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SOFTWARE & SERVICES 19 MAY 2009
WEB 2.O WEEKLY
DAVID SHORE, CFA, MBA 416.860.6784
david.shore@researchcapital.com
Arun Thomas (Associate) 416.860.7666 
AD NETWORK COMPANY CYBERPLEX RAISES C$15 MILLION IN EQUITY FINANCING
CANADA’S CYBERPLEX RAISES MONEY TO FUEL NEXT LEVEL OF GROWTH
Last week we saw a number of companies in the media and Web 2.0 sector reporting earnings, but none was moresurprising than Cyberplex. This company, operating in the ad network space, continued to surprise investors both onthe earnings front and capital market activity. In posting approximately 300% growth in revenues Y/Y (see figurebelow), the company has demonstrated the merit of its business model and has returned to the equity markets forC$15 million to fuel the next phase of its growth.
Segmented Revenue, by Quarter
05101520253035
    M   a   r  -    0   7    J   u   n  -    0   7    S   e   p  -    0   7    D   e   c  -    0   7    M   a   r  -    0    8    J   u   n  -    0    8    S   e   p  -    0    8    D   e   c  -    0    8    M   a   r  -    0    9    (    $   m    )
0.0%50.0%100.0%150.0%200.0%250.0%300.0%350.0%400.0%450.0%500.0%
    (    %    )
 Technology Services (LHS)Web Advertising (LHS) Total revenues - yoy growth (RHS)
 
Cyberplex a big boost for financing activity in May:
Month-to-date financings in May totalled $84.3 million andbenefited from a financing from Cyberplex for $12.9 million. So far, there have been 14 financings in May with sevendeals greater than $5 million and only three less than $5 million. Except for Cyberplex, no deals were greater than$10 million, with the capital raise by Imeem and EveryZing closely behind at $8.8 million and $8.3 million,respectively.
Price Performance:
The companies in our universe had mixed stock price performances over the past week (forstocks with prices greater than $1) (Figure 6), with 24 companies showing positive returns on the week. Ynk Korea,Inc. (A023770-KOSE) led the group with a 30.9% return, while Mixi, Inc. (2121-TSE) had the worst return, dropping9.2% 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.comToronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
 
 
 Page 2
THE WEB 2.0 UNIVERSE
Ninety-three public Web 2.0 companies identified:
Our Web 2.0 universe contains 93 companies, with a combinedmarket cap of ~ $46 billion (Figure 1). The average market cap for the group is ~$500 million (but a median of only $50.6million), with average trailing revenue of $148.5 million (median $55.6 million). The companies are also generallyprofitable, with a median EBITDA margin of 16.0%. On a valuation basis, the overall average is 5.2x trailing revenue(median 1.6x) and 9.3x trailing EBITDA (median 8.7x). Fourteen of the companies have more than 500 employees.
Comparable Company Analysis > Web 2.0
Company NameLTM as ofTickerExchangeTradingCurrencyHQCurrentPriceUSD MarketCap ($m)USD LTM TotalRev ($m)USD LTM TotalEBITDA ($m)EBITDA%TEV/LTMRevenueTEV/LTMEBITDAEmployees
