09 03 10 web 2.0 weekly

22
SOFTWARE & SERVICES 10 MARCH 2009 WEB 2.O WEEKLY DAVID SHORE, CFA, MBA 416.860.6784 [email protected] Arun Thomas (Associate) 416.860.7666 VIDEO COMPANIES LEAD FINANCING WAVE MOST ACTIVE SECTOR IN FINANCING - VIDEO COMPANIES Activity over the last three months was busiest in the video sector, with 13 companies raising almost $100 million. Social networking companies have the next highest totals with nine companies raising $46.7 million. Capital Market Activity by Sector - Last Three Months 98.6 46.7 41.5 35.0 26.5 25.3 25.0 22.5 20.9 15.0 12.4 12.0 11.5 11.4 10.0 9.5 6.2 4.3 4.0 2.0 1.3 1.2 0.0 20.0 40.0 60.0 80.0 100.0 120.0 Video Social Networks Ad Network Mic roblog Virtual World G aming Wiki Aggregation Infrastructure Virtual Goods Comment/Reputation Mobile Travel Micromedia R SS Analytics Blog Search Media Financial Services O nline Learning Crowdsourced Content 13 9 4 1 4 4 2 4 2 1 3 1 2 1 1 2 3 1 1 1 1 1 (US$m) 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 03 10 Web 2.0 Weekly

SOFTWARE & SERVICES 10 MARCH 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

VIDEO COMPANIES LEAD FINANCING WAVE

MOST ACTIVE SECTOR IN F INANCING - V IDEO COMPANIES Activity over the last three months was busiest in the video sector, with 13 companies raising almost $100 mill ion. Social networking companies have the next highest totals with nine companies raising $46.7 mil lion.

Capital Market Activity by Sector - Last Three Months

98.6

46.7

41.5

35.0

26.5 25.3 25.022.5

20.9

15.012.4 12.0 11.5 11.4 10.0 9.5

6.2 4.3 4.02.0 1.3 1.20.0

20.0

40.0

60.0

80.0

100.0

120.0

Vid

eo

So

cia

l N

etw

ork

s

Ad

Netw

ork

Mic

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g

Virtu

al W

orl

d

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ing

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Ag

gre

ga

tion

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as

tru

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Virtu

al G

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ds

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ep

uta

tion

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ile

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Me

dia

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erv

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earn

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ou

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Co

nte

nt

13 9 4 1 4 4 2 4 2 1 3 1 2 1 1 2 3 1 1 1 1 1

(US

$m

)

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 tal .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 03 10 Web 2.0 Weekly

Page 2

THE WE B 2 . 0 UNI VE RSE

Eighty-nine public Web 2.0 companies identified: We have identified 89 public companies for our Web 2.0 universe, with a combined market cap of $27.8 bill ion. 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 ful l universe (Figure 1). The average market cap for the group is ~$310 mil lion (but a median of only $31.5 mil lion), with average trai ling revenue of $130 mill ion (median $40 mill ion). The companies are also generally profitable, with a median EBITDA margin of 13.3%. On a valuation basis, the overall average is 3.7x trai l ing revenue (median 0.9x) and 8.1x trai ling EBITDA (median 5.5x). Ten of the companies have more than 500 employees.

Comparable Company Analys is > Web 2.0

Company Name LTM as of Ticker Exc hange

Trading

Currency HQ

Current

Price

US D Market

Cap ($m)

US D L TM Total

Rev ($m )

USD L TM Total

EB ITDA ($m )

E B ITDA

%

TEV /L TM

Revenue

TEV/L TM

EB ITDA E mployees

Acce lerize N ew Media, Inc. 9 /30/2008 ACLZ OTCB B US D United S tates 0. 22 5.9 3.2 ( 4. 7) NM 3. 2x - 20

Actoz S oft Co. , Ltd. 9 /30/2008 A052790 K OS E KR W S outh Korea 10 ,500 59. 9 47.3 8.7 18 .3% 0. 8x 4 .3x NA

AQ Inte ractive, Inc. 12/31/2008 3838 TS E JP Y J a pan 31,350. 00 17. 2 60.9 4.9 8. 0% - - NA As sociated Media Holdings Inc. 6 /30/2007 ASMH OTCP K US D United S tates 0 0.1 0.1 ( 2. 3) NM 8. 0x - 3

B igs tring C orp. 9 /30/2008 B SG C OTCB B US D United S tates 0. 01 0.6 0.1 ( 2. 1) NM 27.0x - 8

Be tawave Corporation 9/30/2008 B WAV OTCB B US D United S tates 0 4.4 6.3 (11 .0 ) NM 2. 4x - 41

Beyond Commerce, Inc. 9 /30/2008 B YOC OTCB B US D United S tates 0. 48 19. 6 1.1 ( 7. 7) -98.9% 20.6x - 25

Br ight Things plc 9/30/2008 A IM:B GT A IM G BP United K ingdom 0 2.9 0.2 ( 1. 6) 47 .1% 12.3x - 9

BroadW ebAs ia Inc. 9 /30/2008 B W BA OTCP K US D United S tates 0. 75 63. 7 0.0 ( 4. 6) NM - - 46 CDC Corp. 9 /30/2008 CHIN. A Na sdaqG S US D Hong K ong 1 80. 9 428. 1 18 .8 16 .0% 0. 3x 7 .3x 3 ,125

China G ateway Corpora tion 9/30/2008 CGWY OTCB B US D United S tates 0. 00 0.0 6.7 ( 6. 6) 13 .3% 0. 0x - 37

Chinese G amer International 9 /30/2008 G TS M:3083 G TS M TWD Ta iwan 144 351 .7 37.0 17 .4 NM 8. 0x 17. 0x NA CornerW orld Corporation 10/31/2008 CWR L OTCB B US D United S tates 0. 14 6.6 0.6 NM NM 13.1x - NA

DADA SpA 9/30/2008 CM:DA CM E UR Italy 5 99. 5 214. 6 34 .3 NM 0. 7x 4 .1x 574

DXN Holdings Bhd 11/30/2008 DXN K LS E MYR Ma lays ia 0. 33 20. 6 74.7 9.9 NM 0. 5x 4 .0x NA Dibz International, Inc. NA DIBZ OTCP K US D United S tates 0 0.0 NA NM -0 .3% - - NA

Digita lP os t Inter active, Inc. 9 /30/2008 DG LP OTCB B US D United S tates 0. 00 0.3 0.4 ( 3. 3) NM 2. 8x - 11 Digita lT own, Inc. 11/30/2008 DG TW OTCB B US D United S tates 3 68. 5 NM ( 2.5) 18 .3% - - 3

Dolphin Digita l Media , Inc. NA DP DM OTCB B US D United S tates 0. 40 19. 5 NA NM NM - - 6

Eolith Co. Ltd. 12/31/2007 A041060 K OS E KR W S outh Korea 555 16. 8 16.2 ( 0.0) -60.6% 1. 0x - NA

E xtensions, Inc. 9 /30/2008 E XT I OTCP K US D United S tates 0. 49 46. 3 NM NM 16 .9% - - 2 F ina ncia l Media Group, Inc. 11/30/2008 FNG P OTCB B US D United S tates 0 1.0 6.8 1. 2 26 .4% 0. 0x 0 .1x 22

F luid Mus ic Canada , Inc. 9 /30/2008 TS X: FMN TS X CAD United S tates 0. 33 13. 4 4.2 ( 8. 6) NM - - 29 F rogs te r Inte ractive P ictures AG 6/30/2008 FR G XT R A E UR G ermany 4 11. 0 5.1 ( 3. 1) 61 .9% 2. 1x - NA

Gamania Digital E nterta inment Co. , L td. 9 /30/2008 6180 G TS M TWD Ta iwan 25. 25 110 .2 106. 8 18 .1 23 .9% 0. 8x 4 .7x NA

GameOn Co L td. 12/31/2008 3812 TS E JP Y J a pan 81 ,000 79. 1 75.4 19 .9 19 .2% 0. 3x 1 .2x NA

GeoS entric Oyj 9 /30/2008 G EO1V HL SE E UR F inland 0. 04 31. 5 5.2 (12 .0 ) 36 .0% 5. 1x - 92

Giant Inte ractive G roup, Inc. 12/31/2008 GA NY SE US D China 7 1, 588 .8 233. 1 144.3 14 .7% - - NA

GigaMedia L td. 9 /30/2008 G IGM Na sdaqG S US D Ta iwan 4. 33 233 .9 200. 5 48 .0 -25.6% 0. 8x 3 .5x 975 Gravity Co., Ltd 9/30/2008 G R V Y Na sdaqGM US D S outh Korea 1 17. 8 31.7 6.1 4. 5% - - 636

Gree, Inc. 6 /30/2008 TS E : 3632 TS E JP Y J a pan 4,690. 00 1, 057 .1 29.7 10 .7 NM 33.5x - NA

GungHo Online Ente rtainment, Inc. 9 /30/2008 3765 OSE JP Y J a pan 116 ,800 134 .9 103. 2 15 .2 NM 1. 1x 7 .2x NA

HanbitS oft, Inc. 9 /30/2008 A047080 K OS E KR W S outh Korea 3,165. 00 44. 9 44.9 (11 .5 ) NM 0. 6x - NA

IAC/Inte rActiveCorp. 12/31/2008 IAC I Na sdaqG S US D United S tates 13 1, 897 .2 1 , 445 .1 64 .6 37 .2% 0. 1x 2 .2x NA

IAS E ne rgy, Inc. 10/31/2008 IAS C .A OTCB B US D Canada 0. 07 4.9 0.0 ( 0. 9) -15.3% - - NA IdeaE dge, Inc. 12/31/2008 OTCB B: IDAE OTCB B US D United S tates 0 16. 9 0.0 ( 4. 6) 7. 6% - - NA

is eemedia Inc. 9 /30/2008 IE E T S XV CAD Canada 0. 08 3.2 1.1 ( 4. 2) 33 .8% 0. 6x - NA

J umbuck Entertainment P ty Ltd. 12/31/2008 ASX :JMB ASX AUD Aus tra lia 0 14. 1 11.3 4.2 -42.5% 0. 9x 2 .4x 72 J umpTV Inc. 6 /30/2008 TS X: J T V TS X CAD Canada 0. 39 34. 2 11.5 ( 1.8) -10.1% 3. 8x - NA

Kaboose Inc. 9 /30/2008 TS X: KAB TS X CAD Canada 0 42. 2 57.3 4.4 -3 .7% 0. 9x 11. 2x NA

K ingsoft Co. Ltd. 9 /30/2008 3888 S EHK HK D China 2. 62 362 .6 106. 7 36 .0 NM 2. 6x 7 .6x 1 ,660 Lingo Media Corpora tion 9/30/2008 TS XV :LM TS XV CAD Canada 1 9.7 3.1 ( 1. 3) 38 .0% 3. 3x - NA

LiveWorld Inc. 9 /30/2008 L VWD OTCP K US D United S tates 0. 04 1.2 11.7 ( 1.2) 16 .0% 0. 0x - 73

LookS mart, Ltd. 9 /30/2008 LOOK Na sdaqGM US D United S tates 1 16. 5 69.5 ( 2.6) NM - - 93 Magnitude Informa tion S ys tems Inc. 9 /30/2008 MAGY OTCB B US D United S tates 0. 02 8.3 0.1 ( 3. 2) NM - - 13

Mixi, Inc. 12/31/2008 2121 TS E JP Y J a pan 308 ,000 476 .4 118. 6 45 .1 26 .9% 3. 1x 8 .2x NA

Modern T imes Group Mtg AB 12/31/2008 MTG B OM SE K S weden 114. 50 828 .6 1 , 446 .0 231.2 48 .6% 0. 9x 5 .5x NA

Moggle , Inc 12/31/2008 MMOG OTCB B US D United S tates 2 72. 6 NM ( 1.1) 65 .0% - - 3

MOK O.mobi L imited 6/30/2008 MK B ASX AUD Aus tra lia 0. 06 3.1 1.3 ( 2. 0) NM 1. 5x - NA

