09 01 13 web 2.0 weekly

SOFTWARE & SERVICES 13 JANUARY 2009

W E B 2 . O W E E K L Y

DAVID SHORE, CFA, MBA 416.860.6784

[email protected]

Arun Thomas (Associate) 416.860.7666

INTRODUCING THE “WEB 2.0 WEEKLY”

INTRODUCTION We are very pleased to announce the introduction of a new weekly publication from Research Capital – The Web 2.0 Weekly. In this report, we wil l highlight key events from around the globe relating to the Web 2.0 sector. We wil l provide summaries of capital market activity, industry news, price performance, upcoming events, and valuation. We have identified over 70 public companies globally that are involved in the Web 2.0 sector, ranging from MMOG (Massive Multi-Player Online Gaming) companies, social networking software companies, media sharing companies, to social lending companies. Our weekly report wil l provide an ongoing framework for investors to identify key trends in Web 2.0, along with specific f inancial metrics by which to measure the success of the companies.

CAPITAL MARKET ACTIVITY This section will highlight capital market events including mergers, acquisit ions, price performance, and financings (both public and private).

INDUSTRY NEWS This section will discuss corporate activity such as partnerships, new product launches, and financial results

VALUATION This section provides an overview of valuation metrics for the 76 public Web 2.0 companies we have identified thus far.

This report has been created by Analysts that are employed by Research Capital Corporation, a Canadian Investment Dealer. www.researchcapi ta l .com

Toronto 416 .860 .7600 Montrea l 514.399 .1500 Vancouver 604 .662 .1800 Calgary 403 .265.7400 Regina 306 .566.7550

THE WE B 2 . 0 UNI VE RSE

A myriad of companies and technologies: The term Web 2.0 was first coined by Tim O’Reil ly who used it to refer to “… the business revolution in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform.” It has come to be used to refer to numerous types of technologies, such as blogs, wikis, and social networking. As the figure below shows (Figure 1), Web 2.0 companies can be defined by the area on which they focus – such as music or video. However, note that there are companies, Google (GOOG-NASDAQ) or Yahoo (YHOO-NASDAQ) for example, which are involved in numerous areas within Web 2.0. One interesting characteristic of many of these companies is how few of them are independent public entit ies. For example, the largest social networking sites include MySpace (bought by News Corp for $580 mill ion in September 2005), Facebook (private), Bebo (bought by AOL for $850 mil lion in May 2008), and Orkut (owned by Google).

Figure 1. The Conversation Prism Source. Brian Solis, www.briansolis.com

Over 70 public Web 2.0 companies identified: We have however identif ied 76 public companies for our Web 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 2). 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.

Comparable Company Analys is > Web 2.0S ummary

Company Name LTM a s of Tic ker E xc hange

Trading

Currenc y HQ

C urrent

P rice

US D Marke t

C ap ($m)

USD LTM Total

R ev ($m)

TE V/LTM

R evenue E mployees Webs ite

Acceler iz e New Me dia , Inc. 9/30/2 008 ACLZ OT C BB USD United S tates 0. 35 9.4 3.2 4. 3x 2 0 www. acce ler ize newmedia .com

A ctoz S oft C o . , L td. 9/30/2 008 A052790 K OS E K R W S outh K orea 10, 050. 00 65.8 5 4.3 0. 7x NA www.a ctoz. com

AQ Inte ra ctive, I nc . 9/30/2 008 3838 T S E J P Y J apan 29, 000. 00 17.5 6 1.2 - NA www.aq i.co. jp

A ss ociated Media Holdings Inc . 6/30/2 007 AS MH OT C PK USD United S tates 0. 01 0.4 0.1 13 .2x 3 www. macgregorenergy . com

B oomJ Inc 9/30/2 008 B OMJ OT C BB USD United S tates 1. 00 40.9 1.1 40 .7x 2 5 www.boomj.com

B right T hings plc 9/30/2 008 AIM:B GT A IM G BP United K ingdom 0. 02 2.9 0.2 11 .3x 9 www. brightthings . com

B roadW ebAs ia Inc. 9/30/2 008 B WBA OT C PK USD United S tates 1. 01 85.7 0.0 - 4 6 www.broadwebas ia .com

CDC C orp. 9/30/2 008 CHIN. A Nas daqG S USD Hong K ong 1. 13 121. 9 4 28.1 0. 4x 3,12 5 www.cdccorpora tion.ne t

C hina Ga teway C orporation 9/30/2 008 CGW Y OT C BB USD United S tates 0. 00 0.0 6.7 0. 0x 3 7 -

C hines e G ame r Inte rnational 9/30/2 008 GT S M:3 083 G T SM TW D T aiwa n 92. 00 236. 0 3 8.8 4. 6x NA www.chines egame r. net

C orne rW orld Corporation 10 /31/2008 CWR L OT C BB USD United S tates 0. 25 11.7 0.6 21 .5x NA www.corne rworld. com

DADA S pA 9/30/2 008 CM:D A C M E UR Italy 6. 90 151. 1 2 29.0 0. 9x 5 74 dada .dada .ne t

DigitalFX Internationa l, Inc . 9/30/2 008 DXN AME X USD United S tates 0. 18 4.5 1 6.9 0. 4x 6 8 www.digitalfx.com

DigitalP os t Inte ractive, Inc. 9/30/2 008 DG LP OT C BB USD United S tates 0. 03 1.7 0.4 6. 6x 1 1 www.d igita lpostinterac tive.com

DigitalTown, I nc . 8/31/2 008 D GTW OT C BB USD United S tates 2. 70 73.3 NM - 3 www.ene tpc .com

Dolphin D igita l Media, Inc. NA D PDM OT C BB USD United S tates 0. 80 38.9 NA - 6 www.dolphindigitalmedia .com

E olith C o. L td. 12 /31/2007 A041060 K OS E K R W S outh K orea 555. 00 19.2 1 8.5 1. 0x NA www.eolith. co.k r

E xte ns ions , Inc . 9/30/2 008 E XT I OT C PK USD United S tates 0. 99 93.5 NM - 2 www.e xt. com

F inancial Media G roup, Inc. 8/31/2 008 F NG P OT C BB USD United S tates 0. 05 3.0 7.8 0. 2x 2 2 www.walls t.ne t

F luid Mus ic C ana da , I nc . 9/30/2 008 T S X:F MN T S X CAD United S tates 0. 31 13.7 4.2 - 2 9 www.f luidmediane tworks .com

F rogs ter I nteractive P ic tures AG 6/30/2 008 F R G XT R A E UR Ge rmany 5. 80 18.4 5.4 3. 3x NA www.frogste r- ip.de /en/index. php

G amania Digital E ntertainment Co. , Ltd. 9/30/2 008 6180 G T SM TW D T aiwa n 22. 60 103. 6 1 12.2 0. 7x NA www. gamania .co.k r

G ameOn C o Ltd . 9/30/2 008 3812 T S E J P Y J apan 127, 000. 00 140. 2 8 2.6 0. 9x NA www.ga meon.co. jp

G eoS entric O yj 9/30/2 008 G E O1V H LS E E UR F inland 0. 03 36.3 5.5 5. 6x 9 2 www.benefon.com

G ia nt I nteractive G roup, Inc . 9/30/2 008 G A NYS E USD C hina 5. 96 1,4 16.7 2 45.1 - 1,01 6 www.ga-me.com

G igaMedia Ltd. 9/30/2 008 G IG M Nas daqG S USD T aiwa n 6. 32 341. 5 2 00.5 1. 4x 9 75 www. gigamedia .com. tw

G oF ish Corporation 9/30/2 008 GOF H OT C BB USD United S tates 0. 18 4.6 6.3 2. 4x 4 1 www. gofis h.com

G ravity Co. , L td 9/30/2 008 G R V Y Nas daqGM USD S outh K orea 0. 54 15.0 3 6.3 - 6 36 www.grav ity .co.k r

G ree, Inc . NA T S E :3632 T S E J P Y J apan 5, 200. 00 0.0 NA - NA gree. co. jp

