21webIR's  Instablog

Internet and IT Sector Update

We believe we are at an early stage of a long term bull market, and are at the beginning of decade long trends in Mobile Internet, Web 2.0/Social Commerce, Online Local Advertisement, Interactive IPTV, and Cloud Computing. The following reflects some significant industry announcements since our last report:

Union Square Ventures created a new $165 million social media fund and stated that they were "investing in this space for much bigger opportunity." This decision was recently confirmed when social network Reddit announced that Internet traffic on its site jumped to one billion page views in January versus 250 million page views in January 2010

Third quarter tablet computer shipments were announced, showing a gigantic 45% increase in the market for the quarter. Apple shipped 4.4 million I-pads, accounting for 87.4% of tablets shipped. In the fourth quarter, Android replaced Apple as the most important smart phone platform - growing its market share to approximately 41%.

A number of manufacturers introduced Android tablets to compete with Apple. Ebay reported fourth quarter mobile sales up 134% versus the same period in 2009.

Netflix announced that it is moving towards an all-streaming platform and is phasing out DVDs.

At 21^st Century Investor Relations, we highlight companies we believe have the potential to benefit from the aforementioned macro trends. We have been aggressively seeking ideas on the space, and have the following updates to report:

DigitalTown (DGTW: OTCBB) — announced on January 26 that it has chosen Shiny Ads to power its self-service online advertising offering to advertisers on its hyper-local network of spirit sites. Shiny Ads, the innovator in self-service advertising, will support DigitalTown's roll-out by leveraging its platforms beginning in February 2011. Starting with 18,000 basketball teams, 15,000 football teams and over 8,000 boys and girls lacrosse teams, ads will be published on more than 20,000 stand-alone high school websites managed by DigitalTown. They also announced on January 13 that DigitalTown's Basketball Team Spirit site’s traffic increased by 51%. The stock closed at $2.70 - up 116% since adding it to our watch list November 16, 2010.

MacroSolve (MCVE: OTCBB) — announced on February 3 that its Illume Mobile division has added three sales and marketing representatives. MCVE has enormous long term potential following the United States Patent & Trademark (USPT) office awarding it with a landmark patent around the mobile apps industry. It addresses mobile information collection systems across all wireless devices, including tablets, smart phones, and rugged mobile devices, regardless of carrier or hand set manufacturer. The stock closed at $.20 - down 13% since adding it to our watch list November 16, 2010.

Local.com Corp (LOCM: Nasdaq) — announced on January 24 that they have created a new Social Buying business unit. Local.com also announced the appointment of Malcolm Lewis as senior vice president and general manager of the company's Social Buying business unit, effective immediately. The Company announced the completion of its previously announced underwritten public offering of 4,600,000 shares of its common stock at a public offering price of $4.25 per share, including 600,000 shares of common stock sold pursuant to the full exercise of an overallotment option previously granted to the underwriters. All of the shares were offered by Local.com. The net proceeds to the company from the sale of shares in the offering - after deducting underwriting discounts and commissions and anticipated expenses of the offering - are expected to be approximately $18.0 million. The stock closed yesterday at $4.04 - down 22.29 since adding LOCM to our watch list January 10, 2011.

TRADE ALERTS

We are issuing trade alerts on both CrowdGather (CRWG: OTCBB) and Monsters Offers (MONT: OTCBB).

CrowdGather (CRWG: OTCBB) — appears to be reversing its recent down trend and could test its recent high of $2. The Company recently announced that BUYINS.NET, http://www.buyins.net, a leading provider of Regulation SHO compliance monitoring. Short sale trading statistics and market integrity surveillance has updated coverage on CRWG after releasing the latest short sale data through January 31, 2011. The total aggregate number of shares shorted since August 2009 is approximately 27.27 million shares. The SqueezeTrigger price for all CRWG shares shorted is $1.52, while 42.44% of daily trading volume is short selling. A short squeeze has begun as shares of CRWG are above their $1.52 SqueezeTrigger price. In addition, the Company is showing substantial comparison in its web traffic analytics, which could foreshadow a potentially positive surprise when the Company reports its third quarter earnings in about three weeks. The stock closed yesterday at $1.49 - up 16.4% since adding CRWG to our watch list November 16, 2010.