NEOW IZ G ames Corpora tion 12/31/2007 A095660 K OS E KR W S outh Korea 36 ,550 227 .3 116. 7 31 .4 30 .8% 1. 9x 7 .0x NA NetDra gon WebS oft, Inc. 9 /30/2008 777 S EHK HK D China 3. 35 228 .3 95.2 46 .3 17 .6% 0. 6x 1 .2x 1 ,482

Netea se. com Inc. 12/31/2008 NTE S Na sdaqG S US D China 21 2, 571 .8 450. 9 293.1 25 .3% - - NA

NeXplore Corporation 9/30/2007 NXPC OTCP K US D United S tates 0. 95 53. 0 NM ( 4.9) -5 .1% - - 19

Ngi G roup Inc. 12/31/2008 2497 TS E JP Y J a pan 16 ,200 20. 2 99.4 30 .6 54 .1% - - NA

Northgate T echnologies L imited 12/31/2008 590057 B SE INR India 30. 65 20. 6 130. 0 22 .9 -5 .3% 0. 2x 0 .9x 286

Open T ext Corp. 12/31/2008 OTE X Na sdaqG S US D Canada 29 1, 527 .4 769. 3 195.0 NM 2. 2x 8 .5x 3 ,400 Openwa ve S ys tems Inc. 12/31/2008 OPWV Na sdaqG S US D United S tates 0. 72 60. 0 199. 6 (10 .2 ) 13 .1% - - 627

Pe rfect W orld Co., Ltd. 12/31/2008 P W RD Na sdaqG S US D China 10 550 .8 210. 1 113.7 46 .0% - - NA PhotoChannel Ne tworks Inc. 12/31/2008 TS XV :P N TS XV CAD Canada 1. 65 42. 6 15.4 ( 0.8) 13 .3% 2. 7x - NA

Quepasa Corp. 9 /30/2008 QPS A Na sdaqCM US D United S tates 1 11. 4 0.1 (11 .8 ) 9. 4% - - 63

OAO R B C Informa tion S ys tems 12/31/2007 R B C I R T S US D R us s ia 0. 25 34. 7 132. 6 17 .3 10 .1% 0. 0x 0 .1x NA

Shanda Intera ctive Ente rtainment L td. 12/31/2008 S NDA Na sdaqG S US D China 31 2, 134 .9 521. 7 239.7 -34.8% - - NA Shutterfly, Inc. 12/31/2008 S FLY Na sdaqG S US D United S tates 7. 17 180 .3 213. 5 28 .4 -60.5% 0. 4x 3 .2x 514

S K Communications Co. , Ltd. 12/31/2007 A066270 K OS E KR W S outh Korea 6 ,110 162 .6 134. 2 12 .6 NM 1. 2x 12. 9x NA SNAP Interactive, Inc. 9 /30/2008 S TVI OTCB B US D United S tates 0. 95 10. 1 2.3 0. 2 21 .7% 3. 9x 38. 9x 5

SNM G lobal Holdings 9/30/2008 S NMN OTCP K US D United S tates 0 0.0 2.0 ( 0. 7) NM 1. 1x - 33

Social Media V enures , Inc. 12/31/2008 S MVI OTCP K US D United S tates 1. 20 0.0 0.1 ( 0. 1) 49 .5% 0. 1x - NA S i te search Corpora tion 10/31/2008 S TPC OTCB B US D United S tates 1 8.9 NM ( 0.9) -12.0% - - 15

Spark Networks , Inc. 12/31/2008 LOV AMEX US D United S tates 2. 33 47. 9 57.3 12 .4 33 .7% 0. 8x 3 .9x NA

SpectrumDNA, Inc. 9 /30/2008 S PXA OTCB B US D United S tates 0 9.7 0.1 ( 2. 7) 10 .8% - - 7 T encent Holdings Ltd. 9 /30/2008 700 S EHK HK D China 47. 25 10 ,949 .3 903. 2 447.5 -50.6% 13.1x 26. 5x 6 ,039

The P arent Company 8/2/2008 K IDS .Q OTCP K US D United S tates 0 0.2 112. 0 (13 .5 ) -10.4% 0. 2x - 347

The9 Limited 12/31/2008 NCT Y Na sdaqG S US D China 9. 33 250 .2 249. 7 84 .1 0. 4% - - NA

TheS treet.com, Inc. 12/31/2008 TS CM Na sdaqGM US D United S tates 2 55. 0 71.9 7.7 23 .0% - - NA

Total S ports Online ASA 3/31/2006 TOS O OTCNO NOK Norway 0. 04 0.2 1.9 ( 1. 0) -91.6% 4. 6x - 16

T ree .Com, Inc. 12/31/2008 TR E E Na sdaqGM US D United S tates 4 39. 2 228. 6 (23 .9 ) NM 0. 2x - NA Unise rve Communications Corp. 11/30/2008 TS XV :U SS TS XV CAD Canada 0. 05 1.0 23.1 0.1 -10.1% 0. 1x 31. 3x NA

United Online Inc. 12/31/2008 UNT D Na sdaqG S US D United S tates 4 325 .3 669. 4 153.9 NM 0. 9x 4 .1x NA

UOMO Media, Inc 10/31/2008 UOMO OTCB B US D Canada 0. 06 5.1 0.5 ( 0. 4) NM 11.4x - NA VO IS , Inc. 12/31/2008 V OIS OTCB B US D United S tates 0 3.3 0.0 ( 1. 3) NM - - 4

W ebzen Inc. 12/31/2008 WZE N Na sdaqGM US D S outh Korea 1. 22 14. 5 18.4 ( 1.9) NM - - 330

W izza rd S oftwa re Corporation 9/30/2008 WZE AMEX US D United S tates 0 19. 0 6.2 ( 6. 5) 38 .8% 3. 1x - 110 W oozyF ly, Inc. 9 /30/2008 WZYF OTCB B US D United S tates 0. 15 2.6 0.0 NM 22 .4% - - 14

W orlds .com Inc. 9 /30/2008 WDDD OTCB B US D United S tates 0 7.3 0.1 NM -7 .6% - - 1

W ynds torm Corporation NA WYND OTCB B US D United S tates 0. 12 2.2 NA NM NM - - NA XING AG 9/30/2008 O1B C XT R A E UR G ermany 25 162 .5 39.7 15 .4 0. 0% 2. 7x 7 .1x 161

YedangOnline Corp. 12/31/2007 A052770 K OS E KR W S outh Korea 6,300. 00 63. 8 44.4 9.9 65 .0% 1. 4x 6 .4x NA

Ynk K orea Inc. 12/31/2007 A023770 K OS E KR W S outh Korea 3 ,460 5.5 12.6 ( 1.0) -98.9% 0. 4x - NA

ZipL ocal Inc. 9 /30/2008 TS XV :ZIP T S XV CAD Canada 0. 02 0.9 2.7 ( 3. 7) 8. 2% 0. 6x - NA

High 10 ,949 .3 1 ,446 .0 447.5 65 .0% 33.5x 38. 9x 6,039

Low 0.0 0.0 -23.9 -98.9% 0. 0x 0 .1x 1

Average 312.5 130.4 28.2 7.3% 3.7x 8.1x 468

Median 31. 5 39 .7 0 .2 13 .3% 0. 9x 5 .5x 72

Figure 1. Web 2.0 Universe Summary Source. Capital IQ

Page 3: 09 03 10 Web 2.0 Weekly

Page 3

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

Twitter raises $35 million: The largest Web 2.0 financing of the last three months remains the $35 mill ion raised by Twitter (Figure 2). Overall, there were 25 financings announced in February, totall ing $185.5 mil lion, or $7.4 mil lion on average. There have been five financings announced so far in March, totall ing $36.2 mill ion, led by the $15 mil lion Series D round for Vidyo. The average value for February was above the $6.8 mill ion average for January, with four f inancings over $15 mill ion in February (Twitter, Synthasite, Tremor Media, and Offerpal Media) vs. no deals over $15 mil lion in January. For additional details, see Figure 29 (at end of note).

Financing Summary - Last Three Months

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

Video continues to be the most active sector: Activity over the last three months was busiest in the video sector, with 13 companies raising almost $100 mil lion (Figure 3). Social networking companies have the next highest totals with nine companies raising $46.7 mil lion.

Page 4: 09 03 10 Web 2.0 Weekly

Page 4

Capital Market Activity by Sector - Last Three Months

98.6

46.7

41.5

35.0

26.5 25.3 25.022.5 20.9

15.012.4 12.0 11.5 11.4 10.0 9.5

6.2 4.3 4.02.0 1.3 1.20.0

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

Average round size increases slightly: On a trail ing 12-month basis, total f inancing dollars inched up as of February 2009, with average round sizes increasing sl ightly as well (Figure 4).

Page 5: 09 03 10 Web 2.0 Weekly

Page 5

LTM Financing

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

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Jul-05

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14.0

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)

Total Average

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

Cumulative total over $5.6 billion: Overall, on a cumulative basis, Web 2.0 financings have totalled over $5.6 bil lion, with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 5). Financing for the first quarter of 2009 ($438 mil lion) has now passed that raised in the fourth quarter of 2008 ($339 mill ion) – reversing the downtrend since the second quarter last year.

Page 6: 09 03 10 Web 2.0 Weekly

Page 6

Web 2.0 Financing (cumulative)

38.8 20.1

87.237.5 33.5 18.2

41.9 57.8 77.4

135.6

82.8

151.7151.5106.6

319.4

959.2

727.7

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338.5

438.0

0.0

200.0

400.0

600.0

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1,000.0

1,200.0

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Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1

2004 2005 2006 2007 2008 2009

(US

$m

)

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

(US

$m

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Figure 5. Financing, Cumulative Source. Company reports

U.S. remains dominant: U.S. companies continue to dominate capital market activity – with almost 67% of f inancings/M&A involving U.S. companies (based on dollars) (Figure 6). The international spread of Web 2.0 companies is demonstrated in the financings as well, with 16.6% raised for Chinese companies and 4.2% for Russian companies. Based on number of transactions, the U.S. leads with 72.1% of deals, while Canada is third in number of f inancings at 5.1% (Figure 7).

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

Russia

4.2%

UK

2.1%

USA

66.7%

ROW

5.1%

Denmark

1.6%

France

1.6%

China

16.6%

Israel

1.9%

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

Israel

3.7%

Canada

5.1%France

2.8%

UK

5.1%

ROW

11.2%

USA72.1%

Page 7: 09 03 10 Web 2.0 Weekly

Page 7

Figures 6 & 7. Financing/M&A, by Country (LTM, $, #) Source. Company reports

Larger volume of 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 8). Series B rounds are 28.4% of the total, with later-stage (Series D, E and PIPE) deals accounting for just 7.3%.

Financing by Type - LTM

PIPE

1.7%

Series A

35.8%

Series B

28.4%

Debt financing

3.0%

Series C

15.1%

Series D

4.7%

Angel/Seed

11.2%

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

Equity financings smaller over last 12 months: In the last 12 months, the average size of Series A, B, C, and D rounds have all been lower than the overall average (Figure 9). Note though that Angel/Seed rounds have been larger.

Page 8: 09 03 10 Web 2.0 Weekly

Page 8

Average financing round size

3.5

36.1

9.8

5.8

11.7

18.2

22.7

11.3

2.5

33.5

6.87.3

11.9

28.8

33.5

11.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Angel/Seed Debt financing PIPE Series A Series B Series C Series D Series E

(US

$m

)

LTM Average Size Overall Average

Figure 9. Average Size per Round Source. Company reports

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

Price Performance: Our Web 2.0 index (market-cap weighted) underperformed the NASDAQ composite index from mid 2008 unti l recently (Figure 10).

Page 9: 09 03 10 Web 2.0 Weekly

Page 9

Web 2.0 Index Price Performance

0

20

40

60

80

100

120

140

3/1

0/2

008

3/2

4/2

008

4/7

/2008

4/2

1/2

008

5/5

/2008

5/1

9/2

008

6/2

/2008

6/1

6/2

008

6/3

0/2

008

7/1

4/2

008

7/2

8/2

008

8/1

1/2

008

8/2

5/2

008

9/8

/2008

9/2

2/2

008

10/6

/2008

10/2

0/2

008

11/3

/2008

11/1

7/2

008

12/1

/2008

12/1

5/2

008

12/2

9/2

008

1/1

2/2

009

1/2

6/2

009

2/9

/2009

2/2

3/2

009

3/9

/2009

NASDAQ COMP Web 2.0 (Market Cap Weighted)

Figure 10. Web 2.0 Price Performance Source. Capital IQ

Webzen leads; NGI gives back price increase: NGI Group (2497-TSE) fel l 22.8% after leading last week, to have the worst performance in the group (for stocks with prices greater than $1) (Figure 11), after increasing 22.1% last week. Webzen (WZEN-NasdaqGM) rose the most, +37.1%.

