09-01-27 Web 2.0 Weekly

SOFTWARE & SERVICES

27 JANUARY 2009

DAVID SHORE, CFA, MBA 416.860.6784

WEB 2.O WEEKLY

[email protected] Arun Thomas (Associate) 416.860.7666

BUSIEST FINANCING MONTH SINCE APRIL 2008 S UMM AR Y W e have identified 80 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 ~$300 million, with average trailing revenue of $100 million. The companies are also highly profitable, with an average EBITDA margin of 17.5%. On a valuation basis, the overall average is 3.8x trailing revenue and 8.4x 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 18 financings in December totalling $122.1 million (average $6.8 million), the New Year has started strong, with 23 financings already totalling $158.1 million (average $6.9 million). This is the largest number of financings since April 2008. The largest financing in the last three months was of HuffingtonPost for $25.0 million in November (Figure 2). Eight companies have raised more than $10 million each thus far in January – with Aster Data Systems the largest at $12 million so far. Microblogging phenomenon Twitter is rumoured to be raising more than $20 million with a valuation of $250 million. Financing Transactions by Month 30

25

(#)

20

15 28

27 25 23

10

19

18

17

16

16

17

15 13

5

5 3

6

11 9

9

6

3

6

6 3

4

4

Jan-09

Dec-08

Oct-08

Nov-08

Jul-08

Sep-08

Jun-08

Aug-08

Apr-08

May-08

Jan-08

Mar-08

Feb-08

Oct-07

Nov-07

Dec-07

Sep-07

Jul-07

Aug-07

Apr-07

Jun-07

May-07

Jan-07

Mar-07

Feb-07

Dec-06

Oct-06

Nov-06

Jul-06

Aug-06

Jun-06

Apr-06

Mar-06

7

1 May-06

Jan-06

7

5

1 Feb-06

Oct-05

Nov-05

Dec-05

Jul-05

4 1

Sep-05

1 Aug-05

3 1

5

4

7

Sep-06

6

0

11

10 7

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 80 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

Page 2

THE WEB 2.0 UNIVERSE 80 public Web 2.0 companies identified: W e have identified 80 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 ~$300 million, with average trailing revenue of $100 million. The companies are also highly profitable with an average EBITDA margin of 17.5%. On a valuation basis, the overall average is 3.8x trailing revenue and 8.4x 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 Ngi G roup Inc. 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 orlds .com 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 11 /30/2008 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 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 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 249 7 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 DDD 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 TSE 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 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 J PY 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 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 J apa n 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 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 ,8 00 .0 0 0 .0 1 0 .7 5 0 .0 1 1 .0 1 0 .8 6 0 .0 0 90 .3 0 0 .4 1 6 .4 3 0 .1 0 0 .0 2 2 .3 0 0 .7 0 5 15 .0 0 0 .1 5 0 .0 2 0 .3 1 4 .9 5 21 .5 5 123 ,0 00 .0 0 0 .0 3 5 .9 6 6 .6 0 0 .1 8 0 .6 4 5 ,4 70 .0 0 104 ,5 00 .0 0 3 ,0 75 .0 0 0 .0 2 0 .6 5 0 .3 9 0 .3 0 0 .3 8 2 .6 6 0 .9 8 0 .0 3 1 .3 2 0 .0 2 485 ,0 00 .0 0 2 .0 0 0 .7 3 23 ,0 00 .0 0 2 .6 5 17 .7 2 0 .5 5 44 ,6 00 .0 0 42 .5 0 32 .4 1 0 .6 2 15 .4 5 1 .7 4 1 .8 9 27 .8 5 6 .0 2 7 ,0 50 .0 0 0 .9 9 0 .0 0 2 .4 3 0 .1 0 44 .2 5 0 .0 4 15 .8 1 2 .9 0 4 .3 1 0 .0 8 6 .0 9 0 .0 8 0 .7 5 1 .4 3 0 .7 2 0 .1 5 0 .1 6 0 .5 1 29 .0 0 7 ,0 90 .0 0 3 ,9 50 .0 0 0 .0 2

US D Market Cap ($m) 9. 4 67 . 2 18 . 1 0. 2 30 . 7 2. 3 85 . 7 92 . 8 0. 0 2 27.9 19 . 3 1 37.1 2. 6 1. 4 62 . 5 34 . 1 17 . 3 14 . 2 1. 0 13 . 3 15 . 3 97 . 2 1 37.0 35 . 3 1 ,4 16 .7 3 56.6 4. 6 17 . 8 0. 0 1 33.7 48 . 4 1. 5 27 . 5 12 . 7 27 . 9 43 . 6 3 68.1 10 . 3 0. 9 22 . 5 8. 8 8 30.3 70 . 6 6. 9 1 58.7 1 80.6 2 ,1 80 .5 30 . 7 61 . 6 30 . 5 1 ,6 80 .9 51 . 5 8 81.4 47 . 7 24 . 0 1 ,9 32 .3 1 50.9 2 08.4 10 . 6 0. 0 52 . 1 4. 9 10, 25 1. 1 1. 0 4 36.5 88 . 4 40 . 4 1. 6 4 99.2 6. 8 5. 4 17 . 0 32 . 5 2. 6 8. 4 9. 2 1 98.4 79 . 7 7. 0 1. 3

US D L TM Total R ev ($m) 3. 2 52 . 6 61 . 7 0. 1 1. 1 0. 2 0. 0 428 .1 6. 7 38 . 2 0. 6 222 .9 16 . 9 0. 4 NM NA 17 . 9 NM 6. 8 4. 2 5. 3 110 .4 83 . 4 5. 4 245 .1 200 .5 6. 3 35 . 2 NA 114 .3 49 . 9 0. 0 0. 0 10 . 4 11 . 5 60 . 8 106 .7 3. 3 11 . 7 69 . 5 0. 1 125 .9 NM 7. 4 129 .6 95 . 2 422 .4 NM 102 .3 137 .3 744 .2 199 .0 186 .8 14 . 0 0. 1 477 .7 203 .3 149 .0 2. 3 2. 0 60 . 1 0. 1 903 .3 112 .0 252 .4 75 . 2 231 .2 26 . 5 538 .7 0. 5 0. 0 20 . 3 6. 2 0. 0 0. 1 NA 41 . 2 49 . 3 14 . 0 2. 9

US D L TM Total EB ITDA ($m) (4.7 ) 9 .6 4 .9 (2.3 ) (7.7 ) (1.6 ) (4.6 ) 18. 8 (6.6 ) 18. 0 3 .1 35. 6 (4.5 ) (3.3 ) (2.5 ) NM (0.0 ) NM 1 .2 (8.6 ) (3.2 ) 18. 7 21. 1 ( 12. 4) 15 5. 6 48. 0 ( 11. 0) 6 .8 NM 16. 8 ( 12. 8) (0.9 ) (3.5 ) 4 .8 (1.8 ) 4 .6 36. 0 (1.4 ) (1.2 ) (2.6 ) (3.2 ) 49. 6 (1.1 ) (1.6 ) 34. 8 46. 3 27 4. 2 (4.9 ) 34. 2 24. 5 18 7. 9 ( 22. 8) 99. 9 (2.5 ) ( 11. 8) 22 8. 2 25. 7 14. 0 0 .2 (0.7 ) 11. 7 (2.7 ) 44 7. 5 ( 13. 5) 95. 1 12. 2 ( 39. 6) 0 .7 13 0. 6 (0.4 ) (4.0 ) (6.0 ) (6.5 ) NM NM NM 16. 0 11. 0 (1.1 ) (3.9 )

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 18. 3% NM -60 . 6% 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 33. 5% 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 NM 38. 8% 22. 4% - 7. 6% NM