G ungHo Online E nterta inment, Inc. 9/30/2 008 3765 OS E J P Y J apan 108, 900. 00 138. 0 1 13.2 1. 0x NA www.gungho. co. jp/english/

HanbitS oft, I nc . 9/30/2 008 A047080 K OS E K R W S outh K orea 3, 400. 00 55.3 5 1.5 0. 7x NA www. hanbits oft.co.k r

IA S E nergy, Inc . 10 /31/2008 IA S C .A OT C BB USD Ca nada 0. 02 1.4 0.0 - NA www.ias ene rgy.com

IdeaE dge, Inc . 9/30/2 008 OT CB B : IDA E OT C BB USD United S tates 0. 83 33.8 0.0 - NA www. ideaedge.com

J umbuck E nterta inment P ty L td. 6/30/2 008 AS X: JMB AS X AUD Aus tra lia 0. 39 13.6 1 1.1 0. 8x 7 2 www. jumbuck .com

J umpT V Inc. 6/30/2 008 T S X:J T V T S X CAD Ca nada 0. 30 28.6 1 1.5 2. 9x NA www.jumptv .com

K aboose Inc. 9/30/2 008 T S X:K AB T S X CAD Ca nada 0. 40 47.0 6 2.3 0. 9x NA www.kaboos e.com

L iveWorld Inc . 9/30/2 008 L VW D OT C PK USD United S tates 0. 08 2.3 1 1.7 0. 1x 7 3 www.liveworld .com

LookSmart, L td. 9/30/2 008 L OOK Nas daqGM USD United S tates 1. 69 28.7 6 9.5 0. 0x 9 3 www.looks ma rt.com

Ma gnitude Information S ys tems Inc . 9/30/2 008 MAG Y OT C BB USD United S tates 0. 02 8.7 0.1 - 1 3 www.magnitude.com

Mixi , Inc. 9/30/2 008 2121 T S E J P Y J apan 567, 000. 00 961. 9 1 24.8 6. 8x NA www.mixi.co. jp

Moggle, I nc NA MMOG OT C BB USD United S tates 2. 00 70.6 NA - NA www.playmoggle. com

Nationa l Lampoon Inc. 7/31/2 008 NLN AME X USD United S tates 0. 73 6.9 7.4 1. 6x 2 4 www.nationallampoon. com

NE OW IZ G ames C orpora tion 12 /31/2007 A095660 K OS E K R W S outh K orea 20, 000. 00 142. 5 1 33.8 1. 0x NA www.neowiz.com/kor/

NetDra gon W ebS oft, Inc. 9/30/2 008 777 S E HK HKD China 2. 84 193. 6 9 5.3 0. 2x 1,48 2 www.nd.com. cn

Neteas e.com Inc. 9/30/2 008 NT E S Nas daqG S USD C hina 18. 04 2,2 19.9 4 22.6 - 2,41 3 corp. 163. com

NeX plo re C orpora tion 9/30/2 007 N XPC OT C PK USD United S tates 1. 00 55.8 NM - 1 9 www.nexplore. com

Northgate T echnologies L imited 9/30/2 008 590057 BS E INR India 55. 55 40.1 1 37.9 0. 3x 2 86 www.northgatetech. com

Open T ext Corp. 9/30/2 008 OT E X Nas daqG S USD Ca nada 30. 75 1,5 94.8 7 44.2 2. 2x 3,00 0 www.opente xt. com

Openwave S ys tems Inc. 9/30/2 008 OP W V Nas daqG S USD United S tates 0. 76 63.1 1 99.0 - 6 18 www.openwa ve. com

P erfect World C o. , L td. 9/30/2 008 P W R D Nas daqG S USD C hina 17. 28 985. 8 1 86.9 - 1,40 1 www.wa nmei. com/e n/index .htm

P hotoC hannel Network s Inc. 6/30/2 008 T S X V : PN T S XV CAD Ca nada 1. 67 47.0 1 2.7 3. 6x NA www.photochannel.com

Quepas a C orp. 9/30/2 008 QP S A Nas da qCM USD United S tates 1. 81 22.9 0.1 - 6 3 www.quepa sa .com

S handa In teractive E ntertainment L td. 9/30/2 008 S NDA Nas daqG S USD C hina 27. 37 1,8 99.0 4 77.9 - 2,56 4 www. snda. com

S hutterfly , I nc . 9/30/2 008 S F L Y Nas daqG S USD United S tates 7. 54 189. 0 2 03.3 0. 7x 5 12 www.s hutterfly .com

S K C ommunications C o. , L td. 12 /31/2007 A066270 K OS E K R W S outh K orea 6, 150. 00 187. 7 1 53.9 1. 2x NA -

S NAP Interac tive, Inc . 9/30/2 008 S T V I OT C BB USD United S tates 0. 94 10.0 2.3 3. 9x 5 www.s nap-interactive.com

S NM G lobal Holdings 9/30/2 008 S NMN OT C PK USD United S tates 0. 00 0.0 2.0 - 3 3 www.s nmgloba lholdings .com

S park Networks , I nc . 9/30/2 008 LOV AME X USD United S tates 2. 57 55.1 6 0.1 0. 8x 1 76 www.s park .net

S pectrumDNA , Inc. 9/30/2 008 S PXA OT C BB USD United S tates 0. 19 9.2 0.1 - 7 -

T encent Holdings L td. 9/30/2 008 700 S E HK HKD China 45. 00 10,4 18.5 9 03.6 12 .5x 6,03 9 www.tencent. com.hk/index_ e.s html

T he Pa rent C ompany 8 /2/2 008 K I DS . Q OT C PK USD United S tates 0. 05 1.3 1 12.0 0. 2x 3 47 www.theparentcompany .com

T he9 L imited 9/30/2 008 NCT Y Nas daqG S USD C hina 14. 05 387. 9 2 52.5 - 1,36 1 www.the 9.com

T heS tree t. com, Inc. 9/30/2 008 T S CM Nas daqGM USD United S tates 3. 21 97.9 7 5.2 0. 3x 3 49 www.thes tree t.com

T ree.C om, Inc . 9/30/2 008 T R E E Nas daqGM USD United S tates 4. 15 38.9 2 31.2 0. 1x 1,00 0 www. lendingtre e. com

Unis erve C ommunications C orp. 8/31/2 008 T S XV : US S T S XV CAD Ca nada 0. 05 1.0 2 7.2 0. 5x NA www. unise rve.com

United Online Inc . 9/30/2 008 UN TD Nas daqG S USD United S tates 6. 04 495. 1 5 38.7 1. 6x 9 28 www.unitedon line.net

UOMO Media , I nc 10 /31/2008 U OMO OT C BB USD Ca nada 0. 08 6.8 0.5 15 .1x NA www.uomolife. com

V OI S , Inc . 9/30/2 008 V O IS OT C BB USD United S tates 0. 40 2.9 0.0 - 4 www.vo is .com

W ebze n Inc. 9/30/2 008 W ZE N Nas daqGM USD S outh K orea 0. 96 11.4 2 1.0 - 3 38 www.webzen .co.k r

W izz ard S oftware C orpora tion 9/30/2 008 W ZE AME X USD United S tates 0. 76 34.3 6.2 5. 5x 1 10 www. wiz za rdsoftware.com

W oozyF ly , I nc . 9/30/2 008 W ZYF OT C BB USD United S tates 0. 15 2.6 0.0 - 1 4 www.woozyfly. com

W ynds torm C orpora tion NA W YND OT C BB USD United S tates 0. 12 2.2 NA - NA www.wyndstorm.com

XING AG 9/30/2 008 O1BC XT R A E UR Ge rmany 31. 35 220. 3 4 2.3 3. 8x 1 61 www. xing.com

Y edangOnline C orp. 12 /31/2007 A052770 K OS E K R W S outh K orea 7, 270. 00 84.4 5 0.9 1. 6x NA www.yedangonline. com/indexhome .as p

Y nk Ko re a Inc. 12 /31/2007 A023770 K OS E K R W S outh K orea 4, 310. 00 7.8 1 4.5 0. 5x NA www.ynk .net

Z ipLoca l Inc. 9/30/2 008 T S X V :ZI P T S XV CAD Ca nada 0. 01 0.7 3.0 0. 5x NA www.z iploca l.com

High 10,4 18.5 903. 6 21 .5x 6,0 39

Low 0.0 0.0 - 2

Average 354. 8 110.9 2.7x 627

Figure 2. Web 2.0 Universe Summary Source. Capital IQ

CAPIT AL M ARKET S ACT IV I TY (M &A AND F I NANCI NG )

January rebounds from December: After 16 financings in December totall ing $107.9 mil lion (average $6.7 mill ion), the New Year has started strong, with eight financings already totalling $66.5 mil lion (average $8.3 mil lion). The largest f inancing in the last three months was of HuffingtonPost for $25.0 mill ion in November (Figure 3). Three companies have raised $10 mil lion each thus far in January – Yodle, RatePoint, and DECA. For additional details, see Figure 19 (at end of note).

