LYRI.ob $0.

24
Lyris,Inc.
Lyris, Inc.––Online
OnlineMarketing
Marketing(SaaS)
Accumulate

Huge Insider Buying Price targets

Near term: $2.50
Mid term: $7.00
Insiders are Professional Private Equity Investors
New CEO ran Omniture US Sales Bruckman
How the Rich get Richer Technology
Research
- Insider
Buying
Reports
Lyris sells an online marketing suite for SMBs.
Lyris offers a suite with mobile marketing, web analytics, search
marketing, email marketing, social media marketing
(such as Facebook and Twitter), and web page
optimization, www.Lyris.com Stock Data
Symbol: LYRI.ob
Huge Insider Buying
Price $0.24
Big time private equity investors have been buying Lyris. Why? 52 Wk $.13/.44
They have purchased $7 million of Lyris common stock Shares Out 121m
in last 12 months. They now own more than 50%. Mrkt Value $29 m

Lyris is an emerging Omniture, focused on

medium sized businesses with a Stellar Client List.
Lyris’ target market is medium sized business but its strong
features, integration and ease of use have attracted stellar
blue chip companies (Oracle, NYSE) as clients. See page 2.

New CEO ran Omniture’s US Sales

Lyris hired Wolfgang Maasberg in August 2010. Maasberg
ran Omniture’s North American sales from 2006 to August 2010.
Adobe acquired Omniture for $1.8 billion in 2010 at 5.3 times
revenues.

Bruckman Technology Research publishes this opinion for informational purposes only and it is not, and
should not be relied upon in any way as, advice for any person or entity to buy or sell any security. See all
disclosures herein.
Lyris, Inc. – Online Marketing (SaaS)

Stellar Client List Bruckman

Technology
Research
- Insider
Buying
Reports
Blue Chip Clients. For technology companies, the best
validation of their technology is the purchase by other top
technology companies. Lyris has superior clients from the
technology sector as well as the financial and publishing sectors.
The purchase of Lyris product by these clients is
also noteworthy because the product is primarily designed
for mid-sized businesses but the integration and ease
of use makes it appealing for enterprise clients.

Technology Clients

Oracle, Intuit, San Disk, McAfee, nVidia

Financial Services Clients

New York Stock Exchange - NYSE

TIAA-CREF, Lloyds

RBC Capital Markets, Silicon Valley Bank

Publishing Clients

Morningstar, Investors Business Daily

Thomson Reuters, IDG, Wiley, CNET, Forbes.com

www.lyris.com/solutions/industry/technology
Lyris, Inc. – Online Marketing (SaaS)

Huge Insider Buying - Why?

Big Time Private Equity Investors Bruckman
Technology
Research
- Insider
Buying
Why ? Why are big time professional private equity
Reports
investors – who are insiders in Lyris – investing their personal
money to buy more stock of Lyris? These professional investors
spend their days investing billions of dollars in private equity
investments, including technology companies. They are insiders
in Lyris. What do they see and know about Lyris that is leading
them to buy $ millions more common stock of Lyris for their
personal accounts?

Most Recent Purchases of Lyris Common Stock

William T. Comfort, III $ 4 million in June 2010

James Urry $ 2 million in June 2010

(See filings for Lyris at www.sec.gov)

Insider Ownership.
William T. Comfort, III 46.2% Comfort is the Chairman of the Board
James Urry 6.2% Urry is a director

Big Time Professional Private Equity Investors

James Urry, a director of Lyris, is a managing director of CourtSquare Capital

Investors. (www.courtsquare.com).

Courtsquare manages more than $ 6 billion in private equity. Courtsquare invests in

technology companies (and other sectors). Urry is on the board of Intersill (a $ 2
billion revenue chip company). Courtsquare claims their professionals have invested
$ 4 billion and returned $14.5 billion to investors on their investments.

Comfort runs Conversion Partners, an investment fund. He has worked as a

professional investor at CVC Capital Partners, and for Citicorp Venture Capital.
Lyris, Inc. – Online Marketing (SaaS)

Huge Insider Buying - Why?

