09 07 07 web 2.0 weekly

19
SOFTWARE & SERVICES 7 JULY 2009 WEB 2.O WEEKLY DAVID SHORE, CFA, MBA 416.860.6784 [email protected] Arun Thomas (Associate) 416.860.7666 ADVERTISING MANAGEMENT COMPANY HI-MEDIA ACQUIRES ADLINK INTERNET MEDIA FOR $41 MILLION IS THIS THE BEGINNING OF BACKWARD INTEGRATION? We have often discussed in our various publications about the crossover of old media (TV, Radio, and Newspapers) into new media platforms such as blogs/micro-blogs, online video, online radio, mobile media, etc. Alongside this crossover, the role of the traditional advertising/media buying companies is changing rapidly. With the ability to target advertisements (on the new platforms) to very specific demographics and user base, the new media platform has helped create the analytics sector that provides data to media buyers or in themselves distribute advertisements through their affiliate networks using the data (or intelligence) they have amassed. We believe that the acquisition of AdLink (an internet marketing solutions company) by a large online publisher such as Hi-Media validates the potential of a backward integration in the online media and advertising sector. With the sector being in the very early stages, these business models or operating models are far away from maturity. Nevertheless, we expect to see many more such partnerships or integrations in the future. A quiet week on the capital raise front: Last week being marked by holidays in both Canada and United States, it was extremely quiet on the capital raise front. Total capital raised for the first few days of July is $4 million on a single transaction. Hi-Media’s acquisition of AdLink Internet Media (July 6, 2009) for $41 million was the other transaction of note. June closed with $180 million on 36 transactions. It was led by Sugar Inc. raising $16.0 million, closely followed by Tumri ($15 million), Boku ($13 million), Wimba ($12 million), and Grab Networks ($12 million). The averages for the months of May (excluding the Facebook transaction) and June were $6.4 million and $4.7 million, respectively. Financing Activity Last Three Months 4.7 4.0 6.4 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0 May-09 (excl FB) Jun-09 Jul-09 (US$m) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 (US$m) Total Average Price performance for the week was mixed: The companies in our universe had a mixed stock price performance over the past week (for stocks with prices greater than $1) (Figure 6), with 22 companies showing positive returns on the week. VOIS Inc. (VOIS:OTCBB) led the group with a 30.9% return, while Tencent Holdings Ltd. (700-SEHK) had the worst return, dropping 7.4% in the week. This report has been created by Analysts that are employed by Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report. www.researchcapital.com Toronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550

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Page 1: 09 07 07 Web 2.0 Weekly

SOFTWARE & SERVICES 7 JULY 2009

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

DAVID SHORE, CFA, MBA 416.860.6784

[email protected]

Arun Thomas (Associate) 416.860.7666

ADVERTISING MANAGEMENT COMPANY HI-MEDIA ACQUIRES ADLINK INTERNET MEDIA FOR $41 MILLION

IS THIS THE BEGINNING OF BACKWARD INTEGRATION? We have often discussed in our various publications about the crossover of old media (TV, Radio, and Newspapers) into new media platforms such as blogs/micro-blogs, online video, online radio, mobile media, etc. Alongside this crossover, the role of the traditional advertising/media buying companies is changing rapidly. With the abil ity to target advertisements (on the new platforms) to very specific demographics and user base, the new media platform has helped create the analytics sector that provides data to media buyers or in themselves distribute advertisements through their affi l iate networks using the data (or intel ligence) they have amassed.

We believe that the acquisition of AdLink (an internet marketing solutions company) by a large online publisher such as Hi-Media validates the potential of a backward integration in the online media and advertising sector. With the sector being in the very early stages, these business models or operating models are far away from maturity. Nevertheless, we expect to see many more such partnerships or integrations in the future.

A quiet week on the capital raise front: Last week being marked by holidays in both Canada and United States, i t was extremely quiet on the capital raise front. Total capital raised for the first few days of July is $4 mil lion on a single transaction. Hi-Media’s acquisit ion of AdLink Internet Media (July 6, 2009) for $41 mil lion was the other transaction of note. June closed with $180 mil lion on 36 transactions. It was led by Sugar Inc. raising $16.0 mil lion, closely followed by Tumri ($15 mill ion), Boku ($13 mil lion), Wimba ($12 mill ion), and Grab Networks ($12 mill ion). The averages for the months of May (excluding the Facebook transaction) and June were $6.4 mill ion and $4.7 mil lion, respectively.

Financing Activity Last Three Months

4.7

4.0

6.4

0.0

20.0

40.0

60.0

80.0

100.0

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(US

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)

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6.0

7.0

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$m

)

Total Average

Price performance for the week was mixed: The companies in our universe had a mixed stock price performance over the past week (for stocks with prices greater than $1) (Figure 6), with 22 companies showing positive returns on the week. VOIS Inc. (VOIS:OTCBB) led the group with a 30.9% return, while Tencent Holdings Ltd. (700-SEHK) had the worst return, dropping 7.4% in the week.

This report has been created by Analysts that are employed by Research Capital Corporation, a Canadian Investment Dealer.

For further disclosures, please see last page of this report. www.researchcapi ta l .com

Toronto 416 .860 .7600 Montrea l 514.399 .1500 Vancouver 604 .662 .1800 Calgary 403 .265.7400 Regina 306 .566 .7550

Page 2: 09 07 07 Web 2.0 Weekly

Page 2

THE WE B 2 . 0 UNI VE RSE

Ninety public Web 2.0 companies identified: Our Web 2.0 universe contains 90 companies, with a combined market cap of ~$53 bil lion (Figure 1). The average market cap for the group is ~$588 mil lion (but a median of only $50.0 mil lion), with average trai ling revenue of $152.2 mil lion (median $54.1 mill ion). The companies are also generally profitable, with a median EBITDA margin of 13.2%. On a valuation basis, the overall average is 4.6x trai ling revenue (median 1.4x) and 10.1x trail ing EBITDA (median 9.2x). Fourteen of the companies have more than 500 employees.

Comparable C ompany Analys is > Web 2.0

C ompany Name L TM as o f T icker Exchange

Trading

Currency HQ

Current

Price

USD Market

C ap ($m)

USD LTM Total

R ev ($m)

USD L TM Total

E B ITDA ($m)

E BITDA

%

TEV/LTM

R evenue

TEV /L TM

EBITDA Employees

Acce le rize New Media, Inc. 3 /31 /2009 AC LZ OT C BB USD United S ta tes 0 .50 1 3.8 4.1 (4 .4) NM 4.6x - 1 1

Actoz S of t C o. , L td. 3 /31 /2009 A052790 KOS E KR W South Korea 25 100 169.2 91. 0 1 9.8 21 .7% 1.5x 7. 1x NA

AQ Inte ractive , Inc. 3 /31 /2009 38 38 T S E J PY J apan 69 100 3 9.6 65. 1 4 .1 6 .3% 0.2x 2. 5x NA

As socia ted Media Holdings Inc. 6 /30 /2007 AS MH OT C PK USD United S ta tes 0 .02 0 .9 0.1 (2 .3) NM 19.2x - 3 B igstring Corp. 3 /31 /2009 BS GC OT C BB USD United S ta tes 0 .03 1 .8 0.1 (2 .0) NM 43.2x - 4

Be tawave Corpora tion 3 /31 /2009 BWAV OT C BB USD United S ta tes 0 .10 2 .9 8.4 (1 2.6) NM - - 5 3

Be yond Commerce, Inc. 3 /31 /2009 BYOC OT C BB USD United S ta tes 0 .44 1 9.8 7.1 (9 .5) NM 3.5x - 6 9

Br ight T hings plc 9 /30 /2008 AIM:BGT AIM GBP United K ingdom 0 .02 4 .8 0.3 (1 .8) NM 17.6x - 9 B roa dW ebAs ia Inc. 9 /30 /2008 BWBA OT C PK USD United S ta tes 0 .23 1 9.5 0.0 (4 .6) NM - - 4 6

C DC C orp. 3 /31 /2009 CHIN .A Nasda qGS USD Hong Kong 1 .43 151.7 389 .9 3 0.8 7 .9% 0.4x 5. 4x NA

C ha ngyou. com Limite d 3 /31 /2009 C YOU Nasda qGS USD C hina 38 .83 2,135.7 222 .5 135.1 60 .7% 8.8x 14 .4x 628

C hina Gatewa y C orpora tion 9 /30 /2008 CGWY OT C PK USD United S ta tes 0 .02 0 .3 6.7 (6 .6) -98.9% 0.0x - 3 7 C hine se Gamer International 3 /31 /2009 GT SM:3083 GT SM TWD Taiwan 446 .00 1,137.4 56. 0 3 1.4 56 .0% 19.1x 34 .2x NA

C ornerW orld C orporation 1 /31 /2009 CWR L OT C BB USD United S ta tes 0 .06 3 .9 1.3 NM NM 4.1x - NA

C yberplex Inc. 3 /31 /2009 T S X:C X T S X C AD C ana da 1 .57 8 7.5 70. 1 7 .2 10 .3% 1.2x 11 .5x NA

DADA S pA 3 /31 /2009 CM:DA CM EUR Ita ly 6 .23 140.7 234 .0 3 4.2 14 .6% 0.8x 5. 6x 578 DXN Holdings B hd 2 /28 /2009 DXN KL S E MYR Ma la ys ia 0 .37 2 4.1 78. 0 1 0.7 13 .7% 0.5x 3. 7x NA

Dibz Inte rnational, Inc. NA DIBZ OT C PK USD United S ta tes 0 .00 0 .0 NA NM NM - - NA

DigitalPost Inte ra ctive , Inc. 3 /31 /2009 DGLP OT C BB USD United S ta tes 0 .04 3 .2 0.7 (2 .6) NM 6.6x - 7

DigitalT own, Inc. 2 /28 /2009 DGTW OT C BB USD United S ta tes 2 .05 5 5.5 NM (3 .0) NM - - 3 Dolphin D igital Media, Inc. 3 /31 /2009 DPDM OT C BB USD United S ta tes 0 .40 2 0.7 0.8 (3 .7) NM 28.0x - NA

E o lith C o. L td. 1 2/31 /200 8 A041060 KOS E KR W South Korea 795 .00 4 5.4 14. 5 (3 .4) -23.6% 3.3x - NA

E xtens ions , Inc. 3 /31 /2009 EXT I OT C PK USD United S ta tes 0 .20 8 .9 NM NM NM - - 2

F inancia l Media G roup, Inc. 2 /28 /2009 FNGP OT C BB USD United S ta tes 0 .00 0 .2 7.2 2 .4 34 .1% - - 2 2 F luid Mus ic Ca nada, Inc. 3 /31 /2009 T S X:FMN TS X C AD United S ta tes 0 .65 2 9.4 5.0 (6 .9) NM 4.1x - NA

F rogs te r Interactive P icture s AG 12/31/200 8 F RG XT R A E UR Germany 11 .82 3 8.7 3.2 (6 .1) NM 11.5x - NA

Gama nia Digital E ntertainment C o., L td. 3 /31 /2009 61 80 GT SM TWD Taiwan 59 .30 273.1 125 .6 2 0.9 16 .6% 2.0x 12 .0x NA

GameOn C o L td. 3 /31 /2009 38 12 T S E J PY J apan 112 900 114.9 77. 5 1 8.3 23 .7% 0.7x 2. 9x NA GeoS entr ic O yj 3 /31 /2009 GEO1V HLS E E UR F inland 0 .04 5 0.0 5.9 (1 5.2) NM 7.8x - 108

G iant Intera ctive G roup, Inc. 3 /31 /2009 GA NYS E USD C hina 7 .85 1,772.9 218 .9 NM NM - - 1, 570

G igaMedia Ltd . 3 /31 /2009 G IGM Nasda qGS USD Taiwan 5 .45 297.1 183 .6 NM NM 1.2x - 751

Gravity C o. , L td 9 /30 /2008 GR VY Nasda qGM USD South Korea 1 .04 2 8.9 38. 5 7 .4 19 .2% - - 636

Gree, Inc. 6 /30 /2008 T S E : 363 2 T S E J PY J apan 7 400 1,740.4 30. 9 1 1.1 36 .0% - - NA GungHo O nline E ntertainment, Inc. 3 /31 /2009 37 65 OS E J PY J apan 252 000 304.0 108 .5 1 9.5 18 .0% 2.5x 14 .1x NA