Financings - Last three months

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Figure 3. Financings, Last Three Months Source. Company reports

But impact of worldwide financial meltdown lingers: However, on a trail ing 12-month basis, f inancings are down for the third month in the last four, although average round sizes increased slightly as of January (Figure 4).

LTM Financing

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Figure 4. Financings, Last 12 Months Source. Company reports

Cumulative total approaches $5.0 billion: On a cumulative basis, Web 2.0 financings have totalled almost $5.0 bill ion, with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 5).

Web 2.0 Financing (cumulative)

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Figure 5. Financing, Cumulative Source. Company reports

U.S. remains dominant: U.S. companies continue to dominate capital market activity – with just over 73% of f inancings/M&A involving U.S. companies (based on dollars). 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 approximately 77% of deals, while Canada moves to third at 5.7% (Figure 7).

Financing/M&A by Country - LTM

China

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Figure 6. Financing/M&A, by Country (LTM, $) Source. Company reports

Financing by Country - LTM (#)

Israel

2.4%

Canada

5.7%

China

2.4%

UK

5.7%

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7.1%

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76.8%

Figure 7. Financing/M&A, by Country (LTM, #) Source. Company reports

More early-stage funding (by count): Over 40% of f inancings in the last 12 months are for early-stage companies (Angel/Seed or Series A) (Figure 8). Series B rounds are 32.4% of the total, with later-stage (Series D and PIPE) deals accounting for just 7.1%.

Financing by Type - LTM

PIPE

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35.9%

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32.4%

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3.5%

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13.5%

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Figure 8. Financing, by Type (LTM, $) Source. Company reports

But “D” Series are largest equity rounds (by dollar): In the last 12 months, there have been nine “D” series rounds, averaging just over $25 mill ion per f inancing (Figure 9). Note that we have excluded the $430 mill ion Series C financing of Oak Pacific Interactive as it skews the results substantial ly.

Average Financing Round Size - LTM

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Figure 9. Average Size per Round Source. Company reports

CAPIT AL M ARKET S ACT IV I TY (P RI CE PE RFO RM ANCE )

Price Performance: Our Web 2.0 index (market-cap weighted) has closely tracked the performance of the NASDAQ composite index, although it outperformed the index in the last few weeks of 2008 (Figure 10).

Web 2.0 Index Price Performance

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Figure 10. Web 2.0 Price Performance Source. Capital IQ

BroadWebAsia leads performance, Shanda lags: With a 1-week return over 80%, BroadWebAsia (BWBA-OTCPK) had the best performance in the group (for stocks with prices greater than $1) (Figure 11). Shanda Interactive (SNDA-NASDAQ) fell the most, -18.3%, after a number of insiders filed to sell shares.

Figure 11. 1-Week Price Performance Source. Capital IQ

INDUST RY NE WS (P ART NE RS HI PS, F I NANCI AL RES UL TS, NE W P RO DUCT S )

Dolphin moves to Florida: Dolphin Digital Media Inc. announced that it has completed a strategic relocation of i ts corporate headquarters from Toronto, Canada to Miami, Florida, as part of i ts wider strategy to streamline its operations with Dolphin Entertainment.

BoomJ reports strong December revenue: BoomJ Inc. reported December revenue of US$1.0 mm, or more than four t imes revenue recorded in November. In addition, the company expects that it wil l be profitable in the month of January.

National Lampoon director resigns: Paul Skjodt resigned as a director on December 19, 2008 and the company appointed David Tornek on December 22, 2008 to fil l the vacancy.

TheStreet.com director resigns: On January 8, 2009, Jay Hoag resigned as a director of TheStreet.com, Inc. Mr. Hoag had served as the director designee of the Series B Preferred Stockholders, who at this t ime have not elected a successor to fi l l the vacancy created by Mr. Hoag's resignation.

Shutterfly financing? Shutterfly, Inc. has fi led a Shelf Registration in the amount of $9.98 mil lion.

JumpTV Inc. announced the expansion of its HD iPTV Service: NeuLion now unveils the iPTV HD TV Box delivering high-definition programming in 720p and 1080i to the television. NeuLion's existing iPTV HD PC browser service provides HD quality programming of live channels, sports, entertainment events, and video on demand in up to a 1080i format to its Network Partners across the globe. The launch of the HD TV Box provides adaptive streaming in high definition without buffering. NeuLion now offers HD streaming services of l ive TV channels, l ive events, and video on demand over the Internet directly to the television. NeuLion lets the consumer choose viewing of content on either the TV, PC or both. The debut of the NeuLion iPTV HD TV Box includes such features as high definit ion (supporting the major industry standard CODEC and streaming protocol) with standard definition formats in the same box; view the best in both HD and SD programming; Network DVR; store unlimited hours of HD and SD programming; l ive channel delivery in real t ime for l inear channels and events; on-demand customizable programming menus for personalized entertainment libraries; pause and

1-Week Price Performance

-18.3% -16.7% -16.0% -14.1% -14.1% -11.9% -11.1%

-7.3% -5.7% -5.2% -4.4% -4.3% -4.1% -3.4% -2.4% -1.6% -1.4% -0.7% -0.4%

0.0% 0.0% 0.0% 0.0% 0.0% 1.3% 1.6% 1.8% 2.9% 3.0% 3.4% 4.9% 5.1% 6.0% 6.2%

9.6% 9.8%

13.3% 14.8% 16.5%

83.6%

-40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Shanda Interactive Entertainment Ltd. Northgate Technologies Limited

BoomJ Inc Tencent Holdings Ltd.

Frogster Interactive Pictures AG Netease.com Inc.

TheStreet.com, Inc. CDC Corp.

Ynk Korea Inc. Giant Interactive Group, Inc.

Gree, Inc. DADA SpA

NEOWIZ Games Corporation Open Text Corp.

Actoz Soft Co., Ltd. Chinese Gamer International

NetDragon WebSoft, Inc. Perfect World Co., Ltd. Spark Networks, Inc. AQ Interactive, Inc. DigitalTown, Inc. HanbitSoft, Inc.

Moggle, Inc SK Communications Co., Ltd.

Mixi, Inc. GameOn Co Ltd. Eolith Co. Ltd. The9 Limited

LookSmart, Ltd. Gamania Digital Entertainment Co.,

United Online Inc. Shutterfly, Inc. GigaMedia Ltd. Tree.Com, Inc. Quepasa Corp.

GungHo Online Entertainment, Inc. PhotoChannel Networks Inc.

XING AG YedangOnline Corp. BroadWebAsia Inc.

rewind l ive HD TV; gives viewer control to rewind, slow down or use instant replay; 480i, 480p, 720p, 1080i picture output and multiple screen formats supported; multiple connection ports (HDMI, Component, S-Video, Composite, Optical Audio outputs); iInteractive service to increase network revenue using home shopping, donation prompting, auction, and other e-commerce features; take advantage of NeuLion iPTV interactive features l ike channel selection overlays, on screen picture-in-picture, weather information, lottery results and more; customized channel guide; 7-day Stored Program Guide. Search the channel guide for shows up to 7 days in the past; Dolby Digital 5.1 surround sound capable; l isten to superb theatre-quality sound with additional hardware; and parental controls/locks (abil ity to lock out objectionable programming for children).