Accelerize New Media, Inc.3/31/2009ACLZOTCBBUSDUnited States0.5013.8 4.1 (4.4)NM4.6x- 11Actoz Soft Co., Ltd.12/31/2008A052790KOSEKRWSouth Korea14,40099.4 75.7 15.1 20.0%0.9x4.7x NAAQ Interactive, Inc.12/31/20083838TSEJPYJapan48,000.0026.8 61.8 4.9 8.0%-- NAAssociated Media Holdings Inc.6/30/2007ASMHOTCPKUSDUnited States00.1 0.1 (2.3)NM8.1x- 3Bigstring Corp.12/31/2008BSGCOTCBBUSDUnited States0.021.2 0.1 (2.1)NM30.6x- 4Betawave Corporation12/31/2008BWAVOTCBBUSDUnited States03.2 7.7 (11.8)NM-- 45Beyond Commerce, Inc.12/31/2008BYOCOTCBBUSDUnited States1.0443.0 1.8 (8.6)NM25.4x- 43Bright Things plc9/30/2008AIM:BGTAIMGBPUnited Kingdom05.6 0.2 (1.7)NM22.1x- 9BroadWebAsia Inc.9/30/2008BWBAOTCPKUSDUnited States0.3025.3 0.0 (4.6)NM-- 46CDC Corp.3/31/2009CHIN.ANasdaqGSUSDHong Kong1157.3 389.9 30.8 7.9%0.4x5.5x NAChangyou.com Limited3/31/2009CYOUNasdaqGSUSDChina29.801,527.3 222.5 135.1 60.7%6.0x9.9x 628China Gateway Corporation9/30/2008CGWYOTCPKUSDUnited States00.0 6.7 (6.6)-98.9%0.0x- 37Chinese Gamer International3/31/2009GTSM:3083GTSMTWDTaiwan225.00575.6 56.2 31.5 56.0%9.1x16.2x NACornerWorld Corporation1/31/2009CWRLOTCBBUSDUnited States06.4 1.3 NM NM6.0x- NACyberplex Inc.3/31/2009TSX:CXTSXCADCanada1.8786.5 70.3 7.3 10.4%1.2x11.3x NADADA SpA9/30/2008CM:DACMEURItaly6139.4 231.1 36.9 16.0%0.8x5.0x 574DXN Holdings Bhd2/28/2009DXNKLSEMYRMalaysia0.4429.1 78.7 10.8 13.7%0.6x4.2x NADibz International, Inc.NADIBZOTCPKUSDUnited States00.0 NA NM NM-- NADigitalPost Interactive, Inc.12/31/2008DGLPOTCBBUSDUnited States0.021.1 0.5 (3.2)NM5.1x- 7DigitalTown, Inc.2/28/2009DGTWOTCBBUSDUnited States367.7 NM (3.0)NM-- 3Dolphin Digital Media, Inc.12/31/2008DPDMOTCBBUSDUnited States0.6833.5 0.9 (3.0)NM37.2x- NAEolith Co. Ltd.12/31/2007A041060KOSEKRWSouth Korea90052.4 20.2 (0.1)-0.3%2.7x- NAExtensions, Inc.12/31/2008EXTIOTCPKUSDUnited States0.1514.2 NM NM NM-- NAFinancialMedia Group, Inc.2/28/2009FNGPOTCBBUSDUnited States00.4 7.2 2.4 NM-- 22Fluid Music Canada, Inc.12/31/2008TSX:FMNTSXCADUnited States0.4520.4 4.6 (9.3)-60.6%1.9x- NAFrogster Interactive Pictures AG6/30/2008FRGXTRAEURGermany824.6 5.5 (3.3)16.6%4.4x- NAGamania Digital EntertainmentCo., Ltd.3/31/20096180GTSMTWDTaiwan38.60178.2 126.0 20.9 25.9%1.2x7.4x NAGameOn Co Ltd.12/31/20083812TSEJPYJapan91,80091.0 76.5 19.8 NM0.4x1.7x NAGeoSentric Oyj12/31/2008GEO1VHLSEEURFinland0.0448.8 6.0 (13.4)61.9%6.9x- 94Giant Interactive Group, Inc.12/31/2008GANYSEUSDChina81,862.2 233.6 144.6 24.2%-- NAGigaMedia Ltd.12/31/2008GIGMNasdaqGSUSDTaiwan6.38344.7 190.4 46.0 19.2%1.4x5.8x NAGravity Co., Ltd9/30/2008GRVYNasdaqGMUSDSouth Korea127.0 39.7 7.6 36.0%-- 636Gree, Inc.6/30/2008TSE:3632TSEJPYJapan5,260.001,203.8 30.1 10.8 17.8%37.3x- NAGungHo Online Entertainment, Inc.12/31/20083765OSEJPYJapan142,600167.5 115.3 20.6 -28.2%1.3x7.1x NAHanbitSoft, Inc.12/31/2008A047080KOSEKRWSouth Korea4,855.0086.3 56.4 (15.9)3.0%1.2x- NAIAC/InterActiveCorp.3/31/2009IACINasdaqGSUSDUnited States162,392.0 1,406.4 42.6 NM0.4x11.9x 3,200IAS Energy, Inc.1/31/2009IASC.AOTCBBUSDCanada0.2819.6 0.0 (0.8)NM-- NAIdeaEdge, Inc.12/31/2008OTCBB:IDAEOTCBBUSDUnited States124.3 0.0 (4.6)NM-- NAiseemedia Inc.12/31/2008IEETSXVCADCanada0.094.0 1.3 (5.1)37.2%1.8x- NAJumbuck Entertainment Pty Ltd.12/31/2008ASX:JMBASXAUDAustralia015.3 13.7 