HanbitS of t, Inc. 3 /31 /2009 A047080 KOS E KR W South Korea 4 620 7 9.7 54. 4 (1 4.6) -26.8% 1.2x - NA

IAC /InterActiveC orp. 3 /31 /2009 IAC I Nasda qGS USD United S ta tes 16 .14 2,435.8 1 ,406.4 4 2.6 3 .0% 0.4x 12 .9x 3, 200

IAS E nergy, Inc. 1 /31 /2009 IAS C.A OT C BB USD C ana da 0 .19 1 3.3 0.0 (0 .8) NM - - NA iseemedia Inc. 3 /31 /2009 IE E T S XV C AD C ana da 0 .08 3 .5 1.5 (4 .7) NM 1.8x - NA

J umbuck E ntertainment P ty Ltd. 1 2/31 /200 8 AS X:JMB AS X AUD Austra lia 0 .38 1 4.9 14. 2 5 .3 37 .2% 0.7x 1. 9x 7 2

J umpT V Inc. 3 /31 /2009 T S X:J T V T S X C AD C ana da 0 .75 7 3.5 18. 1 (1 1.8) -65.2% 3.5x - 237

KA B D is tribution Inc. 3 /31 /2009 T S X:K AB T S X C AD C ana da 0 .65 7 8.3 70. 9 8 .4 11 .9% 1.2x 9. 9x NA K ingsoft Co . Ltd . 3 /31 /2009 38 88 S E HK HKD C hina 5 .85 818.9 129 .1 5 2.0 40 .3% 6.0x 14 .8x 2, 271

Lingo Media Corporation 3 /31 /2009 T S XV : LM TS XV C AD C ana da 1 .19 1 3.2 0.9 (1 .5) NM 13.7x - NA

LiveWorld Inc. 3 /31 /2009 LV WD OT C PK USD United S ta tes 0 .04 1 .2 11. 4 (0 .0) -0 .4% 0.0x - NA

LookSmart, Ltd. 3 /31 /2009 LOOK Nasda qGM USD United S ta tes 1 .23 2 1.0 60. 7 (3 .8) -6 .3% - - 9 0 Magnitude Information S ys tems Inc. 3 /31 /2009 MAGY OT C BB USD United S ta tes 0 .01 4 .1 0.1 (3 .1) NM - - 1 4

Mixi, Inc. 3 /31 /2009 21 21 T S E J PY J apan 590 000 955.2 126 .9 4 5.0 35 .4% 6.6x 18 .6x NA

Mode rn Times Group Mtg AB 3 /31 /2009 MTG B OM S EK Sweden 222 1,860.5 1 ,712.0 262.3 15 .3% 1.4x 9. 2x 2, 969

MOKO.mobi L imited 1 2/31 /200 8 MK B AS X AUD Austra lia 0 .07 4 .8 1.1 (2 .3) NM 3.2x - NA Myriad G roup AG 12/31/200 8 MYR N SWX C HF Switzerla nd 5 9 2.0 40. 0 0 .8 1 .9% 2.6x - 405

NEOW IZ Games C orpora tion 1 2/31 /200 8 A095660 KOS E KR W South Korea 32 150 266.5 195 .0 5 2.4 26 .8% 1.3x 4. 9x NA

NetDragon W ebS oft, Inc. 3 /31 /2009 77 7 S E HK HKD C hina 5 .64 384.6 86. 9 3 4.4 39 .5% 2.9x 7. 3x 2, 426

Netease.com I nc. 3 /31 /2009 NT E S Nasda qGS USD C hina 33 .30 4,276.7 470 .5 305.8 65 .0% - - NA NeXplore Corpora tion 9 /30 /2007 NXPC OT C PK USD United S ta tes 0 .60 3 3.5 NM (4 .9) NM - - 1 9

Ngi G roup Inc. 3 /31 /2009 24 97 T S E J PY J apan 38 300 .00 5 0.0 93. 0 1 1.2 12 .0% 0.1x 0. 8x NA

Northgate Technologies L imited 3 /31 /2009 59 005 7 BS E INR India 36 .65 2 6.3 115 .6 (2 7.1) -23.5% 0.2x - NA

Open T e xt Corp. 3 /31 /2009 OT EX Nasda qGS USD C ana da 35 .44 1,865.0 782 .6 199.2 25 .5% 2.5x 9. 7x 3, 400 Openwave S ys tems Inc. 3 /31 /2009 OPWV Nasda qGS USD United S ta tes 2 .23 185.8 197 .2 (2 .1) -1 .0% 0.4x - 630

Pe rfect W orld C o. , Ltd. 3 /31 /2009 PWR D Nasda qGS USD C hina 28 .25 1,374.0 228 .1 124.6 54 .6% 0.2x 0. 3x 2, 096

Quepa sa C orp. 3 /31 /2009 QPS A OT C PK USD United S ta tes 0 .99 1 2.6 0.1 (1 0.8) NM - - 7 4

OAO RB C Information S ys tems 1 2/31 /200 7 R BC I R T S USD R uss ia 0 .92 128.0 150 .6 1 9.7 13 .1% 0.0x 0. 2x NA S handa Interactive E ntertainment L td. 3 /31 /2009 SNDA Nasda qGS USD C hina 52 .52 3,506.7 570 .0 260.9 45 .8% 0.0x 0. 1x NA

S hutte rf ly, Inc. 3 /31 /2009 S F LY Nasda qGS USD United S ta tes 12 .98 326.7 215 .2 2 8.3 13 .2% 1.2x 9. 2x 514

S K C ommunications Co . , Ltd. 1 2/31 /200 8 A066270 KOS E KR W South Korea 9 880 .00 326.1 181 .3 1 1.8 6 .5% 1.8x 27 .7x NA

SNAP Inte ra ctive , Inc. 3 /31 /2009 S T VI OT C BB USD United S ta tes 0 .45 4 .9 3.3 0 .9 28 .0% 1.0x 3. 7x 1 1 SNM G lobal Holdings 9 /30 /2008 SNMN OT C PK USD United S ta tes 0 .01 0 .0 2.0 (0 .7) -34.8% 1.1x - 3 3

S ocia l Media Venures , Inc. 1 2/31 /200 8 SMVI OT C PK USD United S ta tes 0 .25 0 .0 0.1 (0 .1) -60.5% 0.0x - NA

S ocia lwis e, Inc. 3 /31 /2009 SC LW OT C BB USD United S ta tes 0 .62 2 6.9 0.0 (4 .8) NM - - NA

S ohu. com Inc. 3 /31 /2009 SOHU Nasda qGS USD C hina 58 .28 2,230.0 460 .0 200.5 43 .6% 4.0x 9. 3x 3, 197 S park Networks , Inc. 3 /31 /2009 LOV AME X USD United S ta tes 2 .38 4 8.9 54. 3 1 1.8 21 .7% 0.9x 4. 2x 183

S pectrumDNA, Inc. 3 /31 /2009 S P XA OT C BB USD United S ta tes 0 .25 1 2.2 0.1 (2 .6) NM - - 7

T encent Holdings L td. 3 /31 /2009 70 0 S E HK HKD C hina 87 .55 20,383. 9 1 ,203.4 576.6 47 .9% 18.4x 38 .4x 6, 194

T he P arent C ompany 8/2/2008 K IDS .Q OT C PK USD United S ta tes 0 .03 0 .7 112 .0 (1 3.5) -12.0% 0.2x - 347 T he 9 L imited 1 2/31 /200 8 NCTY Nasda qGS USD C hina 9 .19 246.5 249 .9 8 4.2 33 .7% - - NA

T he S treet.com, Inc. 3 /31 /2009 T S CM Nasda qGM USD United S ta tes 2 .01 6 1.5 67. 0 1 .9 2 .9% - - 310

T otal S port Online A S 3 /31 /2006 TOSO OT CNO NOK Norwa y 0 0 .1 2.1 (1 .0) -50.6% 4.6x - 1 6

T ree.C om, Inc. 3 /31 /2009 TR E E Nasda qGM USD United S ta tes 9 .21 9 9.4 215 .6 (1 3.3) -6 .2% 0.4x - 700

Uniserve C ommunications Corp. 2 /28 /2009 T S XV : US S T S XV C AD C ana da 0 .08 1 .7 22. 4 0 .1 0 .2% 0.2x - NA United Online Inc. 3 /31 /2009 UNTD Nasda qGS USD United S ta tes 6 .21 519.0 811 .2 177.3 21 .9% 1.0x 4. 5x 1, 469

UOMO Media , Inc 1 /31 /2009 UOMO OT C BB USD C ana da 0 .14 1 1.6 0.6 (0 .5) -78.2% 18.8x - NA

Va lueC lick Inc. 3 /31 /2009 VC LK Nasda qGS USD United S ta tes 10 851.4 591 .7 105.5 17 .8% 1.3x 7. 1x 1, 189

VO IS , Inc. 3 /31 /2009 VOIS OT C BB USD United S ta tes 1 1 1.9 0.0 (1 .1) NM - - 4 W ebzen Inc. 3 /31 /2009 WZEN Nasda qGM USD South Korea 4 4 2.1 22. 6 (0 .4) -1 .9% - - 314

W izza rd S of twa re Corpora tion 3 /31 /2009 WZE AME X USD United S ta tes 0 .51 2 4.4 5.6 (5 .3) -94.5% 4.6x - 110

W orlds .com Inc. 3 /31 /2009 WDDD OT C BB USD United S ta tes 0 .08 3 .9 0.0 (0 .8) NM - - 1

W ynds torm C orporation NA WYND OT C PK USD United S ta tes 0 .04 0 .7 NA NM NM - - NA XING AG 3 /31 /2009 O1B C XT R A E UR Germany 30 .05 220.7 52. 7 1 6.5 31 .2% 3.2x 10 .3x 239

Ye dangOnline Corp. 1 2/31 /200 7 A052770 KOS E KR W South Korea 8 990 .00 111.1 54. 0 1 1.6 21 .6% 2.2x 10 .4x NA

Ynk Korea Inc. 1 2/31 /200 8 A023770 KOS E KR W South Korea 6 690 .00 2 8.1 11. 2 1 .2 10 .5% 2.4x 23 .2x NA

ZipLocal Inc. 3 /31 /2009 T S XV : ZIP T S XV C AD C ana da 0 .01 0 .3 2.6 (2 .0) -78.3% 0.6x - NA

H igh 20,383. 9 1 ,712 .0 57 6.6 65 .0% 43.2x 38 .4x 6,1 94

Low 0 .0 0.0 -27.1 -98.9% 0.0x 0. 1x 1Average 587.9 152.2 33.2 6.7% 4.6x 10. 1x 746

Median 5 0.0 54. 1 0 .9 13 .2% 1.4x 9. 2x 312

Figure 1. Web 2.0 Universe Summary Source. Capital IQ

Page 3: 09 07 07 Web 2.0 Weekly

Page 3

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

July starts with an acquisition in the ad network sector: Last week being marked by holidays in both Canada and United States, i t was extremely quiet on the capital raise front. Total capital raised for the first few days of July is $4 mil lion on a single transaction. Hi-Media’s acquisition of AdLink Internet Media (July 6, 2009) for $41 mil lion was the other transaction of note. June closed with $180 mil lion on 36 transactions. It was led by Sugar Inc. raising $16.0 mil lion, closely followed by Tumri ($15 mill ion), Boku ($13 mill ion), Wimba ($12 mil lion), and Grab Networks ($12 mill ion). The averages for the months of May (excluding the Facebook transaction) and June were $6.4 mill ion and $4.7 mil lion, respectively.

Financing Activity Last Three Months

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

StyleCaster raises $4 million: Partly due to the holidays in North America, last week was very quiet on the capital raise front, except for vertical community company, StyleCaster, raising $4 mil lion. For additional details, see Figures 23 and 24 (at end of note).

Page 4: 09 07 07 Web 2.0 Weekly

Page 4

Financing & M/A Summary - Last Three Months

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Figure 3. Capital Market Activity, Last Three Months Source. Company reports

Social Network remains the most active sector in dollars raised, while Ad Network remains the most active in number of transactions: Following recent trends, Social Networks as a sector saw the most activity in dollars raised ($240.5 mil lion), largely attributed to the $200 mill ion investment by Digital Sky Technologies in Facebook. However, i t was the Ad Network sector that saw the most transactions (13), raising $117.2 mill ion (Figure 4). The comment/reputation sector has the next highest totals, closely fol lowed by Gaming ($25.8 mil lion). Overall, the fol lowing sectors continue to generate the most capital activity over the last few months: Ad Network, Media, Gaming, and Social Networks.

