1. Small Cap Tech Update
June 21, 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 track the performance of the index periodically as a barometer of the
Canadian small cap technology sector.
% Price % Price
FW EV / TTM EV / Change Change
Key Stats EBITDA* EBITDA FW P/E* (Last Report) (YTD)
RES Small Cap Tech 7.4x 8.0x 16.6x -5.8% 5.9%
S&P/TSX Composite 8.2x 10.5x 12.75 -2.4% 1.4%
Difference -0.9x -2.5x 3.8x -3.4% 4.5%
*Based on 44 companies w/Estimates
Source: Capital IQ, Bloomberg, M Partners
Since our last Small Cap Tech report on April 30, 2010, our index has underperformed the S&P/TSX composite index
with a return of -5.8% vs. -2.4% as of June 15, 2010. Investors were shedding risk by moving to liquid, dividend-
yielding stocks, or gold. Considering that Small Cap Tech is considered by investors to be risky, and less liquid than
other sectors, the downdraft could be expected.
Notwithstanding recent underperformance, the RES Small Cap Tech has returned 5.9% YTD versus a 1.4% YTD for
the main index.
Our index continues to trade at a discount to the S&P/TSX on both forward and trailing EV/EBITDA multiples of
10.4% and 24% respectively.
Top 5 and Bottom 5 Performers
% Price
Change % Price
(Last Change
Company Name Market Cap Last Price Report) (YTD)
Top Five
Bluepoint Data, Inc. (TSXV:BLP) $8.85 $0.20 73.9% -20.0%
Aptilon Corporation (TSXV:APZ) $48.20 $0.25 61.3% 150.0%
Free Energy International Inc. (TSXV:FFX) $5.24 $0.40 40.4% -11.1%
Healthscreen Solutions Inc. (TSXV:MDU) $17.20 $0.20 31.3% -2.3%
VIQ Solutions Inc. (TSXV:VQS) $32.90 $0.40 30.0% 47.2%
Bottom Five
Call Genie Inc. (TSX:GNE) $5.40 $0.07 -52.0% -70.0%
Intermap Technologies Corp. (TSX:IMP) $41.90 $0.80 -46.6% -61.0%
Natcore Technology, Inc. (TSXV:NXT) $12.40 $0.77 -46.2% 27.9%
Firan Technology Group Corp. (TSX:FTG) $5.87 $0.33 -40.0% -21.4%
Tranzeo Wireless Technologies Inc. (TSX:TZT) $34.90 $0.75 -39.7% -41.6%
Source: Capital IQ
Sub-Segment Performance
Member of the Investment Industry Regulatory Organization of Canada (IIROC) Daniel Lee,
Participating Organization – Toronto Stock Exchange (TSX) Ron Shuttleworth, Research Associate
M|PARTNERS
Member Canadian Investor Protection Fund (CIPF) 416.603.7381 ext. 277
Equity Analyst
416.603.7381 ext. 250 dl@mpartners.ca
Research • Trading • Advisory rs@mpartners.ca
2. Small Cap Tech Update
June 21, 2010
The technology sector was not immune to the
% Price
Change % Price
general declines in the market cause by
(Last Change uncertainty related to the EU debt crisis.
Sub-Segment Performance Market Cap Last Price Report) (YTD)
Mobile Ecosystem
Bridgewater Systems Corporation (TSX:BWC) $ 240.40 $ 9.72 8.0% 16.9% Most of the companies in the sub-segments
DragonWave Inc. (TSX:DWI) $ 233.50 $ 6.32 -23.6% -44.9%
iseemedia Inc. (TSXV:IEE) $ 9.41 $ 0.13 8.3% -35.0% experienced monthly declines with some notable
MOSAID Technologies Inc. (TSX:MSD)
Multiplied Media Corporation (TSXV:MMC)
$
$
253.60
30.00
$
$
21.56
0.12
-0.2%
-32.4%
12.8%
-29.4%
exceptions including iLOOKABOUT, Wi-Lan, Tio
Redknee Solutions, Inc. (TSX:RKN) $ 84.20 $ 1.40 -11.9% 40.0% Networks, and Bridgewater Systems. Each of
Sandvine Corporation (TSX:SVC)
Sierra Wireless Inc. (TSX:SW)
$
$
290.00
226.70
$
$
2.13
7.30
-1.8%
-7.3%
69.0%
-32.9%
these companies either announced great quarters
Tranzeo Wireless Technologies Inc. (TSX:TZT) $ 34.90 $ 0.75 -39.7% -41.6% or significant corporate developments.