CDC reaffirms strong results: CDC Corp. announced that i t has reaffirmed its previously-increased guidance for the second half of 2008. Based on preliminary financial results, projections, and estimates, the company continues to expect adjusted EBITDA from continuing operations (Adjusted EBITDA) for the second half of 2008 to be in the range of approximately $16.0 million to $18.0 mil lion. The current Adjusted EBITDA guidance represents an increase of approximately 189%-225% from the prior year period, when the company posted approximately $5.5 mil lion in Adjusted EBITDA for second half of 2007. Furthermore, the current Adjusted EBITDA guidance represents an approximately 88% increase based on the midpoint of the range from the original, lower guidance that was announced on August 26, 2008, and where Adjusted EBITDA estimates were in the range of $8.0 mill ion to $10.0 mill ion.

Openwave director appointed: Effective as of January 8, 2008, the Board of Directors of Openwave Systems Inc. appointed David Nagel to serve as a member of the company’s Board of Directors as a Class III Director. Nagel brings to Openwave more than 35 years of technology leadership and management experience in building profitable businesses. Nagel previously served as president, chief executive officer, and as a director of PalmSource Inc. With this appointment, Openwave's Board is now composed of seven directors, six of whom are independent. Prior to joining Openwave's Board, Nagel served as a member of the Palm Board of Directors and then as the first chief executive officer of PalmSource, now known as ACCESS Systems Americas Inc.

Perfect World licenses new game: Perfect World Co. Ltd. announced that i t recently signed an agreement with CJ Internet Corporation to l icense “Zhu Xian”, the 3D massive multiplayer online role-playing game (MMORPG), in South Korea. This is the second time that Perfect World has cooperated with CJ Internet.

Shutterfly collaborates with Adobe: Shutterfly Inc. announced a collaboration with Adobe Systems Incorporated that will help customers make the most of their digital images. Shutterfly's services are now integrated into Adobe Photoshop Elements 6 and 7(R), Photoshop Album Starter(R) Edition, and Photoshop.com, making it easy for Adobe users to create quality photo books, cards, calendars, and prints in just a few clicks. By integrating Shutterfly into Adobe's broadly-distributed consumer imaging products, it is creating a seamless experience for customers to turn their digital artistry into beautiful prints and merchandise. There are few companies as passionate about inspiring photographers and helping them be creative with their images as Shutterfly. Additionally, digital scrapbook customers, who consider Adobe a basic necessity, will f ind tremendous value in the ease and integration to turn their digital works into beautiful physical works of art.

Quepasa hires new VP Business Development, new GM Brazil: Quepasa Corp. announced that i t has hired Brian Garrett to serve as VP of Business Development and Strategy, and Paulo Maia as the General Manager of Quepasa Brazil, which is slated to launch in late March. Prior to joining Quepasa, Garrett was co-founder and managing director of Crosscut Ventures. He has spent the last eight years investing in numerous early-stage companies as a venture capital ist and has been actively advising several companies in the digital media ecosystem. In his new role at Quepasa, Garrett wil l be responsible for identifying and developing new business opportunities and partnerships, as well as creating revenue-generating initiatives. Maia brings nearly a decade of experience to Quepasa. As General Manager of Quepasa Brazil, Maia wil l be responsible for overseeing all aspects of daily operations in Brazil, including development, production, sales, promotions, and the overall launch of the site. Before joining Quepasa, Maia was CEO of ClickFilmes.

Tencent launches social network: Tencent Holdings Ltd. official ly launched a campus social networking service (SNS) on January 6, 2009. The move is destined to pose a new challenge to existing campus SNS providers in the Chinese market, such as 51.com, xiaonei.com, and kaixin.com, noted industry watchers. In addition, the Hong Kong-l isted instant messaging provider wil l be likely to launch a QQ-themed netbook this year by cooperating with manufacturers.

UP CO MI NG EVE NTS

This section will highlight select upcoming conferences and events regarding Web 2.0.

Upcoming EventsE vent Date Location Webs ite

B logW ell Ja nua ry 22 Ch icago www.ga speda l.com/blogwe ll/

S ocial Media C onference Ja nua ry 22 -2 3 M iami www.s ocialmediaconference.com/conference-mia mi-2 009. php

OMMA S oc ia l Ja nua ry 26 New York www.mediapost.com/omma socia l

W eb 2.0 C anadian

Le aders hip S eries F ebruary 3 T oronto http: //web2lea ders hipse ries . iglooevents.net/

O 'R eilly Money: T ech F ebruary 4-6 New York www.conferences .oreilly .com/money/

Us er G ene ra ted C ontent F ebruary 9-10 S an Jose www.ugcxevent. com/

E ngage! E xpo March 10 -1 1 New York www.engageexpo.com

Mesh 200 9 April 7-8 T oronto www.mes hconference.com

Figure 12. Upcoming Events Source. Company reports

VAL UAT IO N

Six companies top US$1 billion market cap: Just six companies in our Web 2.0 universe top US$1 bill ion in market capitalization (Figure 13). However, 55 of the 76 companies have market caps under US$100 mill ion, with 23 under $10 mil lion. Online gaming companies dominate the top of the list with five of the top six by market cap.

Figure 13. Market Cap Ranking Source. Capital IQ

TEV/Revenue (LTM) averages 2.7x: The overall average TEV/Revenue (LTM) multiple for our group is 2.7x (Figure 14). However, this is skewed by BoomJ at 42.7x (BOMJ-OTCBB) and CornerWorld (CWRL-OTCBB) at 21.5x. Excluding those

Market Cap (US$ mm)

0.0 0.4 0.7 1.0 1.3 1.4 1.5 2.2 2.3 2.6 2.9 2.9 3.0 3.4 5.1 6.8 6.9 7.8 8.4 9.2 9.4 10.0 11.2 11.7 11.7 13.6 13.7 15.0 17.5 18.4 19.2 24.7 28.6 29.0 34.1 34.6 34.8 37.7 40.1 43.0 47.8 48.4 49.4 54.5 55.3 63.1 65.8 70.6 73.3 84.4 85.7 93.0 93.5 103.6 124.0 138.0 140.2 142.5 153.2 187.7 193.6 195.3 218.7 236.0 379.8 400.6 505.8 961.9 1017.1 1426.3 1578.3 1896.2 2243.2

0 500 1,000 1,500 2,000 2,500 3,000

China Gateway Corporation Associated Media Holdings Inc. ZipLocal Inc. Uniserve Communications Corp.The Parent Company IAS Energy, Inc. DigitalPost Interactive, Inc. Wyndstorm Corporation LiveWorld Inc. WoozyFly, Inc. VOIS, Inc.

Bright Things plc DigitalFX International, Inc. Financial Media Group, Inc. GoFish Corporation UOMO Media, Inc National Lampoon Inc. Ynk Korea Inc.NeXplore CorporationSpectrumDNA, Inc.

Accelerize New Media, Inc. SNAP Interactive, Inc. Magnitude Information Systems Inc.Webzen Inc.

CornerWorld CorporationJumbuck Entertainment Pty Ltd. Fluid Music Canada, Inc. Gravity Co., Ltd

AQ Interactive, Inc.Frogster Interactive Pictures AG Eolith Co. Ltd. Quepasa Corp. JumpTV Inc. LookSmart, Ltd. Dolphin Digital Media, Inc. IdeaEdge, Inc. Wizzard Software Corporation Tree.Com, Inc.Northgate Technologies Limited BoomJ Inc PhotoChannel Networks Inc. GeoSentric Oyj Kaboose Inc.

Spark Networks, Inc. HanbitSoft, Inc. Openwave Systems Inc. Actoz Soft Co., Ltd. Moggle, Inc DigitalTown, Inc. YedangOnline Corp. BroadWebAsia Inc. TheStreet.com, Inc. Extensions, Inc. Gamania Digital Entertainment Co.,CDC Corp.

