Ann: Key Terms Agreed for Mobile Sports Streaming with Indosat, page-118

Market caps in Australia and some other countries are really meaningless. These MCs are calculated in the simplest possible way (MC = number of issued share x share value on a given day). This method of calculation is a volatile and unreliable measure of a company's true value and hence the reason why shareholders suffer massive losses in the event of an economical crisis or a sudden change in sentiment and sometimes massive rewards when the sentiment is euphoric. Stock exchanges that use this method, versus others, do it because it helps them boost their image and their ranking (XYZ exchange is ranked number x in the world because it has n trillions in market cap).

Other exchanges have more complex and rigorous metrics to determine a company's real value. The most reliable method, especially for small companies, is the multiplier method. It is used by most European exchanges (and Canada's I believe). The method uses company revenue figures, inventory, total assets (including Intellectual Property), debt load, and other key indicators the sum of which is then multiplied by a given coefficient to determine the true value of the company. The coefficient is calculated based on the specific industry, market risk, and other factors. Some dislike this method because it doesn't give them the "flexibility" of including other factors to determine what, for them, is the "true" value of a company (i.e. hype it up).

As an example relevant to TV2U, take a company based in France, called Anevia. It has its own OTT platform as well (NEA and Flamingo) but offers a lot more than what TV2U is currently offering. It is listed on Euronext with a market cap of 11 million Euros (Australian $17.5 million) and a share price of 3 Euros (AU$4.8) that varies of course daily. Last year, this company generated 13 million Euros (AU$20.6 million) in revenue (one of the metrics used to calculate its value). Compare this with TV2U that is valued at AU$33 million (give or take a few millions depending on the day), generates close to zero in revenue, and where its most valuable assets (Intellectual Property) is owned by another company.

All this to say that we are dealing with a speculative share price, a game we are all happy to play. Anyone's guess is as good as the other's. We speculate on sentiment and enjoy or suffer the consequences. We do not really own a percentage of the true value of the company, or any other for that matter. That's why people like Warren Buffet invest in companies for their true value, not their market cap of the day.

Happy weekend!