Monsters Offers (MONT: OTCBB) — filed an 8K on February 3, announcing that it has retained Equititrend Advisors, LLC for Investor Relations services and has issued Equititrends 400,000 restricted shares of MONT. On a short-term basis we would expect to see a near term “pump” as their IR people get their program into gear. Don’t be surprised to see MONT in the $.60-$70 area near term. MONT is an extremely volatile and speculative daily deal stock that is trying to take advantage of the interest in the space. Use the IR announcement as an opportunity to trade the stocks, but don’t make a long-term holding until the Company demonstrates that it has the ability to attract upfront funds in a non-toxic fashion. The stock closed yesterday at $.36 - up 44% since adding MONT to our watch list January 10, 2011.

Internet and IT Sector Update

Signs are pointing to 2011 as the year a sustainable IPO market develops, with the market leadership coming from the Internet and IT sector. There is currently a tremendous amount of private market financing activity for Internet companies, and major Internet deals are all over the news.

Since our last update, Facebook raised $500 million last week through Goldman Sacks, in a deal that values the company at almost $50 billion.  Groupon rejected a $6 billion offer from Google, and then raised $500 million privately. It was rumored that one of the reasons that Groupon rejected the Google deal is that they were concerned with potential anti-trust issues. These issues stem from the fact that there are only a handful of large Internet companies capable of acting as an “exit” acquirer.

Speculation is pointing to a Groupon IPO in the next 18 months. If Groupon were to go public, it could then use its own public currency to buy other ventures in the same space. The SEC mandates that companies go public when they reach the magic 500-shareholder mark. In addition, VC’s and other investors are seeking to get liquid in order to circulate money into other deals to cash in on the anticipated “Dotcom 2.0” that is shaping up for 2011 and 2012. Major IPO announcements will continue to increase demand and eventually create an investor “feeding frenzy.”

The Internet is undergoing a transformation with the advent of Web 2.0 technologies, the proliferation of mobile devices and mobile commerce, and the trend toward Cloud Computing to reduce IT expenses. So it makes sense that the VC’s want to fund some of the Internet startups currently being launched, so they are looking to cash out in searching for the next Facebook or Groupon.

Since a rising tide will lift all boats, our strategy is to seek out small obscure Internet companies with no analyst coverage.  We want to place special emphasis on the emerging Internet trends for 2011 with a couple of themes in play:

1) Mobile Commerce

We are currently witnessing an explosion in the proliferation of smart phones and tablet computers, and increasingly seeing the move from desk computers to mobile devices. Apple is forecasting shipping 65 million iPads in 2011, up from 20 million in 2010. As a result we are seeing an emerging shift by consumers and the rise of mobile payment technologies and applications designed to facilitate mobile shopping. According to PayPal, mobile payments made between Nov. 15, 2010 and Dec. 15 2009 increased 300% from the same period a year earlier. Mobile payment systems are starting to make in-roads in the US, especially as online payment systems become more widely accepted.

2) Web 2.0/Social Commerce

Facebook is adding e-commerce features to attract users, keep them logged-on longer, and generate higher advertising sales.  The social network is teaming up with startups, vendors, and even giant Internet rivals to drive social commerce by turning its pages into online shopping outlets fueled by recommendations from friends who "like” buy. The market opportunity to invest in new companies in this space is enormous as confirmed by a recent launching of a $250 million social applications fund by VC stalwart Kleiner Perkins Caufield & Byers. The fund is seeking to invest in social e-commerce startups and application developers using the Facebook platform. Facebook is projecting $15 billion in advertisement revenue by 2015, so a lot of money will be made in the next few years by focusing on early stage companies who leverage the Facebook platform.