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Page 10

1 Week Price Performance

-22.8%-14.9%-14.2%-14.2%-13.5%-12.9%

-10.4%-10.0%-9.1%-8.6%-8.5%-8.4%

-5.3%-4.7%-4.6%-4.5%-4.0%-3.7%-3.0%-2.6%-2.4%-0.8%-0.2%

0.0%0.0%0.0%0.5%1.7%2.2%

4.1%4.4%

6.6%6.7%7.0%8.3%

11.8%12.7%14.3%

17.2%20.4%

37.1%

-30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Ngi Group Inc .G igaMedia Ltd.

X ING AGMix i, Inc .

The9 L imitedGameOn Co Ltd.

Northgate Technologies L imitedUnited Online Inc .

IAC/InterActiveCorp.Frogs ter Interactive Pictures AG

S hutterf ly , Inc .Digita lTow n, Inc .

Y edangOnline Corp.AQ Interactive, Inc .

PhotoChannel Netw orks Inc .S park Netw orks , Inc .

S ocial Media V enures , Inc .Open Tex t Corp.

DADA S pAModern Times Group Mtg A B

Y nk K orea Inc .S K Communications Co. , Ltd.

GungHo Online Entertainment, Inc .Moggle, Inc

Tree.Com, Inc .S handa Interactive Entertainment Ltd.

Actoz S oft Co. , Ltd.TheS treet.com, Inc .Neteas e.com Inc .HanbitS oft, Inc .K ings oft Co. Ltd.

Gree, Inc .Eolith Co. Ltd.

Tencent Holdings Ltd.Chines e Gamer InternationalG iant Interactive Group, Inc .

Gamania Digita l Entertainment Co. , Ltd.NetDragon WebS oft, Inc .Perfect World Co. , Ltd.

NEOWIZ Games CorporationWebzen Inc .

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

Page 11: 09 03 10 Web 2.0 Weekly

Page 11

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

Key DevelopmentsCompany Headline Notes

Tree .Com, Inc. (NasdaqGM:TRE E) T ree. C om Inc . L aunches New, S implifie d F ilte r

T echnology

T re e.C om I nc . announce s the launch of new, simplified f ilter te chnology available only to Le ndingT ree Network lende rs . F iltering te chnology

at L endingT ree give s lenders a cus tomer targeting capability at their finger tips . T he te chnology , now eas ier tha n ever, s implifie s the filter s et

up a nd management proces s providing le nders a more stre amlined approa ch to targeting the exa ct cus tomer s egments that mee t s pecific

unde rwriting crite ria a nd inves tor requirements. LendingT re e's proprieta ry filtering technology was firs t introduced in 1998 and s ince that

time, has helped more than 25 million borrowers work with lende rs c los ing more tha n $1 85 billion in loa ns . Le nders who belong to the

LendingT re e Ne twork work with highly-qua lified cus tomers look ing for mortgages a nd ref ina nce loans , home e quity loa ns /lines o f c redit, a uto

loans , and pe rs onal loans .

OAO R BC Information Sys tems

(R TS :R BC I)

R B C Information S ystems L aunche s Macroeconomics

P roje ct

OAO R B C Information S ys tems a nnounced the launch of a new proje ct-Macroeconomics -integrated with the Quote. ru financia l news porta l.

T he product is a imed at providing R BC 's us ers with re gular updates on macroeconomic statistics for R uss ia and a number o f other countries .

T he new project is divided into s everal blocks o ffering information, news a nd analys is . In thes e block s vis itors will ha ve acce ss to an

economic ca lendar for 6 countries , the late st s howings for at leas t 3 0 to 40 ma croe conomic indicators , the mos t recent economic updates ,

analy tical artic les a nd commenta ries by experts o f the world 's inves tment companies , a s well as e conomic fore ca s ts by more tha n 20 top

world's and R us sian inves tment banks . In a ddition to tha t, the portal' s us ers will a ls o be granted a cce ss to s tatis tics archives featuring

historical ma croe conomic indices , a long with a brief des cription of e ach of the indicators, including a note on the pe riodic ity of updates a nd

the date of the lates t update. T he dynamics of e ach of the indicators ca n be tracked in a chart.

Northgate Technologies L imited

(B SE :590057)

Northgate T echnologie s L imited Appoints R ames h

Y arllaga da a s Additional Director

Northgate T e chnologies L imited informed that M r. R ames h Y arllagada has be en a ppointe d as a dditional dire ctor (non-executive and

independent director) of the company effective from F ebruary 2 8, 2 009 in the board mee ting he ld on F e bruary 28, 2 009 .

IdeaEdge, Inc. (OTCBB : IDAE ) IdeaE dge Inc . Announces Auditor C hange Idea E dge I nc . announced tha t the B DO S e idman, LL P wa s appointed the independent re gis te re d public accounting firm of the C ompany on

O ctober 8, 200 8 and remains its independent re gistere d public accounting firm.

P erfec t World Co., L td.

(NasdaqGS :PWR D)

P erfect W orld C o. L td. Announces U naudite d

C ons olidated E arnings R e su lts for the F ourth Quarter and

Y ear E nded De cembe r 31, 2008 ; P rovides E arnings

G uidance for the F irs t Quarter of 2009

Pe rfect W orld C o. Ltd. announced unaudited cons olidated earnings res ults for the fourth quarter a nd year e nded December 3 1, 2 008. F or the

quarte r, the company 's total re venues were R MB 417 .8 million ($61. 2 million) , an increas e of 61. 7% f rom R MB 258. 4 million for the fourth

quarte r of 2 007. Net income for the qua rter was R MB 12 4.8 million and or R MB 0.42 per diluted s hare a s compa re d to net income of R MB

146. 2 million or R MB 0. 50 for the same qua rter of 2 007.

F or the ye ar, the company 's total reve nues we re R MB 1, 437. 2 million as compared to total reve nues of R MB 6 89.1 million in 2 007. T he yea r-

over-year increas e wa s primarily due to the expansion of the C ompany 's game portfolio , the s ucces sful launch of a s eries of e xpa ns ion

pack s and ma rketing campaigns , and a significant e xpa ns ion in overs eas licens ing bus ine ss . Net income for the ye ar was R MB 64 6.5 million

and net income attributa ble to ordinary s ha re holders of R MB 646 .5 million or R MB 2. 18 per diluted s ha re as compared to net income of R MB

361. 94 million and net income attributa ble to ordinary shareholders of R MB 360 .2 million or R MB 1 .35 per diluted share in 20 07.

P erfec t World Co., L td.

(NasdaqGS :PWR D)

P erfect W orld C o S eeks A cquis itions Michael C hi, the F ounder, C hairman and C EO of P erfect W orld C o. , Ltd. , s a id in a conference ca ll, “Our pos itive re su lts during the period

continue to be drive n by our e xecution of our s trategy. W e continue to de velop and launch new games to the marke t in a very time ly ma nne r.

W e have also s een ma ny great achie vements in our overs eas e xpa ns ion efforts during 20 08. W e s ucces s fully broadened our geographic

cove ra ge in A s ia and E urope through overse as licens ing and we es tablis he d a wholly owned s ubs idia ry in the Unite d S tate s that ope rates

our own games throughout N orth Ame rica . P urs uing s trate gic a cquisitions is a ls o one of our stra tegy to drive bus ines s growth. ”

P erfec t World Co., L td.

(NasdaqGS :PWR D)

Update to P erfe ct W orld C o. , Ltd . 's E quity Buyba ck on

March 1, 2 009

As of Ma rch 1 , 20 09, P e rfe ct W orld C o. , Ltd. ha s re purchas ed 977, 492 ADS 's (equivalent to 48 874 60 s ha re s) and 18 ,750 ,000 s hares , under

its s ha re repurchas e pla n.

J umbuc k E ntertainment P ty L td.

(AS X :J MB )

J umbuck E nterta inment P ty Ltd. announces a n E quity

B uyback

Jumbuck E nterta inment P ty Ltd. (A S X : J MB ) authoriz ed a n on-market s ha re repurchas e program on March 3, 200 9. Under the program,

Jumbuck will repurchas e up to 4,80 2,011 ordinary s hares , repres enting 9. 7% of the is s ued capita l. T he program will begin on March 18 ,

2009 and continue for 1 2 months, or until the maximum number o f s hares is acquired or until notice is given that the buyback is concluded.

T he s ha re buyback program is a part of J umbuck ’s capita l management program. On March 3, 2009 , J umbuck has 4 9,53 2,82 5 s hares in

is s ue. Austock S ecuritie s Ltd. (Melbourne ) acted as the broker to Jumbuck for the trans action.

Tencent Holdings L td. (S EHK :700) T encent Holdings Ltd. E xpands Mobile S ervice T urf in

C hina

T encent Holdings Ltd. expands its se rv ice to 1 6 area s across C hina , on the s trength of gene ra l packe t radio s erv ice (G P R S ) o f C hina

Unicom (Hong K ong) Ltd. , formerly known as C hina Unicom Ltd. C hina Unicom's G PR S use rs can install the lates t vers ion of Mobile QQ , a

ce llular me ss aging s ervice provided by T e ncent, in the ir mobile phones . It means that they can cha t with their friends anytime. T he lates t

ve rs ion will be available in succes s ion in other area s in the country. Up to now, the lates t vers ion is expe cted in the 1 6 area s inc luding

G uangdong P rovince, Zhe jiang P rovince , Hubei P rovince, S hanghai, J iangs u P rovince , F ujia n P rovince, T ianjin, J ilin P rovince, H enan

P rovince , S handong P rovince , Hebei P rovince, Ha ina n P rovince, J iangxi P rovince, He ilongjiang P rovince, Xinjiang Uygur Autonomous

R egion, and G uangxi Zhua ng Autonomous R e gion.

X ING AG (XTRA:O1B C ) XING AG Opens S ubs idiary in Mila n XING AG is continuing on its clea r cours e of inte rnational expansion. T he opening of a new subs idiary office in M ilan mea ns that XIN G AG is

now pre se nt a t a local leve l for the thriving online community in Ita ly . T he C ompa ny has appointed C ipriano Moneta (45) , an internationally

re nowned Internet Manager, with the a im of driv ing forwa rd member growth and B2 B operations in Ita ly with increa se d impe tus .

Beyond Commerce , Inc .

(OTCB B :BYOC )

B eyond C omme rce Inc . R e ports S ale s R es ults for the

Month of F e bruary 2009 ; P rovide s E arnings G uidance for

the F irs t Quarter of 2009 ; to La unch i-S UP P LY 's E -

C ommerce W idge t S tore

Be yond C ommerce Inc . re ported s ale s re su lts for the month of F ebruary 2 009. T ota l revenues of $3,3 26,0 00 for the month of F ebruary

re pres ent an increas e of 44% compared with the prior month, a nd a bout 80% increa se s ince December 20 08. The company a nticipa tes the

firs t quarter to be profitable, bas ed on current trends .

T he compa ny announced that its i-S U PP LY 's E -comme rce widget s tore will enter the market using a be ta vers ion 1.0 on thousa nds of W eb

sites in late March 2 009, offering about 1 .8 million brand name products . i-S UP P LY will a dd a n additional re ve nue stream and be the

backbone of the proprie tary advertis ing network the C ompa ny is currently developing.

The9 L imited (NasdaqGS :NCTY) T he 9 to Launch Open Be ta T e st for F IF A Online 2 T he9 L imited announced that it planned to in itiate open be ta te st for P E ente rta in ing game, F IF A Online 2 in April. T he game is the

developed ve rs ion of footba ll game FI F A, a multimedia online role -play ing game (MMOR P G ) by American game runner, E le ctronic A rts ,

which has got the of fic ia l authoriz ation f rom F ederation Inte rnationale de F ootball As s ocia tion.