Page 5: 09 07 07 Web 2.0 Weekly

Page 5

Capital Market Activity by Sector - Last Three Months

240.5

117.2

29.0 25.8 23.0 18.2 17.5 17.0 16.5 16.4 13.3 13.0 12.0 8.0 6.8 6.3 4.0 1.0 1.0 0.00.0

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oic

e

11 13 1 5 2 5 5 3 3 2 2 1 2 2 1 1 1 1 1 0

(US

$m

)

# companies

Figure 4. Capital Market Activity, by Sector, Last Three Months Source. Company reports

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

Web 2.0 index outpaces NASDAQ recovery: Our Web 2.0 index (market-cap weighted) essentially mirrored the performance of the NASDAQ composite index from mid-2008 unti l recently. However, the index has recently had a much stronger recovery relative to the NASDAQ index (Figure 5).

Page 6: 09 07 07 Web 2.0 Weekly

Page 6

40

50

60

70

80

90

100

110

120

07/0

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07/2

1/08

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08/1

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09/1

5/08

09/2

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10/1

3/08

10/2

7/08

11/1

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11/2

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5/09

01/1

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02/0

2/09

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8/09

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2/09

07/0

6/09

^COMP - Share Pricing Index: Web 2.0 X (Market Cap Weights) - Index Value

Web 2.0 Index Price Performance

Figure 5. Web 2.0 Price Performance Source. Capital IQ

A mixed price performance week: The companies in our universe had a mixed stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), with 22 companies showing positive returns on the week. VOIS Inc. (VOIS:OTCBB) led the group with a 30.9% return, while Tencent Holdings Ltd. (700-SEHK) had the worst return, dropping 7.4% in the week.

Page 7: 09 07 07 Web 2.0 Weekly

Page 7

1 Week Price Performance

-7.4%-7.4%-6.7%-6.0%-5.8%-5.7%-4.8%-4.7%

-4.6%-4.5%

-3.4%-3.0%-2.9%

-2.9%-1.6%-1.1%-0.8%

0.0%

0.2%0.2%0.6%0.6%0.7%0.8%1.3%2.2%2.3%2.8%

4.3%4.6%5.1%

6.2%6.7%7.0%

8.2%9.6%10.5%

12.1%19.4%

30.9%

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Tencent Holdings Ltd.Neteas e. com Inc .

Openw ave S ys tems Inc .Perfect World Co. , Ltd.

Myriad Group AGS handa Interactive

Giant Interactive Group, Inc .

CDC Corp.Gravity Co. , Ltd

United Online Inc .Tree.Com, Inc .

Open Tex t Corp.

AQ Interac tive, Inc .TheS treet. com, Inc .

Y nk K orea Inc .DADA S pA

S park Netw orks , Inc .Digita lTow n, Inc .

NEOWIZ Games CorporationMix i, Inc .XING AG

Eolith Co. Ltd.S K Communications Co. , Ltd.

LookSmart, Ltd.IAC/InterActiveCorp.

Gamania Digita l EntertainmentModern Times Group Mtg A B

K ings of t Co. Ltd.HanbitS oft, Inc .

Ac toz S oft Co. , Ltd.GameOn Co Ltd.

Chines e Gamer InternationalNgi Group Inc .

Y edangOnline Corp.L ingo Media Corporation

Gree, Inc .Webzen Inc .

NetDragon WebS oft, Inc .Frogs ter Interac tive Pictures AG

V OIS , Inc .

Figure 6. 1-Week Price Performance Source. Capital IQ

Page 8: 09 07 07 Web 2.0 Weekly

Page 8

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

K ey Developments

Company Headline Notes

MOK O.mobi Limited (ASX:MKB ) MOKO.mobi L imited Launches on S econd I ndian C arrier MOKO.mobi L imited has launched on I dea C ellular I ndia and has become the s econd Indian ca rrier launch for MOK O.mobi this month.

MOKO.mobi is localis ed for an Ind ian audience and will be developed to incl ude complimenta ry content that the carrier is involved in,

including Idea's s pons orship of the Mumba i I ndians IP L c ricket team. T he Idea vers ion of MOKO .mobi is bas ed on a user-pay s subs cription

and premium activ ity busines s model, where MOKO .mobi is paid a share of a ll revenues from the mobile opera tor. T he launch includes a

free tria l period and revenues are expected to begin during the s econd quarter of the new financial year.

Gamania Digital E ntertainment C o. ,

L td. (GTSM:6180)

Gamania D igita l E ntertainment C o., L td., 1.00 (TWD ),

Cas h D ivi dend, Jun-29-2009

Gamania Digita l E ntertainment Co. , L td., 1. 00 (TWD ), Cas h D ividend, Jun-29-2009

S hutterfly, Inc . (NasdaqGS :S FL Y) S hutterfly Inc . E xpands its W edding S ta tionery C ollection S hutterfly I nc . announced new additions to its wedding stati onery collec tion, including brida l showe r inv ita tions, save-the-dates, thank you

cards and addres s labels . R anging from clas sic to modern, photo or non-photo designs , S hutterfly's new wedding s tationery offers s omething

for every bride-to-be. S hutterfly's new wedd ing s ta tionery inc ludes 46 photo and non-photo s ave-the-dates in two ca rd s izes , either 5'x7' or

4.5'x5. 5', and 40 non-photo brida l shower inv ita tions . Many of the save-the-dates and invita tions inc lude matching wedding thank you cards

and addres s labels to complete the perfect look . Always on trend, S hutterfly 's wedding stationery offerings inc lude not only bold colors like

lime, orange and bright pink , but a lso s oft pink s , blues and greens for the more traditi ona l bride. T here is a lso a wide variety of s ilhouettes

and nature-inspired themes for thos e planning des tina tion weddings. For the modern bride, fres h new patterns updated with on-trend colors

offer a simple choice. T he new s ty les are from popular des igners inc luding S tacy Cla ire B oyd, E rin C ondren, Tag & Co. and W hitney E nglish.

As with all S hutterfly merchandis e, the wedding s tationery collection is supported by the company's cus tomer s ervi ce including one of the turna round times in online personaliz ed sta tionery .

Unis erve C ommunications C orp.

(TSXV:USS )

Unis erve Communications C orp. Appoints Aziz P irani as

Direc tor of the C ompany E ffective J une 17, 2009

Unis erve Communications C orp. appointed Az iz P irani as a director of the company effective J une 17, 2009. M r. P irani brings to U niserve

over 30 years of experience in the I T S erv ices and T elecommunica tions indus try .

X ING AG (XTR A:O1B C) Xing to S top E xpans ion in China Xing will probably consider s topping expans ion in s ome countries like C hina.

Accelerize New Media, Inc.

(OTCB B:ACL Z)

Acceleriz e New Media Inc . Announces the Launch of I ts

Lates t F inancia l P ortal

Accelerize New Media Inc . announced the launch of its la tes t financia l portal. W hile a llowing advertis ers to reach a targeted audience, the

company miss ion is to educate the inves tment community about C hinese public companies listed on U .S . a nd internationa l exchanges and

become a leading destination for C hinese investment opportunities. Chines eP ublicC ompanies. com provides inves tors with news and

information: News-P res s releas e s yndication s ervices for public companies. Opinion-Independent, unbias ed coverage written by in-hous e

financ ia l profes siona ls and s elect third parties . R es earch-Acces s to indus try and company res ea rch reports designed to s hed light on under-

followed C hinese public companies. E ducation-E ducational content covering Chines e polic ies , economics, and other topics neces sa ry to

make informed inves tment decisions . Acceleriz e intends to genera te revenues by implementing the following programs : P erformance B ased

Mark eting-C hineseP ubl icC ompanies . com will feature the produc ts and s ervices of leading legal and accounting firms interested in obta ining

Chines e c lients through dis play advertis ing, targeted lead generation, and e-ma il mark eting.

F luid Mus ic C anada, Inc. (T SX:FMN) F luid Mus ic C anada Inc . Announces Management

Changes

F luid Mus ic C anada Inc. announced that it held its annua l and s pecia l meeting on June 29, 2009. At the meeting, s ha reholders elected the

following indiv idua ls as directors of the corpora tion: Lorne K . Abony , Direc tor and CE O , J us tin F . B eckett, D irector, R icha rd Weil ,

Independent D irector, J ames Lanthier, D irec tor and C hief F inancia l O fficer, Ha rvey S olursh, Independent D irector and Anatoly P lotkin,

Independent D irector. Mr. R ivkin will cease to hold the off ice of P res ident of the corporation effecti ve June 29, 2009. H owever, the company

announced that it has entered into a cons ulting agreement with Mr. R ivk in purs uant to which he will continue to provide cons ulting s ervices to

the corporation.

The9 L imited (NasdaqG S :NC TY) The9 L imited announced delayed 20-F f iling On 07/01/2009, The9 L imited announced that they will be unable to file their next 20-F by the deadline requi red by the S E C .

2K S ports Inc .; Tencent Holdings Ltd.

(S EHK :700)

2K S ports Inc. P a rtners with T encent Holdings Ltd. to

B ring NBA 2K Online to As ia

2K S ports Inc. announced its pa rtners hip with Tencent Holdings L imited to co-de velop the online versio n of NB A 2K and distribute it to C hina

and other key markets. 2K S ports has s ecu red a multi-year license to develop the online s imula tion game, which will inc lude all of the N BA

teams , as well as current and retired NB A players .

P erform Local, Inc .; Perform L ocal,

Inc., Home Improvement Profes s ionals

Directory Service; T ree.Com, Inc .

(NasdaqGM:TR EE )

Tree. Com, I nc. (Nas daqGM: T R E E ) acquired home

improvement profes s iona ls direc tory s ervice of P erform

Local, Inc .

T ree. Com, I nc. (N asdaqG M: T R E E ) acquired home improvement profes sionals directory serv ice of P erform Loca l, Inc . on July 1, 2009. The

financ ia l terms of the transaction were not dis cl osed.

Tree. Com, I nc. (N asdaqG M: T R E E ) completed the acquis ition of home improvement profes sionals directory serv ice of P erform Loca l, I nc.

on J uly 1, 2009.

IB 3 Networks , Inc. (OTCB B: IBNW);

iB eam Solutions L LC

IB 3 N etwork s Announces W eb S ite R edes ign P roject for

FeeC orp E nvironmenta l S ervices

IB 3 Network s I nc. and its wholly owned s ubsidiary iB eam S olutions LLC announced that it has been contrac ted to redesi gn the web s ite and

online pres ence for F eeCorp E nvironmental S erv ices of Ohio. iB eam S olutions has been reta ined to redes ign FeeC orp's company web s ite

and to c reate a templa te that can be used as a second s ite for a new divis ion. T he new s ite will inc lude an up-to-date look and feel, customer

friendly navigation, and a reas where customers and pros pective cus tomers can as k ques tions and interact.

DigitalTown, Inc . (OTCB B:DGTW) Digita lT own I nc . Announces E xecutive C hanges On J uly 2, 2009, the board of direc tors of Digita lTown I nc. accepted the res ignation of J ohn W itham as chief financial officer. E ffec tive J uly 2,

2009, Mr. P aul G ramstad was appointed as chief financi a l officer. Mr. G rams tad is currently serv ing as controller and principa l accounting

off icer of the company. M r. G rams tad prev iously s erved as ac ting C FO of the company from Oc tober 5, 2007, to S eptember 16, 2008.

Modern Times Group Mtg AB (OM:MTG

B )

Modern Times G roup Mtg A B S uccess fully R efinances its

E xis ting S E K 3.0 B illion Loan F ac ility

Modern Times G roup Mtg AB announced the s ucces sful refinancing of its ex isting S E K 3. 0 billion loan fac ility. T he ex isting loan, which was

a rranged in August 2008, was due for repayment in April 2010. The new S E K 3.0 billion three year term loan, which was overs ubs cribed, has

been arranged by DnB NO R B ank AS A, N ordea B ank AB (public ), S k andinavis ka E ns ki lda B ank en A B (public ) and S vensk a H andelsba nken

AB (public ) a s Mandated Lead Arrangers and by S wedbank A B (public ) as Joint Lead Arranger. T he S E K 3. 0 billion credit fac ility was

announced on A ugust 27, 2008, being put in place in order to finance the acquis ition of N ova Telev isa B ulga ria , a s well a s to provide

continued financia l f lexibility for the G roup to make further inves tments and enhance sha reholder returns .