GungHo Online Entertainment, Inc.GameOn Co Ltd. NEOWIZ Games Corporation

DADA SpA SK Communications Co., Ltd. NetDragon WebSoft, Inc. Shutterfly, Inc. XING AG Chinese Gamer InternationalGigaMedia Ltd. The9 Limited United Online Inc. Mixi, Inc. Perfect World Co., Ltd. Giant Interactive Group, Inc. Open Text Corp. Shanda Interactive Entertainment Netease.com Inc.

Tencent Holdings Ltd.

companies, the average is 2.3x. Note that we exclude multiples greater than 100x. Twenty-eight of the companies have multiples under 1.5x.

TEV/LTM Revenue (x)

0.0 0.0 0.0 0. 1 0.1 0.2 0. 2 0.2 0.2 0.3 0. 3 0.4 0.5 0. 5 0. 5 0.7 0. 70. 7 0.8 0.8 0. 8 0. 9 0.9 0. 9 1.0 1.0 1.0 1. 2

1.6 1.6 1. 6 1. 6 2.22.5 2. 9

3.3 3.7 3.8 3. 94.3 4. 6

5. 6 6. 06.8

7. 7

11.312. 5

13. 2

15. 1

21.5

42. 7

Average, 2.7

0. 0

5. 0

10. 0

15. 0

20. 0

25. 0

30. 0

35. 0

40. 0

45. 0

SNM Global Holdings

China Gateway Corporation

LookSmart, Ltd.

Tree.Com, Inc.

LiveWorld Inc.

NetDragon WebSoft, Inc.

TheStreet.com, Inc.

Financial Media Group, Inc.

The Parent Company

Northgate Technologies Limited

DigitalFX International, Inc.

CDC Corp.

ZipLocal Inc.

Uniserve Communications Corp.

Ynk Korea Inc.

Gamania Digital Entertainment Co., Ltd.

HanbitSoft, Inc.

Actoz Soft Co., Ltd.

Shutterfly, Inc.

Jumbuck Entertainment Pty Ltd.

Spark Networks, Inc.

DADA SpA

GameOn Co Ltd.

Kaboose Inc.

GungHo Online Entertainment, Inc.

NEOWIZ Games Corporation

Eolith Co. Ltd.

SK Communications Co., Ltd.

National Lampoon Inc.

GigaMedia Ltd.

United Online Inc.

YedangOnline Corp.

Open Text Corp.

GoFish Corporation

JumpTV Inc.

Frogster Interactive Pictures AG

PhotoChannel Networks Inc.

XING AG

SNAP Interactive, Inc.

Accelerize New Media, Inc.

Chinese Gamer International

Wizzard Software Corporation

DigitalPost Interactive, Inc.

Mixi, Inc.

GeoSentric Oyj

Bright Things plc


Associated Media Holdings Inc.

UOMO Media, Inc

CornerWorld Corporation

BoomJ Inc

Figure 14. TEV/Revenue Ranking Source. Capital IQ

TEV/EBITDA (LTM) averages 8.6x: The average multiple for the 27 companies with positive EBITDA (and multiples under 100x) is 8.6x LTM EBITDA, led by SNAP Interactive’s (STVI-OTCBB) 38.4x multiple (Figure 15). Sixteen of the companies have EBITDA multiples under 7x.

TEV/LTM EB ITDA (x)

0.4 1.0 1.3 1.6 1.7

3.6 3.7 4.0 4.1 4.2 4.35.4 6.0 6.5 6.6 6.6

7.48.7

9.6 9.8 9.8

11.913.0

17.318.7

25.1

38.4

Average, 8. 6

0. 0

5. 0

10. 0

15. 0

20. 0

25. 0

30. 0

35. 0

40. 0

45. 0


Financial Media Group, Inc.

TheStreet.com, Inc.

Northgate Technologies Limited

Jumbuck Entertainment Pty Ltd.

GameOn Co Ltd.

NEOWIZ Games Corporation


Gamania Digital Entertainment Co., Ltd.

CornerWorld Corporation


DADA SpA

Shutterfly, Inc.

GigaMedia Ltd.

United Online Inc.

GungHo Online Entertainment, Inc.

YedangOnline Corp.

Open Text Corp.

CDC Corp.

Chinese Gamer International

XING AG

Kaboose Inc.

SK Communications Co., Ltd.

Mixi, Inc.

Uniserve Communications Corp.



Figure 15. TEV/EBITDA Ranking Source. Capital IQ

P/E (LTM) averages 13.7x: The average multiple for the 26 companies with positive earnings (and multiples under 100x) is 13.7x LTM EPS, led by again by SNAP Interactive’s (STVI-OTCBB) 55.6x multiple (Figure 16). Fourteen of the companies have P/E multiples under 10x.

P/E LTM (x)

1. 0 1. 3 1. 6 1. 7 1. 72. 5

4. 25. 5 5. 5

7. 0 7. 7 7. 98. 9

9. 711. 2 11. 6

12. 513. 6 13. 9

15. 8

20. 6

26. 9

32. 0

34. 1

41. 7

55. 6

Average, 13.7

0. 0

10. 0

20. 0

30. 0

40. 0

50. 0

60. 0

The9 Limited

Giant Interactive Group,

Inc.

Perfect World Co., Ltd.

Shanda Interactive

Entertainment Ltd.

Netease.com Inc.

Northgate Technologies

Limited

LookSmart, Ltd.



Jumbuck Entertainment Pty

Ltd.

United Online Inc.

NEOWIZ Games

Corporation

DADA SpA

YedangOnline Corp.

GigaMedia Ltd.

Gamania Digital

Entertainment Co., Ltd.


GameOn Co Ltd.

Chinese Gamer

International

TheStreet.com, Inc.

XING AG

Open Text Corp.

Shutterfly, Inc.


Mixi, Inc.


Figure 16. P/E Ranking Source. Capital IQ

C omparable C ompany Analys is > Web 2.0

P ric e P erformance

Company Name Currenc y Tic ker Exchange USD Market Cap ($m) Current Price 1 Wk 1 Mth 3 Mth 6 Mth 1 Y r 52 Week

Acceleriz e New Media , Inc. U S D AC LZ OT CB B 9.4 0.3 5 0 .0% 0.0% -30.0% -46.2% -48 .5% -56 .3%

Actoz S oft C o . , L td. K R W A052 790 K OS E 65. 8 10,0 50.0 0 -2. 4% 1.0% 18. 8% 27.5% 27 .2% -21 .2%

AQ Inte ra ctive, I nc . J PY 3 838 T S E 17. 5 29,0 00.0 0 0 .0% -3 .3% -19.4% -82.9% -90 .7% -91 .5%

Ass oc iated Media Holdings Inc . U S D AS MH OT CP K 0.4 0.0 1 73 3.3% 233.3% 25. 0% 809. 1% -75 .0% -87 .5%

B oomJ Inc U S D B OMJ OT CB B 43. 0 1.0 5 -16 .0% 16.7% -50.0% -67.7% NM -68 .2%

B right T hings plc G B P AIM :BG T AIM 2.9 0.0 2 2 0.0% 56.3% 57. 9% -18.9% -51 .0% -64 .7%

B roadW ebAs ia Inc. U S D BW BA OT CP K 85. 7 1.0 1 8 3.6% 0.0% 68. 3% -32.7% NM -66 .3%

CDC C orp. U S D CHIN.A Na sdaqG S 124. 0 1.1 5 -7. 3% 8.5% -36.1% -56.8% -69 .9% -74 .4%

China Ga teway C orporation U S D CGW Y OT CB B 0.0 0.0 0 3 3.3% 0.0% -80.0% -93.3% -99 .5% -99 .7%

Chines e G ame r Inte rnational TWD G T S M:3 083 G T S M 236. 0 92.0 0 -1. 6% 6.7% 36. 5% 32.6% -12 .0% -33 .8%

Corne rW orld C orporation U S D CW R L OT CB B 11. 7 0.2 5 0 .0% -46 .8% 25. 0% -59.0% -77 .3% -83 .9%

DADA S pA E UR CM:DA CM 153. 2 7.0 0 -4. 3% 1.8% -5.2% -24.4% -48 .5% -56 .8%

Digita lFX Internationa l, Inc . U S D DXN AME X 3.0 0.1 2 0 .0% -29 .4% -64.7% -81.3% -90 .8% -92 .9%

