09-01-20 Web 2.0 Weekly

SOFTWARE & SERVICES

20 JANUARY 2009

DAVID SHORE, CFA, MBA 416.860.6784

WEB 2.O WEEKLY

[email protected] Arun Thomas (Associate) 416.860.7666

FINANCING ACTIVITY PICKS UP S UMM AR Y W e have identified 77 public companies for our W eb 2.0 universe. These include a wide variety of companies, including MMOG (Massive Multi-Player Online Gaming) companies, social networking software companies, media sharing companies, and social lending companies. The average market cap for the group is over $300 million, with average trailing revenue greater than $100 million. The companies are also highly profitable, with an average EBITDA margin of 18.4%. On a valuation basis, the overall average is 3.8x trailing revenue and 8.6x trailing EBITDA. Seventeen of the companies have more than 500 employees.

CA P IT AL M AR K ET A CT I V IT Y After 17 financings in December totalling $117.8 million (average $6.9 million), the New Year has started strong, with 20 financings already totalling $139.6 million (average $7.0 million). The largest financing in the last three months was of HuffingtonPost for $25.0 million in November. Seven companies have raised more than $10 million each thus far in January – with Aster Data Systems the largest at $12 million so far.

IN DU ST R Y N E W S This section discusses corporate activity such as partnerships, new product launches, and financial results.

V AL U AT I O N This section provides an overview of valuation metrics for the 77 public W eb 2.0 companies we have identified thus far. W e calculate TEV/Revenue, TEV/EBITDA, and P/E multiples for the companies in our universe. We also compare multiples by country and exchange.

This report has been created b y Anal ysts that are emplo yed b y Research Capital Corporation, a Canadian Investment Dealer. T o ro n t o 4 1 6 . 8 6 0 . 7 6 0 0

Montreal 514.399.1500

w w w . r e s e a rc h c a p i t a l . c o m Vancouver 604.662.1800

Calgary 403.265.7400

Regina 306.566.7550

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THE WEB 2.0 UNIVERSE Over 75 public Web 2.0 companies identified: W e have identified 77 public companies for our W eb 2.0 universe. These include a wide variety of companies, including MMOG (Massive Multi-Player Online Gaming) companies, social networking software companies, media sharing companies, and social lending companies. See below for a summary of the full universe (Figure 1). Note that we have not included the large technology and media companies such as Google, Yahoo, Disney, and Sony in our universe as they would skew the results due to their immense size relative to the rest of the group. The average market cap for the group is over $300 million, with average trailing revenue greater than $100 million. The companies are also highly profitable with an average EBITDA margin of 18.4%. On a valuation basis, the overall average is 3.8x trailing revenue and 8.6x trailing EBITDA. Seventeen of the companies have more than 500 employees. C omparable C ompany Analys is > Web 2.0 S ummary

C ompany Name Acce lerize N ew Media, Inc. Actoz S oft C o. , Ltd. AQ Interactive, Inc. As s ociated Me dia Holdings Inc. B oomJ I nc B r ight T hi ngs plc B r oadW ebA s ia Inc. C DC C orp. C hina G ateway C orpora tion C hines e G amer International C ornerW orld C orporation DAD A S pA Digi ta lF X Inte rnational, Inc. Digi ta lP os t Inter active, Inc. Digi ta lT own, Inc. Dolphin Digita l Me dia , Inc. E olith C o. Ltd. E xtensi ons, Inc. F ina ncia l Me dia Group, Inc. F luid Mus ic C anada , Inc. F rogs ter Inte ractive P icture s A G Ga mania Digital E nterta inme nt C o. , L td. Ga meO n C o L td. Ge oS entric O yj Giant Inte ractive G roup, Inc. GigaMe dia L td. GoF is h C or por ation Gr avity C o., Ltd Gr ee, Inc. GungHo Online E ntertainment, Inc. HanbitS oft, Inc. IA S E ne rgy, Inc. IdeaE dge, Inc. J umbuck E ntertainment P ty Ltd. J umpT V I nc. K a boos e Inc. K ings oft C o. Ltd. Lingo Me dia C orpora tion Live World Inc. LookS mar t, Ltd. Magnitude Informa tion S ys tems Inc. Mixi, Inc. Moggle , Inc National L ampoon Inc. NE O W IZ G ame s C orpora tion NetDra gon We bS oft, Inc. Netea s e. com Inc. NeXplore C or por ation Northgate T echnologies L imited Open T ext C or p. Openwa ve S ys tems Inc. P e rfect W orld C o., Ltd. P hotoC hannel Ne tworks Inc. Quepas a C orp. S handa Intera ctive E ntertainment L td. S hutterfly, Inc. S K C ommunications C o. , Ltd. S NA P I nter active, Inc. S NM G lobal Holdings S park Ne tworks , Inc. S pectrum DNA, Inc. T encent Holdings Ltd. T he P ar ent C ompany T he 9 Limited T he S tre et.com, Inc. T ree . C om, Inc. Unis e rve C ommunications C or p. Unite d Online Inc. UOMO Media, Inc VO IS , I nc. W ebzen Inc. W izza rd S oftwa re C orporation W oozyF ly, Inc. W ynds torm C orporation XING A G Y e dangO nli ne C orp. Y nk K or ea I nc. ZipL ocal I nc.

L TM as of 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 6/30 /2 00 7 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 10 /31/2008 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 11 /30/2008 NA 12 /31/2007 9/30 /2 00 8 8/31 /2 00 8 9/30 /2 00 8 6/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 NA 9/30 /2 00 8 9/30 /2 00 8 10 /31/2008 9/30 /2 00 8 6/30 /2 00 8 6/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 12 /31/2008 7/31 /2 00 8 12 /31/2007 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 7 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 12 /31/2007 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 8 /2/2008 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 8/31 /2 00 8 9/30 /2 00 8 10 /31/2008 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 9/30 /2 00 8 NA 9/30 /2 00 8 12 /31/2007 12 /31/2007 9/30 /2 00 8

High Low Average

Figure 1. Web 2.0 Universe Summary Source. Capital IQ

Ticker AC LZ A0 52 790 383 8 A S MH B O MJ A IM: B GT B W BA C HIN.A CG WY G T S M: 30 83 CWRL C M:DA DXN DG LP DG T W DP DM A0 41 060 E XT I F NGP T S X: F MN FR G 618 0 381 2 G E O1 V GA GIGM G OF H GRVY T S E : 363 2 376 5 A0 47 080 IAS C . A OT C B B :IDA E AS X: J MB T S X :J T V T S X :K AB 388 8 T S X V: LM LV W D LO OK MA GY 212 1 MMOG NLN A0 95 660 7 77 NT E S NXP C 5 90057 OTEX OPW V P WR D T S XV : PN QP S A S NDA S F LY A0 66 270 S TV I S NMN LO V S P XA 7 00 K IDS .Q NC T Y T SCM TRE E T S XV :US S UNT D UO MO VO IS W ZE N W ZE W ZY F W YND O 1B C A0 52 770 A0 23 770 T S X V: ZIP

E xc hange OTCB B K OSE TSE OTCP K OTCB B AIM OTCP K Na s daqGS OTCB B GTSM OTCB B CM A ME X OTCB B OTCB B OTCB B K OSE OTCP K OTCB B TSX XT R A GTSM TSE HL S E NY S E Na s daqGS OTCB B Nas da qG M TSE OS E K OSE OTCB B OTCB B AS X TSX TSX S E HK T S XV OTCP K Nas da qG M OTCB B TSE OTCB B A ME X K OSE S E HK Na s daqGS OTCP K B SE Na s daqGS Na s daqGS Na s daqGS T S XV Nas daqC M Na s daqGS Na s daqGS K OSE OTCB B OTCP K A ME X OTCB B S E HK OTCP K Na s daqGS Nas da qG M Nas da qG M T S XV Na s daqGS OTCB B OTCB B Nas da qG M A ME X OTCB B OTCB B XT R A K OSE K OSE T S XV

Trading C urrency U SD KRW J PY U SD U SD GBP U SD U SD U SD T WD U SD E UR U SD U SD U SD U SD KRW U SD U SD C AD E UR T WD J PY E UR U SD U SD U SD U SD J PY J PY KRW U SD U SD A UD C AD C AD H KD C AD U SD U SD U SD J PY U SD U SD KRW H KD U SD U SD INR U SD U SD U SD C AD U SD U SD U SD KRW U SD U SD U SD U SD H KD U SD U SD U SD U SD C AD U SD U SD U SD U SD U SD U SD U SD E UR KRW KRW C AD

HQ United S tates S outh K orea J apa n United S tates United S tates United K ingdom United S tates H ong Kong United S tates T a iwan United S tates Ita ly United S tates United S tates United S tates United S tates S outh K orea United S tates United S tates United S tates G ermany T a iwan J apa n F inland C hina T a iwan United S tates S outh K orea J apa n J apa n S outh K orea C anada United S tates Aus tr alia C anada C anada C hina C anada United S tates United S tates United S tates J apa n United S tates United S tates S outh K orea C hina C hina United S tates I ndia C anada United S tates C hina C anada United S tates C hina United S tates S outh K orea United S tates United S tates United S tates United S tates C hina United S tates C hina United S tates United S tates C anada United S tates C anada United S tates S outh K orea United S tates United S tates United S tates G ermany S outh K orea S outh K orea C anada

C urrent P rice 0 .3 5 10 ,6 00 .0 0 29 ,0 00 .0 0 0 .0 1 1 .0 0 0 .0 1 1 .0 1 1 .0 1 0 .0 0 92 .7 0 0 .2 5 6 .7 9 0 .1 5 0 .0 2 3 .0 0 0 .7 5 5 45 .0 0 0 .5 2 0 .0 5 0 .3 9 4 .7 5 22 .8 0 116 ,1 00 .0 0 0 .0 4 5 .6 1 6 .8 2 0 .2 2 0 .5 8 5 ,7 00 .0 0 101 ,6 00 .0 0 3 ,1 60 .0 0 0 .0 2 0 .8 3 0 .4 8 0 .3 0 0 .3 8 2 .7 0 0 .9 9 0 .0 5 1 .2 9 0 .0 3 570 ,0 00 .0 0 2 .0 0 0 .7 3 19 ,6 00 .0 0 2 .9 0 17 .5 4 1 .0 0 47 .6 0 31 .2 7 0 .6 5 15 .6 7 1 .6 2 1 .9 3 28 .5 6 7 .1 0 6 ,6 70 .0 0 1 .0 2 0 .0 0 2 .5 0 0 .1 9 44 .5 0 0 .0 5 14 .9 5 3 .0 2 4 .6 0 0 .0 6 6 .1 9 0 .1 2 0 .4 0 1 .0 1 0 .7 5 0 .1 5 0 .1 2 30 .4 4 6 ,6 00 .0 0 4 ,1 90 .0 0 0 .0 2

