SOFTWARE & SERVICES 6 OCTOBER 2009

WEB 2.O WEEKLY

DAVID SHORE, CFA, MBA 416.860.6784

david.shore@researchcapital.comDamian Wojcichowsky, CFA (Associate), 416.860.7652

TWITTER FINANCING BRINGS VALUE TO $1 BILLION

EARLY TWITTER FUNDERS STAYING ON THE SIDELINES THIS TIME

The rumour proven true, Twitter raised $100 million in a Series E round of financing, bringing the company’s totalfunding to date to approximately $159 million. More importantly, the company’s value has concretely increased from$250 million at last funding to $1 billion, established in this latest financing round.Absent from this round of funding were Union Square Ventures and Charles River Ventures – two investors that hadparticipated in earlier Twitter rounds. Both of these venture firms have experienced significant gains in their Twitterinvestments based on the latest valuation. Charles River specifically cited the high valuation of the latest round as anobstacle to the firm’s participation. Could Twitter’s valuation be reaching unsustainable levels given the company’sstate of financial and operational development?We reprise our

Value per Unique Visitor

analysis. While the increase in value seems extraordinary, when looking atthe valuation per unique visitor (UV), the increase is less impressive – from $29 to $42 (+47%). Note that we would ofcourse prefer comparing valuation based on financial metrics such as cash flow or even revenue. However, Twitterhas not yet started generating any revenue.

Value per unique visitor (UV)

Plaxo, $200Mint.com, $113FriendFeed, $48Club Penguin, $29 Twitter, $29Linkedin, $88 Twitter, $42Bebo, $22People Media, $20StumbleUpon, $5FriendsReunited, $2(200,000,000)-200,000,000400,000,000600,000,000800,000,0001,000,000,0001,200,000,000$(50)$-$50$100$150$200$250(Value per Unique Visitor)

( T o t a l V a l u a t i o n $ )

PlaxoMint.comLinkedinFriendFeed TwitterClub Penguin TwitterBeboPeople MediaStumbleUponFriendsReunitedFeb 09

Sep 09

Bubble size denotes number of UV Source: Company reports, Compete.com

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 public Web 2.0 companies:

Our Web 2.0 universe contains 90 companies, with a combined market cap ofapproximately $66 billion (Figure 1). The median market cap for the group is $47 million, with average trailing revenue of$163 million (median $57 million). The companies are also generally profitable, with a median EBITDA margin of 12.5%.On a valuation basis, the overall average is 4.2x trailing revenue (median 1.7x) and 12.4x trailing EBITDA (median 10.2x).Twenty 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.6/30/2009ACLZOTCBBUSDUnited States0.6016.8 4.4 (3.7)-83.3%4.9x- 11Actoz Soft Co., Ltd.6/30/2009A052790KOSEKRWSouth Korea 17,250 124.6 108.7 25.9 23.8%0.8x3.6x NAAQ Interactive, Inc.6/30/20093838TSEJPYJapan 48,650 29.6 66.1 (2.0)-2.9%0.1x- NAAssociated Media Holdings Inc.6/30/2007ASMHOTCPKUSDUnited States0.010.6 0.1 (2.3)NM15.6x- 3Bigstring Corp.6/30/2009BSGCOTCBBUSDUnited States0.042.1 0.1 (1.5)NM-- 4Betawave Corporation6/30/2009BWAVOTCBBUSDUnited States0.072.0 9.4 (12.6)NM-- 51Beyond Commerce, Inc.6/30/2009BYOCOTCBBUSDUnited States0.2411.3 11.7 (12.8)NM1.5x- 101Bright Things plc3/31/2009AIM:BGTAIMGBPUnited Kingdom0.015.9 0.0 (2.7)NM-- NABroadWebAsia Inc.9/30/2008BWBAOTCPKUSDUnited States0.2319.5 0.0 (4.6)NM-- 46CDC Corp.6/30/2009CHIN.ANasdaqGSUSDHong Kong2.50264.9 361.6 25.1 6.9%0.7x10.4x 2,227Changyou.com Limited6/30/2009CYOUNasdaqGSUSDChina33.071,818.9 241.2 147.2 61.0%6.4x10.5x 628China Gateway Corporation9/30/2008CGWYOTCPKUSDUnited States0.000.0 6.7 (6.6)-98.9%0.0x- 37Chinese Gamer International6/30/2009GTSM:3083GTSMTWDTaiwan 484 1,255.2 61.6 34.7 56.3%19.2x34.1x NACLICKER Inc.5/31/2009CLKZOTCBBUSDUnited States0.010.6 2.5 (1.2)-45.8%0.3x- 22CornerWorld Corporation7/31/2009CWRLOTCBBUSDUnited States0.065.7 6.8 NM NM2.4x- 16Cyberplex Inc.6/30/2009TSX:CXTSXCADCanada174.9 89.8 9.7 10.8%0.6x5.7x NADADA SpA6/30/2009CM:DACMEURItaly6.73159.7 241.9 31.8 13.1%0.9x6.6x NADXN Holdings Bhd5/31/2009DXNKLSEMYRMalaysia0.6039.4 77.1 11.1 14.4%0.7x4.9x NADibz International, Inc.NADIBZOTCPKUSDUnited States0.000.0 NA NM NM-- NADigitalPost Interactive, Inc.6/30/2009DGLPOTCBBUSDUnited States0.064.5 1.0 (1.4)NM6.6x- 7DigitalTown, Inc.5/31/2009DGTWOTCBBUSDUnited States2.0155.0 NM (2.5)NM-- 3Dolphin Digital Media, Inc.6/30/2009DPDMOTCBBUSDUnited States0.3719.9 0.6 (3.4)NM35.9x- NAEolith Co. Ltd.12/31/2008A041060KOSEKRWSouth Korea 745 45.2 15.4 (3.6)-23.6%3.1x- NAExtensions, Inc.6/30/2009EXTIOTCPKUSDUnited States0.208.9 NM NM NM-- 2Fluid Music Canada, Inc.6/30/2009TSX:FMNTSXCADUnited States1.5273.3 5.3 (5.1)-95.2%12.6x- NAFrogster Interactive Pictures AG6/30/2009FRGXTRAEURGermany18.5068.4 9.6 (4.5)-47.0%7.0x- NAGamania Digital Entertainment Co., Ltd.6/30/20096180GTSMTWDTaiwan48.10225.2 140.6 25.1 17.9%1.4x8.1x NAGameOn Co Ltd.6/30/20093812TSEJPYJapan 86,000 93.0 81.9 20.1 24.5%0.2x0.9x NAGeoSentric Oyj6/30/2009GEO1VHLSEEURFinland0.0565.8 5.4 (17.4)NM12.1x- 115Giant Interactive Group, Inc.6/30/2009GANYSEUSDChina71,512.6 198.5 124.1 62.5%-- 1,570GigaMedia Ltd.3/31/2009GIGMNasdaqGSUSDTaiwan4.80261.7 183.6 NM NM1.0x- 751Gravity Co., Ltd6/30/2009GRVYNasdaqGMUSDSouth Korea1.8752.0 49.1 16.6 33.9%-- 469Gree, Inc.6/30/2009TSE:3632TSEJPYJapan 4,280 2,142.8 156.0 93.7 60.1%13.0x21.6x NAGungHo Online Entertainment, Inc.6/30/20093765OSEJPYJapan 216,500 277.4 119.5 26.6 22.2%2.0x9.2x NAHanbitSoft, Inc.6/30/2009A047080KOSEKRWSouth Korea 4,180 76.7 60.7 1.4 2.3%1.0x44.7x NAIAC/InterActiveCorp.6/30/2009IACINasdaqGSUSDUnited States19.252,548.7 1,392.3 52.7 3.8%0.6x15.4x 3,200IAS Energy, Inc.4/30/2009IASA.EOTCBBUSDCanada0.064.2 0.0 (0.6)NM-- NAiseemedia Inc.3/31/2009IEETSXVCADCanada0.135.9 1.6 (5.0)NM3.1x- NAJumbuck Entertainment Limited6/30/2009ASX:JMBASXAUDAustralia0.4017.0 16.7 7.2 42.8%0.6x1.5x 79KAB Distribution Inc.6/30/2009TSX:KABTSXCADCanada 0 0.6 67.9 4.0 5.8%-- NAKingsoft Co. Ltd.6/30/20093888SEHKHKDChina 7 968.2 139.1 61.4 44.2%6.9x15.5x 2,463Lingo Media Corporation6/30/2009TSXV:LMTSXVCADCanada1.0212.1 1.2 (1.9)NM9.4x- NALiveWorld Inc.6/30/2009LVWDOTCPKUSDUnited States0.082.5 