Digita lPos t Inte ractive, Inc. U S D D GL P OT CB B 1.5 0.0 2 -15 .4% -12 .0% -37.1% -80.2% -95 .7% -96 .3%

Digita lTown, I nc . U S D DG TW OT CB B 73. 3 2.7 0 0 .0% -1 .8% -10.0% -3.6% 8 .0% -55 .7%

Dolphin D igita l Media , Inc. U S D DP DM OT CB B 34. 1 0.7 0 -12 .5% -12 .5% -18.6% NM NM -38 .1%

E olith C o. L td. K R W A041 060 K OS E 19. 2 5 55.0 0 1 .8% -3 .5% -20.7% -27.5% -76 .3% -81 .9%

E xtens ions, Inc . U S D E XT I OT C P K 93. 5 0.9 9 0 .0% 890.0% 890. 0% 560. 0% 560.0% -2. 0%

F inanc ia l Media G roup, Inc. U S D F NG P OT CB B 3.4 0.0 5 -33 .3% -39 .8% -85.3% -94.0% -78 .3% -94 .9%

F luid Mus ic C ana da, I nc . C AD T S X:FMN T S X 13. 7 0.3 1 -11 .4% 40.9% -22.5% -80.6% NM -84 .8%

F rogs ter I nteractive P ic tures AG E UR F R G XT R A 18. 4 5.8 0 -14 .1% 26.6% 18. 6% 23.7% -33 .9% -44 .0%

G amania Digita l E ntertainment C o. , L td . TWD 6180 G T S M 103. 6 22.6 0 3 .4% 49.2% 47. 2% -7.4% -20 .3% -38 .8%

G ameOn C o Ltd. J PY 3 812 T S E 140. 2 1 27,0 00.0 0 1 .6% 0.8% 82. 7% 1.6% 0 .0% -22 .3%

G eoS entric O yj E UR G E O1V HLS E 48. 4 0.0 4 0 .0% 33.3% 33. 3% -20.0% -20 .0% -55 .6%

G ia nt I nteractive G roup, Inc . U S D GA NY S E 1,426.3 6.0 0 -5. 2% 0.5% -5.2% -47.3% -45 .5% -65 .1%

G igaMedia Ltd. U S D G IGM Na sdaqG S 379. 8 7.0 3 6 .0% 21.8% -1.4% -41.6% -55 .5% -66 .4%

G oF ish C orporation U S D G OFH OT CB B 5.1 0.2 0 5 .3% 25.0% -4.8% -31.0% -61 .5% -66 .1%

G ravity C o. , L td U S D G R VY Na sdaqGM 15. 0 0.5 4 -10 .0% -6 .9% -40.0% -44.3% -82 .4% -83 .9%

G ree, Inc . J PY T S E :36 32 T S E 0.0 5,2 00.0 0 -4. 4% NM NM NM NM -12 .0%

G ungHo O nline E nterta inment, Inc. J PY 3 765 OS E 138. 0 1 08,9 00.0 0 9 .8% 11.5% -16.2% -35.6% -36 .7% -75 .0%

HanbitS oft, I nc. K R W A047 080 K OS E 55. 3 3,4 00.0 0 0 .0% 7.6% 3.3% 24.8% -53 .5% -58 .5%

IAS E nergy, Inc . U S D IA S C .A OT CB B 1.4 0.0 2 -20 .0% -33 .3% -85.7% -90.5% -95 .6% -95 .6%

IdeaE dge, Inc . U S D OT CB B : IDAE OT CB B 34. 6 0.8 5 6 .2% -37 .0% -59.1% -68.2% -30 .5% -70 .0%

J umbuck E nterta inment P ty L td. AUD AS X: J MB AS X 13. 6 0.3 9 0 .0% -11 .4% -20.4% -30.4% -35 .0% -55 .7%

J umpT V Inc . C AD T S X: J T V T S X 28. 6 0.3 0 -36 .2% 0.0% -56.5% -67.4% -83 .7% -85 .1%

K aboose Inc . C AD T S X :KAB T S X 49. 4 0.4 2 1 8.3% 68.0% -40.8% -40.0% -80 .6% -83 .8%

LiveW orld Inc . U S D L VWD OT CP K 2.3 0.0 8 15 0.0% 50.0% 7.1% -73.2% -73 .2% -90 .0%

LookSmart, L td. U S D LOOK Na sdaqGM 29. 0 1.7 0 3 .0% 8.3% -4.5% -50.7% -51 .3% -64 .6%

Ma gnitude Information S ys tems Inc . U S D MAG Y OT CB B 11. 2 0.0 3 8 .0% 17.4% 35. 0% 41.4% 35 .0% -22 .9%

Mixi, Inc. J PY 2 121 T S E 961. 9 5 67,0 00.0 0 1 .3% -3 .2% -5.5% -10.3% -59 .5% -60 .9%

Moggle, I nc U S D MMOG OT CB B 70. 6 2.0 0 0 .0% 33.3% NM NM NM 0 .0%

National Lampoon Inc. U S D NLN AME X 6.9 0.7 3 0 .0% 0.0% -23.2% -50.7% -60 .1% -70 .4%

NE OW IZ G ames C orpora tion K R W A095 660 K OS E 142. 5 20,0 00.0 0 -4. 1% 3.1% 13. 3% -7.8% -36 .9% -50 .0%

NetDra gon W ebS oft, Inc. H KD 777 S E HK 193. 6 2.8 4 -1. 4% -3 .1% -12.6% -71.5% -79 .1% -81 .4%

Neteas e.com Inc. U S D NT E S Na sdaqG S 2,243.2 18.2 3 -11 .9% -6 .5% -16.8% -12.9% -2 .6% -32 .9%

NeX plore C orpora tion U S D NX PC OT CP K 8.4 0.1 5 -85 .0% -85 .1% -75.0% -72.7% NM -89 .7%

Northgate T echnologies L imited INR 59 0057 B S E 40. 1 55.5 5 -16 .7% 11.8% -30.3% -81.2% -88 .9% -90 .3%

Open T ext C orp. U S D O T E X Na sdaqG S 1,578.3 30.4 3 -3. 4% 12.2% 12. 4% 0.3% 4 .9% -22 .2%

Openwave S ys tems Inc. U S D OP W V Na sdaqG S 63. 1 0.7 6 1 0.1% 38.2% -14.6% -46.9% -66 .8% -73 .7%

P erfect W orld C o. , L td. U S D P W R D Na sdaqG S 1,017.1 17.8 3 -0. 7% 6.0% -12.9% -31.1% -21 .2% -46 .8%

P hotoChannel Network s Inc. C AD T S X V :P N T S XV 47. 8 1.7 0 1 3.3% 14.9% -17.1% -48.6% -48 .0% -59 .0%

Quepas a C orp. U S D QPS A Nas daqCM 24. 7 1.9 5 9 .6% -2 .0% -22.9% -7.1% -21 .7% -51 .1%

S handa Interactive E ntertainment Ltd. U S D S NDA Na sdaqG S 1,896.2 27.3 3 -18 .3% -2 .5% -0.2% 16.9% 0 .6% -28 .5%

S hutterfly , I nc . U S D S F LY Na sdaqG S 195. 3 7.7 9 5 .1% 1.0% 7.0% -32.4% -59 .4% -64 .8%

S K C ommunications C o. , L td. K R W A066 270 K OS E 187. 7 6,1 50.0 0 0 .0% 24.6% -35.9% -57.3% -81 .4% -83 .9%

S NAP Interactive, Inc . U S D S T V I OT C B B 10. 0 0.9 4 3 4.3% 34.3% 370. 0% 36.2% -7 .8% -14 .5%

S NM G lobal Holdings U S D S NMN OT CP K 0.0 0.0 0 -100 .0% -10 0.0% -1 00.0% -1 00.0% -10 0.0% -100 .0%

S park Networks , I nc . U S D LOV AME X 54. 5 2.5 4 -0. 4% -7 .6% -9.6% -37.9% -51 .7% -57 .7%