US D Market Cap ($m) 9. 4 68 . 8 17 . 4 0. 2 40 . 9 2. 4 85 . 7 1 08.9 0. 0 2 34.8 11 . 7 1 44.4 3. 7 1. 5 81 . 5 36 . 5 18 . 7 49 . 1 3. 4 16 . 3 14 . 6 1 03.2 1 27.8 47 . 0 1 ,3 33 .5 3 68.5 5. 6 16 . 1 0. 0 1 28.4 51 . 0 1. 5 35 . 1 15 . 9 27 . 2 42 . 4 3 73.5 10 . 2 1. 5 22 . 0 13 . 1 9 64.1 70 . 6 6. 9 1 38.6 1 97.6 2 ,1 58 .3 55 . 8 34 . 1 1 ,6 21 .8 54 . 0 8 93.9 43 . 2 24 . 5 1 ,9 81 .6 1 78.0 2 02.0 10 . 9 0. 0 53 . 6 9. 2 10, 30 6. 0 1. 3 4 12.8 92 . 1 43 . 1 1. 1 5 07.4 10 . 2 2. 9 12 . 0 33 . 9 2. 6 2. 2 2 07.8 76 . 0 7. 6 1. 3

US D L TM Total R ev ($m) 3. 2 53 . 9 61 . 0 0. 1 1. 1 0. 2 0. 0 428 .1 6. 7 38 . 3 0. 6 222 .4 16 . 9 0. 4 NM NA 18 . 4 NM 7. 8 4. 2 5. 3 110 .8 82 . 4 5. 4 245 .1 200 .5 6. 3 36 . 1 NA 112 .9 51 . 1 0. 0 0. 0 10 . 5 11 . 5 59 . 1 106 .7 3. 2 11 . 7 69 . 5 0. 1 124 .4 NM 7. 4 132 .8 95 . 2 422 .5 NM 137 .0 744 .2 199 .0 186 .8 13 . 6 0. 1 477 .8 203 .3 152 .7 2. 3 2. 0 60 . 1 0. 1 903 .5 112 .0 252 .4 75 . 2 231 .2 25 . 8 538 .7 0. 5 0. 0 20 . 8 6. 2 0. 0 NA 41 . 1 50 . 5 14 . 4 2. 8

US D L TM Total EB ITDA ($m) (4.7 ) 9 .8 4 .9 (2.3 ) (7.7 ) (1.6 ) (4.6 ) 18. 8 (6.6 ) 18. 1 3 .1 35. 5 (4.5 ) (3.3 ) (2.5 ) NM (0.1 ) NM 1 .7 (8.6 ) (3.2 ) 18. 7 20. 9 ( 12. 4) 15 5. 6 48. 0 ( 11. 0) 6 .9 NM 16. 6 ( 13. 1) (0.9 ) (3.5 ) 4 .8 (1.8 ) 4 .5 36. 1 (1.4 ) (1.2 ) (2.6 ) (3.2 ) 49. 0 (1.1 ) (1.6 ) 35. 7 46. 3 27 4. 3 (4.9 ) 24. 5 18 7. 9 ( 22. 8) 99. 9 (2.4 ) ( 11. 8) 22 8. 3 25. 7 14. 4 0 .2 (0.7 ) 11. 7 (2.7 ) 44 7. 6 ( 13. 5) 95. 1 12. 2 ( 39. 6) 0 .7 13 0. 6 (0.4 ) (4.0 ) (6.1 ) (6.5 ) NM NM 16. 0 11. 3 (1.1 ) (3.8 )

E B ITDA % NM 18. 3% 8 .0 % NM NM NM NM 4 .4 % -98 . 9% 47. 1% 50 6. 8% 16. 0% -26 . 4% NM NM NM - 0. 3% NM 21. 9% NM 16. 9% 25. 4% NM 63. 5% 23. 9% NM 19. 2% NM 14. 7% -25 . 6% NM NM 46. 0% -15 . 3% 7 .6 % 33. 8% -42 . 5% -10 . 1% - 3. 7% NM 39. 4% NM -21 . 1% 26. 9% 48. 6% 64. 9% NM 17. 8% 25. 3% -11 . 5% 53. 5% -17 . 7% NM 47. 8% 12. 6% 9 .4 % 10. 1% -34 . 8% 19. 5% NM 49. 5% -12 . 0% 37. 7% 16. 2% -17 . 1% 2 .8 % 24. 2% -91 . 6% NM -29 . 5% NM NM NM 38. 8% 22. 4% - 7. 6% NM 0 .0 %

TE V /L TM R evenue 4. 3x 0. 8x 10 .2 x 40 .7 x 9. 7x 0. 4x 0. 0x 4. 6x 21 .5 x 0. 8x 0. 4x 6. 0x 1. 0x 0. 2x 0. 5x 2. 7x 0. 7x 0. 8x 7. 7x 1. 5x 2. 6x 0. 9x 0. 6x 1. 1x 2. 9x 0. 8x 2. 7x 3. 3x 0. 1x 6. 9x 1. 6x 1. 0x 0. 2x 0. 2x 2. 3x 3. 1x 0. 7x 1. 3x 4. 3x 0. 8x 12 .3 x 0. 2x 0. 2x 0. 1x 0. 5x 1. 6x 22 .4 x 5. 5x 3. 7x 1. 5x 0. 5x 0. 7x

TEV /L TM EB ITDA 4. 4x 8. 8x 9. 8x 4. 2x 5. 3x 1. 0x 4. 1x 3. 0x 6. 3x 6. 1x 2. 4x 11 . 0x 7. 9x 17 . 4x 3. 6x 0. 5x 1. 4x 9. 0x 5. 4x 14 . 0x 42 . 1x 4. 2x 24 . 9x 1. 2x 18 . 8x 6. 6x 9. 5x 6. 7x -

Employees 20 NA NA 3 25 9 46 3 , 125 37 NA NA 574 68 11 3 6 NA 2 22 29 NA NA NA 92 1 , 016 975 41 636 NA NA NA NA NA 72 NA NA 1 , 660 NA 73 93 13 NA 3 24 NA 1 , 482 2 , 413 19 286 3 , 000 618 1 , 401 NA 63 2 , 564 512 NA 5 33 176 7 6 , 039 347 1 , 361 349 1 , 000 NA 928 NA 4 338 110 14 NA 161 NA NA NA

10, 30 6. 0 0. 0 308.9

90 3. 5 0.0 101.8

4 47 .6 -39 .6 25.9

50 6. 8% -98 . 9% 18.4%

40 .7 x 3.8x

42 . 1x 0. 5x 8.6x

6 ,0 39 2 614

Website www. acce lerizene wmedia. com www. actoz.com www. aqi.co.jp www. ma cgregor ene rgy. com www. boomj. com www. brightthings . com www. broadweba s ia. com www. cdccorpora tion.net www. chines e gamer. net www. cornerworld. com da da .dada . net www. digitalfx.com www. digitalpos tinte ractive. com www.e ne tpc.com www.dolphindigitalmedia. com www. eolith. co. kr www. ext. com www.wa lls t.net www.fluidmedia networks . com www. frogste r-ip.de/en/inde x.php www. ga mania. co. kr www.gameon.co. jp www.benefon.com www. ga-me. com www.giga media. com.tw www. gofis h. com www.gra vity. co. kr gre e. co. jp www. gungho. co. jp/e nglis h/ www. hanbits oft. co. kr www. ia s ene rgy. com www. idea edge. com www. jumbuck. com www. jumptv.com www. kaboos e .com www. kings oft. com www.l ingome dia .com www. live world. com www. looks mar t. com www. ma gnitude. com www.mixi. co. jp www. playmoggle . com www. nationallampoon. com www. neowiz.com/kor/ www. nd. com. cn corp. 16 3. com www.nexplore .com www.northgatetech. com www.ope ntext.com www. openwa ve. com www. wanmei .com/en/inde x. htm www. photocha nnel. com www.que pas a . com www. snda .com www.s hutterfly.com www. s nap-inte ractive .com www. s nmglobalholdings .com www. spar k.net www. tencent. com. hk /inde x_ e. s html www. thepare ntcompany. com www. the9 .com www. thes tre et. com www. le ndingtre e. com www. unis erve. com www.unitedonline. net www. uomolife .com www.vois . com www. webzen. co. kr www.wizzar ds oftware .com www. woozyfly. com www. wynds torm.com www.xing. com www. yeda ngonli ne. com/i ndexhome. as p www. ynk. ne t www. ziplocal. com

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C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G ) January rebounds from December: After 17 financings in December totalling $117.8 million (average $6.9 million), the New Year has started strong, with 20 financings already totalling $139.6 million (average $7.0 million). The largest financing in the last three months was of HuffingtonPost for $25.0 million in November (Figure 2). Seven companies have raised more than $10 million each thus far in January – with Aster Data Systems the largest at $12 million so far. For additional details, see Figure 27 (at end of note). Financings - Last three months 30.0

25.0

(US$m)

20.0

Jan-09 15.0

Dec-08 Nov-08

10.0

5.0

Pulse Entertainment

Meez

Clickpass

Identi.ca

StockTwits

Casual Collective

DotBlu

Snooth

Hubdub

Overlay.TV

Geni

Tumblr

Jackbe

Tagged

Multiply

Sportsblogs

AboutUs

Snapmylife

ChakPak

Superfish

Kewego

Motionbox

Xobni

InsideView

JibJab

Social Median

Play Hard Sports

Scribd

One True Media

Taptu

FooMojo

DECA

Yodle

RatePoint

Nurien

Go Internet Media

Blue Kai

NewsGator

NetShelter

KickApps

Aster Data Systems

PlaySpan

GoFish

Rockyou

Angie's List

HuffingtonPost

0.0

Figure 2. Financings, Last Three Months Source. Company reports

But impact of worldwide financial meltdown lingers: However, on a trailing 12-month basis, financings are down for the third month in the last four, with average round sizes decreasing slightly as of January (Figure 3).