TE V /L TM R evenue 4. 3x 0. 8x 10 .2 x 31 .1 x 9. 8x 0. 3x 0. 0x 4. 5x 33 .7 x 0. 8x 0. 3x 5. 9x 1. 0x 0. 0x 2. 8x 0. 6x 0. 9x 5. 6x 1. 4x 2. 4x 0. 9x 0. 6x 0. 8x 2. 9x 0. 8x 2. 6x 3. 3x 5. 7x 1. 6x 1. 2x 0. 0x 0. 2x 2. 3x 3. 4x 0. 5x 1. 4x 4. 1x 1. 1x 0. 8x 12 .2 x 0. 2x 0. 1x 0. 1x 0. 5x 1. 6x 15 .1 x 5. 3x 3. 5x 1. 6x 0. 5x 0. 7x

TEV /L TM EB ITDA 4. 4x 7. 9x 9. 5x 6. 7x 5. 1x 0. 1x 3. 8x 3. 4x 6. 1x 6. 3x 1. 7x 11 . 0x 7. 8x 14 . 5x 4. 3x 0. 0x 1. 2x 9. 3x 4. 3x 14 . 8x 40 . 7x 4. 1x 24 . 7x 0. 9x 19 . 5x 6. 5x 8. 9x 7. 2x -

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 NA 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 1 NA 161 NA NA NA

10, 25 1. 1 0. 0 298.8

90 3. 3 0.0 100.3

4 47 .5 -39 .6 26.0

50 6. 8% -98 . 9% 17.5%

33 .7 x 0. 0x 3.8x

40 . 7x 0. 0x 8.4x

6 ,0 39 1 602

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 www.gree. 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. ne ta ge .co.j p/en/index. html 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. wor lds . 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 ) Financing activity continues: After 18 financings in December totalling $122.1 million (average $6.8 million), the New Year has started strong, with 23 financings already totalling $158.1 million (average $6.9 million). This is the largest number of financing since April 2008. The largest financing in the last three months was of HuffingtonPost for $25.0 million in November (Figure 2). Eight companies have raised more than $10 million each thus far in January – with Aster Data Systems the largest at $12 million so far. Microblogging phenomenon Twitter is rumoured to be raising more than $20 million with a valuation of $250 million. W e will add this to our database once details are confirmed. 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

HuffingtonPost GoFish Angie's List Rockyou PlaySpan KickApps Aster Data Systems NetShelter Blue Kai IMVU NewsGator Go Internet Media Nurien Yodle RatePoint DECA Taptu FooMojo Scribd One True Media Play Hard Sports Social Median JibJab Xobni InsideView Kewego Motionbox Superfish Gbox ChakPak Snapmylife Multiply Sportsblogs AboutUs Tagged Jackbe Geni Tumblr Playdo Machinima.com Overlay.TV E-Global Sports DotBlu Hubdub Casual Collective Snooth StockTwits Worlds.com Inc. Identi.ca Clickpass Pulse Entertainment Meez

0.0

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

January activity doesn’t offset weak 2H/08: 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).

Page 4

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

Nov-08

Sep-08

Jul-08

May-08

Mar-08

Jan-08

Nov-07

Sep-07

Jul-07

May-07

Mar-07

Jan-07

Nov-06

Sep-06

Jul-06

May-06

Mar-06

Jan-06

Nov-05

Sep-05

0.0 Jul-05

0.0

Average

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

Cumulative total $5.2 billion: Overall, on a cumulative basis, W eb 2.0 financings have totalled almost $5.2 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) 1,400.0

6,000.0 1,303.0

1,200.0

5,000.0

1,000.0

941.2 4,000.0

701.7 3,000.0 600.0

524.9 2,000.0

400.0 311.8

296.0 200.0 87.2 35.5 28.8 20.1

124.1 37.5 33.5 18.2 40.0 49.1 29.4

69.4

158.1

145.7 101.3 97.0

0.0

1,000.0

0.0 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2003

Figure 4. Financing, Cumulative Source. Company reports

2004

2005

2006

2007

2008

2009

(US$m)

(US$m)

800.0

Page 5

U.S. remains dominant: U.S. companies continue to dominate capital market activity – with almost 73% of financings/M&A involving U.S. companies (based on dollars) (Figure 5). Canadian companies generated under 1% of capital market activity based on dollar volume (Figure 5). Based on number of transactions, the U.S. leads with approximately 74% of deals, while Canada is third in number of financings at 5.2% (Figure 6). Financing/M&A by Country - LTM ($)

Financing/M&A by Country - LTM (#) UK 6.0%

UK 13.4%

Canada 5.2%

Israel 2.8% China 2.4%

China 7.9%

Russia 1.7%

Canada 0.7%

ROW 9.3%

Israel 0.7% Denmark 0.7%

ROW 2.1%

USA 72.8%

USA 74.2%

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

More early-stage funding (by count): Almost half of financings in the last 12 months are for early-stage companies (Angel/Seed or Series A) (Figure 7). Series B rounds are 30.7% of the total, with later-stage (Series D, E and PIPE) deals accounting for just 7.3%. Financing by Type - LTM

Series B 30.7%

Series C 12.1%

Series D 4.8%

Angel/Seed 9.1%

Debt financing 3.0% Series A 38.1%

PIPE 2.2%

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 eleven “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.

Page 6

Average financing round size - LTM 40.0

35.0

30.0

(US$m)

25.0

20.0 38.1

15.0 26.2

10.0

18.9

11.3

5.0

10.0

8.8 6.4 3.4

0.0 # rounds

Angel/Seed

Debt financing

PIPE

Series A

Series B

Series C

Series D

Series E

21

7

5

88

71

28

11

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 140

120

100

80

60

40

20

NASDAQ COMP

Figure 9. Web 2.0 Price Performance Source. Capital IQ

Web 2.0 (Market Cap Weighted)

1/26/2009

1/12/2009

12/29/2008

12/15/2008

12/1/2008

11/17/2008

11/3/2008

10/20/2008

10/6/2008

9/8/2008

9/22/2008

8/25/2008

8/11/2008

7/28/2008

7/14/2008

6/30/2008

6/16/2008

6/2/2008

5/19/2008

5/5/2008

4/7/2008

4/21/2008

3/24/2008

3/10/2008

2/25/2008

2/11/2008

1/28/2008

0

Page 7

DigitalTown reverses fortune, BroadWeb Asia leads: After leading last week with a 1-week return of 11.1%, DigitalTown (DGTW -OTCBB) had the worst performance in the group (for stocks with prices greater than $1) (Figure 10), falling 23.3% on the week. BroadW eb Asia (BW BA-OTCPK) increased the most, +83.6%. 1 Week P ric e P erformanc e B roadW ebAs ia Inc. W ebzen Inc. Moggle, Inc S K C ommunica tions C o., Ltd. NE O W IZ G ames C orpora tion Y edangOnline C orp. P hotoC ha nnel Networks Inc. G iant Interactive G roup, Inc. G ameOn C o Ltd. T he9 Limited F rogs ter Interactive P ictures AG Open T ext C orp. Actoz S oft C o., Ltd. T encent Holdings Ltd. G ungHo Online E ntertainment, Inc. AQ Interactive, Inc. LookS ma rt, Ltd. Neteas e.com Inc. C hines e G a mer Internationa l P erfect W orld C o., Ltd. K ings oft C o. Ltd. United O nline Inc. Quepas a C orp. S handa Interactive E ntertainment Ltd. HanbitS oft, Inc. S park Networks , Inc. G amania Digital E nterta inment C o., Ltd. G iga Media Ltd. T heS treet.com, Inc. G ree, Inc. E olith C o. Ltd. XING AG DADA S pA Northga te T echnologies Limited T ree. C om, Inc. NetDragon W ebS oft, Inc. Y nk K orea Inc. Ngi G roup Inc. Mixi, Inc. S hutterfly, Inc. DigitalT own, Inc. -40.0%

