LZ OTCB B U SD United S tates 0 .3 5 9. 4 3. 2 (4.7 ) NM 4. 3x - 20 www. acce lerizene wmedia. com Actoz S oft C o. , Ltd. 9/30 /2 00 8 A0 52 790 K OSE KRW S outh K orea 10 ,6 00 .0 0 67 . 2 52 . 6 9 .6 18. 3% 0. 8x 4. 4x NA www. actoz.com AQ Interactive, Inc. 9/30 /2 00 8 383 8 TSE J PY J apa n 29 ,8 00 .0 0 18 . 1 61 . 7 4 .9 8 .0 % - - NA www. aqi.co.jp As s ociated Me dia Holdings Inc. 6/30 /2 00 7 A S MH OTCP K U SD United S tates 0 .0 1 0. 2 0. 1 (2.3 ) NM 10 .2 x - 3 www. ma cgregor ene rgy. com B oomJ I nc 9/30 /2 00 8 B O MJ OTCB B U SD United S tates 0 .7 5 30 . 7 1. 1 (7.7 ) NM 31 .1 x - 25 www. boomj. com B r ight T hi ngs plc 9/30 /2 00 8 A IM: B GT AIM GBP United K ingdom 0 .0 1 2. 3 0. 2 (1.6 ) NM 9. 8x - 9 www. brightthings . com B r oadW ebA s ia Inc. 9/30 /2 00 8 B W BA OTCP K U SD United S tates 1 .0 1 85 . 7 0. 0 (4.6 ) NM - - 46 www. broadweba s ia. com C DC C orp. 9/30 /2 00 8 C HIN.A Na s daqGS U SD H ong Kong 0 .8 6 92 . 8 428 .1 18. 8 4 .4 % 0. 3x 7. 9x 3 , 125 www. cdccorpora tion.net C hina G ateway C orpora tion 9/30 /2 00 8 CG WY OTCB B U SD United S tates 0 .0 0 0. 0 6. 7 (6.6 ) -98 . 9% 0. 0x - 37 - C hines e G amer International 9/30 /2 00 8 G T S M: 30 83 GTSM T WD T a iwan 90 .3 0 2 27.9 38 . 2 18. 0 47. 1% 4. 5x 9. 5x NA www. chines e gamer. net C ornerW orld C orporation 10 /31/2008 CWRL OTCB B U SD United S tates 0 .4 1 19 . 3 0. 6 3 .1 50 6. 8% 33 .7 x 6. 7x NA www. cornerworld. com DAD A S pA 9/30 /2 00 8 C M:DA CM E UR Ita ly 6 .4 3 1 37.1 222 .9 35. 6 16. 0% 0. 8x 5. 1x 574 da da .dada . net Digi ta lF X Inte rnational, Inc. 9/30 /2 00 8 DXN A ME X U SD United S tates 0 .1 0 2. 6 16 . 9 (4.5 ) -26 . 4% 0. 3x - 68 www. digitalfx.com Digi ta lP os t Inter active, Inc. 9/30 /2 00 8 DG LP OTCB B U SD United S tates 0 .0 2 1. 4 0. 4 (3.3 ) NM 5. 9x - 11 www. digitalpos tinte ractive. com Digi ta lT own, Inc. 11 /30/2008 DG T W OTCB B U SD United S tates 2 .3 0 62 . 5 NM (2.5 ) NM - - 3 www.e ne tpc.com Dolphin Digita l Me dia , Inc. NA DP DM OTCB B U SD United S tates 0 .7 0 34 . 1 NA NM NM - - 6 www.dolphindigitalmedia. com E olith C o. Ltd. 12 /31/2007 A0 41 060 K OSE KRW S outh K orea 5 15 .0 0 17 . 3 17 . 9 (0.0 ) - 0. 3% 1. 0x - NA www. eolith. co. kr E xtensi ons, Inc. 9/30 /2 00 8 E XT I OTCP K U SD United S tates 0 .1 5 14 . 2 NM NM NM - - 2 www. ext. com F ina ncia l Me dia Group, Inc. 11 /30/2008 F NGP OTCB B U SD United S tates 0 .0 2 1. 0 6. 8 1 .2 18. 3% 0. 0x 0. 1x 22 www.wa lls t.net F luid Mus ic C anada , Inc. 9/30 /2 00 8 T S X: F MN TSX C AD United S tates 0 .3 1 13 . 3 4. 2 (8.6 ) NM - - 29 www.fluidmedia networks . com F rogs ter Inte ractive P icture s A G 6/30 /2 00 8 FR G XT R A E UR G ermany 4 .9 5 15 . 3 5. 3 (3.2 ) -60 . 6% 2. 8x - NA www. frogste r-ip.de/en/inde x.php Ga mania Digital E nterta inme nt C o. , L td. 9/30 /2 00 8 618 0 GTSM T WD T a iwan 21 .5 5 97 . 2 110 .4 18. 7 16. 9% 0. 6x 3. 8x NA www. ga mania. co. kr Ga meO n C o L td. 9/30 /2 00 8 381 2 TSE J PY J apa n 123 ,0 00 .0 0 1 37.0 83 . 4 21. 1 25. 4% 0. 9x 3. 4x NA www.gameon.co. jp Ge oS entric O yj 9/30 /2 00 8 G E O1 V HL S E E UR F inland 0 .0 3 35 . 3 5. 4 ( 12. 4) NM 5. 6x - 92 www.benefon.com Giant Inte ractive G roup, Inc. 9/30 /2 00 8 GA NY S E U SD C hina 5 .9 6 1 ,4 16 .7 245 .1 15 5. 6 63. 5% - - 1 , 016 www. ga-me. com GigaMe dia L td. 9/30 /2 00 8 GIGM Na s daqGS U SD T a iwan 6 .6 0 3 56.6 200 .5 48. 0 23. 9% 1. 4x 6. 1x 975 www.giga media. com.tw GoF is h C or por ation 9/30 /2 00 8 G OF H OTCB B U SD United S tates 0 .1 8 4. 6 6. 3 ( 11. 0) NM 2. 4x - 41 www. gofis h. com Gr avity C o., Ltd 9/30 /2 00 8 GRVY Nas da qG M U SD S outh K orea 0 .6 4 17 . 8 35 . 2 6 .8 19. 2% - - 636 www.gra vity. co. kr Gr ee, Inc. NA T S E : 363 2 TSE J PY J apa n 5 ,4 70 .0 0 0. 0 NA NM NM - - NA www.gree. co. jp GungHo Online E ntertainment, Inc. 9/30 /2 00 8 376 5 OS E J PY J apa n 104 ,5 00 .0 0 1 33.7 114 .3 16. 8 14. 7% 0. 9x 6. 3x NA www. gungho. co. jp/e nglis h/ HanbitS oft, Inc. 9/30 /2 00 8 A0 47 080 K OSE KRW S outh K orea 3 ,0 75 .0 0 48 . 4 49 . 9 ( 12. 8) -25 . 6% 0. 6x - NA www. hanbits oft. co. kr IA S E ne rgy, Inc. 10 /31/2008 IAS C . A OTCB B U SD C anada 0 .0 2 1. 5 0. 0 (0.9 ) NM - - NA www. ia s ene rgy. com IdeaE dge, Inc. 9/30 /2 00 8 OT C B B :IDA E OTCB B U SD United S tates 0 .6 5 27 . 5 0. 0 (3.5 ) NM - - NA www. idea edge. com J umbuck E ntertainment P ty Ltd. 6/30 /2 00 8 AS X: J MB AS X A UD Aus tr alia 0 .3 9 12 . 7 10 . 4 4 .8 46. 0% 0. 8x 1. 7x 72 www. jumbuck. com J umpT V I nc. 6/30 /2 00 8 T S X :J T V TSX C AD C anada 0 .3 0 27 . 9 11 . 5 (1.8 ) -15 . 3% 2. 9x - NA www. jumptv.com K a boos e Inc. 9/30 /2 00 8 T S X :K AB TSX C AD C anada 0 .3 8 43 . 6 60 . 8 4 .6 7 .6 % 0. 8x 11 . 0x NA www. kaboos e .com K ings oft C o. Ltd. 9/30 /2 00 8 388 8 S E HK H KD C hina 2 .6 6 3 68.1 106 .7 36. 0 33. 8% 2. 6x 7. 8x 1 , 660 www. kings oft. com Lingo Me dia C orpora tion 9/30 /2 00 8 T S X V: LM T S XV C AD C anada 0 .9 8 10 . 3 3. 3 (1.4 ) -42 . 5% 3. 3x - NA www.l ingome dia .com Live World Inc. 9/30 /2 00 8 LV W D OTCP K U SD United S tates 0 .0 3 0. 9 11 . 7 (1.2 ) -10 . 1% - - 73 www. live world. com LookS mar t, Ltd. 9/30 /2 00 8 LO OK Nas da qG M U SD United S tates 1 .3 2 22 . 5 69 . 5 (2.6 ) - 3. 7% - - 93 www. looks mar t. com Magnitude Informa tion S ys tems Inc. 9/30 /2 00 8 MA GY OTCB B U SD United S tates 0 .0 2 8. 8 0. 1 (3.2 ) NM - - 13 www. ma gnitude. com Mixi, Inc. 9/30 /2 00 8 212 1 TSE J PY J apa n 485 ,0 00 .0 0 8 30.3 125 .9 49. 6 39. 4% 5. 7x 14 . 5x NA www.mixi. co. jp Moggle , Inc 12 /31/2008 MMOG OTCB B U SD United S tates 2 .0 0 70 . 6 NM (1.1 ) NM - - 3 www. playmoggle . com National L ampoon Inc. 7/31 /2 00 8 NLN A ME X U SD United S tates 0 .7 3 6. 9 7. 4 (1.6 ) -21 . 1% 1. 6x - 24 www. nationallampoon. com NE O W IZ G ame s C orpora tion 12 /31/2007 A0 95 660 K OSE KRW S outh K orea 23 ,0 00 .0 0 1 58.7 129 .6 34. 8 26. 9% 1. 2x 4. 3x NA www. neowiz.com/kor/ NetDra gon We bS oft, Inc. 9/30 /2 00 8 7 77 S E HK H KD C hina 2 .6 5 1 80.6 95 . 2 46. 3 48. 6% 0. 0x 0. 0x 1 , 482 www. nd. com. cn Netea s e. com Inc. 9/30 /2 00 8 NT E S Na s daqGS U SD C hina 17 .7 2 2 ,1 80 .5 422 .4 27 4. 2 64. 9% - - 2 , 413 corp. 16 3. com NeXplore C or por ation 9/30 /2 00 7 NXP C OTCP K U SD United S tates 0 .5 5 30 . 7 NM (4.9 ) NM - - 19 www.nexplore .com Ngi G roup Inc. 9/30 /2 00 8 249 7 TSE J PY J apa n 44 ,6 00 .0 0 61 . 6 102 .3 34. 2 33. 5% - - NA www. ne ta ge .co.j p/en/index. html Northgate T echnologies L imited 9/30 /2 00 8 5 90057 B SE INR I ndia 42 .5 0 30 . 5 137 .3 24. 5 17. 8% 0. 2x 1. 2x 286 www.northgatetech. com Open T ext C or p. 9/30 /2 00 8 OTEX Na s daqGS U SD C anada 32 .4 1 1 ,6 80 .9 744 .2 18 7. 9 25. 3% 2. 3x 9. 3x 3 , 000 www.ope ntext.com Openwa ve S ys tems Inc. 9/30 /2 00 8 OPW V Na s daqGS U SD United S tates 0 .6 2 51 . 5 199 .0 ( 22. 8) -11 . 5% - - 618 www. openwa ve. com P e rfect W orld C o., Ltd. 9/30 /2 00 8 P WR D Na s daqGS U SD C hina 15 .4 5 8 81.4 186 .8 99. 9 53. 5% - - 1 , 401 www. wanmei .com/en/inde x. htm P hotoC hannel Ne tworks Inc. 9/30 /2 00 8 T S XV : PN T S XV C AD C anada 1 .7 4 47 . 7 14 . 0 (2.5 ) -17 . 7% 3. 4x - NA www. photocha nnel. com Quepas a C orp. 9/30 /2 00 8 QP S A Nas daqC M U SD United S tates 1 .8 9 24 . 0 0. 1 ( 11. 8) NM - - 63 www.que pas a . com S handa Intera ctive E ntertainment L td. 9/30 /2 00 8 S NDA Na s daqGS U SD C hina 27 .8 5 1 ,9 32 .3 477 .7 22 8. 2 47. 