Intertainment is one of Canada's leading technology incubators and is focused on developing, nurturing and investing in both North American and global technologies and companies that provide technology solutions for brands and consumers alike. Intertainment also owns and operates a number of key properties including Ad Taffy, itiBiti, Ortsbo, Deal Frenzy, The Sweet Card and Magnum, with investments in leading edge technologies and social media platforms including theaudience.com.

Investment Highlights

Profile

The whole paradigm of communications has changed dramatically in a short period of time. It was only a few decades ago that physical letter writing was still popular. Now, putting pen to paper to say “hello” is virtually unheard of. Advertisers used ads in paper and magazines to attract attention to their products. Over the last decade, print forms of advertising have lost their traction while many magazines that didn’t make the shift to online formats have been forced to shutter their doors. Today, the key word is “engagement.” Marketers seek to engage and target consumers. Through social media, authors become thought leaders and influencers by engaging other members to follow their writings. Hollywood stars or pro athletes stay engaged with fans through Twitter, Facebook and other mediums. Music videos are coming back into fashion and debuting on YouTube, three decades after MTV was the hotspot for music artists.

That’s by no means saying that television is becoming obsolete, but it’s one-directional and limited in engagement/communication powers. In what could be considered the second-coming of technology, the powers surrounding computers and mobile devices are simply undeniable. To quote Forbes earlier this year, “When two data collection companies you’ve barely heard of, Epsilon and Acxiom, are named by the trade magazine Advertising Age as the top ad agencies in the country, you know technology has arrived as the key driver of advertising innovation.”

The online space represents a truly blossoming industry of opportunity. Market research firm IDC predicts that worldwide online advertising will increase from $70 billion in 2010 to nearly double that at $138.0 billion in 2015.

Take the two tech stalwarts, Google (Nasdaq:GOOG) and Apple (Nasdaq:AAPL), for example. The companies are constant topics amongst analysts as to just how big they can possibly grow because they are diversified in many facets of software, hardware and advertising. Their dominance in the mobile markets has now slingshot them far beyond any competitors. Facebook (Nasdaq:FB) recently reported that it has over one billion members using their platform each month. Amongst those users, about 600 million are accessing the site via mobile devices at least once a month and 100 million users access Facebook exclusively through a mobile device. It is the prevalence of mobile users that has Facebook in the hot seat with investors because their advertising model must be modified to better capture revenue in the mobile space.

Realistically, the advertising and communications digital ecosystem is still very fragmented outside of a few major players. This levels the playing field for upstarts that can quickly emerge on the scene as a stand-alone business or a prime acquisition target for majors. Things can change very quickly in either direction related to social media as the biggest can tumble and the small can flourish in a short amount of time. Just ask MySpace.com, the once extremely popular social website bought by News Corp. (Nasdaq:NWS) for $580 million in 2005 and then sold in 2011 for $35 million as the former king of social networking’s traffic went into freefall.

This type of quickly-shifting social atmosphere should keep investors keen to well-positioned and diversified companies like Intertainment Media Inc. (TSX-Venture:INT) (OTCQX:ITMTF) that have a strong foundation and growth model that could catapult their value higher in the near term.

Headquartered outside of Toronto, Canada, with offices in New York, Los Angeles and San Mateo, CA, Intertainment is a leading technology incubator focused on developing and investing in both North American and global technologies and companies that provide technology solutions for brands and consumers alike. Intertainment has a portfolio of properties covering a broad array of services, including Ad Taffy, itiBiti, Ortsbo, Deal Frenzy, The Sweet Card and Magnum, with investments in leading edge technologies and social media platforms including TheAudience.com.

Intertainment’s flagship property, Ortsbo.com, employs an online, real-time language translation technology platform that is unprecedented in the industry. The revolutionary technology instantly translates conversations into 66 languages (with plans to add more languages to bring the total to 80) in its global social media chat. Ortsbo combines all of a users’ instant message accounts and supports all the major chat platforms, including MSN Messenger, Google Talk, Facebook, Twitter and Yahoo! Messenger, as well as all major desktop and mobile operating systems, browsers and devices. Once a user is signed in to Ortsbo, the person can chat with friends in different languages, even if that person is using Ortsbo Global Chat.