Investment Thesis Bruckman
Technology
Research
- Insider
Buying
Investment Thesis Reports

Big time private equity investors do not commit $ millions of their own
money to an investment without doing their homework and being confident
in their investment analysis and thesis. Here is a likely investment thesis
for Lyris:

1. Great Growth Industry. Online marketing has been and continues

to be one of the greatest growth sectors in the market. Online marketing
revenues grew even during the great recession. (www.iab.net). Online
marketing is expected to continue great growth (www.emarketer.com)

2. Great Company. Top clients like Oracle and the NYSE would not buy
Lyris if it did not have a great product. Lyris products have strong feature
sets, integration and ease of use.

3. Great M&A Target. Two public online marketing companies that sell
integrated suites have been acquired in 2009 and 2010. Adobe bought
Omniture for $1.8 billion and IBM bought Unica for $480 million. Adobe
paid 5.3 times revenue for Adobe and IBM paid 4.5 times revenue for Unica.

4. Hotshot CEO. Hire a hotshot CEO who helped build the leader –
Omniture. Maasberg ran North American sales for Omniture and grew their
US revenues from $37 million to $244 million (72% of their global revenues).
Maasberg was hired by Lyris in August 2010 directly from Omniture (Adobe).

5. Results. Let new CEO build Lyris the way he helped build Omniture and
sell for a multiple of revenue near the same as Adobe paid for Omniture (5.3
times revenue) or even the multiple IBM paid for Unica (4.5 times revenue).
Lyris, Inc. – Online Marketing (SaaS)

How the Investment Thesis

Plays Out – Great Sales Growth Bruckman
Technology
Research
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Buying
Reports

Omniture’s North American Sales Growth.

Maasberg was in charge of North American sales for Omniture
from 2006 thru August 2010. In the United States, Omniture’s US
sales grew from $37 million to $244 million for the period of 2005
thru the 2009 acquisition of Omniture. Sales increased a total of 6.6
times over that 5 year period for a CAGR of 61%.

Omniture US Sales
($ millions)

300

250

200

150

100

50

0
2005 2006 2007 2008 2009
US Sales 37 66 106 212 244

The private equity investors have gotten themselves the Hotshot CEO – can he build
Lyris’ revenue the way he grew Omniture’s US revenue?
Lyris, Inc. – Online Marketing (SaaS)

How the Investment Thesis Plays

Out - Lyris Revenue Growth Bruckman
Technology
Research
- Insider
Buying
Lyris Sales Growth Reports

Maasberg started before at Omniture with $37 million in U.S. revenue and grew
it to $244 million. With Lyris, he is starting with $44 million in revenue. What
does Lyris revenue growth look like if Maasberg can grow Lyris as fast as he grew
Omniture US revenues? What does Lyris look like if Maasberg only grows Lyris
at 50% (1/2) of the growth rate he had at Omniture?

The graph and chart below show Lyris revenue if Maasberg grows Lyris at rates
equal to 50% and 100% of his Omniture growth rate (in $ millions):

Lyris Sales Growth Curves

350

300

250
Omniture
200
Lyris Sales Growth
150 50% of Omni
Lyris Sales Growth
100
100% of Omni
50

0
2011 2012 2013 2014 2015

Fiscal Year
(in $ millions) 2011 2012 2013 2014 2015
Omniture 37 66 106 212 244
Lyris Sales Growth 50% of Omni 44 57 74 97 126
Lyris Sales Growth 100% of Omni 44 71 118 182 292

The Omniture sales figures in the above charts are for 2005-2009.
Lyris, Inc. – Online Marketing (SaaS)

How the Investment Thesis

Plays Out – The Rich Get Richer
Bruckman
Technology
Research
- Insider
Sale. Private equity pros like to exit an investment by selling Buying
at the right time at the right price. Lyris will likely try to sell the Reports
business after Maasberg gets the sales growth curve headed in
the right direction. If Lyris can be sold after 4 years of sales
growth at a multiple equal to Adobe / Omniture (5.3 X revenues)
or IBM/Unica (4.5) (or an average of the 2 multiples, 4.9), the
Company’s enterprise value will have grown substantially.