8% - - 2 , 564 www. snda .com S hutterfly, Inc. 9/30 /2 00 8 S F LY Na s daqGS U SD United S tates 6 .0 2 1 50.9 203 .3 25. 7 12. 6% 0. 5x 4. 3x 512 www.s hutterfly.com S K C ommunications C o. , Ltd. 12 /31/2007 A0 66 270 K OSE KRW S outh K orea 7 ,0 50 .0 0 2 08.4 149 .0 14. 0 9 .4 % 1. 4x 14 . 8x NA - S NA P I nter active, Inc. 9/30 /2 00 8 S TV I OTCB B U SD United S tates 0 .9 9 10 . 6 2. 3 0 .2 10. 1% 4. 1x 40 . 7x 5 www. s nap-inte ractive .com S NM G lobal Holdings 9/30 /2 00 8 S NMN OTCP K U SD United S tates 0 .0 0 0. 0 2. 0 (0.7 ) -34 . 8% 1. 1x - 33 www. s nmglobalholdings .com S park Ne tworks , Inc. 9/30 /2 00 8 LO V A ME X U SD United S tates 2 .4 3 52 . 1 60 . 1 11. 7 19. 5% 0. 8x 4. 1x 176 www. spar k.net S pectrum DNA, Inc. 9/30 /2 00 8 S P XA OTCB B U SD United S tates 0 .1 0 4. 9 0. 1 (2.7 ) NM - - 7 - T encent Holdings Ltd. 9/30 /2 00 8 7 00 S E HK H KD C hina 44 .2 5 10, 25 1. 1 903 .3 44 7. 5 49. 5% 12 .2 x 24 . 7x 6 , 039 www. tencent. com. hk /inde x_ e. s html T he P ar ent C ompany 8 /2/2008 K IDS .Q OTCP K U SD United S tates 0 .0 4 1. 0 112 .0 ( 13. 5) -12 . 0% 0. 2x - 347 www. thepare ntcompany. com T he 9 Limited 9/30 /2 00 8 NC T Y Na s daqGS U SD C hina 15 .8 1 4 36.5 252 .4 95. 1 37. 7% - - 1 , 361 www. the9 .com T he S tre et.com, Inc. 9/30 /2 00 8 T SCM Nas da qG M U SD United S tates 2 .9 0 88 . 4 75 . 2 12. 2 16. 2% 0. 1x 0. 9x 349 www. thes tre et. com T ree . C om, Inc. 9/30 /2 00 8 TRE E Nas da qG M U SD United S tates 4 .3 1 40 . 4 231 .2 ( 39. 6) -17 . 1% 0. 1x - 1 , 000 www. le ndingtre e. com Unis e rve C ommunications C or p. 8/31 /2 00 8 T S XV :US S T S XV C AD C anada 0 .0 8 1. 6 26 . 5 0 .7 2 .8 % 0. 5x 19 . 5x NA www. unis erve. com Unite d Online Inc. 9/30 /2 00 8 UNT D Na s daqGS U SD United S tates 6 .0 9 4 99.2 538 .7 13 0. 6 24. 2% 1. 6x 6. 5x 928 www.unitedonline. net UOMO Media, Inc 10 /31/2008 UO MO OTCB B U SD C anada 0 .0 8 6. 8 0. 5 (0.4 ) -91 . 6% 15 .1 x - NA www. uomolife .com VO IS , I nc. 9/30 /2 00 8 VO IS OTCB B U SD United S tates 0 .7 5 5. 4 0. 0 (4.0 ) NM - - 4 www.vois . com W ebzen Inc. 9/30 /2 00 8 W ZE N Nas da qG M U SD S outh K orea 1 .4 3 17 . 0 20 . 3 (6.0 ) -29 . 5% - - 338 www. webzen. co. kr W izza rd S oftwa re C orporation 9/30 /2 00 8 W ZE A ME X U SD United S tates 0 .7 2 32 . 5 6. 2 (6.5 ) NM 5. 3x - 110 www.wizzar ds oftware .com W oozyF ly, Inc. 9/30 /2 00 8 W ZY F OTCB B U SD United S tates 0 .1 5 2. 6 0. 0 NM NM - - 14 www. woozyfly. com W orlds .com Inc. 9/30 /2 00 8 W DDD OTCB B U SD United S tates 0 .1 6 8. 4 0. 1 NM NM - - 1 www. wor lds . com W ynds torm C orporation NA W YND OTCB B U SD United S tates 0 .5 1 9. 2 NA NM NM - - NA www. wynds torm.com XING A G 9/30 /2 00 8 O 1B C XT R A E UR G ermany 29 .0 0 1 98.4 41 . 2 16. 0 38. 8% 3. 5x 8. 9x 161 www.xing. com Y e dangO nli ne C orp. 12 /31/2007 A0 52 770 K OSE KRW S outh K orea 7 ,0 90 .0 0 79 . 7 49 . 3 11. 0 22. 4% 1. 6x 7. 2x NA www. yeda ngonli ne. com/i ndexhome. as p Y nk K or ea I nc. 12 /31/2007 A0 23 770 K OSE KRW S outh K orea 3 ,9 50 .0 0 7. 0 14 . 0 (1.1 ) - 7. 6% 0. 5x - NA www. ynk. ne t ZipL ocal I nc. 9/30 /2 00 8 T S X V: ZIP T S XV C AD C anada 0 .0 2 1. 3 2. 9 (3.9 ) NM 0. 7x - NA www. ziplocal. com High 10, 25 1. 1 90 3. 3 4 47 .5 50 6. 8% 33 .7 x 40 . 7x 6 ,0 39 Low 0. 0 0.0 -39 .6 -98 . 9% 0. 0x 0. 0x 1 Average 298.8 100.3 26.0 17.5% 3.8x 8.4x 602 Figure 1. Web 2.0 Universe Summary Source. Capital IQ
    • Page 3 C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G ) Financing activity continues: After 18 financings in December totalling $122.1 million (average $6.8 million), the New Year has started strong, with 23 financings already totalling $158.1 million (average $6.9 million). This is the largest number of financing since April 2008. The largest financing in the last three months was of HuffingtonPost for $25.0 million in November (Figure 2). Eight companies have raised more than $10 million each thus far in January – with Aster Data Systems the largest at $12 million so far. Microblogging phenomenon Twitter is rumoured to be raising more than $20 million with a valuation of $250 million. W e will add this to our database once details are confirmed. For additional details, see Figure 27 (at end of note). Financings - Last Three Months 30.0 25.0 20.0 Jan-09 (US$m) 15.0 Dec-08 Nov-08 10.0 5.0 0.0 NewsGator IMVU InsideView Motionbox Gbox Multiply Meez Xobni Overlay.TV GoFish Rockyou PlaySpan NetShelter Go Internet Media Nurien Yodle Taptu FooMojo Scribd One True Media Social Median JibJab Kewego Superfish Snapmylife Tagged Jackbe Playdo DotBlu Hubdub Casual Collective Snooth Identi.ca HuffingtonPost Angie's List KickApps Aster Data Systems RatePoint Play Hard Sports ChakPak Sportsblogs AboutUs E-Global Sports StockTwits Clickpass Blue Kai DECA Geni Machinima.com Tumblr Pulse Entertainment Worlds.com Inc. Figure 2. Financings, Last Three Months Source. Company reports January activity doesn’t offset weak 2H/08: However, on a trailing 12-month basis, financings are down for the third month in the last four, with average round sizes decreasing slightly as of January (Figure 3).
    • Page 4 LTM Financing 4,000.0 20.0 18.0 3,500.0 16.0 3,000.0 14.0 2,500.0 12.0 (US$m) (US$m) 2,000.0 10.0 8.0 1,500.0 6.0 1,000.0 4.0 500.0 2.0 0.0 0.0 May-06 May-07 May-08 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Jul-08 Sep-08 Nov-08 Jan-09 Total Average Figure 3. Financings, Last 12 Months Source. Company reports Cumulative total $5.2 billion: Overall, on a cumulative basis, W eb 2.0 financings have totalled almost $5.2 billion, with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 4). Web 2.0 Financing (cumulative) 1,400.0 6,000.0 1,303.0 1,200.0 5,000.0 1,000.0 941.2 4,000.0 800.0 (US$m) (US$m) 701.7 3,000.0 600.0 524.9 2,000.0 400.0 311.8 296.0 1,000.0 158.1 200.0 145.7 124.1 101.3 97.0 87.2 69.4 37.5 33.5 18.2 40.0 49.1 29.4 35.5 28.8 20.1 0.0 0.0 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2003 2004 2005 2006 2007 2008 2009 Figure 4. Financing, Cumulative Source. Company reports
    • Page 5 U.S. remains dominant: U.S. companies continue to dominate capital market activity – with almost 73% of financings/M&A involving U.S. companies (based on dollars) (Figure 5). Canadian companies generated under 1% of capital market activity based on dollar volume (Figure 5). Based on number of transactions, the U.S. leads with approximately 74% of deals, while Canada is third in number of financings at 5.2% (Figure 6). Financing/M&A by Country - LTM ($) Financing/M&A by Country - LTM (#) Canada 5.2% UK UK 6.0% 13.4% Israel 2.8% China China 2.4% 7.9% Russia Canada ROW 1.7% 0.7% 9.3% Israel 0.7% Denmark 0.7% ROW 2.1% USA 72.8% USA 74.2% Figures 5 & 6. Financing/M&A, by Country (LTM, $, #) Source. Company reports More early-stage funding (by count): Almost half of financings in the last 12 months are for early-stage companies (Angel/Seed or Series A) (Figure 7). Series B rounds are 30.7% of the total, with later-stage (Series D, E and PIPE) deals accounting for just 7.3%. Financing by Type - LTM Series B 30.7% Series C 12.1% Series D 4.8% Angel/Seed 9.1% Debt financing 3.0% PIPE Series A 2.2% 38.1% Figure 7. Financing, by Type (LTM, $) Source. Company reports But “D” series are largest equity rounds (by dollar): In the last 12 months, there have been eleven “D” series rounds, averaging over $25 million per financing (Figure 8). Note that we have excluded the $430 million Series C financing of Oak Pacific Interactive as it skews the results substantially.