The website is seething with growth, now having over 212 million unique users in over 170 countries and territories. These are formidable figures considering that Facebook says it has one billion users and Twitter – who is much more secretive about their stats – only claims to have 140 million active users.

In fact, the latest statistics from Digital Market Ramblings has Orsbo listed Number 6 on the top social media websites based on the number of users, behind only Facebook, YouTube, Google+, Skype and Shazam. Based on these numbers, Ortsbo has more users than “household name”-sites like Twitter and LinkedIn, not to mention other massive sites such as Ebay, Groupon, Badoo and Tumblr.

Further, on a user-per-month basis, Ortsbo is significantly undervalued compared to peers. Facebook is worth about $41 per user; Pandora’s 160 million users equal $10.67 each; Zynga’s 313 million users equate to $5.91 each; and Groupon’s 37 million users are worth $93.51 each. Yet, Ortsbo users, based on the combined value of all the Intertainment properties are only worth about $0.25 each.

Ortsbo has garnered the attention of some of the biggest names in entertainment. Rock legends KISS launched the first globally social fan engagement platform on Ortsbo in July; broadcasting fan communications worldwide for the band’s 40-city summer tour with Motley Crüe. Last week, rock band Daughtry - with four #1 hits, four Grammy nominations, four American Music Awards and more than 7 million albums sold – began using Ortsbo as its global communications platform of choice to stay engaged with fans. Daughtry is kicking-off its tour with co-headliners 3 Doors Down and special guest P.O.D. on Nov. 17 in Tunica, Mississippi.

The Ortsbo platform is free to use and generates revenue through advertising for Intertainment. Ortsbo has also released a commercial product for Microsoft Outlook and plans to release an enterprise version for corporations in the near term, which should provide additional revenue to its coffers. Additional money will be generated from sponsorship revenues from corporations or media firms from hosting live events.

While Ortsbo is the most prominent asset of Intertainment, the company has other properties in its portfolio that can provide substantial future value. Ad Taffy integrates a new type of "call to action" that reduces user frustration, increases immediate verifiable connectivity to call a retailer or service provider directly from the ad, and delivers the brand location both physically and communicatively. The platform is a growing, geography-based target advertising and promotional program that utilizes mapping technologies to improve on-line marketing.

An advertising-based revenue stream, ItiBiti is a desktop application that connects users with content while offering a free VoIP service. ItiBiti, provides solutions for companies to increase their brand’s marketing reach, better engage consumers, build deeper relationships, and increase loyalty. The application can be private-labeled for third party brands or used without a title brand. Third parties can brand the white label product and distribute to consumers through a combination of social and traditional media programs. McDonald’s Canada was a sponsor in building the sophisticated content communication tool.

ItiBiti utilizes a program called KNCTR and is currently available for free in North America. KNCTR features corporate advertising and material to engaging consumers and also features a VoIP phone which allows for direst contact to landlines of the company. KNCTR currently has about 3 million users.

Intertainment also has Magnum Printing as one of its divisions. For over 25 years, Magnum has provided clients with leading edge print design, production and distribution services globally to meet the needs of their business, promotional and customer requirements. Magnum provides clients with established robust online order (web to print) and management information service (“MIS”) platforms allowing clients to increase efficiencies and management of collateral programs.

Dealfrenzy.com is a website, similar to that of Groupon, which offers deals to users and consumers from retailers at discounts up to 90 percent. Unlike Groupon, though Dealfrenzy does not put minimum thresholds on when a deal can become active. Revenue is derived from sharing sales with partners and through advertising.

Intertainment’s management team is led by CEO David Lucatch, a pioneer in media and tech start-ups whom has spent 28 years developing businesses. COO and President Anthony Pearlman has 25 years’ experience in the tech sector and has held executive roles in other organizations. CFO Edward Jonasson has over 15 years of business experience and is the former VP, Corporate Controller at Open Text Corporation. CMO Brad Parry brings 18 years of business and marketing experience and is the former VP of Marketing, Communications & Strategy at Canwest Media.