G iant Interactive G roup, Inc .

(NYS E :GA)

G iant I nteractive G roup I nc . R e ports E arnings R es ults for

the F ourth Quarte r a nd F u ll Y ear E nded December 3 1,

20 08 ; P rovides E arnings G uidance for the F irs t Qua rter

of 200 9 ; Declares C as h Dividend P ayable on April 10,

20 09 ; P lans to La unch N ew G ames

G iant Interactive G roup Inc . unaudited consolidated ea rn ings re su lts for the fourth qua rter and fiscal year ended December 31 , 20 08. F or the

fourth qua rter 200 8, the company reported that net income was CNY 290 .3 million , a yea r-over-yea r decreas e of 13 .0% f rom C NY 333. 8

million. N et income de clined from the same period las t year as the C ompany remained in a trans ition pe riod following the adjus tments made

to ZT Online's mone tiz ation s tructure during the third qua rter 200 8. B as ic e arnings per s ha re for the pe riod was CNY 1.2 6 and diluted

earnings pe r share was CN Y 1 .23 compare d to bas ic earnings pe r share of CNY 1.3 9 and diluted earnings pe r share of CNY 1.3 3 for the

same period las t year. Net revenue was CN Y 3 53.1 million, re pres enting 18.8% decreas e from CNY 434 .8 million in the fourth qua rter 200 7.

Income before income tax expens es was CNY 25 5.31 million compa re d to CNY 333 .80 million in the fourth quarter 20 07. Non-G AAP net

income for the quarter was CNY 29 8.26 million compa re d to CNY 347 .32 million for the s ame period in 20 07. B as ic Non-G AAP earnings per

share for the period was CNY 1 .29 a nd dilute d Non-G AAP ea rn ings per s hare was CNY 1.2 6 compared to bas ic Non-GAAP e arnings per s ha r

S park Networks , Inc. (AMEX :LOV) S park Networks Inc. Announces Unaudited C ons olida ted

E arnings R es ults for the Fourth Qua rter and F ull Y ear

E nded Decembe r 31, 2 008 ; Announces Impairment

C harges

S park Network s Inc . a nnounced unaudited consolidate d ea rn ings re su lts for the fourth qua rter and full yea r e nded Decembe r 3 1, 2 008.

R evenue for the fourth quarter o f 20 08 was $ 13.2 million, a de crea se of 18% compa re d to $16 .0 million in the fourth qua rter of 2 007, and a

6% decre as e compared to $ 14.0 million for the prior quarter. Net los s for the fourth quarter o f 200 8 was $ 164, 000, or $0 .01 per bas ic and

diluted s ha re, compared to ne t income of $6. 6 million, or $0. 25 per bas ic and dilute d s hare, for the fourth quarter o f 200 7. I n the fourth

quarte r of 2 007, the C ompany releas ed net ope ra ting los s valuation allowa nces , which reduced the ta x provision. Adjus te d E B I T DA for the

fourth qua rter of 2 008 was $3. 7 million, a decre as e of 3% compa red to $3.8 million for the fourth qua rter of 2 007 , and a decre as e of 11%

compared to $4 .1 million in the prior quarter. For the quarte r, the company has operating income of $ 1,23 7,000 aga inst ope rating income of

$1,6 19,0 00 reported a year ago. F or the quarter, the compa ny had income before income taxes of $721 ,000 aga ins t income before income

taxes of $1,89 6,00 0 reported a ye ar ago . F or the quarter, the company had E B IT DA of $ 1,17 8,00 0 agains t E B IT DA of $2, 420, 000 re ported a yModern T imes G roup Mtg AB

(OM:MTG B )

Modern T imes G roup to La unch New T V C hannel in

C z ech R epublic

Modern T imes G roup Mtg AB will launch a new free tele vis ion channel in the C ze ch R epublic . T he company s aid the channel, to be called

P rima COOL , will a ir on April 1, 200 9 and complement the compa ny's exis ting P rima televis ion cha nnel. P rima C OOL will be a broad-ba se d

gene ra l e nterta inment channel, ta rgeting 2 0-4 0 year o ld viewers .

Page 12: 09 03 10 Web 2.0 Weekly

Page 12

Wizzard Software Corpora tion

(AME X:WZE )

W izz ard Media S igns Distribution Agre ement with G et

Married

W iz z ard Media a div is ion of W izz ard S oftware C orpora tion announced that it ha s signed a n agreement with Ge t Ma rried to dis tribute its

exc lus ive v ideo content via Apple iT unes , Microsoft Zune Ma rketpla ce and s ele ct vide o s treaming web s ite s. Driven by unique video and

informa tion, www.G etMarried.com and G et Married's s how on L ifetime T elevis ion conne cts bride s with loca l a nd national wedding

profes s ionals and indus try expe rts online and on televis ion every day through e nterta inment and news. W ork ing with G et Married fits with

W iz z ard's s trategy o f he lping high-qua lity, branded content produce rs expand their rea ch and expos ure to new audiences . As pa rt of Ge t

Marrie d's mis s ion to provide unique content to brides and wedding profe ss ionals how and when they want it, the pa rtnersh ip with W izz ard

Media further e nables G et Married to dis tribute its expans ive portfolio of wedding-related video .

G iant Interactive G roup, Inc .

(NYS E :GA)

Update to G iant Inte ra ctive G roup, Inc . ’ s E quity Buyba ck

on December 3 1, 2 008

As o f Decembe r 3 1, 2 008 Giant Interactive G roup, Inc. has repurchas ed 1 4,94 7,20 0 s hares for a total cos t of $97. 7 million, under the

program announced on Augus t 1 1, 2 008.

S itesea rch C orporation

(OTCB B :STP C )

S ites earch C orpora tion Appoints J a mes Dixon as a C hief

E xecutive O ff icer

S ites ea rch C orporation commenced an employment agreement with J ames Dixon purs ua nt to which Mr. Dixon will s erve as the company 's

C hief E xe cutive O ff icer ef fective March 4, 200 9. T he agreement is for an in itia l one year te rm unles s te rminate d by eithe r party and ma y be

extended by mutual agreement between the compa ny and Mr. Dixon.

Tree .Com, Inc. (NasdaqGM:TR E E) T ree. C om, Inc. P rovides E arn ings G uidance for the F irs t

Qua rte r of 2 009

T re e.C om, Inc . provided earnings gu ida nce for the f irs t quarter of 200 9. F or the quarter, the compa ny expects E B IT DA and ne t income ( los s )

to be roughly in-line with or s lightly better tha n E B I T DA a nd net income ( los s) for the fourth qua rter of 2 008.

Figure 12. Key Developments Source. Capital IQ

VAL UAT IO N

MMOG companies lead market cap charts: Seven companies in our Web 2.0 universe top US$1 bill ion in market capitalization (Figure 13). Sixty-seven of the 89 companies have market caps under US$100 mil lion, with 30 under $10 mil lion. Online gaming companies dominate the top of the list with four of the top five by market cap.

Page 13: 09 03 10 Web 2.0 Weekly

Page 13

Market C ap (USD m)

0.00.00.00.00.10.20.20.30.60.91.01.01.22.22.62.93.13.23.34.44.95.15.55.96.67.38.38.99.79.710.111.011.413.414.114.516.516.816.917.217.819.019.519.620.220.620.631.534.234.739.242.242.644.946.347.953.055.059.960.063.763.868.572.679.180.999.5110.2134.9162.5162.6180.3227.3228.3233.9250.2325.3351.7362.6

550.8828.6

1057.11527.41588.8

1897.22134.9

2571.8

476.4

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

S NM Global HoldingsDibz International, Inc .

S oc ia l Media V enures , Inc .China Gatew ay Corporation

A s s oc iated Media Holdings Inc .Tota l S ports Online A S A

The Parent CompanyDigitalPos t Interactive, Inc .

B igs tring Corp.ZipLocal Inc .

Unis erve Communications Corp.Financ ia l Media Group, Inc .

L iveWorld Inc .Wynds torm Corporation

Wooz yFly , Inc .B right Things plc

MOKO.mobi L imitedis eemedia Inc .

V OIS , Inc .Betaw ave Corporation

IA S Energy , Inc .UOMO Media , IncY nk Korea Inc .

A cceleriz e New Media , Inc .CornerWorld Corporation

Worlds .com Inc .Magnitude Information S ys tems Inc .

S ites earch CorporationS pectrumDNA , Inc .

L ingo Media CorporationS NAP Interactive, Inc .

Frogs ter Interactive Pic tures AGQuepas a Corp.

F luid Mus ic Canada , Inc .Jumbuck Entertainment Pty L td.

Webz en Inc .LookSmart, L td.Eolith Co. L td.IdeaEdge, Inc .

AQ Interactive, Inc .Gravity Co. , Ltd

Wiz z ard S of tw are CorporationDolphin Digita l Media , Inc .Beyond Commerce, Inc .

Ngi Group Inc .Northgate Technologies L imited

DXN Holdings BhdGeoS entric OyjJumpTV Inc .

OAO RBC Information S ys temsTree.Com, Inc .K aboos e Inc .

PhotoChannel Netw orks Inc .HanbitS of t, Inc .Ex tens ions , Inc .

S park Netw orks , Inc .NeXplore CorporationTheS treet. com, Inc .A ctoz S of t Co. , L td.

Openw ave S ys tems Inc .B roadWebAs ia Inc .Y edangOnline Corp.

Digita lTow n, Inc .Moggle, Inc

GameOn Co Ltd.CDC Corp.DADA S pA

Gamania Digita l Enterta inment Co. ,GungHo Online Entertainment, Inc .

XING AGS K Communications Co. , L td.

S hutterf ly , Inc .NEOWIZ Games Corporation

NetDragon WebS oft, Inc .G igaMedia L td.The9 L imited

United Online Inc .Chines e Gamer International

K ings oft Co. L td.Mix i, Inc .

Perfect World Co. , L td.Modern Times Group Mtg AB

Gree, Inc .Open Tex t Corp.

G iant Interactive Group, Inc .IAC/InterA ctiveCorp.

S handa Interactive Enterta inment L td.Neteas e.com Inc .

Tencent Holdings L td.

Figure 13. Market Cap Ranking Source. Capital IQ

TEV/Revenue (LTM) averages 3.8x: The overall average TEV/Revenue (LTM) multiple for our group is 3.7x – down from 3.8x last week (Figure 14). However, this is skewed by Gree (3633-TSE) at 33.5x and Bigstring (BSGC-OTCBB) at 27.0x.

Page 14: 09 03 10 Web 2.0 Weekly

Page 14

The median is only 1.1x. Note that we exclude multiples greater than 50x. Thirty-three of the companies have multiples under 1.5x.

TEV/LTM R evenue (x)

0.00.00.00.00.00.10.10.10.20.20.20.30.30.40.40.50.60.60.60.60.70.80.80.80.80.90.90.90.91.01.11.11.21.41.5

1.92.12.22.42.62.72.72.83.13.13.23.3

3.83.94.65.1

8.08.0

11.412.313.113.1

20.6

27.0

33.5

A verage, 3.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

#NUM!

China Gateway Corporation

OAO RBC Information Systems

Financial Media Group, Inc.

LiveWorld Inc.

Social Media Venures, Inc.

IAC/InterActiveCorp.

Uniserve Communications Corp.

Northgate Technologies Limited

Tree.Com, Inc.

The Parent Company

GameOn Co Ltd.

CDC Corp.

Shutterfly, Inc.

Ynk Korea Inc.

DXN Holdings Bhd

iseemedia Inc.

ZipLocal Inc.

NetDragon WebSoft, Inc.

HanbitSoft, Inc.

DADA SpA

Actoz Soft Co., Ltd.

Gamania Digital Entertainment Co., Ltd.

GigaMedia Ltd.

Spark Networks, Inc.

Kaboose Inc.

Modern Times Group Mtg AB

Jumbuck Entertainment Pty Ltd.

United Online Inc.

Eolith Co. Ltd.

SNM Global Holdings

GungHo Online Entertainment, Inc.

SK Communications Co., Ltd.

YedangOnline Corp.

MOKO.mobi Limited

NEOWIZ Games Corporation

Frogster Interactive Pictures AG

Open Text Corp.

