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09 02 10 Web 2.0 Weekly
 

09 02 10 Web 2.0 Weekly

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$25m in financings in Feb so far.

$25m in financings in Feb so far.

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    09 02 10 Web 2.0 Weekly 09 02 10 Web 2.0 Weekly Document Transcript

    • SOFTWARE & SERVICES 10 FEBRUARY 2009 DAVID SHORE, CFA, MBA 416.860.6784 WEB 2.O WEEKLY david.shore@researchcapital.com Arun Thomas (Associate) 416.860.7666 $25 MILLION IN FINANCING MONTH-TO-DATE S U MMA R Y We have identified 80 public companies for our Web 2.0 universe with a combined market cap of almost $25 billion. 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 over $300 million, with average trailing revenue of $100 million. The companies are also highly profitable with an average EBITDA margin of 16.6%. On a valuation basis, the overall average is 4.1x trailing revenue and 9.4x trailing EBITDA. Seventeen of the companies have more than 500 employees. CAPITAL MARKET ACTIVITY January was the busiest month since April 2008, with 29 financings totalling $199.5 million (average $6.9 million). February has started well, with $25 million in financings so far. The largest financing in the last three months was of GoFish for $22.5 million in December. Ten companies raised more than $10 million each in January – with AdMob the largest at $12.5 million. Financing Transactions by Month 35 30 25 20 (#) 15 29 28 27 26 10 19 18 17 17 17 17 16 15 12 11 5 10 10 9 7 7 7 7 7 6 6 6 6 5 5 5 5 4 4 4 4 4 3 3 3 2 2 1 1 1 0 May-06 May-07 May-08 Nov-05 Mar-06 Nov-06 Mar-07 Nov-07 Mar-08 Nov-08 Jul-05 Aug-05 Sep-05 Oct-05 Dec-05 Jan-06 Feb-06 Apr-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Dec-06 Jan-07 Feb-07 Apr-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Dec-07 Jan-08 Feb-08 Apr-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Dec-08 Jan-09 Feb-09 I ND US T R Y NEW S This section discusses corporate activity such as partnerships, new product launches, and financial results. VAL UAT ION This section provides an overview of valuation metrics for the 80 public Web 2.0 companies we have identified thus far. We 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 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
    • Page 2 THE WEB 2.0 UNIVERSE 80 public Web 2.0 companies identified: We have identified 80 public companies for our Web 2.0 universe with a combined market cap of almost $25 billion. 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 over $300 million, with average trailing revenue of $100 million. The companies are also highly profitable with an average EBITDA margin of 16.6%. On a valuation basis, the overall average is 4.1x trailing revenue and 9.4x trailing EBITDA. Seventeen of the companies have more than 500 employees. Comparable Company Analys is > W eb 2.0 S u mmary US D LTM Trad ing C urrent USD Market T otal US D LTM Total TEV /LT M T EV /LTM C omp any Name LTM as of Tic ker E xc h an ge C urrenc y HQ P ric e C ap ($m) R ev ($m) E B ITDA ($m ) E B ITDA % R evenue E B ITDA E mployees Webs ite A cc elerize New Media, Inc. 9/30/2008 ACLZ O TCB B US D United S ta tes 0. 35 9. 4 3. 2 ( 4.7) NM 4. 3x - 20 www. a c celer iz enewmedia . c om A ctoz S oft C o. , L td. 9/30/2008 A 052790 KO S E KR W S outh Kor ea 12, 150. 00 77. 7 53.0 9.7 18. 3% 1. 0x 5. 4x NA www. ac toz. com A Q Inter a ctiv e, Inc . 9/30/2008 3838 T SE JP Y J a pa n 33, 100. 00 19. 7 60.3 4.8 8. 0% - - NA www.a qi. co. jp A ss oc ia ted Media Holdings Inc . 6/30/2007 A SMH O TCP K US D United S ta tes 0. 01 0. 2 0. 1 ( 2.3) NM 10. 2x - 3 www. mac gregorener gy. com B oomJ Inc 9/30/2008 B O MJ O TCB B US D United S ta tes 0. 75 30. 7 1. 1 ( 7.7) NM 31. 1x - 25 www. boomj. c om B right Things plc 9/30/2008 AIM: BG T A IM GB P United K ingdom 0. 02 3. 8 0. 2 ( 1.7) NM 15. 0x - 9 www. brightthings . com B roa dW ebA sia Inc . 9/30/2008 BWBA O TCP K US D United S ta tes 1. 50 127. 3 0. 0 ( 4.6) NM - - 46 www. broa dwebas ia . c om C DC C orp. 9/30/2008 C HIN. A Na s da qG S US D Hong K ong 0. 94 101. 4 428. 1 18. 8 4. 4% 0. 4x 8. 4x 3,125 www. cdc corpora tion. net C hina Ga tewa y C orpora tion 9/30/2008 C GW Y O TCB B US D United S ta tes 0. 00 0. 0 6. 7 ( 6.6) -98. 9% - - 37 - C hines e G a mer Interna tiona l 9/30/2008 G T S M: 3083 G TS M TW D T a iwa n 111. 00 280. 0 38.2 18. 0 47. 1% 5. 9x 12.4x NA www. chines egamer. net C ornerW orld C or por a tion 10/31/2008 CWR L O TCB B US D United S ta tes 0. 41 19. 3 0. 6 3.1 506. 8% 33. 7x 6. 7x NA www. cornerworld. com DA DA S pA 9/30/2008 C M:D A CM EUR Ita ly 6. 19 131. 1 221. 4 35. 4 16. 0% 0. 8x 4. 9x 574 da da . da da . net Digita lF X Inter na tiona l, Inc . 9/30/2008 DXN AME X US D United S ta tes 0. 11 2. 7 16.9 ( 4.5) -26. 4% 0. 3x - 68 www. digita lfx .c om Digita lP ost Intera ctive, Inc. 9/30/2008 DGL P O TCB B US D United S ta tes 0. 02 1. 0 0. 4 ( 3.3) NM 4. 8x - 11 www. digita lpos tintera ctive. c om Digita lT own, Inc. 11/30/2008 DG T W O TCB B US D United S ta tes 1. 50 40. 7 NM ( 2.5) NM - - 3 www. enetpc. c om Dolphin Digita l Media, Inc. NA DP DM O TCB B US D United S ta tes 0. 59 28. 7 NA NM -0. 3% - - 6 www. dolphindigita lmedia . com E olith C o. L td. 12/31/2007 A 041060 KO S E KR W S outh Kor ea 605. 00 20. 5 18.1 ( 0.0) NM 1. 1x - NA www.eolith. c o. k r E xtensions , Inc . 9/30/2008 E XT I O TCP K US D United S ta tes 0. 20 18. 9 NM NM 18. 3% - - 2 www. ext. c om F inanc ia l Media G roup, Inc . 11/30/2008 F NGP O TCB B US D United S ta tes 0. 02 1. 0 6. 8 1.2 NM - 0. 1x 22 www. wa llst. net F luid Mus ic C a nada , Inc. 9/30/2008 TS X: F MN TS X C AD United S ta tes 0. 56 24. 1 4. 2 ( 8.6) -60. 6% 2. 7x - 29 www. fluidmedia network s . com F rogs ter Intera c tiv e P ictures A G 6/30/2008 FR G XT R A EUR Germa ny 4. 68 14. 4 5. 3 ( 3.2) 16. 9% 2. 6x - NA www. frogs ter -ip. de/en/index. php Ga ma nia Digita l E nterta inment C o., L td. 9/30/2008 6180 G TS M TW D T a iwa n 22. 00 99. 1 110. 3 18. 7 25. 4% 0. 7x 4. 0x NA www.ga ma nia . c o. k r Ga meOn C o L td. 9/30/2008 3812 T SE JP Y J a pa n 119, 700. 00 130. 2 81.4 20. 7 NM 0. 8x 3. 2x NA www. ga meon. co. jp GeoS entr ic Oyj 9/30/2008 GE O 1V HL S E EUR F inla nd 0. 04 46. 8 5. 4 ( 12. 3) 63. 5% 7. 7x - 92 www. benefon. c om Gia nt Intera c tive G roup, Inc. 9/30/2008 GA NYS E US D C hina 6. 18 1, 469. 0 245. 1 155. 6 23. 9% - - 1,016 www. ga -me. com Giga Media L td. 9/30/2008 GIG M Na s da qG S US D T a iwa n 7. 44 402. 0 200. 5 48. 0 NM 1. 7x 7. 0x 975 www. gigamedia. c om. tw GoF ish C orpora tion 9/30/2008 GO F H O TCB B US D United S ta tes 0. 20 5. 1 6. 3 ( 11. 0) 19. 2% 2. 5x - 41 www.gofish. com Gr av ity C o., L td 9/30/2008 G R VY Na sda qGM US D S outh Kor ea 0. 70 19. 5 35.5 6.8 NM - - 636 www. gra vity. co. k r Gr ee, Inc. NA TS E: 3632 T SE JP Y J a pa n 5, 470. 00 0. 0 NA NM 14. 7% - - NA www. gree. co. jp GungHo Online Enterta inment, Inc. 9/30/2008 3765 OS E JP Y J a pa n 103, 000. 00 128. 7 111. 6 16. 4 -25. 6% 0. 9x 6. 2x NA www. gungho. co. jp/english/ Ha nbitS oft, Inc. 9/30/2008 A 047080 KO S E KR W S outh Kor ea 3, 355. 00 53. 4 50.3 ( 12. 9) NM 0. 7x - NA www. hanbitsoft. co. k r IAS E ner gy, Inc . 10/31/2008 IA S C . A O TCB B US D C a nada 0. 03 1. 8 0. 0 ( 0.9) NM - - NA www. ia s ener gy . com Idea E dge, Inc . 9/30/2008 OT C BB : IDA E O TCB B US D United S ta tes 0. 50 21. 1 0. 0 ( 3.5) 46. 0% - - NA www. idea edge. com Jumbuck E nterta inment P ty L td. 6/30/2008 A S X: JMB AS X AUD A ustr alia 0. 40 13. 5 10.8 4.9 -15. 3% 0. 8x 1. 8x 72 www. jumbuck . com JumpT V Inc. 6/30/2008 TS X :J TV TS X C AD C a nada 0. 49 45. 7 11.5 ( 1.8) 7. 6% 4. 