Keek Fair Value "Potential" of 95 Cents per Share - Stockhouse

Keek Fair Value "Potential" of 95 Cents per Share Stockhouse Ticker Trax, Danny Deadlock June 16, 2014

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Keek (KEK.V 12 cents) www.keek.com

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Net Cash & Receivables ending Feb 28th: $14 million. Shares outstanding: 343 million / Market Cap $41 million. Keek.com at 12 cents is therefore being valued at $27 million.

http://investors.keek.com/ https://www.keek.com/about http://en.wikipedia.org/wiki/Keek

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Social Media video app based upon 36 second "keeks" Niche market focused on teens and young adults 66 million Keek members Keek platform available in 36 languages and active in dozens of countries

The entire social media sector has been dragged down because the past few months the financial media has continually made reference to the 2014 losses. There is no doubt that valuations were in a bubble peaking Q1/14 and current prices in relation to that "peak" are off considerably. However, what they rarely discuss is that these companies are still boasting incredibly high valuations. For a small microcap company in the space (like Keek), this sector correction was incredibly destructive because investors avoided the company and many shareholders abandoned them. Yet if we look at the current state of the social media stocks, it becomes clear that there is VERY significant value in Keek at current levels - even in light of the sector correction.

ESTIMATING KEEK FAIR VALUE Leading public social media companies: Share Price 1st Wk of Nov/13 < > ... Q1/14 Peak ( ) .... May 22/14 [ ] % shows valuation percentage change between 1st wk Nov/13 and Now Facebook ... < $50 > ... ( $72 ) ... [ $64 ] ... +28% Twitter ... < $45 > ... ( $67 ) ... [ $37 ] ... -18% Linkedin ... < $225 > ... ( $232 ) ... [ $168 ] ... -25%

Facebook

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November 7, 2013 - Forbes published an article entitled: A Twitter User Is Worth $110; Facebook's $98; LinkedIn's $93 "What’s an active social-media user worth? The surprising answer is: about $100, regardless of whether we’re talking about Twitter, Facebook and LinkedIn. Even though each company has a unique business model — and sharply different success so far at monetizing traffic — Wall Street treats them almost as triplets. In fact, Twitter’s devotees, who generate the least revenue, are currently deemed most valuable, at $110 apiece." The article goes into detail explaining the stock's market capitalization in relation to "active users". Here is the summary based upon market capitalization November 2013. Facebook: $117 Billion with 1.2 billion active users Twitter: $25.5 Billion with 232 million active users Linkedin: $24 billion with 259 million active users In Addition to that Article.... Vine is owned by Twitter and is a video app similar to Keek but only allows 6 second video - which doesn't seem to make a lot of sense but they are still estimated to have 40 million users.

Instagram (available in 25 languages) is a photo and video sharing service owned by Facebook. In April 2012 Facebook acquired Instagram for $1 Billion. They are currently estimated to have 150 million active users and some articles believe the company is currently worth $10 to $15 Billion. Snapchat boasts one of the more bizarre valuations given the business model. Users send photos, videos and texts that exist for only 10 seconds and then disappear. The company refuses to disclose how many users they have but in December 2013 they were estimated to have 60 million installs and 30 million active users (primarily aged 13 to 23). In November 2013 it was reported that Facebook offered to buy them for $3 Billion and then Google offered $4 Billion - Both offers were turned down !? The company has been plagued with controversy related to pornography. Excluding Facebook which is currently 28% higher than November 2013, it is likely a safe assumption to now discount valuations per user by 30% based upon share price correction since that time for Twitter and Linkedin. So if fair industry value was $100 per user November 2013 and values have corrected 30%, we are now down to an estimated 70 USD per user. Because Keek has a very large audience of users but still only a smaller percentage of the giants, we may be able to discount that value per user another 50% - so I will go on the assumption fair value for someone like Keek is in the range of $35 per "Active" user. This number actually makes sense as the "user" is worth a certain dollar value to an advertiser. Keek just needs to work on "monetizing" that user. The more successful they are at doing that, the more valuable the social media user becomes. If we discount that $35 even further (for sake of risking a microcap speculation) let's assume fair value of the Keek active user is currently worth $25 CDN - that would be a 70% discount to the average user value of the large social media companies. If Keek over this next year becomes successful in monetizing their users (growing their advertising model), then it is a fair assumption that the active user valuation will rise - even if the sector valuation of the larger stocks was to remain stagnant. Simply because the active user is worth $ to advertisers or another (larger) Internet company. SO WE WILL ASSUME A FAIR VALUE OF $25 CDN PER ACTIVE KEEK USER > May 2014 Keek is reporting an estimated 66 million users. > Industry average of "Active Users" for the majors has been in the range of 50% to 60% > According to PCMag April 2014 non-active users form part of the “Dark Pool” For sake of risking our KEK speculation we will assume 20% will be "Active" Keek users by Q4/14 based upon current corporate initiatives. The number may be higher but this should be a realistic objective. 66 million x 20% = 13 million Active Keek users X $25/user = $325 Million