5.1 -62.6%0.8x2.1x 72JumpTV Inc.12/31/2008TSX:JTVTSXCADCanada0.7169.7 13.4 (8.4)10.0%4.0x- 237Kaboose Inc.12/31/2008TSX:KABTSXCADCanada172.5 70.7 7.0 38.7%1.1x11.2x NAKingsoftCo. Ltd.12/31/20083888SEHKHKDChina4.14576.9 120.2 46.6 NM4.2x10.9x 2,271Lingo Media Corporation12/31/2008TSXV:LMTSXVCADCanada111.1 0.8 (1.5)-4.3%10.9x- NALiveWorld Inc.12/31/2008LVWDOTCPKUSDUnited States0.072.2 11.8 (0.5)-6.3%0.1x- NALookSmart, Ltd.3/31/2009LOOKNasdaqGMUSDUnited States124.6 60.7 (3.8)NM-- 90Magnitude Information Systems Inc.12/31/2008MAGYOTCBBUSDUnited States0.014.4 0.1 (3.0)38.0%-- 14Mixi, Inc.12/31/20082121TSEJPYJapan450,000708.4 120.3 45.8 15.3%5.0x13.2x NAModern Times Group Mtg AB3/31/2009MTG BOMSEKSweden237.502,020.2 1,737.6 266.2 NM1.5x9.7x 2,969Moggle, Inc12/31/2008MMOGOTCBBUSDUnited States283.5 NM (1.1)NM-- 3MOKO.mobi Limited12/31/2008MKBASXAUDAustralia0.085.0 1.1 (2.3)1.9%3.5x- NAMyriad Group AG12/31/2008MYRNSWXCHFSwitzerland598.2 40.0 0.8 26.8%2.8x- 405NEOWIZ Games Corporation12/31/2008A095660KOSEKRWSouth Korea62,400.00487.1 200.8 53.9 45.7%2.4x8.9x NANetDragon WebSoft, Inc.12/31/2008777SEHKHKDChina6377.2 87.3 39.9 65.0%2.8x6.1x 2,426Netease.com Inc.12/31/2008NTESNasdaqGSUSDChina30.963,809.7 451.8 293.7 NM-- NANeXplore Corporation9/30/2007NXPCOTCPKUSDUnited States139.0 NM (4.9)30.8%-- 19Ngi Group Inc.12/31/20082497TSEJPYJapan31,700.0040.2 100.8 31.0 17.6%-- NANorthgate Technologies Limited12/31/2008590057BSEINRIndia3927.6 136.2 24.0 25.5%0.2x1.2x 286Open Text Corp.3/31/2009OTEXNasdaqGSUSDCanada31.731,669.7 782.6 199.2 -1.0%2.2x8.7x 3,400Openwave Systems Inc.3/31/2009OPWVNasdaqGSUSDUnited States1105.8 197.2 (2.1)54.1%0.0x- 630Perfect World Co., Ltd.12/31/2008PWRDNasdaqGSUSDChina18.90997.1 210.5 113.9 -4.9%-- NAPhotoChannel Networks Inc.12/31/2008TSXV:PNTSXVCADCanada247.0 17.2 (0.8)NM2.7x- NAQuepasa Corp.12/31/2008QPSANasdaqCMUSDUnited States0.9712.3 0.1 (11.4)13.1%-- 74OAO RBC Information Systems12/31/2007RBCIRTSUSDRussia1173.4 146.9 19.2 46.0%0.0x0.3x NAShanda Interactive Entertainment Ltd.12/31/2008SNDANasdaqGSUSDChina49.383,426.1 522.7 240.2 13.2%0.2x0.4x NAShutterfly, Inc.3/31/2009SFLYNasdaqGSUSDUnited States13323.5 215.2 28.3 6.5%1.2x9.1x 514SK Communications Co., Ltd.12/31/2008A066270KOSEKRWSouth Korea9,390.00313.1 186.7 12.1 31.4%1.7x25.8x NASNAP Interactive, Inc.12/31/2008STVIOTCBBUSDUnited States18.1 3.0 0.9 -34.8%2.2x7.0x 11SNM Global Holdings9/30/2008SNMNOTCPKUSDUnited States0.000.0 2.0 (0.7)-60.5%1.1x- 33Social Media Venures, Inc.12/31/2008SMVIOTCPKUSDUnited States00.0 0.1 (0.1)43.6%0.0x- NASohu.com Inc.3/31/2009SOHUNasdaqGSUSDChina55.322,116.8 460.0 200.5 NM3.8x8.7x 3,197Sitesearch Corporation1/31/2009STPCOTCBBUSDUnited States328.2 NM (1.1)21.5%-- 15Spark Networks, Inc.12/31/2008LOVAMEXUSDUnited States2.7556.5 57.3 12.3 NM1.0x4.6x 183SpectrumDNA, Inc.12/31/2008SPXAOTCBBUSDUnited States020.5 0.1 (2.5)48.9%-- 7 TencentHoldings Ltd.12/31/2008700SEHKHKDChina71.3016,568.2 1,047.8 512.5 -12.0%17.2x35.3x 6,194 The ParentCompany8/2/2008KIDS.QOTCPKUSDUnited States00.3 112.0 (13.5)33.7%0.2x- 347 The9 Limited12/31/2008NCTYNasdaqGSUSDChina9.46253.7 250.2 84.3 2.9%-- NA