83.6% 41. 6% 33.3% 21.6% 20.4% 9.1% 7.4% 6. 2% 5.9% 5.8% 4. 2% 3. 6% 3. 4% 3.3% 2.9% 2.8% 2.3% 1. 0% -0.3% -1. 4% -1.5% -1.6% -2.1% -2.5% -2.7% -2.8% -2.9% -3. 2% -4. 0% -4.0% -4.6% -4.7% -5.3% -6. 3% -6.3% -6.4% -8.1% -14.4% -14. 9% -15. 2% -23. 3% -20.0%

0.0%

20.0%

40. 0%

60. 0%

80. 0%

100. 0%

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

INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) Tencent Holdings Ltd. Launches English Version of QQ: Tencent Holdings Ltd. launched the English-language version of its popular instant messaging (IM) tool QQ. It is the right time to launch the new program considering the increasing demand for communication between Chinese Internet users and their overseas counterparts. The company has recently developed an international version of the IM program. The English language users can register and download software through the new service. Perfect World Co. Ltd. Partners with KTHitel Co. Ltd. to License 'Chi Bi' in Korea: Perfect W orld Co. Ltd. announced that it recently signed an agreement with KTHitel Co. Ltd. to license 'Chi Bi,' the Company's 3D massively multiplayer online role playing game (MMORPG) based on the Three Kingdoms period in Chinese history, to the Korean market. 'Chi Bi' was launched domestically in January 2008 and is Perfect W orld's first historical theme-based 3D MMORPG. The game's unique features, such as the '18 Legendary W eapons System,' the 'Battle of the Three Kingdoms System,' and cutting edge graphic design, have proven to be quite popular with players. 'Chi Bi' has previously been licensed in a number of countries and regions including Taiwan, Malaysia and Japan. Spark Files Shelf: Spark Networks, Inc. has filed a Shelf Registration in the amount of $2.67 million. DADA Acquired: RCS MediaGroup SpA (CM: RCS) acquired remaining 50.5% stake in DADA SpA (CM: DA) on January 21, 2009. The transaction was approved by Italy’s antitrust authorities. RCS MediaGroup S.p.A (CM: RCS) completed the acquisition of remaining 50.5% stake in DADA SpA (CM: DA) on January 21, 2009. The9 Limited Declares Special Cash Dividend Payable On or Around February 9, 2009: The9 Limited announced that its Board of Directors has declared a special cash dividend in an aggregate amount of $29,410,000, or approximately of $1.11 per share on its ordinary shares, par value $0.01 per share, based on the number of shares outstanding on the date hereof. The actual dividend per share will be based on the number of shares outstanding on the record date. The special cash dividend, net of taxes withheld pursuant to applicable law, is payable on or around February 9, 2009 to shareholders of record as of the close of business on February 2, 2009, U.S. Eastern Standard Time. GoFish Corporation to Amend and Restate Articles of Incorporation: GoFish Corporation announced that on January 20, 2009, pursuant to the approval of the Board and the written consent of at least a majority of the outstanding shares of the company's capital stock, the company filed a Certificate of Amendment to the company's Amended and Restated Articles of Incorporation with the Secretary of State of Nevada to change the name of the company from 'GoFish Corporation' to 'Betawave Corporation'. The Certificate of Amendment became effective upon filing. The company intends on notifying FINRA of the name change and expects to receive a new ticker symbol for the company's common stock,

Page 8

which is currently quoted on FINRA's OTC Bulletin Board. In addition, the company intends on contacting the CUSIP Service Bureau and expects to receive a new CUSIP number for the company's common stock. Playbo y Mexico and Quepasa Corp. Announce Strategic Partnership: Quepasa Corp. and Playboy Mexico announced a strategic partnership to launch a model search to find the next Playboy Mexico Playmate of the Year for 2009. The model search will be largely judged by Quepasa members who will vote for which models advance to the finalist's pool. As part of the partnership Quepasa, one of the fastest growing online social communities for young Latinos, will develop a fully interactive online community for Playboy Mexico in which Quepasa members can enter to become a Playboy Playmate or vote for which models make it to the finals. The community, which will launch in February, will feature a vibrant, interactive viral community, including model profiles, pictures, and user-generated content. Open Text Corp. Announces the Release of Open Text Recruiting Management for Microsoft SharePoint: Open Text Corp. announced the release of Open Text Recruiting Management for Microsoft SharePoint, a native Microsoft Office SharePoint Server 2007 application for collaborative hiring case management that helps to simplify the recruiting process within organizations. This release is part of a continuing Open Text strategy to build applications that extend Office SharePoint Server 2007, based on the Open Text ECM Suite. Features for Open Text Recruiting Management for Microsoft SharePoint include: Integration with Oracle's PeopleSoft Enterprise: Open Text Recruiting Management for Microsoft SharePoint automatically imports relevant HR data from PeopleSoft; Full Auditing Capabilities and Records Retention: Built upon the compliance strengths of long term retention and archival of Open Text Enterprise Library Services, the application shares central records management practices and maintains compliance with corporate and legislative regulations; Automated W orkflow and Approval: Open Text Recruiting Management for Microsoft SharePoint leverages request forms, automated tasks and notifications to simplify the hiring process; and Dedicated Collaborative W ork Area: Information related to the job is available within the Office SharePoint Server 2007 site. Users work with everyone involved in the hiring process and take advantage of the collaborative features of Office SharePoint Server 2007. Shanda Signs Agreement w ith Zhejiang Satellite Television: Shanda Interactive Entertainment Ltd. announced that it would launch an interactive music program through collaboration with Zhejiang Satellite Television. The program is wholly based on its year-consuming music community game and interactive music platform, 'Juxing', which integrates such functions as singing, making friends and competition. The move marks the first trial promotion of online game via Televisions in China and indicates the formal operation of 'Juxing' under way, noted market watchers. Snap Interactive Inc. Provides Revenue Guidance for the Fourth Quarter and Year Ending December 31, 2008: SNAP Interactive Inc. provides revenue guidance for the fourth quarter and year ending December 31, 2008. The company anticipates revenue in excess of $1.08 million for the quarter ended December 31, 2008. The company anticipates total revenue in excess of $3.0 million for the year ended December 31, 2008. The9 to Launch ‘Wrath of the Lich King’ in China: The9 Limited is set to launch W rath of the Lich King, the second expansion set for the massively multiplayer online role-playing game (MMORPG) W orld of W arcraft, in China soon, but they have not determined the date. The expansion set has made a hit in some western countries such as the U.S. Sales of W rath of the Lich King gained the top spot during the Christmas. Financial Media Seeks Financing: Financial Media Group, Inc. plans to raise funds. The firm said in a SEC filing that it anticipates that the firm will need an additional $2,000,000 to fund its anticipated operations for the next 12 months, depending on revenues from operations. The firm added that it presently does not have any available credit, bank financing or other external sources of liquidity. It also said that it will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the firm may need to sell additional shares of its common stock or borrow funds from private lenders. 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. GoFish Name Change: GoFish Corporation has changed its name to Betawave Corporation. 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.