8x - NA www. jumptv. c om K aboos e Inc. 9/30/2008 T S X : KA B TS X C AD C a nada 0. 40 46. 0 60.9 4.6 33. 8% 0. 9x 11.5x NA www. ka boose. com K ingsoft C o. L td. 9/30/2008 3888 S E HK HKD C hina 3. 05 422. 3 106. 7 36. 0 -42. 5% 3. 2x 9. 5x 1,660 www. kingsoft. com L ingo Media C or por a tion 9/30/2008 T S X V: L M TS X V C AD C a nada 0. 95 10. 0 3. 3 ( 1.4) -10. 1% 3. 2x - NA www. lingomedia . com L iv eW orld Inc. 9/30/2008 L VW D O TCP K US D United S ta tes 0. 04 1. 2 11.7 ( 1.2) -3. 7% - - 73 www. liv eworld. c om L ook S ma rt, Ltd. 9/30/2008 L O OK Na sda qGM US D United S ta tes 1. 39 23. 7 69.5 ( 2.6) NM - - 93 www. looks ma rt. com Magnitude Informa tion Sy stems Inc. 9/30/2008 MA G Y O TCB B US D United S ta tes 0. 03 12. 7 0. 1 ( 3.2) 39. 4% - - 13 www. ma gnitude. com Mix i, Inc. 9/30/2008 2121 T SE JP Y J a pa n 454, 000. 00 759. 2 123. 0 48. 5 NM 5. 3x 13.4x NA www. mix i. c o.jp Moggle, Inc 12/31/2008 MMO G O TCB B US D United S ta tes 2. 00 70. 6 NM ( 1.1) 26. 9% - - 3 www. pla y moggle. c om NE OW IZ Ga mes C or por ation 12/31/2007 A 095660 KO S E KR W S outh Kor ea 27, 700. 00 192. 9 130. 8 35. 2 48. 6% 1. 4x 5. 2x NA www. neowiz . com/kor / NetDra gon W ebS oft, Inc. 9/30/2008 777 S E HK HKD C hina 2. 83 192. 9 95.2 46. 3 64. 9% 0. 2x 0. 3x 1,482 www. nd. com. c n Neteas e. com Inc. 9/30/2008 NTE S Na s da qG S US D C hina 20. 23 2, 489. 3 422. 4 274. 2 NM - - 2,413 cor p. 163. com NeXplore C orpor a tion 9/30/2007 NX P C O TCP K US D United S ta tes 0. 84 46. 9 NM ( 4.9) 30. 8% - - 19 www. nex plore. com Ngi G roup Inc . 12/31/2008 2497 T SE JP Y J a pa n 27, 410. 00 37. 0 107. 4 33. 1 17. 8% - - NA www. netage. c o. jp/en/index . html Northga te T ec hnologies Limited 9/30/2008 590057 BSE INR India 39. 55 28. 4 137. 2 24. 5 25. 4% 0. 2x 1. 2x 286 www. nor thga tetech. com Open T ext C orp. 12/31/2008 OTE X Na s da qG S US D C a nada 36. 17 1, 877. 2 769. 3 195. 4 -5. 2% 2. 6x 10.3x 2,915 www. opentext. com Openwa ve S ystems Inc . 12/31/2008 O PW V Na s da qG S US D United S ta tes 0. 74 61. 6 199. 6 ( 10. 4) 53. 5% - - 657 www. openwa v e.c om P er fect W orld C o. , L td. 9/30/2008 PWRD Na s da qG S US D C hina 15. 74 897. 9 186. 8 99. 9 -17. 7% - - 1,401 www. wa nmei. com/en/index. htm P hotoC ha nnel Networ ks Inc . 9/30/2008 TS X V: P N TS X V C AD C a nada 1. 61 44. 3 14.0 ( 2.5) NM 3. 1x - NA www. photoc hannel.c om Quepa sa C orp. 9/30/2008 Q PS A Na sda qC M US D United S ta tes 1. 82 23. 1 0. 1 ( 11. 8) 47. 8% - - 63 www. quepa sa . c om S ha nda Inter ac tiv e E nterta inment L td. 9/30/2008 S NDA Na s da qG S US D C hina 31. 30 2, 171. 7 477. 7 228. 2 13. 9% - - 2,564 www. s nda . c om S hutterfly, Inc. 12/31/2008 S FLY Na s da qG S US D United S ta tes 8. 84 222. 2 213. 5 29. 8 9. 4% 0. 6x 4. 5x NA www. shutterfly . com S K C ommunic a tions C o. , L td. 12/31/2007 A 066270 KO S E KR W S outh Kor ea 8, 030. 00 239. 6 150. 4 14. 2 10. 1% 1. 6x 16.9x NA - S NAP Inter a ctive, Inc . 9/30/2008 S TV I O TCB B US D United S ta tes 1. 00 10. 7 2. 3 0.2 -34. 8% 4. 2x 41.2x 5 www. s na p- intera ctive. c om S NM G loba l Holdings 9/30/2008 S NMN O TCP K US D United S ta tes 0. 00 0. 0 2. 0 ( 0.7) -60. 5% 1. 1x - 33 www. snmgloba lholdings . com S oc ial Media Venures, Inc. 12/31/2008 S MV I O TCP K US D United S ta tes 1. 39 0. 0 0. 1 ( 0.1) 19. 5% 0. 1x - NA - S pa r k Network s, Inc. 9/30/2008 L OV AME X US D United S ta tes 2. 40 51. 5 60.1 11. 7 NM 0. 8x 4. 0x 176 www. s pa rk . net S pec trumDNA , Inc . 9/30/2008 SP X A O TCB B US D United S ta tes 0. 10 4. 9 0. 1 ( 2.7) 49. 5% - - 7 - Tencent Holdings L td. 9/30/2008 700 S E HK HKD C hina 45. 10 10,448. 0 903. 3 447. 5 -12. 0% 12. 5x 25.2x 6,039 www. tencent. c om. hk /index_e. shtml The P ar ent C ompa ny 8/2/2008 K IDS . Q O TCP K US D United S ta tes 0. 05 1. 3 112. 0 ( 13. 5) 37. 7% 0. 2x - 347 www. thepar entc ompa ny. c om The9 L imited 9/30/2008 NC T Y Na s da qG S US D C hina 14. 92 411. 9 252. 4 95. 1 16. 2% - - 1,361 www. the9. c om TheS treet. c om, Inc . 9/30/2008 T SC M Na sda qGM US D United S ta tes 2. 81 85. 7 75.2 12. 2 -11. 8% 0. 1x 0. 7x 349 www. thestr eet. c om Tr ee. C om, Inc . 12/31/2008 TR E E Na sda qGM US D United S ta tes 4. 17 39. 1 228. 6 ( 27. 0) 0. 4% 0. 2x - NA www. lendingtree. com Unis erv e C ommunic a tions C orp. 11/30/2008 T S XV : US S TS X V C AD C a nada 0. 08 1. 6 24.5 0.1 24. 2% 0. 2x 36.9x NA www. uniser ve. com United Online Inc. 9/30/2008 UNT D Na s da qG S US D United S ta tes 5. 88 482. 0 538. 7 130. 6 -91. 6% 1. 6x 6. 4x 928 www. unitedonline. net UOMO Media , Inc 10/31/2008 UO MO O TCB B US D C a nada 0. 08 6. 8 0. 5 ( 0.4) NM 15. 1x - NA www. uomolife. com V OIS , Inc . 9/30/2008 VO IS O TCB B US D United S ta tes 0. 75 5. 4 0. 0 ( 4.0) -29. 5% - - 4 www. vois. com W ebzen Inc . 9/30/2008 W ZE N Na sda qGM US D S outh Kor ea 1. 46 17. 3 20.5 ( 6.0) NM - - 338 www. webzen. co. k r W iz za rd S oftwa r e C or por ation 9/30/2008 W ZE AME X US D United S ta tes 0. 64 28. 9 6. 2 ( 6.5) NM 4. 7x - 110 www. wizza rds oftwa r e. c om W oozyF ly, Inc. 9/30/2008 W ZY F O TCB B US D United S ta tes 0. 15 2. 6 0. 0 NM NM - - 14 www. wooz yfly. com W orlds . com Inc. 9/30/2008 W DDD O TCB B US D United S ta tes 0. 22 11. 5 0. 1 NM NM - - 1 www. worlds . com W yndstorm C orpora tion NA W Y ND O TCB B US D United S ta tes 0. 12 2. 2 NA NM 38. 8% - - NA www. wynds tor m. c om XING AG 9/30/2008 O1BC XT R A EUR Germa ny 31. 00 210. 7 40.9 15. 9 22. 4% 3. 8x 9. 8x 161 www. xing. c om Yeda ngOnline C orp. 12/31/2007 A 052770 KO S E KR W S outh Kor ea 6, 750. 00 76. 6 49.7 11. 1 -7. 6% 1. 5x 6. 8x NA www. yeda ngonline. com/indexhome. a sp Ynk K or ea Inc. 12/31/2007 A 023770 KO S E KR W S outh Kor ea 4, 515. 00 8. 0 14.1 ( 1.1) NM 0. 6x - NA www. y nk . net ZipLoc a l Inc. 9/30/2008 TS XV : ZIP TS X V C AD C a nada 0. 02 1. 3 2. 9 ( 3.9) 0. 0% 0. 7x - NA www. z iploc a l. c om High 10,448. 0 903.3 447. 5 506. 8% 33. 7x 41.2x 6, 039 L ow 0. 0 0. 0 -27. 0 -98. 9% 0. 1x 0. 1x 1 Average 314.6 100.6 26.5 16.6% 4.1x 9.4x 607 Figure 1. Web 2.0 Universe Summary Source. Capital IQ
    • Page 3 CAPITAL MARKETS ACTIVITY (M&A AND FINANCING) $25 Million in financing month-to-date: After 18 financings in December totalling $122.1 million (average $6.8 million), January was the busiest month since April 2008, with 29 financings totalling $199.5 million (average $6.9 million). As of yesterday, February recorded transactions totalling a little below $25 million. The largest financing in the last three months was of GoFish for $22.5 million in December (Figure 2). Ten companies raised more than $10 million each in January – with AdMob the largest at $12.5 million. For additional details, see Figure 27 (at end of note). Financing - Last Three Months 25.0 20.0 15.0 Feb-09 (US$m) Jan-09 Dec-08 10.0 5.0 0.0 Mixpo Motionbox TextDigger Xobni CoveritLive NewsGator SundaySky Gbox Meez AdMob IMVU Go Internet Media FooMojo One True Media Tvtrip Social Median InsideView Kewego SocialMedia Playdo Overlay.TV Tripwolf VirtuOz NetShelter GoFish Nurien Yodle Taptu Play Hard Sports Scribd JibJab E-Global Sports Network StockTwits Superfish Jackbe Geni Tagged Identi.ca Snapmylife 7 Billion People DotBlu Hubdub Snooth DECA ChakPak Sportsblogs AboutUs Clickpass Aster Data Systems Blue Kai OneSpot RatePoint Tumblr Angie's List Pulse Entertainment Figure 2. Financings, Last Three Months Source. Company reports Travel site Tvtrip raises $9 million: Activity in February so far was led by Tvtrip, a travel-related site, raising about $9 million (Figure 3). Further, single transactions in Search, Aggregation, and Video sectors raised about $4 million each in the first 10 days of the month.