TheStreet.com, Inc.3/31/2009TSCMNasdaqGMUSDUnited States262.8 67.0 1.9 -50.6%-- 310 Total SportOnline AS3/31/2006TOSOOTCNONOKNorway0.030.1 2.1 (1.1)-6.2%4.6x- 16 Tree.Com, Inc.3/31/2009TREENasdaqGMUSDUnited States12130.5 215.6 (13.3)0.4%0.6x- 700Uniserve Communications Corp.11/30/2008TSXV:USSTSXVCADCanada0.040.8 25.8 0.1 21.9%0.1x29.5x NAUnited Online Inc.3/31/2009UNTDNasdaqGSUSDUnited States7605.1 811.2 177.3 -78.2%1.1x5.0x 1,469UOMO Media, Inc1/31/2009UOMOOTCBBUSDCanada0.2521.0 0.6 (0.5)17.8%33.6x- NAValueClick Inc.3/31/2009VCLKNasdaqGSUSDUnited States10899.2 591.7 105.5 NM1.3x7.5x 1,189VOIS, Inc.12/31/2008VOISOTCBBUSDUnited States0.322.7 0.0 (1.3)-19.8%-- 4Webzen Inc.12/31/2008WZENNasdaqGMUSDSouth Korea338.9 23.1 (4.6)-98.2%-- NAWizzard Software Corporation12/31/2008WZEAMEXUSDUnited States0.6229.2 6.1 (6.0)NM4.8x- 110Worlds.com Inc.12/31/2008WDDDOTCBBUSDUnited States08.9 0.1 (0.7)NM-- 1Wyndstorm CorporationNAWYNDOTCBBUSDUnited States0.030.5 NA NM 32.0%-- NAXING AG12/31/2008O1BC XTRAEURGermany29208.1 47.6 15.2 22.4%3.1x9.8x 174YedangOnline Corp.12/31/2007A052770KOSEKRWSouth Korea8,900.00113.3 55.6 12.4 -7.6%2.0x9.0x NAYnk Korea Inc.12/31/2007A023770KOSEKRWSouth Korea6,85013.6 15.8 (1.2)NM0.9x- NAZipLocal Inc.12/31/2008TSXV:ZIPTSXVCADCanada0.010.3 2.8 (3.0)0.0%0.6x- NAHigh16,568.21,737.6512.565.0%37.3x35.3x6,194Low0.00.0-15.9-98.9%0.0x0.3x1
Average496.0148.533.18.3%5.2x9.3x682
Median50.655.60.916.0%1.6x8.7x210
 
Figure 1. Web 2.0 Universe Summary Source. Capital IQ 
 
 Page 3
CAPITAL MARKETS ACTIVITY (M&A AND FINANCING)
Cyberplex a big boost for financing activity in May:
Month-to-date financings in May totalled $84.3 million and benefitedfrom a financing from Cyberplex for $12.9 million. So far, there have been 14 financings in May with seven deals greaterthan $5 million and only three less than $5 million. Except for Cyberplex, no deals were greater than $10 million, with thecapital raise by Imeem and EveryZing closely behind at $8.8 million and $8.3 million, respectively. The average value forApril was $6.5 million on 21 financings. The March average was $6.6 million on 24 financings. Except for two deals(Kaixin001.com and Collective Media), all were below $20 million for the last three months and a total of four deals weregreater than or equal to $15 million.
Financing Activity Last Three Months
0.020.040.060.080.0100.0120.0140.0160.0180.0Mar-09Apr-09May-09
   (   U   S   $  m   )
5.75.85.96.06.16.26.36.46.56.66.7
   (   U   S   $  m   )
TotalAverage
 
Figure 2. Financings, Last Three Months Source. Company reports 
Cyberplex largest deal in May:
After two weeks into May, Cyberplex tapped the equity markets for $12.9 million. Imeem,a company from the social networks sector, follows with an $8.8 million raise, followed very closely by EveryZing at $8.3million. Eleven of the 14 deals in the month are equal to or greater than $5 million. For additional details, see Figures 23and 24 (at end of note). Further, the month of May also witnessed the spin-off of StumbleUpon from E-bay on a $29 millionvaluation. E-bay had bought StumbleUpon for $75 million.
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