    • Page 6 Average financing round size - LTM 40.0 35.0 30.0 25.0 (US$m) 20.0 38.1 15.0 26.2 10.0 18.9 11.3 5.0 10.0 8.8 6.4 3.4 0.0 Angel/Seed Debt financing PIPE Series A Series B Series C Series D Series E # rounds 21 7 5 88 71 28 11 1 Figure 8. Average Size per Round Source. Company reports C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E ) Price Performance: Our W eb 2.0 index (market-cap weighted) has closely tracked the performance of the NASDAQ composite index, although it has outperformed the index since late October 2008 (Figure 9). Web 2.0 Index Price Performance 140 120 100 80 60 40 20 0 1/28/2008 2/11/2008 2/25/2008 3/10/2008 3/24/2008 4/7/2008 4/21/2008 5/5/2008 5/19/2008 6/2/2008 6/16/2008 6/30/2008 7/14/2008 7/28/2008 8/11/2008 8/25/2008 9/8/2008 9/22/2008 10/6/2008 10/20/2008 11/3/2008 11/17/2008 12/1/2008 12/15/2008 12/29/2008 1/12/2009 1/26/2009 NASDAQ COMP Web 2.0 (Market Cap Weighted) Figure 9. Web 2.0 Price Performance Source. Capital IQ
    • Page 7 DigitalTown reverses fortune, BroadWeb Asia leads: After leading last week with a 1-week return of 11.1%, DigitalTown (DGTW -OTCBB) had the worst performance in the group (for stocks with prices greater than $1) (Figure 10), falling 23.3% on the week. BroadW eb Asia (BW BA-OTCPK) increased the most, +83.6%. 1 Week P ric e P erformanc e B roadW ebAs ia Inc. 83.6% W ebzen Inc. 41. 6% 33.3% Moggle, Inc S K C ommunica tions C o., Ltd. 21.6% NE O W IZ G ames C orpora tion 20.4% Y edangOnline C orp. 9.1% P hotoC ha nnel Networks Inc. 7.4% G iant Interactive G roup, Inc. 6. 2% G ameOn C o Ltd. 5.9% T he9 Limited 5.8% F rogs ter Interactive P ictures AG 4. 2% Open T ext C orp. 3. 6% 3. 4% Actoz S oft C o., Ltd. T encent Holdings Ltd. 3.3% G ungHo Online E ntertainment, Inc. 2.9% AQ Interactive, Inc. 2.8% LookS ma rt, Ltd. 2.3% 1. 0% Neteas e.com Inc. C hines e G a mer Internationa l -0.3% P erfect W orld C o., Ltd. -1. 4% K ings oft C o. Ltd. -1.5% United O nline Inc. -1.6% -2.1% Quepas a C orp. S handa Interactive E ntertainment Ltd. -2.5% HanbitS oft, Inc. -2.7% S park Networks , Inc. -2.8% G amania Digital E nterta inment C o., Ltd. -2.9% G iga Media Ltd. -3. 2% T heS treet.com, Inc. -4. 0% G ree, Inc. -4.0% E olith C o. Ltd. -4.6% XING AG -4.7% DADA S pA -5.3% Northga te T echnologies Limited -6. 3% T ree. C om, Inc. -6.3% -6.4% NetDragon W ebS oft, Inc. Y nk K orea Inc. -8.1% Ngi G roup Inc. -14.4% Mixi, Inc. -14. 9% S hutterfly, Inc. -15. 2% -23. 3% DigitalT own, Inc. -40.0% -20.0% 0.0% 20.0% 40. 0% 60. 0% 80. 0% 100. 0% Figure 10. 1-Week Price Performance Source. Capital IQ INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) Tencent Holdings Ltd. Launches English Version of QQ: Tencent Holdings Ltd. launched the English-language version of its popular instant messaging (IM) tool QQ. It is the right time to launch the new program considering the increasing demand for communication between Chinese Internet users and their overseas counterparts. The company has recently developed an international version of the IM program. The English language users can register and download software through the new service. Perfect World Co. Ltd. Partners with KTHitel Co. Ltd. to License 'Chi Bi' in Korea: Perfect W orld Co. Ltd. announced that it recently signed an agreement with KTHitel Co. Ltd. to license 'Chi Bi,' the Company's 3D massively multiplayer online role playing game (MMORPG) based on the Three Kingdoms period in Chinese history, to the Korean market. 'Chi Bi' was launched domestically in January 2008 and is Perfect W orld's first historical theme-based 3D MMORPG. The game's unique features, such as the '18 Legendary W eapons System,' the 'Battle of the Three Kingdoms System,' and cutting edge graphic design, have proven to be quite popular with players. 'Chi Bi' has previously been licensed in a number of countries and regions including Taiwan, Malaysia and Japan. Spark Files Shelf: Spark Networks, Inc. has filed a Shelf Registration in the amount of $2.67 million. DADA Acquired: RCS MediaGroup SpA (CM: RCS) acquired remaining 50.5% stake in DADA SpA (CM: DA) on January 21, 2009. The transaction was approved by Italy’s antitrust authorities. RCS MediaGroup S.p.A (CM: RCS) completed the acquisition of remaining 50.5% stake in DADA SpA (CM: DA) on January 21, 2009. The9 Limited Declares Special Cash Dividend Payable On or Around February 9, 2009: The9 Limited announced that its Board of Directors has declared a special cash dividend in an aggregate amount of $29,410,000, or approximately of $1.11 per share on its ordinary shares, par value $0.01 per share, based on the number of shares outstanding on the date hereof. The actual dividend per share will be based on the number of shares outstanding on the record date. The special cash dividend, net of taxes withheld pursuant to applicable law, is payable on or around February 9, 2009 to shareholders of record as of the close of business on February 2, 2009, U.S. Eastern Standard Time. GoFish Corporation to Amend and Restate Articles of Incorporation: GoFish Corporation announced that on January 20, 2009, pursuant to the approval of the Board and the written consent of at least a majority of the outstanding shares of the company's capital stock, the company filed a Certificate of Amendment to the company's Amended and Restated Articles of Incorporation with the Secretary of State of Nevada to change the name of the company from 'GoFish Corporation' to 'Betawave Corporation'. The Certificate of Amendment became effective upon filing. The company intends on notifying FINRA of the name change and expects to receive a new ticker symbol for the company's common stock,
    • Page 8 which is currently quoted on FINRA's OTC Bulletin Board. In addition, the company intends on contacting the CUSIP Service Bureau and expects to receive a new CUSIP number for the company's common stock. Playbo y Mexico and Quepasa Corp. Announce Strategic Partnership: Quepasa Corp. and Playboy Mexico announced a strategic partnership to launch a model search to find the next Playboy Mexico Playmate of the Year for 2009. The model search will be largely judged by Quepasa members who will vote for which models advance to the finalist's pool. As part of the partnership Quepasa, one of the fastest growing online social communities for young Latinos, will develop a fully interactive online community for Playboy Mexico in which Quepasa members can enter to become a Playboy Playmate or vote for which models make it to the finals. The community, which will launch in February, will feature a vibrant, interactive viral community, including model profiles, pictures, and user-generated content. Open Text Corp. Announces the Release of Open Text Recruiting Management for Microsoft SharePoint: Open Text Corp. announced the release of Open Text Recruiting Management for Microsoft SharePoint, a native Microsoft Office SharePoint Server 2007 application for collaborative hiring case management that helps to simplify the recruiting process within organizations. This release is part of a continuing Open Text strategy to build applications that extend Office SharePoint Server 2007, based on the Open Text ECM Suite. Features for Open Text Recruiting Management for Microsoft SharePoint include: Integration with Oracle's PeopleSoft Enterprise: Open Text Recruiting Management for Microsoft SharePoint automatically imports relevant HR data from PeopleSoft; Full Auditing Capabilities and Records Retention: Built upon the compliance strengths of long term retention and archival of Open Text Enterprise Library Services, the application shares central records management practices and maintains compliance with corporate and legislative regulations; Automated W orkflow and Approval: Open Text Recruiting Management for Microsoft SharePoint leverages request forms, automated tasks and notifications to simplify the hiring process; and Dedicated Collaborative W ork Area: Information related to the job is available within the Office SharePoint Server 2007 site. Users work with everyone involved in the hiring process and take advantage of the collaborative features of Office SharePoint Server 2007. Shanda Signs Agreement w ith Zhejiang Satellite Television: Shanda Interactive Entertainment Ltd. announced that it would launch an interactive music program through collaboration with Zhejiang Satellite Television. The program is wholly based on its year-consuming music community game and interactive music platform, 'Juxing', which integrates such functions as singing, making friends and competition. The move marks the first trial promotion of online game via Televisions in China and indicates the formal operation of 'Juxing' under way, noted market watchers. Snap Interactive Inc. Provides Revenue Guidance for the Fourth Quarter and Year Ending December 31, 2008: SNAP Interactive Inc. provides revenue guidance for the fourth quarter and year ending December 31, 2008. The company anticipates revenue in excess of $1.08 million for the quarter ended December 31, 2008. The company anticipates total revenue in excess of $3.0 million for the year ended December 31, 2008. The9 to Launch ‘Wrath of the Lich King’ in China: The9 Limited is set to launch W rath of the Lich King, the second expansion set for the massively multiplayer online role-playing game (MMORPG) W orld of W arcraft, in China soon, but they have not determined the date. The expansion set has made a hit in some western countries such as the U.S. Sales of W rath of the Lich King gained the top spot during the Christmas. Financial Media Seeks Financing: Financial Media Group, Inc. plans to raise funds. The firm said in a SEC filing that it anticipates that the firm will need an additional $2,000,000 to fund its anticipated operations for the next 12 months, depending on revenues from operations. The firm added that it presently does not have any available credit, bank financing or other external sources of liquidity. It also said that it will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the firm may need to sell additional shares of its common stock or borrow funds from private lenders. NetDragon WebSoft Inc. Launches New Expansion Pack for Eudemons Online, Divine Path: NetDragon W ebSoft Inc. has launched a new expansion pack--'Divine Path'--for its major online game Eudemons Online on 16 January 2009. 'Divine Path' is the fifth expansion pack of the game following the previous expansion pack 'The W ings of the Ruler', which launched in April 2008. 'Divine Path' combines mythical elements of Greece and launches a brand-new map 'Land of the God', which brings players a new era of 'god incarnation'. The latest expansion pack with enriched game features such as new challenges, maps, skills and equipment will enable NetDragon to continue to offer a fantastic entertainment experience for the Company's players. GoFish Name Change: GoFish Corporation has changed its name to Betawave Corporation. Perfect World to Launch Closed Beta Testing for 'Pocketpet Journey West' in North America: Perfect W orld Co. Ltd. announced that it will begin closed beta testing for 'Pocketpet Journey West,' a 3D MMORPG, in North America on February 10, 2009. The game will be released as 'Ether Saga Online' through its wholly owned U.S. subsidiary, Perfect W orld Entertainment Inc. Based on the Chinese literary classic, Journey to the W est, 'Ether Saga Online' features youthful anime graphics, as well as exciting in-game systems, and has been localized to cater to North American game players. Since the game's launch in China in October 2008, it has been well-received by domestic online game players.