$325 Million / 343 million KEK shares outstanding = $0.95 per share This potential valuation all depends upon how successful Keek is in monetizing their users - developing an advertising model that demonstrates each active user could be worth at least $25 to an advertiser (even over the course of the next year or two). That is the premise that makes social media companies so valuable and why you have a company like Twitter worth $20 BILLION when they only have an estimated 230 million ACTIVE users. Keep in mind that Twitter's 230 million active users are only 17 times more than what we are estimating with Keek at 13 million. So when I estimate that eventually Keek could be worth at least $325 million (and that seems ridiculously high given the current valuation of $27 million) it is surprisingly realistic in relation to the industry. > Twitter has 17 times the number of active users as Keek yet has a current market cap of $20 Billion. > 17 times is the equivalent of 6% $20 Billion x 6% = $1.2 Billion So even after discounting Keek as I have above and arriving at a potential fair market value of $325 Million, it is still FAR below $1.2 Billion which would value Keek active users similar to companies like Twitter who still generate very low revenue to justify a $20 Billion market cap - even after Twitter trading 18% below November 2013 levels or 45% below Q1/14 peak levels. So why then is Keek currently being valued near $27 million and seeing continued selling near 12 cents? More than likely because they are a microcap company trading on Canada's TSX Venture exchange and 99.9% of the investing world currently views them as nothing more than a low priced penny stock. But when you really look at the fundamental value of Keek in relation to the rest of the public social media world, there is tremendous value at these levels. Even if the $325 million valuation is not achieved over the next 12 to 24 months, the "potential" for capital appreciation from these levels is definitely high. It all boils down to how well the new CEO and management team can monetize those International users and then how valuable they become to advertisers. PURCHASING POWER OF TEENAGE GIRLS (KEEK'S core demographic)     

47% of teens have a Smartphone and 23% own a tablet 95% of teens use the internet In the U.S alone there are 26 million teens Products bought by and for U.S. teens - $209 Billion annually Percentage of teens who have placed an online order in the past 3mths (2012) – 26%

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Percentage of girls who identify shopping as their hobby or activity – 80% Girls sourcing trends via: Ads 68% , Websites 44%

TOP LEVEL MANAGEMENT CHANGES 1) April 23rd - Ms. Alexandra Cameron appointed as CEO. Most recently served as senior vice-president, general manager, of Emmis NY, leading one of the world's most iconic radio brands Hot 97. Ms. Cameron has won numerous awards including: Radio Ink's 2013 Best Managers in America list, as well as Most Influential Women in Radio, four years consecutively. She currently sits on the board of Advertising Week, the world's biggest conference for the advertising industry, attended by leading brands, agencies and media companies. She also served as a board director for the New York Broadcasters Association. "My strategic plan will focus on increasing engagement on the platform and developing a compelling revenue model, while enhancing the user experience," commented Ms. Cameron. "By providing unique social interactions, we are going to make Keek an integral part of consumers' lives and deliver greater value to our shareholders." 2) April 23rd - Lin Dai appointed as chief marketing officer. Most recently, Mr. Dai served as vice-president of digital programming for Emmis NY. He launched Loud Digital, a premium multicultural digital network reaching 61 million viewers. At SVP he established the Alloy digital network, the largest digital advertising network for teens and young adults, reaching over 100 million viewers. "Keek is the most exciting mobile video social network in the world," adds Mr. Dai. "For a digital marketer who strongly believes in great content, Keek is a dream come true. No other mobile video platform provides the level of flexibility and communication capability like Keek. Thirty-six seconds allows you more freedom to be creative, and 60 million members worldwide is the proof. I'm excited to work with Alex to bring Keek to every teen and young adult on the planet!" 3) June 12th - Jamie King appointed as Chief Product Officer. One of the founders of Rockstar Games (Grand Theft Auto fame) in 1998. Director of Development at gaming giant Take-Two Interactive. Over his career Mr. King has more than 90 video games to his credit and managed over 750 employees across eight studios. In that role he worked with engineers, designers and artists. "I have always worked with innovative, game-changers. What Keek has done over the last few years is no exception," said Mr. King. "36 Seconds has proved to be just right for the 67 million users that have made us the dark horse in the video social space. You can't deny the momentum Keek has. We are not just a player in the category, we are going to define it. The kind of creativity we can expect is boundless and we're about to take a fantastic journey with Keekers around the world!" CONCLUSION

Prior to Keek going public through a reverse takeover in January of this year, the emphasis of the previous CEO (and founder) was to grow the audience at all cost - he gave no consideration to building the revenue model. Simply grow the number of active users. While a very good job was done building the user base, it came at the cost of burning through too much cash. When the company went public this year, the emphasis was completely different and a new management team and board of directors was put in place. It is very likely that Keek’s International user base will continue to grow or that they will convert more “registered” users to “active” users. However, even without adding another user (and maintaining the status quo) the real value will come from monetizing that large database. The new CEO and board realize this and that will be their emphasis in 2014. Mitigate cash burn while developing the business model with far more emphasis on the revenue model. This will build shareholder value FAR quicker than simply adding warm bodies. And depending upon how successful they are over the next 12 months, will demonstrate to the market (and to potential suitors) that not only should they be worth this estimated $25 per active user – but potentially even more (based upon fair peer comparison). If a company like Snapchat can attract $3 to $4 Billion takeover offers from the industry giants (and be turned down) I find it almost impossible to imagine why Keek should currently be worth $27 million and we cannot make decent money from this level. Stranger things have happened with these small stocks and nothing (as we often find out) ever goes according to plan. But in terms of managing risk and balancing risk/reward, I believe Keek may be an exceptional opportunity for us in this depressed microcap environment.

______________________________________________________________________________ Disclosure: Danny Deadlock owns 300,000 shares of Keek acquired in the open market April & May 2014

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