Page 9

VALUATION Five companies top US$1 billion market cap: Just five (same as last week) companies in our Web 2.0 universe top US$1 billion in market capitalization (Figure 11). In addition, 60 of the 80 (up from 55 last week) companies have market caps under US$100 million, with 24 (21 last week) under $10 million. Online gaming companies dominate the top of the list with five of the top six by market cap. Market C ap (US D m) T encent H oldings Ltd. Netea s e. com Inc. S handa Interactive E nterta inment O pen T ext C orp. G iant Interactive G roup, Inc. P erfect W orld C o., Ltd. Mixi, Inc. U nited O nline Inc. T he9 Limited K ings oft C o. Ltd. G igaMedia Ltd. C hines e G amer Internationa l S K C ommunications C o., Ltd. X ING AG N etDra gon W ebS oft, Inc. N E O W IZ G ames C orporation S hutterfly, Inc. DA DA S pA G a meO n C o Ltd. G ungH o O nline E ntertainment, Inc. G amania Digital E nterta inment C DC C orp. T heS treet.com, Inc. B roa dW ebA s ia Inc. Y eda ngO nline C orp. Moggle, Inc A ctoz S oft C o., Ltd. DigitalT own, Inc. Ngi G roup Inc. S park Networks , Inc. O penwave S ys tems Inc. Ha nbitS oft, Inc. P hotoC hannel Networks Inc. K a boos e Inc. T ree. C om, Inc. G eoS entric O yj Dolphin Digital Media , Inc. W izzard S oftwa re C orporation B oomJ Inc N eXplore C orporation Northgate T echnologies Limited J umpT V Inc. IdeaE dge, Inc. Q uepas a C orp. LookS mart, Ltd. C ornerW orld C orporation AQ Interactive, Inc. G ravity C o. , Ltd E olith C o. Ltd. W ebzen Inc. F rogs ter Interactive P ictures AG E xtens ions , Inc. F luid Mus ic C a nada , Inc. J umbuck E ntertainment P ty Ltd. S NA P Interactive, Inc. Lingo Media C orporation Accelerize New Media , Inc. W ynds torm C orporation Ma gnitude Informa tion S ys tems W orlds . com Inc. Y nk K orea Inc. Nationa l La mpoon Inc. UO MO Media, Inc V O IS , Inc. S pectrumDNA , Inc. G oF is h C orporation W oozyF ly, Inc. DigitalF X Interna tional, Inc. B right T hings plc Unis erve C ommunications C orp. IAS E nergy, Inc. Digita lP os t Interactive, Inc. ZipLoca l Inc. F inancial Media G roup, Inc. T he P arent C ompany LiveW orld Inc. A s s ociated Media Holdings Inc. C hina G ateway C orporation S N M G lobal Holdings G ree, Inc.

227. 9 208. 4 198. 4 180. 6 158.7 150.9 137.1 137.0 133.7 97. 2 92.8 88. 4 85.7 79.7 70. 6 67. 2 62. 5 61. 6 52.1 51. 5 48.4 47. 7 43.6 40.4 35.3 34.1 32. 5 30.7 30.7 30.5 27. 9 27. 5 24.0 22. 5 19.3 18.1 17. 8 17. 3 17.0 15. 3 14. 2 13.3 12.7 10. 6 10. 3 9.4 9.2 8. 8 8.4 7.0 6.9 6.8 5. 4 4.9 4.6 2.6 2.6 2. 3 1.6 1.5 1.4 1.3 1.0 1.0 0.9 0.2 0.0 0.0 0.0

0

499. 2 436. 5 368.1 356. 6

500

881. 4 830.3

1, 000

1416.7

1,500

1680. 9

1932. 3

2,000

2180.5

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 CornerW orld (CW RL-OTCBB) at 33.7x and BoomJ at 31.1x (BOMJ-OTCBB). Excluding those companies, the average is 2.6x. Note that we exclude multiples greater than 50x. Twenty-seven of the companies have multiples under 1.5x.

Page 10

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

33. 7

35. 0

31.1 30. 0

25. 0

20. 0 15. 1 15. 0 12. 2 9.810. 2 10. 0 Average, 3.8

5. 0

0.0 0.0 0.0 0. 1 0.1 0.2 0. 2 0.3 0.3 0.5 0. 5 0.5 0.6 0. 6

0. 7 0.8 0. 8 0. 8 0.8 0.8 0. 9 0. 9 1.0 1. 1 1.2

1.4 1.4 1. 6 1.6 1.6

2. 3 2. 4 2.6 2.8 2. 9

3.3 3.4 3.5

4. 1 4.3 4. 5

5. 3 5. 6 5.7 5. 9

B oomJ Inc

C ornerW orld C orporation

UO MO Media, Inc

T encent Holdings L td.

B right T hings plc

As s ociated Media Holdings Inc.

Mixi, Inc.

DigitalP os t Interactive, Inc.

G eoS entric Oyj

Accelerize New Media, Inc.

C hines e G a mer International

W iz za rd S oftware C orpora tion

X ING AG

S NAP Interactive, Inc.

P hotoC hannel Networks Inc.

J umpT V Inc.

Lingo Media C orporation

F rogs ter Interactive P ictures AG

Open T ext C orp.

K ings oft C o. L td.

G oF is h C orpora tion

United O nline Inc.

Y edangOnline C orp.

G igaMedia Ltd.

Na tional Lampoon Inc.

S K C ommunica tions C o., Ltd.

E olith C o. L td.

S NM G lobal Holdings

NE O W IZ G a mes C orporation

G ameOn C o Ltd.

G ungHo Online E ntertainment, Inc.

DADA S pA

K aboos e Inc.

J umbuck E nterta inment P ty Ltd.

ZipL oca l Inc.

Actoz S oft C o., Ltd.

S pa rk Networks , Inc.

G amania Digital E ntertainment C o., Ltd.

S hutterfly, Inc.

HanbitS oft, Inc.

Unis erve C ommunications C orp.

C DC C orp.

Y nk K orea Inc.

T he P a rent C ompany

DigitalF X International, Inc.

Northga te T echnologies Limited

T ree. C om, Inc.

T heS treet.com, Inc.

NetDragon W ebS oft, Inc.

F ina ncia l Media G roup, Inc.

C hina G ateway C orporation

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 (20), trading at an average multiple of 10.7x (down from 11.3x last week). On a geographic basis, the United States has the most companies (37), trading at an average of 5.4x revenue (up from 4.8x revenue lat week) (Figure 14). Nine of the companies are Canadian (average 3.6x 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

6.0

10.7 9.8 9.8 4.0 4.0 5.6 5.0 2.0

5.6 3.8

3.3

3.1 1.3

1.0

0.9

0.8

7

1

1

ASX

10

CM

3

OSE

4

KOSE

4

NasdaqGS

2

TSX

2

AMEX

5

TSXV

7

GTSM

TSE

3

XTRA

OTCPK

1

SEHK

AIM

HLSE

OTCBB

1

3.6

3.1 2.5

0.8

0.0

20

5.0

1.9

1

0.2

0.1 NasdaqGM

2.0

BSE

2.0

# Companies

5.4

2.0

2.6

1

5

2.2 1.0

0.8

0.8

0.3

0.2

United Kingdom

Finland

United States

China

Canada

Germany

Japan

Taiwan

South Korea

Italy

Australia

Hong Kong

India

1

1

37

8

9

2

6

3

9

1

1

1

1

0.0

# Companies

Figure 13 & 14. TEV/Revenue Ranking (Exchange, Country) Source. Capital IQ

TEV/EBITDA (LTM) averages 8.4x: The average multiple for the 28 companies with positive EBITDA (and multiples under 100x) is 8.4x LTM EBITDA (8.6x last week), led by SNAP Interactive’s (STVI-OTCBB) 40.7x multiple (Figure 15). Sixteen of the companies have EBITDA multiples under 7x.

Page 11

TE V/L TM E B ITDA (x) 45. 0 40.7 40. 0

35. 0 30. 0 24.7

25. 0 19.5

20. 0 14.5 14.8

15. 0

7.8

Y edangOnline C orp.

K ings oft C o. L td.

C DC C orp.

8. 9

9. 3

9. 5

Open T ext C orp.

7.2

United O nline Inc.

5. 1

6. 7

7.9

6. 5

C ornerW orld C orporation

NE O W IZ G a mes C orporation

4. 4

6.3

G ungHo Online E ntertainment, Inc.

S pa rk Networks , Inc.

4. 3

DADA S pA

4.3

6.1

G igaMedia Ltd.

4.1

S hutterfly, Inc.

3.8

Actoz S oft C o., Ltd.

3. 4

G amania Digital E ntertainment C o., Ltd.

1.7

J umbuck E nterta inment P ty Ltd.

