Tech sector 20100504 - tech sector - m partners res small cap tech index update

Small Cap Tech Update May 4, 2010 M Partners RES Small Cap Tech Index Update The M Partners RES Small Cap Tech Index is made up of 132 TSX and TSX.V technology companies with market capitalizations of between $5M and $500M. We began reporting the performance of this index on April 12, 2010. From this point forward, we will provide updates on a monthly basis at the end of every month. Change % Price Revenue Est. 1 Yr FW EV / TTM EV / [04/12/2010- Change Growth % - EBITDA Growth Key Stats EBITDA* EBITDA 04/30/2010] (YTD) Consensus** % - Consensus RES Small Cap Tech 6.0x 8.4x 3.2 15.1 45.5 75.0 S&P/TSX Composite 8.7x 10.5x 0.4 2.9 7.7 20.7 Difference -2.7x -2.1x 2.8 12.2 37.8 54.3 *Based on 35 companies w/Estimates; **Based on 43 companies w/ Estimates Source: Capital IQ, Bloomberg, M Partners Since our last Small Cap Tech report on April 12, 2010, our index has continued to outperform the S&P/TSX composite index with a return of 3.2% vs. 0.4% as of April 30, 2010. YTD, our index has outperformed by 12.2%. Despite significant outperformance, our index continues to trade at a discount to the S&P/TSX on both forward and trailing EV/EBITDA multiples of 30% and 25% respectively we think there is more potential upside to come. Top 5 and Bottom 5 Performers Change [04/12/2010- Company Name Market Cap Last Price 04/30/2010] Top Five Burntsand Inc. (TSX:BRT) $ 10.5 $ 0.15 123.1 ARISE Technologies Corp. (TSX:APV) $ 48.9 $ 0.31 106.3 Natcore Technology, Inc. (TSXV:NXT) $ 19.9 $ 1.42 104.6 LasVegasFromHome.com Ent. Inc. (TSXV:LVH) $ 6.5 $ 0.06 83.3 Medworxx Solutions Inc (TSXV:MWX) $ 5.2 $ 0.08 66.7 Bottom Five Mint Technology Corp. (TSXV:MIT) $ 5.8 $ 0.10 (25.0) Resin Systems Inc. (TSX:RS) $ 46.0 $ 0.22 (25.9) Star Navigation Systems Group Ltd. (TSXV:SNA) $ 36.2 $ 0.26 (31.6) Empower Technologies Corp. (TSXV:EPT) $ 8.2 $ 0.19 (32.1) Bluepoint Data, Inc. (TSXV:BLP) $ 5.1 $ 0.12 (39.5) Source: Capital IQ Daniel Lee, M|PARTNERS Member of the Investment Industry Regulatory Organization of Canada (IIROC) Ron Shuttleworth, Participating Organization – Toronto Stock Exchange (TSX) Member Canadian Investor Protection Fund (CIPF) Equity Analyst Research Associate 416.603.7381 ext. 250 416.603.7381 ext. 277 Research • Trading • Advisory rs@mpartners.ca dl@mpartners.ca