New Lyris Enterprise Values (in $ millions):

New Lyris Enterprise Values ($ millions)

Multiple of Sales 4.5 4.9 5.3
Sales 50% of Omni Growth Yr 4 $ 567 $ 617 $ 668
Sales 100% of Omni Growth Yr 4 $ 1,314 $ 1,431 $ 1,548

To put these numbers in perspective, Omniture began with total (US and global)
revenue of $43 million in revenue in 2005, grew to $338 million in revenue in 2009
and was sold for $1.8 billion. The enterprise value of Lyris could rise to between
$567 million and $1.5 billion.

Lyris Share Price. Lyris has 121 million shares fully diluted. At these
enterprise values, Lyris share prices would be:

New Lyris Stock Prices

Multiple of Sales 4.5 4.9 5.3
Sales 50% of Omni Growth Yr 4 $ 4.69 $ 5.10 $ 5.52
Sales 100% of Omni Growth Yr 4 $ 10.86 $ 11.82 $ 12.79

Lyris share price would increase to between $4.69 and $5.52 if Maasberg does only
50% of what he did before. If he can equal what he did before, the share price would
rise to between $10.86 and $12.79.
Lyris, Inc. – Online Marketing (SaaS)

How the Investment Thesis

Plays Out – The Rich Get Seriously
Richer Bruckman
Technology
Research
- Insider
The Rich get Seriously Richer. How the Buying
Professional Investors Do it. Reports

William T. Comfort, III, the Chairman of the Board of Lyris and a

professional investor, recently invested another $4 million in Lyris. He now owns
(jointly) a total of 55 million shares of Lyris stock. Here is what Comfort’s 55 million
Lyris shares would be worth if Maasberg can do 50% or 100% of what he did at
Omniture:

New Values of Comfort Shares: 55,074,338

Multiple of Sales 4.5 4.9 5.3

Sales 50% of Omni Growth Yr 4 $ 258,075,617 $ 281,015,672 $ 303,955,727

Sales 100% of Omni Growth Yr 4 $ 598,080,001 $ 651,242,668 $ 704,405,335

New value for Comfort shares on sale: between $258 million and $704 million.

If Lyris shares trade just at the near target we have placed on the Lyris stock, the new
value for Comfort shares at $2.50 per share would be $138 million; at the mid
target of $7 per share the value of the Comfort shares is $386 million.

James Urry, a director of Lyris and a professional private equity investor, recently
invested an additional $2 million in Lyris. He now owns (jointly) a total of
7,500,000 shares of Lyris. If Maasberg can do what is discussed, Urry’s shares would
be worth:

New Values of Urry Shares: 7,500,000

Multiple of Sales 4.5 4.9 5.3
Sales 50% of Omni Growth Yr 4 $ 35,144,628 $ 38,268,595 $ 41,392,562
Sales 100% of Omni Growth Yr 4 $ 81,446,281 $ 88,685,950 $ 95,925,620

New value for Urry shares on sale: between $35 million and $95 million. If they
trade at the near target of $2.50, the Urry shares would be worth $18 million and at
the mid target of $7 would be worth $53 million.
Lyris, Inc. – Online Marketing (SaaS)

Valuation
Near and Mid Term Bruckman
Technology
Research
Valuation: Near Term Target - Insider
Lyris’ light has been under a bushel. The current share price ($0.24) Buying
for Lyris does not reflect (1) Lyris current value in online marketing; Reports
(2) the hiring of a hotshot CEO, or (3) any potential for growth. The
new CEO will likely want to increase the public mindshare of Lyris.
We believe the following may move the stock higher in the next 12 months (near term):
Maasberg charging revenue growth, comparing Lyris to many comparable companies,
recognition of Lyris product and market strength, hiring of a hot shot CEO and huge insider
buying.

Lyris Compared to Peers in Online Marketing

Many small public online market companies trade at multiples to sales equal to 2.16 to 5.22
times revenues.

Internet Marketing Price to Sales

Companies Ratios
Constant Contact 5.22
LivePerson 5.06
Rightnow 4.8
Digital River 3.69
Marchex 3.15
Vocus 4.74
ReachLocal 2.16
web.com 2.5
Average 3.915

If Lyris traded at a multiple equal to 3.9 times revenues, it would have an enterprise value
today of $172 million and a share price of $1.42. Our view is that when investors look at
these factors, particularly the hot new CEO and the huge, professional insider buying, and if
there is quick revenue growth to $50m+ Lyris will relatively quickly trade to a multiple
closer to the top of its peers: a 5+ multiple of sales at $50 m+ This would give Lyris a stock
price of approximately $2.50 per share.
Lyris, Inc. – Online Marketing (SaaS)

Valuation
Near and Mid Term Bruckman
Technology
Research
- Insider
Buying
Reports
Mid term Valuation

We look out approximately 3 years for our mid term valuation.