    • Page 4 Financing by Sector - February 2009 10.0 9.0 8.0 7.0 6.0 (US$m) 5.0 9.0 4.0 3.0 4.3 4.2 2.0 4.0 3.0 1.0 0.0 Travel Search Aggregation Video Analytics 1 1 1 1 1 # companies Figure 3. Financings, by Sector, January 2009 Source. Company reports Average round size increases slightly: On a trailing 12-month basis, total financing dollars are down for the third month in the last four. However; average round sizes increased slightly as of February (Figure 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 Nov-05 Mar-06 Nov-06 Mar-07 Nov-07 Mar-08 Nov-08 Jul-05 Sep-05 Jan-06 Jul-06 Sep-06 Jan-07 Jul-07 Sep-07 Jan-08 Jul-08 Sep-08 Jan-09 Total Average Figure 4. Financings, Last 12 Months Source. Company reports Cumulative total nears $5.3 billion: Overall, on a cumulative basis, Web 2.0 financings have totalled nearly $5.3 billion, with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 5).
    • Page 5 Web 2.0 Financing (cumulative) 1,400.0 6,000.0 1,313.3 1,200.0 5,000.0 1,000.0 944.7 4,000.0 800.0 (US$m) (US$m) 701.7 3,000.0 600.0 524.9 2,000.0 400.0 338.5 301.8 224.0 1,000.0 200.0 145.7 130.6 116.3 97.0 87.2 73.4 37.5 33.5 18.2 41.9 49.1 29.4 35.5 28.8 20.1 0.0 0.0 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2003 2004 2005 2006 2007 2008 2009 Figure 5. Financing, Cumulative Source. Company reports U.S. remains dominant: U.S. companies continue to dominate capital market activity – with almost 73% of financings/M&A involving U.S. companies (based on dollars) (Figure 6). Canadian companies generated under 1% of capital market activity based on dollar volume (Figure 6). Based on number of transactions, the U.S. leads with 73.6% of deals, while Canada is third in number of financings at 5.5% (Figure 7). Financing/M&A by Country - LTM (#) Financing/M&A by Country - LTM ($) Canada UK UK 5.5% 13.2% 5.1% Israel 3.4% France China 3.0% 8.1% Russia ROW 1.7% Israel 9.4% 0.8% Canada 0.7% France 0.7% ROW 2.0% USA USA 73.6% 72.8% Figures 6 & 7. Financing/M&A, by Country (LTM, $, #) Source. Company reports Larger volume of 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 8). Series B rounds are 28.8% of the total, with later-stage (Series D, E and PIPE) deals accounting for just 7.3%.
    • Page 6 Financing by Type - LTM Series B Series C 28.8% 13.7% Series D 4.6% Angel/Seed 10.0% Debt financing 2.7% Series A PIPE 37.9% 2.3% Figure 8. Financing, by Type (LTM, $) Source. Company reports “D” series remain largest equity rounds (by dollar): In the last 12 months, there have been 10 “D” series rounds, averaging $23.8 million per financing (Figure 9). Note that we have excluded the $430 million Series C financing of Oak Pacific Interactive as it skews the results substantially. Average financing round size - LTM 45.0 40.0 35.0 30.0 25.0 (US$m) 41.9 20.0 15.0 23.8 10.0 18.5 11.2 5.0 10.0 8.8 6.1 3.5 0.0 Angel/Seed Debt financing PIPE Series A Series B Series C Series D Series E # rounds 22 6 5 83 63 30 10 1 Figure 9. Average Size per Round Source. Company reports
    • Page 7 CAPITAL MARKETS ACTIVITY (PRICE PERFORMANCE) Price Performance: Our Web 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 10). Web 2.0 Index Price Performance 140 120 100 80 60 40 20 0 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 2/9/2009 NASDAQ COMP Web 2.0 (Market Cap Weighted) Figure 10. Web 2.0 Price Performance Source. Capital IQ Chinese Gamer leads; NGI falls: NGI Group Inc. (2497-TSE) had the worst performance in the group (for stocks with prices greater than $1) (Figure 11), falling 20.1% on the week. Chinese Gamer International (3083-GTSM) increased the most, +22.9 %.
    • Page 8 1 Week Pric e P erformanc e C hines e G a mer Interna tional 22. 9% Y nk K orea Inc. 18. 7% NE O W IZ G ames C orporation 17. 4% K ings oft C o. L td. 14. 7% E olith C o. L td. 14. 2% G iga Media L td. 14. 1% P erfect W orld C o. , L td. 13. 2% HanbitS oft, Inc. 10. 4% DADA S pA 9. 9% XING AG 9. 9% Netea s e. com Inc. 8.0% S ocia l Media V enures , Inc. 7.8% S ha nda Intera ctive E ntertainment L td. 7. 1% G iant Interactive G roup, Inc. 6. 6% G a mania Digita l E nterta inment C o. , L td. 5. 8% Actoz S oft C o. , L td. 5. 2% T ree. C om, Inc. 4. 3% O pen T ext C orp. 4. 1% S K C ommunications C o. , L td. 3. 2% LookS mart, L td. 3. 0% NetDra gon W ebS oft, Inc. 2. 9% Northgate T echnologies Limited 1. 7% F rogs ter Intera ctive P ictures AG 1. 1% W ebzen Inc. 0. 7% G a meO n C o L td. 0. 2% T he9 Limited 0. 1% S park Networks , Inc. -0. 4% Y edangO nline C orp. -1. 2% United O nline Inc. -2. 0% T heS treet. com, Inc. -2. 1% Q uepa s a C orp. -2. 7% T encent Holdings L td. -4. 1% P hotoC ha nnel Networks Inc. -6. 4% G ree, Inc. -7. 8% Mixi, Inc. -15. 0% AQ Intera ctive, Inc. -15. 1% Ngi G roup Inc. -20. 1% -25. 0% -20. 0% -15. 0% -10. 0% -5. 0% 0. 0% 5. 0% 10. 0% 15. 0% 20. 0% 25. 0% 30. 0% Figure 11. 1-Week Price Performance Source. Capital IQ INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) Open Text Corp. Announces Availability of Latest Release of Open Text Web Solutions: Open Text Corp. announced availability of the latest release of Open Text Web Solutions. Available to customers now, this new release offers a number of additional enhancements to what is already a core strength of Open Text Web Solutions: Helping customers translate, manage and synchronize multiple websites worldwide. Web Solutions is an integral component of the Open Text ECM Suite, the industry's most comprehensive suite of content services used by tens of thousands of organizations worldwide. The enhanced functionality is part of a complete solution called Open Text Web Solutions for Multi-Sites that gives customers everything they need to develop a global Web presence. It helps large enterprises to more efficiently share corporate information, leverage existing translation memory tools such as Across Systems(R) or SDL TRADOS(R), and to personalize the user experience. For small and mid-size businesses, it provides a simple and cost-effective tool for expanding globally. For organizations with a global presence, Web Solutions for Multi-Sites adds new content distribution services that make it easy for Web localization teams to share and update content via a centralized content pool. Team members are automatically notified when content changes or updates become available. Once localized content is added to this pool all countries that use the same language can use this content for their local websites. A new Content Translation Management module offers translation workflow integration, expanded support for computer-aided translation tools, and export to standardized XLIFF formats. XLIFF, which stands for XML Localization Interchange File Format, streamlines the exchange of localization data among companies, vendors and across software tools. Openw ave Systems Announces Executive Appointments: Openwave Systems Inc. announced the appointment of Martin McKendry as senior vice president, engineering, effective immediately. Mr. McKendry most recently held this role with Openwave on an interim basis. He brings more than 22 years of executive leadership experience in leading global engineering organizations. He will report to Openwave's chief executive officer, Kenneth Denman. Openwave also announced the appointment of Bruce K. Posey as senior vice president, general counsel and corporate secretary responsible for leading Openwave's legal team and overseeing the company's vital regulatory and governmental relations efforts. Mr. Posey brings over 28 years of senior legal, public policy and regulatory experience to Openwave. Mr. Posey will also report to Mr. Denman. Most recently, Mr. Posey was senior vice president, general counsel and corporate secretary at iPass Inc. Bright Things plc Announces Launch of SocialGO: Bright Things plc announced the launch of the first of its subscription based products going live with effect from 2nd February 2009. SocialGO is a subscription based revenue
    • Page 9 earning product with many additional features being released over the next few months. The product has been in full beta test for the last four months offering customers a free trial period. During that period over 22,000 networks have been registered. United Online Declares Quarterly Dividend Payable on February 27, 2009: United Online Inc. announced that its Board of Directors has declared a regular quarterly cash dividend of $0.10 per share. The dividend is payable on February 27, 2009 to shareholders of record on February 13, 2009. Open Text Corp. Extends eDiscovery Offering: Open Text Corp. announced that it has extended its new eDiscovery solution to its Open Text eDOCS customers. Now organizations, particularly corporate legal departments, will be able to significantly minimize the need for third-party processing and control the high costs of legal reviews by culling irrelevant information. Open Text eDiscovery Early Case Assessment is being offered through a strategic relationship with Recommind, the leader in search-powered information risk management (IRM). The solution combines Recommind's Insite Legal Hold application with the Open Text ECM Suite. The combination not only addresses the critical need for eDiscovery in an age of growing regulatory and legal challenges, it also lets customers tightly integrate eDiscovery within their broader ECM initiatives. Open Text eDOCS customers will gain expanded eDiscovery capabilities woven into their overall content, records and email management practices. Wizzard Media to Provide Catalog of Branded and Independent Streaming Video Content to Sevenload: Wizzard Media announced that it will provide a catalog of branded and independent streaming video content to sevenload. The sevenload network reaches 15 million users monthly with independent, intelligent and creative content through twelve international country portals including the USA, Germany, Spain, France, Italy, Turkey, Russia, the UK, India, Australia, Singapore and Poland. The delivery of video content through sevenload or on sevenload properties/portals/platforms is an ideal distribution channel for the Wizzard Media Network catalog. Through this partnership, Wizzard will reach a large audience of fans across Europe and the United States and offer more opportunities for monetization to its network of video producers. Shutterfly Inc. Reports Unaudited Consolidated Earnings Results for the Fourth Quarter and Full Year Ended December 31, 2008; Provides Earnings Guidance for the First Quarter Ending March 31, 2009 and Full Year Ending December 31, 2009: quot;Shutterfly Inc. reported unaudited consolidated earnings results for the fourth quarter and full year ended December 31, 2008. For the fourth quarter, the company reported net income of $14.92 million or $0.59 diluted net income per share on sales of $107.74 million compared