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LTM Financing 4,000.0

20.0

18.0 3,500.0 16.0 3,000.0 14.0 2,500.0

2,000.0

10.0

(US$m)

(US$m)

12.0

8.0 1,500.0 6.0 1,000.0 4.0 500.0 2.0

Total

Jan-09

Dec-08

Oct-08

Nov-08

Sep-08

Jul-08

Aug-08

Jun-08

Apr-08

May-08

Mar-08

Jan-08

Feb-08

Dec-07

Oct-07

Nov-07

Sep-07

Jul-07

Aug-07

Jun-07

Apr-07

May-07

Mar-07

Jan-07

Feb-07

Dec-06

Oct-06

Nov-06

Sep-06

Jul-06

Aug-06

Jun-06

Apr-06

May-06

Mar-06

Jan-06

Feb-06

Dec-05

Oct-05

Nov-05

Sep-05

0.0 Aug-05

0.0

Average

Figure 3. Financings, Last 12 Months Source. Company reports

Cumulative total breaks $5.0 billion: Overall, on a cumulative basis, W eb 2.0 financings have totalled more than $5.0 billion, with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 4). Web 2.0 Financing (cumulative) 6,000.0

1,400.0 1,277.0 1,200.0

5,000.0

1,000.0

941.2

800.0 695.7

3,000.0

(US$m)

(US$m)

4,000.0

600.0 488.2 2,000.0 400.0 295.3

280.7 200.0 87.2

94.3

69.4

41.1 29.4 37.5 33.5 14.7 35.0

20.0 2.4 35.5 28.8 16.8

1,000.0

143.0

124.1

139.6 72.0

0.0

2002

2003

2004

2005

2006

2007

2008

Q1/2009

Q4/2008

Q3/2008

Q2/2008

Q1/2008

Q4/2007

Q3/2007

Q2/2007

Q1/2007

Q4/2006

Q3/2006

Q2/2006

Q1/2006

Q4/2005

Q3/2005

Q2/2005

Q1/2005

Q4/2004

Q3/2004

Q2/2004

Q1/2004

Q4/2003

Q4/2002

Q2/2002

0.0

2009

Figure 4. Financing, Cumulative Source. Company reports

U.S. remains dominant: U.S. companies continue to dominate capital market activity – with just over 73% of financings/M&A involving U.S. companies (based on dollars) (Figure 5). Canadian companies generated under 1% of

Page 5

capital market activity based on dollar volume (Figure 5). Based on number of transactions, the U.S. leads with approximately 76% of deals, while Canada is third in number of financings at 5.8% (Figure 6). Financing by Country - LTM (#) UK 6.3%

Canada 5.8%

Financing/M&A by Country - LTM ($) Israel 2.2%

UK 13.5%

China 2.2%

China 8.0%

ROW 7.6%

Russia 1.7%

Canada 0.7% Denmark 0.7% Israel 0.6%

ROW 1.7%

USA 75.9%

USA 73.1%

Figures 5 & 6. Financing/M&A, by Country (LTM, $, #) Source. Company reports

More early-stage funding (by count): Over 40% of financings in the last 12 months are for early-stage companies (Angel/Seed or Series A) (Figure 7). Series B rounds are 32.6% of the total, with later-stage (Series D, E and PIPE) deals accounting for just 7.1%. Financing by Type - LTM

Series C 13.8% Series B 32.6%

Series D 5.0%

Angel/Seed 8.3%

Debt financing 3.3% PIPE 1.7%

Series A 35.4%

Figure 7. Financing, by Type (LTM, $) Source. Company reports

But “D” series are largest equity rounds (by dollar): In the last 12 months, there have been nine “D” series rounds, averaging over $25 million per financing (Figure 8). Note that we have excluded the $430 million Series C financing of Oak Pacific Interactive as it skews the results substantially.

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Average financing round size - LTM 45.0

40.0

35.0

30.0

(US$m)

25.0

41.9

20.0

15.0 25.6 20.1

10.0

5.0

11.5

9.8

10.0

6.6 4.3 0.0 # rounds

Angel/Seed

Debt financing

PIPE

Series A

Series B

Series C

Series D

Series E

15

6

3

64

59

25

9

1

Figure 8. Average Size per Round Source. Company reports

C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E ) Price Performance: Our W eb 2.0 index (market-cap weighted) has closely tracked the performance of the NASDAQ composite index, although it has outperformed the index since late October 2008 (Figure 9). Web 2.0 Index Price Performance 160

140

120

100

80

60

40

20

Figure 9. Web 2.0 Price Performance Source. Capital IQ

1/19/2009

1/5/2009

12/22/2008

12/8/2008

11/24/2008

11/10/2008

10/27/2008

9/29/2008

Web 2.0 (Market Cap Weighted)

10/13/2008

9/1/2008

9/15/2008

8/18/2008

8/4/2008

7/21/2008

7/7/2008

6/9/2008

NASDAQ COMP

6/23/2008

5/26/2008

5/12/2008

4/28/2008

4/14/2008

3/31/2008

3/17/2008

3/3/2008

2/18/2008

2/4/2008

1/21/2008

0

Page 7

DigitalTown leads performance, LookSmart lags: W ith a 1-week return of 11.1%, DigitalTown (DGTW -OTCBB) had the best performance in the group (for stocks with prices greater than $1) (Figure 10). LookSmart (LOOK-NASDAQ) fell the most, -23.4%. 1 Week P ric e P erformance DigitalT own, Inc. T ree. C om, Inc. G ree, Inc. S NAP Interactive, Inc. S K C ommunica tions C o., Ltd. G iga Media Ltd. Quepas a C orp. T he9 Limited Actoz S oft C o., Ltd. W ebzen Inc. S ha nda Intera ctive E ntertainment United O nline Inc. NetDragon W ebS oft, Inc. Open T ext C orp. G amania Digital E ntertainment C hines e G amer International Mixi, Inc. Moggle, Inc B roadW ebAs ia Inc. AQ Interactive, Inc. K ings oft C o. Ltd. T encent Holdings Ltd. DADA S pA E olith C o. Ltd. NE OW IZ G a mes C orporation S pa rk Networks , Inc. Neteas e.com Inc. Y nk K orea Inc. X ING AG P hotoC hannel Networks Inc. S hutterfly, Inc. G iant Interactive G roup, Inc. T heS treet. com, Inc. G ungHo Online E ntertainment, Inc. HanbitS oft, Inc. G ameO n C o Ltd. Y edangOnline C orp. P erfect W orld C o., Ltd. C DC C orp. Northgate T echnologies Limited F rogs ter Interactive P ictures AG LookS mart, Ltd. -30. 0%

11.1% 10.8% 9.6% 8.5% 8.5% 7.9% 6.6% 6.4% 5.5% 5.2% 4. 3% 2. 5% 2. 1% 1. 7% 0. 9% 0.8% 0.5% 0.0% 0.0% 0.0% -0. 4% -1. 1% -1.6% -1. 8% -2.0% -2. 7% -2.8% -2.8% -2.9% -3. 0% -5.8% -5.9% -5.9% -6. 8% -7.1% -8.6% -9. 2% -9. 3% -10.6% -14.3% -18. 1% -23.4% -25. 0%

-20. 0%

-15. 0%

-10. 0%

-5.0%

0. 0%

5. 0%

10. 0%

15. 0%

Figure 10. 1-Week Price Performance Source. Capital IQ

INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) Netdragon Websoft Inc. Launches New Expansion Pack for Eudemons Online, Divine Path: NetDragon W ebSoft, Inc. has launched a new expansion pack -- 'Divine Path' -- for its major online game Eudemons Online on 16 January 2009. 'Divine Path' is the fifth expansion pack of the game following the previous expansion pack 'The W ings of the Ruler', which launched in April 2008. 'Divine Path' combines mythical elements of Greece and launches a brand-new map 'Land of the God', which brings players a new era of 'god incarnation'. The latest expansion pack with enriched game features such as new challenges, maps, skills and equipment will enable NetDragon to continue to offer a fantastic entertainment experience for the Company's players. Perfect World to Launch Closed Beta Testing for 'Pocketpet Journey West' in North America: Perfect W orld Co., Ltd. announced that it will begin closed beta testing for 'Pocketpet Journey West,' a 3D MMORPG, in North America on February 10, 2009. The game will be released as 'Ether Saga Online' through its wholly owned U.S. subsidiary, Perfect W orld Entertainment Inc. Based on the Chinese literary classic, Journey to the W est, 'Ether Saga Online' features youthful anime graphics, as well as exciting in-game systems, and has been localized to cater to North American game players. Since the game's launch in China in October 2008, it has been well-received by domestic online game players. CDC Corp. Reaffirms Earnings Guidance for the Second Half of 2008: CDC Corp. reaffirmed earnings guidance for the Second Half of 2008. The company announced that, based upon preliminary financial results and estimates, it expects: (i) Adjusted EBITDA from continuing operations (Adjusted EBITDA) to be in the range of approximately $17.0 million to $19.0 million for the second half of 2008; and (ii) total revenue to be in the range of approximately $95.0 to $97.0 million, for the fourth quarter of 2008. This revised estimated Adjusted EBITDA range represents an increase of between 207% and 243% from Adjusted EBITDA in the prior year period, and represents an increase of $1.0 million from the Adjusted EBITDA guidance of $16.0 million to $18.0 million, that was reaffirmed by the Company on January 8, 2009. GoFish Corporation Files Shelf: GoFish Corporation has filed a Shelf Registration in the amount of $3.54 million. The Parent Company Delisted: The NASDAQ Stock Market announced that it will delist the common stock of The Parent Company. The Parent Company's stock was suspended on January 8, 2009 and has not traded on NASDAQ since that time. NASDAQ will file a Form 25 with the Securities and Exchange Commission to complete the delisting. The delisting becomes effective ten days after the Form 25 is filed. LiveWorld Inc. Announces Revenue Results for the Fourth Quarter of 2008: LiveW orld Inc. announced revenue results for the fourth quarter of 2008. For the quarter the company reported revenues of approximately $3.0 million. This represented an increase of 12% compared to $2.7 million in revenue for the third quarter of 2008.