Neteas e.com Inc. (NasdaqGS :NTE S ) Netease. com I nc. F ails to Open Firs t W ow G ame S ervers

on T ime

Netease. com Inc . fa iled to open the f irst WOW game s ervers in J une as scheduled as the company has not yet receive approva l from the

Minis try of C ulture for the content of the WOW game. T he company in May tha t they will open the f irst WOW game s ervers in la te J une that

have been ended by The 9, the former C hinese operator of the game. T he approval proces s for game products rela ted to a foreign game

company will be sus pended if the foreign company is involved in an a rbitra tion or laws uit filed by a Chines e company, s o as to protec t the

interes ts of the country's game enterpris es , according to the G eneral A dminis tration of P ress and P ublica tion of C hina .

K ingsoft Co . Ltd. (S EHK:3888) K ings oft, Q ihoo C oopera tes in Antiv irus B usines s K ingsoft C o. Ltd. announced that it would ca rry out the deepe ned coopera tion with Qihoo C orporation. T he two pa rties agreed to l aunch

Qihoo-cus tomiz ed K ings oft Internet S ecurity antivirus software and K ings oft-cus tomiz ed Qihoo 360 S afe W eb browsers to cons umers, and

help promote each other's products on their own webs ites . T he coopera ti on is expected to boost the expansion of the K ingsoft Internet

S ecurity s oftware. E arlier, Q ihoo la rgely facilita ted the populariz a ti on of K as pers ky Lab's anti-virus s oftware, too.

Figure 7. Key Developments Source. Capital IQ

Page 9: 09 07 07 Web 2.0 Weekly

Page 9

VAL UAT IO N

Online Gaming companies lead market-cap charts: Twelve companies in our Web 2.0 universe top US$1 bill ion in market capitalization (Figure 8). Fifty-eight of the 90 companies have market caps under US$100 mil lion, with 23 under US$10 mil lion. Online gaming companies dominate the top of the l ist, led by Tencent Holdings with a market cap over US$18 bill ion.

M arke t C ap (U S D m)

0 . 00 . 00 . 00 . 10 . 20 . 30 . 30 . 70 . 70 . 91 . 21 . 71 . 82 . 93 . 23 . 53 . 93 . 94 . 14 . 84 . 84 . 98 . 91 1 . 61 1 . 91 2 . 21 2 . 61 3 . 21 3 . 31 3 . 81 4 . 91 9 . 51 9 . 82 0 . 72 1 . 02 4 . 12 4 . 42 6 . 32 6 . 92 8 . 12 8 . 92 9 . 43 3 . 53 8 . 73 9 . 64 2 . 14 5 . 44 8 . 95 0 . 05 0 . 05 5 . 56 1 . 57 3 . 57 8 . 37 9 . 78 7 . 59 2 . 09 9 . 41 1 1 . 11 1 4 . 91 2 8 . 01 4 0 . 71 5 1 . 71 6 9 . 21 8 5 . 82 2 0 . 72 4 6 . 52 6 6 . 52 7 3 . 12 9 7 . 13 0 4 . 03 2 6 . 13 2 6 . 73 8 4 . 6

5 1 9 . 08 1 8 . 98 5 1 . 4

9 5 5 . 21 1 3 7 . 4

1 7 4 0 . 41 7 7 2 . 9

1 8 6 0 . 51 8 6 5 . 0

2 1 3 5 . 72 2 3 0 . 0

2 4 3 5 . 83 5 0 6 . 7

1 3 7 4 . 0

0 5 0 0 1 , 0 0 0 1 , 5 0 0 2 , 0 0 0 2 , 5 0 0 3 , 0 0 0 3 , 5 0 0 4 , 0 0 0

D ibz In te r na tiona l, Inc .S oc ia l Me dia V e nur e s , Inc .

S NM G loba l Ho ld ingsT ota l S po r t O n line A S

F ina nc ia l Me dia G r oup, Inc .C h ina G a tew a y C o rpora tion

Z ipL oc a l Inc .W y nds to rm C orpora tion

T he P a r e nt C ompa nyA s s oc ia te d Me dia Ho ld ings Inc .

L iv eW or ld Inc .Un is e r v e C ommun ic a tions C o r p .

B igs tr ing C o r p .B e ta w a v e C orpora tion

Dig ita lP os t In te r a c tiv e , Inc .is e eme dia Inc .

C o r ne rW or ld C o rpora tionW or lds . c om Inc .

Ma gn itude In f o rma tion S y s tems Inc .B r igh t T h ings p lc

MO K O .mobi L imite dS NA P In te r a c tiv e , Inc .

E x te ns ions , Inc .UOMO Me dia , Inc

V O IS , Inc .S pe c tr umDNA , Inc .

Q ue pa s a C o r p .L ingo Me dia C o rpora tion

IA S E ne r gy , Inc .A c c e le r iz e New Me dia , Inc .

J umbuc k E nte r ta inme nt P ty L td .B r oa dW ebA s ia Inc .

B e y ond C omme r c e , Inc .Do lph in D ig ita l Me dia , Inc .

L ookS ma r t, L td .DX N Ho ld ings B hd

W iz z a r d S o f tw a r e C o rpora tionNor thga te T e c hno log ie s L imite d

S oc ia lw is e , Inc .Y nk K o r e a Inc .G r a v ity C o . , L td

F lu id Mu s ic C a na da , Inc .Ne X p lo r e C o rpora tion

F r ogs te r In te r a c tiv e P ic tu r e s A GA Q In te r a c tiv e , Inc .

W e bz e n Inc .E o lith C o . L td .

S pa r k Ne tw ork s , Inc .Ng i G r oup Inc .G e oS e ntr ic O y j

D ig ita lT ow n , Inc .T he S tr e e t. c om, Inc .

J umpT V Inc .K A B D is tr ibu tion Inc .

H a nbitS o f t, Inc .C y be rple x Inc .

My r ia d G r oup A GT r e e . C om, Inc .

Y e da ngO nline C o r p .G a meO n C o L td .

O A O R B C In f o rma tion S y s temsDA DA S pAC DC C or p .

A c toz S o f t C o . , L td .O pe nw a v e S y s tems Inc .

X ING A GT he 9 L imite d

NE OW IZ G a me s C o rpora tionG ama n ia D ig ita l E n te r ta inme nt C o . , L td .

G iga Me dia L td .G ungHo O n line E nte r ta inme nt, Inc .

S K C ommunic a tions C o . , L td .S hutte r f ly , Inc .

Ne tDr a gon W e bS o f t, Inc .U n ite d O n line Inc .K ings o f t C o . L td .V a lue C lic k Inc .

Mix i, Inc .C h ine s e G a me r In te r na tiona l

P e r f e c t W o r ld C o . , L td .G r e e , Inc .

G ia nt In te r a c tiv e G r oup, Inc .Mode r n T ime s G roup Mtg A B

O pe n T e x t C o r p .C ha ngy ou . c om L imite d

S ohu . c om Inc .IA C /In te r A c tiv e C or p .

S ha nda In te r a c tiv e E nte r ta inme nt L td .Ne te a s e . c om Inc .

T e nc e nt Ho ld ings L td .

Figure 8. Market Cap Ranking Source. Capital IQ

TEV/Revenue (LTM) averages 4.6x: The overall average TEV/Revenue (LTM) multiple for our group is 4.6x (versus 5.3x last week) (Figure 9). One company trades at more than 35x revenue – Bigstring Corp. (OTCBB:BSGC) at 43.2x – closely followed by with Dolphin Digital (OTCBB:DPDM) at 28.0x. The median is only 1.8x. Note that we exclude multiples greater than 50x. Thirty-five companies have multiples under 1.9x.

Page 10: 09 07 07 Web 2.0 Weekly

Page 10

TEV/LTM R evenue (x)

0.00.00.10.20.20.20.20.20.40.40.40.40.50.60.70.70.80.91.01.01.11.21.21.21.21.21.31.31.41.51.81.82.02.2

2.42.52.52.62.93.23.23.33.53.54.04.14.14.64.64.6

6.06.66.67.88.8

11.513.7

17.618.418.819.119.2

28.0

43.2

A verage, 4.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Shanda Interactive Entertainment Ltd.

China Gateway Corporation

Ngi Group Inc.

AQ Interactive, Inc.

Perfect World Co., Ltd.

Uniserve Communications Corp.

The Parent Company

Northgate Technologies Limited

IAC/InterActiveCorp.

Openwave Systems Inc.

Tree.Com, Inc.

CDC Corp.

DXN Holdings Bhd

ZipLocal Inc.

GameOn Co Ltd.

Jumbuck Entertainment Pty Ltd.

DADA SpA

Spark Networks, Inc.

United Online Inc.

SNAP Interactive, Inc.

SNM Global Holdings

HanbitSoft, Inc.

KAB Distribution Inc.

Cyberplex Inc.

Shutterfly, Inc.

GigaMedia Ltd.

ValueClick Inc.

NEOWIZ Games Corporation

Modern Times Group Mtg AB

Actoz Soft Co., Ltd.

iseemedia Inc.

SK Communications Co., Ltd.

Gamania Digital Entertainment Co., Ltd.

YedangOnline Corp.

Ynk Korea Inc.

Open Text Corp.

GungHo Online Entertainment, Inc.

Myriad Group AG

NetDragon WebSoft, Inc.

XING AG

MOKO.mobi Limited

Eolith Co. Ltd.

Beyond Commerce, Inc.

JumpTV Inc.

Sohu.com Inc.

CornerWorld Corporation

Fluid Music Canada, Inc.

Accelerize New Media, Inc.

Total Sport Online AS

Wizzard Software Corporation

Kingsoft Co. Ltd.

DigitalPost Interactive, Inc.

Mixi, Inc.

GeoSentric Oyj

Changyou.com Limited

Frogster Interactive Pictures AG

Lingo Media Corporation

Bright Things plc

Tencent Holdings Ltd.

UOMO Media, Inc

Chinese Gamer International

Associated Media Holdings Inc.

Dolphin Digital Media, Inc.

Bigstring Corp.

Figure 9. TEV/Revenue Ranking Source. Capital IQ

TEV/Revenue (LTM) by country/exchange: We have also calculated multiples based on where the companies are listed or domiciled. Figure 10 shows the average TEV/Revenue multiples by stock exchange. The OTCBB has the largest number of companies (17), trading at an average multiple of 13.7x (versus. 14.3x last week). On a geographic basis, the United States has the most companies (38), trading at an average of 5.7x revenue (versus 5.7x last week) (Figure 11). Ten of the companies are Canadian (average 4.8x revenue).

Average TEV/LTM Revenue - By Exchange

0.4 0.20.00.50.8

1.41.81.92.02.02.52.52.62.83.44.14.6

7.47.89.1

10.6

13.7

17.6

0.02.0

4.06.08.0

10.0

12.014.016.0

18.020.0

AIM

OT

CB

B

GT

SM

SE

HK

HLS

E

XT

RA

OT

CN

O

TS

XV

OT

CP

K

AM

EX

SW

X

OS

E

TS

X

KO

SE

AS

X

TS

E

NasdaqG

S

OM

CM

KLS

E

NasdaqG

M

BS

E

RT

S

1 17 2 3 1 2 1 4 12 2 1 1 4 7 2 5 14 1 1 1 5 1 1

(x)

# Companies

Average TEV/LTM Revenue - By Country

0.4 0.2 0.00.8 0.5

1.42.02.02.02.6

4.64.85.75.87.4

7.47.8

17.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Unite

d

Fin

land

Taiw

an

Germ

any

Chin

a

Unite

d

Canada

Norw

ay

Sw

itzerland

Japan

South

Austr

alia

Sw

eden

Italy

Mala

ysia

Hong K

ong

India

Russia

1 1 3 2 10 38 10 1 1 6 9 2 1 1 1 1 1 1

(x)

# Companies

Figures 10 & 11. TEV/Revenue Ranking (Exchange, Country) Source. Capital IQ

TEV/EBITDA (LTM) averages 10.1x: The average multiple for the 35 companies with positive EBITDA (and multiples under 100x) is 10.1x LTM EBITDA (vs. 9.9x last week), led by Tencent Holding’s (700-SEHK) 38.4x multiple (Figure 12). Fourteen of the companies have EBITDA multiples under 7x. The median multiple is 9.2x (vs. 8.7x last week).