Betawave Corporation

Kingsoft Co. Ltd.

PhotoChannel Networks Inc.

XING AG

DigitalPost Interactive, Inc.

Wizzard Software Corporation

Mixi, Inc.

Accelerize New Media, Inc.

Lingo Media Corporation

JumpTV Inc.

SNAP Interactive, Inc.

Total Sports Online ASA

GeoSentric Oyj

Associated Media Holdings Inc.

Chinese Gamer International

UOMO Media, Inc

Bright Things plc

CornerWorld Corporation

Tencent Holdings Ltd.

Beyond Commerce, Inc.

Bigstring Corp.

Gree, Inc.

Figure 14. 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 15 shows the average TEV/Revenue multiples by stock exchange. The OTCBB has the largest number of companies (22), trading at an average multiple of 8.4x (down from 10.8x from last week). On a geographic basis, the United States has the most companies (40), trading at an average of 4.4x revenue (also down from 5.1x from last week) (Figure 16). Ten of the companies are Canadian (average 2.8x revenue).

Average TEV/LTM Revenue - By Exchange

0.20.5

0.70.80.91.11.11.21.51.92.02.32.4

4.44.65.1

5.4

8.4

12.3

12.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

TS

E

AIM

OT

CB

B

SE

HK

HLS

E

OT

CN

O

GT

SM

XT

RA

TS

X

AM

EX

OT

CP

K

TS

XV

AS

X

OS

E

KO

SE

OM

NasdaqG

S

CM

KLS

E

NasdaqG

M

5 1 22 3 1 1 2 2 3 2 9 5 2 1 7 1 11 1 #N/A 5

(x)

# Companies

Average TEV/LTM Revenue - By Country

0.5 0.30.70.91.11.2

2.42.83.2

4.44.65.15.4

9.5

12.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Unite

d

Kin

gdom

Japan

Chin

a

Fin

land

Norw

ay

Unite

d

Sta

tes

Taiw

an

Canada

Germ

any

Austr

alia

South

Kore

a

Sw

eden

Italy

Mala

ysia

Hong

Kong

1 6 8 1 1 40 3 10 2 2 9 1 1 #N/A 1

(x)

# Companies

Figures 15 & 16. TEV/Revenue Ranking (Exchange, Country) Source. Capital IQ

TEV/EBITDA (LTM) averages 8.1x: The average multiple for the 31 companies with positive EBITDA (and multiples under 100x) is 8.1x LTM EBITDA (same as last week), led by SNAP Interactive’s (STVI-OTCBB) 38.9x multiple (Figure 17). Seventeen of the companies have EBITDA multiples under 7x. The median multiple is 5.1x.

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Page 15

TEV/LTM EB ITDA (x)

0.0 0.0 0.1 0.1 0.9 1.2 1.22.2 2.4 3.2 3.5 3.9 4.0 4.1 4.1 4.3 4.7 5.5 6.4 7.0 7.1 7.2 7.3 7.6 8.2 8.5

11.212.9

17.0

26.5

31.3

38.9

A verage, 8.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

#NUM!

#NUM!

OAO RBC Information Systems

Financial Media Group, Inc.

Northgate Technologies Limited

GameOn Co Ltd.

NetDragon WebSoft, Inc.

IAC/InterActiveCorp.

Jumbuck Entertainment Pty Ltd.

Shutterfly, Inc.

GigaMedia Ltd.

Spark Networks, Inc.

DXN Holdings Bhd

DADA SpA

United Online Inc.

Actoz Soft Co., Ltd.

Gamania Digital Entertainment Co., Ltd.

Modern Times Group Mtg AB

YedangOnline Corp.

NEOWIZ Games Corporation

XING AG

GungHo Online Entertainment, Inc.

CDC Corp.

Kingsoft Co. Ltd.

Mixi, Inc.

Open Text Corp.

Kaboose Inc.

SK Communications Co., Ltd.

Chinese Gamer International

Tencent Holdings Ltd.

Uniserve Communications Corp.

SNAP Interactive, Inc.

Figure 17. TEV/EBITDA Ranking Source. Capital IQ

TEV/EBITDA (LTM) by country/exchange: Figure 18 shows the average TEV/EBITDA multiples by stock exchange. The OTCBB has the largest number of companies (22), trading at an average multiple of 19.5x, while companies on the TSXV have the highest multiples (31.3x). On a geographic basis, the United States has the most companies (40), trading at an average of 8.7x EBITDA (Figure 19). Ten of the companies are Canadian (average 17.0x EBITDA).

Average TEV/LTM EBITDA - By Exchange

0.10.92.43.94.04.14.74.85.57.17.27.6

10.911.211.8

19.5

31.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

TS

XV

OT

CB

B

SE

HK

TS

X

GT

SM

KO

SE

OS

E

XT

RA

OM

NasdaqG

S

TS

E

CM

KLS

E

AM

EX

AS

X

BS

E

RT

S

5 22 3 3 2 7 1 2 1 11 5 1 #N/A 2 2 1 #N/A

(x)

# Companies

Average TEV/LTM EBITDA - By Country

2.4 0.9

4.04.1

5.55.57.17.37.68.48.7

11.8

17.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Canada

Chin

a

Unite

d

Sta

tes

Taiw

an

South

Kore

a

Hong

Kong

Germ

any

Japan

Sw

eden

Italy

Mala

ysia

Austr

alia

India

10 8 40 3 9 1 2 6 1 1 #N/A 2 1

(x)

# Companies

Figures 18 & 19. TEV/EBITDA Ranking (Exchange, Country) Source. Capital IQ

P/E (LTM) averages 13.8x: The average multiple for the 31 companies with positive earnings (and multiples under 100x) is 13.8x LTM EPS (inline with 13.9x last week), led again by TheStreet.com (TSCM-NASDAQ) 58.3x multiple (Figure 20). Seventeen of the companies have P/E multiples under 10x. The median is just 8.1x.

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Page 16

P/E LTM (x)

0.7 1.0 1.4 1.6 1.7 1.8 2.4 2.6 2.7 4.16.0 6.2 6.5 6.9 7.2 8.1 8.4

10.7 11.5 12.9 13.0 14.1 14.416.3

21.8 23.1

31.2

35.8

40.5

56.158.3

Average, 13.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

The9 Limited

Perfect World Co., Ltd.

Northgate Technologies Limited

Giant Interactive Group, Inc.

Netease.com Inc.

Shanda Interactive Entertainment Ltd.

LookSmart, Ltd.

Modern Times Group Mtg AB

Worlds.com Inc.

DXN Holdings Bhd

Ngi Group Inc.

DADA SpA

NetDragon WebSoft, Inc.

GigaMedia Ltd.

Jumbuck Entertainment Pty Ltd.

GameOn Co Ltd.

YedangOnline Corp.

Kingsoft Co. Ltd.

Spark Networks, Inc.

Gamania Digital Entertainment Co., Ltd.

Actoz Soft Co., Ltd.

IAC/InterActiveCorp.

NEOWIZ Games Corporation

XING AG

Chinese Gamer International

Mixi, Inc.

Open Text Corp.

Tencent Holdings Ltd.

Shutterfly, Inc.

SNAP Interactive, Inc.

TheStreet.com, Inc.

Figure 20. P/E Ranking Source. Capital IQ

P/E (LTM) by country/exchange: Figure 21 shows the average P/E multiples by stock exchange. The OTCBB has the largest number of companies (22), trading at an average multiple of 29.4x. On a geographic basis, the United States has the most companies (40), trading at an average of 26.5x earnings (Figure 22). Ten of the companies are Canadian (average 31.2x EPS).

Average P/E - By Exchange

1.62.6

4.16.27.211.511.9

12.212.416.3

17.417.7

29.4

30.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

NasdaqG

M

OT

CB

B

SE

HK

GT

SM

XT

RA

TS

E

NasdaqG

S

KO

SE

AM

EX

AS

X

CM

KLS

E

OM

NY

SE

5 22 3 2 2 5 11 7 2 2 1 #N/A 1 1

(x)

# Companies

Average P/E - By Country

2.64.1

6.27.27.5

11.912.4

13.916.3

26.5

31.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Canada

Unite

d

Sta

tes

Germ

any

Taiw

an

Japan

South

Kore

a

Chin

a

Austr

alia

Italy

Mala

ysia

Sw

eden

10 40 2 3 6 9 8 2 1 #N/A 1

(x)

# Companies

Figures 21 & 22. P/E Ranking (Exchange, Country) Source. Capital IQ

Page 17: 09 03 10 Web 2.0 Weekly

Page 17

UP CO MI NG EVE NTS

Upcoming EventsE vent Date Location Webs ite

E ngage! E xpo March 1 0-11 New Y ork www. enga geexpo. com

O ’R e illy E me rging T echnology C onfe re nce March 9 -1 2 S a n J os e http: //conferences .oreilly . com/etech

T he G artner P orta ls , C ontent & C ollaboration S ummit March 1 6-18 O rlando http: //www.ga rtnerinfo.com/tr/g/pcc6_04

T he Bo ld and the B logging March 2 4 T oronto http: //profectio .com/events /power-bre ak fas t-s emina rs /the-bold-and-the-blogging

W eb 2.0 E xpo March 3 1-April 3 S a n F rancisco http: //www.web2expo.com/s f% 20rel=

Me sh 2009 April 7-8 T oronto www.me shconference .com

Figure 23. Upcoming Events Source. Company reports

Earnings C alendarCompany Date & Time Quarter Conf Call Details

NetDra gon W ebS oft, Inc. (S E HK : 777) T hurs day , Ma rch 12, 2009 8:0 0 AM (E D T ) Q4 200 8 8 00-96-38 44

Figure 24. Earnings Calendar Source. Company reports

Page 18: 09 03 10 Web 2.0 Weekly

Page 18

C omparable C ompany Analys is > Web 2.0

P ric e P erformance

Company Name Currenc y Tic ker E xchange USD Market Cap ($m) Current Price 1 Wk 1 Mth 3 Mth 6 Mth 1 Yr 52 Week

Acce leri ze N ew Media, Inc. US D ACLZ OTCBB 5.9 0 .22 -29 .0% -37.1% -45. 0% -56. 9% -69. 4% -71 .8%

Actoz Soft Co. , Ltd. K R W A052790 K OS E 59. 9 10 ,500 .00 0 .5% -10.6% 7.8% 15 .4% 22.8% -25 .5%

AQ Inte ractive, Inc. J PY 3838 TS E 17. 2 31 ,350 .00 -4. 7% -3. 5% -5 .0% -73. 4% -81. 7% -87 .3%

As sociated Media Holdings Inc. US D AS MH OTCPK 0.1 0 .00 0 .0% -72.0% -53. 3% -93. 6% 27.3% -97 .2%

Bigstring C orp. US D BS GC OTCBB 0.6 0 .01 -27 .3% -29.4% -45. 5% -81. 5% -94. 0% -94 .6%

Betawave C orporation US D BWAV OTCBB 4.4 0 .15 -21 .1% -16.7% -6 .3% -48. 3% -54. 5% -68 .1%

Beyond Commerce, Inc. US D BY OC OTCBB 19. 6 0 .48 -25 .0% -40.0% -43. 5% -80. 8% -58. 3% -85 .5%

Br ight Things plc G BP AIM:B G T AIM 2.9 0 .02 0 .0% -18.2% 27 . 5% 2.0% -49. 0% -64 .0%BroadWebAs ia Inc. US D BWB A OTCPK 63. 7 0 .75 -25 .7% -25.7% -25. 7% -42. 3% NM -75 .0%

CDC Corp. US D CHIN.A Na sdaqGS 80. 9 0 .75 -1. 3% -12.8% -14. 8% -69. 3% -80. 8% -82 .1%

China G ateway Corpora tion US D CGW Y OTCBB 0.0 0 .00 -33 .3% -33.3% -80. 0% -94. 4% -99. 7% -99 .7%

Chinese G amer International TW D GTS M: 3083 G TSM 351 .7 144 .00 8 .3% 29. 1% 61 . 8% 79 .6% 44.7% -1. 7%