S pectrumDNA , Inc. U S D S P XA OT CB B 9.2 0.1 9 2 6.7% -9 .5% 18. 8% NM NM -68 .3%

T encent Holdings L td. H KD 700 S E HK 10, 418. 5 45.0 0 -14 .1% -3 .7% -16.7% -24.2% -6 .9% -37 .5%

T he P a re nt C ompany U S D K ID S .Q OT CP K 1.3 0.0 5 -10 .0% -81 .7% -93.8% -97.3% -98 .9% -99 .1%

T he9 L imited U S D N CT Y Na sdaqG S 400. 6 14.5 1 2 .9% 19.1% -12.1% -43.2% -23 .2% -49 .1%

T heS tree t.com, Inc. U S D T S CM Na sdaqGM 93. 0 3.0 5 -11 .1% -10 .0% -23.0% -50.8% -73 .1% -76 .3%

T ree.C om, Inc . U S D T R E E Na sdaqGM 37. 7 4.0 2 6 .2% 143.9% 63. 6% NM NM -63 .7%

Unis erve C ommunications C orp. C AD T S X V :U S S T S XV 1.0 0.0 5 2 5.0% 66.7% -72.2% -76.2% -88 .9% -89 .6%

United Online Inc . U S D UNTD Na sdaqG S 505. 8 6.1 7 4 .9% 0.5% -27.2% -40.4% -39 .6% -50 .6%

UOMO Media , I nc U S D UOMO OT CB B 6.8 0.0 8 -20 .0% -33 .3% -60.0% -82.3% -88 .4% -90 .0%

V OI S , Inc . U S D V O IS OT CB B 2.9 0.4 0 0 .0% 33.3% -46.7% -91.6% NM -92 .9%

W ebzen Inc. U S D W ZE N Na sdaqGM 11. 7 0.9 9 3 .1% 23.8% -17.6% -63.2% -74 .7% -77 .8%

W izz ard S oftware C orpora tion U S D WZE AME X 34. 8 0.7 7 -18 .9% -17 .2% -18.9% -37.9% -65 .8% -76 .3%

W oozyF ly , I nc . U S D W ZYF OT CB B 2.6 0.1 5 0 .0% -50 .0% NM NM NM -100 .0%

W ynds torm C orpora tion U S D W Y ND OT CB B 2.2 0.1 2 0 .0% 0.0% -40.0% -60.0% NM -85 .9%

XI NG AG E UR O 1BC XT R A 218. 7 31.1 2 1 4.8% 16.1% 7.3% 10.6% -21 .4% -31 .6%

Y edangOnline C orp. K R W A052 770 K OS E 84. 4 7,2 70.0 0 1 6.5% 15.9% 5.7% -29.1% -11 .0% -42 .1%

Y nk Kore a Inc. K R W A023 770 K OS E 7.8 4,3 10.0 0 -5. 7% -14 .5% -49.3% -57.3% -73 .6% -78 .3%

ZipLocal Inc. C AD T S XV :ZIP T S XV 0.7 0.0 1 10 0.0% 0.0% -75.0% -90.9% -92 .9% -95 .9%

Average 316.8 11.1% 18.7% 1.4% -20.4% -41.9% -64.3%

Figure 17. Price Performance Source. Capital IQ

Comparable Company Analys is > Web 2.0Valuation Multiples

Company Name

P rimary

E xchange Ticker

USD Market

Cap ($m)

TE V/LTM

R evenue

TEV / NTM

R evenue

TEV/L TM

EB ITDA

TE V/NTM

EB ITDA P /LTM E P S P /NTM E P S P /TangBV

Accelerize N ew Media, Inc. OTCBB ACLZ 9 . 4 4 .3x - - - - - -Actoz S oft Co. , Ltd. K OS E A052790 65 . 8 0 .7x - 4 .0x - 12.5x - 1.3xAQ Inte ractive, Inc. T S E 3838 17 . 5 - - - - - - 0.3xAs sociated Media Holdings Inc. OTCPK ASMH 0 . 4 13. 2x - - - - - -

BoomJ Inc OTCBB BOMJ 43 . 0 42. 7x - - - - - -

Br ight T hings plc A IM A IM:B GT 2 . 9 11. 3x - - - - - -BroadW ebAs ia Inc. OTCPK BWBA 85 . 7 - - - - - - -CDC Corp. Na sdaqGS CHIN .A 124 . 0 0 .4x 0.4x 9 .6x 7 .3x - 16 .9x -China G ateway Corpora tion OTCBB CGWY 0 . 0 0 .0x - - - - - -

Chinese G amer International G T SM G TSM:3083 236 . 0 4 .6x - 9 .8x - 13.9x - 4.5xCornerW orld Corporation OTCBB CWR L 11 . 7 21. 5x - 4 .2x - - - -DADA SpA CM CM:DA 153 . 2 0 .9x - 5 .4x - 8. 9x - -

Digita lF X Inte rnational, Inc. AMEX DXN 3 . 0 0 .3x - - - - - -Digita lP os t Interactive, Inc. OTCBB DG LP 1 . 5 6 .0x - - - - - -

Digita lT own, Inc. OTCBB DG TW 73 . 3 - - - - - - -Dolphin Digita l Media , Inc. OTCBB DP DM 34 . 1 - - - - - - -Eolith Co. Ltd. K OS E A041060 19 . 2 1 .0x - - - - - -Extensions, Inc. OTCPK E XT I 93 . 5 - - - - - - -F ina ncia l Media Group, Inc. OTCBB FNGP 3 . 4 0 .2x - 1 .0x - - - -

F luid Mus ic C anada , Inc. T S X T S X: FMN 13 . 7 - - - - - - 1.1x

F rogs te r Interactive P icture s AG XTR A FR G 18 . 4 3 .3x - - - - - 1.7xGamania Digital E nterta inment Co. , L td. G T SM 6180 103 . 6 0 .7x - 4 .1x - 11.6x - 1.5xGameOn Co L td. T S E 3812 140 . 2 0 .9x - 3 .6x - 13.6x - 1.7xGeoS entric O yj HLS E G E O1V 48 . 4 7 .7x - - - - - 7.0x

Giant Inte ractive G roup, Inc. NY S E G A 1 , 426 . 3 - - - - 1. 3x 12 .7x 0.3xGigaMedia L td. Na sdaqGS G IGM 379 . 8 1 .6x 1.4x 6 .5x 5 .6x 11.2x 9. 4x 3.6xGoF ish Corporation OTCBB GOFH 5 . 1 2 .5x - - - - - -

Gravity Co., Ltd Na sdaqGM GR V Y 15 . 0 - - - - - - -Gree, Inc. T S E T SE :3632 0 . 0 - - - - - - -

GungHo Online E nte rtainment, Inc. OS E 3765 138 . 0 1 .0x - 6 .6x - - - 39 . 0xHanbitS oft, Inc. K OS E A047080 55 . 3 0 .7x - - - - - 1.8xIAS E nergy, Inc. OTCBB IAS C .A 1 . 4 - - - - - - -IdeaE dge, Inc. OTCBB OTCB B :IDAE 34 . 6 - - - - - - 30 . 9xJ umbuck E ntertainment P ty Ltd. ASX AS X: JMB 13 . 6 0 .8x - 1 .7x - 7. 0x - 1.5x

J umpTV Inc. T S X T SX :J T V 28 . 6 2 .9x - - - - - 1.9x

Ka boose Inc. T S X T SX: K AB 49 . 4 0 .9x 0.8x 11. 9x 6 .0x - - -LiveWorld Inc. OTCPK LV WD 2 . 3 0 .1x - - - - - 1.1xLookS mar t, Ltd. Na sdaqGM LOOK 29 . 0 0 .0x 0.0x - - 4. 2x - 1.0xMagnitude Informa tion S ys tems Inc. OTCBB MAGY 11 . 2 - - - - - - -Mixi, Inc. T S E 2121 961 . 9 6 .8x - 17. 3x - 41.7x - 7.1x

Moggle , Inc OTCBB MMOG 70 . 6 - - - - - - -National L ampoon Inc. AMEX N LN 6 . 9 1 .6x - - - - - 19 . 4x