3) Online Local Advertising

The promise of the web has been a global one. It connects companies to telecommuters, outsourcers, far-off countries and customers worldwide. But a new trend in the web is bringing it closer to home and business. The "local web" is the way the Internet helps connect people with places in their hometowns, as well as with their business and travel destinations. For local entrepreneurs, it's about using the web to reach customers worldwide and vice versa. In the US alone, local online advertising is expected to grow to nearly one quarter of advertising dollars spent by 2014. Facebook - through its network of more than 500,000,000 accounts - is expected to earn more than $1 billion from local, online-targeted advertising in 2011. The recent Groupon news is placing a lot of attention on local online advertising. Giants like Google (GOOG: Nasdaq), Microsoft (MSFT: Nasdaq), Amazon (AMZN: Nasdaq), Ebay (EBAY: Nasdaq) and Yahoo (YHOO: Nasdaq) are eager to get in on the action of this burgeoning market and are currently playing catch up to Facebook.

4) Cloud Computing

This is a technology that uses the Internet and central remote servers to maintain all data and applications. Cloud computing allows consumers and businesses to use applications without installation and access their personal files at any computer with Internet access. This technology allows for much more efficient computing by centralizing storage, memory, processing and bandwidth. One of the results of the slow economic activity that we have experienced is that corporations have not invested in IT staffing or datacenter capacity, and will need to catch up as the economy recovers. The pent up demand is creating an enormous market for Cloud services. In addition, less than 5% of IT computing services is currently outsourced. IDC is forecasting a $1.6 billion cloud market for network equipment revenues used to power both public and private cloud deployments in 2011. The market for Cloud services could conservatively be estimated at $15-20 billion in 2011

We have been aggressively seeking ideas on the space, and have the following updates to report:

ADDITIONS

We are adding Local.com Corp (LOCM: Nasdaq), Monster Offers (MONT: OTCBB), and Iveda Corp (IVDA: OTCBB) to our watch list and have added landing pages for each company within our Internet & IT section.

Local.com Corp (LOCM: Nasdaq) — Local.com Corporation operates a local search Website - Local.com - with over 15 million monthly visitors, a private label local syndication network of approximately 750 United States regional media sites, a local distribution network for its advertising feeds, and a sales and advertiser services operation for approximately 50,000 direct monthly subscribers. By providing its users and those of network partners with robust, current, local information about businesses and other offerings in their local area, the company has created an audience of users that its direct advertisers and advertising partners desire to reach. Sales of advertising on Local.com and its local syndication network (LSN) accounted for 91% of the Company’s total revenues for the year ended December 31, 2009. The Company operates in three business segments: Owned and Operated (O&O), Network, and Sales and Ad Services (SAS). LOCM did an IPO in 2004 and was as high as $30 per share back in late 2004.  In late November the stock ran from $3.50 to $7.50 on the Groupon news. On Friday, January 7, 2011, the company announced that Yahoo pulled its local contract in favor of Microsoft Bing, and LOCM was down 24%. Despite the setback the company has proven to be a survivor, and has demonstrated the ability to make money. We would not bet against these guys. LOCM could pull back further to its support areas of $4, but the stock has a big upside and is a strong buyout candidate with a number of big players including GOOG wanting to get in on the space.

Monster Offers (MONT: OTCBB) — A startup “Deal of the Day” company that recently announced its entry into the rapidly expanding Deal of the Day marketplace with the launch of its new multi-match search engine - www.monsteroffers.com. This new offering provides consumers with deeply discounted local offers by aggregating the top Internet Deal-of-the-Day websites all in one place, with an experienced entrepreneurial CEO possessing a successful track record of starting, building, and selling companies. The company recently introduced the Social Network Channel™ (SCN), a breakthrough social commerce platform and is getting ready to launch its unique crowd-sourced Monster Community based on the technology.