to net income of $16.9 million or $0.63 diluted net income per share on sales of $97.54 million for the same period last year. For the year, the company reported net income of $4.56 million or $0.18 diluted net income per share on sales of $213.48 million compared to net income of $10.09 million or $0.38 diluted net income per share on sales of $186.72 million for the same period last year. The company also provided earnings guidance for the first quarter ending March 31, 2009 and full year ending December 31, 2009. For the first quarter, the company expects operating loss from $15 million to $13 million. GAAP diluted net loss per share to range from $0.35 to $0.14. Non-GAAP operating loss to range from $12 million to $10 million. Non-GAAP diluted net loss per share to range from $0.69 to $0.26. Adjusted EBITDA was from $5.6 million to $3.2 million. Net revenues to range from $28 million to $32 million, a year-over-year decrease of 7% to 19%. For the full year, the company expects operating loss from $14 million to $2 million. GAAP diluted net loss per share to range from $0.30 to $0.01. Non-GAAP operating loss to range from $1 million to $13 million. Non-GAAP diluted net income per share to range from $0.08 to $0.35. Adjusted EBITDA was from $26 million to $38 million. Net revenues to range from $190 million to $210 million, a year-over-year decrease of 11% to 2%.quot; CDC Corp. Reaffirms Earnings Guidance for the Second Half of 2008: CDC Corp. reaffirmed earnings guidance for the second half of 2008. The company reaffirmed its previously provided guidance for adjusted EBITDA for the second half of 2008, despite announced preliminary plans by China.com Inc., to record an approximately $2.7 million investment impairment loss in the fourth quarter of 2008, subject to final year-end audit. Based upon preliminary financial results and estimates, the company expects its Adjusted EBITDA from continuing operations to be in the range of approximately $17.0 million to $19.0 million for the second half of 2008. The Company does not expect that China.com's preliminary planned fourth quarter 2008 net impairment loss charges of approximately $2.2 million (after the impact of minority interest) announced by China.com in a filing made to the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited, or GEM Market, will impact the Company's previously announced second half guidance. The company currently has significant cash on hand and expect to report strong Adjusted EBITDA from continuing operations for the fourth quarter 2008. Tree.Com, Inc. (NasdaqGM: TREE) Acquired JustThrive.com.: Tree.Com, Inc. (NasdaqGM: TREE) acquired JustThrive.com on February 4, 2009. The financial terms of the transaction were not disclosed. Best of Malayalam TV Chooses NeuLion as End-to-End Service Provider: Best of Malayalam TV (BoMTV) announces the launch of a new broadcast service throughout the United States and Canada. BoMTV offers a full range of high quality South Indian entertainment made possible through JumpTV Inc., an iPTV service provider and NeuLion's proprietary set top box solution. Viewers will be able to watch live Malayalam content directly on the television. Tree.Com Inc. Reports Earnings Results for the Fourth Quarter and Year of 2008: quot;Tree.Com Inc. reported earnings results for the fourth quarter and year of 2008. The company reported a net loss of $7 million, or 75 cents per share, on revenue of $48.1 million. That was considerably better than the loss of $22.6 million, or $2.41 per share, it reported in the third quarter. Revenue in the third quarter was $50.3 million. A year ago, the businesses making up Tree.com lost $531.5 million on $50.8 million in revenue, largely because of the write-down and impairment charges. For the full year, Tree.com
    • Page 10 reports a net loss of $202.3 million, or $21.59 per share. That compares with a net loss of $550.42 million, or $59 per share in 2007. Again, the year ago figures are skewed by the special charges. Revenue last year dropped to $228.6 million from $346.4 million in 2007.quot; GeoSentric Oyj Announces Availability of its Mobile Social Networking Application on Nokia and BlackBerry Devices: GeoSentric Oyj's GyPSii announced that its market leading mobile social networking application is now available on over 25 more Nokia devices, as well as the BlackBerry Bold, Curve and Pearl devices from Research in Motion - a move that extends the reach of GyPSii to millions of potential new customers. GyPSii users can uniquely experience a broad range of location-specific functions and mobile lifestyle services - including sharing user generated content, mobile geo-location content search, and social networking, as well the ability to view it all on a map - all within a single user experience. The latest version of the GyPSii software extends these features to even more devices and markets in particular, China. Supported Nokia phones include: N96, N95-8GB, N95, N93/N931, N92, N85, N82, N81, N80, N79, N78, N77, N76, N75, N73, N72, N71, E90, E71, E70, E66, E65, E62, E61/E61i, E60, E51, E50, Touch Xpress 5800, 6220 Classic, 6210 Navigator, 6120 Classic, 6110 Navigator, 5700, 5500, 5320XM. Supported Blackberry Smartphones include: Bold; Pearl series 8110, 8120, 8130; Curve series 8310, 8320, 8330 and 8800, 8820, 8830. Perfect World Co., Ltd. Partners with HI-WIN Co., Ltd. to License 'Pocketpet Journey West' in Korea: Perfect World Co., Ltd. signed an agreement with HI-WIN Co., Ltd. to license 'Pocketpet Journey West' in Korea. This is the company's fifth game licensed in the country. VALUATION MMOG companies lead market cap charts: Just five (same as last week) companies in our Web 2.0 universe top US$1 billion in market capitalization (Figure 12). Fifty-eight of the 80 (down from 60 last week) companies have market caps under US$100 million, with 22 (same as 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 Holdings L td. Netea s e. com Inc. 2489. 3 2171. 7 S ha nda Intera ctive E nterta inment O pen T ext C orp. 1877. 2 G ia nt Intera ctive G roup, Inc. 1469.0 P erfect W orld C o. , L td. 897. 9 Mixi, Inc. 759. 2 United O nline Inc. 482. 0 K ings oft C o. L td. 422. 3 T he9 L imited 411. 9 G iga Media L td. 402. 0 280. 0 C hines e G a mer Interna tiona l S K C ommunica tions C o. , L td. 239. 6 S hutterfly, Inc. 222. 2 X ING AG 210. 7 NetDra gon W ebS oft, Inc. 192. 9 NE O W IZ G a mes C orpora tion 192. 9 DADA S pA 131. 1 G a meO n C o L td. 130. 2 G ungHo O nline E nterta inment, Inc. 128. 7 127. 3 B roa dW ebAs ia Inc. C DC C orp. 101. 4 G a mania Digita l E nterta inment 99. 1 T heS treet. com, Inc. 85. 7 77. 7 Actoz S oft C o. , L td. Y edangO nline C orp. 76. 6 Moggle, Inc 70. 6 O penwa ve S ys tems Inc. 61.6 Ha nbitS oft, Inc. 53. 4 S park Networks , Inc. 51.5 NeX plore C orpora tion 46. 9 G eoS entric O yj 46. 8 K aboos e Inc. 46. 0 45. 7 J umpT V Inc. P hotoC ha nnel Networks Inc. 44. 3 DigitalT own, Inc. 40. 7 T ree. C om, Inc. 39. 1 Ngi G roup Inc. 37. 0 B oomJ Inc 30. 7 W izza rd S oftwa re C orpora tion 28. 9 Dolphin Digita l Media , Inc. 28. 7 Northga te T echnologies L imited 28. 4 24. 1 F luid Mus ic C ana da , Inc. L ookS ma rt, L td. 23. 7 Q uepa s a C orp. 23. 1 Idea E dge, Inc. 21. 1 E olith C o. L td. 20.5 AQ Intera ctive, Inc. 19. 7 G ra vity C o. , L td 19. 5 C ornerW orld C orpora tion 19. 3 E xtens ions , Inc. 18. 9 17. 3 W ebzen Inc. F rogs ter Intera ctive P ictures AG 14. 4 J umbuck E nterta inment P ty L td. 13. 5 Ma gnitude Informa tion S ys tems 12. 7 W orlds . com Inc. 11. 5 S NAP Intera ctive, Inc. 10.7 L ingo Media C orpora tion 10. 0 Accelerize New Media , Inc. 9. 4 Y nk K orea Inc. 8. 0 6. 8 UOMO Media , Inc V O IS , Inc. 5. 4 G oF is h C orpora tion 5. 1 S pectrumDNA, Inc. 4. 9 3.8 B right T hings plc DigitalF X Interna tiona l, Inc. 2. 7 W oozyF ly, Inc. 2. 6 W ynds torm C orpora tion 2. 2 IAS E nergy, Inc. 1. 8 Unis erve C ommunica tions C orp. 1. 6 ZipL oca l Inc. 1. 3 T he P a rent C ompa ny 1. 3 L iveW orld Inc. 1. 2 1. 0 Digita lP os t Intera ctive, Inc. F ina ncia l Media G roup, Inc. 1. 0 As s ocia ted Media Holdings Inc. 0. 2 C hina G a tewa y C orpora tion 0. 0 S ocia l Media V enures , Inc. 0. 0 S NM G loba l Holdings 0. 0 G ree, Inc. 0. 0 0 500 1, 000 1, 500 2, 000 2, 500 3, 000 3, 500 4, 000 Figure 12. Market Cap Ranking Source. Capital IQ
    • Page 11 TEV/Revenue (LTM) averages 4.1x: The overall average TEV/Revenue (LTM) multiple for our group is 4.1x (Figure 13). However, this is skewed by CornerWorld (CWRL-OTCBB) at 33.7x and BoomJ at 31.1x (BOMJ-OTCBB). Excluding those companies, the average is 2.9x. Note that we exclude multiples greater than 50x. Twenty-four of the companies have multiples under 1.5x. TE V/L TM R evenue (x) 40. 0 33. 7 35. 0 31. 1 30. 0 25. 0 20. 0 15. 0 1 15. 15. 0 12. 5 10. 2 10. 0 7. 7 5. 9 4. 7 4. 8 4. 8 5. 3 Avera ge, 4. 1 3. 8 4. 2 4. 3 5. 0 3. 2 3. 2 2. 5 2. 6 2. 6 2. 7 3. 1 1. 4 1. 5 1. 6 1. 6 1. 7 0. 7 0. 7 0. 7 0. 8 0. 8 0. 8 0. 8 0. 9 0. 9 1. 0 1. 1 1. 1 0. 0 0. 1 0. 1 0. 2 0. 2 0. 2 0. 2 0. 2 0. 3 0. 4 0. 6 0. 6 0. 0 L ingo Media C orporation G eoS entric O yj G oF is h C orporation W iz z ard S oftware C orporation Northgate T echnologies L imited UO MO Media, Inc C hines e G amer International B right T hings plc T he P arent C ompa ny C ornerW orld C orporation Acceleriz e New Media, Inc. Mixi, Inc. NE O W IZ G ames C orporation DigitalF X International, Inc. O pen T ext C orp. B oomJ Inc DADA S pA S ocial Media V enures , Inc. S hutterfly, Inc. S park Networks , Inc. Actoz S oft C o. , L td. G igaMedia L td. F luid Mus ic C anada, Inc. P hotoC hannel Networks Inc. S NAP Interactive, Inc. DigitalP os t Interactive, Inc. As s ociated Media Holdings Inc. #NUM! C DC C orp. Y nk K orea Inc. ZipL ocal Inc. HanbitS oft, Inc. K aboos e Inc. E olith C o. L td. Y edangO nline C orp. United O nline Inc. K ings oft C o. L td. T encent Holdings L td. S NM G lobal Holdings X ING AG G ungHo O nline E ntertainment, Inc. T heS treet. com, Inc. Unis erve C ommunications C orp. G ameO n C o L td. J umbuck E ntertainment P ty L td. J umpT V Inc. T ree. C om, Inc. G amania Digital E ntertainment C o. , L td. S K C ommunications C o. , L td. F rogs ter Interactive P ictures AG NetDragon W ebS oft, Inc. Figure 13. TEV/Revenue Ranking Source. Capital IQ TEV/Revenue (LTM) by country/exchange: We have also calculated multiples based on where the companies are listed or domiciled. Figure 14 shows the average TEV/Revenue multiples by stock exchange. The OTCBB has the largest number of companies (20), trading at an average multiple of 10.6x (down from 11.3x last week). On a geographic basis, the United States has the most companies (37), trading at an average of 4.9x revenue (down from 5.7x revenue last week) (Figure 15). Nine of the companies are Canadian (average 3.8x revenue).