Page 8

Shanda Interactive Entertainment Ltd. Establishes Strategic Cooperation w ith Kingsoft Co. Ltd.: Shanda Interactive Entertainment Ltd. announced that it has established a strategic cooperation with Kingsoft Co. Ltd. regarding JX Online W orld and JX Online II, which are Kingsoft’s in-house developed games. Pursuant to the strategic cooperation, Shanda Games Limited will operate JX Online W orld, which Kingsoft will also continue to operate. In addition, Shanda Online Holdings Limited will open its unified platform to support the operation of JX Online II. The parties intend to expand further their strategic cooperation in additional areas. According to the agreements relating to the strategic cooperation, SDG, which develops, sources, operates and publishes online game content, will establish a dedicated team to operate JX Online W orld. In addition, SDO will introduce JX Online II to the SDO platform, through which Shanda’s users access Shanda’s interactive entertainment content. As a part of SDO’s platform, JX Online II will enjoy SDO’s broad user base and renowned unified services such as billing and payment services, customer services, call center services, and other similar services. Financial Media Group, Inc. announced delayed 10-Q filing: On 01/14/2009, Financial Media Group, Inc. announced that they will be unable to file their next 10-Q by the deadline required by the SEC. National Lampoon To Voluntarily Delist Shares: National Lampoon, Inc. announced its decision to voluntarily delist its common stock, par value $0.0001 per share, from NYSE Alternext US LLC. This decision was based on the determination that it is unlikely that the Company will be able to comply with the Exchange’s listing requirements as they relate to the Company’s financial condition and operating results and the market value of the Company’s common stock. It is the Company’s intention to have its common stock quoted on the Over-the-Counter Bulletin Board once the delisting of its common stock from the Exchange has been completed, although it has not yet arranged to do so. PhotoChannel Networks Inc. Reports Consolidated Earnings Results for the Year Ended September 30, 2008; Reports Goodwill Impairment: PhotoChannel Networks Inc. reported consolidated earnings results for the year ended September 30, 2008. For the year, the company reported net loss of CAD 8,717,026 or CAD 0.26 per basic and fully diluted net loss per share on revenue of CAD 17,049,587 against net loss of CAD 6,072,236 or CAD 0.20 per basic and fully diluted net loss per share on revenue of CAD 7,511,328 reported a year ago. Major contributors to this increased loss are as follows: An increase in amortization over fiscal 2007 of CAD 4,035,599, CAD 2,640,724 of which arose as a result of intangible assets related to the acquisition of Pixology with the remainder of the increase as a result of setting up a new data facility in Toronto and purchasing more hardware and software for new and existing retail customers; CAD 770,000 of hosting costs related to the new Toronto data facility; CAD 1,664,208 related to new software development staff to grow and manage new and existing customers; increased non-cash expenses associated with the Company's stock based compensation plan of CAD 712,000; CAD 1,086,577 taken as a goodwill write down related to Pixology, due to negative change in estimated future cash flows; Change in foreign exchange losses (loss in 2007 versus gain in 2008) resulting in a net year on year gain of CAD 2,179,205 incurred as a result of holding an inter company account in UK pounds. The company reported goodwill impairment of CAD 1,086,577 for the year 2008. DigitalFX Receives Non Compliance Notice: DigitalFX International, Inc. announced that on January 8, 2009, the Company received notice from the NYSE Alternext US Staff indicating that the Company no longer complies with the Exchange’s continued listing standards and its securities are, therefore, subject to being delisted from the Exchange. The Company has appealed this determination and requested an oral hearing before the Exchange’s listing qualifications panel. mig33 Names CEO: mig33, the leading global mobile community, announced the appointment of Steve Boom as CEO. Mr. Boom was previously with Yahoo! where he established the company as the number one mobile web site. DigitalPost increases subscribe base: DigitalPost Interactive added 9,400 new recurring subscribers in Q4, bringing the total to over 12,300. The company estimates that a subscriber base of 30,000 will bring it to positive cash flow. NeXplore Search Surpasses 5.6 million monthly uniques: NeXplore Corporation announced that NeXplore Search, the company’s interactive, media-rich W eb 2.0 search engine had passed 5.6 million unique monthly visitors in December 2008, according to web analytics firm Compete.com. VALUATION Five companies top US$1 billion market cap: Just five (down from six last week) companies in our W eb 2.0 universe top US$1 billion in market capitalization (Figure 11). In addition, 55 of the 77 companies have market caps under US$100 million, with 21 under $10 million. Online gaming companies dominate the top of the list with four of the top five by market cap.

Page 9

Market C ap (US D m) T encent H oldings L td. Netea s e.com Inc. S handa Intera ctive E ntertainment L td. Open T ext C orp. G iant Intera ctive G roup, Inc. Mixi, Inc. P erfect W orld C o., L td. U nited Online Inc. T he9 Limited K ings oft C o. L td. G iga Media L td. C hines e G a mer Internationa l XING AG S K C ommunica tions C o., L td. NetDragon W ebS oft, Inc. S hutterfly, Inc. DA DA S pA NE O W IZ G ames C orpora tion G ungH o Online E nterta inment, Inc. G ameO n C o L td. C DC C orp. G amania Digital E ntertainment C o., L td. T heS treet. com, Inc. B roa dW ebAs ia Inc. Digita lT own, Inc. Y edangO nline C orp. Moggle, Inc Actoz S oft C o., L td. NeXplore C orpora tion O penwa ve S ys tems Inc. S pa rk Networks , Inc. H anbitS oft, Inc. E xtens ions , Inc. G eoS entric O yj P hotoC hannel Networks Inc. T ree.C om, Inc. K a boos e Inc. B oomJ Inc Dolphin Digita l Media , Inc. IdeaE dge, Inc. Northga te T echnologies Limited W izza rd S oftware C orpora tion J umpT V Inc. Q uepa s a C orp. LookS mart, L td. E olith C o. L td. A Q Interactive, Inc. F luid Mus ic C a na da , Inc. G ravity C o., Ltd J umbuck E ntertainment P ty L td. F rogs ter Interactive P ictures AG Magnitude Information S ys tems Inc. W ebzen Inc. C ornerW orld C orpora tion S NAP Interactive, Inc. UO MO Media, Inc L ingo Media C orpora tion A ccelerize New Media , Inc. S pectrumDNA , Inc. Y nk K orea Inc. Na tional La mpoon Inc. G oF is h C orpora tion Digita lF X Interna tiona l, Inc. F ina ncial Media G roup, Inc. V O IS , Inc. W oozyF ly, Inc. B right T hings plc W ynds torm C orpora tion L iveW orld Inc. Digita lP os t Interactive, Inc. IAS E nergy, Inc. T he P arent C ompany ZipL oca l Inc. Unis erve C ommunica tions C orp. A s s ocia ted Media H oldings Inc. C hina G ateway C orpora tion

234. 8 207. 8 202. 0 197. 6 178. 0 144. 4 138.6 128. 3 127. 8 108. 9 103. 2 92. 1 85.7 81. 5 76. 0 70. 6 68. 8 55. 8 54. 0 53. 6 51.0 49. 1 47. 0 43. 2 43. 1 42. 4 40. 9 36. 5 35. 1 34. 1 33. 9 27. 2 24. 5 22. 0 18. 7 17. 4 16. 3 16. 1 15. 9 14. 6 13.1 12. 0 11. 7 10. 9 10. 2 10. 2 9. 4 9. 2 7. 6 6.9 5. 6 3. 7 3. 4 2. 9 2. 6 2. 4 2. 2 1. 5 1. 5 1. 5 1. 3 1. 3 1. 1 0.2 0.0

0

412. 8 373. 5 368. 5

507.4

500

964.1 893. 9

1, 000

1333. 5

1, 500

1621. 8

1981. 6

2, 000

2158. 3

2, 500

3, 000

Figure 11. Market Cap Ranking Source. Capital IQ

TEV/Revenue (LTM) averages 3.8x: The overall average TEV/Revenue (LTM) multiple for our group is 3.8x (Figure 12). However, this is skewed by BoomJ at 40.7x (BOMJ-OTCBB), UOMO Media (UOMO-OTCBB) at 22.4x, and CornerW orld (CW RL-OTCBB) at 21.5x. Excluding those companies, the average is 2.3x. Note that we exclude multiples greater than 100x. Twenty-nine of the companies have multiples under 1.5x.

Page 10

TE V/L TM R evenue (x) 45. 0 40. 7 40. 0

35. 0 30. 0 25. 0

22. 4 21. 5

20. 0 15. 0

12. 3 9. 710. 2

10. 0

0. 8 0. 0 0. 0 0. 1 0. 1 0. 2 0. 2 0. 2 0. 2 0. 2 0. 4 0. 4 0. 5 0. 5 0. 5 0. 6 0. 7 0. 7 0. 7

0. 8 0. 8 0. 8 0. 8 0. 9 1. 0 1. 0 1. 1 1. 3 1. 5 1. 5

1. 6 1. 6 2. 3

3. 3

X ING AG S NAP Interactive, Inc. Accelerize New Media, Inc. C hines e G amer International

5. 0

4. 6 3. 7 4. 3 4. 3

J umpT V Inc. P hotoC hannel Networks Inc. L ingo Media C orporation

Average, 3. 8 2. 6 2. 7 2. 7 2. 9 3. 1

5. 5 6. 0

6. 9

7. 7

UO MO Media, Inc B oomJ Inc

W iz z ard S oftware C orporation DigitalP os t Interactive, Inc. Mixi, Inc. G eoS entric Oyj B right T hings plc As s ociated Media Holdings Inc. T encent Holdings L td. C ornerW orld C orporation

O pen T ext C orp. G oF is h C orporation F rogs ter Interactive P ictures AG K ings oft C o. L td.

NE O W IZ G ames C orporation E olith C o. L td. J umbuck E ntertainment P ty L td. S K C ommunications C o. , L td. Y edangOnline C orp. G igaMedia L td. National L ampoon Inc. United Online Inc.

S park Networks , Inc. K aboos e Inc. DADA S pA G ungHo Online E ntertainment, Inc.

Y nk K orea Inc. F luid Mus ic C anada, Inc. HanbitS oft, Inc. S hutterfly, Inc. ZipL ocal Inc. G amania Digital E ntertainment C o. , L td. G ameOn C o L td. Actoz S oft C o. , L td.

Northgate T echnologies L imited DigitalF X International, Inc. C DC C orp. Unis erve C ommunications C orp.

T heS treet. com, Inc. F inancial Media G roup, Inc. NetDragon W ebS oft, Inc. T he P arent C ompany

S NM G lobal Holdings C hina G ateway C orporation L iveW orld Inc. T ree. C om, Inc.

0. 0

Figure 12. TEV/Revenue Ranking Source. Capital IQ

TEV/Revenue (LTM) by Country/Exchange: W e have also calculated multiples based on where the companies are listed or domiciled. Figure 13 shows the average TEV/Revenue multiples by stock exchange. The OTCBB has the largest number of companies (19), trading at an average multiple of 11.3x. On a geographic basis, the United States has the most companies (36), trading at an average of 4.8x revenue (Figure 14). Nine of the companies are Canadian (average 4.5x revenue). Average TEV/LTM Revenue - By Exchange

Average TEV/LTM Revenue - By Country

12.0

12.0

10.0

10.0

8.0

6.0

(x)

(x)

8.0

11.3

6.0

9.7 9.7

4.0

7.7 4.0

7.7

5.1 2.0

5.1

3.8 2.1

1.9

1.3

1.1

1.0

0.9

3

10

1

7

1

2.8 2.3

0.8 CM

4

OSE

4

ASX

7

KOSE

TSX

2

NasdaqGS

TSXV

2

AMEX

4

GTSM

3

OTCPK

TSE

1

XTRA

HLSE

AIM 1

SEHK

OTCBB 19

4.5 3.2

1.4

0.0

# Companies

4.8

2.0

2.6

1

0.2

0.1 NasdaqGM

2.7

BSE

3.2

1

5

1.1

1.0

0.8

0.4

0.2

United Kingdom

Finland

China

United States

Canada

Germany

Japan

Taiwan

Australia

South Korea

Italy

Hong Kong

India

1

1

8

36

9

2

5

3

1

9

1

1

1

0.0

# Companies

Figure 13 & 14. TEV/Revenue Ranking (Exchange, Country) 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) 42.1x multiple (Figure 15). Seventeen of the companies have EBITDA multiples under 7x.