F ina ncia l Media G roup, Inc.

1.2

T heS treet.com, Inc.

0. 1

0.9

Northga te T echnologies Limited

0. 0 NetDragon W ebS oft, Inc.

5. 0

G ameOn C o Ltd.

Average, 8. 4

10. 0

C hines e G a mer International

11.0

T encent Holdings L td.

S NAP Interactive, Inc.

Unis erve C ommunications C orp.

Mixi, Inc.

S K C ommunica tions C o., Ltd.

K aboos e Inc.

X ING AG

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 (20), trading at an average multiple of 15.8x, while companies on the TSXV have the highest multiples (19.5x). On a geographic basis, the United States has the most companies (37), trading at an average of 9.0x EBITDA (Figure 17). Nine of the companies are Canadian (average 13.3x EBITDA). Average TEV/LTM EBITDA - By Exchange

Average TEV/LTM EBITDA - By Country 14.0

25.0

12.0 20.0

10.0

15.0

(x)

(x)

8.0

13.3 10.0

19.5

6.0 10.8

15.8

9.0

7

5.1 4.1

1

1

AMEX

2

CM

10

OSE

KOSE

XTRA 2

GTSM

5

NasdaqGS

3

TSE

SEHK

OTCBB

TSXV

TSX 3

7.7

6.3 2.0 1.7

1.2

0.9 NasdaqGM

6.7

0.0

20

7.9

6.5 6.8

5.1

4

8.0

8.9

BSE

8.9

7.7

# Companies

8.9

4.0

10.8

ASX

11.0

5.0

4

1

1

1.7

1.2

0.0

5

Canada

China

United States

Germany

Japan

Hong Kong

South Korea

Taiwan

Italy

Australia

India

9

8

37

2

6

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 29 companies with positive earnings (and multiples under 100x) is 12.5x LTM EPS (down from 13.6x LTM EPS), led by again by SNAP Interactive’s (STVI-OTCBB) 58.5x multiple (Figure 18). Sixteen of the companies have P/E multiples under 10x.

Page 12

P/E L TM (x) 70. 0

58. 5

60. 0

50. 0

40. 0 33. 6

35. 7

28. 7

30. 0 24.8 19. 2

20. 0

United O nline Inc.

8.2

9.1

9.5

Y edangOnline C orp.

7. 6

DADA S pA

7.0

NE O W IZ G a mes C orporation

6.8

Ngi G roup Inc.

3. 2

5. 3

S pa rk Networks , Inc.

3.1

5.2

NetDragon W ebS oft, Inc.

1. 9

LookS mart, Ltd.

P erfect W orld C o. , Ltd.

1. 7

W orlds . com Inc.

T he9 Limited

1.6

Northga te T echnologies Limited

1. 4

Neteas e. com Inc.

1. 3

S handa Interactive E nterta inment L td.

1.1

G iant Interactive G roup, Inc.

10. 0

J umbuck E nterta inment P ty Ltd.

Avera ge, 12.5 10.5 10.8 11.0

13.1 13. 2 13.7

15. 0

S NAP Interactive, Inc.

Mixi, Inc.

Open T ext C orp.

T encent Holdings L td.

X ING AG

S hutterfly, Inc.

T heS treet.com, Inc.

G ameOn C o Ltd.

C hines e G a mer International

Actoz S oft C o., Ltd.

G amania Digital E ntertainment C o., Ltd.

G igaMedia Ltd.

K ings oft C o. L td.

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 (20), trading at an average multiple of 30.8x. On a geographic basis, the United States has the most companies (37), trading at an average of 16.8x earnings (Figure 20). Nine of the companies are Canadian (average 28.7x EPS). Average P/E - By Exchange

Average P/E - By Country

30.0

30.0

25.0

25.0

20.0

20.0 (x)

35.0

(x)

35.0

15.0

30.8

10.0

15.0

19.2

28.7

10.0

18.6

19.2

18.6 16.8

16.5 12.4 10.6

5.0

11.7 9.7

9.1

5.0 8.2

10.6 8.2

7.0

7.1

7.0

5.3 1.9 0.0

1.3

OTCBB

XTRA

TSE

SEHK

GTSM

KOSE

NasdaqGS

NasdaqGM

CM

ASX

AMEX

BSE

NYSE

20

2

5

3

2

7

10

5

1

1

4

1

1

# Companies

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

1.9 0.0

# Companies

Canada

Germany

Japan

United States

Taiwan

South Korea

Italy

China

Australia

India

9

2

6

37

3

9

1

8

1

1

Page 13

UPCOMING EVENTS

Upc oming E vents E vent

Date

Location

Webs ite

O 'R eilly Money: T ech

F ebruary 4-6

Ne w Y ork

www. con ferences . oreilly. com/mo ney /

Us er G ene ra ted C onte nt

F ebruary 9-10

S a n J o se

www. u gc xevent. co m/

W eb 2. 0 C an adian L ea de rs hip S erie s G am in g

March 3

T o ro nto

http: //web2 lea ders hipse ries .iglo oevents. net/

E ngag e! E xpo

March 1 0-1 1

Ne w Y ork

www. e ngag eexpo. com

Me sh 200 9

April 7-8

T o ro nto

www. mes hc onf erenc e. com

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 nc e C ompany Name

A cc eleriz e New Me dia , In c. A ctoz S o ft C o ., L td. A Q Inte ra ctive, I nc . A ss oc iated Media Holdin gs Inc . B oomJ Inc B right T hings plc B ro adW e bAs ia In c. C D C C orp. C hina G a teway C o rporation C hines e G ame r Inte rn ational C orne rW orld C orporation DA DA S pA DigitalFX Internationa l, Inc . DigitalP os t Inte rac tive, In c. DigitalTo wn, I nc . Dolphin D igital Me dia, In c. E olith C o. L td. E xte ns ion s, Inc . F inanc ial Media G roup, In c. F luid Mus ic C ana da, I nc . F rogs ter I nterac tive P ic tures A G G am ania Digital E ntertainment C o. , L td. G am eO n C o L td. G eoS entric O yj G ia nt I nterac tive G roup, Inc . G igaMedia L td. G oF ish C orporation G ravity C o. , L td G ree, Inc . G ungHo O nlin e E nterta inm en t, In c. Han bitS o ft, I nc. IA S E n ergy, 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 . L td. L ingo Media C orporation L ive W orld Inc . L o ok S mart, L td. Ma gnitude Inf ormation S ys tems Inc . Mixi, In c. Mo ggle, I nc Nation al L ampoo n Inc. NE O W IZ G ames C orpora tio n NetDra gon W ebS oft, In c. Neteas e.c om In c. NeX plo re C orpo ra tio n Ngi G roup Inc . North gate T ec hno logies L imited O pen T ext C orp. O pen wave S y s tems Inc. P erfec t W o rld C o., L td. P hoto C han nel N etwo rk s Inc. Q uepas a C orp. S handa In terac tive E n tertainment L td. S hutterfly , I nc . S K C ommun ic ations C o., L td. S N AP In terac tive, Inc . S N M G lobal Ho ldings S park Netwo rk s , I nc . S pec trumDNA , In c. T enc e nt Ho ldings L td. T he P a re nt C o mpany T he9 L imited T heS tree t.c om, In c. T ree. C om, Inc . Unis erve C ommu nic ation s C orp. United O nline Inc . UO MO M edia, I nc V OI S , Inc . W ebze n In c. W izz ard S oftware C orpo ra tio n W oo zy F ly , I nc . W orlds . com Inc . W y nds to rm C orpo ra tio n XI NG AG Y edan gO nline C orp. Y nk K o re a In c. ZipLoc al In c. Aver age