Page 11: 09 07 07 Web 2.0 Weekly

Page 11

TEV/LTM EB ITDA (x)

0.1 0.2 0.3 0.81.9 2.5 2.9 3.7 3.7 4.2 4.5 4.9 5.4 5.6

7.1 7.1 7.39.2 9.2 9.3 9.7 9.9 10.3 10.4

11.5 12.012.9

14.1 14.4 14.8

18.6

23.2

27.7

34.2

38.4

Average, 10.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Shanda Interactive Entertainment Ltd.

OAO RBC Information Systems

Perfect World Co., Ltd.

Ngi Group Inc.

Jumbuck Entertainment Pty Ltd.

AQ Interactive, Inc.

GameOn Co Ltd.

SNAP Interactive, Inc.

DXN Holdings Bhd

Spark Networks, Inc.

United Online Inc.

NEOWIZ Games Corporation

CDC Corp.

DADA SpA

ValueClick Inc.

Actoz Soft Co., Ltd.

NetDragon WebSoft, Inc.

Modern Times Group Mtg AB

Shutterfly, Inc.

Sohu.com Inc.

Open Text Corp.

KAB Distribution Inc.

XING AG

YedangOnline Corp.

Cyberplex Inc.

Gamania Digital Entertainment Co., Ltd.

IAC/InterActiveCorp.

GungHo Online Entertainment, Inc.

Changyou.com Limited

Kingsoft Co. Ltd.

Mixi, Inc.

Ynk Korea Inc.

SK Communications Co., Ltd.

Chinese Gamer International

Tencent Holdings Ltd.

Figure 12. TEV/EBITDA Ranking Source. Capital IQ

TEV/EBITDA (LTM) by country/exchange: Figure 13 shows the average TEV/EBITDA multiples by stock exchange. The OTCBB has the largest number of companies (17), trading at an average multiple of 3.7x (vs. 3.7x last week). On a geographic basis, the United States has the most companies (38), trading at an average of 6.9x EBITDA (Figure 14). Ten of the companies are Canadian (average 10.4x EBITDA).

Average TEV/LTM EBITDA - By Exchange

0.00.00.21.93.73.7

4.25.66.27.39.210.310.7

14.114.6

20.2

23.1

0.0

5.0

10.0

15.0

20.0

25.0

GT

SM

SE

HK

KO

SE

OS

E

TS

X

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OM

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S

TS

E

CM

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KLS

E

OT

CB

B

AS

X

RT

S

SW

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BS

E

2 3 7 1 4 2 1 14 5 1 2 1 17 2 1 1 1

(x)

# Companies

Average TEV/LTM EBITDA - By Country

1.90.0

0.2

3.75.4

5.66.97.89.210.310.4

12.1

14.6

23.1

0.0

5.0

10.0

15.0

20.0

25.0

Taiw

an

South

Kore

a

Chin

a

Canada

Germ

any

Sw

eden

Japan

Unite

d

Sta

tes

Italy

Hong K

ong

Mala

ysia

Austr

alia

Russia

Sw

itzerland

3 9 10 10 2 1 6 38 1 1 1 2 1 1

(x)

# Companies

Figures 13 & 14. TEV/EBITDA Ranking (Exchange, Country) Source. Capital IQ

P/E (LTM) averages 17.2x: The average multiple for the 29 companies with positive earnings (and multiples under 100x) is 17.2x LTM EPS (vs. 17.9x last week), led Tencent Holding’s (700-SEHK) 48.9x multiple (Figure 15). Ten of the companies have P/E multiples under 10x. The median is just 13.2x.

Page 12: 09 07 07 Web 2.0 Weekly

Page 12

P/E LTM (x)

1.9 2.3 2.5 2.84.0

5.6 6.17.4

8.811.7 12.0 12.5 13.3 13.8 14.6 15.0

18.420.7 21.0

23.925.6 25.9

29.1 29.2 29.5

44.147.1

48.9

A verage, 17.2

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Giant Interactive Group, Inc.

Perfect World Co., Ltd.

Netease.com Inc.

Shanda Interactive Entertainment Ltd.

DXN Holdings Bhd

Modern Times Group Mtg AB

Jumbuck Entertainment Pty Ltd.

SNAP Interactive, Inc.

Cyberplex Inc.

GigaMedia Ltd.

YedangOnline Corp.

Sohu.com Inc.

GameOn Co Ltd.

NetDragon WebSoft, Inc.

Changyou.com Limited

Spark Networks, Inc.

Kingsoft Co. Ltd.

IAC/InterActiveCorp.

XING AG

DADA SpA

Worlds.com Inc.

Actoz Soft Co., Ltd.

Open Text Corp.

Gamania Digital Entertainment Co., Ltd.

NEOWIZ Games Corporation

Chinese Gamer International

Mixi, Inc.

Tencent Holdings Ltd.

Figure 15. P/E Ranking Source. Capital IQ

P/E (LTM) by country/exchange: Figure 16 shows the average P/E multiples by stock exchange. The OTCBB has the largest number of companies (17), trading at an average multiple of 16.5x. On a geographic basis, the United States has the most companies (38), trading at an average of 17.2x earnings (Figure 17). Ten of the companies are Canadian (average 18.9x EPS).

Average P/E - By Exchange

0.01.9

4.05.66.18.810.8

15.016.5

21.022.5

23.927.0

30.2

36.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

GT

SM

TS

E

SE

HK

CM

KO

SE

XT

RA

OT

CB

B

AM

EX

NasdaqG

S

TS

X

AS

X

OM

KLS

E

NY

SE

SW

X

2 5 3 1 7 2 17 2 14 4 2 1 1 1 1

(x)

# Companies

Average P/E - By Country

0.0

4.05.66.1

11.817.2

18.921.0

22.523.928.3

30.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Ja

pan

Taiw

an

Italy

South

Kore

a

Germ

an

y

Can

ada

Unite

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Au

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Sw

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6 3 1 9 2 10 38 10 2 1 1 1

(x)

# Companies

Figures 16 & 17. P/E Ranking (Exchange, Country) Source. Capital IQ

Page 13: 09 07 07 Web 2.0 Weekly

Page 13

UP CO MI NG EVE NTS

E arnings Calendar

Company Date & T ime Quarter Conf Call Details

T ree. Com, Inc . (N asdaqGM:T R E E ) T hursday , Jul y 30, 2009 11: 00 A M (E DT ) Q 2 2009 877-723-9523

Figure 18. Earnings Calendar Source. Company reports

Page 14: 09 07 07 Web 2.0 Weekly

Page 14

Comparable Company Analys is > Web 2 .0

P rice Performance

C ompany Name Cur rency Tic ker Exchange USD Market C ap ($m) Current Pric e 1 Wk 1 Mth 3 Mth 6 Mth 1 Yr 52 Week

Acce le rize New Media, Inc. USD ACL Z OTC BB 13.8 0.5 0 25.0% -3.8% 56 .3% 42 .9% -33 .3% -28. 6%

Actoz S of t C o., L td. KR W A052790 KO S E 169.2 25,100.0 0 4.6% -28. 8% 88 .7% 147.3% 208. 0% -30. 3%

AQ Inte ractive , Inc. J PY 3838 T S E 39.6 69,100.0 0 -2.9% -9.1% 48 .6% 130.3% -43 .8% -60. 5%As socia ted Media Holdings Inc. USD A SMH OTC PK 0 .9 0.0 2 1233 .3% 1233. 3% 1328.6% 566.7% NM -60. 0%

B igstring Corp. USD B SGC OTC BB 1 .8 0.0 3 6.3% 36.0% 142.9% 100.0% -71 .7% -83. 0%

Be tawave Corpora tion USD B W AV OTC BB 2 .9 0.1 0 0.0% 33.3% -31.0% -54.5% -71 .4% -75. 0%

Beyond Commerce, Inc. USD B YOC OTC BB 19.8 0.4 4 -29. 0% -56. 4% -60.0% -60.0% -86 .3% -86. 7%Bright T hings plc GBP A IM:B GT AI M 4 .8 0.0 2 3.4% 14.5% 9 .1% 20 .0% -25 .0% -40. 0%

Broa dWebAs ia Inc. USD B W BA OTC PK 19.5 0.2 3 -22. 8% -22. 8% -54.9% -77.2% -84 .7% -92. 1%

C DC C orp. USD CH IN .A Nasda qGS 151.7 1.4 3 -4.7% -7.7% 26 .5% 18 .2% -40 .7% -54. 9%

C ha ngyou. com Limited USD C YOU Nasda qGS 2,1 35. 7 38.8 3 -7.4% 0.1% 62 .9% NM NM -17. 1%C hina Gatewa y C orpora tion USD CGWY OTC PK 0 .3 0.0 2 -25. 0% 650.0% 650.0% 650.0% -50 .0% -57. 1%

C hine se G amer International TW D G TS M:3083 GT SM 1,1 37. 4 446.0 0 6.2% 31.2% 139.8% 384.8% 443. 9% -3.7%

C ornerW orld C orporation USD CW R L OTC BB 3 .9 0.0 6 -14. 3% -33. 3% -57.1% -87.2% -85 .4% -92. 4%

C yberplex Inc. C AD T S X:CX T S X 87.5 1.5 7 -7.6% 1.3% 63 .5% 336.1% 196. 2% -21. 1%

DADA S pA EUR CM:DA CM 140.7 6.2 3 -1.1% 9.1% 46 .2% -13.7% -41 .2% -50. 0%DXN Holdings B hd MYR DXN KL S E 24.1 0.3 7 -3.9% -6.3% 23 .3% 5 .7% -2. 6% -21. 3%

D ibz Inte rnational, Inc. USD DIBZ OTC PK 0 .0 0.0 0 -90. 0% -90. 0% -90.0% -98.0% -98 .0% -98. 0%

D igitalPost Inte ra ctive , Inc. USD DGLP OTC BB 3 .2 0.0 4 22.9% 168.8% 115.0% 95 .5% -71 .3% -74. 6%

D igitalT own, Inc. USD DGTW OTC BB 55.5 2.0 5 0.0% -18. 0% -18.0% -31.7% -18 .0% -66. 4%Dolphin Digital Media, Inc. USD DPDM OTC BB 20.7 0.4 0 -21. 6% -33. 3% -38.5% -48.7% NM -64. 6%

E olith C o. L td. KR W A041060 KO S E 45.4 795.0 0 0.6% 19.5% 45 .9% 45 .9% 6.0% -31. 5%

E xtens ions , Inc. USD E XT I OT C PK 8 .9 0.2 0 33.3% 33.3% 33 .3% -80.2% NM -80. 2%

F inancia l Media G roup, Inc. USD FNGP OTC BB 0 .2 0.0 0 -10. 0% -32. 5% -70.0% -93.3% -99 .7% -99. 7%F luid Mus ic Ca nada, Inc. C AD T S X:FMN T S X 29.4 0.6 5 -17. 7% -7.1% 30 .0% 85 .7% -57 .0% -67. 3%

F rogste r Interactive P icture s AG EUR F R G XT R A 38.7 11.8 2 19.4% 50.8% 68 .9% 82 .1% 162. 1% 1.9%

Gama nia Digital E ntertainment C o., L td. TW D 6180 GT SM 273.1 59.3 0 2.2% 6.5% 69 .4% 167.1% 105. 9% -5.4%

GameOn C o L td. J PY 3812 T S E 114.9 112,900.0 0 5.1% -3.4% 24 .8% -12.5% -9. 7% -30. 9%GeoS entr ic O yj E UR G EO1V HLS E 50.0 0.0 4 0.0% 0.0% 33 .3% 33 .3% -20 .0% -42. 9%

G iant Intera ctive G roup, Inc. USD G A NYS E 1,7 72. 9 7.8 5 -4.8% -15. 6% 7 .5% 24 .0% -28 .0% -33. 3%

G igaMedia Ltd. USD G IGM Nasda qGS 297.1 5.4 5 -8.6% -13. 5% -1 .1% -15.6% -54 .7% -59. 5%