Our valuation target is premised on our view (1) that the professional
investors have a huge incentive to ensure Lyris’ success; and
(2) that Maasberg, based on his track record, is a CEO worth backing.

If Maasberg can do what he did before – not asking him to do more – and put up 2 to
3 years of growth numbers, we believe investors will begin to look to a possible sale
after 4 years of growth and probably toward the upper end of the range.

Here is the range of share prices assuming a sale after 4 years of either 50% or 100%
of Omniture growth.

New Lyris Stock Prices

Multiple of Sales 4.5 4.9 5.3

Sales 50% of Omni Growth Yr 4 $ 4.69 $ 5.10 $ 5.52

Sales 100% of Omni Growth Yr 4 $ 10.86 $ 11.82 $ 12.79

The midpoint of this range is $8.75. We believe that investors are likely to look, at
that point toward the upper end of this range - $10.86 to $12.79. Doing so and
discounting back (and providing for some possible acquisition dilution) provides us
with a price target of: $7.00 per share for Lyris in the mid term.
Additional Information

Our View on Important Information

In the last 10 years or so, there has been a lot of new research published on the value
of information related to insider buying and selling. Much of this evidence points to
the value of insider buying as opposed to insider selling. The old saying guides our
research: “Insiders sell for a lot of different reasons. They buy for only one reason.”

We focus our research in the tech area on insider buying. We look for the following
criteria:

1) A company in technology with strong products/services/technology

2) A small or microcap company (much research points to the value of insider
buying information in this subset of stocks)
3) Insider buying – “They buy for only one reason.” But not just all insider
buying
4) We look for large, substantial purchases – in the Millions of dollars
5) We really want to see large substantial purchases by professional investors –
hedge fund managers, private equity investors, venture capitalists,
proprietary investors for large investment houses
6) Significant motivation on the part of the buyers to see the stock do well – even
really well. Can they make a huge amount of money for themselves?
7) Our ability to discern a clear and understandable path to substantial value
creation for the professional insiders. If what they are up to is too
complicated for us to discern, we generally view this as not worth following.
We want to be able to figure out why the pro’s are buying
8) We prefer to see a “cluster” of insider buying. We like to see more than one
professional investor putting substantial cash into a stock

Investor Duties and Warnings

Our research reports are not intended to be, and should not be relied upon in any
way as, advice for any person or entity to buy or sell any security. It is not and shall
not be considered an offer, or invitation to make an offer, for any security. This
research report is for general informational purposes only. We obtained the
information in this report from public sources and do not guarantee in any way its
accuracy or completeness. We will not, and make no promises to, update any
information in this research report. We make no representation or warranties in
any way for anything in this report.

In particular, do not come back to us and say “I bought a stock based on your report.”
Our strongest possible view is that an investor should never, ever read one report
and go buy a stock. DO NOT DO IT ! ! ! It’s foolish; the SEC recommends against it;
your broker recommends against it, and common sense dictates against it. We
dictate against it.

What we intend: we try to offer research that triggers peoples’ interest. Does our
research make sense to you? Have we missed anything? Are we wrong? How are we
wrong? Where are we wrong? Did we get any facts wrong? Is our analysis wrong?
Did we get the industry wrong? Product demand wrong? Product strengths and
weakness? Did we misjudge the management? Directors? Insiders? Did we rely too
much on insider activity?

In our view, we hope that this report – if you find it interesting – is a spur to get you
to do your own first hand research. Do not ever buy a stock unless you do your own
research, including reading all of the relevant filings the company has made with the
SEC.

If you are not familiar with stocks and stock markets, we recommend you read the
information on website of the SEC concerning investing and its dangers and risks.
We also recommend going to Amazon and getting a number of books on investing,
including everything you can read about how Warren Buffett invests and also how
successful tech investors invest.