    • Page 12 Average TEV/LTM Revenue - By Country Average TEV/LTM Revenue - By Exchange 16.0 16.0 14.0 14.0 12.0 12.0 10.0 10.0 (x) (x) 8.0 8.0 15.0 15.0 6.0 6.0 10.6 4.0 4.0 7.7 7.7 5.3 5.3 4.9 2.0 2.0 3.8 3.3 3.2 3.0 3.2 2.8 2.7 2.3 2.3 1.9 1.8 1.4 1.1 0.9 0.8 1.1 0.8 0.8 0.8 0.2 0.1 0.4 0.0 0.2 0.0 AMEX XTRA TSX TSXV ASX AIM GTSM CM NasdaqGM OTCBB HLSE SEHK TSE OTCPK NasdaqGS KOSE OSE BSE United Finland China United Canada Germany Taiwan Japan South Korea Australia Italy Hong Kong India Kingdom States 1 1 8 37 9 2 3 6 9 1 1 1 1 # Companies 1 20 1 3 2 2 5 3 8 3 4 10 7 1 1 1 1 5 # Companies Figures 14 & 15. TEV/Revenue Ranking (Exchange, Country) Source. Capital IQ TEV/EBITDA (LTM) averages 9.4x: The average multiple for the 28 companies with positive EBITDA (and multiples under 100x) is 9.4x LTM EBITDA (9.4x last week), led by SNAP Interactive’s (STVI-OTCBB) 41.2x multiple (Figure 16). Sixteen of the companies have EBITDA multiples under 7x. TE V/L TM E B ITDA (x) 45. 0 41. 2 40. 0 36. 9 35. 0 30. 0 25. 2 25. 0 20. 0 16. 9 15. 0 13. 4 12. 4 11. 5 10. 3 Average, 9. 4 9. 8 9. 5 8. 4 10. 0 7. 0 6. 8 6. 7 6. 4 6. 2 5. 4 5. 2 4. 9 4. 5 4. 0 4. 0 5. 0 3. 2 1. 8 1. 2 0. 7 0. 3 0. 1 0. 0 Northgate T echnologies L imited C hines e G amer International C ornerW orld C orporation Mixi, Inc. NE OW IZ G ames C orpora tion Open T ext C orp. DADA S pA S park Networks , Inc. S hutterfly, Inc. Actoz S oft C o. , L td. G igaMedia L td. S NAP Interactive, Inc. F ina ncial Media G roup, Inc. United Online Inc. Y edangOnline C orp. C DC C orp. K ings oft C o. L td. K aboos e Inc. T encent Holdings L td. X ING AG T heS treet. com, Inc. J umbuck E ntertainment P ty L td. G ameO n C o L td. G ungHo O nline E ntertainment, Inc. Unis erve C ommunications C orp. G a mania Digital E nterta inment C o. , L td. S K C ommunica tions C o. , L td. NetDragon W ebS oft, Inc. Figure 16. TEV/EBITDA Ranking Source. Capital IQ TEV/EBITDA (LTM) by country/exchange: Figure 17 shows the average TEV/EBITDA multiples by stock exchange. The OTCBB has the largest number of companies (20), trading at an average multiple of 16.0x, while companies on the TSXV have the highest multiples (36.9x). On a geographic basis, the United States has the most companies (37), trading at an average of 9.1x EBITDA (Figure 18). Nine of the companies are Canadian (average 19.6x EBITDA).
    • Page 13 Average TEV/LTM EBITDA - By Country Average TEV/LTM EBITDA - By Exchange 25.0 40.0 35.0 20.0 30.0 25.0 15.0 (x) 20.0 (x) 36.9 15.0 10.0 19.6 10.0 16.0 11.7 11.7 11.5 5.0 9.8 5.0 9.8 9.1 8.6 8.6 8.3 8.2 8.4 7.3 7.8 7.6 6.2 4.9 4.0 4.9 1.8 1.2 0.7 0.0 TSXV TSX XTRA AMEX ASX GTSM CM NasdaqGM OTCBB SEHK KOSE TSE NasdaqGS OSE BSE 1.8 1.2 0.0 Canada China Germany United States South Korea Hong Kong Taiwan Japan Italy Australia India 9 8 2 37 9 1 3 6 1 1 1 4 20 3 3 2 7 5 2 10 1 1 3 1 1 5 # Companies # Companies Figures 17 & 18. TEV/EBITDA Ranking (Exchange, Country) Source. Capital IQ P/E (LTM) averages 13.4x: The average multiple for the 29 companies with positive earnings (and multiples under 100x) is 14.2x LTM EPS (up from 13.1x LTM EPS), led again by SNAP Interactive’s (STVI-OTCBB) 59.1x multiple (Figure 19). Fourteen of the companies have P/E multiples under 10x. P /E L TM (x) 70. 0 59. 1 60. 0 50. 0 50. 0 38. 4 40. 0 33. 4 34. 2 30. 0 20. 5 20. 0 16. 8 14. 5 15. 1 Avera ge, 14. 2 12. 4 12. 8 11. 3 11. 8 10. 1 10. 9 9. 0 7. 9 10. 0 7. 3 7. 1 5. 5 5. 2 4. 2 3. 4 1. 9 1. 9 1. 8 1. 4 1. 3 1. 1 0. 0 T he9 Limited Northga te T echnologies Limited C hines e G a mer Interna tiona l Mixi, Inc. NE O W IZ G a mes C orpora tion O pen T ext C orp. DADA S pA G ia nt Intera ctive G roup, Inc. S pa rk Networks , Inc. G iga Media Ltd. Actoz S oft C o. , Ltd. S hutterfly, Inc. S NAP Intera ctive, Inc. S ha nda Intera ctive E ntertainment L td. United O nline Inc. Y eda ngO nline C orp. Ngi G roup Inc. K ings oft C o. L td. T encent Holdings L td. X ING AG Netea s e. com Inc. LookS ma rt, Ltd. J umbuck E nterta inment P ty Ltd. G a meO n C o Ltd. T heS treet. com, Inc. G a ma nia Digita l E nterta inment C o. , L td. P erfect W orld C o. , Ltd. NetDra gon W ebS oft, Inc. W orlds . com Inc. Figure 19. P/E Ranking Source. Capital IQ P/E (LTM) by country/exchange: Figure 20 shows the average P/E multiples by stock exchange. The OTCBB has the largest number of companies (20), trading at an average multiple of 31.7x. On a geographic basis, the United States has the most companies (37), trading at an average of 20.5x earnings (Figure 21). Nine of the companies are Canadian (average 38.4x EPS).
    • Page 14 Average P/E - By Country Average P/E - By Exchange 45.0 35.0 40.0 30.0 35.0 25.0 30.0 20.0 25.0 (x) (x) 20.0 31.7 38.4 15.0 15.0 20.5 10.0 18.8 17.4 20.5 20.5 10.0 18.8 14.2 14.1 11.7 13.3 11.7 5.0 5.0 9.0 7.9 7.9 7.1 7.5 7.1 5.2 1.8 1.8 0.0 1.3 0.0 Canada United States Germany Japan Taiwan South Korea Italy China Australia India OTCBB XTRA TSE SEHK NasdaqGS GTSM KOSE NasdaqGM CM ASX AMEX BSE NYSE 9 37 2 6 3 9 1 8 1 1 20 2 5 3 10 2 7 5 1 1 3 1 1 # Companies # Companies Figures 20 & 21. P/E Ranking (Exchange, Country) Source. Capital IQ
    • Page 15 UPCOMING EVENTS Upc oming E vents E vent Date L oca tion Webs ite U s er G ene ra ted C onte nt F ebrua ry 9-10 S an J os e www. ugc xeven t. c om/ W eb 2. 0 C anadian L eade rs hip S erie s - G a ming Ma rc h 3 T oronto http: //web2le aders hips eries .iglooeven ts . net/ E ngage! E xpo Ma rc h 10-11 New Y ork www. enga geex po. c o m Me sh 200 9 A pril 7-8 T oronto www. mes hc on ferenc e. co m Figure 22. Upcoming Events Source. Company reports E arnings C alendar C ompany Date & Time Qua rter C onf C all Details T heS tree t. c om, In c. (N as daqG M: T S C M ) T hurs day , F ebru ary 1 9, 2 009 4: 30 P M (E S T ) Q4 200 8 N/A U nited O nline Inc . (Na sdaqG S : U NT D) T hurs day , F ebru ary 1 9, 2 009 5: 00 P M (E S T ) Q4 200 8 888-58 7-0611 T he9 L imited (Nas daqG S : NC T Y ) Monday , F ebrua ry 2 3, 20 09 8 : 00 P M ( E S T ) Q4 200 8 1-866-54 3-6 405 Figure 23. Earnings Calendar Source. Company reports