10.6 (0.1)-1.2%0.1x- NALookSmart, Ltd.6/30/2009LOOKNasdaqGMUSDUnited States1.1419.5 56.8 (4.4)-7.8%-- 90Magnitude Information Systems Inc.6/30/2009MAGYOTCBBUSDUnited States0.014.1 0.1 (2.5)NM-- 14Mixi, Inc.6/30/20092121TSEJPYJapan563000.00970.1 136.8 46.2 33.8%6.2x18.4x NAModern Times Group Mtg AB6/30/2009MTG BOMSEKSweden287.002,716.1 1,971.4 302.9 15.4%1.7x10.9x 2,969MOKO.mobi Limited6/30/2009MKBASXAUDAustralia0.074.9 0.7 (2.4)NM5.7x- NAMyriad Group AG6/30/2009MYRNSWXCHFSwitzerland4.49192.5 63.0 3.4 5.4%3.0x- 405NEOWIZ Games Corporation12/31/2008A095660KOSEKRWSouth Korea38300.00676.6 207.3 55.7 26.8%3.2x12.0x NANetDragon WebSoft, Inc.6/30/2009777SEHKHKDChina 5 341.0 89.3 25.7 28.7%2.2x7.6x 2,426Netease.com Inc.6/30/2009NTESNasdaqGSUSDChina43.005,565.3 472.4 297.4 63.0%-- 3,109NeuLion Incorporated6/30/2009TSX:NLNTSXCADCanada0.9498.6 21.5 (13.0)-60.3%4.2x- 237NeXplore Corporation6/30/2008NXPCOTCPKUSDUnited States136.3 0.7 (6.2)NM-- NANgi Group Inc.6/30/20092497TSEJPYJapan24100.0033.4 93.0 6.9 7.4%-- NANorthgate Technologies Limited6/30/2009590057BSEINRIndia40.4029.4 82.9 (41.5)-50.0%0.4x- NAOpen Text Corp.6/30/2009OTEXNasdaqGSUSDCanada37.352,097.2 785.7 205.1 26.1%2.7x10.4x 3,411Openwave Systems Inc.6/30/2009OPWVNasdaqGSUSDUnited States2.50208.7 191.7 4.9 2.6%0.5x20.4x 590Perfect World Co., Ltd.6/30/2009PWRDNasdaqGSUSDChina45.752,250.1 255.6 142.2 55.6%0.7x1.3x 2,096PNI Digital Media Inc.6/30/2009TSXV:PNTSXVCADCanada1.9059.8 21.0 2.3 11.0%2.8x25.0x NAQuepasa Corp.6/30/2009QPSAOTCBBUSDUnited States 2 19.1 0.2 (10.6)NM-- 74OAO RBC Information Systems12/31/2007RBCIRTSUSDRussia1.50208.1 157.4 20.6 13.1%0.0x0.3x NAShanda Interactive Entertainment Ltd.6/30/2009SNDANasdaqGSUSDChina49.633,337.9 629.0 296.7 47.2%-- 3,124Shutterfly, Inc.6/30/2009SFLYNasdaqGSUSDUnited States15.70399.7 218.6 27.3 12.5%1.5x12.3x 514SK Communications Co., Ltd.12/31/2008A066270KOSEKRWSouth Korea8780.00308.1 192.7 12.5 6.5%1.6x24.6x NASNAP Interactive, Inc.6/30/2009STVIOTCBBUSDUnited States 0 3.8 3.5 0.9 27.0%0.6x2.3x 11SNM Global Holdings9/30/2008SNMNOTCPKUSDUnited States0.000.0 2.0 (0.7)-34.8%1.1x- 33Social Media Venures, Inc.12/31/2008SMVIOTCPKUSDUnited States00.0 0.1 (0.1)-60.6%4.5x- NASocialwise, Inc.6/30/2009SCLWOTCBBUSDUnited States0.6127.0 0.0 (5.6)NM-- NASohu.com Inc.6/30/2009SOHUNasdaqGSUSDChina65.452,509.0 485.1 209.6 43.2%4.1x9.6x 3,197Spark Networks, Inc.6/30/2009LOVAMEXUSDUnited States 2 47.1 50.5 10.8 21.3%0.9x4.2x 183SpectrumDNA, Inc.6/30/2009SPXAOTCBBUSDUnited States 0 9.7 0.1 (2.5)NM-- 7 Tencent Holdings Ltd.6/30/2009700SEHKHKDChina 123 28,711.6 1,391.6 680.3 48.9%22.6x46.3x 6,421 The Parent Company8/2/2008KIDS.QOTCPKUSDUnited States0.010.3 112.0 (13.5)-12.0%0.2x- 347 The9 Limited12/31/2008NCTYNasdaqGSUSDChina7.56189.7 250.6 85.5 34.1%-- 1,626 TheStreet.com, Inc.3/31/2009TSCMNasdaqGMUSDUnited States2.8687.5 67.0 1.9 2.9%0.3x11.8x 310 Tree.Com, Inc.6/30/2009TREENasdaqGMUSDUnited States7.6983.1 216.6 (0.7)-0.3%0.4x- 700Uniserve Communications Corp.5/31/2009TSXV:USSTSXVCADCanada0.040.9 17.1 (0.2)-1.0%0.2x- NAUnited Online Inc.6/30/2009UNTDNasdaqGSUSDUnited States7.87659.8 949.8 203.2 21.4%1.0x4.6x 1,469UOMO Media, Inc7/31/2009UOMOOTCBBUSDCanada010.4 0.8 (0.4)-54.2%13.7x- NAValueClick Inc.6/30/2009VCLKNasdaqGSUSDUnited States131,127.8 563.6 99.0 17.6%1.8x10.0x 1,189VOIS, Inc.6/30/2009VOISOTCBBUSDUnited States03.3 0.0 (1.0)NM-- 4Webzen Inc.6/30/2009WZENNasdaqGMUSDSouth Korea2.7132.1 23.2 2.3 9.9%-- 328Wizzard Software Corporation6/30/2009WZEAMEXUSDUnited States0.4723.5 5.3 (4.5)-84.9%4.6x- 110Worlds.com Inc.6/30/2009WDDDOTCBBUSDUnited States0.105.2 0.1 (0.7)NM-- 1Wyndstorm CorporationNAWYNDOTCPKUSDUnited States0.101.8 NA NM NM-- NAXING AG6/30/2009O1BC XTRAEURGermany36.85284.5 58.9 17.0 28.8%3.9x13.7x 246YedangOnline Corp.12/31/2007A052770KOSEKRWSouth Korea8400.00105.5 57.4 12.4 21.6%2.0x9.2x NAYnk Korea Inc.12/31/2008A023770KOSEKRWSouth Korea3745.0016.8 11.9 1.3 10.5% - - NAHigh28,711.61,971.4680.363.0%35.9x46.3x6,421Low0.00.0-41.5-98.9% - - 1