Small Cap Tech Update May 4, 2010 Sub-Segment Performance M Partners Coverage List % Price % Price Change % Price Change % Price M Partners Market [04/12/2010- Change [04/12/2010- Change RES Coverage List Rating Last Price Target Price Cap 04/30/2010] (YTD) Sub-Segment Performance Market Cap Last Price 04/30/2010] (YTD) Bridgewater Systems Corporation (TSX:BWC) BUY $ 9.49 $ 14.30 234.9 (5.6) 12.8 Mobile Ecosystem Cyberplex Inc. (TSX:CX) BUY $ 0.52 $ 1.40 38.3 (18.8) (54.8) Bridgewater Systems Corporation (TSX:BWC) $ 234.9 $ 9.49 (5.6) 12.8 GuestLogix Inc. (TSX:GXI) BUY $ 1.56 $ 2.30 102.1 (11.1) 71.4 DragonWave Inc. (TSX:DWI) $ 324.3 $ 8.65 (12.0) (28.0) Redknee Solutions, Inc. (TSX:RKN) BUY $ 1.65 $ 1.90 92.7 (10.4) 65.0 iseemedia Inc. (TSXV:IEE) $ 8.7 $ 0.12 (16.7) (42.5) Sandvine Corporation (TSX:SVC) HOLD $ 2.25 $ 1.90 311.3 9.05 74.4 MOSAID Technologies Inc. (TSX:MSD) $ 251.7 $ 21.45 (2.4) 12.8 Multiplied Media Corporation (TSXV:MMC) $ 39.9 $ 0.17 (7.9) 0.0 Average (7.37) 33.76 Redknee Solutions, Inc. (TSX:RKN) $ 92.7 $ 1.65 (10.4) 65.0 Source: Capital IQ, M Partners Sandvine Corporation (TSX:SVC) $ 311.3 $ 2.25 9.1 74.4 Sierra Wireless Inc. (TSX:SW) $ 295.0 $ 8.23 8.7 (26.4) Tranzeo Wireless Technologies Inc. (TSX:TZT) $ 60.4 $ 1.26 (9.7) 0.8 Vecima Networks Inc. (TSX:VCM) $ 153.1 $ 6.98 (5.6) 20.3 We are categorizing some stocks within emerging ecosystems Wi-Lan Inc. (TSX:WIN) $ 303.0 $ 3.00 1.4 14.1 Average (4.7) 9.4 that we are beginning to identify. Payments and Transaction Processing Although we have only categorized a small selection of stocks, we believe that the table to the left begins to highlight some GuestLogix Inc. (TSX:GXI) $ 102.1 $ 1.56 (11.1) 71.4 PNI Digital Media Inc. (TSXV:PN) $ 62.3 $ 1.80 5.2 9.1 Selectcore Ltd. (TSXV:SCG) TIO Networks Corp. (TSXV:TNC) $ $ 9.2 $ 25.5 $ 0.08 0.55 28.6 0 33.3 (11.3) relative opportunities. Average 5.7 25.6 Top movers in the mobile ecosystem so far this year are SVC Cloud/SaaS Cortex Business Solutions Inc. (TSXV:CBX) $ 62.1 $ 0.47 (7.1) 108.9 and RKN. Descartes Systems Group Inc. (TSX:DSG) iLOOKABOUT Corp. (TSXV:ILA) $ $ 381.6 14.9 $ $ 6.25 0.50 (1.6) (4.0) (1.1) (3.8) Top mover in the payments ecosystem is GXI Top SaaS player so far is CBX. Average (4.2) 34.7 Group Average (2.3) 17.2 Source: Capital IQ Transactions during April 2010 Transaction Value Company Name Transaction Type ($mm) AgriMarine Holdings Inc. (TSXV:FSH) Private Placement $5.20 Burntsand Inc. (TSX:BRT) M&A; Buyer: Open Text (OTC) $11.00 Eurocontrol Technics, Inc. (TSXV:EUO) Private Placement $3.00 Healthscreen Solutions Inc. (TSXV:MDU) Private Placement $1.30 MicroPlanet Technology Corp. (TSXV:MP) Private Placement $1.50 Mint Technology Corp. (TSXV:MIT) Private Placement $1.50 Nightingale Informatix Corporation (TSXV:NGH) Private Placement $3.30 Nstein Technologies M&A; Buyer: Open Text (OTC) $32.30 Radiant Communications Corp. (TSXV:RCN) Private Placement $4.10 Wavefront Technology Solutions Inc. (TSXV:WEE) Private Placement $21.90 Zaio Corp. (TSXV:ZAO) Private Placement $2.50 Zoommed Inc. (TSXV:ZMD) Private Placement $2.60 Intertainment Media Inc (TSXV:INT) Private Placement $2.30 Total $92.50 Source: Capital IQ Daniel Lee, M|PARTNERS Member of the Investment Industry Regulatory Organization of Canada (IIROC) Ron Shuttleworth, Participating Organization – Toronto Stock Exchange (TSX) Member Canadian Investor Protection Fund (CIPF) Equity Analyst Research Associate 416.603.7381 ext. 250 416.603.7381 ext. 277 Research • Trading • Advisory rs@mpartners.ca dl@mpartners.ca