G ravity C o., L td USD G RV Y Nasda qGM 28.9 1.0 4 -4.6% -12. 6% 16 .9% 92 .6% -13 .3% -47. 7%G ree, Inc. J PY T S E :3632 T S E 1,7 40. 4 7,400.0 0 9.6% 16.2% 29 .1% 40 .2% NM -3.4%

GungHo O nline E ntertainment, Inc. J PY 3765 OS E 304.0 252,000.0 0 5.0% 6.8% 94 .6% 155.8% 21.2% -10. 0%

HanbitS oft, Inc. KR W A047080 KO S E 79.7 4,620.0 0 4.3% -6.7% 31 .4% 35 .9% 57.7% -30. 4%

IAC /InterActiveC orp. USD I ACI Nasda qGS 2,4 35. 8 16.1 4 1.3% -1.0% 1 .9% 2 .9% -52 .4% -68. 0%IAS E nergy, Inc. USD I AS C .A OTC BB 13.3 0.1 9 -5.0% -5.0% 171.4% 850.0% -9. 5% -45. 7%

is eemedia Inc. C AD I E E T S XV 3 .5 0.0 8 6.7% 14.3% -20.0% 6 .7% -55 .6% -70. 4%

J umbuck E ntertainment P ty Ltd. AUD A S X:JMB AS X 14.9 0.3 8 -2.6% -9.5% -17.4% -2.6% -37 .7% -38. 7%

J umpT V Inc. C AD T S X:J T V T S X 73.5 0.7 5 7.1% -1.3% 36 .4% 114.3% -21 .9% -41. 4%KA B Dis tribution Inc. C AD T S X:KAB T S X 78.3 0.6 5 3.2% 6.6% 12 .1% 47 .7% -14 .5% -28. 6%

K ingsoft Co. Ltd. HKD 3888 S E HK 818.9 5.8 5 2.8% 3.9% 72 .6% 117.5% 56.4% -2.5%

Lingo Media Corporation C AD T S XV :LM T S XV 13.2 1.1 9 8.2% 19.0% 48 .8% 19 .0% -34 .6% -38. 0%

LiveWorld Inc. USD L VWD OTC PK 1 .2 0.0 4 -33. 3% -52. 9% -69.2% -11.1% -85 .7% -87. 5%LookSmart, Ltd. USD L OOK Nasda qGM 21.0 1.2 3 0.8% -5.4% 3 .4% -27.6% -67 .2% -69. 4%

Magnitude Information S ys tems Inc. USD MAGY OTC BB 4 .1 0.0 1 -25. 0% -30. 8% -40.0% -65.4% -55 .0% -70. 0%

Mixi, Inc. J PY 2121 T S E 955.2 590,000.0 0 0.2% 28.5% 50 .9% 0 .9% -11 .1% -35. 9%

Mode rn Times G roup Mtg AB S E K MTG B OM 1,860. 5 222.0 0 2.3% 2.3% 47 .5% 33 .3% -27 .9% -43. 1%MOKO.mobi L imited AUD MKB AS X 4 .8 0.0 7 -6.7% 6.1% -28.6% 40 .0% 40.0% -30. 0%

Myriad G roup AG CHF MYR N SW X 92.0 4.7 0 -5.8% -9.6% 11 .6% -24.8% -53 .0% -53. 9%

NEOW IZ Games C orpora tion KR W A095660 KO S E 266.5 32,150.0 0 0.2% -9.9% 30 .2% 209.9% 189. 6% -23. 5%

NetDragon W ebS oft, Inc. HKD 777 S E HK 384.6 5.6 4 12.1% 5.6% 33 .0% 86 .8% -44 .0% -44. 6%Nete ase.com I nc. USD NT E S Nasda qGS 4,2 76. 7 33.3 0 -7.4% -12. 2% 19 .5% 76 .9% 61.9% -14. 0%

NeXplore Corpora tion USD NXPC OTC PK 33.5 0.6 0 -1.6% 9.1% -20.0% -40.0% -7. 7% -58. 6%

Ngi G roup Inc. J PY 2497 T S E 50.0 38,300.0 0 6.7% 16.1% 55 .4% -32.0% -58 .0% -70. 0%

Northgate Te chnologies L imited INR 590057 BS E 26.3 36.6 5 -12. 8% -35. 7% -7 .8% -40.4% -88 .0% -88. 5%

Open T ext Corp. USD O TE X Nasda qGS 1,8 65. 0 35.4 4 -3.0% 2.8% 7 .0% 13 .7% 16.7% -9.3%Openwave S ys tems Inc. USD O PWV Nasda qGS 185.8 2.2 3 -6.7% 17.4% 85 .8% 178.8% 62.8% -9.7%

Pe rfect W orld C o. , Ltd. USD P W RD Nasda qGS 1,3 74. 0 28.2 5 -6.0% 20.9% 61 .2% 58 .4% 3.6% -16. 7%

Quepa sa C orp. USD Q PSA OTC PK 12.6 0.9 9 41.4% 25.3% 4 .2% -47.9% -51 .9% -71. 4%

OAO RB C Information S ys tems USD R BC I R T S 128.0 0.9 2 2.6% -31. 6% 130.8% 84 .6% -89 .0% -89. 2%S handa Interactive E ntertainment L td. USD S NDA Nasda qGS 3,5 06. 7 52.5 2 -5.7% -15. 6% 23 .2% 78 .2% 131. 1% -19. 2%

S hutte rf ly, Inc. USD S F LY Nasda qGS 326.7 12.9 8 -10. 2% -8.5% 30 .1% 65 .4% 27.0% -14. 9%

S K C ommunications Co., Ltd. KR W A066270 KO S E 326.1 9,880.0 0 0.7% -14. 8% -0 .2% 56 .3% -30 .7% -38. 4%

SNAP Inte ra ctive , Inc. USD S T V I OT C BB 4 .9 0.4 5 -30. 8% -43. 0% -40.0% -35.7% -34 .8% -58. 3%SNM G lobal Holdings USD S NMN OTC PK 0 .0 0.0 1 366. 7% 180.0% 600.0% -30.0% -99 .5% -99. 6%

S ocia l Media Venures , Inc. USD S MVI OT C PK 0 .0 0.2 5 2400 .0% 2400. 0% -51.9% -76.0% 0.0% -95. 0%

S ocia lwis e, Inc. USD S CLW OTC BB 26.9 0.6 2 -10. 1% -15. 1% 67 .6% -22.5% -73 .8% -78. 1%

S ohu. com Inc. USD S OHU Nasda qGS 2,2 30. 0 58.2 8 -9.8% -14. 3% 28 .1% 25 .8% -16 .5% -33. 8%S park Networks , Inc. USD L OV AMEX 48.9 2.3 8 -0.8% -0.4% 8 .2% -8.5% -41 .7% -46. 6%

S pectrumDNA, Inc. USD S PXA OTC BB 12.2 0.2 5 25.0% -32. 4% 66 .7% 31 .6% NM -58. 3%

T encent Holdings L td. HKD 700 S E HK 20, 383 .9 87.5 5 -7.4% -3.7% 39 .3% 78 .7% 33.5% -8.6%

T he Parent C ompany USD K IDS .Q OTC PK 0 .7 0.0 3 20.0% 100.0% 172.7% -40.6% -98 .1% -98. 9%T he9 L imited USD NC TY Nasda qGS 246.5 9.1 9 -12. 5% -20. 2% -38.6% -36.5% -63 .3% -67. 8%

T heS treet.com, Inc. USD T S CM Nasda qGM 61.5 2.0 1 -2.9% 3.1% 1 .0% -38.7% -67 .8% -72. 6%

T otal S port Online A S NOK TOS O OTC NO 0 .1 0.0 3 0.0% 0.0% -25.0% -25.0% -40 .0% -40. 0%

T ree.C om, Inc. USD T R E E Nasda qGM 99.4 9.2 1 -3.4% -21. 4% 89 .1% 130.3% NM -29. 5%Unis erve C ommunications Corp. C AD T S XV :US S T S XV 1 .7 0.0 8 14.3% 60.0% 100.0% 100.0% -70 .4% -69. 2%

United Online Inc. USD UNTD Nasda qGS 519.0 6.2 1 -4.5% -11. 7% 25 .7% 5 .8% -38 .8% -49. 3%

UOMO Media , Inc USD UOMO OTC BB 11.6 0.1 4 -3.6% -32. 5% 68 .8% 12 .5% -72 .4% -87. 3%

Va lueC lick Inc. USD V CL K Nasda qGS 851.4 9.7 9 -13. 7% -13. 2% 10 .0% 41 .3% -32 .8% -36. 7%VO IS , Inc. USD V OIS OTC BB 11.9 1.4 4 30.9% 311.4% 526.1% 260.0% -73 .8% -74. 3%

W ebzen Inc. USD W ZEN Nasda qGM 42.1 3.5 5 10.5% -16. 7% 59 .2% 273.7% 21.2% -24. 1%

W izza rd S of twa re Corpora tion USD W ZE AMEX 24.4 0.5 1 0.0% -25. 0% 4 .1% -39.3% -62 .2% -71. 0%

W orlds .com Inc. USD WDDD OTC BB 3 .9 0.0 8 -37. 5% -25. 0% -55.9% -62.5% -70 .0% -81. 3%W ynds torm C orporation USD W YND OTC PK 0 .7 0.0 4 14.3% -92. 2% -66.7% -66.7% -88 .6% -93. 3%

XING AG EUR O 1BC XT R A 220.7 30.0 5 0.6% 0.2% 6 .6% -0.8% 0.2% -16. 5%

YedangOnline Corp. KR W A052770 KO S E 111.1 8,990.0 0 7.0% -8.4% -1 .4% 42 .0% -17 .5% -27. 5%

Ynk Korea Inc. KR W A023770 KO S E 28.1 6,690.0 0 -1.6% -0.1% 42 .9% 48 .7% -38 .6% -47. 7%ZipLocal Inc. C AD T S XV :ZIP T S XV 0 .3 0.0 1 0.0% 0.0% -66.7% -50.0% -95 .5% -95. 5%

H igh 2400 .0% 2400. 0% 1328.6% 850.0% 443. 9% 1.9%

Low -90. 0% -92. 2% -90.0% -98.0% -99 .7% -99. 7%Average 587.9 42.4% 50.3% 57.4% 55.7% -16.3% -50.8%

Median 0.0% -3.6% 27 .3% 20 .0% -37 .7% -48. 5%

Figure 19. Price Performance Source. Capital IQ

Page 15: 09 07 07 Web 2.0 Weekly

Page 15

Comparable C ompany Analys is > Web 2.0V aluation Multiples

C ompany Name Sector Country

Primary

E xchange Ticker

USD Market

Cap ($m)

TEV/LTM

R evenue

TEV/ NTM

R evenue

TEV/LTM

E BITDA

TE V/NTM

E BITDA P/LTM EPS P/NTM EPS P/TangBV

Acce le rize New Media, Inc. D irect Marketing Unite d S tates OT C BB AC LZ 13. 8 4.6 x - - - - - -

Actoz S of t C o., L td. Gaming S outh Kore a KOS E A052790 169. 2 1.5 x - 7.1 x - 25 .9x - 2 .9x

AQ Inte ractive , Inc. Gaming J a pan T S E 3838 39. 6 0.2 x - 2.5 x - - - 0 .6xAs socia ted Media Holdings Inc. Mobile Unite d S tates OT C PK ASMH 0. 9 19.2 x - - - - - -

B igstring Corp. Ins ta nt Mes s aging Unite d S tates OT C BB BSG C 1. 8 43.2 x - - - - - -

Be tawave Corpora tion Media Unite d S tates OT C BB B WAV 2. 9 - - - - - - 0 .4x

Be yond Commerce, Inc. S ocia l Ne tworking Unite d S tates OT C BB BYO C 19. 8 3.5 x - - - - - -B r ight T hings plc S ocia l Ne tworking Unite d K ingdom AIM AIM:BGT 4. 8 17.6 x - - - - - -

B roa dW ebAs ia Inc. S ocia l Ne tworking Unite d S tates OT C PK B WB A 19. 5 - - - - - - -

C DC C orp. Gaming Hong K ong Nasda qGS C HIN .A 151. 7 0.4 x 0.4x 5.4 x 5.8x - 1 0.4 x -