Iveda Corp (IVDA: OTCBB)— Iveda Solutions, a wholly owned subsidiary of Iveda Corp. (OTCBB: IVDA), is the premier online surveillance technology innovator and Managed Video Services provider. Based in Mesa, AZ and incorporated in 2005, the company develops and markets enterprise-class video hosting and real-time remote surveillance services. The company recently entered into a letter of intent to acquire MEGAsys Taiwan (MEGAsys). MEGAsys designs and manufactures electronic security and surveillance products, software, and services. Their software product provides system users with a more convenient, detailed, efficient and reliable graphics operation interface. This all-in-one system fully integrates automatic security, access control, and CCTV surveillance functions. This is a potential win-win deal since it provides synergies for both parties. The possible acquisition of MEGAsys would provide a front end IP camera solution, to Iveda’s recurring revenue managed hosting services. IVDA has potential to be the leading cloud computing service provider in the exploding mobile surveillance industry - currently a $1.5 billion market.

To get profiles on undiscovered companies before they take off, subscribe now to our free newsletter: http://www.21webir.com/subscribe-news-letter.html

21st Century Investor Relations, Inc is not registered as a securities broker-dealer or an investment advisor with either with the SEC or any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.

The company itself or our website - http://www.21webir.com - make no recommendation that purchases of securities of companies profiled on this website or in this email are suitable or advisable for any person or that an investment in such securities will be profitable.

Venture Capital firms are currently pouring money into early stage Internet companies, and froth is beginning to build in private market values of companies in the space. We are starting to see regular valuations of $30-$50,000,000 or more for early round financing’s for Web-based start-ups deals that just 18 months ago were getting done at $5,000,000. Larger, more mature Internet deals - Facebook, Twitter, Linkedin, Groupon, and Zynga - are all starting to line up to go public within the next year. The difference between now and the late 1990s’ dotcom bubble is that lots of companies are actually “printing money” and there seems to be a lot more substance now. With the current VC activity and the IPO window opening with a flood of deals coming in 2011, we expect the valuations of publicly traded Internet companies to catch up in 2011 - and investors would be wise to overweigh the sector.  Since a rising tide will lift all boats, our strategy is to seek out small obscure Internet companies with no analyst coverage. We have been aggressively seeking ideas on the space, and have the following updates to report:

B.O.S. Better Online Solutions (Nasdaq: BOSC)—Announced on December 14 that it had received a contract valued at approximately $1,000,000 annually from the BEE Group ("BEE") an Israeli retailer with 180 stores. BOSC is providing a turnkey warehouse management solution for BEE's logistics warehouse in Kiryat Malachi, Israel. This facility serves as BEE's central warehouse from which it supplies goods and services to the 180 stores in its retail chain, under the brand names Kfar Hasha'ashuim, Vardinon, Dr. Baby, Sheshet, Naaman, and Hakol B'Dollar. The company is turning around operations nicely. For the first nine months of 2010, BOSC reported revenues of $29.2 million - up 16% versus 2009.  Even more impressive, operating profit jumped to $1 million, compared to an operating loss of $4.9 million in the same period last year. BOSC has a total of 2,632,611 outstanding, so with an approximate $1,000,000 operating profit so far in 2010, the shares at $1.60 look ridiculously undervalued.

CrowdGather (OTCBB: CRWG)—Volume spiked yesterday to the highest level in six months following last week’s LD Micro conference in which the Company presented.  We are having breakfast with the CEO tomorrow morning who is in New York City to meet with members of the financial community. The stock technically looks strong - trading at almost a six-month high. Any kind of news could be a catalyst to spring this stock to much higher levels, following its recent announcement that revenues increased 697% from last year's fiscal second quarter. The number of page views on the Companies websites, jumped from 12 million per month to 80 million. Simply stated, more page views in the future equate to more revenue.