Even if you are familiar with investing, stocks and markets, we recommend reading
all of the following before buying any stock, including Lyris:

The SEC’s website on investing in general and in particular in smaller, microcap

companies and those with large, possibly controlling investors;

All filings going back several years for the stock you are researching. For this report,
that would be Lyris. Pay particular attention to all risk factors listed.

All filings going back several years for competitors and others in relevant markets for
your research target. Again, be sure to read all risk factors

Analyst reports and other research on your research target, competitors and
adjacent companies.

Analyst and technology research reports on the relevant industries and technologies.

Blogs and other online sources of information about your research target,
competitors, industry, markets, and technologies.
There is a lot of information available online on the risks of investing, the risks of
investing in equities, the risks of investing in tech companies, the risks of investing in
small tech companies, the risks in investing in companies with large possibly
controlling insiders. We recommend and incorporate by reference, all of the
information discussed above and all information on risks at www.sec.gov (including
all relevant company filings), all of the information on risks in investing that any
reasonable person could uncover by doing Google searches on “stocks” “investing”
“risks” and all combinations and derivatives thereof, including the risk factors listed
by all of the relevant tech companies in their SEC filings.

Do not even consider investing in a stock until you have done all of this research and
then consulted with your broker, lawyer, tax accountant and other relevant experts.

We also urge anyone considering investing in a stock of a company to call the

company directly and speak to executives there, including directors and substantial
stock holders.

Disclosures
We may seek to do business with any company in any report. We may own, buy or
sell any securities listed in any of our reports at anytime and without notice to
anyone. You should assume that we do or may own, buy and/or sell the securities
that are the subject of this report.

In any report, the authors have to make certain opinions, judgments and other
decisions. We may have made many judgments, decisions and opinions in this
report. Some or all of them may be wrong. We point out that our opinions about
what we think may happen in the future are very derivative: we are giving opinions
about what other people may do in the future and how others may react to that.
Needless to say, these opinions are speculation piled upon conjecture.

We also want you to know that there areas areas of the report where we may have
had difficulty getting precise facts or made judgments, including without limitation:

It is not clear from the public releases we reviewed, the exact date Maasberg took
over US Sales for Omniture. It looks like it could be late 2005 or in 2006. If this is
important to you, ask Maasberg. It was not clear in the Omniture filings exactly the
difference between North American and US sales. Presumably, North American also
includes Canadian sales but it was not easily apparent when Maasberg got US vs
North American sales and what the differences between the numbers were. Some of
the Omniture growth can be attributed to acquisitions. We have not tried to quantify
this. It appears that Omniture did some minor acquisitions and then also bought
Visual Sciences as of January 2008. Visual had about a $60 million revenue business
before acquisition. The way we analyze it, Omniture’s organic growth over the
period reviewed would still be approximately 40- 50%. (let us know if you get a
different number) 40- 50% is still terrific. Maasberg gets further credit for being on
the team that clearly managed well through an acquisition.

While Lyris and Omniture share a number of product categories, Omniture has added
some incredibly sophisticated services – much more than Lyris. Omniture acquired
many of these sophisticated services through mergers/acquisitions. It is not clear
what Maasberg will do in this regard. Will he keep Lyris more focused on the
medium business and not go buy or build the very sophisticated services? If
Maasberg follows Omniture, he may do some acquisitions which may be dilutive to
shareholders.

Information about Comfort and Urry was sourced from Lyris filings, Google searches,
and the website for Courtsquare. We generally find 13ds to be less than user
friendly. It is not clear whether or to what extent Comfort has all of the beneficial
ownership of shares that are listed under the LDN entity or other shares. Also the
same is true of Urry and the entity on some of his filings – not sure if he owns jointly
with others, or there are other beneficial owners. Anyone interested should contact
Lyris, Comfort and Urry.

It is absolutely only an opinion that there is even a possibility that Maasberg could
grow Lyris revenues at the rates suggested herein. It could be wrong. Very wrong.

All valuation projections are complete opinions and could be wrong, including
completely wrong. The comparable companies list is not a complete list of all small
internet marketing companies. There are others. Some of the others may be better
comparables. You are advised to do your own comparable research.

Stock go down in value. For lots of reasons. Do not buy stocks based on reading
someone’s research opinion. It is only an opinion. It could be very wrong. Do your
own research.

Report dated as of late February 2011