Vecima Networks Inc. (TSX:VCM) $ 101.50 $ 4.55 -37.7% -24.8%
Wi-Lan Inc. (TSX:WIN) $ 323.00 $ 3.15 7.9% 19.8%
Average -11.8% -4.6% The performance of the mobile ecosystem was
Payments and Transaction Processing heavily impacted by the declines of the mobile
GuestLogix Inc. (TSX:GXI) $ 88.00 $ 1.38 -9.9% 50.5%
PNI Digital Media Inc. (TSXV:PN) $ 54.30 $ 1.60 -12.2% -4.2% gear vendors such as Vecima Networks, Tranzeo
Selectcore Ltd. (TSXV:SCG)
TIO Networks Corp. (TSXV:TNC)
$
$
5.12
31.60
$
$
0.05
0.68
-37.5%
10.9%
-16.7%
-1.6%
Wireless, and Dragonwave as they all missed lofty
Average -12.2% 7.0% expectations. Despite hot demand for capacity,
Cloud/SaaS competition from traditional vendors like Ericsson
Cortex Business Solutions Inc. (TSXV:CBX) $ 58.00 $ 0.40 -13.0% 77.8%
Descartes Systems Group Inc. (TSX:DSG) $ 382.30 $ 6.22 0.6% -1.3% and Alcatel should also heat up and these upstarts
iLOOKABOUT Corp. (TSXV:ILA) $ 15.50 $ 0.50 20.0% 15.4% may find more challenges ahead. Sector
Average 2.5% 30.6%
consolidation should continue.
Group Average -9.5% 3.9%
Source: Capital IQ
M Partners Coverage List
EV/EBITDA Compsets
Target Share Market FY'10 FY'11
Technology Coverage List FY'10 FY'11 FY'10 FY'11 Rating EV
Price Price Cap (M) EBITDA EBITDA
GuestLogix Inc. (TSX:GXI) 8.5x 5.2x 16.1x 12.8x $2.30 $1.37 $87.38 BUY $85.94 $10.13 $16.44
Bridgewater Systems Corporation (TSX:BWC) 8.6x 5.8x 21.3x 13.9x $14.30 $9.83 $243.15 BUY $158.90 18.50 27.36
Redknee Solutions, Inc. (TSX:RKN) 8.3x 5.7x 21.3x 13.9x $1.90 $1.40 $84.18 BUY $64.41 7.76 11.40
Sandvine Corporation (TSX:SVC) 26.0x 13.2x 21.3x 13.9x $1.90 $2.18 $296.85 HOLD $208.41 8.01 15.84
iLOOKABOUT Corp. (TSXV:ILA) 14.4x 2.2x 8.6x 6.9x $1.40 $0.60 $18.57 BUY $16.54 1.15 7.58
Cyberplex Inc. (TSX:CX) Restricted $0.60 $41.08 $25.51 Restricted
Source: Capital IQ, M Partners
*Note: BWC, RKN, and SVC have identical comp sets
Transactions during May 2010
Transaction Transaction
Filing Date Company Transaction Type Status Value (mm) Buyers/Investors Sellers
06/10/2010 OPEL International Inc (TSXV:OPL) Private Placement Announced $6.3 - -
06/08/2010 Azure Dynamics Corp (TSX:AZD) Private Placement Announced $7.0 - -
05/27/2010 Logibec Groupe Informatique Ltee (TSX:LGI) Merger/Acquisition Announced $250.3 Societe Generale Quebec; OMERS Societe Generale Quebec
05/27/2010 Titan Trading Analytics, Inc. (TSXV:TTA) Private Placement Closed $0.9 - -
05/25/2010 Cantronic Systems, Inc. (TSXV:CTS) Private Placement Closed $0.5 GC Global Capital Corp. -
05/19/2010 Cyberplex Inc. (TSX:CX) Merger/Acquisition Closed $75.6 Cyberplex Inc. (TSX:CX) Tsavo Media
05/18/2010 Cyberplex Inc. (TSX:CX) Private Placement Closed $30.3 - -
05/18/2010 ARISE Technologies Corp. (TSX:APV) Public Offering Closed $9.7 - -
05/18/2010 LasVegasFromHome.com Ent. Inc. (TSXV:LVH) Private Placement Announced $2.9 - -
05/17/2010 ARISE Technologies Corp. (TSX:APV) Private Placement Closed $1.8 - -
05/12/2010 Matrikon Inc. (TSX:MTK) Merger/Acquisition Announced $138.1 Honeywell International Inc. (NYSE:HON) -
Source: Capital IQ, SEDAR, M Partners
Member of the Investment Industry Regulatory Organization of Canada (IIROC) Daniel Lee,
Participating Organization – Toronto Stock Exchange (TSX) Ron Shuttleworth, Research Associate
M|PARTNERS
Member Canadian Investor Protection Fund (CIPF) 416.603.7381 ext. 277
Equity Analyst
416.603.7381 ext. 250 dl@mpartners.ca
Research • Trading • Advisory rs@mpartners.ca