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 J PY INR 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 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 HIN.A CGWY G T S M:3 083 CWR L C M: DA DXN D GL P DG T W DP D M 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 :KAB 3 888 T S X V:L M L VW D LO O K MA G Y 2 121 MMO G NL N A 095 660 7 77 NT E S NX PC 2 497 59 0057 OTE X OP W V 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 DD D 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 N a 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 HL S E NY S E N a 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 N a sdaqG S OTCP K TSE BSE N a sdaqG S N a sdaqG S N a sdaqG S T S XV N as daqC M N a sdaqG S N a sdaqG S K OS E OTCB B OTCP K AM E X OTCB B S E HK OTCP K N a sdaqG S Na sdaqG M Na sdaqG M T S XV N a sdaqG S OTCB B OTCB B Na sdaqG M AM E X OTCB B OTCB B OTCB B XT R A K OS E K OS E T S XV

9.4 67. 2 18. 1 0.2 30. 7 2.3 85. 7 92. 8 0.0 227. 9 19. 3 137. 1 2.6 1.4 62. 5 34. 1 17. 3 14. 2 1.0 13. 3 15. 3 97. 2 137. 0 35. 3 1, 4 16.7 356. 6 4.6 17. 8 0.0 133. 7 48. 4 1.5 27. 5 12. 7 27. 9 43. 6 368. 1 10. 3 0.9 22. 5 8.8 830. 3 70. 6 6.9 158. 7 180. 6 2, 1 80.5 30. 7 61. 6 30. 5 1, 6 80.9 51. 5 881. 4 47. 7 24. 0 1, 9 32.3 150. 9 208. 4 10. 6 0.0 52. 1 4.9 10, 251. 1 1.0 436. 5 88. 4 40. 4 1.6 499. 2 6.8 5.4 17. 0 32. 5 2.6 8.4 9.2 198. 4 79. 7 7.0 1.3 298. 8

Current Price

0. 3 5 10, 6 00. 0 0 29, 8 00. 0 0 0. 0 1 0. 7 5 0. 0 1 1. 0 1 0. 8 6 0. 0 0 90. 3 0 0. 4 1 6. 4 3 0. 1 0 0. 0 2 2. 3 0 0. 7 0 5 15. 0 0 0. 1 5 0. 0 2 0. 3 1 4. 9 5 21. 5 5 1 23, 0 00. 0 0 0. 0 3 5. 9 6 6. 6 0 0. 1 8 0. 6 4 5, 4 70. 0 0 1 04, 5 00. 0 0 3, 0 75. 0 0 0. 0 2 0. 6 5 0. 3 9 0. 3 0 0. 3 8 2. 6 6 0. 9 8 0. 0 3 1. 3 2 0. 0 2 4 85, 0 00. 0 0 2. 0 0 0. 7 3 23, 0 00. 0 0 2. 6 5 17. 7 2 0. 5 5 44, 6 00. 0 0 42. 5 0 32. 4 1 0. 6 2 15. 4 5 1. 7 4 1. 8 9 27. 8 5 6. 0 2 7, 0 50. 0 0 0. 9 9 0. 0 0 2. 4 3 0. 1 0 44. 2 5 0. 0 4 15. 8 1 2. 9 0 4. 3 1 0. 0 8 6. 0 9 0. 0 8 0. 7 5 1. 4 3 0. 7 2 0. 1 5 0. 1 6 0. 5 1 29. 0 0 7, 0 90. 0 0 3, 9 50. 0 0 0. 0 2

1 Wk

1 Mth

3 Mth

6 Mth

1 Yr

52 W eek

-12 .5% 3 . 4% 2 . 8% -50 .0% -25 .0% 0 . 8% 8 3.6% -14 .9% -25 .0% -0. 3% 6 4.0% -5. 3% -31 .1% -4. 5% -23 .3% -6. 7% -4. 6% -71 .2% -70 .0% -20 .5% 4 . 2% -2. 9% 5 . 9% -25 .0% 6 . 2% -3. 2% -18 .2% 1 0.7% -4. 0% 2 . 9% -2. 7% 0 . 0% -21 .7% 0 . 0% 0 . 0% 0 . 0% -1. 5% -2. 0% -40 .0% 2 . 3% -33 .0% -14 .9% 3 3.3% 7 . 3% 2 0.4% -6. 4% 1 . 0% -45 .0% -14 .4% -6. 3% 3 . 6% -4. 6% -1. 4% 7 . 4% -2. 1% -2. 5% -15 .2% 2 1.6% -2. 9% 2 5.0% -2. 8% -47 .4% 3 . 3% -21 .6% 5 . 8% -4. 0% -6. 3% 6 0.0% -1. 6% -33 .3% 8 7.5% 4 1.6% -4. 0% NM 6 . 7% 32 5.0% -4. 7% 9 . 1% -8. 1% 10 0.0% 2 .2%

-12 . 5% -2 .8% 4.9% -37 . 5% -6 .3% 3 7. 9% 0.0% -18 . 9% -25 . 0% 3.7% -12 . 8% -8 .1% -7 .3% 5.0% -14 . 8% -12 . 5% -8 .8% 4 2. 9% -62 . 5% 2 9. 2% -10 . 5% 2 3. 5% 5.1% -25 . 0% -1 .3% 1 7. 9% -21 . 7% 2 1. 1% 0.2% 3.8% -6 .4% -30 . 0% -21 . 7% 0.0% -25 . 0% 4 6. 2% 1 0. 8% -2 .0% -33 . 3% -14 . 3% 3 4. 0% -9 .3% 3 3. 3% -17 . 1% 1 5. 0% -7 .3% -14 . 5% -45 . 0% -11 . 2% -33 . 7% 7.1% 3.3% -0 .6% 5 1. 3% 1 5. 2% -8 .0% -12 . 4% 3 6. 6% 4 1. 4% -95 . 0% -6 .2% -33 . 3% -11 . 2% -82 . 5% 2 0. 8% 0.0% 1 00.5 % 1 00.0 % 9.3% -27 . 3% 1 50.0 % 6 0. 7% -18 . 2% NM 4 5. 5% 3 25.0 % 7.4% 1 8. 0% -21 . 0% 3 00.0 % 9.5%

-36.4 % 32. 3% -23.6 % -37.5 % -63.9 % 0.8 % -32.2 % -32.3 % -75.0 % 17. 0% 105. 0% -6. 8% -69.6 % -58.0 % -8. 0% -30.0 % 24. 1% 50. 0% -95.6 % -20.5 % 38. 7% 60. 2% 84. 7% 0.0 % -1. 0% 23. 3% 56. 5% -19.8 % NM 16. 8% 12. 2% -85.0 % -67.0 % -36.1 % -57.7 % -20.8 % 33. 0% -32.4 % -66.7 % -25.0 % 43. 6% -17.5 % NM -21.3 % 91. 7% -8. 3% -9. 8% 10. 0% -36.0 % -47.5 % 37. 2% -11.5 % -4. 0% -0. 6% -3. 1% 6.3 % -7. 4% 51. 6% 94. 1% -99.8 % -21.6 % -60.0 % 0.7 % -95.6 % 30. 1% -26.6 % 91. 6% -55.6 % -15.4 % -50.0 % 0.0 % 66. 3% -21.7 % NM -11.1 % 155. 0% 9.8 % 14. 4% -47.9 % 100. 0% -4.1 %

-53.3 % 34.0 % -79.9 % NM -77.1 % -34.5 % -32.7 % -68.7 % -95.0 % 12.5 % -32.8 % -40.7 % -82.8 % -75.6 % -34.3 % NM -40.1 % NM -98.1 % -79.3 % 0. 0 % -20.9 % -20.8 % -40.0 % -33.8 % -49.7 % -28.0 % -35.2 % NM -55.5 % -21.9 % -91.3 % -75.0 % -22.0 % -68.1 % -51.3 % -21.5 % -45.6 % -85.0 % -55.9 % 0. 5 % -35.1 % NM -58.8 % -7. 1% -71.6 % -20.3 % -31.3 % -52.3 % -85.7 % 6. 7 % -56.3 % -43.4 % -48.1 % -16.7 % 5. 9 % -40.5 % -50.7 % 147. 5% -1 00. 0 % -41.0 % NM -33.7 % -97.8 % -29.1 % -52.7 % NM -55.6 % -45.1 % -80.0 % -81.3 % -49.3 % -58.9 % NM -33.3 % -7. 3% -4. 6% -26.7 % -61.8 % -81.8 % -43.0 %