    • Page 9 VALUATION Five companies top US$1 billion market cap: Just five (same as last week) companies in our Web 2.0 universe top US$1 billion in market capitalization (Figure 11). In addition, 60 of the 80 (up from 55 last week) companies have market caps under US$100 million, with 24 (21 last week) under $10 million. Online gaming companies dominate the top of the list with five of the top six by market cap. Market C ap (US D m) T encent H oldings Ltd. Netea s e. com Inc. 2180.5 S handa Interactive E nterta inment 1932. 3 O pen T ext C orp. 1680. 9 G iant Interactive G roup, Inc. 1416.7 P erfect W orld C o., Ltd. 881. 4 Mixi, Inc. 830.3 U nited O nline Inc. 499. 2 T he9 Limited 436. 5 K ings oft C o. Ltd. 368.1 G igaMedia Ltd. 356. 6 C hines e G amer Internationa l 227. 9 S K C ommunications C o., Ltd. 208. 4 X ING AG 198. 4 N etDra gon W ebS oft, Inc. 180. 6 N E O W IZ G ames C orporation 158.7 S hutterfly, Inc. 150.9 DA DA S pA 137.1 G a meO n C o Ltd. 137.0 G ungH o O nline E ntertainment, Inc. 133.7 G amania Digital E nterta inment 97. 2 C DC C orp. 92.8 T heS treet.com, Inc. 88. 4 B roa dW ebA s ia Inc. 85.7 Y eda ngO nline C orp. 79.7 Moggle, Inc 70. 6 A ctoz S oft C o., Ltd. 67. 2 DigitalT own, Inc. 62. 5 Ngi G roup Inc. 61. 6 S park Networks , Inc. 52.1 O penwave S ys tems Inc. 51. 5 Ha nbitS oft, Inc. 48.4 P hotoC hannel Networks Inc. 47. 7 K a boos e Inc. 43.6 T ree. C om, Inc. 40.4 G eoS entric O yj 35.3 Dolphin Digital Media , Inc. 34.1 W izzard S oftwa re C orporation 32. 5 B oomJ Inc 30.7 N eXplore C orporation 30.7 Northgate T echnologies Limited 30.5 J umpT V Inc. 27. 9 IdeaE dge, Inc. 27. 5 Q uepas a C orp. 24.0 LookS mart, Ltd. 22. 5 C ornerW orld C orporation 19.3 AQ Interactive, Inc. 18.1 G ravity C o. , Ltd 17. 8 E olith C o. Ltd. 17. 3 W ebzen Inc. 17.0 F rogs ter Interactive P ictures AG 15. 3 E xtens ions , Inc. 14. 2 F luid Mus ic C a nada , Inc. 13.3 J umbuck E ntertainment P ty Ltd. 12.7 S NA P Interactive, Inc. 10. 6 Lingo Media C orporation 10. 3 Accelerize New Media , Inc. 9.4 W ynds torm C orporation 9.2 Ma gnitude Informa tion S ys tems 8. 8 W orlds . com Inc. 8.4 Y nk K orea Inc. 7.0 Nationa l La mpoon Inc. 6.9 UO MO Media, Inc 6.8 V O IS , Inc. 5. 4 S pectrumDNA , Inc. 4.9 G oF is h C orporation 4.6 W oozyF ly, Inc. 2.6 DigitalF X Interna tional, Inc. 2.6 B right T hings plc 2. 3 Unis erve C ommunications C orp. 1.6 IAS E nergy, Inc. 1.5 Digita lP os t Interactive, Inc. 1.4 ZipLoca l Inc. 1.3 F inancial Media G roup, Inc. 1.0 T he P arent C ompany 1.0 LiveW orld Inc. 0.9 A s s ociated Media Holdings Inc. 0.2 C hina G ateway C orporation 0.0 S N M G lobal Holdings 0.0 G ree, Inc. 0.0 0 500 1, 000 1,500 2,000 2,500 3,000 Figure 11. Market Cap Ranking Source. Capital IQ TEV/Revenue (LTM) averages 3.8x: The overall average TEV/Revenue (LTM) multiple for our group is 3.8x (Figure 12). However, this is skewed by CornerW orld (CW RL-OTCBB) at 33.7x and BoomJ at 31.1x (BOMJ-OTCBB). Excluding those companies, the average is 2.6x. Note that we exclude multiples greater than 50x. Twenty-seven of the companies have multiples under 1.5x.
    • Page 10 TE V/L TM R evenue (x) 40. 0 33. 7 35. 0 31.1 30. 0 25. 0 20. 0 15. 1 15. 0 12. 2 9.810. 2 10. 0 5. 3 5. 6 5.7 5. 9 Average, 3.8 4. 1 4.3 4. 5 5. 0 3.3 3.4 3.5 2. 3 2. 4 2.6 2.8 2. 9 1.4 1.4 1. 6 1.6 1.6 0. 7 0.8 0. 8 0. 8 0.8 0.8 0. 9 0. 9 1.0 1. 1 1.2 0.0 0.0 0.0 0. 1 0.1 0.2 0. 2 0.3 0.3 0.5 0. 5 0.5 0.6 0. 6 0. 0 C hina G ateway C orporation Lingo Media C orporation W iz za rd S oftware C orpora tion G eoS entric Oyj Northga te T echnologies Limited UO MO Media, Inc G oF is h C orpora tion C hines e G a mer International C ornerW orld C orporation DigitalF X International, Inc. Open T ext C orp. Accelerize New Media, Inc. Mixi, Inc. B right T hings plc B oomJ Inc T he P a rent C ompany DADA S pA NE O W IZ G a mes C orporation F ina ncia l Media G roup, Inc. S hutterfly, Inc. Actoz S oft C o., Ltd. S pa rk Networks , Inc. G igaMedia Ltd. P hotoC hannel Networks Inc. S NAP Interactive, Inc. DigitalP os t Interactive, Inc. As s ociated Media Holdings Inc. X ING AG T ree. C om, Inc. T heS treet.com, Inc. C DC C orp. Y nk K orea Inc. Unis erve C ommunications C orp. HanbitS oft, Inc. ZipL oca l Inc. J umbuck E nterta inment P ty Ltd. K aboos e Inc. G ameOn C o Ltd. G ungHo Online E ntertainment, Inc. E olith C o. L td. S NM G lobal Holdings Na tional Lampoon Inc. United O nline Inc. Y edangOnline C orp. K ings oft C o. L td. J umpT V Inc. T encent Holdings L td. F rogs ter Interactive P ictures AG NetDragon W ebS oft, Inc. G amania Digital E ntertainment C o., Ltd. S K C ommunica tions C o., Ltd. Figure 12. TEV/Revenue Ranking Source. Capital IQ TEV/Revenue (LTM) by country/exchange: W e have also calculated multiples based on where the companies are listed or domiciled. Figure 13 shows the average TEV/Revenue multiples by stock exchange. The OTCBB has the largest number of companies (20), trading at an average multiple of 10.7x (down from 11.3x last week). On a geographic basis, the United States has the most companies (37), trading at an average of 5.4x revenue (up from 4.8x revenue lat week) (Figure 14). Nine of the companies are Canadian (average 3.6x revenue). Average TEV/LTM Revenue - By Exchange Average TEV/LTM Revenue - By Country 12.0 12.0 10.0 10.0 8.0 8.0 (x) 6.0 (x) 6.0 10.7 9.8 9.8 4.0 4.0 5.6 5.0 5.6 5.4 2.0 5.0 3.8 3.3 3.1 2.0 2.6 3.6 2.0 2.0 3.1 1.9 2.5 1.3 1.0 2.2 0.9 0.8 0.8 0.2 0.1 0.0 1.0 0.8 0.8 AMEX XTRA TSXV TSX ASX AIM GTSM CM NasdaqGM OTCBB HLSE SEHK OTCPK TSE NasdaqGS KOSE OSE BSE 0.3 0.2 0.0 United Finland United China Canada Germany Japan Taiwan South Korea Italy Australia Hong Kong India Kingdom States 20 1 1 3 7 5 2 2 4 4 3 10 7 1 1 1 1 5 1 1 37 8 9 2 6 3 9 1 1 1 1 # Companies # Companies Figure 13 & 14. TEV/Revenue Ranking (Exchange, Country) Source. Capital IQ TEV/EBITDA (LTM) averages 8.4x: The average multiple for the 28 companies with positive EBITDA (and multiples under 100x) is 8.4x LTM EBITDA (8.6x last week), led by SNAP Interactive’s (STVI-OTCBB) 40.7x multiple (Figure 15). Sixteen of the companies have EBITDA multiples under 7x.