CornerW orld C orporation US D CWR L OTCBB 6.6 0 .14 -6. 7% -65.9% -68. 9% -77. 0% -88. 8% -88 .8%DADA SpA E UR CM:DA CM 99. 5 4 .85 -3. 0% -20.8% -29. 2% -57. 2% -63. 1% -70 .0%

DXN Holdings Bhd MYR DXN K LS E 20. 6 0 .33 4 .8% -7. 0% -17. 5% -15. 4% -34. 0% -41 .1%

Dibz International, Inc. US D DIB Z OTCPK 0.0 0 .00 -90 .0% -90.0% -90. 0% -98. 0% -98. 0% -98 .0%

Digita lP ost Interactive, Inc. US D DGLP OTCBB 0.3 0 .00 -33 .3% -71.4% -80. 0% -92. 7% -98. 4% -98 .8%

Digita lTown, Inc. US D DGTW OTCBB 68. 5 2 .52 -8. 4% 68. 0% 26 . 0% -37. 0% -4.9% -58 .7%

Dolphin Digita l Media , Inc. US D DPDM OTCBB 19. 5 0 .40 -11 .1% -33.3% -38. 5% -38. 5% NM -64 .6%Eolith Co. Ltd. K R W A041060 K OS E 16. 8 555 .00 6 .7% 4 .7% 3.7% -18. 4% -52. 8% -60 .8%

Extensions, Inc. US D EXT I OTCPK 46. 3 0 .49 145.0% 145.0% 833 .3% 390.0% 226. 7% -51 .5%

F inancia l Media Group, Inc. US D FNGP OTCBB 1.0 0 .02 -50 .0% 36. 4% -78. 6% -97. 1% -92. 1% -98 .5%

F luid Mus ic Canada , Inc. CAD TSX :FMN TS X 13. 4 0 .33 -34 .0% -41.1% 26 . 9% -79. 2% NM -83 .8%

F rogste r Inte ractive P ictures AG E UR FR G XTR A 11. 0 3 .70 -8. 6% -23.6% -11. 7% -35. 4% -25. 1% -51 .6%Gamania Digital E nterta inment Co. , L td. TW D 6180 G TSM 110 .2 25 .25 12. 7% 12. 2% 80 . 4% 21 .4% -11. 4% -31 .7%

GameOn Co L td. J PY 3812 TS E 79. 1 81 ,000 .00 -12 .9% -34.1% -39. 6% -32. 6% -24. 3% -50 .5%

GeoS entric O yj E UR GE O1V HL SE 31. 5 0 .04 33. 3% 0 .0% 33 . 3% -33. 3% -42. 9% -50 .0%

Giant Inte ractive G roup, Inc. US D GA NY SE 1,588.8 7 .03 11. 8% 14. 5% 18 . 0% -11. 7% -29. 6% -59 .1%

GigaMedia L td. US D GIGM Na sdaqGS 233 .9 4 .33 -14 .9% -39.8% -5 .7% -59. 0% -72. 5% -78 .2%

Gravity Co., Ltd US D GR V Y Na sdaqGM 17. 8 0 .64 -7. 2% -10.9% 12 . 3% -48. 4% -61. 4% -68 .0%Gree, Inc. J PY TSE :3632 TS E 1,057.1 4 ,690 .00 6 .6% -17.0% NM NM NM -25 .6%

GungHo Online Entertainment, Inc. J PY 3765 OSE 134 .9 116 ,800 .00 -0. 2% 16. 8% 29 . 6% -39. 8% -30. 1% -73 .1%

HanbitS oft, Inc. K R W A047080 K OS E 44. 9 3 ,165 .00 4 .1% -8. 0% -0 .8% -11. 1% -31. 9% -54 .9%

IAC/Inte rActiveCorp. US D IAC I Na sdaqGS 1,897.2 13 .46 -9. 1% -9. 0% -20. 6% -21. 3% -67. 3% -73 .3%

IAS E ne rgy, Inc. US D IASC .A OTCBB 4.9 0 .07 75. 0% 180.0% 133 .3% -74. 1% -75. 0% -80 .0%IdeaE dge, Inc. US D OTCB B :IDAE OTCBB 16. 9 0 .40 -7. 0% -13.0% -73. 0% -84. 3% -66. 7% -85 .9%

is eemedia Inc. CAD IE E TS XV 3.2 0 .08 -15 .8% 0 .0% 100 .0% -50. 0% -75. 4% -81 .8%

J umbuck Entertainment P ty Ltd. AUD AS X: JMB ASX 14. 1 0 .45 0 .0% 12. 5% 2.3% -10. 0% -35. 7% -35 .7%

J umpTV Inc. CAD TSX :J TV TS X 34. 2 0 .39 8 .3% -22.0% 34 . 5% -48. 0% -41. 8% -69 .5%

Kaboose Inc. CAD TSX :K AB TS X 42. 2 0 .39 -3. 7% -4. 9% 50 . 0% -48. 0% -71. 3% -75 .9%

Kingsoft Co. Ltd. HK D 3888 S EHK 362 .6 2 .62 4 .4% -12.7% 6.1% -11. 2% 18.0% -39 .2%Lingo Media Corpora tion CAD TSXV:LM TS XV 9.7 0 .98 3 .2% -6. 7% -2 .0% -43. 4% -34. 7% -55 .5%

LiveWorld Inc. US D LVWD OTCPK 1.2 0 .04 -33 .3% 0 .0% 166 .7% -78. 9% -80. 0% -94 .7%

LookS mart, Ltd. US D LOOK Na sdaqGM 16. 5 0 .97 -17 .8% -29.2% -37. 0% -64. 5% -72. 4% -79 .8%

Magnitude Informa tion S ys tems Inc. US D MAG Y OTCBB 8.3 0 .02 5 .6% -34.5% -17. 4% 35 .7% -44. 1% -45 .7%

Mixi, Inc. J PY 2121 TS E 476 .4 308 ,000 .00 -14 .2% -36.0% -50. 3% -60. 8% -65. 4% -72 .0%Modern T imes Group Mtg AB S EK MTG B OM 828 .6 114 .50 -2. 6% -23.7% -19. 2% -63. 7% -71. 2% -74 .8%

Moggle , Inc US D MMOG OTCBB 72. 6 2 .00 0 .0% 0 .0% 33 . 3% NM NM 0.0%

MOK O.mobi L imited AUD MKB ASX 3.1 0 .06 20. 0% 50. 0% 275 .0% 76 .5% 50.0% -15 .5%

NEOW IZ G ames Corpora tion K RW A095660 K OS E 227 .3 36 ,550 .00 20. 4% 51. 7% 111 .3% 64 .3% 6 .6% -8. 6%

NetDra gon WebS oft, Inc. HK D 777 S EHK 228 .3 3 .35 14. 3% 17. 1% -5 .6% -35. 5% -65. 4% -75 .4%Netea se. com Inc. US D NTES Na sdaqGS 2,571.8 20 .90 2 .2% 1 .7% 6.6% -8 .3% 3 .6% -23 .0%

NeXplore Corporation US D NXP C OTCPK 53. 0 0 .95 46. 2% 11. 8% -24. 0% 90 .0% NM -34 .5%

Ngi G roup Inc. J PY 2497 TS E 20. 2 16 ,200 .00 -22 .8% -47.2% -68. 7% -82. 6% -88. 4% -90 .6%

Northgate T echnologies L imited INR 590057 B SE 20. 6 30 .65 -10 .4% -21.7% -37. 8% -88. 8% -92. 2% -93 .5%

Open Text Corp. US D OTE X Na sdaqGS 1,527.4 29 .43 -3. 7% -17.7% 6.2% -6 .9% -2.3% -24 .7%

Openwave S ys tems Inc. US D OPW V Na sdaqGS 60. 0 0 .72 -9. 0% -2. 0% 35 . 8% -46. 7% -63. 8% -74 .8%Perfect W orld Co., Ltd. US D PWR D Na sdaqGS 550 .8 10 .44 17. 2% -33.2% -39. 8% -54. 9% -58. 2% -68 .9%

PhotoChannel Networks Inc. CAD TSXV:PN TS XV 42. 6 1 .65 -4. 6% 1 .2% 0.0% -45. 0% -50. 9% -60 .2%

Quepasa Corp. US D QP SA Na sdaqCM 11. 4 0 .90 -24 .3% -49.2% -55. 0% -73. 4% -68. 9% -74 .0%

OAO R B C Informa tion S ys tems US D R BC I R TS 34. 7 0 .25 -16 .7% -13.8% -69. 9% -96. 1% -97. 6% -97 .6%

Shanda Intera ctive Ente rtainment L td. US D SNDA Na sdaqGS 2,134.9 30 .77 0 .0% -0. 9% 5.8% 11 .8% 8 .4% -19 .5%Shutterfly, Inc. US D SFL Y Na sdaqGS 180 .3 7 .17 -8. 5% -16.6% -0 .6% -30. 1% -55. 8% -60 .1%

SK Communications Co. , Ltd. K R W A066270 K OS E 162 .6 6 ,110 .00 -0. 8% -25.5% 13 . 4% -43. 9% -59. 1% -69 .0%

SNAP Interactive, Inc. US D STV I OTCBB 10. 1 0 .95 -5. 0% -5. 0% 28 . 6% 6.7% 18.8% -13 .6%

SNM G lobal Holdings US D SNMN OTCPK 0.0 0 .00 -66 .7% 150.0% -99. 3% -99. 8% -100 .0% -100 .0%

Social Media V enures , Inc. US D SMV I OTCPK 0.0 1 .20 -4. 0% -7. 0% 11 . 1% 380.0% NM -76 .0%

S i tes earch Corpora tion US D STP C OTCBB 8.9 1 .10 NM NM NM NM NM 0.0%Spark Networks , Inc. US D LOV AMEX 47. 9 2 .33 -4. 5% 1 .3% -13. 7% -46. 5% -41. 9% -50 .7%

SpectrumDNA, Inc. US D SP XA OTCBB 9.7 0 .20 110.5% 100.0% -4 .8% -66. 1% NM -66 .7%

Tencent Holdings Ltd. HK D 700 S EHK 10 ,949 .3 47 .25 7 .0% 3 .1% -3 .0% -19. 9% 1 .0% -34 .4%

The P arent Company US D KIDS .Q OTCPK 0.2 0 .01 -37 .5% -61.5% -98. 4% -99. 4% -99. 8% -99 .8%

The9 Limited US D NCTY Na sdaqGS 250 .2 9 .33 -13 .5% -37.1% -22. 6% -45. 0% -50. 8% -67 .3%TheS treet.com, Inc. US D TSCM Na sdaqGM 55. 0 1 .81 1 .7% -38.4% -47. 2% -69. 3% -76. 8% -80 .9%

Total S ports Online ASA NOK TOS O OTCNO 0.2 0 .04 0 .0% 0 .0% -20. 0% -20. 0% -33. 3% -60 .0%

T ree .Com, Inc. US D TR EE Na sdaqGM 39. 2 3 .93 0 .0% 0 .5% 101 .5% -49. 7% NM -64 .6%

Unise rve Communications Corp. CAD TSXV:US S TS XV 1.0 0 .05 0 .0% -50.0% 25 . 0% -76. 2% -87. 5% -88 .9%

United Online Inc. US D UNTD Na sdaqGS 325 .3 3 .96 -10 .0% -32.4% -37. 6% -62. 2% -63. 3% -68 .3%

UOMO Media, Inc US D UOMO OTCBB 5.1 0 .06 -14 .3% -25.0% -53. 8% -80. 6% -88. 2% -92 .5%

VO IS , Inc. US D VO IS OTCBB 3.3 0 .40 -46 .7% -46.7% -46. 7% -81. 3% NM -92 .9%

W ebzen Inc. US D WZE N Na sdaqGM 14. 5 1 .22 37. 1% -10.9% 79 . 4% -34. 1% -58. 9% -72 .6%

W izza rd S oftwa re Corporation US D WZE AMEX 19. 0 0 .42 -22 .2% -40.0% -54. 8% -66. 4% -80. 7% -82 .6%

W oozyF ly, Inc. US D WZY F OTCBB 2.6 0 .15 0 .0% 0 .0% NM NM NM -96 .3%

W orlds .com Inc. US D WDDD OTCBB 7.3 0 .14 -22 .2% -36.4% -36. 4% -36. 4% -60. 0% -68 .9%