C ha ngyou. com Limited Gaming C hina Nasda qGS CY OU 2,1 35. 7 8.8 x 6.6x 14.4 x - 14 .6x 1 3.8 x 1 3.3xC hina Gatewa y C orpora tion Mobile Unite d S tates OT C PK CGWY 0. 3 0.0 x - - - - - -

C hine se Gamer International Gaming T a iwan GT SM GT SM:3083 1,1 37. 4 19.1 x - 34.2 x - 44 .1x - 1 6.6x

C ornerW orld C orporation C ontent Unite d S tates OT C BB CWR L 3. 9 4.1 x - - - - - -

C yberplex Inc. Advertis ing C anada T S X T SX:C X 87. 5 1.2 x 0.9x 11.5 x 7.6x 8. 8x 1 0.3 x 8 .7x

DADA S pA S ocia l Ne tworking Italy CM CM:DA 140. 7 0.8 x - 5.6 x - 23 .9x - -DXN Holdings B hd S ocia l Ne tworking Malays ia KL S E DXN 24. 1 0.5 x - 3.7 x - 4. 0x - 0 .5x

Dibz Inte rnational, Inc. S NS A pps Unite d S tates OT C PK DIBZ 0. 0 - - - - - - -

D igitalPost Inte ra ctive , Inc. C ontent Unite d S tates OT C BB DGL P 3. 2 6.6 x - - - - - -

D igitalT own, Inc. S ocia l Ne tworking Unite d S tates OT C BB DGTW 55. 5 - - - - - - -Dolphin Digital Media, Inc. S ocia l Ne tworking Unite d S tates OT C BB DP DM 20. 7 28.0 x - - - - - -

E olith C o. L td. Gaming S outh Kore a KOS E A041060 45. 4 3.3 x - - - - - 4 .4x

E xte ns ions , Inc. C ontent Unite d S tates OT C PK E XT I 8. 9 - - - - - - -

F inancia l Media G roup, Inc. D irect Marketing Unite d S tates OT C BB FNGP 0. 2 - - - - - - -F luid Mus ic Ca nada, Inc. Media Unite d S tates T S X T S X:FMN 29. 4 4.1 x - - - - - 3 .0x

F rogs te r Interactive P icture s AG Gaming G ermany XT RA F RG 38. 7 11.5 x - - - - - 5 .8x

Gama nia D igital E ntertainment C o. , L td. Gaming T a iwan GT SM 6180 273. 1 2.0 x - 12.0 x - 29 .2x - 3 .5x

GameOn C o L td. Gaming J a pan T S E 3812 114. 9 0.7 x - 2.9 x - 13 .3x - 1 .5xGeoS entr ic O yj Mobile F inland HLSE GEO1V 50. 0 7.8 x - - - - - 8 .6x

G iant Intera ctive G roup, Inc. Gaming C hina NYS E G A 1,7 72. 9 - - - - 1. 9x 1 3.0 x 0 .3x

G igaMedia Ltd. Gaming T a iwan Nasda qGS GIGM 297. 1 1.2 x 1.2x - 5.7x 11 .7x 1 1.0 x 2 .5x

G ravity C o. , L td Gaming S outh Kore a Nasda qGM GR VY 28. 9 - - - - - - -G ree, Inc. S ocia l Ne tworking J a pan T S E T S E :3 632 1,7 40. 4 - - - - - - 2 1.5x

GungHo O nline E ntertainment, Inc. Media J a pan OS E 3765 304. 0 2.5 x - 14.1 x - - - 4 2.8x

HanbitS of t, Inc. Gaming S outh Kore a KOS E A047080 79. 7 1.2 x - - - - - 2 .4x

IAC /InterActiveC orp. Media Unite d S tates Nasda qGS IAC I 2,4 35. 8 0.4 x 0.4x 12.9 x 3.5x 20 .7x 3 1.0 x 1 .1xIAS E nergy, Inc. V ideo C anada OT C BB IA S C .A 13. 3 - - - - - - -

iseemedia Inc. C ontent C anada T S XV IE E 3. 5 1.8 x - - - - - 3 .1x

J umbuck E ntertainment P ty Ltd. S ocia l Ne tworking A us tralia AS X AS X:JMB 14. 9 0.7 x - 1.9 x - 6. 1x - 1 .5x

J umpT V Inc. V ideo C anada T S X TS X:J T V 73. 5 3.5 x - - - - - 4 .4xKA B Dis tribution Inc. C ontent C anada T S X TS X:KAB 78. 3 1.2 x 1.2x 9.9 x 6.1x - - -

K ingsoft Co . Ltd. Gaming C hina S E HK 3888 818. 9 6.0 x - 14.8 x - 18 .4x - 4 .4x

Lingo Media Corporation Le arning C anada T S XV TS XV :LM 13. 2 13.7 x - - - - - 1 3.9x

LiveWorld Inc. S ocia l Ne tworking Unite d S tates OT C PK LVWD 1. 2 0.0 x - - - - - 0 .5xLookSmart, Ltd. D irect Marketing Unite d S tates Nasda qGM LOOK 21. 0 - - - - - - 0 .8x

Magnitude Information S ys tems Inc. S ocia l Ne tworking Unite d S tates OT C BB MAGY 4. 1 - - - - - - -

Mixi, Inc. S ocia l Ne tworking J a pan T S E 2121 955. 2 6.6 x - 18.6 x - 47 .1x - 7 .0x

Mode rn Times G roup Mtg AB Media S weden OM MTG B 1,8 60. 5 1.4 x 1.3x 9.2 x 1 1.1 x 5. 6x 1 1.9 x -MOKO.mobi L imited S ocia l Ne tworking A us tralia AS X MKB 4. 8 3.2 x - - - - - 3 .6x

Myriad G roup AG Mobile S witzerland SWX MYR N 92. 0 2.6 x - - - - - 4 .2x

NEOW IZ Games C orpora tion Gaming S outh Kore a KOS E A095660 266. 5 1.3 x - 4.9 x - 29 .5x - 1 4.9x

NetDragon W ebS oft , Inc. Gaming C hina S E HK 777 384. 6 2.9 x - 7.3 x - 13 .8x - 2 .1xNete ase.com I nc. Gaming C hina Nasda qGS NT E S 4,2 76. 7 - - - - 2. 5x 1 4.8 x 0 .7x

NeXplore Corpora tion C ontent Unite d S tates OT C PK NXPC 33. 5 - - - - - - -

Ngi G roup Inc. Media J a pan T S E 2497 50. 0 0.1 x - 0.8 x - - - 1 .1x

Northgate Te chnologies L imited Direct Marketing India BS E 590057 26. 3 0.2 x - - - - - -

Open T e xt Corp. C ollaboration C anada Nasda qGS O TE X 1,8 65. 0 2.5 x 2.3x 9.7 x 8.4x 29 .1x 1 3.5 x -Openwave S ys tems Inc. Mobile Unite d S tates Nasda qGS OPWV 185. 8 0.4 x 0.4x - 4.8x - 3 5.4 x 2 .7x

Pe rf ect W orld C o., Ltd. Gaming C hina Nasda qGS PWR D 1,3 74. 0 0.2 x 1.0x 0.3 x 1.9x 2. 3x 1 0.7 x 0 .9x

Quepa s a C orp. S ocia l Ne tworking Unite d S tates OT C PK QP S A 12. 6 - - - - - - -

OAO RB C Information S ys tems Media R us s ia R TS R BCI 1 28. 0 0.0 x - 0.2 x - - - -S handa Interactive E ntertainment L td. Gaming C hina Nasda qGS SNDA 3,5 06. 7 0.0 x 0.2x 0.1 x 0.5x 2. 8x 1 4.7 x 1 .1x

S hutte rf ly, Inc. D igital Imaging Unite d S tates Nasda qGS S FL Y 326. 7 1.2 x - 9.2 x 7.0x - - 1 .9x

S K C ommunications Co., Ltd. S earch S outh Kore a KOS E A066270 326. 1 1.8 x - 27.7 x - - - -

S NAP Inte ra ctive , Inc. Dating Unite d S tates OT C BB S TV I 4. 9 1.0 x - 3.7 x - 7. 4x - 2 .9xS NM Global Holdings Media Unite d S tates OT C PK SNMN 0. 0 1.1 x - - - - - -

S ocia l Media Venures , Inc. S ocia l Ne tworking Unite d S tates OT C PK SMV I 0. 0 0.0 x - - - - - -

S ocia lwis e, Inc. S ocia l Ne tworking Unite d S tates OT C BB S CLW 26. 9 - - - - - - 3 4.9x

S ohu. com Inc. Gaming C hina Nasda qGS SOHU 2,2 30. 0 4.0 x 3.5x 9.3 x 8.1x 12 .5x 1 6.1 x 6 .0xS park Networks , Inc. S ocia l Ne tworking Unite d S tates AMEX L OV 48. 9 0.9 x - 4.2 x - 15 .0x - -

S pectrumDNA, Inc. Media Unite d S tates OT C BB SPXA 12. 2 - - - - - - 3 1.8x

T encent Holdings L td. Porta l C hina S E HK 700 20,3 83. 9 18.4 x - 38.4 x - 48 .9x - 2 0.4x

T he Parent C ompany Media Unite d S tates OT C PK K IDS .Q 0. 7 0.2 x - - - - - -T he 9 L imited Gaming C hina Nasda qGS NC T Y 246. 5 - - - - 0. 7x 1 2.6 x 0 .1x

T he S treet.com, Inc. Media Unite d S tates Nasda qGM T S CM 61. 5 - - - - - - 0 .8x

T otal S port Online A S Media Norway OT C NO TOSO 0. 1 4.6 x - - - - - -

T ree.C om, Inc. Porta l Unite d S tates Nasda qGM TR E E 99. 4 0.4 x 0.4x - 4.8x - - 1 .3xUnis erve C ommunications Corp. S ocia l Ne tworking C anada T S XV T S XV :US S 1. 7 0.2 x - - - - - -

United Online Inc. Media Unite d S tates Nasda qGS UNTD 519. 0 1.0 x 0.8x 4.5 x 3.3x - 8.2x -

UOMO Media , Inc Media C anada OT C BB UOMO 11. 6 18.8 x - - - - - -

Va lueC lick Inc. Media Unite d S tates Nasda qGS VC LK 851. 4 1.3 x 1.4x 7.1 x 5.4x - 1 5.6 x 6 .9xVO IS , Inc. S ocia l Ne tworking Unite d S tates OT C BB VOIS 11. 9 - - - - - - 4 1.6x

W ebzen Inc. Gaming S outh Kore a Nasda qGM WZEN 42. 1 - - - - - - 0 .0x

W izza rd S of twa re Corpora tion Podcas ting Unite d S tates AMEX WZE 24. 4 4.6 x - - - - - -

W orlds .com Inc. C ontent Unite d S tates OT C BB WDDD 3. 9 - - - - 25 .6x - -W yndstorm C orporation C ontent Unite d S tates OT C PK WYND 0. 7 - - - - - - -

XING AG S ocia l Ne tworking G ermany XT RA O 1BC 2 20. 7 3.2 x - 10.3 x - 21 .0x - 7 .0x

YedangOnline Corp. Gaming S outh Kore a KOS E A052770 111. 1 2.2 x - 10.4 x - 12 .0x - 4 .1x

Ynk Korea Inc. Gaming S outh Kore a KOS E A023770 28. 1 2.4 x - 23.2 x - - - 1 .5xZipLocal Inc. D irectory C anada T S XV T S XV :ZIP 0. 3 0.6 x - - - - - -

H igh 20,3 83. 9 43.2 x 6.6x 38.4 x 1 1.1 x 48 .9x 3 5.4 x 4 2.8x

Low 0. 0 0.0 x 0.2x 0.1 x 0.5x 0. 7x 8.2x 0 .0xAverage 587.9 4.6x 1.5x 10.1x 5.6x 17.2x 15.2x 7.2x

Median 40. 8 1.8 x 1.0x 9.2 x 5.7x 13 .8x 1 3.3 x 3 .0x

Figure 20. Valuation Comparison Source. Capital IQ

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Page 16

Comparable C ompany Analys is > Web 2.0

Summary by Country

C ompany Name USD Market Cap ($m) Avg USD Market C ap ($m) USD LTM Total R ev ($m) USD LTM Total E B ITDA ($m) EB ITDA %