The company is in a strong financial position. As of their latest filings, Intertainment had cash of $21.2 million and minimal long-term debt of $2.6 million.

Technically speaking, the Intertainment chart has been in a downtrend throughout 2012, but is now providing a value opportunity as it is resting on a long-term area of support. Viewing the chart from a multi-year perspective shows that the area around 15 cents should be expected to hold again as support. There is some resistance at the top of a channel around 20 cents, which if broken, should lead to a move to the next area of resistance at 40 cents, netting gains of over 160 percent from today’s closing price.

It is important to note that shares of INT surged from about a dime to $3.35 the last time it blew through the 20 cent mark early in 2011. Traders who played that run last year will be looking at INT again at these levels to try and catch the full breadth of another possible climb.

With the downtrend this year, the indicators are in oversold territory. The 7-day Relative Strength Index (RSI) is now below 30 which is the point to start paying attention for a technical bounce as the price per share has held 15 cents as a closing price for four consecutive days. The Full Stochastics, another widely-used barometer of momentum is below 20, another sign of a chart being oversold.

The Moving Average Convergence/Divergence (MACD), a measure of trend, is showing a positive divergence, meaning that as the price per share is trending down, the MACD is trending back towards zero. The MACD histogram bars are also now ascending back towards zero, signaling that a bullish cross of the 12 EMA passing through the 26 EMA may be getting ready to happen. With the higher lows being made by the MACD, technical traders will be closely following for the bullish cross to strengthen the idea of a stock bottom and overall trend shift in the chart.

Intertainment’s divisions have been actively involved with top-tier brands and companies including Rogers, Scotiabank, Canadian Red Cross, McDonalds, NBC, University of Toronto, Yogen Früz, Curves and CBS Interactive. They have been selected as a Microsoft Global Agency Initiative Partner, joining an elite group of interactive agencies worldwide that Microsoft recommends to its partners and customers. The company’s portfolio of properties meets needs across the entire thriving advertising and social media ecosystem, giving this quiet company a huge amount of headroom for expansion. With a current market capitalization of $52.79 million, the company seems grossly undervalued as it continues to build its presence across all of its properties. It is for these reasons, as well as those mentioned above, that we encourage our members to promptly begin their due diligence on Intertainment Media Inc. (TSX-Venture:INT) (OTCQX:ITMTF) and add it to their watchlists.

Daughtry Fans Worldwide Chat in Dozens of Languages Through Ortsbo Social Hub and Fan Talk Platform
Marketwire (Thu, Oct 11)

Intertainment Announces Private Placement of Units
Marketwire (Thu, Oct 4)

Ortsbo Expands Its Global Social Media Hub Program for Artists and Celebrities With Launch of Fan Talk
Marketwire (Tue, Sep 25)

Snipp Interactive Inc. and Intertainment Media Inc. Sign Strategic Sales and Marketing MOU
Marketwire (Wed, Sep 19)

Intertainment Media's Ad Taffy(R) Announces Licensing Agreement with Vantage Wire.com
Marketwire (Mon, Sep 10)

Management

David Lucatch - Chief Executive Officer

Mr. Lucatch is the primary founder and has been CEO of Intertainment Media Inc. from May 2006 to the present. Mr. Lucatch has spent over 25 years developing business concepts and taking them to market holding senior management posts at both private and public media and technology firms.

Throughout his business career Mr. Lucatch has been an active supporter of a number of organizations and has been recognized internationally for his service and support.

Mr. Lucatch graduated in 1985 from the University of Toronto. Mr. Lucatch continues to mentor at the University of Toronto and the Management Economics Student Association programs. In 2010 Mr. Lucatch was a recipient of an Arbour Award from the University of Toronto, recognizing his continued activities and contributions to U of T.

Anthony R. Pearlman - Chief Operating Officer & President

Mr. Pearlman was appointed as COO and President in July 2011. He manages all operations enterprise-wide. He brings over 25 years of hands-on experience and practice in the technology sector. He has held C-Level roles in both large and small private and public organizations.