Page 11

TE V/L TM E B ITDA (x) 45. 0

42.1

40. 0 35. 0 30. 0 24. 9 25. 0 18. 8

20. 0

17.4 14.0

8.8

9. 0

9.5

X ING AG

7.9

C DC C orp.

6. 7

Y eda ngOnline C orp.

G ungHo Online E nterta inment, Inc.

6.6

G igaMedia L td.

5. 4

6.3

United O nline Inc.

5.3

DADA S pA

4.4

6.1

S hutterfly, Inc.

4. 2

Actoz S oft C o. , L td.

NE OW IZ G ames C orporation

G ama nia Digital E ntertainment C o. , Ltd.

4.2

S park Networks , Inc.

3. 6

C ornerW orld C orporation

3.0

4.1

2. 4

G ameOn C o Ltd.

1.4

T heS treet.com, Inc.

F inancial Media G roup, Inc.

1. 2

Northgate T echnologies Limited

0.5

1.0

NetDragon W ebS oft, Inc.

5. 0

J umbuck E ntertainment P ty L td.

Avera ge, 8. 6

10. 0

Open T ext C orp.

15. 0 9. 8

11.0

T encent Holdings Ltd.

S NAP Interactive, Inc.

Mixi, Inc.

Unis erve C ommunications C orp.

S K C ommunications C o. , Ltd.

K aboos e Inc.

C hines e G amer International

K ings oft C o. Ltd.

0. 0

Figure 15. TEV/EBITDA Ranking Source. Capital IQ

TEV/EBITDA (LTM) by Country/Exchange: Figure 16 shows the average TEV/EBITDA multiples by stock exchange. The OTCBB has the largest number of companies (19), trading at an average multiple of 15.8x, while companies on the TSXV have the highest multiples (18.8x). On a geographic basis, the United States has the most companies (36), trading at an average of 9.2x EBITDA (Figure 17). Nine of the companies are Canadian (average 12.9x EBITDA). Average TEV/LTM EBITDA - By Exchange

Average TEV/LTM EBITDA - By Country 14.0

20.0

18.0 12.0 16.0

14.0

10.0

12.0

(x)

8.0 10.0

8.0

(x)

18.8

12.9

15.8

6.0 11.1

6.0

11.1

11.0

9.5 10.2

9.5

4.0

9.2

8.8

8.8

4.0 7.2

7.2

7.0

7.2 6.1

6.8

5.3

5.3

4.2

2.0

2.0 1.4

1.2

BSE

NasdaqGM

2.4

2.4

19

3

4

2

2

1

1

4

ASX

AMEX

CM

7

OSE

10

GTSM

XTRA

TSE

TSX

SEHK 3

KOSE

4

NasdaqGS

# Companies

OTCBB

TSXV

0.0

1

1

1.4 0.0

5

Canada

China

Germany

United States

Japan

Hong Kong

South Korea

Taiwan

Italy

Australia

India

9

8

2

36

5

1

9

3

1

1

1

# Companies

Figures 16 & 17. TEV/EBITDA Ranking (Exchange, Country) Source. Capital IQ

P/E (LTM) averages 13.6x: The average multiple for the 27 companies with positive earnings (and multiples under 100x) is 13.6x LTM EPS, led by again by SNAP Interactive’s (STVI-OTCBB) 60.3x multiple (Figure 18). Fourteen of the companies have P/E multiples under 10x.

Page 12

P /E L TM (x) 70. 0 60.3 60. 0

50. 0 42. 0 40. 0 33. 7 27.7

30. 0

29. 2

20. 1

11.7

12.4

G ameOn C o Ltd.

13.1

14. 1

Actoz S oft C o. , L td.

11.0

G ama nia Digital E ntertainment C o. , Ltd.

DADA S pA

10. 9

G igaMedia L td.

8.8

K ings oft C o. Ltd.

8. 6

Y eda ngOnline C orp.

5.6

8. 6

NE OW IZ G ames C orporation

5.4

7. 7

J umbuck E ntertainment P ty L td.

2. 1

7.7

United O nline Inc.

P erfect W orld C o., Ltd.

1.7

NetDragon W ebS oft, Inc.

G iant Interactive G roup, Inc.

1.6

Northgate T echnologies Limited

1.4

Neteas e.com Inc.

1. 2

S handa Interactive E ntertainment Ltd.

1. 1 T he9 Limited

10. 0

S park Networks , Inc.

Avera ge, 13. 6

C hines e G amer International

20. 0

15. 6

3.2

Mixi, Inc.

S NAP Interactive, Inc.

S hutterfly, Inc.

T encent Holdings Ltd.

X ING AG

Open T ext C orp.

T heS treet.com, Inc.

LookS mart, Ltd.

0. 0

Figure 18. P/E Ranking Source. Capital IQ

P/E (LTM) by Country/Exchange: Figure 19 shows the average P/E multiples by stock exchange. The OTCBB has the largest number of companies (19), trading at an average multiple of 60.3x, while companies on the TSX average 27.2x. On a geographic basis, the United States has the most companies (36), trading at an average of 20.2x earnings (Figure 20). Nine of the companies are Canadian (average 27.7x EPS). Average P/E - By Exchange

Average P/E - By Country

70.0

30.0

60.0 25.0

50.0 20.0

(x)

(x)

40.0 15.0 27.7 30.0

27.2

60.3

20.2

10.0

20.1

20.0

12.2

27.2 5.0

9.9

20.1

10.0

8.6

8.6 7.2

16.8 12.9

10.2

9.9

9.4

8.6

8.6 5.4

0.0

2.1

2.1

1.2

OTCBB

TSE

XTRA

SEHK

GTSM

NasdaqGS

KOSE

NasdaqGM

CM

ASX

AMEX

BSE

NYSE

19

4

2

3

2

10

7

5

1

1

4

1

1

# Companies

Figures 19 & 20. P/E Ranking (Exchange, Country) Source. Capital IQ

0.0

# Companies

Canada

Japan

United States

Germany

Taiwan

South Korea

Italy

Australia

China

India

9

5

36

2

3

9

1

1

8

1

Page 13

UPCOMING EVENTS

Upc oming E vents E vent

Date

L ocation

Webs ite

B log W ell

J a nua ry 22

C h icago

www. ga speda l. com/blogwe ll/

S ocial M edia C onferenc e

J a nua ry 22 -2 3

M iam i

www. s ocialmediaconference. co m/con ference-m ia mi-2 009. php

O MMA S oc ia l W eb 2. 0 C anadian Le aders hip S eries

J a nua ry 26

Ne w Y o rk

www. mediapost. c om/om ma social

F ebruary 3

T o ronto

http: //web2lea ders hipse ries . iglo oevents. net/

O 'R eilly Money: T ech

F ebruary 4-6

Ne w Y o rk

www. conf erenc es .oreilly .c om/money/

Us er G ene ra ted C onte nt

F ebruary 9-10

S an J o se

www. ug cx ev ent. com/

E ngage! E xpo

March 10 -1 1

Ne w Y o rk

www. en gageexpo.c om

Me sh 200 9

April 7-8

T o ronto

www. mes hc onf erence.c om

Figure 21. Upcoming Events Source. Company reports

E arnings C alendar C ompany

Date & Time

Qua rter

C onf C all Details

O penwave S ys tems Inc. (Na sd aqG S : O P W V )

T ues day, J anuary 27, 2009 2: 0 0 P M ( P S T )

Q2 200 9

800-36 0-9865

O pen T ext C orp. (Na s daqG S :O T E X )

W ednes day , J anuary 2 8, 2 009 5: 00 P M ( E S T )

Q2 200 9

416-91 5-5761

S hutterfly, I nc. ( Nas daqGS :S F LY )

W ednes day , F ebruary 0 4, 2 009 2: 00 P M ( P S T )

Q4 200 8

719-32 5-4826

T ree.C om, Inc. (N a sdaqG M: T R E E )

T hurs day , F ebru ary 0 5, 2 009 11:0 0 A M ( E S T )

Q4 200 8

877-74 1-4253

Figure 22. Earnings Calendar Source. Company reports

Page 14

C omparable C ompany Analys is > W eb 2.0 P ric e P erforma nce C ompany Name

A cc eleriz e New Me dia , Inc. A ctoz S o ft C o . , Ltd. A Q Inte ra ctive, I nc . A ss oc iated Media Holdings Inc . B oomJ Inc B right T hings plc B ro adW e bAs ia Inc. C DC C orp. C hina Ga teway C o rporation C hines e G ame r Inte rnational C orne rW orld C orporation DA DA S pA DigitalFX Internationa l, Inc . DigitalP os t Inte rac tive, Inc. DigitalTo wn, I nc . Dolphin D igital Me dia, In c. E olith C o. L td. E xte ns ions, Inc . F inanc ial Media G roup, Inc. F luid Mus ic C ana da, I nc . F rogs ter I nterac tive P ic tures A G G amania Digital E ntertainment C o. , Ltd. G ameO n C o Ltd. G eoS entric O yj G ia nt I nterac tive G ro up, Inc . G igaMedia Ltd. G oF ish C orporation G ravity C o. , Ltd G ree, Inc . G ungHo O nline E nterta inment, In c. H anbitS o ft, I nc . IA S E nergy, Inc . IdeaE dge, Inc . J umbuc k E ntertainment P ty L td. J umpT V Inc . K aboo se Inc . K ingso ft C o . Ltd. Lingo Media C orporation Live W orld Inc . Lo ok S mart, L td. Ma gnitude Information S ys tems Inc . Mixi, Inc. Mo ggle, I nc N ational Lampoo n Inc. N E O W IZ G ames C orpo ra tio n N etDra gon W ebS oft, Inc. N eteas e.c om Inc. N eX plo re C orpo ra tio n N orthgate T ec hno logies L imited O pen T ext C orp. O penwave S y s tems Inc . P erfec t W o rld C o., L td. P hoto C hannel Netwo rk s Inc. Q uepas a C orp. S handa In terac tive E ntertainment Ltd. S hutterfly , I nc . S K C ommun ic ations C o. , L td. S NAP Interac tive, Inc . S NM G lobal H o ldings S park Netwo rk s , I nc . S pec trumDN A , Inc. T enc e nt H o ldings L td. T he P a re nt C o mpany T he9 Limited T heS tree t. c om, Inc. T ree. C om, Inc . U nis erve C ommu nic ations C orp. U nited O nline Inc . U O MO M edia, I nc V OI S , Inc . W ebze n Inc. W izz ard S oftware C orpo ra tio n W oo zy F ly , I nc . W y nds to rm C orpo ra tio n X I NG AG Y edangO nline C orp. Y nk K o re a Inc. Z ipLoc al Inc. A verage

Figure 23. Price Performance Source. Capital IQ

C urrenc y

Tic ker

Ex change

US D Market C ap ($m)