W ynds torm Corporation US D WY ND OTCBB 2.2 0 .12 0 .0% 0 .0% 0.0% -45. 5% NM -85 .9%XING AG E UR O1BC XTR A 162 .5 24 .68 -14 .2% -20.4% -14. 5% -22. 9% -37. 8% -47 .1%

YedangOnline Corp. K R W A052770 K OS E 63. 8 6 ,300 .00 -5. 3% -7. 1% -3 .1% -21. 0% -36. 4% -49 .8%

Ynk K orea Inc. K R W A023770 K OS E 5.5 3 ,460 .00 -2. 4% -12.0% -27. 2% -66. 9% -81. 7% -82 .6%

ZipL ocal Inc. CAD TSXV:ZIP T S XV 0.9 0 .02 200.0% -25.0% 50 . 0% -81. 3% -92. 3% -92 .9%

High 200.0% 180.0% 833 .3% 390.0% 226. 7% 0 .0%

Low -90 .0% -90.0% -99. 3% -99. 8% -100 .0% -100 .0%

Average 312.5 -1.3% -8.3% 6.4% -33.1% -47.6% -65.2%Median -3. 9% -12.7% -5 .6% -46. 7% -59. 0% -69 .5%

Figure 25. Price Performance Source. Capital IQ

Page 19: 09 03 10 Web 2.0 Weekly

Page 19

Comparable Company Analys is > Web 2.0Valuation Multiples

Company Name S ector Country

P rimary

E xc hange Ticker

USD Market

Cap ($m)

TE V/LTM

R evenue

TE V/ NTM

R evenue

TE V/LTM

EB ITDA

TEV/NTM

E B ITDA P /LTM E P S P /NTM EP S P /TangBV

Acce leri ze N ew Media, Inc. Direct Ma rketing United S tates OTCB B ACLZ 5. 9 3. 2x - - - - - -

Actoz S oft Co. , Ltd. G aming South Korea K OS E A052790 59. 9 0. 8x - 4 .3x - 13.0x - 1.3x

AQ Inte ractive, Inc. G aming Japa n TS E 3838 17. 2 - - - - - - 0. 3xAs sociated Media Holdings Inc. Mobile United S tates OTCP K ASMH 0. 1 8. 0x - - - - - -

B igs tring C orp. Ins tant Mess aging United S tates OTCB B B S GC 0. 6 27 .0x - - - - - -Be tawave Corporation Media United S tates OTCB B BWAV 4. 4 2. 4x - - - - - -

Beyond Commerce, Inc. S ocia l N etworking United S tates OTCB B BY OC 19. 6 20 .6x - - - - - -Br ight T hings plc S ocia l N etworking United K ingdom AIM AIM: B GT 2. 9 12 .3x - - - - - -

BroadW ebAs ia Inc. S ocia l N etworking United S tates OTCP K BWB A 63. 7 - - - - - - -CDC Corp. G aming Hong Kong Na sdaqGS CHIN.A 80. 9 0. 3x 0.3x 7 .3x 6. 1x - 11 .2x -China G ateway Corpora tion Mobile United S tates OTCB B CGWY 0. 0 0. 0x - - - - - -

Chinese G amer International G aming Taiwan G TSM G TSM:3083 351. 7 8. 0x - 17 .0x - 21.8x - 7.1xCornerW orld Corporation Content United S tates OTCB B CWR L 6. 6 13 .1x - - - - - -

DADA SpA S ocia l N etworking Italy CM CM:DA 99. 5 0. 7x - 4 .1x - 6. 2x - -DXN Holdings Bhd S ocia l N etworking Mala ys ia K LS E DXN 20. 6 0. 5x - 4 .0x - 4. 1x - 0.5x

Dibz International, Inc. S NS Apps United S tates OTCP K DIB Z 0. 0 - - - - - - -

Digi ta lP os t Interactive, Inc. Content United S tates OTCB B DG LP 0. 3 2. 8x - - - - - -

Digi ta lT own, Inc. S ocia l N etworking United S tates OTCB B DG TW 68. 5 - - - - - - -Dolphin Digita l Media , Inc. S ocia l N etworking United S tates OTCB B DP DM 19. 5 - - - - - - -

E olith Co. Ltd. G aming South Korea K OS E A041060 16. 8 1. 0x - - - - - -E xtensions, Inc. Content United S tates OTCP K EXT I 46. 3 - - - - - - -

F ina ncia l Media Group, Inc. Direct Ma rketing United S tates OTCB B FNGP 1. 0 0. 0x - 0 .1x - - - -F luid Mus ic Canada , Inc. Media United S tates T S X TS X: FMN 13. 4 - - - - - - 1. 1x

F rogs te r Interactive P icture s AG G aming Germany XTR A FR G 11. 0 2. 1x - - - - - 1. 1xGamania Digital E nterta inment Co. , L td. G aming Taiwan G TSM 6180 110. 2 0. 8x - 4 .7x - 12.9x - 1.7xGameOn Co L td. G aming Japa n TS E 3812 79. 1 0. 3x - 1 .2x - 8. 1x - 1.1x

GeoS entric Oyj Mobile Finla nd HL SE GE O1V 31. 5 5. 1x - - - - - 7. 0xGiant Inte ractive G roup, Inc. G aming China NY SE G A 1,588. 8 - - - - 1. 6x 11 .8x 0.3x

GigaMedia L td. G aming Taiwan Na sdaqGS GIGM 233. 9 0. 8x 0.8x 3 .5x 3. 3x 6. 9x 6.6x 2.2xGravity Co., Ltd G aming South Korea Na sdaqGM GR V Y 17. 8 - - - - - - -

Gree, Inc. S ocia l N etworking Japa n TS E T S E : 3632 1,057. 1 33 .5x - - - - - 16. 4x

GungHo Online Ente rtainment, Inc. Media Japa n OSE 3765 134. 9 1. 1x - 7 .2x - - - 41. 9x

HanbitS oft, Inc. G aming South Korea K OS E A047080 44. 9 0. 6x - - - - - 1. 7xIAC/Inte rActiveCorp. Media United S tates Na sdaqGS IAC I 1,897. 2 0. 1x 0.1x 2 .2x 0. 9x 14.1x 21 .4x 0.9x

IAS E ne rgy, Inc. V ideo Canada OTCB B IASC .A 4. 9 - - - - - - -IdeaE dge, Inc. S ocia l N etworking United S tates OTCB B OTCB B :IDAE 16. 9 - - - - - - 12. 4x

iseemedia Inc. Content Canada T S XV IE E 3. 2 0. 6x - - - - - 1. 1x

J umbuck Entertainment P ty Ltd. S ocia l N etworking Austra lia ASX AS X: JMB 14. 1 0. 9x - 2 .4x - 7. 2x - 1.8x

J umpTV Inc. V ideo Canada TS X TS X:J TV 34. 2 3. 8x - - - - - 2. 5xKa boose Inc. Content Canada T S X TSX :K AB 42. 2 0. 9x 0.7x 11 .2x 5. 7x - - -K ingsoft Co. Ltd. G aming China S EHK 3888 362. 6 2. 6x - 7 .6x - 10.7x - 2.4x

Lingo Media Corpora tion Online Learning Canada TS XV TSX V: LM 9. 7 3. 3x - - - - - -

LiveWorld Inc. S ocia l N etworking United S tates OTCP K LVW D 1. 2 0. 0x - - - - - 0. 6xLookS mart, Ltd. Direct Ma rketing United S tates Na sdaqGM LOOK 16. 5 - - - - 2. 4x - 0.6xMagnitude Informa tion S ys tems Inc. S ocia l N etworking United S tates OTCB B MAGY 8. 3 - - - - - - -

Mixi, Inc. S ocia l N etworking Japa n TS E 2121 476. 4 3. 1x - 8 .2x - 23.1x - 3.7xModern T imes Group Mtg AB Media Sweden OM MTG B 828. 6 0. 9x 0.9x 5 .5x 6. 5x 2. 6x 6.3x -

Moggle , Inc G aming United S tates OTCB B MMOG 72. 6 - - - - - - -MOK O.mobi L imited S ocia l N etworking Austra lia ASX MKB 3. 1 1. 5x - - - - - 2. 1x

NEOW IZ G ames Corpora tion G aming South Korea K OS E A095660 227. 3 1. 9x - 7 .0x - 14.4x - 8.5xNetDragon WebS oft, Inc. G aming China S EHK 777 228. 3 0. 6x - 1 .2x - 6. 5x - 1.3x

Netea se. com Inc. G aming China Na sdaqGS NTE S 2,571. 8 - - - - 1. 7x 10 .9x 0.5x

NeXplore Corporation Content United S tates OTCP K NXP C 53. 0 - - - - - - -

Ngi G roup Inc. Media Japa n TS E 2497 20. 2 - - - - 6. 0x - 0.3xNorthgate T echnologies L imited Direct Ma rketing India B S E 590057 20. 6 0. 2x - 0 .9x - 1. 4x - -

Open Text Corp. Collabora tion Canada Na sdaqGS OTEX 1,527. 4 2. 2x 1.9x 8 .5x 7. 4x 31.2x 11 .5x -Openwa ve S ys tems Inc. Mobile United S tates Na sdaqGS OPWV 60. 0 - - - - - 24 .0x 0.8x

Pe rfect W orld Co., Ltd. G aming China Na sdaqGS P WR D 550. 8 - - - - 1. 0x 5.0x 0.3xPhotoChannel Ne tworks Inc. Digital Imaging Canada TS XV T SXV : PN 42. 6 2. 7x 1.8x - 5. 7x - 21 .3x 9.5xQuepas a Corp. S ocia l N etworking United S tates Na sdaqCM QP S A 11. 4 - - - - - - 4. 7x

OAO R B C Informa tion S ys tems Media R uss ia R T S R BC I 34. 7 0. 0x - 0 .1x - - - -S handa Intera ctive E ntertainment L td. G aming China Na sdaqGS SNDA 2,134. 9 - - - - 1. 8x 10 .5x 0.8x

Shutterfly, Inc. Digital Imaging United S tates Na sdaqGS S F LY 180. 3 0. 4x 0.5x 3 .2x 2. 9x 40.5x - 1.0xS K Communications Co. , Ltd. S earch South Korea K OS E A066270 162. 6 1. 2x - 12 .9x - - - -

SNAP Interactive, Inc. Online Dating United S tates OTCB B S TV I 10. 1 3. 9x - 38 .9x - 56.1x - 7.4xSNM G lobal Holdings Media United S tates OTCP K S NMN 0. 0 1. 1x - - - - - -

S ocial Media V enures , Inc. S ocia l N etworking United S tates OTCP K SMV I 0. 0 0. 1x - - - - - -

S i te search Corpora tion S ocia l N etworking United S tates OTCB B S TP C 8. 9 - - - - - - 8. 4x

Spark Ne tworks , Inc. S ocia l N etworking United S tates AMEX LOV 47. 9 0. 8x - 3 .9x - 11.5x - -SpectrumDNA, Inc. Media United S tates OTCB B S P XA 9. 7 - - - - - - 10. 4x

T encent Holdings Ltd. P ortal China S EHK 700 10,949. 3 13 .1x - 26 .5x - 35.8x - 14. 2xThe P arent Company Media United S tates OTCP K KIDS .Q 0. 2 0. 2x - - - - - -

T he9 Limited G aming China Na sdaqGS NCTY 250. 2 - - - - 0. 7x 6.2x 0.1xTheStreet.com, Inc. Media United S tates Na sdaqGM TSCM 55. 0 - - - - 58.3x - 0.6xTotal S ports Online ASA Media Norwa y OTCNO TOS O 0. 2 4. 6x - - - - - -

T ree .Com, Inc. P ortal United S tates Na sdaqGM TR E E 39. 2 0. 2x 0.2x - - - - 0. 6xUnis e rve Communications Corp. S ocia l N etworking Canada TS XV TS XV :US S 1. 0 0. 1x - 31 .3x - - - -

United Online Inc. Media United S tates Na sdaqGS UNTD 325. 3 0. 9x 0.6x 4 .1x 2. 7x - 5.5x -