Edward Jonasson - Chief Financial Officer

Mr. Jonasson is Chief Financial Officer at Intertainment Media Inc. serving as the Company’s senior financial officer overseeing all financial reporting and compliance activities. Mr. Jonasson has more than 15 years of business experience. Prior to joining the Company in 2010, Mr. Jonasson was Vice President, Corporate Controller at Open Text Corporation and previously held senior finance positions at DWL Incorporated (acquired by IBM September 2005) and Perle Systems Limited. Mr. Jonasson began his career at Coopers & Lybrand (now PricewaterhouseCoopers LLP).

Mr. Jonasson is a Canadian Chartered Accountant and a US Certified Public Accountant (Illinois) and holds a Bachelor of Arts degree from The University of Western Ontario and a MBA degree from the University of Toronto.

Brad Parry - Chief Marketing Officer

Mr. Parry was appointed to the position of CMO in 2009 and leads all marketing and communication initiatives for Intertainment Media and its divisions. Mr. Parry is a graduate of the University of Alberta and has held several senior positions within the broadcast and advertising industries working with a number of global brands. Most recently Mr. Parry held the position of Vice President Marketing, Communications and Strategy with Canwest Media. Mr. Parry has spent a career developing and instituting marketing and communication programs for clients and brands that add value to the top and bottom lines. Mr. Parry’s addition to the executive management team will ensure that the company is well positioned to capitalize on emerging trends and opportunities.

Jana Lucatch - President, Magnum Fine Commercial Printing Limited

Ms. Lucatch has been President of Magnum from 1991 to the present. Ms. Lucatch graduated from York University, Toronto in 1989 with a Bachelor of Arts degree. Ms. Lucatch is a well-versed entrepreneur in the printing industry. Ms. Lucatch is proud to have achieved the designation of FSC Xpert™ Pioneer.

Rob Cole - Vice President, Production Operations – Intertainment Media Inc. Production Manager, Magnum Fine Commercial Printing Limited

Mr. Cole has served as the Production Manager at Magnum for 15 years and is responsible for the technological and process improvements of the Company as well as staffing of the manufacturing division. Mr. Cole also supports and participates in all matters of the business including sales and marketing. Mr. Cole was named Vice
President of Production Operation for Intertainment Media Inc. in 2008 and in that capacity, champions the process improvements of all departments utilizing the Kaizen principles of business. Mr. Cole supports the CEO and CFO by assessing and reporting on viability of business ventures.

Al Monteath - Vice President, Business Development, Magnum Fine Commercial Printing Limited

Mr. Monteath is an industry veteran with 35 years of experience in all aspects of print/graphic/media services. His roles have included operations, administration & sales reporting directly to him. He was instrumental in moving the company into the Digital publishing marketplace while managing the traditional lines of print services including offset and web production. He has played strategic roles in other companies including the Cartwright companies of Canada Law Book and CLB Media. His experience includes working with major National clients including Legal, Financial, and commercial companies with print solutions and has been responsible for over 15 National brand changes and National roll-out programs working with designers, print production and distribution projects. At D&D Al was also responsible for implementing our graphic security policies which to note few include; fully secure digital pressroom, file and scrap disposal security protocol.

Mr. Monteath has certified and implemented the CGD, Controlled Goods Directorate. This plan included all security plan approval, company implementation plan approval and personal crime history check for Mr. Monteath as well. This allows us to print highly secure goods to and including traditional offset, web print and digital printing.

Contact

Intertainment Media Inc.
30 West Beaver Creek Road, Suite 111
Richmond Hill, Ontario, L4B 3K1
Canada

Toll Free: 1-800-395-9943
Phone: 1-905-763-3510
Fax: 1-905-763-6175
info@intertainmentmedia.com

David Lucatch, CEO
dlucatch@intertainmentmedia.com

Brad Parry, CMO
bparry@intertainmentmedia.com

FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect Intertainment Media Inc. current expectations about its future results, performance, prospects and opportunities. Intertainment Media Inc. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Intertainment Media Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.

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