NM 24 .0% -85 .9% -87 .5% NM -57 .7% NM -79 .1% -99 .6% 2 . 4% -72 .7% -53 .4% -91 .1% -96 .2% -8 .0% NM -81 .1% 0 . 0% -93 .2% NM -37 .7% -12 .6% -5 .4% -50 .0% -42 .1% -63 .8% -48 .6% -76 .2% NM -37 .4% -52 .5% -94 .0% -43 .5% -35 .0% -78 .4% -82 .5% -10 .1% -10 .1% -87 .5% -62 .8% 67 .5% -54 .2% NM -68 .1% -20 .6% -79 .9% -2 .5% NM -71 .4% -91 .5% 2 . 6% -69 .6% -34 .0% -45 .8% -50 .9% -1 .5% -69 .3% -74 .8% 16 .5% -10 0. 0% -52 .9% NM -4 .8% -99 .3% -11 .2% -73 .7% NM -81 .0% -45 .7% -88 .6% NM -56 .3% -74 .7% NM -64 .4% NM -30 .1% -10 .3% -75 .7% -84 .0% -50 .9%

-56 .3% -16 .9% -91 .3% -93 .8% -77 .3% -69 .2% -66 .3% -80 .9% -99 .8% -35 .0% -73 .5% -60 .3% -92 .6% -96 .5% -62 .3% -38 .1% -83 .2% -85 .1% -98 .5% -84 .8% -45 .9% -41 .7% -24 .8% -66 .7% -65 .3% -68 .5% -69 .5% -79 .0% -9. 0% -76 .0% -57 .8% -95 .0% -77 .0% -50 .6% -81 .3% -84 .2% -38 .3% -55 .5% -96 .0% -72 .5% -42 .6% -65 .1% 0 . 0% -69 .6% -42 .5% -81 .5% -34 .8% -62 .1% -77 .7% -92 .6% -17 .1% -78 .5% -53 .9% -58 .1% -52 .6% -27 .2% -72 .3% -76 .3% -10 .0% -100 . 0% -57 .4% -83 .3% -38 .6% -99 .3% -44 .5% -76 .3% -61 .2% -83 .2% -51 .3% -90 .0% -86 .6% -67 .9% -77 .8% -100 . 0% -68 .6% -40 .0% -36 .3% -43 .5% -80 .2% -90 .9% -65 .1%

Page 15

C omparable C ompany Analys is > Web 2.0 Valuation Multiples

C ompany Na me

P rimary E xcha nge

Ti cker

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 or poration 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 mart, 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 Ngi G roup Inc. Northgate T e chnologies L imited Open T e xt C orp. 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 arent 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 izz a rd S oftwa re C orporation W oozyF ly, Inc. W orlds .com Inc. W ynds torm C orporation XING A G Ye dangO nline C orp. Ynk K orea 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 G TSM 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 G TSM 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 AS X 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 TS E BSE 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 O T C BB XT R A K OS E K OS E T S XV

AC L Z A0 52 790 3 83 8 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 A0 41 060 E XT I F NGP T S X: F MN FRG 6 18 0 3 81 2 G E O1 V GA G IGM G OF H GRVY T S E :3 63 2 3 76 5 A0 47 080 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 88 8 T S XV : LM LV W D LO OK MAG Y 2 12 1 MMOG N LN A0 95 660 7 77 NT E S NXP C 2 49 7 59 00 57 OTEX O PW V PW R D T S XV : P N QP S A S NDA S F LY A0 66 270 S TV I S NMN L OV S PX A 7 00 KIDS .Q NC T Y T SCM TRE E T S XV: US S UNT D UO MO V O IS WZE N W ZE W ZYF W DDD W YND O 1B C A0 52 770 A0 23 770 T S X V : ZIP

High Low Average

Figure 24. Valuation Comparison Source. Capital IQ

U S D Market 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 67 . 2 18 . 1 0.2 30 . 7 2.3 85 . 7 92 . 8 0.0 227 . 9 19 . 3 137 . 1 2.6 1.4 62 . 5 34 . 1 17 . 3 14 . 2 1.0 13 . 3 15 . 3 97 . 2 137 . 0 35 . 3 1 , 416 . 7 356 . 6 4.6 17 . 8 0.0 133 . 7 48 . 4 1.5 27 . 5 12 . 7 27 . 9 43 . 6 368 . 1 10 . 3 0.9 22 . 5 8.8 830 . 3 70 . 6 6.9 158 . 7 180 . 6 2 , 180 . 5 30 . 7 61 . 6 30 . 5 1 , 680 . 9 51 . 5 881 . 4 47 . 7 24 . 0 1 , 932 . 3 150 . 9 208 . 4 10 . 6 0.0 52 . 1 4.9 10 , 251 . 1 1.0 436 . 5 88 . 4 40 . 4 1.6 499 . 2 6.8 5.4 17 . 0 32 . 5 2.6 8.4 9.2 198 . 4 79 . 7 7.0 1.3

4 .3 x 0 .8 x 10. 2 x 31. 1 x 9 .8 x 0 .3 x 0 .0 x 4 .5 x 33. 7 x 0 .8 x 0 .3 x 5 .9 x 1 .0 x 0 .0 x 2 .8 x 0 .6 x 0 .9 x 5 .6 x 1 .4 x 2 .4 x 0 .9 x 0 .6 x 0 .8 x 2 .9 x 0 .8 x 2 .6 x 3 .3 x 5 .7 x 1 .6 x 1 .2 x 0 .0 x 0 .2 x 2 .3 x 3 .4 x 0 .5 x 1 .4 x 4 .1 x 1 .1 x 0 .8 x 12. 2 x 0 .2 x 0 .1 x 0 .1 x 0 .5 x 1 .6 x 15. 1 x 5 .3 x 3 .5 x 1 .6 x 0 .5 x 0 .7 x

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

4 .4 x 7 .9 x 9 .5 x 6 .7 x 5 .1 x 0 .1 x 3 .8 x 3 .4 x 6 .1 x 6 .3 x 1 .7 x 11. 0 x 7 .8 x 14. 5 x 4 .3 x 0 .0 x 1 .2 x 9 .3 x 4 .3 x 14. 8 x 40. 7 x 4 .1 x 24. 7 x 0 .9 x 19. 5 x 6 .5 x 8 .9 x 7 .2 x -

6 .0 x 5 .2 x 5 .5 x 8 .3 x 6 .2 x 3 .3 x 2 .8 x 3 .4 x -

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

12 .6 x 12 .5 x 8. 9x 9. 6x 13 .5 x 7. 4x 27 .6 x 10 .1 x 7. 8x 8. 0x -

1. 3x 0. 3x 4. 5x 1. 1x 1. 4x 1. 5x 1. 6x 5. 3x 0. 3x 3. 4x 37 . 5x 1. 7x 23 . 7x 1. 5x 1. 9x 2. 4x 0. 4x 0. 8x 6. 0x 19 . 4x 5. 3x 1. 0x 0. 5x 0. 7x 0. 7x 0. 5x 16 . 4x 9. 8x 0. 9x 1. 0x 7. 7x 5. 2x 13 . 3x 0. 2x 0. 9x 0. 6x 0. 0x 5. 2x 4. 4x -