    • Page 16 C omparable C ompany Analysis > W eb 2.0 P rice P erforma nc e C omp any Name C urrenc y Tic ker E xch ange US D Market C ap ( $m) C urrent Pric e 1 Wk 1 Mth 3 Mth 6 Mth 1 Yr 52 Week A cceleriz e Ne w Me dia , Inc. US D AC L Z OT C B B 9 .4 0.3 5 -1 2. 5% -12 .5 % -3 6. 4% -53 .3 % NM -5 6.3 % A ctoz S oft C o., L td. KR W A 05 279 0 K OS E 77 .7 12, 15 0.0 0 5 .2% 21. 5% 29 .0 % 39 .8% 3 7. 3% -4 .7% A Q Inte ra ctive, Inc. J PY 3 83 8 TSE 19 .7 33, 10 0.0 0 -1 5. 1% 14. 1% -2 1. 2% -77 .0 % -88 .0% -9 0.3 % A s s ocia ted Media H oldings Inc. US D AS MH OT C P K 0 .2 0.0 1 -5 0. 0% -37 .5 % -3 7. 5% NM -87 .5% -9 3.8 % B oomJ Inc US D B OMJ OT C B B 30 .7 0.7 5 -1 6. 7% -28 .6 % -6 0. 5% -76 .3 % -40 .0% -7 7.3 % B right Things plc GBP AIM:B G T A IM 3 .8 0.0 2 1 4.5 % 57. 6% 11 8.9 % 31 .3% -34 .3% -5 3.6 % B roadW ebA s ia I nc. US D B W BA OT C P K 12 7.3 1.5 0 4 8.5 % 1 72 .7 % 11 .1 % 30 .4% NM -5 0.0 % C D C C orp. US D CH I N. A N as daqG S 10 1.4 0.9 4 2 5.3 % -21 .0 % -9.6 % -67 .2 % -76 .6% -7 7.6 % C hina G ate wa y C orporation US D CG W Y OT C B B 0 .0 0.0 0 -2 5. 0% -25 .0 % -7 5. 0% -95 .0 % -99 .6% -9 9.8 % C hines e G a me r Interna tional TWD G T S M:3 08 3 GTS M 28 0.0 11 1.0 0 2 2.9 % 23. 2% 29 .1 % 27 .9% 3 1. 8% -1 0.5 % C orne rW orld C orporation US D CWR L OT C B B 19 .3 0.4 1 6 4.0 % -12 .8 % 10 5.0 % -32 .8 % -72 .7% -7 3.5 % D AD A S pA E UR C M:D A CM 13 1.1 6.1 9 9 .9% -11 .9 % -1 6. 1% -47 .0 % -55 .1% -6 1.7 % D igita lFX International, Inc. US D D XN A ME X 2 .7 0.1 1 -8.3 % -13 .9 % -5 7. 7% -77 .1 % -90 .7% -9 1.5 % D igita lP os t Inte ra ctive, Inc. US D DG L P OT C B B 1 .0 0.0 2 -1 6. 7% -31 .8 % -6 2. 5% -76 .5 % -94 .7% -9 6.8 % D igita lTown, Inc. US D DGT W OT C B B 40 .7 1.5 0 -3 4. 8% -44 .4 % -4 0. 0% -57 .1 % -31 .8% -7 5.4 % D olphin Digital Media, Inc. US D DP D M OT C B B 28 .7 0.5 9 -1 5. 7% -26 .3 % -3 7. 9% NM NM -4 7.8 % E olith Co. L td. KR W A 04 106 0 K OS E 20 .5 60 5.0 0 1 4.2 % 6. 1% 4 .3% -24 .8 % -67 .6% -7 1.5 % E xtens ions , Inc. US D E XT I OT C P K 18 .9 0.2 0 3 3.3 % -80 .2 % 10 0.0 % NM 3 3. 3% -8 0.2 % F ina ncia l Me dia G roup, Inc. US D F NGP OT C B B 1 .0 0.0 2 -2 5. 0% -70 .0 % -9 2. 5% -98 .0 % -92 .5% -9 8.5 % F luid Mus ic C anada, Inc. C AD T S X: F MN TSX 24 .1 0.5 6 8 0.6 % 60. 0% 60 .0 % -65 .0 % NM -7 2.5 % F rogs ter I nte ractive P ictures A G E UR FR G XT R A 14 .4 4.6 8 1 .1% -22 .0 % 2 .0% -14 .1 % -30 .8% -4 2.9 % G a mania D igita l E nterta inment C o., L td. TWD 6 18 0 GTS M 99 .1 2 2.0 0 5 .8% 5. 3% 56 .0 % -16 .0 % -14 .7% -4 0.5 % G a meOn C o Ltd. J PY 3 81 2 TSE 13 0.2 1 19, 70 0.0 0 0 .2% -5 .7% -1.9 % -0 .7% -2. 7% -2 6.8 % G e oS entric Oyj E UR G E O1 V H LS E 46 .8 0.0 4 3 3.3 % 0. 0% 0 .0% -42 .9 % -20 .0% -5 5.6 % G ia nt Interactive G roup, Inc. US D GA NY S E 1 ,46 9. 0 6.1 8 6 .6% 0. 7% -0.3 % -37 .9 % -41 .1% -6 4.1 % G igaMedia L td. US D G IG M N as daqG S 40 2.0 7.4 4 1 4.1 % 10. 1% 31 .7 % -40 .0 % -62 .8% -6 4.5 % G oF is h C orporation US D G OF H OT C B B 5 .1 0.2 0 0 .0% 0. 0% -4.8 % -34 .4 % -39 .4% -6 6.1 % G ra vity C o., Ltd US D GR VY N as daqG M 19 .5 0.7 0 -2.5 % 29. 6% 29 .6 % -54 .2 % -70 .0% -7 3.6 % G re e, Inc. J PY T S E : 363 2 TSE 0 .0 5, 47 0.0 0 -7.8 % 5. 2% NM NM NM -1 3.2 % G ungH o O nline E nterta inment, Inc. J PY 3 76 5 OS E 12 8.7 1 03, 00 0.0 0 -3.4 % -3 .8% 0 .1% -46 .9 % -34 .4% -7 6.3 % H anbitS of t, I nc. KR W A 04 708 0 K OS E 53 .4 3, 35 5.0 0 1 0.4 % 0. 1% 20 .9 % -14 .0 % -51 .9% -5 3.9 % IA S E ne rgy, Inc. US D IA S C .A OT C B B 1 .8 0.0 3 1 9.0 % -16 .7 % -7 0. 6% -90 .0 % -93 .6% -9 3.6 % Idea E dge , Inc. US D OT C B B :ID AE OT C B B 21 .1 0.5 0 1 9.0 % -37 .5 % -7 4. 0% -79 .8 % -56 .5% -8 2.3 % J u mbuc k E nte rta inment P ty L td. AU D A S X:J MB AS X 13 .5 0.4 0 -1 6. 7% 2. 6% -5.9 % -28 .6 % -46 .7% -4 9.4 % J u mpT V Inc. C AD T S X:J T V TSX 45 .7 0.4 9 1 1.4 % 58. 1% -9.3 % -40 .2 % -60 .5% -6 5.0 % K aboos e Inc. C AD T S X:K AB TSX 46 .0 0.4 0 -7.0 % -4 .8% 0 .0% -54 .0 % -81 .6% -8 3.3 % K ings oft Co. L td. HKD 3 88 8 S EHK 42 2.3 3.0 5 1 4.7 % 10. 9% 51 .7 % 5. 5% 1 8. 2% -2 9.2 % L ingo Media C orporation C AD T S XV :L M TSXV 10 .0 0.9 5 -9.5 % -5 .0% -1 4. 4% -47 .2 % -13 .6% -5 6.8 % L ive W orld I nc. US D LV W D OT C P K 1 .2 0.0 4 -2 0. 0% -11 .1 % -5 0. 0% -81 .8 % -85 .2% -9 4.7 % L ookS mart, Ltd. US D L OOK N as daqG M 23 .7 1.3 9 3 .0% -16 .8 % -1 6. 8% -53 .4 % -61 .9% -7 1.0 % Magnitude Information S ys te ms Inc. US D MA G Y OT C B B 12 .7 0.0 3 1 1.5 % 7. 4% 52 .6 % 45 .0% 1 07 .1% -1 7.1 % Mixi, Inc. J PY 2 12 1 TSE 75 9.2 4 54, 00 0.0 0 -1 5. 0% -19 .9 % -3 4. 4% -33 .2 % -59 .8% -6 6.1 % Moggle, Inc US D MMOG OT C B B 70 .6 2.0 0 3 3.3 % 33. 3% NM NM NM 0. 0% N E O W IZ G a mes C orporation KR W A 09 566 0 K OS E 19 2.9 27, 70 0.0 0 1 7.4 % 29. 7% 93 .7 % 22 .8% -6. 1% -3 0.8 % N etDra gon W e bS oft, Inc. HKD 77 7 S EHK 19 2.9 2.8 3 2 .9% -3 .1% 9 .7% -61 .1 % -76 .8% -7 9.2 % N etea s e.com Inc. US D NT E S N as daqG S 2 ,48 9. 3 2 0.2 3 8 .0% 8. 9% -3.5 % -15 .9 % 1 4. 9% -2 5.5 % N eX plore Corpora tion US D N XP C OT C P K 46 .9 0.8 4 5 2.7 % 4 60 .0 % -6.7 % 52 .7% NM -4 2.1 % N gi G roup Inc. J PY 2 49 7 TSE 37 .0 27, 41 0.0 0 -2 0. 1% -48 .9 % -6 5. 8% -66 .2 % -82 .2% -8 6.3 % N orthga te T echnologies Limite d I NR 59 00 57 B SE 28 .4 3 9.5 5 1 .7% -32 .3 % -3 8. 7% -86 .7 % -91 .9% -9 2.8 % Open T ext C orp. US D O TEX N as daqG S 1 ,87 7. 2 3 6.1 7 4 .1% 19. 8% 24 .3 % 6. 2% 6.6 % -7 .5% Openwa ve S ys te ms Inc. US D OP WV N as daqG S 61 .6 0.7 4 -8.0 % 0. 5% 17 .6 % -52 .5 % -66 .9% -7 4.1 % P erfec t W orld Co., Ltd. US D PW R D N as daqG S 89 7.9 1 5.7 4 1 3.2 % -12 .6 % -1 3. 7% -36 .5 % -32 .0% -5 3.0 % P hotoC ha nnel N e tworks Inc. C AD T S XV :P N TSXV 44 .3 1.6 1 -6.4 % 0. 6% -6.9 % -52 .6 % -57 .3% -6 1.2 % Quepas a C orp. US D QP S A N a s da qC M 23 .1 1.8 2 -2.7 % -9 .0% -1 9. 8% -38 .7 % -42 .2% -4 7.4 % S handa Inte ra ctive E nterta inment L td. US D S ND A N as daqG S 2 ,17 1. 7 3 1.3 0 7 .1% 11. 2% 29 .7 % 24 .4% 1 0. 8% -1 8.1 % S hutte rfly, Inc. US D S F LY N as daqG S 22 2.2 8.8 4 2 9.6 % 15. 4% 26 .5 % -13 .8 % -46 .8% -5 0.8 % S K C ommunications C o., Ltd. KR W A 06 627 0 K OS E 23 9.6 8, 03 0.0 0 3 .2% 20. 6% 62 .2 % -40 .5 % -69 .3% -7 1.0 % S NA P I nte ractive , Inc. US D S TVI OT C B B 10 .7 1.0 0 0 .0% 44. 9% 12 2.2 % 12 .4% 1 1. 1% -9 .1% S NM G loba l H oldings US D S N MN OT C P K 0 .0 0.0 0 20 0.0 % 6 50 .0 % -9 7. 0% -99 .8 % -1 00 .0 % -10 0.0 % S ocial Me dia V enures , Inc. US D S MV I OT C P K 0 .0 1.3 9 7 .8% 33. 7% -4.1 % 4 56 .0% NM -7 2.2 % S park Ne tworks , Inc. US D L OV A ME X 51 .5 2.4 0 -0.4 % -5 .5% -1 8. 4% -43 .4 % -56 .4% -5 8.0 % S pec trumD NA , I nc. US D S P XA OT C B B 4 .9 0.1 0 0 .0% -33 .3 % -5 8. 3% NM NM -8 3.3 % T e nce nt Holdings L td. HKD 70 0 S EHK 1 0,4 48 .0 4 5.1 0 -4.1 % 4. 9% -1 1. 7% -31 .7 % -9. 6% -3 7.4 % T he P arent C ompany US D K ID S .Q OT C P K 1 .3 0.0 5 6 .0% -91 .7 % -9 2. 9% -97 .0 % -99 .1% -9 9.2 % T he9 Limited US D NC T Y N as daqG S 41 1.9 1 4.9 2 0 .1% -0 .4% 17 .1 % -17 .8 % -16 .3% -4 7.6 % T heS tre et.com, Inc. US D TSCM N as daqG M 85 .7 2.8 1 -2.1 % -8 .2% -1 3. 8% -59 .2 % -74 .8% -7 6.0 % T ree .C om, Inc. US D TRE E N as daqG M 39 .1 4.1 7 4 .3% -9 .3% 98 .6 % -51 .8 % NM -6 2.4 % U nis e rve C ommunications Corp. C AD T S XV : US S TSXV 1 .6 0.0 8 0 .0% 1 00 .0 % -5 5. 