M|PARTNERS Toronto Dominion Centre Canadian Pacific Tower 100 Wellington Street West Suite 2201, P.O. BOX 320 Toronto, Ontario M5K 1K2 Main line: 416-603-4343 Fax: 416–603-8608 Contact Information Research Alan Breuer ab@mpartners.ca Scott Chan sc@mpartners.ca Greg Doyle gdoyle@mpartners.ca Michael Krestell mk@mpartners.ca Daniel Lee dl@mpartners.ca Marc Pais mp@mpartners.ca Ryan Roebuck rr@mpartners.ca Ron Shuttleworth rs@mpartners.ca Tom Varesh tv@mpartners.ca Trading Robert Barber rb@mpartners.ca Jennifer Burke jb@mpartners.ca Timothy Dalton td@mpartners.ca Trumbull Fisher tf@mpartners.ca Steve Isenberg si@mpartners.ca Jeff Maser jmaser@mpartners.ca Steve Sandusky ss@mpartners.ca Jeff Stevens js@mpartners.ca Advisory Philip Dale pd@mpartners.ca Christopher Dingle cd@mpartners.ca Kelly Klatik kk@mpartners.ca Thomas Kofman tk@mpartners.ca Jason Matheson jm@mpartners.ca Paul Reid pr@mpartners.ca Lawrence Rhee lr@mpartners.ca Who we are As a full-service investment bank, M Partners’ first priority lies in the financial satisfaction of its clients. In keeping with the firm’s self-imposed high standards, M Partners’ approach to investment is anything but standardized. Aiming to create new opportunities and ideas for clients rather than steering them towards typical investment outlets, M Partners has adopted a keen strategy of focused and relevant research. Such knowledge-driven efforts, coupled with the ample skills of the firm’s management, produces successful services ranging from account management to advisory engagements. M Partners received Investment Industry Regulatory Organization of Canada (IIROC) approval on April 14th 2005 and trades under broker number 97. The team currently has 23 members of varying degrees of financial experience, including principals Thomas Kofman and Steve Isenberg, who have a combined 35 years of financial experience and are well known in the field. This backbone of strong leadership will help chart the firm’s course into the future. In the coming months and years, M Partners will be focusing on a number of verticals, including environmental and infrastructure, real estate, mining, merchandising and consumer products, and other special situations. M Partners has strong financial backers who have extensive capital markets experience. The firm is a member of IIROC, a participating member of the Toronto Stock Exchange, The TSX Venture Exchange and the Canadian Investor Protection Fund (CIPF). M Partners does not make a market in an equity or equity related security of the subject issuer. Disclosure The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. In accordance with Policy 3400 of IIROC, M Partners hereby confirms as of the date of this report: Bridgewater GuestLogix Inc. Cyberplex Inc. Systems Redknee Solutions Sandvine Corp. Does M Partners or its affiliates collectively beneficially own 1% or more of any class of equity securities of the company which is the subject of the research report. No No No No No Does the analyst or any associate of the analyst responsible for the report or public comment hold shares in the company. No No Yes No No Has M Partners or a director or officer of M Partners or any analyst provided services to the company for remuneration other than normal investment advisory or trade execution services within the preceeding 12 months, (may seek compensation for investment banking services from the company herein within the next 3 months). No No No No No Is any director, officer, employee or research analyst an officer, director or employee of the company, or serves in an advisory capacity to the company. No No No No No Has the analyst has viewed the material operations of the company. We define material operations as an issuer's corporate head office and its main production facility or a satellite facility that is representitive of the company's operations. Yes Yes No No No Did M Partners provide investment banking services for the company during the 12 months preceding the publication of the research report? No Yes No No No Has the analyst preparing the report received compensation based upon M Partners investment banking reveneus for this issuer? No No No No No Dissemination All final research reports are disseminated to institutional clients of M Partners simultaneously in electronic form. Hard copies will be disseminated to any client that has requested to be on the distribution list of M Partners. All research reports are also posted on the website of M Partners Inc., at www.mpartners.ca. Reproduction of this report in whole or in part without permission is prohibited. Research Analysts The Research Analyst(s) who prepare this report certify that their respective report accurately reflects his/her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. M Partners compensates its research analysts from a variety of sources and research analysts may or may not receive compensation based upon M Partners investment banking revenue. Rating System Buy: price expected to rise Sell: price is inflated and expected to decrease Hold: properly priced Speculative Buy: price expected to rise; material risk to the investment exists Under review: not currently rated Summary of Recommendations as of April 30, 2010 Buy 17 71% Hold 3 13% Under Review 4 17% Total 24 100% M|PARTNERS Research • Trading • Advisory

Tech sector 20100504 - tech sector - m partners res small cap tech index update

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Tech sector 20100504 - tech sector - m partners res small cap tech index update — Document Transcript