10 , 251 . 1 0.0 298.8

33. 7 x 0 .0 x 3.8x

2. 1x 0. 1x 0.9x

40. 7 x 0 .0 x 8.4x

8 .3 x 2 .8 x 5.1x

5 8. 5x 1. 1x 12.5x

27 .6 x 7. 4x 11.8x

37 . 5x 0. 0x 4.9x

Page 16

Comparable C ompany Analys is > Web 2.0 S ummary by C ountry C ompany Na me United S ta tes

U S D Market C a p ($m) 37

C hina

Avg US D Market C ap ($m) 1 7, 64 7.2

C hina

US D L T M Total R ev ($m) 2 ,205 . 9

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

C hina

2 ,689 . 7

C hina

1 ,565 . 1

C an ada

E B IT DA % 1,3 82. 8

C hin a

4 9. 9%

1 82. 4

A us tralia

4 6. 0%

1 26. 7

C a nada

9

C anada

1, 82 1.7

T aiwan

227 . 2

United S tates

S outh K ore a

9

U nited S tates

1, 42 7.8

C a nada

202 . 4

C a nada

863 . 6

J apa n

T a iwan

2 9. 3%

C hina

8

J a pan

1, 18 0.8

J a pan

196 . 8

S outh K o re a

517 . 8

T aiwan

84. 6

J apa n

2 4. 2%

J apa n

6

T a iwa n

68 1.7

Italy

137 . 1

J apan

487 . 6

S outh K ore a

56. 4

U nited S ta tes

2 3. 3%

T aiwan

3

S ou th K orea

62 1.4

G ermany

106 . 8

Hong K ong

428 . 1

Italy

35. 6

I ndia

1 7. 8%

G erma ny

2

G e rma ny

21 3.7

H ong K ong

92 . 8

T aiwan

349 . 1

In dia

24. 5

I taly

1 6. 0%

A us tralia

1

I taly

13 7.1

S outh K orea

69 . 0

Ita ly

222 . 9

Hon g K ong

18. 8

H ong K ong

4. 4%

Hong K ong

1

H ong K on g

9 2.8

U nite d S tate s

38 . 6

India

137 . 3

G ermany

12. 8

S ou th K orea

3. 7%

In dia

1

F inland

3 5.3

F inland

35 . 3

G erma ny

46 . 5

United S ta te s

9. 5

G e rm any

-1 0. 9%

F inla nd

1

I ndia

3 0.5

India

30 . 5

A us tra lia

10 . 4

A us tralia

4. 8

C a nad a

-1 8. 8%

1 2.7

A us tralia

12 . 7

Ita ly

1

A us tralia

United K ing dom

1

U nited K ingdom

G rand Total

80

G rand T ota l

2.3 23,90 5.1

U nite d K ingdom G ra nd T otal

2.3 298.8

F inland

5.4

United K ing dom

United K ingdom

0.2

F inla nd

G rand Total

7 ,323.6

G ra nd Total

-1. 6 -12. 4

U nited K in gdom F inla nd

NM NM

1,9 24.9

17.5%

G rand T ota l

1,0 85. 6

OT CB B

6 9. 0%

Figure 25. Comparison by Country Source. Capital IQ

Comparable C ompany Analys is > Web 2.0 S ummary by E xc hange C ompany Na me

U S D Market C a p ($m)

OTCB B

20

S E HK

Na s 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 IT DA ($m )

E B IT DA %

1 0, 79 9.8

S EHK

3 ,599 . 9

S E HK

368 . 4

Nas da qG S

N as daqG S

8, 26 2.7

NY S E

1 ,416 . 7

Na s da qG S

365 . 3

S E HK

5 29. 8

NYS E

6 3. 5%

K OS E

7

NYS E

1, 41 6.7

Na sd aqG S

826 . 3

NY S E

245 . 1

NY S E

1 55. 6

AS X

4 6. 0%

OTCP K

7

TS E

1, 04 7.1

TS E

209 . 4

CM

222 . 9

TS E

1 09. 9

S E HK

4 4. 0%

Na s da qG M

5

K OS E

58 6.6

GTS M

162 . 5

BSE

137 . 3

K OS E

55. 6

GTS M

3 2. 0%

TS E

5

GTS M

32 5.1

CM

137 . 1

OSE

114 . 3

GTSM

36. 7

N a s daqG S

2 8. 3%

A ME X

4

OTCB B

31 9.1

OS E

133 . 7

TS E

93 . 3

CM

35. 6

TS E

2 6. 5%

T S XV

4

XTR A

21 3.7

X TR A

106 . 8

Na s da qG M

86 . 3

BSE

24. 5

BS E

1 7. 8%

TS X

3

N as daqG M

18 6.1

K OSE

83 . 8

GTSM

74 . 3

OS E

16. 8

CM

1 6. 0%

S E HK

3

CM

13 7.1

Na sd aqG M

37 . 2

K OS E

66 . 0

XT R A

12. 8

OS E

1 4. 7%

XT R A

2

OS E

13 3.7

HL S E

35 . 3

TS X

25 . 5

AS X

GTSM

2

OTCP K

13 2.7

B SE

30 . 5

OTC PK

25 . 2

A ME X

4. 8 -0. 8

K OS E

6. 2%

N a s daqG M

-3.0%

A IM

1

A ME X

9 4.1

TS X

28 . 3

XT R A

23 . 3

A IM

-1. 6

TS X

-3.9%

NY S E

1

TS X

8 4.8

Na sd aqC M

24 . 0

A ME X

22 . 6

TS X

-5. 7

A ME X

-9.3%

HL S E

1

T S XV

6 1.0

A ME X

23 . 5

T S XV

11 . 7

T S XV

Na s da qC M

1

H LS E

3 5.3

OTCP K

19 . 0

AS X

10 . 4

Nas da qC M

CM

1

BSE

3 0.5

OTCB B

16 . 0

HL S E

5.4

HLS E

BSE

1

N as daqC M

2 4.0

T S XV

15 . 2

OT C BB

1.7

OT CP K

AS X

1

AS X

1 2.7

ASX

12 . 7

A IM

0.2

Nas da qG M

OSE G rand Total

1 80

A IM G rand T ota l

Figure 26. Comparison by Exchange Source. Capital IQ

2.3 23,90 5.1

A IM G ra nd T otal

2.3 298.8

Na s da qC M G rand Total

0.1 100.3

OT CB B G ra nd Total

-7. 1

XTRA

-1 0. 9%

OT CP K

-1 9. 0%

-12. 4

T S XV

-1 9. 1%

-27. 1

A IM

NM

-29. 2

N a s daqC M

NM

-47. 0

H LS E

-11. 8

1,9 24.9

G rand T ota l

NM 17.5%

Page 17

Financing - Last Three Months (US$ m) Month

Company Name

Country

Nov-08

HuffingtonPost Angie's List Rockyou PlaySpan KickApps Multiply Machinima.com Casual Collective Worlds.com Inc. (OTCBB:WDDD)

USA USA USA USA USA USA USA UK USA

Nov-08 Total Dec-08

Angel/Seed

Series D

Series E

14.0 5.0 1.0 0.5 18.0

0.5

3.9

16.8

61.0

101.1

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 4.3 3.8 2.0 1.0 0.8 114.6

11.1 10.5 9.9 9.9 9.0 5.3 5.0 5.0 5.0 5.0 4.5 4.3 3.8 2.0 1.0 22.5

0.8 31.9

49.2

1.0

5.0

12.0 10.0 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 5.0 3.5 1.2 1.0 0.2 1.2

Grand Total

2.2

23.0

23.0

34.7

57.5

54.7

70.4

123.5

116.7

Grand Total 25.0 18.0 17.0 16.8 14.0 5.0 3.9 1.0 0.5

3.9

Jan-09 Total

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

Series C

17.0

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

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

Series B

16.8

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

Series A

18.0

Dec-08 Total Jan-09

PIPE

25.0

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

Debt financing

5.0

12.0 10.0 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 5.0 3.5 1.2 1.0 0.2

10.0

158.1

10.0

373.8

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