DigitalTown (OTCBB: DGTW)—Announced on December 8 that it has begun its launch of basketball on its nationwide network of spirit sites. On the week of December 8^th, 11,757 teams with 81,570 games scheduled were published, with this number to grow to more than 18,000 teams as the season rolls out. In addition to scores and schedules, Active Power Ratings (APR) by The Active Network will provide a way to compare teams with others, even though a particular team may not be playing then. APRs are calculated throughout the week. Simply select a region and then one of the SportsPower classifications to see regional and national ratings. Teams may also submit scores on their team page. Active Power Ratings are calculated using a proprietary formula by the Power Ratings Engine (PRE).

On December 14^th DGTW announced a five-year strategic partnership agreement with the National Interscholastic Athletic Administrators Association ("NIAAA"). NIAAA and DigitalTown will work together to establish a national, standardized system for recording schedules, scores, rosters and statistics for interscholastic sports teams and individual students. This partnership will serve to create the first standardized system for collecting and publishing scholastic team information to state athletic associations, media and other interested parties. The scholastic portal under development by DigitalTown will include social media features for all extracurricular activities including sports, spirit, arts, cultural, academic and community. The portal will be integrated into DigitalTown's current roll out of more than 20,000 local online communities for high schools, and feature deep integration with Facebook, Twitter and other major social media platforms.

DGTW has exploded since we initiated on November 16, 2010 @ $1.25. The stock traded as high as $7.50 intraday last week and looks like it is taking a break after the recent massive run. DGTW is a name that we would watch closely, and we would recommend looking into and getting to know the company….this could represent an enormous opportunity long term. The key is getting in at the right price…don’t chase…wait for the stock to pull back.

DGTW owns approximately 27,000 high school spirit sites across the USA. A spirit site contains the high school and the mascot (ex. pasadenabulldogs.com). DGTW has coverage of 99.9% of high schools in the USA. What they are attempting to do is to be a dominant player in the online local advertising area by establishing traffic and a social community around their series of sites. It is a very good sign that Active Networks - a fairly significant private media company with approximately 245 million in revenue - is partnering with DGTW to roll out their online community nationwide. If DGTW is successful and gains traction it could end up being a potential acquisition candidate a la Myspace.

There are a lot of big players trying to get involved in hyper local advertising. Gannet (NYSE: GSI) for example, is bringing its recently established www.highschoolsports.net to its Gannett Digital Network and will create 100 hyper local sites that will be co-branded with its community papers. Gannett hopes to reach about 9.4 million users with this hyper local extension as it also works on rounding out its digital marketing plans for the areas it operates in.  With 99.9% coverage of high schools in the USA, if DGTW were to demonstration traction building its online community, it would be a valuable asset to an acquirer looking to get involved in the local advertising space.

MacroSolve Inc (OTCBB: MCVE)—IDC a Global market intelligence firm, reported this week that the market for mobile applications (apps) will increase 60% to 35 billion by 2014.  MCVE has enormous long-term potential. This follows the USPT office awarding MCVE landmark patent around the mobile apps industry that addresses mobile information collection systems across all wireless devices, including tablets, smart phones, and rugged mobile devices, regardless of carrier or hand set manufacturer.  We are still trying to get an assessment of the approximate market opportunity for the company, which at this point seems unquantifiable. The other question is, “With their revenue model, how will they potentially monetize their patent?”

Healthcare

To get profiles on undiscovered companies before they take off, subscribe now to our free newsletter: http://www.21webir.com/subscribe-news-letter.html

21st Century Investor Relations, Inc is not registered as a securities broker-dealer or an investment advisor either with the SEC or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.

The company or our website - http://www.21webir.com - make no recommendation that the purchase of securities of companies profiled on this website or in this email are suitable or advisable for any person or that an investment in such securities will be profitable.

For our disclosure and disclaimer details visit:

http://21webir.com/disclaimer.html