    • Page 11 TE V/L TM E B ITDA (x) 45. 0 40.7 40. 0 35. 0 30. 0 24.7 25. 0 19.5 20. 0 14.5 14.8 15. 0 11.0 9. 5 9. 3 8. 9 Average, 8. 4 10. 0 7.9 7.8 7.2 6. 7 6. 5 6.3 6.1 5. 1 4. 4 4.3 4. 3 4.1 3.8 5. 0 3. 4 1.7 1.2 0.9 0. 1 0. 0 0. 0 Northga te T echnologies Limited C hines e G a mer International C ornerW orld C orporation Open T ext C orp. Mixi, Inc. NE O W IZ G a mes C orporation DADA S pA F ina ncia l Media G roup, Inc. S pa rk Networks , Inc. S hutterfly, Inc. Actoz S oft C o., Ltd. G igaMedia Ltd. S NAP Interactive, Inc. X ING AG T heS treet.com, Inc. J umbuck E nterta inment P ty Ltd. G ameOn C o Ltd. G ungHo Online E ntertainment, Inc. United O nline Inc. Y edangOnline C orp. K ings oft C o. L td. C DC C orp. K aboos e Inc. Unis erve C ommunications C orp. T encent Holdings L td. NetDragon W ebS oft, Inc. G amania Digital E ntertainment C o., Ltd. S K C ommunica tions C o., Ltd. Figure 15. TEV/EBITDA Ranking Source. Capital IQ TEV/EBITDA (LTM) by country/exchange: Figure 16 shows the average TEV/EBITDA multiples by stock exchange. The OTCBB has the largest number of companies (20), trading at an average multiple of 15.8x, while companies on the TSXV have the highest multiples (19.5x). On a geographic basis, the United States has the most companies (37), trading at an average of 9.0x EBITDA (Figure 17). Nine of the companies are Canadian (average 13.3x EBITDA). Average TEV/LTM EBITDA - By Exchange Average TEV/LTM EBITDA - By Country 25.0 14.0 12.0 20.0 10.0 15.0 8.0 (x) (x) 13.3 10.0 19.5 6.0 10.8 15.8 9.0 8.9 8.0 4.0 7.9 11.0 10.8 7.7 5.0 8.9 8.9 6.5 7.7 6.8 6.7 6.3 5.1 5.1 4.1 2.0 1.7 1.2 0.9 0.0 1.7 AMEX TSXV TSX XTRA ASX GTSM CM NasdaqGM OTCBB SEHK TSE KOSE NasdaqGS OSE BSE 1.2 0.0 Canada China United States Germany Japan Hong Kong South Korea Taiwan Italy Australia India 4 20 3 3 5 2 7 10 2 1 1 4 1 1 5 9 8 37 2 6 1 9 3 1 1 1 # Companies # Companies Figures 16 & 17. TEV/EBITDA Ranking (Exchange, Country) Source. Capital IQ P/E (LTM) averages 13.6x: The average multiple for the 29 companies with positive earnings (and multiples under 100x) is 12.5x LTM EPS (down from 13.6x LTM EPS), led by again by SNAP Interactive’s (STVI-OTCBB) 58.5x multiple (Figure 18). Sixteen of the companies have P/E multiples under 10x.
    • Page 12 P/E L TM (x) 70. 0 58. 5 60. 0 50. 0 40. 0 35. 7 33. 6 28. 7 30. 0 24.8 19. 2 20. 0 15. 0 13.1 13. 2 13.7 Avera ge, 12.5 10.5 10.8 11.0 9.5 9.1 8.2 7. 6 10. 0 7.0 6.8 5. 3 5.2 3. 2 3.1 1. 9 1. 7 1.6 1. 4 1. 3 1.1 0. 0 T he9 Limited Northga te T echnologies Limited C hines e G a mer International Open T ext C orp. Mixi, Inc. DADA S pA NE O W IZ G a mes C orporation G iant Interactive G roup, Inc. S pa rk Networks , Inc. G igaMedia Ltd. Actoz S oft C o., Ltd. S hutterfly, Inc. S NAP Interactive, Inc. X ING AG Neteas e. com Inc. S handa Interactive E nterta inment L td. LookS mart, Ltd. Ngi G roup Inc. J umbuck E nterta inment P ty Ltd. United O nline Inc. Y edangOnline C orp. K ings oft C o. L td. G ameOn C o Ltd. T heS treet.com, Inc. T encent Holdings L td. P erfect W orld C o. , Ltd. NetDragon W ebS oft, Inc. G amania Digital E ntertainment C o., Ltd. W orlds . com Inc. Figure 18. P/E Ranking Source. Capital IQ P/E (LTM) by country/exchange: Figure 19 shows the average P/E multiples by stock exchange. The OTCBB has the largest number of companies (20), trading at an average multiple of 30.8x. On a geographic basis, the United States has the most companies (37), trading at an average of 16.8x earnings (Figure 20). Nine of the companies are Canadian (average 28.7x EPS). Average P/E - By Exchange Average P/E - By Country 35.0 35.0 30.0 30.0 25.0 25.0 20.0 20.0 (x) (x) 30.8 15.0 15.0 28.7 10.0 10.0 19.2 19.2 18.6 18.6 16.8 16.5 12.4 11.7 10.6 10.6 5.0 5.0 9.7 9.1 8.2 8.2 7.1 7.0 7.0 5.3 1.9 1.9 1.3 0.0 0.0 OTCBB XTRA TSE SEHK GTSM KOSE NasdaqGS NasdaqGM CM ASX AMEX BSE NYSE Canada Germany Japan United States Taiwan South Korea Italy China Australia India 20 2 5 3 2 7 10 5 1 1 4 1 1 9 2 6 37 3 9 1 8 1 1 # Companies # Companies Figures 19 & 20. P/E Ranking (Exchange, Country) Source. Capital IQ
    • Page 13 UPCOMING EVENTS Upc oming E vents E vent Date Location Webs ite O 'R eilly Money: T ech F ebruary 4-6 Ne w Y ork www. con ferences . oreilly. com/mo ney / Us er G ene ra ted C onte nt F ebruary 9-10 S a n J o se www. u gc xevent. co m/ W eb 2. 0 C an adian L ea de rs hip S erie s - G am in g March 3 T o ro nto http: //web2 lea ders hipse ries .iglo oevents. net/ E ngag e! E xpo March 1 0-1 1 Ne w Y ork www. e ngag eexpo. com Me sh 200 9 April 7-8 T o ro nto www. mes hc onf erenc e. com Figure 21. Upcoming Events Source. Company reports E arnings C alendar C ompany Date & Time Qua rter C onf C all Details O penwave S ys tems Inc. (Na sd aqG S : O P W V ) T ues day, J anuary 27, 2009 2: 0 0 P M ( P S T ) Q2 200 9 800-36 0-9865 O pen T ext C orp. (Na s daqG S :O T E X ) W ednes day , J anuary 2 8, 2 009 5: 00 P M ( E S T ) Q2 200 9 416-91 5-5761 S hutterfly, I nc. ( Nas daqGS :S F LY ) W ednes day , F ebruary 0 4, 2 009 2: 00 P M ( P S T ) Q4 200 8 719-32 5-4826 T ree.C om, Inc. (N a sdaqG M: T R E E ) T hurs day , F ebru ary 0 5, 2 009 11:0 0 A M ( E S T ) Q4 200 8 877-74 1-4253 Figure 22. Earnings Calendar Source. Company reports
    • Page 14 C omparable C ompany Analys is > W eb 2.0 P ric e P erforma nc e C ompany Name C urrenc y Tic ker Ex change US D Market C ap ($m) Current Price 1 Wk 1 Mth 3 Mth 6 Mth 1 Yr 52 W eek A cc eleriz e New Me dia , In c. USD A C LZ OTCB B 9.4 0. 3 5 -12 .5% -12 . 5% -36.4 % -53.3 % NM -56 .3% A ctoz S o ft C o ., L td. KRW A 052 790 K OS E 67. 2 10, 6 00. 0 0 3 . 4% -2 .8% 32. 3% 34.0 % 24 .0% -16 .9% A Q Inte ra ctive, I nc . J PY 3 838 TSE 18. 1 29, 8 00. 0 0 2 . 8% 4.9% -23.6 % -79.9 % -85 .9% -91 .3% A ss oc iated Media Holdin gs Inc . USD A S MH OTCP K 0.2 0. 0 1 -50 .0% -37 . 5% -37.5 % NM -87 .5% -93 .8% B oomJ Inc USD B O MJ OTCB B 30. 7 0. 7 5 -25 .0% -6 .3% -63.9 % -77.1 % NM -77 .3% B right T hings plc GBP AIM : B G T AI M 2.3 0. 0 1 0 . 8% 3 7. 9% 0.8 % -34.5 % -57 .7% -69 .2% B ro adW e bAs ia In c. USD BW BA OTCP K 85. 7 1. 0 1 8 3.6% 0.0% -32.2 % -32.7 % NM -66 .3% C D C C orp. USD C HIN.A N a sdaqG S 92. 8 0. 8 6 -14 .9% -18 . 9% -32.3 % -68.7 % -79 .1% -80 .9% C hina G a teway C o rporation USD CGWY OTCB B 0.0 0. 0 0 -25 .0% -25 . 0% -75.0 % -95.0 % -99 .6% -99 .8% C hines e G ame r Inte rn ational TWD G T S M:3 083 GTS M 227. 9 90. 3 0 -0. 3% 3.7% 17. 0% 12.5 % 2 . 4% -35 .0% C orne rW orld C orporation USD CWR L OTCB B 19. 3 0. 4 1 6 4.0% -12 . 8% 105. 0% -32.8 % -72 .7% -73 .5% DA DA S pA E UR C M: DA CM 137. 1 6. 4 3 -5. 3% -8 .1% -6. 8% -40.7 % -53 .4% -60 .3% DigitalFX Internationa l, Inc . USD DXN AM E X 2.6 0. 1 0 -31 .1% -7 .3% -69.6 % -82.8 % -91 .1% -92 .6% DigitalP os t Inte rac tive, In c. USD D GL P OTCB B 1.4 0. 0 2 -4. 