United S tates 38 C hina 37, 129.8 China 3,713. 0 C hina 3, 839. 3 C hina 1,774. 0 C hina 47. 9%

C anada 10 United S tates 4, 867.5 S weden 1,860. 5 United S ta tes 3, 795. 5 S weden 262. 3 Aus tra l ia 37. 2%

C hina 10 J apan 3, 204.0 Ta iwan 569. 2 S weden 1, 712. 0 United S ta tes 245. 7 T aiwan 36. 3%

S outh K orea 9 C anada 2, 147.8 Japan 534. 0 C anada 969. 7 C anada 193. 5 G ermany 31. 2%

J apan 6 S weden 1, 860.5 Canada 214. 8 S outh K orea 662. 5 J apan 109. 2 J apan 21. 9%

T a iwan 3 T a iwan 1, 707.6 Hong K ong 151. 7 J apan 502. 0 S outh K orea 85. 7 S weden 15. 3%

A ustra lia 2 S outh K orea 1, 097.1 Ita ly 140. 7 Hong K ong 389. 9 T a iwan 52. 3 I ta ly 14. 6%

Germany 2 Germany 259.3 G ermany 129. 7 T aiwan 365. 3 I ta ly 34. 2 Ma lays ia 13. 7%

S witz erland 1 Hong K ong 151.7 United S tates 128. 1 I ta ly 234. 0 Hong K ong 30. 8 R uss ia 13. 1%

Hong K ong 1 I ta ly 140.7 Rus sia 128. 0 R uss ia 150. 6 R uss ia 19. 7 Hong K ong 7.9%

F inland 1 R uss ia 128.0 S outh K orea 121. 9 India 115. 6 Malays ia 10. 7 S outh K orea 6.0%

I ta ly 1 S witz erland 92.0 S witzerland 92. 0 Ma lays ia 78. 0 G ermany 10. 4 S witz erland 1.9%

United K ingdom 1 F inland 50.0 Finland 50. 0 G ermany 55. 9 Aus tra lia 2. 9 United S ta tes -10.1%

India 1 India 26.3 India 26. 3 S witz erland 40. 0 S witz erland 0. 8 India -23.5%

S weden 1 Malays ia 24.1 Malay sia 24. 1 Aus tra l ia 15. 3 Norway -1. 0 C anada -24.8%

R us sia 1 Aus tra lia 19.7 Austra lia 9. 8 F inland 5. 9 United K ingdom -1. 8 Norway -50.6%

Malays ia 1 United K ingdom 4.8 United K ingdom 4. 8 Norway 2. 1 F inland -15. 2 United K ingdom #DIV /0!

Norway 1 Norway 0.1 Norway 0. 1 United K ingdom 0. 3 India -27. 1 F inland #DIV /0!

Grand Total 90 Grand Total 52,911.1 Grand Total 587.9 Grand Total 12,933.8 Grand Total 2,786.9 Grand Total 6.7%

Figure 21. Comparison by Country Source. Capital IQ

Comparable C ompany Analys is > Web 2.0

Summary by Exc hange

C ompany Name USD Market Cap ($m) Avg USD Market C ap ($m) USD LTM Total R ev ($m) USD LTM Total E B ITDA ($m) EB ITDA %

OT C BB 17 S E HK 21, 587.4 S E HK 7,195. 8 OM 1, 712. 0 NasdaqGS 1,692. 6 S E HK 42. 6%

Nas daqGS 14 NasdaqGS 20, 402.0 OM 1,860. 5 NasdaqGS 484. 2 S E HK 663. 0 AS X 37. 2%

OT C PK 12 T S E 2, 900.0 NY S E 1,772. 9 S E HK 473. 1 OM 262. 3 G T SM 36. 3%

K OS E 7 OM 1, 860.5 Nas daqGS 1,457. 3 C M 234. 0 T S E 89. 7 XT R A 31. 2%

T S E 5 NYS E 1, 772.9 G TS M 705. 3 NY S E 218. 9 K OS E 78. 7 NasdaqGS 30. 1%

Nas daqGM 5 GT S M 1, 410.5 TS E 580. 0 R TS 150. 6 G T S M 52. 3 T S E 22. 7%

T S X 4 KOS E 1, 026.1 OS E 304. 0 B S E 115. 6 C M 34. 2 OS E 18. 0%

T S XV 4 OS E 304.0 KOS E 146. 6 OS E 108. 5 R TS 19. 7 OM 15. 3%

S E HK 3 T S X 268.6 CM 140. 7 G T S M 90. 8 OS E 19. 5 C M 14. 6%

AME X 2 XT R A 259.3 XT R A 129. 7 K OS E 85. 9 K LS E 10. 7 K LS E 13. 7%

A S X 2 NasdaqGM 253.0 R T S 128. 0 NasdaqGM 80. 9 XTR A 10. 4 R TS 13. 1%

XT R A 2 OT CB B 210.6 SW X 92. 0 T S E 78. 7 AME X 6. 4 K OS E 5.2%

GT SM 2 C M 140.7 TS X 67. 2 K LS E 78. 0 AS X 2. 9 S WX 1.9%

S WX 1 R TS 128.0 Nas daqGM 50. 6 T S X 41. 0 S W X 0. 8 NasdaqGM 1.6%

HLS E 1 SW X 92.0 HLS E 50. 0 S WX 40. 0 NY S E 0. 0 OT CB B -5. 3%

C M 1 OT CP K 78.3 AME X 36. 7 AME X 29. 9 OT CNO -1. 0 T S X -14.3%

B S E 1 AME X 73.3 B S E 26. 3 XT RA 28. 0 AIM -1. 8 B S E -23.5%

NY S E 1 HLS E 50.0 K LS E 24. 1 OT CPK 16. 5 T S X -3. 0 AME X -36.4%

OS E 1 B S E 26.3 OTC B B 12. 4 AS X 7. 7 NasdaqGM -8. 2 T S XV -39.0%

A IM 1 K LS E 24.1 AS X 9. 8 T S XV 6. 8 T S XV -8. 2 OT CP K -41.3%

OM 1 AS X 19.7 OTC P K 6. 5 H LS E 5. 9 H LS E -15. 2 OT CNO -50.6%

R TS 1 T S XV 18.8 AIM 4. 8 OT CBB 2. 1 B S E -27. 1 H LS E #DIV /0!

K LS E 1 AIM 4.8 TS XV 4. 7 OT CNO 2. 1 OT CP K -43. 4 NY S E #DIV /0!

OT C NO 1 OT CNO 0.1 OTC NO 0. 1 AIM 0. 3 OT CB B -48. 3 AIM #DIV /0!

Grand Total 90 Grand Total 52,911.1 Grand Total 587.9 Grand Total 152.2 Grand Total 2,786.9 Grand Total 6.7%

Figure 22. Comparison by Exchange Source. Capital IQ

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Page 17

Financ ing - Las t Three Months (US$ m)

Month Company Name C ountry Angel/S eed Debt financ ing PIPE S eries A S eries B S eries C Series D Grand Total

May-09 Facebook USA 200.0 200. 0

One Net Entertainment China 10.0 10. 0 20.0

Cyberplex Canada 12. 9 12.9

Peer39 USA 10. 5 10.5

OpenX UK 10. 0 10.0

Imeem USA 8.8 8. 8

EveryZing USA 8.3 8. 3

WonderHill USA 7. 0 7. 0

BlogHer Inc. USA 7.0 7. 0

Gist USA 6. 8 6. 8

Fuhu Inc. USA 6. 3 6. 3

Azuki Systems USA 6. 0 6. 0

I Love Rewards Canada 5. 9 5. 9

TimeBridge USA 5. 0 5. 0

OLX USA 5.0 5. 0

DocuSign USA 5.0 5. 0

Medialets USA 4.0 4. 0

Resonate Networks USA 2. 0 2. 0

Mo'Minis Israel 1. 5 1. 5

VoxPop USA 1. 5 1. 5

Loop'd Network USA 0.8 0. 8

May-09 Total 13.6 10.0 22.9 23.3 18.7 40.8 205.0 334.1

J un-09 Sugar Inc. USA 16. 0 16.0

Tumri USA 15.0 15.0

Boku USA 13. 0 13.0

Wimba USA 12. 0 12.0

Grab Networks USA 12. 0 12.0

Goojet SAS France 8. 5 8. 5

AdMeld Inc. USA 8. 0 8. 0

beeTV USA 8. 0 8. 0

blueKiwi Software SA France 6. 5 6. 5

Nokeena USA 6. 5 6. 5

Sense Networks USA 6. 0 6. 0

Gather USA 5.3 5. 3

MojoPages USA 5. 0 5. 0

Taomee China 5.0 5. 0

Animoto USA 4. 4 4. 4

GameGround Israel 4.1 4. 1

RingRevenue USA 3. 5 3. 5

Crowdcast USA 3.0 3. 0

YuMe USA 2.9 2. 9

eRepublik Spain 2.8 2. 8

Newser LLC USA 2. 5 2. 5

ClickFuel USA 2. 5 2. 5

Inigral USA 2.4 2. 4

AdEx Media USA 2.3 2. 3

GROU.PS USA 2.1 2. 1

Yapta USA 2. 0 2. 0

OneTXT USA 2. 0 2. 0

my6sense Israel 2. 0 2. 0

I Love Rewards Canada 1. 8 1. 8

Cliqset USA 1.5 1. 5

AdWhirl USA 1.0 1. 0

LiquidPlanner USA 1.0 1. 0

Glubble Netherlands 1. 0 1. 0

Picaboo USA 1.0 1. 0

TodaCell Israel 1. 0 1. 0

MashLogic USA 0.5 0. 5

J un-09 Total 39.3 15.3 18.5 67.8 34.0 5.3 180.1

J ul-09 StyleCaster USA 4. 0 4. 0

J ul-09 Total 4.0 4.0

Figure 23. Financing, Last Three Months Source. Company reports

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Page 18

Company Des c riptions - C urrent Month C apital Market Ac tivity

Company HQ Webs ite Des cription

AdL ink Interne t Media AG Germany www.adlink.net AdL INK Internet Media AG , through its s ubsidia ries , provides digital marketing solutions in E urope and internationally . The company

specializ es in dis play , a ffiliate, permis s ion, direct, and domain marketing. I ts D is play Marketing segment provides online, direc t and dia logue-

based, and permiss ion/email marketing solutions. This s egment’s portfolio comprises 4, 000 Web s ites with advertis ing env ironment for

regiona l, na tional, and internationa l campa igns. T he company’s Affilia te Marketing s egment opera tes as a broker between advertis ers and

W eb s ite publis hers . This s egment a lso offers profess iona l cons ulta tion, promotion options, and works hops. A dLINK I nternet Media ’s

Domain Mark eting segment operates a trading platform for the domain market, a s wel l as acts as a brok er between domain owners and

advertisers . T he company was formerl y known as AdLINK I nternet Media G mbH E urope and changed its name to AdL INK Internet Media AG

in 2000. AdLINK I nternet Media was founded in 1996 and is he adquartered in Montabaur, G ermany . AdLINK Internet Media AG is a

subs idiary of U nited Internet AG .

Hi-Media S .A. F rance wwww.hi-media.com Hi-Media S . A. opera tes as an advertising management company in France. I t mark ets advertis ing s pace to advertis ers on the Internet. T he

company als o offers a range of s ervices to digital media publishers , inc luding direc t marketing serv ices , which compris e direct marketing

me dia planning, email, ma il, S MS addres s es leasing, and implementing interactive TV campa igns ; and micro-payment technical platform

and s ervices . In addition, it provides serv ices for prospecting and canvass ing of advertisers . H i-Media S .A. was founded by C yril

Zimmermann in 1996. It was formerly k nown as H i-Media Multimedia and changed its name to H i-Media S .A . in 2000. T he company is bas ed

in P a ris , F rance.

S tyleCas ter United S ta tes www.stylecaster.com S ty leCas ter Media G roup, LLC provides online fas hion-lifestyle information s ervi ces . The company is based in New York , New Y ork .

Figure 24. Company Descriptions Source. Company reports, Capital IQ, Crunchbase

Page 19: 09 07 07 Web 2.0 Weekly

Page 19

RELEVANT DISCLOSURES APPLICABLE TO: NONE

L IST OF D IS CLOS URE TE RMS :

1. None applicable.

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recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii)

no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or

recommendations expressed in this research report.

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

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