USD KRW J PY USD USD GBP USD USD USD TWD USD E UR USD USD USD USD KRW USD USD C AD E UR TWD J PY E UR USD USD USD USD J PY J PY KRW USD USD A UD C AD C AD H KD C AD USD USD USD J PY USD USD KRW H KD USD USD IN R USD USD USD C AD USD USD USD KRW USD USD USD USD H KD USD USD USD USD C AD USD USD USD USD USD USD USD E UR KRW KRW C AD

A C LZ A 052 790 3 838 A S MH B O MJ AIM :B G T BW BA C H IN. A CG WY G T S M: 3 083 CWR L C M:DA DXN D GL P DG T W DP DM A 041 060 E XT I F NG P T S X :F MN FRG 6 180 3 812 G E O1 V GA G IG M G OFH G R VY T S E :36 32 3 765 A 047 080 IA S C . A O T C B B : IDA E AS X:J MB T S X:J T V T S X :K A B 3 888 T S X V :L M LVWD LO O K MA G Y 2 121 MMO G N LN A 095 660 7 77 NT E S NX PC 59 0057 OTE X OP WV PWRD T S X V :P N QPS A S NDA S F LY A 066 270 S T VI S NMN LO V S P XA 7 00 K ID S . Q NCTY TSCM TREE T S X V:U S S U NT D UO MO V O IS W ZE N W ZE W ZY F W Y ND O1BC A 052 770 A 023 770 T S XV :ZIP

OTCB B K OS E TSE OTCP K OTCB B AI M OTCP K Na sdaqG S OTCB B GTS M OTCB B CM AM E X OTCB B OTCB B OTCB B K OS E OTCP K OTCB B TSX XT R A GTS M TSE HLS E NY S E Na sdaqG S OTCB B Na sdaqG M TSE OS E K OS E OTCB B OTCB B AS X TSX TSX S E HK T S XV OTCP K Na sdaqG M OTCB B TSE OTCB B AM E X K OS E S E HK Na sdaqG S OTCP K BSE Na sdaqG S Na sdaqG S Na sdaqG S T S XV Nas daqC M Na sdaqG S Na sdaqG S K OS E OTCB B OTCP K AM E X OTCB B S E HK OTCP K Na sdaqG S Na sdaqG M Na sdaqG M T S XV Na sdaqG S OTCB B OTCB B Na sdaqG M AM E X OTCB B OTCB B XT R A K OS E K OS E T S XV

9.4 68. 8 17. 4 0.2 40. 9 2.4 85. 7 108. 9 0.0 234. 8 11. 7 144. 4 3.7 1.5 81. 5 36. 5 18. 7 49. 1 3.4 16. 3 14. 6 103. 2 127. 8 47. 0 1, 3 33.5 368. 5 5.6 16. 1 0.0 128. 3 51. 0 1.5 35. 1 15. 9 27. 2 42. 4 373. 5 10. 2 1.5 22. 0 13. 1 964. 1 70. 6 6.9 138. 6 197. 6 2, 1 58.3 55. 8 34. 1 1, 6 21.8 54. 0 893. 9 43. 2 24. 5 1, 9 81.6 178. 0 202. 0 10. 9 0.0 53. 6 9.2 10, 306. 0 1.3 412. 8 92. 1 43. 1 1.1 507. 4 10. 2 2.9 12. 0 33. 9 2.6 2.2 207. 8 76. 0 7.6 1.3 308. 9

C urrent Price

0.3 5 10, 6 00.0 0 29, 0 00.0 0 0.0 1 1.0 0 0.0 1 1.0 1 1.0 1 0.0 0 92.7 0 0.2 5 6.7 9 0.1 5 0.0 2 3.0 0 0.7 5 5 45.0 0 0.5 2 0.0 5 0.3 9 4.7 5 22.8 0 1 16, 1 00.0 0 0.0 4 5.6 1 6.8 2 0.2 2 0.5 8 5, 7 00.0 0 1 01, 5 00.0 0 3, 1 60.0 0 0.0 2 0.8 3 0.4 8 0.3 0 0.3 8 2.7 0 0.9 9 0.0 5 1.2 9 0.0 3 5 70, 0 00.0 0 2.0 0 0.7 3 19, 6 00.0 0 2.9 0 17.5 4 1.0 0 47.6 0 31.2 7 0.6 5 15.6 7 1.6 2 1.9 3 28.5 6 7.1 0 6, 6 70.0 0 1.0 2 0.0 0 2.5 0 0.1 9 44.5 0 0.0 5 14.9 5 3.0 2 4.6 0 0.0 6 6.1 9 0.1 2 0.4 0 1.0 1 0.7 5 0.1 5 0.1 2 30.4 4 6, 6 00.0 0 4, 1 90.0 0 0.0 2

1 Wk

1 Mth

3 Mth

6 Mth

1 Yr

52 W eek

0 .0% 5 .5% 0 .0% -50 .0% 0 .0% -13 .3% 0 .0% -10 .6% 3 3. 3% 0 .8% 0 .0% -1. 6% -17 .6% -12 .0% 1 1. 1% -6. 3% -1. 8% -47 .5% 1 1. 1% 2 5. 8% -18 .1% 0 .9% -8. 6% 3 3. 3% -5. 9% 7 .9% 2 2. 2% 7 .4% 9 .6% -6. 8% -7. 1% 5 .0% 0 .0% 2 3. 1% 0 .0% -5. 0% -0. 4% -1. 0% -33 .3% -23 .4% 4 2. 9% 0 .5% 0 .0% 0 .0% -2. 0% 2 .1% -2. 8% 0 .0% -14 .3% 1 .7% -14 .5% -9. 3% -3. 0% 6 .6% 4 .3% -5. 8% 8 .5% 8 .5% -100 . 0% -2. 7% 0 .0% -1. 1% -11 .7% 6 .4% -5. 9% 1 0. 8% 1 0. 0% 2 .5% 5 0. 0% 0 .0% 5 .2% -1. 3% 0 .0% 0 .0% -2. 9% -9. 2% -2. 8% 10 0.0% 0.0%

0.0% 2.9% 4.3% 4 00.0 % 3 3. 3% 1 3. 0% 0.0% -21 .7% 0.0% 3.1% -46 .8% -3 . 0% -6 . 3% 4.8% -7 . 7% 2 5. 0% -10 .7% 3 95.2 % -28 .6% 5 9. 2% -10 .9% 3 9. 4% -4 . 8% 0.0% -9 . 5% 1 4. 6% 2 9. 4% -3 . 3% 8.6% -7 . 3% -6 . 8% -30 .0% -7 . 8% 2 3. 1% 0.0% 3 5. 7% 4.7% -1 . 0% 4 2. 9% -19 .4% 1 00.0 % -1 . 7% 3 3. 3% 0.0% -3 . 9% -1 . 7% -16 .6% 5.3% -29 .6% 5.6% 1.8% -3 . 9% 2 8. 6% 2 7. 8% -5 . 8% 0.3% 1 6. 8% 4 5. 7% -10 0. 0% -7 . 4% -9 . 5% -12 .7% -75 .9% 8.6% -8 . 5% 8 6. 2% 8 3. 3% 9.0% 9.1% 3 3. 3% 6.3% -19 .4% 0.0% 0.0% 2 7. 4% -3 . 1% -31 .6% 3 00.0 % 18.1%

-30. 0 % 30. 7% -31. 9 % -37. 5 % -53. 5 % 46. 1% 68. 3% -33. 1 % -80. 0 % 19. 9% 25. 0% -12. 7 % -31. 8 % -63. 3 % 50. 0% -25. 0 % 3.8 % 420. 0% -83. 3 % -2.5% 31. 9% 58. 3% 40. 7% 0.0 % -13. 8 % 4.8 % 22. 2% -26. 6 % NM -15. 7 % -5.0% -89. 4 % -60. 5 % -5.9% -62. 5 % -45. 7 % 35. 0% -37. 7 % -50. 0 % -32. 1 % 50. 0% -19. 6 % NM -13. 1 % 35. 6% -1.0% -19. 2 % 53. 8% -36. 9 % 15. 9% -33. 7 % -23. 2 % -15. 6 % -15. 7 % 0.0 % -5.3% -1.2% 100. 0% -1 00.0 % -24. 7 % -24. 0 % -16. 6 % -93. 7 % 8.1 % -20. 9 % 81. 1% -69. 4 % -16. 0 % -33. 3 % -46. 7 % -12. 9 % -7.4% NM -40. 0 % 5.3 % 2.2 % -47. 5 % 0.0 % -6.1 %

-46. 2 % 35. 9 % -80. 5 % -44. 4 % -69. 7 % -30. 7 % -32. 7 % -62. 5 % -93. 3 % 26. 6 % -59. 0 % -38. 9 % -76. 6 % -78. 0 % -6.3% NM -36. 6 % 246. 7% -94. 0 % -77. 1 % -3.8% -16. 3 % -19. 1 % -33. 3 % -47. 4 % -47. 1 % -4.3% -44. 8 % NM -46. 3 % -14. 9 % -92. 2 % -68. 3 % -12. 7 % -75. 0 % -53. 1 % -24. 6 % -43. 4 % -82. 1 % -55. 1 % 50. 0 % -17. 3 % NM -49. 7 % -18. 3 % -69. 6 % -23. 0 % 53. 8 % -84. 6 % 0.0 % -53. 6 % -43. 2 % -51. 2 % -8.1% 13. 6 % -38. 2 % -54. 3 % 126. 7% -1 00.0 % -37. 8 % NM -34. 1 % -97. 5 % -47. 1 % -51. 4 % NM -72. 5 % -45. 4 % -73. 3 % -90. 6 % -63. 7 % -56. 6 % NM -60. 0 % -1.8% -30. 5 % -59. 3 % -81. 8 % -37.1%

-48 . 5% 26 .5% -87 . 8% 66 .7% NM -56 . 7% NM -75 . 4% -99 . 5% 5 . 1% -83 . 3% -46 . 2% -86 . 4% -95 . 4% 20 .0% NM -76 . 6% 24 6. 7% -79 . 2% NM -47 . 4% -7 .5% -17 . 7% -33 . 3% -44 . 9% -57 . 4% -57 . 7% -80 . 3% NM -43 . 0% -55 . 4% -94 . 5% -30 . 8% -20 . 0% -80 . 8% -81 . 6% -12 . 6% -9 .2% -82 . 1% -63 . 7% 87 .5% -57 . 5% NM -60 . 1% -35 . 3% -79 . 3% -5 .7% NM -90 . 6% 4 . 8% -74 . 1% -37 . 5% -47 . 7% -26 . 6% -2 .8% -66 . 1% -74 . 9% 1 . 0% -10 0.0% -52 . 0% NM -9 .3% -99 . 0% -15 . 9% -73 . 9% NM -86 . 9% -42 . 2% -82 . 4% NM -68 . 9% -67 . 4% NM NM -20 . 8% -15 . 6% -75 . 5% -84 . 0% -43.2%