5% 5.0% -58.0 % -75.6 % -96 .2% -96 .5% DigitalTo wn, I nc . USD DG T W OTCB B 62. 5 2. 3 0 -23 .3% -14 . 8% -8. 0% -34.3 % -8 .0% -62 .3% Dolphin D igital Me dia, In c. USD DP D M OTCB B 34. 1 0. 7 0 -6. 7% -12 . 5% -30.0 % NM NM -38 .1% E olith C o. L td. KRW A 041 060 K OS E 17. 3 5 15. 0 0 -4. 6% -8 .8% 24. 1% -40.1 % -81 .1% -83 .2% E xte ns ion s, Inc . USD E XT I OTCP K 14. 2 0. 1 5 -71 .2% 4 2. 9% 50. 0% NM 0 . 0% -85 .1% F inanc ial Media G roup, In c. USD F NG P OTCB B 1.0 0. 0 2 -70 .0% -62 . 5% -95.6 % -98.1 % -93 .2% -98 .5% F luid Mus ic C ana da, I nc . C AD T S X: F MN TSX 13. 3 0. 3 1 -20 .5% 2 9. 2% -20.5 % -79.3 % NM -84 .8% F rogs ter I nterac tive P ic tures A G E UR FRG XT R A 15. 3 4. 9 5 4 . 2% -10 . 5% 38. 7% 0. 0 % -37 .7% -45 .9% G am ania Digital E ntertainment C o. , L td. TWD 6 180 GTS M 97. 2 21. 5 5 -2. 9% 2 3. 5% 60. 2% -20.9 % -12 .6% -41 .7% G am eO n C o L td. J PY 3 812 TSE 137. 0 1 23, 0 00. 0 0 5 . 9% 5.1% 84. 7% -20.8 % -5 .4% -24 .8% G eoS entric O yj E UR G E O1 V HL S E 35. 3 0. 0 3 -25 .0% -25 . 0% 0.0 % -40.0 % -50 .0% -66 .7% G ia nt I nterac tive G roup, Inc . USD GA NY S E 1, 4 16.7 5. 9 6 6 . 2% -1 .3% -1. 0% -33.8 % -42 .1% -65 .3% G igaMedia L td. USD G IG M N a sdaqG S 356. 6 6. 6 0 -3. 2% 1 7. 9% 23. 3% -49.7 % -63 .8% -68 .5% G oF ish C orporation USD G OFH OTCB B 4.6 0. 1 8 -18 .2% -21 . 7% 56. 5% -28.0 % -48 .6% -69 .5% G ravity C o. , L td USD G R VY Na sdaqG M 17. 8 0. 6 4 1 0.7% 2 1. 1% -19.8 % -35.2 % -76 .2% -79 .0% G ree, Inc . J PY T S E : 36 32 TSE 0.0 5, 4 70. 0 0 -4. 0% 0.2% NM NM NM -9. 0% G ungHo O nlin e E nterta inm en t, In c. J PY 3 765 OS E 133. 7 1 04, 5 00. 0 0 2 . 9% 3.8% 16. 8% -55.5 % -37 .4% -76 .0% Han bitS o ft, I nc. KRW A 047 080 K OS E 48. 4 3, 0 75. 0 0 -2. 7% -6 .4% 12. 2% -21.9 % -52 .5% -57 .8% IA S E n ergy, Inc . USD IA S C .A OTCB B 1.5 0. 0 2 0 . 0% -30 . 0% -85.0 % -91.3 % -94 .0% -95 .0% IdeaE dge, Inc . USD O T C B B : IDA E OTCB B 27. 5 0. 6 5 -21 .7% -21 . 7% -67.0 % -75.0 % -43 .5% -77 .0% J umbuc k E ntertainment P ty L td. A UD AS X: J MB AS X 12. 7 0. 3 9 0 . 0% 0.0% -36.1 % -22.0 % -35 .0% -50 .6% J umpT V Inc . C AD T S X: J T V TSX 27. 9 0. 3 0 0 . 0% -25 . 0% -57.7 % -68.1 % -78 .4% -81 .3% K aboo se Inc . C AD T S X :KAB TSX 43. 6 0. 3 8 0 . 0% 4 6. 2% -20.8 % -51.3 % -82 .5% -84 .2% K ingso ft C o . L td. H KD 3 888 S E HK 368. 1 2. 6 6 -1. 5% 1 0. 8% 33. 0% -21.5 % -10 .1% -38 .3% L ingo Media C orporation C AD T S X V:L M T S XV 10. 3 0. 9 8 -2. 0% -2 .0% -32.4 % -45.6 % -10 .1% -55 .5% L ive W orld Inc . USD L VW D OTCP K 0.9 0. 0 3 -40 .0% -33 . 3% -66.7 % -85.0 % -87 .5% -96 .0% L o ok S mart, L td. USD LO O K Na sdaqG M 22. 5 1. 3 2 2 . 3% -14 . 3% -25.0 % -55.9 % -62 .8% -72 .5% Ma gnitude Inf ormation S ys tems Inc . USD MA G Y OTCB B 8.8 0. 0 2 -33 .0% 3 4. 0% 43. 6% 0. 5 % 67 .5% -42 .6% Mixi, In c. J PY 2 121 TSE 830. 3 4 85, 0 00. 0 0 -14 .9% -9 .3% -17.5 % -35.1 % -54 .2% -65 .1% Mo ggle, I nc USD MMO G OTCB B 70. 6 2. 0 0 3 3.3% 3 3. 3% NM NM NM 0 . 0% Nation al L ampoo n Inc. USD NL N AM E X 6.9 0. 7 3 7 . 3% -17 . 1% -21.3 % -58.8 % -68 .1% -69 .6% NE O W IZ G ames C orpora tio n KRW A 095 660 K OS E 158. 7 23, 0 00. 0 0 2 0.4% 1 5. 0% 91. 7% -7. 1% -20 .6% -42 .5% NetDra gon W ebS oft, In c. H KD 7 77 S E HK 180. 6 2. 6 5 -6. 4% -7 .3% -8. 3% -71.6 % -79 .9% -81 .5% Neteas e.c om In c. USD NT E S N a sdaqG S 2, 1 80.5 17. 7 2 1 . 0% -14 . 5% -9. 8% -20.3 % -2 .5% -34 .8% NeX plo re C orpo ra tio n USD NX PC OTCP K 30. 7 0. 5 5 -45 .0% -45 . 0% 10. 0% -31.3 % NM -62 .1% Ngi G roup Inc . J PY 2 497 TSE 61. 6 44, 6 00. 0 0 -14 .4% -11 . 2% -36.0 % -52.3 % -71 .4% -77 .7% North gate T ec hno logies L imited INR 59 0057 BSE 30. 5 42. 5 0 -6. 3% -33 . 7% -47.5 % -85.7 % -91 .5% -92 .6% O pen T ext C orp. USD OTE X N a sdaqG S 1, 6 80.9 32. 4 1 3 . 6% 7.1% 37. 2% 6. 7 % 2 . 6% -17 .1% O pen wave S y s tems Inc. USD OP W V N a sdaqG S 51. 5 0. 6 2 -4. 6% 3.3% -11.5 % -56.3 % -69 .6% -78 .5% P erfec t W o rld C o., L td. USD PWRD N a sdaqG S 881. 4 15. 4 5 -1. 4% -0 .6% -4. 0% -43.4 % -34 .0% -53 .9% P hoto C han nel N etwo rk s Inc. C AD T S X V:P N T S XV 47. 7 1. 7 4 7 . 4% 5 1. 3% -0. 6% -48.1 % -45 .8% -58 .1% Q uepas a C orp. USD QPS A N as daqC M 24. 0 1. 8 9 -2. 1% 1 5. 2% -3. 1% -16.7 % -50 .9% -52 .6% S handa In terac tive E n tertainment L td. USD S NDA N a sdaqG S 1, 9 32.3 27. 8 5 -2. 5% -8 .0% 6.3 % 5. 9 % -1 .5% -27 .2% S hutterfly , I nc . USD S F LY N a sdaqG S 150. 9 6. 0 2 -15 .2% -12 . 4% -7. 4% -40.5 % -69 .3% -72 .3% S K C ommun ic ations C o., L td. KRW A 066 270 K OS E 208. 4 7, 0 50. 0 0 2 1.6% 3 6. 6% 51. 6% -50.7 % -74 .8% -76 .3% S N AP In terac tive, Inc . USD S T VI OTCB B 10. 6 0. 9 9 -2. 9% 4 1. 4% 94. 1% 147. 5% 16 .5% -10 .0% S N M G lobal Ho ldings USD S NMN OTCP K 0.0 0. 0 0 2 5.0% -95 . 0% -99.8 % -1 00. 0 % -10 0. 0% -100 . 0% S park Netwo rk s , I nc . USD LO V AM E X 52. 1 2. 4 3 -2. 8% -6 .2% -21.6 % -41.0 % -52 .9% -57 .4% S pec trumDNA , In c. USD S P XA OTCB B 4.9 0. 1 0 -47 .4% -33 . 3% -60.0 % NM NM -83 .3% T enc e nt Ho ldings L td. H KD 7 00 S E HK 10, 251. 1 44. 2 5 3 . 3% -11 . 2% 0.7 % -33.7 % -4 .8% -38 .6% T he P a re nt C o mpany USD K ID S .Q OTCP K 1.0 0. 0 4 -21 .6% -82 . 5% -95.6 % -97.8 % -99 .3% -99 .3% T he9 L imited USD NCTY N a sdaqG S 436. 5 15. 8 1 5 . 8% 2 0. 8% 30. 1% -29.1 % -11 .2% -44 .5% T heS tree t.c om, In c. USD TSCM Na sdaqG M 88. 4 2. 9 0 -4. 0% 0.0% -26.6 % -52.7 % -73 .7% -76 .3% T ree. C om, Inc . USD TREE Na sdaqG M 40. 4 4. 3 1 -6. 3% 1 00.5 % 91. 6% NM NM -61 .2% Unis erve C ommu nic ation s C orp. C AD T S X V :U S S T S XV 1.6 0. 0 8 6 0.0% 1 00.0 % -55.6 % -55.6 % -81 .0% -83 .2% United O nline Inc . USD U NT D N a sdaqG S 499. 2 6. 0 9 -1. 6% 9.3% -15.4 % -45.1 % -45 .7% -51 .3% UO MO M edia, I nc USD UO MO OTCB B 6.8 0. 0 8 -33 .3% -27 . 3% -50.0 % -80.0 % -88 .6% -90 .0% V OI S , Inc . USD V O IS OTCB B 5.4 0. 7 5 8 7.5% 1 50.0 % 0.0 % -81.3 % NM -86 .6% W ebze n In c. USD W ZE N Na sdaqG M 17. 0 1. 4 3 4 1.6% 6 0. 7% 66. 3% -49.3 % -56 .3% -67 .9% W izz ard S oftware C orpo ra tio n USD W ZE AM E X 32. 5 0. 7 2 -4. 0% -18 . 2% -21.7 % -58.9 % -74 .7% -77 .8% W oo zy F ly , I nc . USD W ZY F OTCB B 2.6 0. 1 5 NM NM NM NM NM -100 . 0% W orlds . com Inc . USD W DD D OTCB B 8.4 0. 1 6 6 . 7% 4 5. 5% -11.1 % -33.3 % -64 .4% -68 .6% W y nds to rm C orpo ra tio n USD W Y ND OTCB B 9.2 0. 5 1 32 5.0% 3 25.0 % 155. 0% -7. 3% NM -40 .0% XI NG AG E UR O1BC XT R A 198. 4 29. 0 0 -4. 7% 7.4% 9.8 % -4. 6% -30 .1% -36 .3% Y edan gO nline C orp. KRW A 052 770 K OS E 79. 7 7, 0 90. 0 0 9 . 1% 1 8. 0% 14. 4% -26.7 % -10 .3% -43 .5% Y nk K o re a In c. KRW A 023 770 K OS E 7.0 3, 9 50. 0 0 -8. 1% -21 . 0% -47.9 % -61.8 % -75 .7% -80 .2% ZipLoc al In c. C AD T S XV : ZIP T S XV 1.3 0. 0 2 10 0.0% 3 00.0 % 100. 0% -81.8 % -84 .0% -90 .9% Aver age 298. 8 2 .2% 9.5% -4.1 % -43.0 % -50 .9% -65 .1% Figure 23. Price Performance Source. Capital IQ