6% -60 .0 % -81 .4% -8 2.2 % U nite d Online Inc. US D UNTD N as daqG S 48 2.0 5.8 8 -2.0 % -5 .3% -1 7. 4% -47 .5 % -48 .8% -5 3.0 % U OMO Media, Inc US D U OMO OT C B B 6 .8 0.0 8 0 .0% -33 .3 % -5 7. 9% -82 .2 % -88 .9% -9 0.0 % V OIS , Inc. US D V OI S OT C B B 5 .4 0.7 5 8 7.5 % 1 50 .0 % 0 .0% -81 .3 % NM -8 6.6 % W e bz en Inc. US D W ZE N N as daqG M 17 .3 1.4 6 0 .7% 41. 8% 57 .0 % -49 .5 % -49 .7% -6 7.2 % W iz z ard S oftware Corporation US D W ZE A ME X 28 .9 0.6 4 -8.6 % -21 .5 % -1 6. 9% -59 .2 % -73 .9% -7 8.3 % W ooz yF ly, I nc. US D W ZY F OT C B B 2 .6 0.1 5 0 .0% 0. 0% NM NM NM -9 6.3 % W orlds .com Inc. US D W DD D OT C B B 11 .5 0.2 2 1 0.0 % 10. 0% 10 .0 % -29 .0 % -43 .6% -5 1.1 % W ynds torm Corporation US D W YND OT C B B 2 .2 0.1 2 -4.0 % 0. 0% -4 0. 0% -80 .0 % NM -8 5.9 % XI NG AG E UR O 1B C XT R A 21 0.7 3 1.0 0 9 .9% 2. 4% 25 .5 % 9. 4% -25 .4% -3 3.5 % Y eda ngOnline C orp. KR W A 05 277 0 K OS E 76 .6 6, 75 0.0 0 -1.2 % 6. 6% 8 .9% -28 .3 % -19 .0% -4 6.2 % Y nk K orea Inc. KR W A 02 377 0 K OS E 8 .0 4, 51 5.0 0 1 8.7 % 3. 8% -2 3. 1% -56 .4 % -76 .2% -7 7.3 % ZipL oca l Inc. C AD T S XV : ZIP TSXV 1 .3 0.0 2 10 0.0 % 3 00 .0 % 10 0.0 % -81 .8 % -84 .0% -9 0.9 % A ver age 314.6 9.1% 19.5% -1.1% -33.1% -46.4% -62.4% Figure 24. Price Performance Source. Capital IQ
    • Page 17 Comparable Company Analys is > W eb 2.0 Valuatio n Multiples P rima ry US D Mark et TE V/L TM T E V / NT M TE V /L T M T E V /NT M C ompany Name E xc ha nge Ti ck er C ap ($m ) R e venue R ev enue E B IT DA E BI TDA P/L TM E PS P/NT M E PS P/T a ngBV A cc elerize New Media, Inc. OT C BB AC L Z 9. 4 4. 3x - - - - - - A ctoz S oft C o. , L td. K OS E A 052790 77. 7 1. 0x - 5. 4x - 15. 1x - 1. 5x A Q Inter a ctiv e, Inc . TS E 3838 19. 7 - - - - - - 0. 3x A ss oc ia ted Media Holdings Inc . OT C PK A S MH 0. 2 10. 2x - - - - - - B oomJ Inc OT C BB BO MJ 30. 7 31. 1x - - - - - - B right T hings plc A IM A IM: B GT 3. 8 15. 0x - - - - - - B roa dW ebA sia Inc . OT C PK B W BA 127. 3 - - - - - - - C DC C orp. Na sda qGS C HIN. A 101. 4 0. 4x 0. 4x 8. 4x 6. 4x - 14. 0x - C hina Ga tewa y C orpora tion OT C BB CG WY 0. 0 - - - - - - - C hines e G a mer Interna tiona l GT S M GT S M: 3083 280. 0 5. 9x - 12. 4x - 16. 8x - 5. 5x C ornerW orld C or por a tion OT C BB CW R L 19. 3 33. 7x - 6. 7x - - - - DA DA S pA CM C M: DA 131. 1 0. 8x - 4. 9x - 7. 9x - - Digita lF X Inter na tiona l, Inc . A ME X DX N 2. 7 0. 3x - - - - - - Digita lP ost Intera ctive, Inc. OT C BB DGL P 1. 0 4. 8x - - - - - - Digita lT own, Inc. OT C BB D GT W 40. 7 - - - - - - - Dolphin Digita l Media, Inc. OT C BB DP DM 28. 7 - - - - - - - E olith C o. L td. K OS E A 041060 20. 5 1. 1x - - - - - - E xtensions , Inc . OT C PK EX TI 18. 9 - - - - - - - F inanc ia l Media G roup, Inc . OT C BB F NGP 1. 0 - - 0. 1x - - - - F luid Mus ic C a nada , Inc. TS X T S X : F MN 24. 1 2. 7x 1. 9x - - - - 1. 9x F rogs ter Intera c tiv e P ictures A G XT R A FR G 14. 4 2. 6x - - - - - 1. 4x Ga ma nia Digita l E nterta inment C o., L td. GT S M 6180 99. 1 0. 7x - 4. 0x - 11. 3x - 1. 5x Ga meOn C o L td. TS E 3812 130. 2 0. 8x - 3. 2x - 12. 8x - 1. 6x GeoS entr ic Oyj HL S E G E O1V 46. 8 7. 7x - - - - - 7. 0x Gia nt Intera c tive G roup, Inc. NY S E GA 1, 469. 0 - - - - 1. 3x 12. 9x 0. 3x Giga Media L td. Na sda qGS G IGM 402. 0 1. 7x 1. 6x 7. 0x 6. 2x 11. 8x 10. 2x 3. 9x GoF ish C orpora tion OT C BB G OF H 5. 1 2. 5x - - - - - - Gr av ity C o., L td Na sda qGM GR V Y 19. 5 - - - - - - - Gr ee, Inc. TS E T S E : 3632 0. 0 - - - - - - - GungHo Online E nterta inment, Inc. OS E 3765 128. 7 0. 9x - 6. 2x - - - 36. 9x Ha nbitS oft, Inc. K OS E A 047080 53. 4 0. 7x - - - - - 1. 8x IAS E ner gy, Inc . OT C BB IAS C . A 1. 8 - - - - - - - Idea E dge, Inc . OT C BB O T C B B: IDA E 21. 1 - - - - - - 18. 2x Jumbuck E nterta inment P ty L td. ASX AS X: J MB 13. 5 0. 8x - 1. 8x - 7. 1x - 1. 6x JumpT V Inc. TS X T S X : JT V 45. 7 4. 8x - - - - - 3. 2x K aboos e Inc. TS X T S X: K AB 46. 0 0. 9x 0. 8x 11. 5x 5. 8x - - - K ingsoft C o. L td. S E HK 3888 422. 3 3. 2x - 9. 5x - 12. 4x - 2. 7x L ingo Media C or por a tion T S XV T S XV : L M 10. 0 3. 2x - - - - - - L iv eW orld Inc. OT C PK LV W D 1. 2 - - - - - - 0. 6x L ook S ma rt, Ltd. Na sda qGM L OOK 23. 7 - - - - 3. 4x - 0. 8x Magnitude Informa tion S y stems Inc. OT C BB MA GY 12. 7 - - - - - - - Mix i, Inc. TS E 2121 759. 2 5. 3x - 13. 4x - 33. 4x - 5. 7x Moggle, Inc OT C BB MMOG 70. 6 - - - - - - - NE OW IZ Ga mes C or por ation K OS E A 095660 192. 9 1. 4x - 5. 2x - 10. 9x - 6. 4x NetDra gon W ebS oft, Inc. S E HK 777 192. 9 0. 2x - 0. 3x - 5. 5x - 1. 1x Neteas e. com Inc. Na sda qGS NT E S 2, 489. 3 - - - - 1. 9x 10. 8x 0. 5x NeXplore C orpor a tion OT C PK NXP C 46. 9 - - - - - - - Ngi G roup Inc . TS E 2497 37. 0 - - - - 10. 1x - 0. 5x Northga te T ec hnologies Limited B SE 590057 28. 4 0. 2x - 1. 2x - 1. 8x - - Open T ext C orp. Na sda qGS OT E X 1, 877. 2 2. 6x 2. 3x 10. 3x 8. 9x 38. 4x 14. 1x - Openwa ve S ystems Inc . Na sda qGS OPWV 61. 6 - - - - - 24. 7x 0. 8x P er fect W orld C o. , L td. Na sda qGS PWRD 897. 9 - - - - 1. 4x 7. 5x 0. 5x P hotoC ha nnel Networ ks Inc . T S XV T S XV : PN 44. 3 3. 1x 1. 9x - 5. 7x - 25. 6x 15. 2x Quepa sa C orp. Na sda qC M QP S A 23. 1 - - - - - - 9. 4x S ha nda Inter ac tiv e E nterta inment L td. Na sda qGS S NDA 2, 171. 7 - - - - 1. 9x 11. 3x 1. 0x S hutterfly, Inc. Na sda qGS SF LY 222. 2 0. 6x 0. 7x 4. 5x 4. 2x 50. 0x - 1. 3x S K C ommunic a tions C o. , L td. K OS E A 066270 239. 6 1. 6x - 16. 9x - - - - S NAP Inter a ctive, Inc . OT C BB S T VI 10. 7 4. 2x - 41. 2x - 59. 1x - 7. 8x S NM G loba l Holdings OT C PK S NMN 0. 0 1. 1x - - - - - - S oc ial Media Venures, Inc. OT C PK S MV I 0. 0 0. 1x - - - - - - S pa r k Network s, Inc. A ME X LO V 51. 5 0. 8x - 4. 0x - 5. 2x - - S pec trumDNA , Inc . OT C BB S P XA 4. 9 - - - - - - 5. 2x T encent Holdings L td. S E HK 700 10, 448. 0 12. 5x - 25. 2x - 34. 2x - 13. 6x T he P ar ent C ompa ny OT C PK KIDS . Q 1. 3 0. 2x - - - - - - T he9 L imited Na sda qGS NC T Y 411. 9 - - - - 1. 1x 7. 3x 0. 2x T heS treet. c om, Inc . Na sda qGM TS C M 85. 7 0. 1x 0. 1x 0. 7x 2. 1x 14. 5x - 0. 9x T r ee. C om, Inc . Na sda qGM TR E E 39. 1 0. 2x 0. 2x - - - - 0. 6x Unis erv e C ommunic a tions C orp. T S XV T S X V: US S 1. 6 0. 2x - 36. 9x - - - - United Online Inc. Na sda qGS UNT D 482. 0 1. 6x 0. 8x 6. 4x 3. 3x 7. 3x 7. 7x - UOMO Media , Inc OT C BB UOMO 6. 8 15. 1x - - - - - - V OIS , Inc . OT C BB V OIS 5. 4 - - - - - - - W ebzen Inc . Na sda qGM W ZE N 17. 3 - - - - - - - W iz za rd S oftwa r e C or por ation A ME X WZE 28. 9 4. 7x - - - - - - W oozyF ly, Inc. OT C BB W Z YF 2. 6 - - - - - - - W orlds . com Inc. OT C BB W DDD 11. 5 - - - - 4. 2x - - W yndstorm C orpora tion OT C BB W YND 2. 2 - - - - - - - XING AG XT R A O1B C 210. 7 3. 8x - 9. 8x - 20. 5x - 5. 6x Yeda ngOnline C orp. K OS E A 052770 76. 6 1. 5x - 6. 8x - 9. 0x - 4. 2x Ynk K or ea Inc. K OS E A 023770 8. 0 0. 6x - - - - - - ZipLoc a l Inc. T S XV T S X V: ZIP 1. 3 0. 7x - - - - - - High 10, 448. 0 33. 7x 2. 3x 41. 2x 8. 9x 59. 1x 25. 6x 36. 9x L ow 0. 0 0. 1x 0. 1x 0. 1x 2. 1x 1. 1x 7. 3x 0. 2x Average 314.6 4.1x 1.1x 9.4x 5.3x 14.2x 13.3x 4.6x Figure 25. Valuation Comparison Source. Capital IQ