NEOW IZ G ames Corpora tion K OS E A095660 142 . 5 1 .0x - 3 .7x - 7. 9x - 4.6xNetDra gon WebS oft, Inc. S EHK 777 193 . 6 0 .2x - 0 .4x - 5. 5x - 1.1xNetea se. com Inc. Na sdaqGS NTE S 2 , 243 . 2 - - - - 1. 7x 9. 8x 0.5x

NeXplore Corporation OTCPK NXP C 8 . 4 - - - - - - -Northgate Technologies L imited B SE 590057 40 . 1 0 .3x - 1 .6x - 2. 5x - -Open T ext Corp. Na sdaqGS OTEX 1 , 578 . 3 2 .2x 1.9x 8 .7x 7 .8x 26.9x 12 .6x -Openwave S ys tems Inc. Na sdaqGS OPWV 63 . 1 - - - - - - 0.8xPe rfect W orld Co., Ltd. Na sdaqGS PW RD 1 , 017 . 1 - - - - 1. 6x 8. 3x 0.5x

PhotoChannel Ne tworks Inc. T S XV T S XV : PN 47 . 8 3 .7x 1.9x - 4 .7x - 13 .6x 16 . 3xQuepas a Corp. Na sdaqCM QP SA 24 . 7 - - - - - - 10 . 1xShanda Intera ctive E nte rtainment L td. Na sdaqGS SNDA 1 , 896 . 2 - - - - 1. 7x 10 .2x 0.9xShutterfly, Inc. Na sdaqGS S F LY 195 . 3 0 .8x 0.8x 6 .0x 4 .6x 32.0x - 1.3xSK Communications Co. , Ltd. K OS E A066270 187 . 7 1 .2x - 13. 0x - - - -

SNAP Interactive, Inc. OTCBB S TV I 10 . 0 3 .9x - 38. 4x - 55.6x - 7.3xSNM G lobal Holdings OTCPK S NMN 0 . 0 - - - - - - -

Spark Networks , Inc. AMEX LOV 54 . 5 0 .8x - 4 .3x - 5. 5x - -SpectrumDNA, Inc. OTCBB S PXA 9 . 2 - - - - - - 9.9xTencent Holdings Ltd. S EHK 700 10 , 418 . 5 12. 5x - 25. 1x - 34.1x - 13 . 6x

The P arent Company OTCPK KIDS .Q 1 . 3 0 .2x - - - - - -The9 Limited Na sdaqGS NCTY 400 . 6 - - - - 1. 0x 7. 1x 0.2xTheS treet.com, Inc. Na sdaqGM T SCM 93 . 0 0 .2x 0.2x 1 .3x 4 .0x 15.8x - 0.9xT ree .Com, Inc. Na sdaqGM TR E E 37 . 7 0 .1x 0.1x - - - - 0.6xUnis erve Communications Corp. T S XV T S XV:US S 1 . 0 0 .5x - 18. 7x - - - -

United Online Inc. Na sdaqGS UNTD 505 . 8 1 .6x 0.8x 6 .6x 3 .4x 7. 7x 8. 1x -UOMO Media, Inc OTCBB UOMO 6 .8 15. 1x - - - - - -VO IS , Inc. OTCBB VOIS 2 . 9 - - - - - - -W ebzen Inc. Na sdaqGM WZE N 11 . 7 - - - - - - 0.0xW izza rd S oftwa re Corporation AMEX W ZE 34 . 8 5 .6x - - - - - -

W oozyF ly, Inc. OTCBB WZYF 2 . 6 - - - - - - -W ynds torm Corporation OTCBB WYND 2 . 2 - - - - - - -XING AG XTR A O1B C 218 . 7 3 .8x - 9 .8x - 20.6x - 5.6x

YedangOnline Corp. K OS E A052770 84 . 4 1 .6x - 7 .4x - 9. 7x - 4.5xYnk K orea Inc. K OS E A023770 7 . 8 0 .5x - - - - - -ZipL ocal Inc. T S XV T SX V:ZIP 0 . 7 0 .5x - - - - - -

High 10 , 418 . 5 21. 5x 1.9x 38. 4x 7 .8x 55.6x 13 .6x 39 . 0xLow 0 . 0 - 0.0x 0 .4x 3 .4x 1. 0x 7. 1x 0.0xAverage 355.9 2.7x 0.9x 8.6x 5.2x 13.7x 10.2x 5.9x

Median 34 . 7 1 .0x 0.8x 6 .3x 4 .7x 8. 4x 9. 8x 1.7x

Figure 18. Valuation Comparison Source. Capital IQ

Figure 19. Financing, Last Three Months Source. Company reports

Financing - Last Three Months (US$ mm) Month Company Name Country Debt financing PIPE Seed Series A Series B Series C Series D Grand Total

Nov-08 HuggingtonPost USA 25.0 25.0 Angie's List USA 18.0 18.0 Rockyou USA 17.0 17.0 PlaySpan USA 16.8 16.8 KickApps USA 14.0 14.0 Multiply USA 5.0 5.0 Casual Collective UK 1.0 1.0

Nov-08 Total 18.0 1.0 16.8 61.0 96.8

Dec-08 GoFish USA 22.5 22.5 NetShelter Canada 11.1 11.1 Blue Kai USA 10.5 10.5 FooMojo USA 9.9 9.9 Scribd USA 9.0 9.0 Superfish Israel 5.3 5.3 Tagged USA 5.0 5.0 Jackbe USA 5.0 5.0 Snapmylife USA 5.0 5.0 ChakPak India 5.0 5.0 Tumblr USA 4.5 4.5 Overlay.TV Canada 3.8 3.8 DotBlu USA 2.0 2.0 Angie's List USA 1.0 1.0 StockTwits USA 0.8 0.8

Dec-08 Total 5.0 22.5 23.8 43.1 1.0 5.0 100.4

Jan-09 Yodle USA 10.0 10.0 RatePoint USA 10.0 10.0 DECA USA 10.0 10.0 One True Media USA 9.0 9.0 Play Hard Sports USA 8.0 8.0 JibJab USA 7.5 7.5 Xobni USA 7.0 7.0 AboutUs USA 5.0 5.0

Jan-09 Total 5.0 34.0 27.5 66.5

Grand Total 23.0 22.5 1.0 28.8 93.9 89.5 5.0 263.7

RELEVANT DISCLOSURES:

L IST OF D IS CLOS URE TE RMS :

1. None Applicable.

ANALYST CERTIFICATION

Each analyst of Research Capital Corporation whose name appears in this report hereby certif ies 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.

In format i on about Research Capi ta l Corpora t i on ’s Rat i ng Sys tem, the dis t r i bu t i on o f our research to c l ien ts and the percen tage o f recommendat i ons whi ch are in each o f our rat i ng ca tegor i es i s avai labl e on our web si te a t www. researchcapi ta l . com.

The in format i on con tai ned i n th i s report has been drawn f rom sources bel i eved to be re l i able but i t s accuracy o r comple teness is no t guaranteed , nor i n p rovi d i ng i t does Research Capi ta l Corpora t ion assume any responsib i l i ty o r l iabi l i ty . Research Capi ta l Corpora t ion , i t s d i recto rs , o f f i cers and o ther employees may, f rom t ime to t ime, have posi t ions i n the secur i t ies ment i oned herein . Conten ts o f th i s report cannot be reproduced i n who le or i n par t wi thou t the expressed permissi on o f Research Capi ta l Corporat i on. (U.S. Ins t i tu t ional Cl ien ts — Research Capi ta l U.S.A. Inc. (a whol l y owned subsid i ary o f Research Capi ta l Corpora t ion) accep ts responsib i l i t y fo r the contents o f th i s repor t sub jec t to the terms & l imi tat i ons se t out above . F i rms o r i ns t i tu t i ons recei v i ng th i s repor t should e f fect t ransact i ons in secur i t i es d i scussed i n the repor t through Research Capi ta l U.S.A. Inc. , a Broker-Dealer Regis te red wi th the Uni ted Sta tes Secur i t ies and Exchange Commissi on) .

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