    • Page 15 C omparable C ompany Analys is > Web 2.0 Valuation Multiples P rimary U S D Market T E V/L T M T E V / NTM T E V /L T M TE V /NT M C ompany Na me E xcha nge Ti cker C ap ($ m) R ev enue R e venue E B I TDA E B IT DA P /L TM E P S P /NT M E P S P /T angB V Acce lerize N ew Media, Inc. O T C BB AC L Z 9.4 4 .3 x - - - - - - Actoz S oft C o. , Ltd. K OS E A0 52 790 67 . 2 0 .8 x - 4 .4 x - 1 3. 1x - 1. 3x AQ Inte ractive, Inc. TS E 3 83 8 18 . 1 - - - - - - 0. 3x As s ociated Me dia Holdings Inc. O T C PK A S MH 0.2 10. 2 x - - - - - - BoomJ Inc O T C BB B O MJ 30 . 7 31. 1 x - - - - - - Br ight T hings plc A IM A IM: B GT 2.3 9 .8 x - - - - - - Br oadW ebA s ia Inc. O T C PK B W BA 85 . 7 - - - - - - - C DC C orp. Na sdaqGS C HIN .A 92 . 8 0 .3 x 0. 4x 7 .9 x 6 .0 x - 12 .6 x - C hina G ateway C orpora tion O T C BB C GW Y 0.0 0 .0 x - - - - - - C hines e G amer International G TSM G T S M: 30 83 227 . 9 4 .5 x - 9 .5 x - 1 3. 7x - 4. 5x C ornerW orld C orporation O T C BB C WR L 19 . 3 33. 7 x - 6 .7 x - - - - DAD A S pA CM C M:DA 137 . 1 0 .8 x - 5 .1 x - 8. 2x - - Digita lF X Inte rnational, Inc. A ME X DXN 2.6 0 .3 x - - - - - - Digita lP os t Inter active, Inc. O T C BB DG LP 1.4 5 .9 x - - - - - - Digita lT own, Inc. O T C BB DG T W 62 . 5 - - - - - - - Dolphin Digita l Me dia , Inc. O T C BB DP DM 34 . 1 - - - - - - - E olith C o. Ltd. K OS E A0 41 060 17 . 3 1 .0 x - - - - - - E xtensions, Inc. O T C PK E XT I 14 . 2 - - - - - - - F ina ncia l Me dia Group, Inc. O T C BB F NGP 1.0 0 .0 x - 0 .1 x - - - - F luid Mus ic C anada , Inc. TS X T S X: F MN 13 . 3 - - - - - - 1. 1x F rogs te r Inte ractive P icture s A G XT R A FRG 15 . 3 2 .8 x - - - - - 1. 4x Ga mania Digital E nterta inme nt C o. , L td. G TSM 6 18 0 97 . 2 0 .6 x - 3 .8 x - 1 1. 0x - 1. 5x Ga meO n C o L td. TS E 3 81 2 137 . 0 0 .9 x - 3 .4 x - 1 3. 2x - 1. 6x Ge oS entric O yj HL S E G E O1 V 35 . 3 5 .6 x - - - - - 5. 3x Giant Inte ractive G roup, Inc. NY S E GA 1 , 416 . 7 - - - - 1. 3x 12 .5 x 0. 3x GigaMe dia L td. Na sdaqGS G IGM 356 . 6 1 .4 x 1. 3x 6 .1 x 5 .2 x 1 0. 5x 8. 9x 3. 4x GoF is h C or poration O T C BB G OF H 4.6 2 .4 x - - - - - - Gr avity C o., Ltd Na sdaqGM GRVY 17 . 8 - - - - - - - Gr ee, Inc. TS E T S E :3 63 2 0.0 - - - - - - - GungHo Online E nte rtainme nt, Inc. OSE 3 76 5 133 . 7 0 .9 x - 6 .3 x - - - 37 . 5x HanbitS oft, Inc. K OS E A0 47 080 48 . 4 0 .6 x - - - - - 1. 7x IA S E ne rgy, Inc. O T C BB IAS C . A 1.5 - - - - - - - IdeaE dge, Inc. O T C BB OT C B B :IDAE 27 . 5 - - - - - - 23 . 7x J umbuck E ntertainme nt P ty Ltd. AS X A S X: J MB 12 . 7 0 .8 x - 1 .7 x - 7. 0x - 1. 5x J umpT V Inc. TS X T S X :J T V 27 . 9 2 .9 x - - - - - 1. 9x Ka boos e Inc. TS X T S X: K AB 43 . 6 0 .8 x 0. 7x 11. 0 x 5 .5 x - - - Kings oft C o. Ltd. S E HK 3 88 8 368 . 1 2 .6 x - 7 .8 x - 1 0. 8x - 2. 4x Lingo Me dia C orpora tion T S XV T S XV : LM 10 . 3 3 .3 x - - - - - - Live World Inc. O T C PK LV W D 0.9 - - - - - - 0. 4x LookS mart, Ltd. Na sdaqGM LO OK 22 . 5 - - - - 3. 2x - 0. 8x Magnitude Informa tion S ys tems Inc. O T C BB MAG Y 8.8 - - - - - - - Mixi, Inc. TS E 2 12 1 830 . 3 5 .7 x - 14. 5 x - 3 5. 7x - 6. 0x Moggle , Inc O T C BB MMOG 70 . 6 - - - - - - - National L ampoon Inc. A ME X N LN 6.9 1 .6 x - - - - - 19 . 4x NE O W IZ G ame s C orpora tion K OS E A0 95 660 158 . 7 1 .2 x - 4 .3 x - 9. 1x - 5. 3x NetDra gon We bS oft, Inc. S E HK 7 77 180 . 6 0 .0 x - 0 .0 x - 5. 2x - 1. 0x Netea s e. com Inc. Na sdaqGS NT E S 2 , 180 . 5 - - - - 1. 6x 9. 6x 0. 5x NeXplore C or por ation O T C PK NXP C 30 . 7 - - - - - - - Ngi G roup Inc. TS E 2 49 7 61 . 6 - - - - 6. 8x - 0. 7x Northgate T e chnologies L imited BSE 59 00 57 30 . 5 0 .2 x - 1 .2 x - 1. 9x - - Open T e xt C orp. Na sdaqGS OTEX 1 , 680 . 9 2 .3 x 2. 1x 9 .3 x 8 .3 x 2 8. 7x 13 .5 x - Openwa ve S ys tems Inc. Na sdaqGS O PW V 51 . 5 - - - - - - 0. 7x Pe rfect W orld C o., Ltd. Na sdaqGS PW R D 881 . 4 - - - - 1. 4x 7. 4x 0. 5x PhotoC hannel Ne tworks Inc. T S XV T S XV : P N 47 . 7 3 .4 x 2. 0x - 6 .2 x - 27 .6 x 16 . 4x Quepas a C orp. Na sdaqC M QP S A 24 . 0 - - - - - - 9. 8x S handa Intera ctive E nte rtainment L td. Na sdaqGS S NDA 1 , 932 . 3 - - - - 1. 7x 10 .1 x 0. 9x S hutterfly, Inc. Na sdaqGS S F LY 150 . 9 0 .5 x 0. 6x 4 .3 x 3 .3 x 2 4. 8x - 1. 0x S K C ommunications C o. , Ltd. K OS E A0 66 270 208 . 4 1 .4 x - 14. 8 x - - - - S NA P Inter active, Inc. O T C BB S TV I 10 . 6 4 .1 x - 40. 7 x - 5 8. 5x - 7. 7x S NM G lobal Holdings O T C PK S NMN 0.0 1 .1 x - - - - - - S park Ne tworks , Inc. A ME X L OV 52 . 1 0 .8 x - 4 .1 x - 5. 3x - - S pectrumDNA, Inc. O T C BB S PX A 4.9 - - - - - - 5. 2x T encent Holdings Ltd. S E HK 7 00 10 , 251 . 1 12. 2 x - 24. 7 x - 3 3. 6x - 13 . 3x T he P arent C ompany O T C PK KIDS .Q 1.0 0 .2 x - - - - - - T he 9 Limited Na sdaqGS NC T Y 436 . 5 - - - - 1. 1x 7. 8x 0. 2x T he S tre et.com, Inc. Na sdaqGM T SCM 88 . 4 0 .1 x 0. 2x 0 .9 x 2 .8 x 1 5. 0x - 0. 9x T ree . C om, Inc. Na sdaqGM TRE E 40 . 4 0 .1 x 0. 1x - - - - 0. 6x Unis e rve C ommunications C or p. T S XV T S XV: US S 1.6 0 .5 x - 19. 5 x - - - - Unite d Online Inc. Na sdaqGS UNT D 499 . 2 1 .6 x 0. 8x 6 .5 x 3 .4 x 7. 6x 8. 0x - UOMO Media, Inc O T C BB UO MO 6.8 15. 1 x - - - - - - VO IS , Inc. O T C BB V O IS 5.4 - - - - - - - W ebzen Inc. Na sdaqGM WZE N 17 . 0 - - - - - - 0. 0x W izz a rd S oftwa re C orporation A ME X W ZE 32 . 5 5 .3 x - - - - - - W oozyF ly, Inc. O T C BB W ZYF 2.6 - - - - - - - W orlds .com Inc. O T C BB W DDD 8.4 - - - - 3. 1x - - W ynds torm C orporation O T C BB W YND 9.2 - - - - - - - XING A G XT R A O 1B C 198 . 4 3 .5 x - 8 .9 x - 1 9. 2x - 5. 2x Ye dangO nline C orp. K OS E A0 52 770 79 . 7 1 .6 x - 7 .2 x - 9. 5x - 4. 4x Ynk K orea Inc. K OS E A0 23 770 7.0 0 .5 x - - - - - - ZipL ocal Inc. T S XV T S X V : ZIP 1.3 0 .7 x - - - - - - High 10 , 251 . 1 33. 7 x 2. 1x 40. 7 x 8 .3 x 5 8. 5x 27 .6 x 37 . 5x Low 0.0 0 .0 x 0. 1x 0 .0 x 2 .8 x 1. 1x 7. 4x 0. 0x Average 298.8 3.8x 0.9x 8.4x 5.1x 12.5x 11.8x 4.9x Figure 24. Valuation Comparison Source. Capital IQ