-56 .3% -16 .9% -91 .5% -93 .8% -69 .7% -69 .4% -66 .3% -77 .6% -99 .7% -33 .3% -83 .9% -58 .0% -88 .5% -96 .3% -50 .8% -33 .6% -82 .2% -48 .5% -94 .9% -80 .9% -48 .1% -38 .3% -29 .0% -55 .6% -67 .4% -67 .4% -62 .7% -82 .7% -3. 6% -76 .7% -57 .8% -95 .3% -70 .7% -39 .2% -83 .8% -84 .2% -37 .4% -55 .0% -93 .3% -73 .1% -14 .3% -62 .5% 0 . 0% -70 .4% -51 .0% -79 .7% -35 .4% -31 .0% -91 .7% -20 .0% -77 .5% -53 .3% -61 .0% -51 .6% -25 .3% -67 .3% -79 .8% -7. 3% -100 . 0% -56 .2% -68 .3% -38 .2% -99 .1% -47 .5% -75 .3% -58 .6% -89 .8% -50 .5% -85 .0% -92 .9% -77 .3% -76 .9% -100 . 0% -85 .9% -33 .1% -47 .4% -78 .9% -90 .9% -63.4%

Page 15

Comparable C ompany Analys is > Web 2.0 Valuation Multiples

C ompany Na me

P ri mary E xc ha nge

Ti c ker

Acce lerize N ew Media, Inc. Actoz S oft C o. , Ltd. AQ Inte ractive, Inc. As s ociated Me dia Holdings Inc. BoomJ Inc Br ight T hings plc Br oadW ebA s ia Inc. C DC C orp. C hina G ateway C orpora tion C hines e G amer International C ornerW orld C orporation DAD A S pA Digita lF X Inte rnational, Inc. Digita lP os t Inter active, Inc. Digita lT own, Inc. Dolphin Digita l Me dia , Inc. E olith C o. Ltd. E xtensions, Inc. F ina ncia l Me dia Group, Inc. F luid Mus ic C anada , Inc. F rogs te r Inte ractive P icture s A G Ga mania Digital E nterta inme nt C o. , L td. Ga meO n C o L td. Ge oS entric O yj Giant Inte ractive G roup, Inc. GigaMe dia L td. GoF is h C orpor ation Gr avity C o., Ltd Gr ee, Inc. GungHo Online E nte rtainme nt, Inc. HanbitS oft, Inc. IA S E ne rgy, Inc. IdeaE dge, Inc. J umbuck E ntertainme nt P ty Ltd. J umpT V Inc. Ka boos e Inc. Kings oft C o. Ltd. Lingo Me dia C orpora tion Live World Inc. LookS mar t, Ltd. Magnitude Informa tion S ys tems Inc. Mixi, Inc. Moggle , Inc National L ampoon Inc. NE O W IZ G ame s C orpora tion NetDra gon We bS oft, Inc. Netea s e. com Inc. NeXplore C or por ation Northgate T e chnologies L imited Open T e xt C or p. Openwa ve S ys tems Inc. Pe rfect W orld C o., Ltd. PhotoC hannel Ne tworks Inc. Quepas a C orp. S handa Intera ctive E nte rtainment L td. S hutterfly, Inc. S K C ommunications C o. , Ltd. S NA P Inter active, Inc. S NM G lobal Holdings S park Ne tworks , Inc. S pectrumDNA, Inc. T encent Holdings Ltd. T he P ar ent C ompany T he 9 Limited T he S tre et.com, Inc. T ree . C om, Inc. Unis e rve C ommunications C or p. Unite d Online Inc. UOMO Media, Inc VO IS , Inc. W ebzen Inc. W izza rd S oftwa re C orporation W oozyF ly, Inc. W ynds torm C orporation XING A G Ye dangO nline C orp. Ynk K or ea Inc. ZipL ocal Inc.

O T C BB K OS E TS E O T C PK O T C BB A IM O T C PK Na sdaqGS O T C BB GTSM O T C BB CM A ME X O T C BB O T C BB O T C BB K OS E O T C PK O T C BB TS X XT R A GTSM TS E HL S E NY S E Na sdaqGS O T C BB Na sdaqGM TS E OSE K OS E O T C BB O T C BB ASX TS X TS X S E HK T S XV O T C PK Na sdaqGM O T C BB TS E O T C BB A ME X K OS E S E HK Na sdaqGS O T C PK B SE Na sdaqGS Na sdaqGS Na sdaqGS T S XV Na sdaqC M Na sdaqGS Na sdaqGS K OS E O T C BB O T C PK A ME X O T C BB S E HK O T C PK Na sdaqGS Na sdaqGM Na sdaqGM T S XV Na sdaqGS O T C BB O T C BB Na sdaqGM A ME X O T C BB O T C BB XT R A K OS E K OS E T S XV

AC L Z A052790 3 838 A S MH B O MJ A IM: B GT B W BA C HIN .A C GW Y G T S M: 30 83 C WR L C M:DA DXN DG LP DG T W DP DM A041060 E XT I F NGP T S X: F MN FRG 6 180 3 812 G E O1 V GA G IGM G OF H GRVY T S E :3632 3 765 A047080 IAS C . A OT C B B :IDAE A S X: J MB T S X :J T V T S X: K AB 3 888 T S XV : LM LV W D LO OK MAG Y 2 121 MMOG N LN A095660 7 77 NT E S NXP C 59 0057 OTEX OPW V PW R D T S XV : P N QP S A S NDA S F LY A066270 S TV I S NMN L OV S PX A 7 00 KIDS .Q NC T Y T SCM TR E E T S XV: US S UNT D UO MO VO IS WZE N W ZE W ZY F W Y ND O 1B C A052770 A023770 T S X V: ZIP

High Low Average

Figure 24. Valuation Comparison Source. Capital IQ

U S D Mar ket C ap ($m)

T E V/L T M R ev enue

T E V / NTM R e venue

T E V /L T M E B I TDA

TE V /NT M E B IT DA

P /L TM E P S

P /NT M E P S

P /T angB V

9.4 68 . 8 17 . 4 0.2 40 . 9 2.4 85 . 7 108 . 9 0.0 234 . 8 11 . 7 144 . 4 3.7 1.5 81 . 5 36 . 5 18 . 7 49 . 1 3.4 16 . 3 14 . 6 103 . 2 127 . 8 47 . 0 1 , 333 . 5 368 . 5 5.6 16 . 1 0.0 128 . 4 51 . 0 1.5 35 . 1 15 . 9 27 . 2 42 . 4 373 . 5 10 . 2 1.5 22 . 0 13 . 1 964 . 1 70 . 6 6.9 138 . 6 197 . 6 2 , 158 . 3 55 . 8 34 . 1 1 , 621 . 8 54 . 0 893 . 9 43 . 2 24 . 5 1 , 981 . 6 178 . 0 202 . 0 10 . 9 0.0 53 . 6 9.2 10 , 306 . 0 1.3 412 . 8 92 . 1 43 . 1 1.1 507 . 4 10 . 2 2.9 12 . 0 33 . 9 2.6 2.2 207 . 8 76 . 0 7.6 1.3

4 .3x 0 .8x 10. 2x 40. 7x 9 .7x 0 .4x 0 .0x 4 .6x 21. 5x 0 .8x 0 .4x 6 .0x 1 .0x 0 .2x 0 .5x 2 .7x 0 .7x 0 .8x 7 .7x 1 .5x 2 .6x 0 .9x 0 .6x 1 .1x 2 .9x 0 .8x 2 .7x 3 .3x 0 .1x 6 .9x 1 .6x 1 .0x 0 .2x 0 .2x 2 .3x 3 .1x 0 .7x 1 .3x 4 .3x 0 .8x 12. 3x 0 .2x 0 .2x 0 .1x 0 .5x 1 .6x 22. 4x 5 .5x 3 .7x 1 .5x 0 .5x 0 .7x

0. 4x 0. 4x 1. 4x 0. 7x 2. 0x 1. 9x 0. 7x 0. 2x 0. 1x 0. 8x -

4.4 x 8.8 x 9.8 x 4.2 x 5.3 x 1.0 x 4.1 x 3.0 x 6.3 x 6.1 x 2.4 x 11. 0 x 7.9 x 17. 4 x 3.6 x 0.5 x 1.4 x 9.0 x 5.4 x 14. 0 x 42. 1 x 4.2 x 24. 9 x 1.2 x 18. 8 x 6.6 x 9.5 x 6.7 x -

6.7 x 5.4 x 5.5 x 8.0 x 5.7 x 4.1 x 3.7 x 3.4 x -

1 3. 1x 1 4. 1x 8. 6x 1 1. 7x 1 2. 4x 1. 2x 1 0. 9x 8. 6x 1 1. 0x 3. 2x 4 2. 0x 7. 7x 5. 6x 1. 6x 2. 1x 2 7. 7x 1. 4x 1. 7x 2 9. 2x 6 0. 3x 5. 4x 3 3. 7x 1. 1x 1 5. 6x 7. 7x 2 0. 1x 8. 8x -

14 .9 x 11 .8 x 9. 2x 9. 5x 13 .1 x 7. 4x 25 .7 x 10 .6 x 7. 3x 8. 1x -

1. 3x 0. 3x 4. 6x 1. 3x 1. 4x 1. 5x 1. 5x 7. 0x 0. 2x 3. 5x 36. 4x 1. 7x 30. 2x 1. 9x 1. 9x 2. 4x 0. 7x 0. 7x 7. 1x 19. 4x 4. 6x 1. 1x 0. 4x 0. 7x 0. 5x 15. 3x 10. 0x 0. 9x 1. 2x 8. 0x 9. 9x 13. 4x 0. 2x 0. 9x 0. 6x 0. 0x 5. 5x 4. 1x -

10 , 306 . 0 0.0 308.9

40. 7x 3.8x

2. 0x 0. 1x 0.9x

42. 1 x 0.5 x 8.6x

8.0 x 3.4 x 5.3x

6 0. 3x 1. 1x 13.6x

25 .7 x 7. 3x 11.8x

36. 4x 0. 0x 5.3x

Page 16

C omparable C ompany Analys is > Web 2.0 S ummary by C ountry C ompany Na me U nited S tates

U S D Market C a p ($m) 36

C hin a

Avg US D Market C ap ($ m)

US D L T M Total R ev ($ m)

17 , 657 . 22

C hina

2, 207. 15

US D L T M Total E B ITDA ($m )