Average740.3163.139.16.1%4.2x12.4x922

Median47.157.41.712.5%1.7x10.2x246

Figure 1. Web 2.0 Universe Summary Source. Capital IQ

Page 3

CAPITAL MARKETS ACTIVITY (M&A AND FINANCING)

Twitter deal ups the average:

Total transaction value in the Web 2.0 universe for September rose to $232.2 million, upfrom $196.6 million at this time last week (we included Twitter, which did not make it into last week’s number in theprevious edition). This week has brought another eight financings to the sector, bringing the total for September to 30transactions averaging $9.3 million each. The largest transaction in the week (excluding Twitter, which closed prior to thebeginning of the week) was a $16 million financing of Livebookings, provider of restaurant reservation applications. Thebiggest deal in the month was Skype at $2.2 billion, followed by the acquisition of InXpo at $170 million, and the Twitterventure raise at $100 million. In comparison, total capital raised in August was $208.5 million, averaging $7.7 million (27deals); for July (35 deals) $191.4 million, averaging $5.5 million; and June (42 deals) was $204.7 million (averaging $4.9million).

Financing Activity Last Twelve Months

7.09.77.06.57.16.66.214.64.95.57.99.316.20.050.0100.0150.0200.0250.0300.0350.0400.0Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09

( U S $ m )

0.02.04.06.08.010.012.014.016.018.0

( U S $ m )

TotalAverage*May-09 includes $200m FB investment

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