    • Page 16 Comparable C ompany Analys is > Web 2.0 S ummary by C ountry C ompany Na me U S D Market C a p ($m) Avg US D Market C ap ($m) US D L T M Total R ev ($m) US D L T M Total E B IT DA ($m ) E B IT DA % 37 1 7, 64 7.2 2 ,205 . 9 2 ,689 . 7 1,3 82. 8 4 9. 9% United S ta tes C hina C hina C hina C hina C hin a 9 1, 82 1.7 227 . 2 1 ,565 . 1 1 82. 4 4 6. 0% C a nada C anada T aiwan United S tates C an ada A us tralia 9 1, 42 7.8 202 . 4 863 . 6 1 26. 7 2 9. 3% S outh K ore a U nited S tates C a nada C a nada J apa n T a iwan 8 1, 18 0.8 196 . 8 517 . 8 84. 6 2 4. 2% C hina J a pan J a pan S outh K o re a T aiwan J apa n 6 68 1.7 137 . 1 487 . 6 56. 4 2 3. 3% J apa n T a iwa n Italy J apan S outh K ore a U nited S ta tes T aiwan 3 S ou th K orea 62 1.4 G ermany 106 . 8 Hong K ong 428 . 1 Italy 35. 6 I ndia 1 7. 8% 2 21 3.7 92 . 8 349 . 1 24. 5 1 6. 0% G erma ny G e rma ny H ong K ong T aiwan In dia I taly 1 13 7.1 69 . 0 222 . 9 18. 8 4. 4% A us tralia I taly S outh K orea Ita ly Hon g K ong H ong K ong 1 9 2.8 38 . 6 137 . 3 12. 8 3. 7% Hong K ong H ong K on g U nite d S tate s India G ermany S ou th K orea 1 3 5.3 35 . 3 46 . 5 9. 5 -1 0. 9% In dia F inland F inland G erma ny United S ta te s G e rm any 1 3 0.5 30 . 5 10 . 4 4. 8 -1 8. 8% F inla nd I ndia India A us tra lia A us tralia C a nad a 1 1 2.7 12 . 7 5.4 -1. 6 NM Ita ly A us tralia A us tralia F inland United K ing dom U nited K in gdom 1 2.3 2.3 0.2 -12. 4 NM United K ing dom U nited K ingdom U nite d K ingdom United K ingdom F inla nd F inla nd 80 23,90 5.1 298.8 7 ,323.6 1,9 24.9 17.5% G rand Total G rand T ota l G ra nd T otal G rand Total G ra nd Total G rand T ota l Figure 25. Comparison by Country Source. Capital IQ Comparable C ompany Analys is > Web 2.0 S ummary by E xc hange C ompany Na me U S D Market C a p ($m) Avg US D Market C ap ($m) US D L T M Total R ev ($m) US D L T M Total E B IT DA ($m ) E B IT DA % 20 1 0, 79 9.8 3 ,599 . 9 368 . 4 1,0 85. 6 6 9. 0% OTCB B S E HK S EHK S E HK Nas da qG S OT CB B 10 8, 26 2.7 1 ,416 . 7 365 . 3 5 29. 8 6 3. 5% Na s da qG S N as daqG S NY S E Na s da qG S S E HK NYS E 7 1, 41 6.7 826 . 3 245 . 1 1 55. 6 4 6. 0% K OS E NYS E Na sd aqG S NY S E NY S E AS X 7 1, 04 7.1 209 . 4 222 . 9 1 09. 9 4 4. 0% OTCP K TS E TS E CM TS E S E HK 5 58 6.6 162 . 5 137 . 3 55. 6 3 2. 0% Na s da qG M K OS E GTS M BSE K OS E GTS M TS E 5 GTS M 32 5.1 CM 137 . 1 OSE 114 . 3 GTSM 36. 7 N a s daqG S 2 8. 3% 4 31 9.1 133 . 7 93 . 3 35. 6 2 6. 5% A ME X OTCB B OS E TS E CM TS E 4 21 3.7 106 . 8 86 . 3 24. 5 1 7. 8% T S XV XTR A X TR A Na s da qG M BSE BS E 3 18 6.1 83 . 8 74 . 3 16. 8 1 6. 0% TS X N as daqG M K OSE GTSM OS E CM 3 13 7.1 37 . 2 66 . 0 12. 8 1 4. 7% S E HK CM Na sd aqG M K OS E XT R A OS E 2 13 3.7 35 . 3 25 . 5 4. 8 6. 2% XT R A OS E HL S E TS X AS X K OS E 2 13 2.7 30 . 5 25 . 2 -0. 8 -3.0% GTSM OTCP K B SE OTC PK A ME X N a s daqG M 1 9 4.1 28 . 3 23 . 3 -1. 6 -3.9% A IM A ME X TS X XT R A A IM TS X 1 8 4.8 24 . 0 22 . 6 -5. 7 -9.3% NY S E TS X Na sd aqC M A ME X TS X A ME X HL S E 1 T S XV 6 1.0 A ME X 23 . 5 T S XV 11 . 7 T S XV -7. 1 XTRA -1 0. 9% 1 3 5.3 19 . 0 10 . 4 -11. 8 -1 9. 0% Na s da qC M H LS E OTCP K AS X Nas da qC M OT CP K CM 1 BSE 3 0.5 OTCB B 16 . 0 HL S E 5.4 HLS E -12. 4 T S XV -1 9. 1% 1 2 4.0 15 . 2 1.7 -27. 1 NM BSE N as daqC M T S XV OT C BB OT CP K A IM 1 1 2.7 12 . 7 0.2 -29. 2 NM AS X AS X ASX A IM Nas da qG M N a s daqC M 1 2.3 2.3 0.1 -47. 0 NM OSE A IM A IM Na s da qC M OT CB B H LS E 80 23,90 5.1 298.8 100.3 1,9 24.9 17.5% G rand Total G rand T ota l G ra nd T otal G rand Total G ra nd Total G rand T ota l Figure 26. Comparison by Exchange Source. Capital IQ
    • Page 17 Financing - Last Three Months (US$ m) Month Company Name Country Angel/Seed Debt financing PIPE Series A Series B Series C Series D Series E Grand Total Nov-08 HuffingtonPost USA 25.0 25.0 USA 18.0 18.0 Angie's List USA 17.0 17.0 Rockyou USA 16.8 16.8 PlaySpan USA 14.0 14.0 KickApps Multiply USA 5.0 5.0 USA 3.9 3.9 Machinima.com UK 1.0 1.0 Casual Collective USA 0.5 0.5 Worlds.com Inc. (OTCBB:WDDD) Nov-08 Total 1.0 18.0 0.5 3.9 16.8 61.0 101.1 USA 22.5 22.5 Dec-08 GoFish Canada 11.1 11.1 NetShelter Blue Kai USA 10.5 10.5 UK 9.9 9.9 Taptu USA 9.9 9.9 FooMojo Scribd USA 9.0 9.0 Israel 5.3 5.3 Superfish Tagged USA 5.0 5.0 USA 5.0 5.0 Snapmylife USA 5.0 5.0 Jackbe ChakPak India 5.0 5.0 USA 4.5 4.5 Tumblr Sweden 4.3 4.3 Playdo Overlay.TV Canada 3.8 3.8 USA 2.0 2.0 DotBlu Angie's List USA 1.0 1.0 StockTwits USA 0.8 0.8 Dec-08 Total 5.0 22.5 31.9 49.2 1.0 5.0 114.6 USA 12.0 12.0 Jan-09 Aster Data Systems USA 10.0 10.0 IMVU Korea 10.0 10.0 Nurien USA 10.0 10.0 NewsGator Go Internet Media USA 10.0 10.0 USA 10.0 10.0 Yodle USA 10.0 10.0 RatePoint DECA USA 10.0 10.0 USA 9.0 9.0 One True Media USA 8.0 8.0 Play Hard Sports USA 7.5 7.5 JibJab USA 7.0 7.0 Xobni InsideView USA 6.5 6.5 France 6.2 6.2 Kewego USA 6.0 6.0 Motionbox Gbox USA 5.0 5.0 USA 5.0 5.0 Sportsblogs Geni USA 5.0 5.0 USA 5.0 5.0 AboutUs USA 3.5 3.5 E-Global Sports Network Hubdub UK 1.2 1.2 USA 1.0 1.0 Snooth Canada 0.2 0.2 Identi.ca USA Meez Jan-09 Total 1.2 34.7 57.5 54.7 10.0 158.1 Grand Total 2.2 23.0 23.0 70.4 123.5 116.7 5.0 10.0 373.8 Figure 27. Financing, Last Three Months Source. Company reports
    • Page 18 RELEVANT DISCLOSURES APPLICABLE TO: NONE LIST OF DISCLOSURE TERMS: None applicable. 1. ANALYST CERTIFICATION Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report. I n f o r ma t i o n a b o u t Re s e a r ch C a p i t a l C o r p o r a t i o n ’ s Ra t i n g S y s t e m, t h e d i s t r i b u t i o n o f o u r r e s e a r ch t o cl i e n t s a n d t h e p e r ce n t a g e o f r e c o m me n d a t i o n s wh i c h a r e i n e a c h o f o u r r a t i n g c a t e g o r i e s i s a v a i l a b l e o n o u r we b si t e a t ww w. r e s e a r ch c a p i t a l . c o m. T h e i n f o r ma t i o n c o n t a i n e d i n t h i s r e p o r t h a s b e e n d r a wn f r o m s o u r c e s b e l i e ve d t o b e r e l i a b l e b u t i t s a c cu r a c y o r co mp l e t e n e ss i s n o t g u a r a n t e e d , n o r i n p r o vi d i n g i t d o e s R e s e a r c h Ca p i t a l C o r p o r a t i o n a s s u me a n y r e sp o n si b i l i t y o r l i a b i l i t y . R e s e a r ch C a p i t a l C o r p o r a t i o n , i t s d i r e ct o r s , o f f i c e r s a n d o t h e r e mp l o y e e s ma y , f r o m t i me t o t i me , h a v e p o si t i o n s i n t h e s e cu r i t i e s me n t i o n e d h e r e i n . Co n t e n t s o f t h i s r e p o r t c a n n o t b e r e p r o d u c e d i n wh o l e o r i n p a r t wi t h o u t t h e e xp r e ss e d p e r mi s si o n o f R e se a r ch C a p i t a l C o r p o r a t i o n . ( U . S . I n s t i t u t i o n a l Cl i e n t s — Re s e a r ch C a p i t a l U . S. A . I n c. ( a wh o l l y o wn e d s u b si d i a r y o f R e s e a r c h C a p i t a l Co r p o r a t i o n ) a cc e p t s r e s p o n si b i l i t y f o r t h e c o n t e n t s o f t h i s r e p o r t s u b je c t t o t h e t e r ms & l i mi t a t i o n s s e t o u t a b o v e . F i r ms o r i n s t i t u t i o n s r e ce i vi n g t h i s r e p o r t s h o u l d e f f e ct t r a n s a ct i o n s i n s e c u r i t i e s d i sc u s se d i n t h e r e p o r t t h r o u g h R e s e a r ch C a p i t a l U . S . A . I n c. , a B r o k e r - D e a l e r R e g i s t e r e d wi t h t h e U n i t e d S t a t e s S e cu r i t i e s a n d E xc h a n g e C o m mi s si o n ) . Tor on to 4 16. 8 60. 76 00 M ontr eal 51 4. 39 9. 150 0 V anco u ver 60 4. 66 2. 180 0 C al gar y 40 3. 26 5. 740 0 R egi na 306. 566. 7550 www.researchcapital.com