    • Page 18 Comparable Company Analys is > W eb 2.0 S u mmary by C ountry C ompany Name US D Ma rke t Ca p ($m) Av g US D Ma rke t Ca p ($m) US D LT M T otal R ev ($m) US D L TM Total E B IT DA ($m) E B I TDA % 37 18 ,50 3. 2 2 ,3 12. 9 2,6 89 .7 1 ,38 2. 8 6 3.5 % U nite d S ta te s C hina C hina C hina C hina F inland C anada 9 C anada 2 ,03 4. 7 T aiwan 2 60. 4 U nited S ta te s 1,5 65 .9 C a na da 18 9. 2 T aiwan 3 6.2 % 9 1 ,51 7. 9 2 26. 1 8 87 .0 12 3. 4 2 5.4 % S outh K orea U nite d S ta te s C anada C anada J a pa n India C hina 8 J a pa n 1 ,07 4. 7 J a pa n 1 79. 1 S outh K ore a 5 22 .6 T a iwa n 8 4. 6 U nite d S ta tes 2 1.0 % 6 78 1. 1 1 31. 1 4 83 .7 5 6. 9 1 9.6 % J a pa n T a iwan Italy J a pa n S outh K ore a G e rma ny T a iwan 3 S outh K orea 70 5. 4 G e rma ny 1 12. 5 H ong K ong 4 28 .1 U nited S tate s 4 0. 1 S outh K orea 1 7.3 % 2 22 5. 0 1 01. 4 3 49 .0 3 5. 4 1 6.0 % G e rma ny G e rma ny H ong K ong T a iwa n I taly Italy 1 13 1. 1 78. 4 2 21 .4 2 4. 5 8 .4 % A us tra lia Italy S outh K orea I taly I ndia C anada H ong K ong 1 H ong K ong 10 1. 4 F inla nd 46. 8 I ndia 1 37 .2 H ong K ong 1 8. 8 C hina 6 .7 % 1 4 6. 8 41. 0 46 .2 1 2. 7 4 .4 % India F inla nd U nite d S ta tes G erma ny G ermany H ong K ong F inla nd 1 India 2 8. 4 India 28. 4 A us tra lia 10 .8 A us tra lia 4. 9 J a pan 3 .7 % 1 1 3. 5 13. 5 5 .4 -1. 7 -1 5. 3% Italy A us tra lia Aus tralia F inla nd U nited K ingdom Aus tralia 1 3. 8 3. 8 0 .2 -1 2. 3 NA U nite d K ingdom U nite d K ingdom U nite d K ingdom U nited K ingdom F inla nd U nite d K ingdom Gr and T otal 80 Gr and T otal 25,167. 1 Gra nd Tota l 314. 6 G rand T otal 7,347.2 G rand Total 1,959. 3 Gra nd Tota l 16.6% Figure 26. Comparison by Country Source. Capital IQ Comparable Company Analys is > W eb 2.0 S u mmary by E xc h ange C ompany Name US D Ma rke t Ca p ($m) Av g US D Ma rke t Ca p ($m) US D LT M T otal R ev ($m) US D L TM Total E B IT DA ($m) E B I TDA % 20 11 ,06 3. 3 3 ,6 87. 8 3 68 .9 1 ,10 9. 5 6 3.5 % OT C B B S EHK S E HK N as daqG S N a s da qG S H LS E N as daqG S 10 N as daqG S 9 ,11 7. 3 NYS E 1 ,4 69. 0 S EHK 3 68 .4 S E HK 52 9. 8 OT C B B 5 1.2 % 8 1 ,46 9. 0 9 11. 7 2 45 .1 15 5. 6 4 7.8 % OT C P K NYS E N as daqG S NYS E NY S E N as daqCM K OS E 7 TS E 94 6. 1 GT S M 1 89. 5 CM 2 21 .4 TS E 10 7. 0 GT S M 3 6.2 % 5 66 8. 6 1 89. 2 1 37 .2 5 6. 1 2 5.4 % TS E K OS E TSE B SE K OS E BS E N as daqG M 5 GTS M 37 9. 1 CM 1 31. 1 OSE 1 11 .6 G TSM 3 6. 6 NYS E 2 3.9 % 4 28 6. 1 1 28. 7 93 .0 3 5. 4 1 9.6 % T S XV OT C B B OS E TS E CM XT R A 3 22 5. 0 1 12. 5 85 .9 2 4. 5 1 7.3 % A ME X XT R A XT R A N as daqG M B SE KO SE S EHK 3 OT C P K 19 5. 8 KO SE 95. 5 G TS M 74 .3 OSE 1 6. 4 CM 1 6.0 % 3 18 5. 2 46. 8 66 .7 1 2. 7 1 3.5 % TS X N as daqG M H LS E K OS E X TR A TSE GT S M 2 CM 13 1. 1 TSX 38. 6 A ME X 27 .7 ASX 4. 9 OT C P K 7 .0 % 2 12 8. 7 37. 0 25 .5 0. 8 4 .7 % XT R A OS E N as daqG M TS X A ME X TSXV 1 11 5. 8 28. 4 23 .1 -1. 7 3 .5 % A IM TS X BS E XT R A A IM S E HK NYS E 1 A ME X 8 3. 1 AM E X 27. 7 O TC P K 21 .0 TS X -5. 7 N as daqG S -2.1 % 1 5 7. 2 24. 5 11 .2 -7. 7 -5.7 % H LS E T S XV OT C P K T S XV T S XV N as daqG M N as daqC M 1 H LS E 4 6. 8 N as daqC M 23. 1 ASX 10 .8 N a s da qC M -1 1. 8 TSX -6.4 % 1 2 8. 4 14. 3 5 .4 -1 2. 3 -1 5. 3% CM B SE TSXV H LS E HL S E AS X 1 2 3. 1 14. 3 1 .7 -1 6. 6 -2 5. 6% B SE N as daqC M OT C B B O TC B B N a s da qG M OS E ASX 1 ASX 1 3. 5 AS X 13. 5 A IM 0 .2 O T CP K -2 7. 2 AM E X -2 6. 4% 1 3. 8 3. 8 0 .1 -4 7. 0 NA OS E A IM AI M N as daqC M O T CB B AI M 80 25,167. 1 314. 6 100.6 1,959. 3 16.6% Gr and T otal Gr and T otal Gra nd Tota l G rand T otal G rand Total Gra nd Tota l Figure 27. Comparison by Exchange Source. Capital IQ
    • Page 19 Financing - Last Three Months (US$ m) Month Company Name Country Angel/Seed Debt financing PIPE Se ries A Series B Series C Series D Series E Grand Total USA 22.5 22.5 Dec-08 GoFish Canada 11.1 11.1 NetShelter USA 10.5 10.5 Blue Kai UK 9.9 9.9 Taptu FooMojo USA 9. 9 9.9 Scri bd USA 9.0 9.0 Superfish I srael 5.3 5.3 Tagged USA 5.0 5.0 USA 5.0 5.0 Snapmylife USA 5.0 5.0 Jackbe I ndia 5.0 5.0 ChakPak USA 4.5 4.5 Tumbl r Sweden 4. 3 4.3 Playdo Canada 3. 8 3.8 Overlay.TV USA 2. 0 2.0 DotBl u USA 1.0 1.0 Angie's List StockTwi ts USA 0. 8 0.8 Dec-08 Total 5.0 22.5 31.9 49.2 1.0 5.0 114.6 USA 12.5 12.5 Jan-09 AdMob USA 12.0 12.0 Aster Data System s France 11.4 11.4 VirtuOz USA 10.0 10.0 IMVU USA 10.0 10.0 NewsGator USA 10.0 10.0 Go Internet Media Korea 10.0 10.0 Nurien DECA USA 10.0 10.0 Yodle USA 10.0 10.0 RatePoint USA 10.0 10.0 One True Media USA 9.0 9.0 I srael 8. 0 8.0 SundaySky USA 8.0 8.0 Play Hard Sports USA 7.5 7.5 JibJab USA 7.0 7.0 Xobni USA 6.5 6.5 InsideView France 6.2 6.2 Kewego USA 6.0 6.0 Motionbox USA 6.0 6.0 SocialMedia USA 5. 0 5.0 AboutUs USA 5.0 5.0 Geni USA 5. 0 5.0 Gbox Sportsblogs USA 5.0 5.0 E-Global Sports Network USA 3. 5 3.5 Tri pwolf Austria 2. 5 2.5 Hubdub UK 1. 2 1.2 USA 1.0 1.0 Snooth Canada 1.0 1.0 CoveritLive Canada 0.2 0.2 Identi.ca USA Meez Jan-09 Total 2.2 45.2 68.9 73.2 10.0 199.5 Feb-09 Tvtri p France 9.0 9.0 USA 4. 3 4.3 TextDi gger USA 4. 2 4.2 OneSpot Canada 4.0 4.0 Mixpo USA 3. 0 3.0 7 Bill ion People Feb-09 Total 11.5 13.0 24.5 Gr and Total 2.2 5.0 22.5 88.6 131.1 74.2 5.0 10.0 338.5 Figure 28. Financing, Last Three Months Source. Company reports
    • Page 20 RELEVANT DISCLOSURES APPLICABLE TO: NONE LIST OF DISCLOSURE TERMS: 1. None applicable. 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. Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our web site at www.researchcapital.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the expressed permission of Research Capital Corporation. (U.S. Institutional Clients — Research Capital U.S.A. Inc. (a wholly owned subsidiary of Research Capital Corporation) accepts responsibility for the contents of this report subject to the terms & limitations set out above. Firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital U.S.A. Inc., a Broker-Dealer Registered with the United States Securities and Exchange Commission). Tor ont o 416. 860.7600 M ontr eal 514. 399. 1500 Vancouver 604.662.1800 Calgar y 403. 265.7400 Regi na 306.566.7550 www.researchcapital.com