C hina

2, 690. 14

C hina

1, 566. 00

C an a da

E B IT DA % 1,38 3. 03

F inla nd

6 3.5%

18 2. 47

T a iwa n

3 6.2%

C an ada

9

C anada

1 , 758 . 76

J a pa n

247. 51

U nited S tates

S outh K o re a

9

U nited S ta tes

1 , 566 . 20

T aiwan

235. 48

C an ada

860. 71

J apa n

9 1. 35

U nited S tates

2 6.7%

C hina

8

J a pa n

1 , 237 . 56

C a nada

195. 42

S outh K o re a

530. 57

T aiwan

8 4. 77

I ndia

2 5.3%

J a pa n

5

T a iwan

706 . 44

Italy

144. 42

Hon g K ong

428. 12

S outh K ore a

5 7. 78

G e rm any

1 9.6%

T a iwa n

3

S ou th K orea

590 . 88

G erm any

111. 20

J a pan

380. 62

Italy

3 5. 52

I ta ly

1 6.0%

G erma ny

2

G e rm any

222 . 40

Hong K ong

108. 94

T a iwa n

349. 63

India

2 4. 45

S ou th K orea

1 3.8%

A us tra lia

1

I taly

144 . 42

S outh K orea

65. 65

Ita ly

222. 41

Hon g K ong

1 8. 81

C anada

7. 4%

Hon g K ong

1

H ong K on g

108 . 94

F inla nd

46. 98

India

137. 03

G ermany

1 2. 77

C hina

6. 5%

In dia

1

F inla nd

46 . 98

U nite d S ta te s

43. 51

G erma ny

46. 40

U nited S ta te s

9. 98

H ong K on g

4. 4%

F inla nd

1

I ndia

34 . 14

India

34. 14

A us tra lia

10. 52

A us tralia

4. 84

J apa n

-1. 0%

15 . 90

A us tra lia

15. 90

F in lan d

5. 38

U nited K ingdom

A us tralia

-1 5. 3%

U nited K ingdom

0. 24

F inla nd

Ita ly

1

A us tra lia

U nited K ingdom

1

U nited K ingdo m

G rand Total

78

G rand Tota l

2 . 41 24 ,092.23

2. 41

U nite d K in gdom

308. 87

G ra nd Total

G rand Total

7, 227. 77

G ra nd Total

-1. 64 -1 2. 40

U nited K ingdo m

NA

1,89 1.72

G rand T ota l

18.4 %

1,08 5. 69

H LS E

6 3.5%

Figure 25. Comparison by Country Source. Capital IQ

C omparable C ompany Analys is > Web 2.0 S ummary by Exc hange C ompany Na me

U S D Market C a p ($m)

OTCB B

19

S E HK

Nas da qG S

10

Avg US D Market C ap ($ m)

US D L T M Total R ev ($ m)

US D L T M Total E B ITDA ($m )

E B IT DA %

10 , 877 . 07

S EH K

3, 625. 69

S E HK

368. 48

Nas da qG S

N as da qG S

8 , 285 . 28

NY S E

1, 333. 55

Nas da qG S

365. 33

S E HK

52 9. 92

OTCB B

4 8.9%

15 5. 61

N as daqC M

4 7.8%

K OS E

7

NYS E

1 , 333 . 55

Na sda qG S

828. 53

NY S E

245. 11

NY S E

OTCP K

7

TS E

1 , 109 . 31

TS E

277. 33

CM

222. 41

TS E

7 4. 76

GTS M

3 6.2%

Nas da qG M

5

K OS E

562 . 78

GTS M

168. 98

B SE

137. 03

K OS E

5 6. 99

BSE

2 5.3%

A ME X

4

OTCB B

348 . 76

CM

144. 42

OSE

112. 88

GTSM

3 6. 80

N YS E

2 3.9%

TS E

4

GTS M

337 . 95

OS E

128. 25

TS E

89. 25

CM

3 5. 52

TS X

2 0.7%

T S XV

4

XTR A

222 . 40

X TR A

111. 20

Nas da qG M

86. 57

BSE

2 4. 45

XTR A

1 9.6%

TS X

3

OTCP K

193 . 68

K OSE

80. 40

GTSM

74. 57

OSE

1 6. 58

OTCP K

1 7.8%

S E HK

3

N as da qG M

185 . 23

HL S E

46. 98

K OS E

67. 67

XT R A

1 2. 77

CM

1 6.0%

XT R A

2

CM

144 . 42

Na sda qG M

37. 05

OTCPK

25. 17

ASX

GTSM

2

OS E

128 . 25

B SE

34. 14

TS X

24. 93

A ME X

A IM

1

A ME X

98 . 11

TS X

28. 62

XT R A

23. 20

NY S E

1

TS X

85 . 85

OTCP K

27. 67

A ME X

22. 65

HLS E

1

T S XV

55 . 71

A ME X

24. 53

T S XV

Nas da qC M

1

H LS E

46 . 98

Na sda qC M

24. 46

CM

1

BSE

34 . 14

OTCB B

B SE

1

N as da qC M

24 . 46

ASX T S XV

13. 93

ASX

1

AS X

15 . 90

OSE

1

A IM

2 . 41

G rand Total

78

G rand Tota l

Figure 26. Comparison by Exchange Source. Capital IQ

24 ,092.23

A IM G ra nd Total

K OS E

1 3.8%

-0. 79

TS E

1 1.3%

A IM

-1. 64

T S XV

4. 7%

TS X

-5. 83

S E HK

3. 5%

11. 36

T S XV

-6. 88

A ME X

0. 2%

ASX

10. 52

Nas da qC M

-1 1. 80

N as daqG S

-3. 1%

18. 36

HLS E

5. 38

HLS E

-1 2. 40

N as daqG M

-7. 2%

15. 90

OTCBB

1. 93

OTCP K

-2 7. 13

AS X

-1 5. 3% -2 5. 6%

2. 41 308. 87

4. 84

A IM

0. 24

Nas da qG M

-2 9. 16

OS E

Nas da qC M

0. 07

OTCB B

-4 6. 58

A IM

G rand Total

101. 80

G ra nd Total

1,89 1.72

G rand T ota l

NA 18.4 %

Page 17

Financing - Last Three Months (US$ m) Month

Company Name

Country

Nov-08

HuffingtonPost Angie's List Rockyou PlaySpan KickApps Multiply Casual Collective

USA USA USA USA USA USA UK

GoFish NetShelter Blue Kai Taptu FooMojo Scribd Superfish Tagged Snapmylife Jackbe ChakPak Tumblr Overlay.TV DotBlu Angie's List StockTwits

USA Canada USA UK USA USA Israel USA USA USA India USA Canada USA USA USA

Nov-08 Total Dec-08

Angel/Seed

USA USA Korea USA USA USA USA USA USA USA USA USA France USA USA USA USA UK USA Canada USA

Series B

Series C

Series D

Series E

17.0 14.0 5.0 1.0 1.0

18.0

16.8

61.0

22.5

22.5 11.1 10.5 9.9 9.9 9.0 5.3 5.0 5.0 5.0 5.0 4.5 3.8 2.0 1.0 0.8 110.3

11.1 10.5 9.9 9.9 9.0 5.3 5.0 5.0 5.0 5.0 4.5 3.8 2.0 1.0 22.5

0.8 23.8

53.0

1.0

5.0

12.0 10.0 10.0 10.0 10.0 10.0 10.0 9.0 8.0 7.5 7.0 6.5 6.2 6.0 5.0 5.0 5.0 1.2 1.0 0.2 1.2

Grand Total

2.2

23.0

22.5

26.2

57.5

44.7

50.0

127.3

106.7

Grand Total 25.0 18.0 17.0 16.8 14.0 5.0 1.0 96.8

16.8

Jan-09 Total

Figure 27. Financing, Last Three Months Source. Company reports

Series A

18.0

5.0 Aster Data Systems NewsGator Nurien Go Internet Media Yodle RatePoint DECA One True Media Play Hard Sports JibJab Xobni InsideView Kewego Motionbox AboutUs Geni Sportsblogs Hubdub Snooth Identi.ca Meez

PIPE

25.0

Dec-08 Total Jan-09

Debt financing

5.0

12.0 10.0 10.0 10.0 10.0 10.0 10.0 9.0 8.0 7.5 7.0 6.5 6.2 6.0 5.0 5.0 5.0 1.2 1.0 0.2

10.0

139.6

10.0

346.7

Page 18

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.

I n f o r ma t i o n a b o u t Re s e a r ch C a p i t a l C o r p o r a t i o n ’ s Ra t i n g S y s t e m, t h e d i s t r i b u t i o n o f o u r r e s e a r ch t o cl i e n t s a n d t h e p e r ce n t a g e o f r e c o m me n d a t i o n s wh i c h a r e i n e a c h o f o u r r a t i n g c a t e g o r i e s i s a v a i l a b l e o n o u r we b si t e a t ww w. r e s e a r ch c a p i t a l . c o m. T h e i n f o r ma t i o n c o n t a i n e d i n t h i s r e p o r t h a s b e e n d r a wn f r o m s o u r c e s b e l i e ve d t o b e r e l i a b l e b u t i t s a c cu r a c y o r co mp l e t e n e ss i s n o t g u a r a n t e e d , n o r i n p r o vi d i n g i t d o e s R e s e a r c h Ca p i t a l C o r p o r a t i o n a s s u me a n y r e sp o n si b i l i t y o r l i a b i l i t y . R e s e a r ch C a p i t a l C o r p o r a t i o n , i t s d i r e ct o r s , o f f i c e r s a n d o t h e r e mp l o y e e s ma y , f r o m t i me t o t i me , h a v e p o si t i o n s i n t h e s e cu r i t i e s me n t i o n e d h e r e i n . Co n t e n t s o f t h i s r e p o r t c a n n o t b e r e p r o d u c e d i n wh o l e o r i n p a r t wi t h o u t t h e e xp r e ss e d p e r mi s si o n o f R e se a r ch C a p i t a l C o r p o r a t i o n . ( U . S . I n s t i t u t i o n a l Cl i e n t s — Re s e a r ch C a p i t a l U . S. A . I n c. ( a wh o l l y o wn e d s u b si d i a r y o f R e s e a r c h C a p i t a l Co r p o r a t i o n ) a cc e p t s r e s p o n si b i l i t y f o r t h e c o n t e n t s o f t h i s r e p o r t s u b je c t t o t h e t e r ms & l i mi t a t i o n s s e t o u t a b o v e . F i r ms o r i n s t i t u t i o n s r e ce i vi n g t h i s r e p o r t s h o u l d e f f e ct t r a n s a ct i o n s i n s e c u r i t i e s d i sc u s se d i n t h e r e p o r t t h r o u g h R e s e a r ch C a p i t a l U . S . A . I n c. , a B r o k e r - D e a l e r R e g i s t e r e d wi t h t h e U n i t e d S t a t e s S e cu r i t i e s a n d E xc h a n g e C o m mi s si o n ) .

Tor on to 4 16. 8 60. 76 00

M ontr eal 51 4. 39 9. 150 0

V anco u ver 60 4. 66 2. 180 0

www.researchcapital.com

C al gar y 40 3. 26 5. 740 0

R egi na 306. 566. 7550