UOMO Media, Inc Media Canada OTCB B UOMO 5. 1 11 .4x - - - - - -

VO IS , Inc. S ocia l N etworking United S tates OTCB B VO IS 3. 3 - - - - - - 7. 5xW ebzen Inc. G aming South Korea Na sdaqGM WZE N 14. 5 - - - - - - 0. 0x

W izza rd S oftwa re Corporation P odca s ting United S tates AMEX W ZE 19. 0 3. 1x - - - - - -W oozyF ly, Inc. S ocia l N etworking United S tates OTCB B WZY F 2. 6 - - - - - - -

W orlds .com Inc. Content United S tates OTCB B WDDD 7. 3 - - - - 2. 7x - -W yndstorm Corporation Content United S tates OTCB B WYND 2. 2 - - - - - - -

XING AG S ocia l N etworking Germany XTR A O1B C 162. 5 2. 7x - 7 .1x - 16.3x - 4.4xYedangOnline Corp. G aming South Korea K OS E A052770 63. 8 1. 4x - 6 .4x - 8. 4x - 3.9xYnk K orea Inc. G aming South Korea K OS E A023770 5. 5 0. 4x - - - - - -

ZipL ocal Inc. Online Directory Canada T S XV TSXV: ZIP 0. 9 0. 6x - - - - - -

High 10,949. 3 33 .5x 1.9x 38 .9x 7. 4x 58.3x 24 .0x 41. 9x

Low 0. 0 0. 0x 0.1x 0 .1x 0. 9x 0. 7x 5.0x 0.0x

Average 312.5 3.7x 0.8x 8.1x 4.6x 13.8x 11.7x 4.4x

Median 20. 2 1. 1x 0.7x 5 .1x 5. 7x 8. 1x 10 .9x 1.7x

Figure 26. Valuation Comparison Source. Capital IQ

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Page 20

Comparable Company Analys is > Web 2.0S ummary by Country

Company Name US D Market Cap ($m) Avg US D Market Cap ($m ) US D LTM Total R ev ($m ) US D LTM Total EB ITDA ($m) E B ITDA %

United S tates 40 China 18 ,636 .7 C hina 2, 329. 6 United S ta tes 3 ,118 .8 C hina 1,40 4.7 S wede n 48.6%

C anada 10 Unite d S tate s 3 ,097 .9 S weden 828. 6 C hina 2 ,770 .5 S weden 23 1.2 Unite d K ingdom 47.1%

S outh Kore a 9 J apan 1 ,785 .0 J apa n 297. 5 S weden 1 ,446 .0 C anada 18 6.3 F inland 36.0%

China 8 Ca nada 1 ,671 .2 T a iwan 231. 9 C ana da 884 .0 J apan 12 6.3 G ermany 31.0%

J apa n 6 S wede n 828 .6 C anada 167. 1 J apan 487 .1 United S tates 12 6.3 J apan 27.0%

T aiwan 3 T a iwan 695 .8 Ita ly 99. 5 S outh K orea 466 .4 T aiwan 8 3.4 Hong K ong 16.0%

Aus tra lia 2 S outh K orea 613 .1 G erma ny 86. 7 Hong K ong 428 .1 S outh K ore a 5 4.3 R uss ia 10.1%

G erma ny 2 G ermany 173 .5 Hong K ong 80. 9 T aiwa n 344 .3 Ita ly 3 4.3 Unite d S tate s 9 .5%

Norway 1 I ta ly 99 .5 United S tates 77. 4 Italy 214 .6 India 2 2.9 C a nada 6 .8%

Hong K ong 1 Hong K ong 80 .9 S outh K ore a 68. 1 R us s ia 132 .6 Hong K ong 1 8.8 C hina 2 .7%

F inla nd 1 R uss ia 34 .7 R us s ia 34. 7 India 130 .0 R us s ia 1 7.3 T a iwan -0 .8%

Ita ly 1 F inland 31 .5 F inla nd 31. 5 Malaysia 74 .7 G erma ny 1 2.3 I ndia -5 .3%

United K ingdom 1 Mala ys ia 20 .6 Ma lays ia 20. 6 G ermany 44 .8 Malays ia 9.9 S outh K orea -6 .8%

India 1 I ndia 20 .6 India 20. 6 Austra lia 12 .6 Aus tra lia 2.3 Aus tra lia -42 .5%

S weden 1 Aus tralia 17 .2 Aus tralia 8. 6 F in land 5 .2 Norway -1.0 Norwa y -91 .6%

R us s ia 1 Unite d K ingdom 2 .9 United K ingdom 2. 9 Norway 1 .9 United K ingdom -1.6 I ta ly NM

Ma lays ia 1 Norwa y 0 .2 Norway 0. 2 United K ingdom 0 .2 F in land -1 2.0 Mala ys ia NM

Grand Total 89 G rand Tota l 27,809.9 G rand Total 312.5 G rand Total 130.4 G rand Total 2,315.8 G rand Tota l 7 .3%

Figure 27. Comparison by Country Source. Capital IQ

Comparable Company Analys is > Web 2.0S ummary by Exc hange

Company Name US D Market Cap ($m) Avg US D Market Cap ($m ) US D LTM Total R ev ($m ) US D LTM Total EB ITDA ($m) E B ITDA %

OT CB B 22 S E HK 11 ,540 .2 S E HK 3, 846. 7 OM 1 ,446 .0 Nas da qG S 1,22 9.2 OM 48.6%

Nas da qG S 11 Na sdaqG S 9 ,812 .7 NY S E 1, 588. 8 Nas daqGS 487 .1 S E HK 52 9.8 A IM 47.1%

OT CP K 9 T S E 1 ,650 .0 Nas da qG S 892. 1 S E HK 368 .4 OM 23 1.2 AME X 36.3%

K OS E 7 NY S E 1 ,588 .8 OM 828. 6 NY S E 233 .1 NY S E 14 4.3 HL S E 36.0%

T S E 5 OM 828 .6 T S E 330. 0 CM 214 .6 T S E 11 1.2 X T R A 31.0%

Nas da qGM 5 K O S E 580 .8 G T SM 230. 9 R T S 132 .6 K OS E 5 0.1 T S E 27.0%

T S XV 5 G T S M 461 .8 O S E 134. 9 B S E 130 .0 G T SM 35.5 G T S M 23.9%

S EHK 3 OTC B B 278 .3 CM 99. 5 OS E 103 .2 CM 34.3 T S XV 16.7%

T S X 3 X T R A 173 .5 XT R A 86. 7 Nas daqGM 84 .0 B S E 2 2.9 NY S E 14.7%

AME X 2 OTC P K 164 .5 K OS E 83. 0 T S E 76 .8 R T S 1 7.3 Na sdaqGM 13.7%

XT R A 2 Na sdaqGM 143 .0 R T S 34. 7 K L S E 74 .7 OS E 1 5.2 OT CP K 11.1%

ASX 2 OS E 134 .9 AME X 33. 4 G T SM 71 .9 XT R A 1 2.3 R T S 10.1%

G T SM 2 CM 99 .5 HLS E 31. 5 KOS E 59 .5 K LS E 9.9 Na sdaqCM 9 .4%

OT CNO 1 T S X 89 .8 T S X 29. 9 AME X 31 .7 AME X 5.9 OT CB B 4 .3%

HLS E 1 AME X 66 .8 Nas da qGM 28. 6 T S X 24 .3 A S X 2.3 Na sdaqG S 1 .9%

OS E 1 T S XV 57 .4 K LS E 20. 6 XT R A 22 .4 OT CNO -1.0 B S E -5 .3%

CM 1 R T S 34 .7 B S E 20. 6 OT C PK 21 .0 A IM -1.6 T S X -6 .9%

B S E 1 HL S E 31 .5 O TC P K 18. 3 T S X V 9 .1 T S X -6.0 K OS E -9 .1%

Nas da qCM 1 K LS E 20 .6 O TC B B 12. 6 AS X 6 .3 T S X V -1 0.0 S E HK -16 .5%

NY S E 1 B S E 20 .6 T S XV 11. 5 HLS E 5 .2 Nas da qCM -1 1.8 A S X -42 .5%

A IM 1 AS X 17 .2 Nas da qCM 11. 4 OT CNO 1 .9 HLS E -1 2.0 OT CNO -91 .6%

OM 1 Na sdaqCM 11 .4 AS X 8. 6 OT C BB 1 .6 Nas da qGM -1 4.5 CM NM

R T S 1 A IM 2 .9 A IM 2. 9 AIM 0 .2 OT C PK -2 7.2 OS E NM

K LS E 1 OTCNO 0 .2 O TCNO 0. 2 Nas daqCM 0 .1 OT C BB -5 1.5 K LS E NM

Grand Total 89 G rand Tota l 27,809.9 G rand Total 312.5 G rand Total 130.4 G rand Total 2,315.8 G rand Tota l 7 .3%

Figure 28. Comparison by Exchange Source. Capital IQ

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Page 21

Financing - Last Three Months (US$ m)Month Company Name Country Angel/Seed Debt financing Series A Series B Series C Series D Series E Grand Total

Jan-09 Aster Data Systems USA 17.0 17.0

Yodle USA 13.0 13.0

AdMob USA 12.5 12.5

VirtuOz France 11.4 11.4

IMVU USA 10.0 10.0

NewsGator USA 10.0 10.0

Go Internet Media USA 10.0 10.0

DECA USA 10.0 10.0

Nurien Korea 10.0 10.0

RatePoint USA 10.0 10.0

One True Media USA 9.0 9.0

SundaySky Israel 8.0 8.0

Play Hard Sports USA 8.0 8.0

JibJab USA 7.5 7.5

Xobni USA 7.0 7.0

InsideView USA 6.5 6.5

Kewego France 6.2 6.2

Fliqz USA 6.0 6.0

Motionbox USA 6.0 6.0

SocialMedia USA 6.0 6.0

Sportsblogs USA 5.0 5.0

AboutUs USA 5.0 5.0

Geni USA 5.0 5.0

Gbox USA 5.0 5.0

E-Global Sports Network USA 3.5 3.5

mEgo USA 2.5 2.5

Tripwolf Austria 2.5 2.5

Hubdub UK 1.2 1.2

Snooth USA 1.0 1.0

CoveritLive Canada 1.0 1.0

BackType USA 0.3 0.3

Identi.ca Canada 0.2 0.2

Meez USA

Jan-09 Total 5.0 45.2 73.9 82.2 10.0 216.3

Feb-09 Twitter USA 35.0 35.0

Synthasite South Africa 20.0 20.0

Tremor Media USA 18.0 18.0

Offerpal Media USA 15.0 15.0

Imagini UK 13.5 13.5

Emergent Game Technologies USA 12.5 12.5

Outbrain Israel 12.0 12.0

Tvtrip France 9.0 9.0

Tongxue China 6.0 6.0

Oodle USA 5.6 5.6

TextDigger USA 4.3 4.3

OneSpot USA 4.2 4.2

Mixpo Canada 4.0 4.0

FetchDog USA 4.0 4.0

Virtual Fairground Netherlands 4.0 4.0

7 Billion People USA 3.0 3.0

FamilyLink.com USA 2.9 2.9

WhistleBox USA 2.3 2.3

Mendeley UK 2.0 2.0

Outright USA 2.0 2.0

Tvinci Israel 1.6 1.6

Filtrbox USA 1.4 1.4

MMO Life Netherlands 1.3 1.3

Cake Financial USA 1.3 1.3

fav.or.it UK 0.7 0.7

Feb-09 Total 13.3 24.8 76.4 58.6 12.5 185.5

Mar-09 Vidyo USA 15.0 15.0

SendMe Inc. USA 12.0 12.0

Simulmedia USA 4.0 4.0

Tynt Canada 3.9 3.9

Myngle Netherlands 1.3 1.3

Mar-09 Total 1.3 7.9 15.0 12.0 36.2

Grand Total 18.3 1.3 77.9 150.2 155.8 12.0 22.5 438.0

Figure 29. Financing, Last Three Months Source. Company reports

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Page 22

RELEVANT DISCLOSURES APPLICABLE TO: NONE

L IST OF D IS CLOS URE TE RMS :

1. None applicable.

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recommendations expressed in this research report.

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